Hi MMM Forum!
I started reading the MMM blog about two years ago, with $20k in debt between student loans and credit cards. As of 2014, I'm happy to say that I am Debt Free. Every time I needed a punch in the face...I visited the blog. Anyways - now I'd like to plan for FI and wanted to reach out to the MMM community. Below are the stats:
IncomeNew Job as of Oct 2013: Gross $5834/month, take home ~ $4000
Part-time gig: Extra net $2600/month
TOTAL = $6600
ExpensesThis budget includes helping my mom out (see below). Also, my company provides a company car (repairs, gas, and insurance) and phone, so the gas budget is for my mom.*Health Insurance - $250
**Rent/utilities - $250
Restaurants - $200
Groceries - $200
Shopping/pets - $200
ATM/Cash - $200
Taxi - $50
Pharmacy - $50
Gas - $50
Bars - $20
Netflix/spotify - $20
EXPENSES TOTAL ~ $1500*I pay for my mother's health insurance because she doesn't qualify for it at her part-time job. I get my health insurance from work which is deducted from my paycheck.
** We (my brother and I) also help my mother with the mortgage and utilities of her house. Mortgage and utilities (internet, gas, electricity, water, trash) come to about $1000. My brother and I take care of $500, she pays the other $500.
Assets 401(k) - $1500 (Started with my new job, put in 4% automatically because company matches 4%)
Roth IRA - $5000 (Started it when I was 19, but haven't contributed to it since 23)
Savings - $1500
LiabilityMy car that I don't use (?) - Paid off $23k loan, now worth maybe $5000
QuestionI want to know if this is a wise plan moving forward - maxing out 401k and Roth for next couple of years and putting the rest away in a 'Stash.
Starting in March
- Max out Roth IRA - $550/month for next 10 months
- Max out 401k - $1,750/month for next 10 months
After my expenses, I have $2800/month left...
BUT - My part time gig is scheduled to end in July, with maybe a chance of renewing for a few months longer, but I can't guarantee it. Which would mean with that plan I'd only have $200 left a month after August. That kind of scares me. Of course, I can sell that extra car and have more in savings accounts. Also, I can save everything I make from that part time gig this year and put it in the savings account so that I have a buffer for when the part time gig ends.
But then what in 2015?
I
think it would be wise to continue maxing out those accounts in the following years at $2000/month until I've reached the limit MMM talks about in this post
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/. Also in 2015, I'm going after a promotion and more part time gigs. I read a couple of posts about what some other folks my age are doing
https://forum.mrmoneymustache.com/ask-a-mustachian/i-would-like-a-report-card/msg210810/#msg210810 and
https://forum.mrmoneymustache.com/ask-a-mustachian/case-study-chicago-25yr-old/msg211629/#msg211629. They both either have property or talk about purchasing property. So I know home ownership is also an option, but I'm happy helping my mom out and living with her. Besides, she has no retirement, divorced, and filed for bankruptcy already so the house and car is all she has for now.
I appreciate the help and look forward to your advice/thoughts.