I was going to sent this to Mr. MM but I don't think it's terribly unique, dire, or interesting so I thought I would post is here!
We’ve always lived more frugally than all of our friends thanks to me being a big Dave Ramsey fan and my husband just being a natural non-spender. However, I stumbled upon your blog a couple of weeks ago and we’ve now decided that we want to RETIRE EARLY!! We’re willing to work part-time doing whatever our little heart’s desire but we really want to kick this mandatory full-time job business to the curb. I’m 27 and he’s 34. We don’t have kids yet but we would like them in the next few years (probably when the debt is gone).
Ideally I’d like for us both to retire from full-time work in the next 10 years. We rent a duplex right now and see no point in wasting money to buy a house when we want to retire early. Once we get the debt paid off and have some money saved we would like to buy a house to earn some rental income from (maybe buy a duplex and live in one side and rent out the other).
I keep really good track of our finances and I feel like we’re doing well. However, just because I think we’re doing well doesn’t mean that Mr. Money Mustache would agree! Every time I read a new blog post I go back to our budget to see where we can save some more money. Please give me your wise opinion as to what else we can do to retire early, and whether or not you think our 10-year goal is too lofty.
NET INCOME:
$1,360 twice a month (24 checks a year) my salary
$1,445 every two weeks (26 checks a year) his commission so it varies, but this is the average
$5,610 per month, not counting his two extra checks which we just throw towards debt/investing
He’s a personal trainer so we both get free gym memberships.
My company pays for 100% of our medical insurance (mine, his, and any future children).
I put in 5% ($2,000 year) to my 401k, plus an additional 10% of any bonuses I get, and my company puts in 10% ($4,000). Total I have about $4,700 so far.
He now puts in 15% of his gross income ($56,000 last year) towards his 401k per month. Total he has is about $10,000 so far.
We have $6,000 invested in other mutual funds.
We have around $3,000 in our checking account (he wants to keep a $2000 cushion and the rest is money designated for some of the things listed below).
MONTHLY EXPENSES:
Rent – $750
Phones –$118
Auto insurance – $150
Cable TV – $63
Internet – $52
Electric/water – $90-$160
Gas (utility) – $30
Groceries/toiletries/household – $450
Gas (auto) – $200
Date night – $120
Starbucks – $50
The expenses below don’t happen every month but we set aside money each month for when they do happen:
Oil changes – $18
Auto repairs – $50 (he needs new tires soon)
Vehicle registration – $12 (paid annually but we save a little for it all year)
Vehicle inspection – $12 (paid annually but we save a little for it all year)
Renters insurance – $9 (paid annually but we save a little for it all year)
Clothes – $13
Haircuts – $14 (four per year for him at $15 each and two for me at $50 each)
Gifts – $155 (Christmas, birthdays, showers, etc.)
Races – $50
TOTAL: $2,476
He has no debt at all but I have three student loans:
$22,243 at 9.5% APR ($274 min monthly payment, we’re paying $2,145 per month) private loan
$38,029 at 6.8% APR ($164 min monthly payment, we’re paying $200 per month) federal loan
$13,000 with NO APR ($155 min monthly payment) private loan
Actual monthly debt payments - $2,500
We’re paying off the highest APR loan first, no matter what Dave Ramsey says, and we’re going to just pay the minimum payments on the one with no APR. We calculate that we’ll have all of the interest-accruing debt gone by July 2014 at the latest! Once that happens then we’ll put $2,800 per month towards investing.
Investing (non 401k) – $400 per month towards our non-401k mutual funds.
Additional notes about our expenses:
We live in Austin, Texas. We don’t run the central heat at all in the winter but the summers are brutal. We keep it set at 79 during the day when we’re not home, 74 when we’re are home, and 70 when we sleep.
Our clothes dryer runs on gas, not electric. We recently bought a low-flow showerhead to reduce the amount of water we use. We already have low-flow toilets and only flush for solids.
His cell phone contract isn’t up until August 2013 and mine isn’t up until May 2014. Once they’re up we’re going to look into the $10/month plan that you and Mrs. MM have.
I believe that we could happily live without cable TV and just have a Hulu and/or Netflix subscription. He does not agree with me. He’s a huge football fan and the only way for him to watch football the five gruesome months that it’s on is with cable service. We have discussed this many times and he’s not budging so neither is our cable bill.
He is a personal trainer and will sometimes train 6 or 7 sessions in row without a break and often he’ll have two sessions, a four hour gap, and then three more sessions. He doesn’t want to drive home during that big break and waste gas so Starbucks is his treat to himself to stay sane (it’s across the street from the gym). He doesn’t go every single day and he’s working on ordering tea or drip coffee instead of the expensive drinks he used to order, so hopefully this number goes down.
Date night is every Friday night for us. He doesn’t get home until after 8:00 most nights during the week and I try to be in bed by 9:30 so we like to go on date nights on Fridays to ensure some good time together outside of our normal environment. We currently spend about $25-$30 by going out to dinner but we’re going to just do dinner twice a month now and something cheaper the other two weeks, like frozen yogurt or coffee.
Races – he’s a competitive cyclist and I’m a runner. We don’t race as much as we’d like to because it can get very expensive very quickly but we do set some money aside for it. This money also pays for things like new running shoes when they’re needed.
We each own our own cars (him – 2009 Mazda Speed3, me – 2009 Toyota Yaris). We always take my car on longer trips because it gets amazing gas mileage. We plan on driving these cars until they fall apart.
We only pay $750 per month for a 2bed/2 bath duplex which is a steal! He works 8.5 miles north of our house and I work 14.8 miles south of our house so living closer to one of our jobs would still be more inconvenient for the other.
Public transportation isn’t very good here and it would take me almost two hours each way by bus. To bike to work I would have to leave the house before it’s light outside and then I’d arrive sweaty with no way to shower. He is considering getting a commuter bike so he can ride to work some days (not the ones where he’d be coming home after dark) so that could save us a little money there. I also plan to get a commuter bike so I can use it for errands, grocery shopping, etc. Hopefully I can limit my driving to just the 145 miles I drive to get to and from work each week (sigh).
I don’t love my job so I could try to find a job closer to our house but then I fear I’d lose out on benefits (like free health insurance for the whole family and the 10% they contribute to my 401k) and the end numbers would come out the same. If he were to transfer to a gym closer to my job that wouldn’t really help because the housing (and apartment) prices near where I work are insane. We’d end up paying more than $1,000 per month for a smaller space than we have now so I feel like that doesn’t really save us much money either. He’s also the highest paid trainer at his gym and if he were to transfer he’d have to build his clientele all over again and we’d be living on significantly less pay until he did.
So, Mr. Money Mustache, what have you got to tell me? Can we be living more frugally? Are we crazy to think that we can retire in 10 years or less?