Hi all,
I am a fan of MMM and am working on accumulating my 'stache. Please check out my current situation and let me know if you think I should do anything differently. I think I am doing pretty well and I have a lot of information and knowledge, but am getting paralyzed with the idea of changing things from here. I feel like I'm 85% there, but the minutiae involved to get me to 95% is overwhelming. Sorry in advance for the wall of text.
Background: 26 years old living in the Washington, DC area. Working at a Fortune 1000 company. I just got a raise to my current salary, so some numbers below might be a bit off because I have not yet gotten a paycheck fully with my new salary. I have been getting 4-5% raises each year but hope to do better next year. I am in school part-time for a Master's Degree and will graduate next Spring (2016). Also am working on a professional certification which should make me more valuable. I do not plan on changing jobs until I graduate.
Goal: Financial independence/early retirement by age 45, earlier if possible. I don't have my "number" yet for how much income I'll need, so I want to just save and invest as much as possible for now.
Income: $49,000 PRETAX + $5250 in tax free tuition reimbursement while in school.
Current Monthly Expenses:
-Rent: $820, Including Utilities (Currently living in VA, will move in with SO in DC end of summer to house SO owns and agreed to pay same rent I am currently paying to SO)
-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)
-Loans: $300 (I'm still in school so there is no minimum payment yet)
-Roth IRA: $300 (I add in whatever I need to max it before filing for taxes from whatever I have available
-Fun/Shopping/Unexpected Expenses account: $300
-Metro: $100 (pretax money as a benefit)
-401(k): $182 @5% (match is up to 4%)
-Health Insurance: $103 ($700 deductible, then pay 10%), no HSA but FSA which I don't use.
-Dental Insurance:$12
-Vision Insurance: $6 (will probably drop next year)
-Employee Stock Purchasing Program (ESPP): $390 @10% of post-tax income, max possible under benefits
Other monthly costs already paid for:
-Capital Bikeshare: $6 (already paid for the year, worth keeping while I live where I am even though I have a bike)
-Rental Insurance: $6 (already paid for the year)
-Zipcar $5 (already paid for the year, up mid-summer, will probably cancel)
Assets: $36,500
Cash: $11,700
-$8,000 Emergency Fund (around 6 months of necessary expenses)
-$2,000 For Lasik (Planning on getting it next year. My vision is bad and I can't wear contacts, so it's important to me)
-$1,700 Fun/Shopping/Unexpected Expenses money
Investments: $24,800
Retirement
-$12,700 Roth IRA invested in VFFVX
-$6,600 401(k) (including matching which is not fully vested) Invested in LIVAX
Taxable
-$5,500 Company ESPP. 15% discount on price at beginning of each quarter. Must hold for 1 quarter before selling. $20 fee for selling, no other fees. It is a Canadian company with usually between 2% and 3% dividends which I have set to automatically reinvest. I am contributing the max that I can right now to this, 10% of my post-tax income so around $4,700 per year. My understanding is that the 15% discount will be taxed as income, but the capital gains are short-term until 2 years, then long-term. Not that it means much, but the stock is rated well as a Buy and Long hold stock by analysts.
Debts: $37,400 (a final $20,000 coming next year)
Federal Student Loan 1: $19,700 @ 6.2%
Federal Student Loan 2: $17,700 @ 5.41%
Federal Student Loan 3: Coming next year for my last year of grad school at ~$20,000
There are no minimum payments for the student loans until I graduate, but I have been putting $300 per month toward the principal of the higher interest loan.
Notes:
I have a SO who makes a little more than double my income and has a house. Marriage is on the table for the future, but I want to just deal with my own stuff for now and act as if that does not exist. But it does mean that there are some costs for dates and occasional gifts and travel. I have also applied for many scholarships but have not yet gotten any. Also, I mostly act like it doesn't exist, but part of the reason I am not attacking the loans with everything I have right now is that I will receive ~$50k from my lovely grandmother when she passes away. This is already gifted to me in a trust, but I will not spend it before she passes away in case she needs it while she is still alive for medical expenses. She does still have significant assets for that though. I hope it is far away, but she is already unfortunately in poor health.
Questions:
-What should I change? Forget ESPP and put it all towards loans or 401(k)? Keep smaller emergency fund/invest half of it? If yes in what? Sell current ESPP and put it towards loans and/or IRA? Forget all investments and only attack loans? Go back in time and tell myself not to go to school without scholarships? I am open to suggestions. Thank you!
*SO is Significant Other.