Category | Monthly | Comments | Annual |
Summary: | |||
Gross income | $4,083 | $49,000 | |
Income taxes | $824 | $9,888 | |
After-tax income | $3,259 | $39,112 | |
IRA+401k/403b/TSP/457 (Savers' credit) | $504 | $6,050 | |
ESPP+529/other | $390 | $4,680 | |
Living expenses | $2,115 | $25,380 | |
Non-mortgage loans | $634 | $7,608 | |
After-tax investable | -$384 | -$4,606 |
This is a good place to start. You have some good investing going on, but the loans are going to bury you.
Honestly, until you pay off the loans, you should be putting the investing to the side (except for the company match requirements). Destroy the loans, then work on building the stash. You already have a good start, so you can pause most of it for a while to tackle the loans.
As for expenses, you can save a lot if you think about how you spend what you currently put out. Four items are on your list that could be dramatically reduced, saving you a lot of money:
-Food and Bars: $450 budgeted. (Actuals for the year are from $200-$600, but 450 is the average lately. This is what I have paid, but reimbursements on groceries from my roommate are not recorded in Mint and we both split groceries.) I shop mostly at Costco, Trader Joes, and CVS, and eat out a few times per month, although I'm trying to cut that down as much as possible while maintaining a social life.
-BJJ Gym:$180 (My main hobby and enjoyment, will never drop)
-Ramit Sethi's Networking Group (RBT): $50 (Worth it, don't want to drop. I consider it an investment)
-Fun/Shopping/Unexpected Expenses account: $300
You can reduce food by half. (My family of 3 also in N.Va. lives on twice this, so you can do better!) You can get enjoyment out of working out in many ways, so paying $180 a month for a gym is just wasteful when you have debt! What is your goal with networking? Can you achieve that goal without Ramit? Why are you giving the group $50 a month for the opportunity to meet other people you can meet on your own with a little effort on your part?
$300 fun/shopping/unexpected - that's huge! It's as much as your student loan payments! Put the money from the networking into this every month and kill two birds with one stone.
If you can cut your food to $300, you gym and networking to time rather than money, and your fun to $50. you can have an extra $630 a month to eliminate those loans quickly. Then you'd have that money to throw at investments in the future.
You've got your mind in the right place. Taking those last few steps will allow you to achieve the goals you've set for yourself.
Good luck!
Jeremy
For the Jiu Jitsu (I'm assuming that's what your BJJ gym is), is there an option to barter for membership fees? Ie, teach classes to kids, or volunteer for events on weekends, or make a website for them? I've literally traded salmon for tae kwon do before, you'd be surprised what people will take if you ask. Since it's already a huge part of your life, this extra work would just further integrate you into the activity, so it shouldn't feel arduous, and it's another 1/2 of your food budget.
Were your utilities, cell phone, etc listed anywhere? I don't recall seeing those. And how does insurance work with zipcar- is there a payment there that's missing?
This is a pretty small one, but good news: You can get tons of discounts on Lasik. My wife got here eyes done a year and a half ago. She got 20% off because her health insurance has deals with most major providers. It's not an insurance benefit, per se. Just ask about it. She got another 10% off for paying cash. It saved us about $1300, if I remember correctly.
I just looked up Ramit Sethi- apparently he has done $12k/person networking workshops.
I need to figure out a side hustle like that!
Don't stop your ESPP purchases. Ramp that up to the max your company will allow, it's free money. If you don't have the cash flow to do it, then sell some of the stock to help your cash flow position so that you can continue to participate at the max contribution. Do not set your dividends to reinvest - they will probably be reinvested at market price, which you don't want (and might even incur a transaction fee). I assume you are purchasing through the ESPP program for the 15%+ discount, and not because you actually want to own a ton of stock in the company you work for, so just have them cut you a check for dividends and then invest them in your IRA or taxable accounts in a more efficient and diversified manner.
You should probably sell your ESPP stocks asap too. Read through your program to make sure it's beneficial, but if it works like I think it works you will probably gain more benefit from selling and putting that money into a low cost index fund even if you have to realize short term capital gains to do it. The short term gains you will realize will probably be small potatoes since you held that portion of the stock for not very long. Since you will incur a $20 fee for selling you should probably try to sell it all in as few transactions as possible.
I just looked up Ramit Sethi- apparently he has done $12k/person networking workshops.
I need to figure out a side hustle like that!
I know, right? I do highly recommend reading his stuff. The free material on his blog is a goldmine for actionable things you can do to improve your salary, career, networking, or business. He has a different philosophy on life from MMM so you may not agree with some of his points (especially re: frugality), but I find it valuable to hear different viewpoints.Don't stop your ESPP purchases. Ramp that up to the max your company will allow, it's free money. If you don't have the cash flow to do it, then sell some of the stock to help your cash flow position so that you can continue to participate at the max contribution. Do not set your dividends to reinvest - they will probably be reinvested at market price, which you don't want (and might even incur a transaction fee). I assume you are purchasing through the ESPP program for the 15%+ discount, and not because you actually want to own a ton of stock in the company you work for, so just have them cut you a check for dividends and then invest them in your IRA or taxable accounts in a more efficient and diversified manner.
You should probably sell your ESPP stocks asap too. Read through your program to make sure it's beneficial, but if it works like I think it works you will probably gain more benefit from selling and putting that money into a low cost index fund even if you have to realize short term capital gains to do it. The short term gains you will realize will probably be small potatoes since you held that portion of the stock for not very long. Since you will incur a $20 fee for selling you should probably try to sell it all in as few transactions as possible.
You are correct with why I am purchasing it, and I am currently doing the maximum that I can. I think that dividend reinvestment does not have a fee, but it is buying stocks at market rate and of course dividends are taxed as income but I don't think those taxes are due until I sell. The $20 fee is what gets me... I'm not sure how often I should sell it so that I don't wipe out my gains with the stupid fee. But it is probably better to sell as often as it makes sense as I am overexposed to my company and don't need to have taxable investments when I have unfilled space in retirement accounts.
The dividends should be taxed in the year they are distributed, whether you purchase more stock with them or just put it in your bank account. The 15% discount you receive will count as income, but usually not until the year you sell it.
"ESPP" is not descriptive enough. The one frugalnacho is familiar with behaves that way, but for others (e.g. the one from Megacorp) that I had the discount is income the year you buy. Check your program details.
The dividends should be taxed in the year they are distributed, whether you purchase more stock with them or just put it in your bank account. The 15% discount you receive will count as income, but usually not until the year you sell it.
Oh darn... might need to amend my 2014 taxes then :(
Thanks for the info!