Author Topic: Case Study Lower Income NYC Mustachian Household  (Read 6544 times)

sunkissie24

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Case Study Lower Income NYC Mustachian Household
« on: November 08, 2014, 09:13:15 AM »
Lower Income Mustacian in NYC

Recently in between full time work and school I have been trying to get on board with living in a mustacian. The thought of early retirement sounds like a dream come true and I would love to achieve it. The process has been difficult for me though and I believe I could use a bit more guidance.  I believe my situation is a little different than most New Yorkers who post here in that my household income is a lot lower than what other New Yorkers I have seen posting. 

Despite this I am hoping to still be able to get some help in better arranging my life. Especially since both of us just got raises which bumped up our incomes a little bit. Currently I am focusing on achieving four goals.  There is a possibility for more to be added later on when I am successful in reaching some of my  goals.  Here they are not in any particular order:
1.   paying debts down
2.   establishing a higher credit rating
3.   obtaining a better standard of living
4.   getting started down the road of retiring early.

I plan to be brutally honest in our spending habits in the hopes that I can get the best possible assistance and I hope do not get too much flack.  I know there are things we are doing that are wrong that is why I want to make a change and I am asking for help from other mustachians. 
Thank you in advance for any help you are able to provide and here is my info.

Income:  Both myself and my husband work full-time we just got raises so now I believe we make about 60,000 pretax combined.  After taxes, pension, metrocard (we are part of wage works and the fee for the metrocard is taken out as a deduction) are taken out of our check we are left with about 3300 per month in income combined.

Expenses per month breakdown with total debt owed where applicable:
Rent: 950   We rent an apartment in a house in Queens near the projects.  It is not a good area, high crime and we have to shop in supermarkets outside the neighborhood to get good quality food. I do not believe the area we rent can be considered a legal apartment there are various issues with the apartment (heating, maintenance etc ). But the landlord does not increase the rent and that has been helpful to us.

Xbox One Payment- 45.66  per month  456.60 left to pay    My husband and I are gamers although because I am in work and school full time he utilizes the systems more than I do.  This is a payment plan we set up to purchase the Xbox with a warranty he wanted. 
 
Time Warner Cable: 71    This is just for internet we do not have cable.  I take some of my classes online and my husband streams gameplay and uploads youtube videos as part of his gaming hobby.  We utlize Netflix, hulu, and amazon prime subscriptions instead of a cable tv service which I charge to a credit card monthly.

Con Edison:  85 average  Our con Edison bill fluctuates but that is the average bill

Credit Card:  20 minimum   300 currently on card  I only have 1 credit card and I owe 300 dollars on it.  I also have my subscriptions listed above that charge on a montly basis on it.

My Cell phone bill : 65 I am on the Verizon prepaid plan with the addition of 3gb data.  Prior to the I used metro pcs but I needed a service that was more reliable.

My husbands cell phone bill : 98  My husband has an unlimited data plan with t-moblile.  Along with a payment plan for his phone. He uses his phone for youtube, twitter, facebook etc.  So he wanted an unlimited plan with a good phone.

My student loan total: 50,398.40  with 6.8% interest rate  I am not making any payments while I am currently still pursuing my undergrad. I will be done next May with my undergrad degree.  I plan to attend graduate school in which I will be done hopefully by Fall 2017.

My husbandís student loans:  109.93 and 135.40   He has two different loan servicers.  He owes 14,735.90 with a 3.375 % interest rate and 7646.99 at 4.25% interest respectively.

Child support payments: 250   Non court ordered mutually decided amount

Groceries: 350 per month approx.   We do not buy food from within our neighborhood due to quality issues so I go to other neighborhoods and Costco, trader joes, and supermarkets in higher socio economic neighborhoods to buy food that I know is fresh.  We also buy extra for the times he has visitation with his child.

Toiletries and household items: 60
Laundry: 60   
Husbandís hair cuts: 30
Husbandís medicine copay: 60   
Husbandís dr visit copay 30

Cabs: 200 aprox.   We have to take a bus from where I live to the train to get to work.  Oftentimes the buses in the area I live are overcrowded and do not stop or do not come.  So we take $2 per person gypsy cabs to and from the train.  Also because we cannot shop in our area due to quality issues I have to take a cab home from the places I do shop at.

Video game purchases:  120 on average  As I said we are gamers. This is about average that we spend. Some months we do not buy anything at all some months while other months we buy a lot.  I looked over our purchases and it is about that much monthly.

Eating out:  350   I am finding myself eating breakfast at home, but because I leave my house for work so early in the morning to get there on time by the time I get to work I am hungry again. I end up picking up something else to eat.  My husband also has the same problem and does the same thing.  Also I go straight from work to school at night 2 times a week and I do not have time to stop home so I eat at my college.  This amount also includes the times myself and my husband may go out to eat together.

Total Expenses per month 3089.99   
Income Ė Expenses    3300-3100=200 left over per month


Seeing this written out this way has proven to be very eye opening to me. I am at a lost as to where I should begin to get my goals accomplished.  I want to raise our credit so we can move to an apartment in a better area that is not so far from our jobs and has better quality goods and services. I also want to start paving the way to early retirement.

We both have a lot of debt and expenses. I am not sure where to cut the fat and where to put any extra money we may receive that would be beneficial to achieving our goals.  I am not sure if we can even afford the cost for a one bedroom in a better area which can run 1600 on average.  Please any help or advice is greatly appreciated.


mm1970

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #1 on: November 08, 2014, 09:25:38 AM »
Lower Income Mustacian in NYC

Recently in between full time work and school I have been trying to get on board with living in a mustacian. The thought of early retirement sounds like a dream come true and I would love to achieve it. The process has been difficult for me though and I believe I could use a bit more guidance.  I believe my situation is a little different than most New Yorkers who post here in that my household income is a lot lower than what other New Yorkers I have seen posting. 

Despite this I am hoping to still be able to get some help in better arranging my life. Especially since both of us just got raises which bumped up our incomes a little bit. Currently I am focusing on achieving four goals.  There is a possibility for more to be added later on when I am successful in reaching some of my  goals.  Here they are not in any particular order:
1.   paying debts down
2.   establishing a higher credit rating
3.   obtaining a better standard of living
4.   getting started down the road of retiring early.

I plan to be brutally honest in our spending habits in the hopes that I can get the best possible assistance and I hope do not get too much flack.  I know there are things we are doing that are wrong that is why I want to make a change and I am asking for help from other mustachians. 
Thank you in advance for any help you are able to provide and here is my info.

Income:  Both myself and my husband work full-time we just got raises so now I believe we make about 60,000 pretax combined.  After taxes, pension, metrocard (we are part of wage works and the fee for the metrocard is taken out as a deduction) are taken out of our check we are left with about 3300 per month in income combined.

Expenses per month breakdown with total debt owed where applicable:
Rent: 950   We rent an apartment in a house in Queens near the projects.  It is not a good area, high crime and we have to shop in supermarkets outside the neighborhood to get good quality food. I do not believe the area we rent can be considered a legal apartment there are various issues with the apartment (heating, maintenance etc ). But the landlord does not increase the rent and that has been helpful to us.

Xbox One Payment- 45.66  per month  456.60 left to pay    My husband and I are gamers although because I am in work and school full time he utilizes the systems more than I do.  This is a payment plan we set up to purchase the Xbox with a warranty he wanted. 
 
Time Warner Cable: 71    This is just for internet we do not have cable.  I take some of my classes online and my husband streams gameplay and uploads youtube videos as part of his gaming hobby.  We utlize Netflix, hulu, and amazon prime subscriptions instead of a cable tv service which I charge to a credit card monthly.

Con Edison:  85 average  Our con Edison bill fluctuates but that is the average bill

Credit Card:  20 minimum   300 currently on card  I only have 1 credit card and I owe 300 dollars on it.  I also have my subscriptions listed above that charge on a montly basis on it.

My Cell phone bill : 65 I am on the Verizon prepaid plan with the addition of 3gb data.  Prior to the I used metro pcs but I needed a service that was more reliable.

My husbands cell phone bill : 98  My husband has an unlimited data plan with t-moblile.  Along with a payment plan for his phone. He uses his phone for youtube, twitter, facebook etc.  So he wanted an unlimited plan with a good phone.

My student loan total: 50,398.40  with 6.8% interest rate  I am not making any payments while I am currently still pursuing my undergrad. I will be done next May with my undergrad degree.  I plan to attend graduate school in which I will be done hopefully by Fall 2017.

My husbandís student loans:  109.93 and 135.40   He has two different loan servicers.  He owes 14,735.90 with a 3.375 % interest rate and 7646.99 at 4.25% interest respectively.

Child support payments: 250   Non court ordered mutually decided amount

Groceries: 350 per month approx.   We do not buy food from within our neighborhood due to quality issues so I go to other neighborhoods and Costco, trader joes, and supermarkets in higher socio economic neighborhoods to buy food that I know is fresh.  We also buy extra for the times he has visitation with his child.

Toiletries and household items: 60
Laundry: 60   
Husbandís hair cuts: 30
Husbandís medicine copay: 60   
Husbandís dr visit copay 30

Cabs: 200 aprox.   We have to take a bus from where I live to the train to get to work.  Oftentimes the buses in the area I live are overcrowded and do not stop or do not come.  So we take $2 per person gypsy cabs to and from the train.  Also because we cannot shop in our area due to quality issues I have to take a cab home from the places I do shop at.

Video game purchases:  120 on average  As I said we are gamers. This is about average that we spend. Some months we do not buy anything at all some months while other months we buy a lot.  I looked over our purchases and it is about that much monthly.

Eating out:  350   I am finding myself eating breakfast at home, but because I leave my house for work so early in the morning to get there on time by the time I get to work I am hungry again. I end up picking up something else to eat.  My husband also has the same problem and does the same thing.  Also I go straight from work to school at night 2 times a week and I do not have time to stop home so I eat at my college.  This amount also includes the times myself and my husband may go out to eat together.

Total Expenses per month 3089.99   
Income Ė Expenses    3300-3100=200 left over per month


Seeing this written out this way has proven to be very eye opening to me. I am at a lost as to where I should begin to get my goals accomplished.  I want to raise our credit so we can move to an apartment in a better area that is not so far from our jobs and has better quality goods and services. I also want to start paving the way to early retirement.

We both have a lot of debt and expenses. I am not sure where to cut the fat and where to put any extra money we may receive that would be beneficial to achieving our goals.  I am not sure if we can even afford the cost for a one bedroom in a better area which can run 1600 on average.  Please any help or advice is greatly appreciated.
Well, my first recommendations would be on the eating out and cell phones.

1.  Look for cheaper cell phone plan. I have a prepaid plan at $45 a month, my husband's is $25 a month, and we could probably do better.  If you have internet at home, then you can change from "unlimited" data to pre-paid and utilize your home internet/ wi-fi.  Yes, when I'm on vacation, I often run out of data before the month renews because of all the posting of FB pictures.  So I started cutting back on that.

2.  Eating out.  You need to plan ahead. I know it can be tough (I am thinking back to my days living in DC, when I worked all day and went directly to school at night.  Oh, I ate out WAY too much back then because I didn't know how to cook.)  Pack your lunch the night before so you have it with you.  Do the same for your husband.  There was a time when I was going to the gym in the morning, then going directly to work, so I'd pack up my breakfast, lunch, AND snacks the night before and put them in the car when I left for the gym at 5:30 am.

I'm going to add a third: gaming.  You cannot afford this.  I know you are "gamers" (I really don't know what that means).  So, it's your hobby?  You need to set a budget for your hobby, and it needs to be less than $120 a month.

sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #2 on: November 08, 2014, 09:35:50 AM »
Thank you mm1970 for your suggestions

1.  I should have elaborated better on my cellphone plan mine is the $45 with an addition amount for data that I add every three months.  So it is 45 dollars except every 3rd month where it is 65 dollars. I cannot get my husband to go down on his he wants an unlimited. he used at minimum 10gb of data his consumption is crazy.  I am not sure if time warner has a prepaid.  I will call them and find out.

2. Yea the planning ahead is hard but you are right I will try to do that going forward.  I just have to figure out some good filling snacks. My husband says he hates carrying around a lot of stuff but I will see if I can sway him over to the "dark side" lol

3. Gamers- I am sorry for the terminology I forgot that not a lot of people know what a gamer is.  It is basically a hobby that revolves around the playing of video games and partaking in video game culture.  We will discuss a better way to indulge in our hobby without spending 120 per month.  Thank you again mm1970  :)

sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #3 on: November 08, 2014, 10:11:40 AM »
Hiya serpentstooth.  Awesome you live in queens too.  I did not know there was a BJ's out there.  I normally go to the Costco in Rego Park.  The only problem is I do not know how much a cab would cost from there to my home in Jamaica.  The cabs in Rego Park can run me $30 or more just to get home. I can normally only get to Costco once maybe twice a month because the cab cost adds onto my grocery expenses.

How is the food quality at BJ's?  Also hows the rent for a one bedroom in Flushing?

I just looked at my TWC bill and it went up sigh...

Monthly services
10/28 - 11/27 Standard Internet 39.99
Internet Modem Lease 5.99
Home WiFi 0.00
Ultimate 100 Upgrade 30.00
Total monthly services 75.98
Total after taxes 76.51

I have online college classes so I need reliable internet and TWC seems to have me in a chokehold.  I can not have my internet disconnect in the middle of an online exam.

I told my husband about the prepaid option.  He said after he pays off this phone he may look into it.  With him its more he likes certain (expensive sigh) phones and he wants unlimited data that is non negotiable to him.

Verizon is the only service that works at my job everybody that has something else has no signal.  I am on a prepaid plan so I save some money there though.  See my previous post for details.  Thanks for your help and suggestions :)

Distshore

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #4 on: November 08, 2014, 10:12:54 AM »
I am not sure on your neighbourhood exactly, but there are plenty of places in Queens with relatively reasonable rent IF you share an apartment.  Would you guys be open to getting a larger apartment and roommates?  The price differential between a 1 and 2BR, a 2 and 3BR is much less than the big step between no apartment and a 1BR.  You can rent a really nice 3BR condo in Flushing for 2400/month and get 2 tenants @ $850 ea, bringing your rental costs down and being in walking distance to the 7 train, so no cabs.  Or get a bike to help with your commute.  Don't know if that will do it for you ie right train line, but you get the idea.  Also then access to lots of supermarkets, particularly if you like Asian food.

I shared a 2BR apt with roommate in Northern Queens for 5 years, so some experience here :)  Also if you move to a better area, you get better quality room-mates available, better food, more transit, sharing of utilities with your better quality room-mates...I know you guys are married, but you're also students, which often requires a bit of sucking it up!  May also give you access to the building's laundry, which could cut your bill from a ridiculous $60 to a more reasonable $20 or so.  Please don't tell me you're doing drop off laundry!

Regarding cell phone, again - I would say, you're students.  Get a cheaper plan.  There are plenty available and you know it.  Unless your husband is earning money running a business via his phone and actually "needs" the data, I see that as a digital addiction issue as much as a financial one.  Leave the phone at home for a day once a month and try to enjoy your surroundings....see how it changes your perspective.  At least you get to look at all the crazy New Yorkers glued to their phones 24/7 and marvel at what you yourself look like most days, and how bloody stupid it is.

So that, with the items MM1970 covered, could bring you down:

Rent (assuming above scenario) $700 (from $950)
Cell phone: 2 lines Republic Wireless $80 (from $165)
Eating out:  $150 (from $350)
Gypsy cabs:  $0 (from $200)
Husband's haircuts $20 (from $30) - extend the haircut time frame by 1 week.  It's not that bad.
I won't comment on the gaming, except that can't you play the games you already have??  Or restrict purchases to birthdays and Christmas? 


Total completely painless savings $545/month.
I realise this will involve one-off moving expenses, phone purchase, maybe a bike and lock, but it will pay for itself very, very quickly.  Then you have cash to put towards your unexpected expenses, cash cushion, paying off loans EARLIER so they don't keep compounding...i.e. moving towards the goals you name.

Good luck!  PM me if you have questions about Northern Queens.  Been here 7 years now so pretty familiar.
 
 

Distshore

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #5 on: November 08, 2014, 10:17:56 AM »
Serpentstooth +1 BJs College Point. 
There is also one in Middle Village (close to Rego Park I think) but IMHO moving is better than having to pay $30 fare per trip to get there.  Not a huge fan of Jamaica I must admit.

sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #6 on: November 08, 2014, 10:26:26 AM »
Hi Distshore thank you for taking the time to reply to me.  Yea I also am not a big fan of Jamaica certain circumstances in life brought us here and I believe it is not the best for us and where we want to be.  I definitely like your numbers.  I am not sure how open my husband is to renting a room maybe if I can show him that is was temporary to help us get things more together?  Also we have a cat not sure how that would work in a roommate situation.  I would love to see  that cab bill disappear.  And my husband was ok with stretching out his haircuts. 

I will PM you for more info about Northern Queens.  Thanks again.

Future Lazy

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #7 on: November 08, 2014, 10:40:38 AM »
There's a number of things going on here that are holding you back.

Your goals are well defined and definitely deserve attention, but unless you get some spending under control, you can't even being to tackle #1: Debt Paydown.

From the top down:

An Xbox One is not in your budget. Neither is $120 in video games. I love video games as much as the next gamer, and spend whole days grinding away in Minecraft or harvesting flowers and butterflies in Skyrim. They're great. However, I would recommend cutting his. Completely. Not only are you going to pay twice again for the machine while leasing it (bad idea), you're also going to be looking at games for the Xbox One - shiny new games that cost $60 and then another $40-60 in DLC and maybe even an Xbox Live subscription fee. I would recommend taking the XKCD approach to this expense: http://xkcd.com/606/
Also skim this thread: http://forum.mrmoneymustache.com/ask-a-mustachian/a-mustachian-gamer/
Savings: $456.60 + ($120/mo * 10 months of your remaining console lease or $1200 what) + ??? in DLC and other goodies = at least $1656.60 Saved
Motivation idea: Save this money toward a nice $1000 gaming PC - It will play all the same games as an Xbox and you can still use a controller. You can take advantage of Steam sales, borrow games from friends, play extremely cheap games like Minecraft or free games like Hearthstone, or MMOs with excellent replayability, like LoL. It'll also last longer, and you won't be trapped into having to buy a new $600 console every 3-5 years. Just upgrade to a newer but used video card every 3-5 years instead.

Whew, now that we averted that money sink, let's move on to..

The husband's phone - and maybe yours too, but it seems pretty reasonable for now - I don't see any reason why someone would need 10gb of data, but I also don't ride the bus multiple hours a day and watch Youtube videos the entire time, which could be the habit, or something like it, that is pushing his data usage so high. Giving up the data is the only thing that is going to cut this back. All I can tell you is that if your DH would be willing to read a book on the bus instead of watching Super Smash Brothers trailers while paying $1176 per year for this luxury, you could be paying $300 a year (5gb 3g, unlimited 2g, Republic Wireless), and saving $876. Republic Wireless is just an example here - Ting and other services have competitive pricing and different features. Do some research.

About groceries and shopping in more affluent areas - I live in a little poorish corner of my town, and I also work in a more richish part of my town. I shop exclusively at King Soopers, and I buy all the same staples each trip. Now, we have the same store, the same shopping list, and two different areas of town. One would think that there wouldn't be any difference, but there is. I stopped shopping at the slightly more convenient and close to work store. It was, on average, 10% more expensive because it was placed in an affluent area. I would worry that this could be the case with your groceries as well. As weird as it sounds, shopping closer to your neighborhood might save you money on this bill, not to mention transport fees.

Savings on groceries: $35/mo or $420/year, not including possible transportation savings.

if you're spending $350/mo on groceries, and ALSO spending $350 on luxury premade meals (fast food through restaurants), something is wrong. If you were only spending $350 on all food, that would be OK, but as it stands, you're spending $700/mo on eating, or $8400 a year. As far as being hungry when you're out and about, carry snacks. Think of it like that thing your parents said you had to do anyways, even if you didn't want to. Like, homework. You don't want to do homework for school, but you do, because you know it's good for you in the end. This is the same - you might not want to haul cliff bars or PB&J sammiches around with you, but you should. Because it's good for you.

Set an eating out budget of, say, $50 a month, which would be 2-3 fast food meals together where you share fries and a drink, or one nice dinner date per month.
Savings on eating out: $300/mo or $3600/yr, otherwise known as more than a whole month of your current income.

Total Saved over an entire year with these changes: $1656.60 (Games) + $876 (DH's phone) + $420 (Groceries) + $3600 (Eating out) = $6553.60
Total surplus income per year after these changes: $6553.60 + $2400 (current surplus) = $8953.60

Now, we can talk about debts... Assuming no change in income or expenses:

The total owed for DH's loans, $22382.89, divided by your new yearly savings of $8953.60 is 2.499 - or approximately 2.5 - 3 years to pay off his student loan debts.

The total owed on your loans, $50,398.40, divided by your new yearly savings of $8953.60 is 5.628 - or approximately 5.5 - 6.5 years to pay off your student loan debts.

Where your credit rating is concerned, I would recommend paying off your credit card completely. Continue to use it monthly to autopay bills, but continue to pay it off in full each month. This, i in combination with paying down student loans will bring your credit rating up. In the 5-10 years it may take you to pay off debts, get raises, earn more money and build a down payment, you should have a pretty good credit rating and be able to easily get a good rate on a house or townhome (assuming that's your goal, since you want to raise your credit, and that's mostly why people do it...). Or, I mean, if houses aren't your thing, you'll be able to push your credit rating up to where you can get some sweet deals on credit cards.
Check out these forums: http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/bd-p/rebuildingcredit



I think that's all I can help with. I'm not very familiar with commuting in your city, so I'm not able to offer tips here. I live in a basement room of crappy apartment tucked away in a mixed suburb of my own city, and sympathize greatly with living someplace extremely uncomfortable on the pretense of savings...  Other than that housing is bonkers in NYC, so I don't really have any suggestions to offer here, but wish you the best of luck. Hopefully none of this advice comes across too harsh, and hopefully the numbers will persuade you more than anything. Other than these things, to me, it sounds like you really have your head on your shoulders and are working hard, and succeeding every day to overcome some bad cards. Great job at life, man! Keep up being conscious about your spending and your upward mobility, and you won't have trouble improving your quality of life. :)


EDIT: Mayday's post below this one alerted me to something I'd overlooked! Thanks, Mayday!

$8 Netflix + $8 Hulu + $8 Amazon = $24/mo or $288/yr. This could easily be cut and then become your used games and Steam sale budget.
« Last Edit: November 08, 2014, 11:00:36 AM by KaylaEM »

MayDay

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #8 on: November 08, 2014, 10:46:17 AM »
46 for Xbox + 120 for games + 25$ extra for fast internet + 8$ netflix +8$ Amazon + 12$ July = 219$ a month for entertainment. Plus the eating out.

That's crazy. Cut it in half. Or more. Why in the world do you need Netflix, Amazon AND hulu while also gaming?

Distshore

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #9 on: November 08, 2014, 10:48:52 AM »
Look forward to hearing from you, sunkissie.  PS I forgot to mention my roommate situation in Bayside Queens was with 1 room mate AND HER CAT!!!  It happens :)  Just get roommates that like or tolerate cats.  Cats also do better in larger spaces as it gives them more room for that crazy thing they do where they go to the kitty litter, then scratch it, then GO COMPLETELY CRAZY and run up and down the apartment for 2 minutes straight before collapsing back into lazy-cat stupor.


sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #10 on: November 08, 2014, 11:01:34 AM »
46 for Xbox + 120 for games + 25$ extra for fast internet + 8$ netflix +8$ Amazon + 12$ July = 219$ a month for entertainment. Plus the eating out.

That's crazy. Cut it in half. Or more. Why in the world do you need Netflix, Amazon AND hulu while also gaming?

Hi MayDay. Yea I know I never really realized how much we spend on entertainment until I started typing out that post to yall.  I also think it grew over the years because at first we made so little that we couldn't afford to go out even on dates really so we got netflix and made that date night. Over time when our income increased that grew to all the other stuff.  I really didn't not realize that we spend so much on entertainment definitely gonna discuss that with my husband. 

sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #11 on: November 08, 2014, 11:23:19 AM »
There's a number of things going on here that are holding you back.

Your goals are well defined and definitely deserve attention, but unless you get some spending under control, you can't even being to tackle #1: Debt Paydown.

From the top down:

An Xbox One is not in your budget. Neither is $120 in video games. I love video games as much as the next gamer, and spend whole days grinding away in Minecraft or harvesting flowers and butterflies in Skyrim. They're great. However, I would recommend cutting his. Completely. Not only are you going to pay twice again for the machine while leasing it (bad idea), you're also going to be looking at games for the Xbox One - shiny new games that cost $60 and then another $40-60 in DLC and maybe even an Xbox Live subscription fee. I would recommend taking the XKCD approach to this expense: http://xkcd.com/606/
Also skim this thread: http://forum.mrmoneymustache.com/ask-a-mustachian/a-mustachian-gamer/
Savings: $456.60 + ($120/mo * 10 months of your remaining console lease or $1200 what) + ??? in DLC and other goodies = at least $1656.60 Saved
Motivation idea: Save this money toward a nice $1000 gaming PC - It will play all the same games as an Xbox and you can still use a controller. You can take advantage of Steam sales, borrow games from friends, play extremely cheap games like Minecraft or free games like Hearthstone, or MMOs with excellent replayability, like LoL. It'll also last longer, and you won't be trapped into having to buy a new $600 console every 3-5 years. Just upgrade to a newer but used video card every 3-5 years instead.

Whew, now that we averted that money sink, let's move on to..

The husband's phone - and maybe yours too, but it seems pretty reasonable for now - I don't see any reason why someone would need 10gb of data, but I also don't ride the bus multiple hours a day and watch Youtube videos the entire time, which could be the habit, or something like it, that is pushing his data usage so high. Giving up the data is the only thing that is going to cut this back. All I can tell you is that if your DH would be willing to read a book on the bus instead of watching Super Smash Brothers trailers while paying $1176 per year for this luxury, you could be paying $300 a year (5gb 3g, unlimited 2g, Republic Wireless), and saving $876. Republic Wireless is just an example here - Ting and other services have competitive pricing and different features. Do some research.

About groceries and shopping in more affluent areas - I live in a little poorish corner of my town, and I also work in a more richish part of my town. I shop exclusively at King Soopers, and I buy all the same staples each trip. Now, we have the same store, the same shopping list, and two different areas of town. One would think that there wouldn't be any difference, but there is. I stopped shopping at the slightly more convenient and close to work store. It was, on average, 10% more expensive because it was placed in an affluent area. I would worry that this could be the case with your groceries as well. As weird as it sounds, shopping closer to your neighborhood might save you money on this bill, not to mention transport fees.

Savings on groceries: $35/mo or $420/year, not including possible transportation savings.

if you're spending $350/mo on groceries, and ALSO spending $350 on luxury premade meals (fast food through restaurants), something is wrong. If you were only spending $350 on all food, that would be OK, but as it stands, you're spending $700/mo on eating, or $8400 a year. As far as being hungry when you're out and about, carry snacks. Think of it like that thing your parents said you had to do anyways, even if you didn't want to. Like, homework. You don't want to do homework for school, but you do, because you know it's good for you in the end. This is the same - you might not want to haul cliff bars or PB&J sammiches around with you, but you should. Because it's good for you.

Set an eating out budget of, say, $50 a month, which would be 2-3 fast food meals together where you share fries and a drink, or one nice dinner date per month.
Savings on eating out: $300/mo or $3600/yr, otherwise known as more than a whole month of your current income.

Total Saved over an entire year with these changes: $1656.60 (Games) + $876 (DH's phone) + $420 (Groceries) + $3600 (Eating out) = $6553.60
Total surplus income per year after these changes: $6553.60 + $2400 (current surplus) = $8953.60

Now, we can talk about debts... Assuming no change in income or expenses:

The total owed for DH's loans, $22382.89, divided by your new yearly savings of $8953.60 is 2.499 - or approximately 2.5 - 3 years to pay off his student loan debts.

The total owed on your loans, $50,398.40, divided by your new yearly savings of $8953.60 is 5.628 - or approximately 5.5 - 6.5 years to pay off your student loan debts.

Where your credit rating is concerned, I would recommend paying off your credit card completely. Continue to use it monthly to autopay bills, but continue to pay it off in full each month. This, i in combination with paying down student loans will bring your credit rating up. In the 5-10 years it may take you to pay off debts, get raises, earn more money and build a down payment, you should have a pretty good credit rating and be able to easily get a good rate on a house or townhome (assuming that's your goal, since you want to raise your credit, and that's mostly why people do it...). Or, I mean, if houses aren't your thing, you'll be able to push your credit rating up to where you can get some sweet deals on credit cards.
Check out these forums: http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/bd-p/rebuildingcredit



I think that's all I can help with. I'm not very familiar with commuting in your city, so I'm not able to offer tips here. I live in a basement room of crappy apartment tucked away in a mixed suburb of my own city, and sympathize greatly with living someplace extremely uncomfortable on the pretense of savings...  Other than that housing is bonkers in NYC, so I don't really have any suggestions to offer here, but wish you the best of luck. Hopefully none of this advice comes across too harsh, and hopefully the numbers will persuade you more than anything. Other than these things, to me, it sounds like you really have your head on your shoulders and are working hard, and succeeding every day to overcome some bad cards. Great job at life, man! Keep up being conscious about your spending and your upward mobility, and you won't have trouble improving your quality of life. :)


EDIT: Mayday's post below this one alerted me to something I'd overlooked! Thanks, Mayday!

$8 Netflix + $8 Hulu + $8 Amazon = $24/mo or $288/yr. This could easily be cut and then become your used games and Steam sale budget.

Hi Kayla thank you so much.  I wish you could have seen my husbands face when I was reading your post to him. It was priceless.  I am glad there are people out there that can understand the plight of a mustachian gamer.  The games they are so shiny its so hard sometimes they definitely are a huge money sink lol.. But actually totaling everything up for us like that helped me talk to him. Thank you very much for taking the time to do that. I read the figures to my husband and I think he lost a few shades of color. He and I totally did not realize just how far away our spending habits were taking us from our goals.

Now the grocery thing the problem is the food in our neighborhood is basically old.  We stopped shopping in the neighborhood stores years ago because upon bringing it home we found it would spoil very quickly, have an aged look or smell, or have mold etc on it.  There have been complaints by the community but nothing has changed.  So I shop outside my neighborhood.  I would love to be able to shop in my neighborhood but we can not.  That is mainly a neighborhood issue and part of the reason I am trying to leave.

I am definitely going to do the prepare snacks and other things at home to carry to work and school.  I can definitely save a lot by cutting out my eating out bill.  And I am also taking MayDay's point into consideration did not realize we were spending so much on entertainment.

lizzzi

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #12 on: November 08, 2014, 11:37:15 AM »
Get a Wahl clipper and cut your husband's hair. If there aren't instructions in the box, there are lots of Youtube tutorials. Why spend even $20 every five weeks? I am soooooo not a hair person, but I had no trouble at all cutting my husband's hair (Mr. Picky-picky), and he liked it!

Future Lazy

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #13 on: November 08, 2014, 11:46:10 AM »
Hi Kayla thank you so much.  I wish you could have seen my husbands face when I was reading your post to him. It was priceless.  I am glad there are people out there that can understand the plight of a mustachian gamer.  The games they are so shiny its so hard sometimes they definitely are a huge money sink lol.. But actually totaling everything up for us like that helped me talk to him. Thank you very much for taking the time to do that. I read the figures to my husband and I think he lost a few shades of color. He and I totally did not realize just how far away our spending habits were taking us from our goals.

Now the grocery thing the problem is the food in our neighborhood is basically old.  We stopped shopping in the neighborhood stores years ago because upon bringing it home we found it would spoil very quickly, have an aged look or smell, or have mold etc on it.  There have been complaints by the community but nothing has changed.  So I shop outside my neighborhood.  I would love to be able to shop in my neighborhood but we can not.  That is mainly a neighborhood issue and part of the reason I am trying to leave.

I am definitely going to do the prepare snacks and other things at home to carry to work and school.  I can definitely save a lot by cutting out my eating out bill.  And I am also taking MayDay's point into consideration did not realize we were spending so much on entertainment.

Dude, no problem. I kind of jumped on your thread because you guys are obviously gamers, and that's sometimes not considered very Mustachian, since it's an expensive indoor activity that could be better replaced by biking or hiking or other things that outdoor type people like to do. I wanted to present a middle ground between the polarizing positions of "Buy all the new games!" and "Go outside, fatties!", haha. To me FIRE and Mustachianism in general represent giving up the things you don't need to have the things you want. Giving up extensive gaming for now doesn't mean that you'll have to do it forever, but once you eliminate some other things holding you back, you'll be able to purchase your own Xbox Point Five (or whatever the 2018 model will be) and invest in your hobby without shorting yourself in other ways.

100% Kudos to your DH for being willing to get on board - it's hard to change habits, especially those centered around comforts like games.

I want to play AC Black Flag and AC Unity so bad it hurts, and I'm considering getting a PS4 from Santa this year, but even then, I know I have greater goals and can't really afford distractions right now. It might not be the wisest decision - and at the same time, the prices on those games and that console will continue to go down while I focus on my greater good. When I do have the luxury and the time to get that console and play those games, I'll also get to pat myself on the back for buying a used console and used games and saving the money. :)

Do you have extra freezer space? Even if things are old at the time you purchase them, you can still chop them up and freeze them for later, if it's cheaper than buying frozen stuff at stores farther away. Raspberries at my local store were 88c a package yesterday. Some were already a bit moldy - you can tell they're the last harvest of local fruit. I bought ten packagles, ate one and froze the rest; they'll keep in the freezer, and I can use them to make a pie over the winter. TL;DR Look for creative ways to take advantage of bulk sales, even on less than ideal produce, such as freezing the surplus or cooking it all immediately and in bulk. Likewise, if you have the resources, consider canning!

Over this summer, I worked 47 hours a week, and my DH worked 60+ hours a week at two jobs. Both of us felt like we were beat, and our fast food bill really crept up on us, till August when it topped about $200/mo (just out of my pocket, I don't know how much DH spent...) Working long hours, going to school while working and having to rely on public transport can all make food a huge hurdle. Our solution is usually to buy meal bars for breakfasts, cook cheap foods like spaghetti in bulk on the weekends and eat that all week. It's boring eating sometimes, but it keeps plans for the future on track.

sunkissie24

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #14 on: November 08, 2014, 11:59:20 AM »
Hi again Kayla yea I want a PS4 also. Persona 5 is coming out I have been waiting years for that game...OMG i screamed when I saw the trailer for it...I just love that series ona whole I dunno what I am going to do. Its hard being an adult sigh lol.  I will try the neighborhood store again with your suggestions.  I just got so turned off from the other times with the meat,  vegetables, and fruit being old  I started to travel to costco for my shopping needs.

I will definitely figure out something better about the cooking and the meals.  Everyone has been such a big help I am very happy I found about MMM and the form.

sheepstache

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #15 on: November 08, 2014, 12:14:15 PM »
With low income in NYC you might want to check out UHAB and other affordable housing programs. Everyone thinks it takes forever to get in, but if you just get yourself on the waitlist, the time will pass quicker than you realize. And if you get offered a place and it's no longer the right decision for you, there's no downside, you just say no thanks. UHAB is the one I know about because I have one and it's nice because you own the place so even if your income goes up in the future they don't care. If you want to ask about it feel free to PM me.

frugal_c

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #16 on: November 08, 2014, 12:37:03 PM »
Don't have much to add as the other posters have covered the best areas to cut expenses.   I would just say you're taking the right steps by simply thinking about being a mustachian.   It can be overwhelming at first, and you will feel like you are sacrificing.  Don't feel the need to implement all the cuts immediately if you don't want to.  As you do this you will get better at cutting, you will literally find better deals and new ways to reduce your costs.   You will also find that the "sacrifices" really aren't that at all, as you start to gain more financial independence it is actually liberating.

Best of luck to you.

mm1970

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #17 on: November 08, 2014, 06:10:24 PM »
Thank you mm1970 for your suggestions

1.  I should have elaborated better on my cellphone plan mine is the $45 with an addition amount for data that I add every three months.  So it is 45 dollars except every 3rd month where it is 65 dollars. I cannot get my husband to go down on his he wants an unlimited. he used at minimum 10gb of data his consumption is crazy.  I am not sure if time warner has a prepaid.  I will call them and find out.

2. Yea the planning ahead is hard but you are right I will try to do that going forward.  I just have to figure out some good filling snacks. My husband says he hates carrying around a lot of stuff but I will see if I can sway him over to the "dark side" lol

3. Gamers- I am sorry for the terminology I forgot that not a lot of people know what a gamer is.  It is basically a hobby that revolves around the playing of video games and partaking in video game culture.  We will discuss a better way to indulge in our hobby without spending 120 per month.  Thank you again mm1970  :)
I do have an 8 year old boy who likes video games, so I was guessing.

The "dark side" about packing snacks and such are the dishes.  I'm not gonna lie.  There are some days that I come home with 10 dirty tupperware. 

Also, the cable bill seems normal.  We just have internet,that's about our cost, all the way our here in California.
« Last Edit: November 08, 2014, 06:14:03 PM by mm1970 »

LeboLebo

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #18 on: November 08, 2014, 11:11:57 PM »
Regarding student loans:

You could investigate how to refinance your own loan & consolidate/refinance SO's loan to lower your interest rates.

I don't remember the exact details (this was back in '06 - waaaay before my MMM mindset shift) but I was able to consolidate my loans and lower the interest rate to my current 2.89%

While you might not be able to refi while in school, maybe SO's loan can benefit from this?

Best of luck!!

Pooperman

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #19 on: November 09, 2014, 05:09:36 AM »
You can do this! I work in nyc, but couldn't live there. I live in NJ. My after tax is about the same as both of you together, but my SO doesn't work so the budgeting is about the same. We rent at $950/mo also. We live in a place that was designated 'middle class housing' 40 years ago, and it's a good area and getting better (Rahway).

I'll echo the moving idea above. Move somewhere to a big place and rent out the rooms to reduce your housing cost below what it is now. You get a better area, better shopping, no cab rides, etc. the benefits at that point make your life easier to live. The thing you can't forget about is to pay yourself first (in this case, your debts, but after, your investments). If you do decide to move, check out task rabbit or hire a friend/borrow a truck. Whatever you do, don't hire an expensive moving company you don't need.

Peony

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Re: Case Study Lower Income NYC Mustachian Household
« Reply #20 on: November 09, 2014, 08:40:47 AM »
Welcome to the forums. I grew up in NYC and lived there during my early adulthood and I was always a moderate earner, not a giant earner, so I can relate to your situation. Anyway, it's been my experience that the tighter the circumstances the more the budget is important, so I'm going to suggest you check out the YNAB ("You Need a Budget") budgeting software. Many people on this forum, including myself, have found YNAB's virtual envelope system to be lifechanging. And they have a great and motivating forum over there, which overlaps some with the forum here. YNAB offers a month-long free trial and you can often get the software ($60 one-time), should you decide you want to buy it, for a discount on Steam or even via YNAB (Black Friday sale, at least some years). You can also win it for free if you participate in YNAB online classes while doing the trial. Good luck on your mission of financial self-improvement!