Author Topic: Case Study - Saving… Now What  (Read 1998 times)

nathan01xl

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Case Study - Saving… Now What
« on: March 11, 2015, 03:19:27 AM »
Greeting from a fellow Stache groomer. My wife and I recently married (both 23 years of age) and have been getting our lifestyle settled. Lately we have been able to achieve close to a 50% savings rate! Now we are seeing our savings grow and are not sure where to put it all. A great problem to have no doubt!

Income:
$3500-4000 per month in take home between us.

We both work in sales at Fortune 500 companies and pay fluctuates based on commission earnings. We both like where we work and are positioning ourselves to move up the ladder into management positions in the future.

She contribes 8% to her 401k with a match for first 4% using 2050 target date fund and we just signed up for an additional 5% into the ESPP(10% discount). I contribute just 2% to my company 401k because company match won’t be available until I reach 1 year with company in August, same goes for ESPP(15% discount)

Our Monthly Expenses Breakdown:
Rent: $680
Student Loan: $215 Only mine, wife has none (11,350 remaining b/n 3.15-4.25%)
Groceries: $200
Dining Out: $60
Car Payment: $121 For 2007 Prius (6,500 remaining at 1.49%)
Car Insurance: $110 paid bi-annually (07 Prius and 01 Ranger)
Fuel: $75 we both commute 5 miles to work and visit family a few times per month out of town (Prius 45 mpg/Ranger 30 mpg)
Utilities: $60 ($40 for Natural gas and $20 for Electricity)
Phones: $40 both now using Republic Wireless (wife has 3g, I do not)
Internet: $30
Gifts and Donations: $100 includes charities we support and family/friends
Misc. Exp: $100 household supplies and personal care
Shopping: $100 includes clothing, electronics and more

TOTAL: $1891

Assets:
$18k in checking/saving accounts, 12k of which is in high yield GE account gifted to wife from grandparents.
2007 Toyota Prius (financed)
2001 Ford Ranger

Liabilities:
Student loan: 11,350 remaining b/n 3.15-4.25%
Car Loan: 6,500 remaining at 1.49%

We have been married since October but been together for 7 years (we were 16) and are both frugal people. Our lifestyles are modest and now that we have settled in a routine our saving rate is becoming pretty easy to maintain. We are looking for guidance on how to distribute the money we do have and how we should allocate our savings going forward. Our plan is to start a family in the next 3-5 years and look into buying a home in a similar time frame. We would also like to do some traveling before  any children enter the picture.

There are so many options between 401k, IRAs, saving, and paying down debt we just don’t know how to balance it all. I also feel uncomfortable with spending the money my Wife’s grandparents gifted her to pay off my SL… should I be uncomfortable with that?

So fellow mustachians how would you allocate resources in our position? I look forward to your responses!

Runningtuff

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Re: Case Study - Saving… Now What
« Reply #1 on: March 11, 2015, 04:09:10 AM »
Looks pretty good to me!
How about using the $1500 - 2000 p/m excess to pay the debt and then go from there? Won't take long.
I can understand not wanting to use the gifted money - don't think I would either.

nathan01xl

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Re: Case Study - Saving… Now What
« Reply #2 on: March 11, 2015, 03:21:43 PM »
Looks pretty good to me!
How about using the $1500 - 2000 p/m excess to pay the debt and then go from there? Won't take long.
I can understand not wanting to use the gifted money - don't think I would either.

That is a kinda the plan. Not sure on what to do investing and savings wise since we are looking to buy a home in the near future. Would a Roth IRA be the right way to go? I understand we can pull funds out for a home down payment.