ContextRecently married couple, early 30’s, both in careers that were low-paying and/or required lots of formal education in our 20’s. Have been makin’ the big money for about 1.5 years now and are working to keep our heads on straight in a very high COL, spendy location (Manhattan). No debt of any kind and no plans to purchase property in the next 3-5 years. Some possibility of adding a child to our mix in the next 5 years - or maybe just a dog.
Anticipating that income will just about double in the next 1-2 years (looking at approx 280K/year)and we plan to continue our non-mustachian level of spending (approx 63K/year) and funnel the rest into investments.
Let the facepunching commence!
IncomeMonthly take-home pay: 7K
This number is what's in our pocket after paying city, state, and federal taxes along with 1400/month towards our 4xx(x) (only one of us has access to a 4xx(x) program) and a little taken out for pre-tax health insurance and transport benefits through employer
Current ExpensesRent
1700
internet
60
cell phones
150
electricity and gas
80
downloads/streaming
10
educational expenses (textbooks, required exams)
150
gifts and economic support of family members
300
restaurants
450
cash (a big chunk of this goes to restaurants/take out/happy hours as well)
550
groceries
450
travel
200
shopping
250
savings (this is all savings/investing apart from our 4xx(x))
1800
medical expenses/insurance contributions/pharmacy
100
entertainment (tickets to events, movie theaters)
100
transportation (100% trains)
200
random expenses (we were saving about 1000/month for our wedding this spring, which I think is inflating this number when we look at the past 12 months. I estimate we have around 200-250 of unknown expenses besides our cash purchases)
450
TOTAL
7000
Expected ER expensesWe’d like to maintain our spending in ER - currently 62-63K/year in 2014 dollars. Sometimes when I’m feeling extra fancy I’ll calculate for 70K/year. A lot of our restaurant spending would go down in ER, but we want to make sure we account for transportation costs since we’ll likely need a car or two and will travel more.
AssetsEmergency Fund
we keep 3-5K around. Parents can be tapped if we need cash quickly, otherwise we’d rather invest and put emergencies on CCs (we have a 20K+ limit)
'Stache
just over 90K
By Account
His Roth: 12K
Fidelity LifeCycle
Her Roth: 34.5K
11.5 in VSMAX (small cap)
11.5 in VBTLX (total bond)
11.5 in VTIAX (total international)
Her 4xx(x): 14K
S&P 500 Index
Taxable Investments with Vanguard: 32.5
16+ in VSMAX (small cap)
16+ in VTIAX (total international)
By Asset Type
12K in LifeCycle (hoping to move this soon though the ER isn’t awful)
27.5 in small-cap
11.5 in total bond
27.5 in total international
14 in S&P Index (large cap)
Questions- Expenses were calculated from our last 12 months of spending as logged in Mint. We both work 50+ hours/week and the restaurants/take out add up so quickly - better systems at home would help us order out less. Maybe one night out/week is a "date night" - the rest is laziness/convenience. Seeing it like this, our spending is so high, though we’re more mustachian than any of our friends and feel like we’re rather frugal. I’ve been thinking of investing in YNAB to better track this. Other systems folks set up to help them spend on items that are truly contributing to happiness rather than laziness?
- Our next step - especially as we anticipate our earning jumping so much - will be to invest more strategically. The Fidelity money and 4xx(x) money aren’t available now, but will be in the next couple years (immigration issues make the Roth difficult to move and I anticipate transitioning to another company in the next 1-3 years). I was going for a modified version of the Boglehead 3-fund portfolio here (balancing S&P with small caps in lieu of a full market index) but it’s a bit more complicated than I’d like. Perhaps I hold tight until the Roth and 4xx(x) open up, then pursue a better asset allocation. Other thoughts on ways to tighten up our investments?
- With our anticipated increase in income in the next 1-2 years, we estimate that we can FIRE in our late 40’s. If anyone is open to running those numbers to pressure test my thinking, I’d love it.
Thanks in advance for your observations and thoughts!