Author Topic: Going on right path?  (Read 5601 times)

dlauth

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Going on right path?
« on: March 26, 2014, 08:38:08 PM »
Stats

Age: 24 in Apr
Retirement Funds: $31k
Savings in Cash:$4.5k
Net Worth: $136.5k
Cryptocurrency: $67.5k
Debt: $0
Salary:$73k before taxes
Yearly Expenses(Exaggerated): $21,480 ($4,400 going towards gas, currently driving a 4cyl Camry)($2880/yr for electricity for the crypto miners)
I max out my 401k($17.5k/yr) and Roth IRA currently
New job is 83mi round trip a day
Savings/yr + retirement = around $36k per year
Currently renting

Any advice on my setup?
Would it be a good option to just put up to company match in my 401k and save the rest for a down payment on a place near my work?
Any other information needed?

Thanks in advance!
« Last Edit: March 27, 2014, 06:42:05 PM by dlauth »

MDM

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Re: Going on right path?
« Reply #1 on: March 26, 2014, 08:55:41 PM »
dlauth,

Very good - both your financial situation itself and the fact that you have analyzed it well.  Keep up the good work.

Don't know enough to say whether your $3K/yr for crypto mining is a waste or brilliant.  Time will tell.

Can you rent closer to work?  At your age there is value in having flexibility to move, unless you are very sure you will stay in a particular place starting now.

dlauth

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Re: Going on right path?
« Reply #2 on: March 26, 2014, 09:05:37 PM »
I suppose I can rent close to work. I am in the contracting field so my job could change "at best" every 2-3 years. The location I am looking at is a center point between 3 hubs for jobs that wouldnt be a far commute.

When you say stay in a place, what kind of time frame are we talking about? 5 years?

MDM

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Re: Going on right path?
« Reply #3 on: March 26, 2014, 09:30:47 PM »
Time frame = "enough for any yearly savings to overcome the bookend costs of buying and selling".  Five years might be ok.  Check http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/, including the comments (e.g. the NY Times link) for more details very pertinent to your question.

I'd vote for continuing to max your 401k and Roth, based on what I see in your posts.
« Last Edit: March 26, 2014, 09:32:48 PM by MDM »

dlauth

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Re: Going on right path?
« Reply #4 on: March 26, 2014, 09:32:29 PM »
I will have to give that a look.

Does everything else seem ok?

What should I focus most of my energy on?

MDM

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Re: Going on right path?
« Reply #5 on: March 26, 2014, 09:37:33 PM »
From a financial perspective?  Probably "doing a better job" (whatever that means in your field) to improve your cash intake.  The earlier you can invest it, the more time it has to accumulate.

From a life perspective?  That's a much bigger question, one that would require much more detailed info to answer, and probably nobody but you could understand enough to say.  But from what you have managed so far, you seem to have a good head on your shoulders so I'd say "trust your instincts" at this point.

nereo

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Re: Going on right path?
« Reply #6 on: March 27, 2014, 05:38:29 AM »
Hello there

You've got a lot of great things going for you - keep maxing out your 401(k) and IRA every year at your age and it should be easy to reach FIRE pretty quickly.

suggestions:  start looking for a cheap place to live closer to work.  83mi round trip eats up both your free time and your budget.
Also - $67.5k in cryptocurrency  worries me, particularly when it's about half your total net worth.  I'd move most of that into an index fund.

dlauth

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Re: Going on right path?
« Reply #7 on: March 27, 2014, 07:17:55 AM »
Great ideas!

Yeah, I am looking to move closer to the new job but just can't decide if renting cheap or buying cheap would be in my best interest right now.

Thegoblinchief

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Re: Going on right path?
« Reply #8 on: March 27, 2014, 07:24:03 AM »
That's a lot of fake money with limited legitimate ways to make it into real money. Convert ASAP.

Keep mining by all means, but don't count it as your net worth until it's actually in dollars.

Edit: are you using a specialized ASIC miner or a GPUcompute based rig? If the latter, upgrading the efficiency of your power supply would be worth it if you're running an 80 Plus Silver or lower.
« Last Edit: March 27, 2014, 07:27:29 AM by Thegoblinchief »

dlauth

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Re: Going on right path?
« Reply #9 on: March 27, 2014, 07:41:12 AM »
GPU and they are all on gold PSU.


matchewed

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Re: Going on right path?
« Reply #10 on: March 27, 2014, 07:41:51 AM »
Keep the rent vs. buy down to the money. Rent keeps you more mobile and buying will be harder to be mobile but not impossible. I'd personally keep renting if my situation was 3-5 year contract work so that I maintain my flexibility but that depends on your rent vs. buy market.

Definitely keep the commute down. It's a waste of time and money.

dlauth

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Re: Going on right path?
« Reply #11 on: March 27, 2014, 05:14:48 PM »
I am a very nice spot for job opportunities so if I were to buy a place, it would be located between the job hubs which at most would mean a 30min commute.

Currently I am renting on the cheap due to my Dad owning the property and I am having a hard time finding something closer to my work location for close to the same amount.

I figure the new job will cost me about $200 extra a month due to the long commute so getting a place for $200 more would be a wash, plus I would gain free time!

I should try to find the cheapest place possible that fits all my needs and I feel safe in ;0

What is the bigger evil and what is optimum financially:

having to spend more to live closer
keep searching to find something that is either equal to current rent or ends up a wash due to travel savings
making the commute from my current location
buying a place closer to the job

nereo

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Re: Going on right path?
« Reply #12 on: March 27, 2014, 06:13:37 PM »
What is the bigger evil and what is optimum financially:

having to spend more to live closer
keep searching to find something that is either equal to current rent or ends up a wash due to travel savings
making the commute from my current location
buying a place closer to the job

I'm a bit uncertain about your numbers, but you stated that it's 83mi round trip to your job in your 4cyl camry, and also added that oyu spend $6500/yr on gasoline.

Assuming your 83mi each day to work is correct, here are a few numbers for you.  The IRS plugs the "real cost of driving at 51 cents/mile".  Now, you are going to do much better than that with your fuel efficient Camry, but 25 cents/mile would be pretty mustachian.  Assuming the average ~22 days of work/month, your commute costs you over $450 every single month. That's still quite a bit less than the $6500/yr in fuel you stated, but I'm assuming you go other places on long road trips.

Point is, moving to within 10mi of your workplace would save you over $340/month. Move to somewhere you can bike/walk to and you save the full $450.  In terms of rent, you should be willing to spend at least $350 more per month to live within 10 miles of work.

Then there's the time component.  I'm estimating your commute takes you ~45 min each way.  If you work the typical full-time, 5 days a week with holidays you're spending about 400 hours every year commuting. Ten full work-weeks just getting to and from work.  Think about how much you earn in 10 weeks - it's not unrealistic to add that (divided by 12) to the amount you could add to the rent you'd pay for a place close to your work, especially if you have the option of overtime.

bottom line: living so far from where you work because you have "cheap rent" is rarely as good of a deal as it seems at first.

To get back to your question: 
Search for something that is less than 10 miles from work, even if it costs $200-350 more - high priority.
travel savings - this will be done by finding a closer place
making the commute from your current location - probably a bad idea
buying a place closer to your job - insufficient data. lots of threads about buy vs rent here.

dlauth

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Re: Going on right path?
« Reply #13 on: March 27, 2014, 06:22:27 PM »
Im not sure where I got the original fuel est from, but it was incorrect.

My new estimates assuming 30mpg, $4 gal and a few hundred on maintenance

Old Job
$2.4k with $1.2k@ 31mi day @ 250 days/yr

New Job
$4.2k with $3k for work @ 83mi day @ 250 days/yr

Hypothetical New Location
$2k with $800 for work @ 20mi/day @ 250 days/yr

Total savings of $2200 per year, if I live 10miles away.

Conclusion:
$180 more on rent a month would break even and whatever my time is worth to add to rent
« Last Edit: March 27, 2014, 06:59:52 PM by dlauth »

nereo

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Re: Going on right path?
« Reply #14 on: March 27, 2014, 07:49:05 PM »
Quote
My new estimates assuming 30mpg, $4 gal and a few hundred on maintenance
Ok, that's $0.13/mile
What you seem to be ignoring in your calculations is depreciation, generally the second highest cost-per-mile-driven after gasoline.  I have no idea what you paid, but let's use MMM's "ideal," where you paid $5,000 cash, no interest, nad you can get $100,000miles total.  That adds $0.05/mile. If you want to add how much you bought your car for, and how many miles you expect it to last, I can give you more accurate figures.
Tires, oil changes, fluids brake pads etc. will add another $0.01-0.02/mile.  That's assuming you do all the work yourself.  Total cost per mile will likely be above $0.20/mi.  Probably near the $0.25/mi I estimated.  I'll give both (low and hi numbers)
Let's move on and run your numbers.
For all of these, I'm quoting annual amounts assuming you commute a typical 265 days/year.
Quote
Old Job
$2.4k with $1.2k@ 31mi day @ 250 days/yr
commuting costs:$1,643 - $2053
Quote
New Job
$4.2k with $3k for work @ 83mi day @ 250 days/yr
commuting costs: $4,339 - 5,499

Quote
Hypothetical New Location
$2k with $800 for work @ 20mi/day @ 250 days/yr
commuting costs: $1060 - 1,325

Quote
Total savings of $2200 per year, if I live 10miles away.
Total savings
(low)  - $4,339 - 1060= $3,279
(high) - $5,499 - 1,325 = $4,121
Quote
Conclusion:
$180 more on rent a month would break even and whatever my time is worth to add to rent
realistically, you'd likely save $343 every month moving closer.  More if your car cost significantly more than the $5k I theorized with, or if you won't do the maintenance yourself.

here's a thread you might want to read:
http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

Just trying to show you some real-life numbers.   

dlauth

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Re: Going on right path?
« Reply #15 on: March 27, 2014, 08:03:33 PM »
Wouldnt it be 250 days a year commuting? I get 10 holidays off even if I do not take any leave.

nereo

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Re: Going on right path?
« Reply #16 on: March 27, 2014, 08:23:50 PM »
Wouldnt it be 250 days a year commuting? I get 10 holidays off even if I do not take any leave.
You can adjust the numbers to your situation - I'm just working off some assumptions that may or may not be true.  You are lucky to have 10 days vacation.  Then again, if your job requires you to go in once a month on a weekend, that skews things too. 
The biggest unknown in my calculations was depreciation. I don't know what your car is worth

dlauth

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Re: Going on right path?
« Reply #17 on: March 27, 2014, 08:28:12 PM »
Bought the car for $600 but it is worth $3k and it has 200k miles so your guess is as good as mine how much longer it will last!

Also, I have 16 days off for vacation and an additional 10 holidays for a total of 26 per year if I use all my leave.

nereo

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Re: Going on right path?
« Reply #18 on: March 28, 2014, 08:35:38 AM »
Bought the car for $600 but it is worth $3k and it has 200k miles so your guess is as good as mine how much longer it will last!

Also, I have 16 days off for vacation and an additional 10 holidays for a total of 26 per year if I use all my leave.
Sounds like you have a really inexpensive car, which is great.  At 200k it might be in its twilight years.
I'm not here to start a fight, my simple point is this: driving costs far more than most people think it does. Your original estimate of $3k to commute 83 miles, 250 days a year gives you a cost per mile of 14.4.  That is absurdly low, especially when your stated MPG and cost of gasoline works out to 13.4/mile.  Eventually (and probably in the next year or three) you will need a new (used) vehicle, or a major repair.  Most people around here consider 17/mile to be extremely mustachian, and 20-25/mile is still less than half the average cost in the USA.

Use those numbers however you see fit - by all means determine the exact number of commuting days in your calculations.  If you can carpool and split the driving, it will dramatically cut your costs.  My broad conclusion is that moving within 10mi of work will save you well over $200/month in commuting costs, probably over $300, not to mention a couple dozen hours of your time .