The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: cwide on October 07, 2014, 08:44:20 PM

Title: Critics welcome.
Post by: cwide on October 07, 2014, 08:44:20 PM
I have only started reading the blog and following along on the forums for a few months now. I never considered myself super consumeristic and have always been leery of the classic American dream (accumulate as many things as possible). I feel like this blog really gets it and I want to pursue financial freedom.

However, I think I may have made a few mistakes before reading this blog. The first mistake was going to a private college and racking up $50k of student loan debt. The second, more recent mistake was taking out a loan for a car. I bought a 2008 Prius (85k miles) for $10.5k and I still owe ~$5k.  It's a great car, but I'm not sure I should own it in my current situation. I also consider myself handy enough to not need such a new and reliable car.

I am 27 year old single male.

Here is the breakdown of my monthly expenses:
Rent: $283  (I live in Kansas City with 2 roommates... pretty damn cheap)
Utilities: ~$100 (utilities and internet)
Car:  $375  (This is combining my car payment, full coverage insurance, gas ~$50, and maintenance)
Phone: ~$20 (I am always changing my phone around because I'm still kind of a consumer, but I am on Republic Wireless currently)
Food: $220 (This is groceries and eating out)
Giving: $200  (I'm not sure if this is going to continue)
Other random expenses: ~$100  (this is shopping, dating, necessities...)

Income: $2800/mo

Whatever is left after my expenses goes directly towards high interest student loans.

Before you get started... I'm going to be a complainy pants and say that I live 13 miles from work. I would absolutely love to bike to work because I love riding my bike (and I have a few times), but there are no showers there and I do face to face customer service. I only ride my bike when I don't need to look professional. Honestly, my dream is to live within 10 miles from work (where I can store things and shower occasionally) and bike everyday.

Your thoughts!

Title: Re: Critics welcome.
Post by: DollarsAndDissonance on October 07, 2014, 09:00:37 PM
Seems to me you're a pretty strong "Mustachian" already in terms of your spending.  50%+ savings rate, even including your car payment and your "giving" expense.  If you were to just look at your more "essential" spending (allowing $100/mo for gas/maintenance), you're at less than $10k/year.  At your current savings rate, that car could be paid off in just a few months.  Or, you could choose to sell it for something more economical (though a 2008 Prius doesn't sound particularly outrageous if you do need the car).

With regard to your income, are you satisfied with your current job and income?  Are there other things you'd rather do?  What are your goals?  Retire early?  Just be financially independent?

You've posted your income statement, but what does your balance sheet look like?  Have you paid off your $50k in student loans?
Title: Re: Critics welcome.
Post by: cwide on October 07, 2014, 09:16:23 PM
Seems to me you're a pretty strong "Mustachian" already in terms of your spending.  50%+ savings rate, even including your car payment and your "giving" expense.  If you were to just look at your more "essential" spending (allowing $100/mo for gas/maintenance), you're at less than $10k/year.  At your current savings rate, that car could be paid off in just a few months.  Or, you could choose to sell it for something more economical (though a 2008 Prius doesn't sound particularly outrageous if you do need the car).

With regard to your income, are you satisfied with your current job and income?  Are there other things you'd rather do?  What are your goals?  Retire early?  Just be financially independent?

You've posted your income statement, but what does your balance sheet look like?  Have you paid off your $50k in student loans?

I'm not sure what it is I would really like to do. I currently work at a university and could get free education if I ever decide to go back to school (which will probably be soon... it's free). I don't love my job, but I don't hate it. I think I should probably establish clearer goals. I guess I just want financial independence for whenever it is that I figure it out. I don't want money/lifestyle to get in the way of a passion when I find it.

I still owe all $50k. I went to school for a while with a low paying job and couldn't make any real payments.
Title: Re: Critics welcome.
Post by: b1gm1ke11 on October 07, 2014, 09:49:45 PM
Looks like you are living on less than half your income so you're doing pretty darn good.

It is going to take some time to pay off the student loans, but do not let that discourage you.   What is the interest rate on the loan?

I don't see the Prius as a mistake really.  You only owe 5k on it and you could pay it off in a few months if you were committed. 

Title: Re: Critics welcome.
Post by: cwide on October 08, 2014, 07:57:26 AM
Looks like you are living on less than half your income so you're doing pretty darn good.

It is going to take some time to pay off the student loans, but do not let that discourage you.   What is the interest rate on the loan?

I don't see the Prius as a mistake really.  You only owe 5k on it and you could pay it off in a few months if you were committed.

The car loan is ~3.7%

I'm just wondering if it makes more financial sense to buy an older Focus Wagon type vehicle even if I owed nothing on the car. Pay less on insurance and potential major repairs are cheaper. I would of course be losing 20 MPG. So my monthly gas costs would probably be ~$80 instead of $50.  If I spend $2-3k on an older car that not only leaves me with an extra ~$200 every month, but it also allows me to put the difference in selling price minus loan payoff toward student loan debt.
Title: Re: Critics welcome.
Post by: Timmmy on October 08, 2014, 08:08:26 AM
One idea about biking to work.  Is there a cheap gym near your work?  In my area there is a chain of gyms that charge $10 per month.  You could bike there and just use the shower facilities.  It should be cheap enough to offset the costs of your commute if you do it more than a few times per week.
Title: Re: Critics welcome.
Post by: cwide on October 08, 2014, 09:47:17 AM
One idea about biking to work.  Is there a cheap gym near your work?  In my area there is a chain of gyms that charge $10 per month.  You could bike there and just use the shower facilities.  It should be cheap enough to offset the costs of your commute if you do it more than a few times per week.

That's a good thought. There is a YMCA literally a block away from work. I'll check into their rates.
Title: Re: Critics welcome.
Post by: MayDay on October 08, 2014, 09:50:30 AM
If you work for a university, I assume apartment costs increase as you get closer to campus.  But, I would think you could get within 5 miles and stay fairly cheap.  Do your other roommates work in the opposite direction, or would they be willing to move? 

Can you not use the university gym?  I know some are only open to students, but many allow faculty and staff to join.  You would still probably need to drive some in the winter, if Kansas is anything like Iowa in terms of weather.   It might not be worth the cost of thee gym.  I know at my probably similar Midwestern university, you could just walk into the PE building and use their locker rooms.  They were open for students taking PE classes. 

I think your spending looks awesome.  If you want to get rid of the loans faster, could you pick up a little part time work on the side? 
Title: Re: Critics welcome.
Post by: cwide on October 08, 2014, 02:09:06 PM
If you work for a university, I assume apartment costs increase as you get closer to campus.  But, I would think you could get within 5 miles and stay fairly cheap.  Do your other roommates work in the opposite direction, or would they be willing to move? 

Can you not use the university gym?  I know some are only open to students, but many allow faculty and staff to join.  You would still probably need to drive some in the winter, if Kansas is anything like Iowa in terms of weather.   It might not be worth the cost of thee gym.  I know at my probably similar Midwestern university, you could just walk into the PE building and use their locker rooms.  They were open for students taking PE classes. 

I think your spending looks awesome.  If you want to get rid of the loans faster, could you pick up a little part time work on the side?

Actually, it's a pretty small university in KC. I could move there and housing wouldn't be much more, but there is no way any of my friends are going to move to the 'burbs and I also like living in the middle.

The gym is unfortunately closed to anyone who isn't a student athlete.

Honestly, I think it will be worth it to use my job for the free education. In a few years I could have a different degree that lets me find a job closer to where I want to live.  I could definitely be making more money on the side, but I've never felt great doing work for individuals... I always feel bad ripping people off for easy computer fixes.

Title: Re: Critics welcome.
Post by: Rosbif on October 09, 2014, 05:28:53 AM
If you work for a university, I assume apartment costs increase as you get closer to campus.  But, I would think you could get within 5 miles and stay fairly cheap.  Do your other roommates work in the opposite direction, or would they be willing to move? 

Can you not use the university gym?  I know some are only open to students, but many allow faculty and staff to join.  You would still probably need to drive some in the winter, if Kansas is anything like Iowa in terms of weather.   It might not be worth the cost of thee gym.  I know at my probably similar Midwestern university, you could just walk into the PE building and use their locker rooms.  They were open for students taking PE classes. 

I think your spending looks awesome.  If you want to get rid of the loans faster, could you pick up a little part time work on the side?

Actually, it's a pretty small university in KC. I could move there and housing wouldn't be much more, but there is no way any of my friends are going to move to the 'burbs and I also like living in the middle.

The gym is unfortunately closed to anyone who isn't a student athlete.

Honestly, I think it will be worth it to use my job for the free education. In a few years I could have a different degree that lets me find a job closer to where I want to live.  I could definitely be making more money on the side, but I've never felt great doing work for individuals... I always feel bad ripping people off for easy computer fixes.
Don't rip 'em off, then! If you feel bad charging market rates for a given service, why? We all acquire knowledge, and the more in demand it is, and the fewer people have this knowledge, the more people will pay to get the benefit of it.

If they don't like market rates, they can always teach themselves enough to fix it, right?

I pay an IT guy for the complex stuff, because my hourly outstrips his, and it doesn't make sense to DIY... I'd say go for it and get that side money in!
Title: Re: Critics welcome.
Post by: norabird on October 09, 2014, 10:13:03 AM
Honestly you're doing great. I love that you have a giving line in your budget! Sadly much less than what I'm allotting right now.

You can always keep a look out for good used car deals on craigslist in your area if you think you could handle any repairs that come up.

Are you taking classes for a second degree? That's always such an awesome perk.
Title: Re: Critics welcome.
Post by: mozar on October 09, 2014, 08:34:07 PM
You could take computer science classes. I think if you need a car you might as well keep yours. The real savings would come once you can get rid of the car and bike to work/ amenities.