Hey everyone,
I was hoping for some advice on how best to move towards FI while having fun doing it. I'm sure you can deliver the goods so here goes:
I am a 20something yuppie, by most measures. I make $4000 a month in gross pay, which comes in the form of bi-weekly paychecks of about $1400, with a 5% ($100) contribution to my 401(k). $200 is automatically deducted into a savings account at the local credit union, I end up seeing about $1200 in my primary checking account every 2 weeks, so $2400 monthly.
Rent = $825/mo. I 'd consider moving but I haven't found anything better yet, plus my lovely neighborhood is incredibly walkable.
Food = $250/mo. I like to eat and I think this is pretty reasonable for a guy in his 20s. I bring lunch to work every day and eat out sparingly.
Transport = $60/mo. I carpool to work and buy gas for my carpool buddy, don't own a car yet.
Utilities = $50/mo
401(k) = $1500 w/ Fidelity invested in index funds. Thanks to QE3 I've got a 5.7% return going so I'm hoping that keeps up. I was contributing around 20% of my income when I started but now I'm down to 5% while I build up my savings.
Current Savings = $5000. Each month I have an automatic transfer of $500 to my savings from primary checking, so combined with the other one I'm saving $700 or about half of my $1400 bi-weekly pay. I think this is pretty good, and I'm trying to do better by minimizing my expenses.
I have around $7250 in student loan debt, about half at 4.5% and the other half at 3.4%. It comes due in November, so I'm thinking I'll pay off the 4.5% loan, then pay the other one down gradually over the next year while tax deducting the interest I pay on that. Is this a good plan?
I know I want to open up a Roth IRA and max that out. I'm planning on doing this with Vanguard sometime early next year after all the fiscal cliff hysteria is (hopefully) over.
I've been thinking about buying a car (used of course), and my budget is about $7.5-10k. Is there an optimal time I should buy this thing, and how do I plan for all of the insurance and assorted expenses that come with a vehicle? Is it possible to stay on my parents' insurance if I'm in my early 20s? I'm interested in a Subaru wagon for the practicality/reliability of it, but I'm a bit worried it's going to run me a huge sum of money monthly after it kills my savings. However, having a car would be amazing in terms of helping me get around town and out into the outdoors without hassling my friends. How can I get this done? I'm definitely feeling a bit hamstrung in terms of the activities I can do without transport.
In a way, I feel a bit like the fantastic MMM post
http://www.mrmoneymustache.com/2012/08/16/what-it-feels-like-to-become-rich/. I'm sort of bored! And that's weird for me, because I've constantly worried about money when I didn't have any. Now that it's coming in, I'm wondering what else I should do with it besides save up a few months of living expenses in an emergency fund, max out the IRA and the 401k, pay down my loans, and look at making some bigger purchases? I feel like I'm doing everything right but I'm sure there's still room to improve. Perhaps boosting my income somehow?
Thanks, and I'm sure I'll have some more questions for you masters of frugality a bit later.
-illah