Income
Main Job (9-5)
Gross:
$48,000/yr
$4,000/mo
Net:
$33,800/yr
$2,800/mo
Side Income
Gross:
$28,000/yr
$2,330/mo
Net (approx.):
$22,000/yr
$1,830/mo
*Contract based side income at $2000/month; variable side projects average about $4,000/yr.
Total Income
Gross:
$76,000/year
Net (approx.):
$55,800/year
$4,650/month
Current Expenses
3-Month Average
$4,010/month
3-Month High
$4,672
3-Month Low
$3,600
Last Month
$3,600.00
Breakdown - Fixed
$1,050/mo – Rent
$250/mo – Verizon Cell Phone (This is due to me being far too generous with family in the past, 1 line is my brother, 1 line is my dad, 1 is mine, contract ends in 2 months, and then I can kick them off and get different provider for just myself at MUCH cheaper cost)
$150/mo – Credit Card Bill #1 (Furniture Payoff - 0% interest – 24 mo., utilizing this to rebuild credit, minimum payment is $70)
$100/mo – Internet/TV
$100/mo – Secured Loan Payment (Local credit union, 1.5%, utilizing this to rebuild credit, minimum payment is $80)
$75 - Student Loan 1 ($3,300, 5.75%, min. $44)
$50 - Student Loan 2 ($2,000, 6.55%, min. $28)
$70/mo – Electric Bill (Very Consistent)
$30/mo – Gas
$24/mo – Trash/Water (Same bill)
$750/mo – Secured Credit Card Payoff (I put all fixed expenses on this every month and payoff entirely the next month, 0% interest, using this to rebuild credit. $750 is 25% of my $3000 limit that I secured this with)
Side Business Expenses - Fixed
$175/mo
I don't really have variables with this, any business expenses are reimbursed almost immediately. I set this company up to run on very low costs without unforeseen emergencies. No loans/credit cards or anything of that sort yet.
Fixed Expenses Total
$1,900 + $750 secured CC payoff from previous month + $175 side business expenses
$2,825 Total
Breakdown – Variable – Avg. from 3-Month
$400/mo - Restaurants
$150/mo - Fast Food
$125/mo – Groceries
$250/mo –Entertainment (Varies: fishing, drinking with friends, etc., aside from food, this will be my other major area of improvement, average is skewed by $80 due to keg purchase for a wedding last month)
$140/mo – Cigarettes (they kill my body and wallet!)
$65/mo – Dog Food/Treats (Great Dane, he’s a hungry boy)
$45/mo – Gas
Variable Expenses Total – Avg. from 3-Month
$1,175/mo
Assets
$5,000 – Cash from side business income – sitting in savings account doing nothing while I figure all of this out
$3,500 – Motorcycle – Paid off back at purchase date in 2006, use this for commuting; value based on current rates in my area for this same motorcycle, no plans to sell as long as I maintain it well enough, hard to beat 50mpg and not having to deal with traffic
Liabilities - $9,600 Total Owed
Student Loan 1 - $3,300, 5.75%, min. payment $44)
Student Loan 2 - $2,000, 6.55%, min. payment $28)
Secured Loan - $2,700 secured in share certificate, amount owed $2,000, 1.5%, min payment $80
Credit Card #1 - $2,300, 0%*, min. payment $84 (*as long as payments on time, 18.99% if late, I won’t be late)
Secured Credit Card #2? - $3,000 secured credit card – I spend $750 every month to cover fixed expenses, 0% interest since I pay it off before the 25-day grace period, 13.9% if I pay after grace period. I’m never late, I learned my lesson from screwing up so bad with credit when I was younger. Not sure if I should’ve included this or not.
Questions/Goals
How best to lower expenses? I know (and cry myself to sleep over this) that my biggest area of concern right now is entertainment and food. Ways to improve the habit? Ideas on how to stick to the improved spending habits?
Notes: I have a Costco card, crockpot, oven, microwave, and a good full kitchen that I just simply don’t use. I am wasting what is available to me. This is where I know I can improve my health and wallet the most. Succeeding at this is the biggest hurdle to overcome. Any tips or guidance on how to go about this is greatly appreciated.
Pay off student loans or leave them going to continue rebuilding credit?
Pay off Credit Card 1? Or continue paying $100/mo at 0% interest for the next 23 months in order to build credit?
I personally believe keeping at what I’m doing with the secured credit card #2 is my best bet, until my credit is back into the 650+ range where I can then look at regular credit cards and free up that secured money for other uses.
After choosing what to do with current debts, and fixing current expenses, what is the best option for beginning investments? I recognize that I have a problem where when I see money in my checking account, I feel more willing to spend the money, so I’d like to lock the money I don’t need away in some type of investments where I can’t touch it until I become more Mustachian, or FI. I have to hide myself, from myself, in other words. What are the best options for this?
I am considering a first home purchase 2 years from now, if things look right at that time in the market; this is motivated by not wanting to pay so much in rent every month to something that does nothing for me in the long run except that whole "roof over my head" thing :P Should this be an option? I would be trying to find something in the $150-300k range, however, it is exceptionally difficult to do so in my area. I live in Southern California in the Orange County area so cost of living is high. It is difficult to find cheap rent, and even more so to find a house cheap enough to buy that isn't falling in upon itself in repair costs. Most homes out here are 40+ years old. I've considered a mobile/manufactured home as I can find those for about $250-300k but, I am still studying the future prospects I would have out of something like that as far as appreciation/depreciation are concerned. Still learning after all :)
Supplementary: Financial Portrait
I am a man that likes to be optimistic about the path ahead, and I also like to reflect on what I’ve done wrong. Here are some numbers from the past that will make any true Mustachian on this forum pass out from anger. Please pay attention though as these numbers may be able to help paint a picture for future growth.
I am 25. I do not have data for the years before 2010, you could say I was going through my young exploratory years finding myself and what not. The financials for those years would have been worse than or equal to 2011, so there’s not much to discuss or pick at there.
Annual Income:
2011: $14,112.12 – Baseline (First year data was collected through Mint; previous years were <= this amount)
2012: 68% increase over previous year $23,727.76
2013: 57% increase over previous year $37,385.13
2014: 101% increase over previous year $75,235.02*
2015: Can't see into the future, can we? Realistically, I can expect at least a 10% increase due to main job raise and increase in side venture income as I slowly hone in on exactly what I want to target my career towards and how I want to proceed with either my main job or side business.
*Number based on total income from 1/2014 - 7/2014 plus projected income from stable main job income plus side ventures; current income as of 7/23/14 is $37,735.00
Here’s the faint-y part…
From 02/2011 – 07/2014
Income: $112,960
Expense: -$102,105.89
Net: $10,854.14
Sad.
When I saw these numbers, I realized that I have just been ignorant of my own habits and that everything needs to change. That is why I am so excited to have found you Mustachians, and cannot wait to make a complete change to my finances. Please help, and let the punching commence.