Hello Mustachians! I've been a lurker for some time and have seriously been utilizing MMM as part of my "life team" since 2013 and it has truly changed the way I look at life. Now I am at a critical junction and need some advice. This will be long but bear with me... and if you have any advice please please please let me know.
First off I am in the military. I am an officer and make a decent amount of money for a 26 year old (88K Gross income). I try to stick to a frugal lifestyle as much as possible and i has paid off significantly but I've got the thirst for more. I'm thinking about getting out of the military (personal opinions) and really really want to get into real estate investing. I've been doing a lot of research over the past year, consuming everything I can and trying to get my feet wet. I want to get my hands on a few section 8 homes to start passive income and eventually dive deeper into real estate... This is truly a passion of mine and the military is not conducive to jumping into this. Anyhow, here's where I'm at.
I am about to move to a new duty location where I will be getting a $300 dollar increase in my allowance for housing ($1500/month). I have a brandy spankin new wife a little munchkin on the way. I am also making between 8-10K for moving my stuff myself (a pain but worth the couple of days of hard work). I also have the ability to take up to 3 months of advanced pay at 0% paid back over a year ($1200/month reduction in pay for one year but ~15K of cash up front).
Right now my expenses are as follows:
-$930/mth for first home- soon to be rented for $1200/month (i currently live in this home)
-$50/month for dog food (3 dogs- sorry can't get rid of them, i'd be going through a divorce if i did)
-$60/month for internet, I'm an IT guy and I run a bunch of services from my home, I need at least 20 down and 5 up
-$290/month for a car payment. Gasp! I know.. but i needed to help my credit out a bit, it's at 4% and I was making more on investments... I can pay this off now... we'll get to that.
-$80/month car insurance. Full coverage for my 4Runner (6cyl).
-$600 month (budgeted) for groceries and household chemicals/goods
-$7/month Netflix
-$12/month IT "services" that i utilize nearly every day
-$180/month GAS
-$220/month utilities (electricity, gas, water, trash)
Now the "Savings" portions
-$19,990 in vanguard index funds
-$16K in ROTH TSP (Military Retirement) fund. I put ~$100/month into this.
-$16K in ROTH IRA- I max this out every year. ~$458/month
-$1300 in stock options (my play around to learn stocks money)
Now the Debts
-~$6k remaining on 4runner loan
-~$5k on credit card, soon to be paid off entirely
-$2k student loan for masters. I pay nothing on this yet... still in school
- ~139K out of 145K remaining on my first home 30yr mortgage @ 4.25%
So here's where I'm stuck. We are about to use our remaining VA funds to buy another property. Thats no money down, I'm qualified for 210K. My wife and I are currently looking at homes and we really really like this house that is listing for 180K. The goal here will be to rent the property once i leave for my next duty station after this one's done (if i leave for another one). However, if I take the advanced pay from the military, it my monthly costs completely burn up pay check. Oh btw, we're looking at getting a 2004-2007 prius for around 6-7K (paying cash) to cut back on commute costs. My wife will be selling her mustang and taking the 4Runner because she doesn't travel nearly as much. I need to keep the 4 runner because the homes I'm looking at purchasing need serious work and I have to pull my trailer that I have. Biking in the area I'm about to move to is a no-go. I cannot budge on that.
So what can I do to save more. I know i'm basically putting 10K in the bank after this move, which equates to 833/month while also eliminating all of our debt minus the 4runner loan. But at the current costs i have in my life i'm not putting any more in for an entire year. I also want to be able to purchase another investment property (~50K After all repairs). But that puts me at some risk for funds as it will deplete me for a bit (unless i do a cash-out refi...).
So i don't like to whine without giving some solutions. Here are the "sacrifices" I came up with in order to save more ranking from easiest to complete to hardest.
-Pay less for internet. I can reduce this by $40 per month.
-Reduce eating costs by eliminating eating out and shopping at COSTCO (previously unavailable to me due to my "remote" duty station). I can probably get this down to 300/month or less for 2 people and a baby.
-Reduce gas cost by 30/week by purchasing more fuel efficient vehicle... but this will cost me $6-8K...
-Buy a cheaper house. This one is the hardest because anything under 180K puts me in less than desirable locations... I'm already skimping a bit. Plus at current rates, for every 10K I reduce on the homes only brings my payment down by $50/month
If I can accomplish the first 2, that puts an additional 460 in the bank. What else can I do. What am I missing? What can I do to generate more income?
I appreciate you guys and I really have enjoyed lurking for the past year and a half. This site has changed my life for the better. Thank you!
DTJ