Author Topic: Case Study: Finally getting to a stable point. Time to make sure I知 on track.  (Read 3421 times)

CanyonMan

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First, the numbers.

Income: All numbers pretax

2011: 20k
2012: 25k
2013: 27k
2014: 42k (Estimated) Income starting April 2014 = $3,700/Month
2014: 52k (Projected)

Current expenses:

Rent: $170 Month
Food: $200 Month
Restaurants/bars: $100 month
Motorcycle Insurance & Registration: $37 month
Fuel: $100 month
Electric: $50/month (Avg)
Internet: $30/month
Portion of car insurance: $30/month
Dental/Vision insurance: $30/Month
All other spending: $600 (Avg, and includes things like vacations.)
Average Monthly Costs: $1350


Monthly Investment costs:
$55 - Vanguard 500 auto deposit
$190 401k deposit for full match Goal is $1100/Month with promotion effective April 2014.

Current: $250
Goal: $1,300

Expected ER expenses:
Unknown. Just getting settled in life. Let痴 just call it 30k, because that seems close to the numbers that get thrown around a lot on MMM. I知 not really planning on a 吐ull ER at this time, just working my way towards FI so I have more flexibility in my life.


Assets:
$11,000 Loan to family member. 10% interest rate with 4 year repayment schedule. Stable and backed by partial ownership on paid off home.
$8,000 TSP (Government employee 401k) 33% S-Fund, 33% C-Fund, 33% I-Fund.
$5,000 Motorcycle (I guess this goes here)
$4,500 Vanguard 500 fund
$4,000 Emergency fund and assorted cash.
Total assets: $32,500
 
Liabilities:
Zero, Zilch, Nada. Worked full time through college to ensure graduation with no debt.

Specific Question(s):
Am I on track, and what can I do better?

Backstory and helpful info.
I知 23 and just finished college with AAS in Network Engineering and BIS in Technology Management (mostly based in project management). I have been in a federal student job working in Information Technology for the last 5 years while working on my degrees. Since finishing my degree I have been hired in a career ladder position that pays 45k for the first year, and 54k for three following years. At the end of the 4th year, the position ends. My goal is to only spend 2 years in the position before moving up. The long term goal is to stay in Federal Service for my career.

At this time I live in a sub 500 square foot 1 bedroom apartment with my girlfriend. While the rent is cheap, we池e looking to move into a larger place in the near future. We池e currently looking at a 1,000 square foot townhome as our next possible option, at a cost of $460/month plus utilities. I live and work in a remote area, roughly 60 miles from the nearest town of 10,000 people. Because of this there is very limited housing, and utility and food costs are high. There is nothing size or cost wise between the sub 500 sqft apartment we currently have and a 1,000 sqft townhome.

Asset note: $11,000 loan is to my parents to help zero out their credit card debt. One is retired, one is still working but getting close to retirement. With the credit card debt they had they were never going to be able to retire, so I 釘ought Out their highest interest debt with a lump sum from money I had in my Vanguard account. In exchange for buying out the majority of their debt I will receive a flat payment per month, with interest included, for the next four years. This will be fully repaid in April of 2018.

I知 happy to answer any questions that help fill out the information. I致e read all of the MMM posts, as well as the Bogglehead痴 guide, but I grew up in a family where money was not discussed and I知 just getting to the point in my life where I have enough free time to actually sit down and take a look at planning for the future. Thanks in advance!

-CanyonMan

marty998

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Specific Question(s):
Am I on track, and what can I do better?


Are you on track for what? What sort of life exactly do you want? Does that ideal life include your girlfriend? Have you convinced her about this grand ER plan?

I don't think money is going to be the problem for you. Choices about life...that's what will be the challenge to work out.

Thegoblinchief

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Your savings rate is good.

Normally I tell people 1,000 sqft is too much space, but for less than $500/month I can't really say anything. If $500 is just your share, though, seriously consider something in between. I raise three kids in less than 1,000 sqft.

Whatever you do, make sure you and your GF are on the same page about the future. You're making more money, but this is the danger point where so many people upgrade their life - selling out their future in the process.

If you want kids in the future, consider busting your savings butts to be FIRE or close by 30, then have kids. Kids are hard, but they are much easier once jobs are no longer a necessity.

CarDude

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^ Yes yes yes. Definitely watch out for lifestyle inflation.

CanyonMan

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Specific Question(s):
Am I on track, and what can I do better?


Are you on track for what? What sort of life exactly do you want? Does that ideal life include your girlfriend? Have you convinced her about this grand ER plan?

I don't think money is going to be the problem for you. Choices about life...that's what will be the challenge to work out.

Just on track financially in a general sense. I know that without a designated goal it's hard to answer. Overall I'm just trying to make sure I'm doing the correct things to build a stable financial future now that I'm joining the "real" world.

CanyonMan

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Your savings rate is good.

Normally I tell people 1,000 sqft is too much space, but for less than $500/month I can't really say anything. If $500 is just your share, though, seriously consider something in between. I raise three kids in less than 1,000 sqft.

Whatever you do, make sure you and your GF are on the same page about the future. You're making more money, but this is the danger point where so many people upgrade their life - selling out their future in the process.

If you want kids in the future, consider busting your savings butts to be FIRE or close by 30, then have kids. Kids are hard, but they are much easier once jobs are no longer a necessity.

The $460/month would be split equally. My portion would be half ($230). 1000sqft felt like a huge amount of space when we toured it. We've been living in <500 sqft for the last two years. If there was ANYTHING in between we'd be interested, but it's taken more than a year for this unit to come available. I mentioned the small town/remote area, let me emphasize how small. There are only 463 rental units available, and all are organization-owned. There is no privately owned housing unless we were willing to live in a trailer in the middle of nowhere and commute 30 minutes each way by car. Think of it like military base housing. We have looked at every unit that's come available and this is only the 2nd one in two years that is less than $800/mo. Hope this doesn't come across as defensive, just trying to provide a more complete picture.

My girlfriend is already a Mustachian, she just doesn't know it. She came from a poor family in an (even more) rural and remote area, so frugality is already deeply ingrained. She's not yet on board for ER as an overall idea, she enjoys her job far too much. Her income has been higher than mine in past years. My promotions this year leapfrogged her, but she has positioned herself for advancement so the income balance may switch back soon. Currently she's making about 39K pretax, with the next step up in her career path would be between 43K and 48K. She's interested in getting to the point of FI so she would have more flexibility later in life when we want to start a family. Kids are on the to-do list, but FI and spending some time as DINKs with good careers comes first.

Thanks.

CanyonMan

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^ Yes yes yes. Definitely watch out for lifestyle inflation.

I keep hearing that term, but I'm not sure I fully understand. Lifestyle inflation seems like the positive part of working for a greater salary. Is it just about controlling it so it doesn't affect your financial future too heavily?

Right now my "Lifestyle" is as minimal as it can get. Eat meals from/at home 95% of the time, zero paid activities, no hobbies other than occasional videogames that were purchased long ago. My only entertainment cost is taking a motorcycle ride to go get supplies in the city, which seems like it's a necessary part of life more than a hobby. Vacations all consist of backpacking with no money, haven't bought anything new in years,  etc.

I think that my current lifestyle is far below what's enjoyable. I've always filled every moment of my time with online classes and a full time job. I've never had the time or the money to consider doing anything "fun" in life, it's always just been the grind every day to get to the point where I "make it". Now that I've ended the portion of my life where a "normal" week is 50 hours of work and 40+ hours of homework I hope to have time for things I actually enjoy. Part of figuring out how to manage my finances hopefully includes learning about how to spend money for enjoyable things without feeling guilt every time I pull out my wallet.

I think part of my worry about finances is based on living in an area where there are very few free or "cheap" activities, other than wandering around in the woods. Don't get me wrong, I'm an outdoorsy person, and love being in the forest from from time to time, but not as the only available activity. When a pizza costs $30 and the nearest library or public park requires $20 in gas to drive to it's hard to have a positive correlation between low cost activities and fun.

Ninjaedit: Looking back at this it's kinda of funny to read over. I live in a location where people visit from all over the world and dream about being able to live here. Once you're in as a local though, the place is really a pit. Saying this sounds like the sort of thing that's going to get a facepunch for being negative.

warfreak2

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I keep hearing that term, but I'm not sure I fully understand. Lifestyle inflation seems like the positive part of working for a greater salary. Is it just about controlling it so it doesn't affect your financial future too heavily?
It means responding to any increase in income by immediately spending it all, pushing you further away from FI.