Hi everyone! I stumbled across MMM a couple months ago, and voraciously read through dozens of the articles. Further clicking around led me to the forums and I have been lurking for a month reading different questions and responses. I decided to post my own case study, pose a few questions, and look for some answers – or at least some suggestions!
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Life situation: single, recently turned 26, male, teacher at a private school a bit outside of Boston. No dependents. My girlfriend is a teacher as well; she rents an apartment with roommates a couple miles from me, is gainfully employed, and is slowly learning more about budgets, personal finances, saving, etc!
Gross Salary: $53,984
Pre-tax deductions: medical ($133.41/month); 403(b) - $224/93/month (5% of my gross – plus 5% school match); dental ($25.20/month)
AGI: $47,785
Taxes: Income tax = $9,027/year - $752/month
State tax (5.15%) = just under $2,000/year
Other income (this is
not included in my gross salary number above):
- Stipends at school (all together = ~$530/month pretax):
o $1800 baseball coach
o $1000 improv comedy teacher
o $1800 golf coach
o $1250 summer class
o $500 miscellaneous tasks/duties
- Weekly music gig: $130/month
Take home pay/month: - (without stipends and extra income): $3,069
- (with stipends and extra income): closer to $3,400-$3,500
Current expenses: - Rent: $800 (my portion of the 4BR apartment)
- Non Cable utilities: ~$50
- Cable/internet: $25
- Gas (for car): $87
- Car Insurance: $74 (1 speeding ticket – gets removed next spring)
- Car Expenses: $27
- Groceries: $128
- Clothing: $13
- Eating Out: $120 (I know!)
- Concerts/sport events: $8
- Alcohol (bar + liquor store): $44
- Entertainment: $21
- Phone: $50 (Verizon family plan)
- Miscellaneous: $60
- Gifts: $52
- Trips: $292*
*I took a four week stadium tour with a buddy this summer (saw 17 different MLB games in 17 different parks – it was expensive, but not the norm for me, at all.)
Total monthly expenses: $1851
Monthly earnings: $3,400
Monthly net: $1,549 (just under $19,000/year)
I put $5,500 of my $19,000 net into a Roth IRA every year (see below), and have been stashing the rest. This spring I opened a VTSAX account to the tune of $10,000 (see below).
Assets: - Roth IRA (vanguard target retirement 2050): $36,331.81
- VTSAX: $9,939.11
- BoA Savings: $8,024.97
- BoA Checkings: $13,895.79
- Public Teacher Retirement (from my 1 year as a public school teacher): $5,280
- Car (via KBB): ~$6,000 (ten years old, no payments, 70,000 miles)
Liabilities: n/aSpecific questions:
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Ideas/suggestions for lowering my monthly expenses? I am proud of my monthly expense sheet, given my HCOL area, but I would love to trim where I can. FWIW – I have looked into biking to work. It’s 22-24 miles round trip, which is a bit longer than I want.
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Where do you advice I put my savings/surplus? I always want 6ish months as an emergency fund (that’d what my BoA savings is doing. But I have quite a bit of cash just sitting in my checking account. I do like seeing the number and feeling extra secure given that I can access it at any time. But I think it could be put to work better elsewhere. Of course this depends on my future goals. This brings me to:
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Long term changes: my current relationship (we’ve been dating for almost three years) is headed towards engagement/marriage/kids. My family is from the greater Boston area; hers is from Western Michigan (Grand Rapids). At this point, our landing spot is unknown, but it will definitely be one of our hometowns. That’s why I don’t want to buy right now, even though I could, soon, muster up a decent DP. What’s interesting is the COL difference between our two cities is unbelievable. I do know that we both value being in a position where she can be a SAHM, at least for the pre-elementary school years. I’ve tried running some preliminary numbers, but it’s so hard to sift through everything when we are not even married yet, never mind with children.
Basically I’m trying to figure out if living in a HCOL location, with a higher salary, would better allow for a SAHM than a LCOL area with a lower salary. For what it’s worth, we could get a great 3BR/1BA in Grand Rapids for $80,000-$120,000 (we could almost buy this, for cash, with a few years of hard saving). The same house in the Boston suburbs costs $300,000+. This one is tough because it is part financial, but majority personal/emotional/a joint decision. I do not plan on figuring out the answer to this here, but I really appreciate thoughts!
Thanks everyone!