Author Topic: Could I be doing better?  (Read 6437 times)

ketchup

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Could I be doing better?
« on: October 13, 2012, 03:21:45 PM »
Greetings, Mustachians.

I am ketchup, and I hope to solve as many of the world's problems as the condiment does.

I am 21, and live with three roommates: my girlfriend (20), my girlfriend's sister (21), and my girlfriend's sister's boyfriend (24).  We are living in a small house (~500ft^2) "purchased" (financed) by my girlfriend and I this past March.  Including property taxes, we pay just under $400 a month to be on track to pay off our little house in five years total (payoff date without extra payments: March 2017). We live in the western Chicago suburbs, about 40 miles from downtown.

So, monthly expenses:

We split the house payments and insurance 30%/30%/20%/20%. We pay about $43 total "monthly" (I pay by the year) in homeowner's insurance (not able to shop around really, as only this particular agent was able to whip up a policy for our unique situation of purchasing our house through a land contract).

So my portion of this "rent" works out to be $130.

We split our utilities evenly. Using our September numbers:

Nicor natural gas: $14.30 - This is currently only accounting for water heating.  As it cools down outside, we are beginning to use it for heat as well. Also, we just received a new gas stove from my parents as an early Christmas gift, so it will probably go up a little in the coming months due to that as well.

ComEd electricity: $78.40 - This accounts for plenty of AC usage, so will go down as we have stopped using it for the season. In April our electricity bill was something like $38.

Comcast business class internet: $66.95 including modem rental - We are a bunch of internet nerds and use the hell out of this connection.  The only option in our area for any connection without a bandwidth cap.

Trash pickup: $25

No water bill. We have well water that doesn't taste very good.

Total: $184.65

My share: $46.17

We also split our grocery costs. Last month's grocery bill totaled $385.64. This includes other consumables like cleaning supplies, paper towels, toothpaste, toilet paper, etc.

My share: $96.41

Total of my portion of shared costs: $272.58, varying slightly month to month.

Now, my personal expenses (based on averaging recent months):

Gas - $100 - I work 20 miles from home and drive a 53MPG car (No, not a Prius. 1988 Chevy Sprint with 54.5k miles on the clock.)
Car insurance - $50 - I'm young and drive a 1600lbs car without airbags.
Cell phone - $32.70 including screw-you fees and taxes. - 100 minutes, unlimited texting, and "unlimited" data from T-mobile on my HTC G1 that cost me $60 on eBay last November. Looking to potentially improve on this area soon.
Car maintenance/car "stuff" - $35 - Had to replace my clutch cable last week because the brand new one I put in a month ago (to replace the original one that rusted itself to death) snapped after 700 miles. Not too happy about that.  Also ended up buying a set of jumper cables to jump my girlfriend's coworker's dad's girlfriend's car (long story).  Oil change due soon, $12 for oil plus filter at Farm & Fleet.
Eating out - $60.  If I were single this would be $0...
Clothes - roughly $5. I've spent about $45 on clothes so far this year.  I'm still of the opinion that I own too many clothes.
Gym membership - $20 - Quarter mile from home, I go at least twice a week. Paying for this is motivation to actually go, as I'm a cheapskate that always wants to get his money's worth.
The infamous "Misc." - $30 This past month's "Misc" consisted of a gift for a coworker, and Memento on Blu-ray because Memento is awesome and I'm a huge film nerd.

Total: $332.17

Total of my monthly expenses: $605.28.

I'm currently bringing home about $1600 after taxes and such each month.  I have around nine grand in the bank at the moment.  No debt apart from our house.  Credit card paid in full each month. 

I plan on finishing my electrical engineering degree starting this coming fall semester, during which I plan to continue working.  Total cost of finishing my degree should end up around $25,000.  I am fortunate to have a 529 college account my grandmother started in 1996 worth about $10,000 currently.  My immediate goal for the next few years is to graduate without any debt, and hopefully have some cash left over to jump-start my Real Life(tm).

I guess my real question: Is there anything staring me in the face that I could cut down on?  I like to think my budget is cut pretty lean already, especially with my current living situation.

Also, is there a better place for my short-term savings (1-2 years, for college expenses) than an Ally savings account netting me a whopping 0.95% APY?

Thanks for any help.
« Last Edit: October 13, 2012, 04:04:34 PM by ketchup »

arebelspy

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Re: Could I be doing better?
« Reply #1 on: October 13, 2012, 03:51:49 PM »
Pat yourself on the back.  62% savings rate on such a low income is pretty dang good.

It's nice that you have a supportive partner as well as supportive friends (her sister and boyfriend) that are similar in their frugality (less than $100 per person for groceries per month, for example).

Your challenge will be not succumbing to lifestyle inflation over the next half dozen years.  You will have some, naturally (heck, your expenses will likely at least double, possibly triple or quadruple), but keeping it under control is key.

You'll be making a lot more when you graduate, and if you can keep that spending down you should hit FI by 30 or so.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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ketchup

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Re: Could I be doing better?
« Reply #2 on: October 13, 2012, 04:27:48 PM »
Your challenge will be not succumbing to lifestyle inflation over the next half dozen years.  You will have some, naturally (heck, your expenses will likely at least double, possibly triple or quadruple), but keeping it under control is key.

You'll be making a lot more when you graduate, and if you can keep that spending down you should hit FI by 30 or so.
I certainly agree that lifestyle inflation is my next enemy to fight down once I start making more money.  And of course my expenses will grow.  For example, I am still on my parents' health insurance (they're keeping me on their ludicrously expensive plan until I graduate), and that's one big expense that everyone knows is a big pain in the butt.  My employer gives me benefits that I currently turn down (I think it was around $180 a month for a $1000 deductible medical plan).

One thing I've been thinking about lately too that I forgot to mention in my first post:  Come next May (a year since I weaseled my way into full-time at work), I will be eligible for my company's 401k plan.  I have no idea what the terms of it are, but I'm kind of torn as to whether it would be a good idea or not.  I will need plenty of my savings for college stuff in the next few years, but anything like employer matching will be hard to resist.

arebelspy

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Re: Could I be doing better?
« Reply #3 on: October 13, 2012, 04:36:51 PM »
You shouldn't resist any employer matching; it's free money.

Roth contributions at your current tax level is likely better than 401k contributions past a match level.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

lhamo

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Re: Could I be doing better?
« Reply #4 on: October 14, 2012, 12:26:55 AM »
This is awesome for someone still in college!  Congratulations on being so smart so young.  You are going to become very, very wealthy if you can keep this up over the long term.

A few questions/thoughts about how you might maximize things further:

1)  Can you give some more detail about the 529 plan and your expected college expenses from here on out?  You say you have roughly 10k left in the 529 -- what do you have left to pay for school?  Unless you are planning to go to grad school, you might as well cover all the school-related costs you can from that, unless you have a plan to turn the balance over to your spouse or kids in the future (not a bad alternative plan, btw).  Anyway, wasn't clear from how you described it how exactly the numers would be playing out there, so more information might help us help you plan the use of that asset.

2)  Since you are now working full time, is there any possibility that your employer could cover part of your remaining school expenses?  I know probably unlikely, but it doesn't hurt to ask.

3)  Living expenses.  Looks like you are knocking it out of the park with a sensible housing purchase and excellent cost reduction strategies.  Is the sharing arrangement likely to continue once you start your "real life?"  As long as you all get along well, I would stick with that for as long as you can -- you ALL will become wealthy if you can keep living costs this low in early adulthood 

On the eating out thing, could you propose an arrangement with your partner where you cut the number of times you eat out a month in half, and for your half you promise to make her an awesome special meal?  It will probably still cost 1/2 of what it would cost you to eat out, and you could then up savings.   

Gas -- is your water heater insulated?  If not, an insulating blanket might help drop the cost.  If everybody is gone during the day then a timer on the thermostat might also save money (have it come on early morning and then early afternoon, shut off after everyone typically leaves the house and goes to bed).

Electricity -- see if you can install ceiling fans before next summer.  they are awesome.  We spent a horribly hot summer in a NYC apartment with nothing but ceiling fans and did fine.  MMM's article about conditioning your body to adapt to hotter temperatures is right on the money, in my book.

Gas:  Once you aren't doing school + full time job, will it be feasible to use public transit or bike to work?  Understand moving closer is unlikely with your sweet housing deal, but maybe you can reduce the cost of gas, even a couple of days a week.  Carpooling would also help with this.

Gym membership:  What do you actually do at the gym?  Are there ways you could get similar exercise without the recurring cost (e.g. running outside, biking outside, investing in a set of weights (can be purchased on craigslist or ebay) for working out at home)? 

Overall it looks like you are doing great.  Not sure what kind of groceries you all buy, but the cost seems very reasonable for 4 people.  However, if you aren't doing so already you might be able to bring that down by judicious visits to costco, ethnic markets, co-ops, etc.


ketchup

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Re: Could I be doing better?
« Reply #5 on: October 14, 2012, 10:36:27 AM »
This is awesome for someone still in college!  Congratulations on being so smart so young.  You are going to become very, very wealthy if you can keep this up over the long term.

A few questions/thoughts about how you might maximize things further:

1)  Can you give some more detail about the 529 plan and your expected college expenses from here on out?  You say you have roughly 10k left in the 529 -- what do you have left to pay for school?  Unless you are planning to go to grad school, you might as well cover all the school-related costs you can from that, unless you have a plan to turn the balance over to your spouse or kids in the future (not a bad alternative plan, btw).  Anyway, wasn't clear from how you described it how exactly the numers would be playing out there, so more information might help us help you plan the use of that asset.
I don't really know any details about the 529 plan other than the approximate value and that my grandmother started it through the Connecticut Higher Education Trust.  I have yet to tap into it for any college expenses.  I am planning for six more semesters of school (not sure of specifics quite yet, but that's what I am planning for), starting next fall.  I would like to use the 529 money last if at all possible, because a) it will have more time to accumulate interest, and b) it'll make my grandma happy.  My estimate of the total cost of those six semesters is 25 grand, so I would like to have about 15 saved up for school.

2)  Since you are now working full time, is there any possibility that your employer could cover part of your remaining school expenses?  I know probably unlikely, but it doesn't hurt to ask.
Extremely unlikely, given my current job and my future degree are in rather different fields (chemistry vs. electrical engineering).
3)  Living expenses.  Looks like you are knocking it out of the park with a sensible housing purchase and excellent cost reduction strategies.  Is the sharing arrangement likely to continue once you start your "real life?"  As long as you all get along well, I would stick with that for as long as you can -- you ALL will become wealthy if you can keep living costs this low in early adulthood
We plan on sticking this out as much as we can until we all have our lives in order. I would also like to save up a tidy sum before selling this house.
On the eating out thing, could you propose an arrangement with your partner where you cut the number of times you eat out a month in half, and for your half you promise to make her an awesome special meal?  It will probably still cost 1/2 of what it would cost you to eat out, and you could then up savings.   
She's the awesome cook, not me unfortunately. Still something I can work on though.
Gas -- is your water heater insulated?  If not, an insulating blanket might help drop the cost.  If everybody is gone during the day then a timer on the thermostat might also save money (have it come on early morning and then early afternoon, shut off after everyone typically leaves the house and goes to bed).
Had not ever thought about insulating our water heater. That is something I will investigate today.  What sort of insulating blanket is best for this application?
We do try to turn the thermostat down when the house is empty, although sometimes this is forgotten as it can be hard to keep track of. Also, we don't all work similar hours, so there isn't always a lot of time when the house is empty anyway. I don't think our thermostat is compatible with any such timer. We have an old school Honeywell dial thermometer.
Electricity -- see if you can install ceiling fans before next summer.  they are awesome.  We spent a horribly hot summer in a NYC apartment with nothing but ceiling fans and did fine.  MMM's article about conditioning your body to adapt to hotter temperatures is right on the money, in my book.
We have a ceiling fan in one room, and it works great. The other rooms of the house unfortunately have rather low ceilings and I think ceiling fans would be asking for trouble.  As the tallest member of our household, I already tend to hit my head on our protruding overhead lights, to the great amusement of others.  My girlfriend and her sister are from Phoenix, and conventional wisdom would say that they are used to the heat. However, in reality, they are merely used to air conditioning all the time. First thing either of them do when we get in a car is turn on the AC. Adaptation conditioning would be a hard sell to them.
Gas:  Once you aren't doing school + full time job, will it be feasible to use public transit or bike to work?  Understand moving closer is unlikely with your sweet housing deal, but maybe you can reduce the cost of gas, even a couple of days a week.  Carpooling would also help with this.
This is something I've thought of even with my current set-up.  I need my car for work occasionally, but I also have a train that has a stop about a quarter mile from work. The stop I'd have to get on is four miles from home.  I've thought of leaving my car at work during the week, just driving it in Monday and home Friday, and biking to and the train station during the week.  A train ticket round trip works out to be about double what I pay for gas in my car, so it's kind of a toss up whether it would be worth it to not have my car at home weeknights.
Gym membership:  What do you actually do at the gym?  Are there ways you could get similar exercise without the recurring cost (e.g. running outside, biking outside, investing in a set of weights (can be purchased on craigslist or ebay) for working out at home)? 
This is more a motivation thing than anything else.  If I pay for it, I will go because I want to get my money's worth. My girlfriend's sister's boyfriend is helping me get into certain exercises there. I'm still pretty new to it, only had the membership for a few months.  I'm nowhere near overweight, but hardly in shape.  We don't really have any room in our house for any exercise equipment, even something as simple as some weights.  Also, it is nice to get a decent shower at the gym, as our well water is very hard and harsh on hair and such (the female members of our household have gym memberships for solely this reason. Working out is just a bonus for them).
Overall it looks like you are doing great.  Not sure what kind of groceries you all buy, but the cost seems very reasonable for 4 people.  However, if you aren't doing so already you might be able to bring that down by judicious visits to costco, ethnic markets, co-ops, etc.
We've been exploring this lately. Also, a coworker of mine has gotten us into some couponing which is starting to save us a decent amount. We try to balance cheapness, healthiness, deliciousness, and easiness, not always in that order.
« Last Edit: October 14, 2012, 11:02:09 AM by ketchup »

mlipps

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Re: Could I be doing better?
« Reply #6 on: October 15, 2012, 12:28:53 PM »
I don't know how much a cable modem costs, but usually you pay $5/month to rent one from Comcast. Over the long run, you'd probably save a few bucks if you buy your own.

ketchup

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Re: Could I be doing better?
« Reply #7 on: October 16, 2012, 07:52:10 AM »
I don't know how much a cable modem costs, but usually you pay $5/month to rent one from Comcast. Over the long run, you'd probably save a few bucks if you buy your own.
I've thought of this too.  A good friend of mine has had Comcast service a lot longer than I have, and he said they burn out a modem about every year and a half to two years.  So it's kind of a wash.  Comcast Business Class has excellent customer service though, so if this one dies, I'm sure they'd have a replacement for me right away.

James

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Re: Could I be doing better?
« Reply #8 on: October 16, 2012, 08:08:00 AM »
I'd say focus on your health.  You are doing so well financially, make sure you are able to enjoy it for a good long time.  That means keeping the gym membership if it helps get you fit, working on eating good food (not just cheap food), and developing good exercise and nutrition habits that you can benefit from the rest of your life.  People are such creatures of habit that it's very important what habits you develop early in life.  Eating right and exercising right might help you feel better right now, but just like investing, it's the compounding and dividends that pay off over time that make it a slam dunk decision.

trammatic

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Re: Could I be doing better?
« Reply #9 on: October 16, 2012, 08:26:13 AM »
So a $1600 net pay is something around $2000 gross?  Or about $24,000/year?  And considering it's not in the field you want to go into eventually anyway, would it be worth reconsidering your job?  One benefit of 24k jobs is that they are plentiful.  Maybe be an evening clerk at the 7-11 where it's generally quiet and you could get some studying done, etc...  Commuting that far for that pay seems like a bit much.  Although, if it's a job you like, it's obviously not killing your budget.

ketchup

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Re: Could I be doing better?
« Reply #10 on: October 17, 2012, 05:55:41 PM »
I'd say focus on your health.  You are doing so well financially, make sure you are able to enjoy it for a good long time.  That means keeping the gym membership if it helps get you fit, working on eating good food (not just cheap food), and developing good exercise and nutrition habits that you can benefit from the rest of your life.  People are such creatures of habit that it's very important what habits you develop early in life.  Eating right and exercising right might help you feel better right now, but just like investing, it's the compounding and dividends that pay off over time that make it a slam dunk decision.
This is definitely sound.  I eat very little variety when it comes to food, and that's something I'm trying to improve on.
So a $1600 net pay is something around $2000 gross?  Or about $24,000/year?  And considering it's not in the field you want to go into eventually anyway, would it be worth reconsidering your job?  One benefit of 24k jobs is that they are plentiful.  Maybe be an evening clerk at the 7-11 where it's generally quiet and you could get some studying done, etc...  Commuting that far for that pay seems like a bit much.  Although, if it's a job you like, it's obviously not killing your budget.
I estimate low. Around 27k a year, 28-29k including bonus. Finding a job like this without a college degree was not easy.  The 7-11 clerk sort of jobs around here all pay something like nine bucks an hour.  I'm sure my income could be higher if I really scrounged around, but I quite like my job and coworkers.