Author Topic: Case Study Commute kills, is my picture too rosy?  (Read 2844 times)

ladyuniscorn

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Case Study Commute kills, is my picture too rosy?
« on: February 24, 2014, 05:08:03 PM »
Income:
$60,000 base salary + quarterly (~$1,000 but not guaranteed) and annual bonuses (~2,500)
Total: $62,500-$66,500
Monthly: ~$3,000 (base pay after 401k and taxes)

Current expenses:
Mortgage $1900 (property tax, insurance, principle, and interest included)
PG&E $50-70
Internet: $51
Water: $45 (bi-monthly)
Garbage: $50 (quarterly)
Food $250
Auto/Transportation: $62 ($40 gas, $22 insurance)
Public Transit: $180-$220 (bike to public transit 5 days a week, not possible to bike all the way)
Discretionary spending, bike repairs and other misc. expenses are usually <$100 per month
Worst Case Total: $2,708 (usually closer to $2,500)

Assets:
Cash: $31,100 ($20K+ in a CapitalOne360 savings account)
401k: $14,000 (current contribution is 20% + 3% match, fully vested in November, index funds through Vanguard)
Roth: $25,300 (max every year, index funds through Vanguard)
Rollover: $14,600 (leaving alone in an index fund, also Vanguard)
Taxable: $13,500 (index fund through Vanguard, auto transfer of $100 from savings account every two weeks)
ESOP: $17,500
Real Property: $375,000-$400,000 (current market value of a 3 bedroom, 1 bath in my neighborhood)
Car: KKB $3,000
Total: $494,000-$519,000

Liabilities:
Mortgage: $264,000

Current Savings Rate: 34% + additional that is swept over as my savings gets too big.

I currently live farther than I would like from work, I work in San Francisco and live in the East Bay. I bought my house with my ex-husband and the commute is killing, nearly 2 hours a day. Since housing prices have recovered for the most part I could get $375,000 on the low end for my house which would leave me with $111,000 in capital to invest (more index funds with Vanguard). If I moved to San Francisco I would get a smaller apartment for <$2,000 (rent would be split with my SO and reducing my utility bills). Anywhere within San Francisco I could ditch my car and the majority of my transportation costs by relying solely on my bike.

I am 29 years old, so ideally I would work another 5-10 years full time (allowing 5-10 years to transition into something I at least enjoy more than my current job while I continue to build a good cushion). Another goal is that I would like also like to be able to semi-retire and travel more in the future, possibly going to part time to accomplish this. Does this sound overly optimistic or even realistic?

sideways

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Re: Case Study Commute kills, is my picture too rosy?
« Reply #1 on: February 24, 2014, 05:16:39 PM »
A daily drive from the East Bay to San Francisco does sound horrible! Out of curiosity, have you tried taking BART?

Eric

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Re: Case Study Commute kills, is my picture too rosy?
« Reply #2 on: February 24, 2014, 05:52:36 PM »
A daily drive from the East Bay to San Francisco does sound horrible! Out of curiosity, have you tried taking BART?

Ummm, dude...

Auto/Transportation: $62 ($40 gas, $22 insurance)
Public Transit: $180-$220 (bike to public transit 5 days a week, not possible to bike all the way)

Anyway, so you have ~$250K in net worth.  You're saving ~$5K/year (plus 401k) now, but moving sounds to SF proper sounds like it would actually save you money.  (I'll guess that's the first time that sentence has ever been typed) 

So you'll max out your 401k at $17.5K + ~$2K match and add $7K to your taxable account.  That's $26.5 per year.  After 5 years that would give you about $500K.  I think that would put you well on your way to any goal you'd like.  That'll give you $20K per year at a 4% withdrawal rate, so if you wanted to go part time, you'd only have to make up about $10K in shortfall.  This doesn't count your travel budget of course.  At that time, you may be ready to reduce your living expenses by relocating to a cheaper area to help with that.

ladyuniscorn

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Re: Case Study Commute kills, is my picture too rosy?
« Reply #3 on: February 24, 2014, 07:40:29 PM »
Quote
...moving sounds to SF proper sounds like it would actually save you money.  (I'll guess that's the first time that sentence has ever been typed)

Exactly why I have been running the numbers backwards and forwards. Seemed too good to be true.

Quote
So you'll max out your 401k at $17.5K + ~$2K match and add $7K to your taxable account.  That's $26.5 per year.  After 5 years that would give you about $500K.  I think that would put you well on your way to any goal you'd like.  That'll give you $20K per year at a 4% withdrawal rate, so if you wanted to go part time, you'd only have to make up about $10K in shortfall.  This doesn't count your travel budget of course.  At that time, you may be ready to reduce your living expenses by relocating to a cheaper area to help with that.

Well that certainly put things into perspective. While I am working full time I was planning on staying in San Francisco, but I wanted to give myself the flexibility to be able to relocate if I choose or if I come across a good opportunity. I will certainly look into relocating somewhere less expensive as I am less tied to my 9-5, this has been something my SO and I have discussed.

Another consideration I have made is that I will have to max out my 401k to offset my increased tax liability, thank you for pointing this out. Thank you for your input, I really appreciate it.