Author Topic: How do we stand and what next?  (Read 4373 times)

ILostMySpoon

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How do we stand and what next?
« on: January 20, 2016, 11:58:15 AM »
Hi everybody! My fiancée (24) and I (25) have recently started reading this blog and wanted to see if would get some input on how we stand, advice on where we can improve and what would be our next best steps. We are interested in investing and have no idea where to start in regards to Vanguard Mutual Index Funds.

About us
We both share a checking (SunTrust) and savings (Ally) as well as have our own personal checking and savings that we keep separate until we officially get married.
We live Maryland and recently just bought a new home together back in August 2015.
Both of us commute to work (an hour from the hospital for her and 20 minutes from the office for me). Biking isn't really an option for either of us.

Finances (tracked with Mint)

Me
Checking: $5300
Savings: $12000
401k (15% contribution): $72000

Monthly Breakdown:
Income - $500
Gas - $60
Gym - $89 (MMA)
Haircut - $17
Spotify - $5
Adobe Photoshop & Lightroom - $9
Total: $180

Other expenses:
Tuition for Master's - $4500 each semester (reimbursed by employer; 2 semesters left  until June 2016)

Her
Checking: $3300
Savings: $9000
401k (contribution): $19000

Monthly Breakdown:
Income - $500
Gas - $120
Work Parking - $100
Gym - $110 (MMA + Yoga)
Spotify - $5
Total - $305

Other expenses:
Tuition for Bachelor's (reimbursed until end of 2016) - $2600
Tuition for Doctorate (until 2022) - TBD

Mutual
Checking - $9000
Savings - $20000

Monthly breakdown:
Income -  $6000
Mortgage payment  - $2662 ($449,000 at 3.875%)
Electric - $150
Water - $170 (high based on our habits; waiting for next bill to see if a leak is the cause)
Internet  - $69
Groceries - $500
Cell phone - $170
Misc (e.g. going out, home improvements, etc) - $150
Total $3800 - $5000 dependent on exceeding our budgets
Savings: $1000 - 2200 dependent on expenses

Future and long term debts
Parents' down payment help - $50000 (within 5 years)
Predicated wedding budget - $28000 (with $15000 gift from her parents)

Thanks in advanced for any advice! Please bear with us as we are just starting out with this!

FrugalFan

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Re: How do we stand and what next?
« Reply #1 on: January 20, 2016, 12:13:32 PM »
It is a bit difficult to say because of how you report income. I'm also too lazy to add up all your income and expenses to see what the difference is. You are saving 1-2 k a month but have you started repaying your downpayment help and are you saving for the wedding already? My general thoughts are that your house seems expensive relative to your income, especially since you had to borrow for the downpayment, you are probably underestimating your home repair/maintenance budget, you don't seem to be saving up for large expenses like a new roof or car or furnace, you haven't listed any spending for clothes, personal care items, gifts, eating out, etc. Is this really a complete picture of your finances? 

ROY2007

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Re: How do we stand and what next?
« Reply #2 on: January 20, 2016, 12:15:04 PM »
Welcome to the forums!

Just trying to understand your debts...

Mortgage: $449k
Debt to parents for your house down payment: $50k - I would not be able to stand owing my parents or in-laws money. This would be my first priority.

Other large upcoming expenses:

Wedding expense: $28K - Sounds like a very fancy wedding! Ours was around $10k before we found MMM, and many other readers here will have some ideas for cutting that expense.
Fiancée's doctorate tuition: How much do you expect this to cost?

A $449k mortgage when you're making $72k (is that correct? I'm not sure if I follow the way you laid things out) sounds a little crazy to me. What do you expect to be making when you both finish your graduate degrees?

shotgunwilly

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Re: How do we stand and what next?
« Reply #3 on: January 20, 2016, 12:29:22 PM »
Your house is crazy expensive for what you're making.  From what I can tell, your combined income seems to be around $84,000? ($6000/month combined income + $500/month each.)  Maybe you're anticipating high incomes in the future after school is complete (since it appears she's going to be a doctor.)  But still... you jumped the gun a little IMO.

But it's done now so I would focus on cutting back as much as you can everywhere and maintaining a GOOD emergency fund.  Your savings accounts are looking good.

ILostMySpoon

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Re: How do we stand and what next?
« Reply #4 on: January 20, 2016, 02:22:32 PM »
It is a bit difficult to say because of how you report income. I'm also too lazy to add up all your income and expenses to see what the difference is. You are saving 1-2 k a month but have you started repaying your downpayment help and are you saving for the wedding already? My general thoughts are that your house seems expensive relative to your income, especially since you had to borrow for the downpayment, you are probably underestimating your home repair/maintenance budget, you don't seem to be saving up for large expenses like a new roof or car or furnace, you haven't listed any spending for clothes, personal care items, gifts, eating out, etc. Is this really a complete picture of your finances?

We have not started pay back my parents yet but have plans to do so towards the end of this year. We also have already started saving for the wedding.  The house is new construction so while I understand the need to budget for home repair and maintenance, I don't foresee any issues that wouldn't be covered under warranty or by our savings at the moment (knock on wood).
 
What I have provided is generally a normal month for us. What I listed for Misc under our mutual section includes money we spend on gifts, eating out, etc. Personal care items and clothes come out of our own individual accounts.

Welcome to the forums!

Just trying to understand your debts...

Mortgage: $449k
Debt to parents for your house down payment: $50k - I would not be able to stand owing my parents or in-laws money. This would be my first priority.

Other large upcoming expenses:

Wedding expense: $28K - Sounds like a very fancy wedding! Ours was around $10k before we found MMM, and many other readers here will have some ideas for cutting that expense.
Fiancée's doctorate tuition: How much do you expect this to cost?

A $449k mortgage when you're making $72k (is that correct? I'm not sure if I follow the way you laid things out) sounds a little crazy to me. What do you expect to be making when you both finish your graduate degrees?


Thank you for your input! I am uncertain as to how much she will be paying for her doctorate, but her company will be reimbursing her full AFAIK. She is a bit underpaid as a registered nurse with 3 years of experience, but by the time she's finished her doctorate, we're hoping close to 6 figures. I am hoping to make low 6 figures by the end of this year.

Your house is crazy expensive for what you're making.  From what I can tell, your combined income seems to be around $84,000? ($6000/month combined income + $500/month each.)  Maybe you're anticipating high incomes in the future after school is complete (since it appears she's going to be a doctor.)  But still... you jumped the gun a little IMO.

But it's done now so I would focus on cutting back as much as you can everywhere and maintaining a GOOD emergency fund.  Your savings accounts are looking good.

Yes, we jumped the gun a bit, but considering new construction and the location of the home, it was a dive we decided to take together. We plan on staying here for quite some time.

EIther way, there's no point in dwelling over what's already done. We want to work with what we have and figure out ways we can improve upon that :-)
« Last Edit: January 20, 2016, 02:24:59 PM by ILostMySpoon »

Mr.Tako

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Re: How do we stand and what next?
« Reply #5 on: January 20, 2016, 03:07:10 PM »
I think you could pretty easily squeeze another $1000 a month into savings if you wanted to.

For example:
* You are both paying for Spotify?  Unnecessary.
* She's not giving you a haircut?  Start.
* You both have gym memberships? Cancel them and get exercise other ways.
* You're paying a monthly fee for photoshop & lightroom?  Cancel that and use open source software.
* $100 for work parking?  Take the bus!
* $170 for cellphones?  Outrageous!
* $180 a month for gas?  That's a lot!  Move closer or take the bus.
* Misc money for eating out?  Forget eating out and partying until you have your debts paid off or seriously paid down.
* You really shouldn't be going into debt for a wedding.  Change your plans.  If you can't afford it now, you shouldn't have a fancy wedding.

Not trying to pick on you, but it looks like you guys are pretty spendy pants, and now you've got yourself into some big debts.    If you really want to be financially independent, you need to cut the unnecessary expenses until you have your debts paid off.

CindyBS

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Re: How do we stand and what next?
« Reply #6 on: January 20, 2016, 03:15:29 PM »
A few things that jumped out at me immediately:

-I'm not sure if you are in a HCOL, but $500/month groceries seems excessive.  We have 4 people (1 is pre-teen boy eating machine), eat mostly organic food, only go out to eat once per week and still spend about $450/month.  Basically half of what you are paying

-You are spending over $200 for gym memberships?  Can you get a family membership instead of 2 individuals?

-I agree with $28K wedding seems excessive.  15 years ago I had a $7K wedding and $500 of that was the dress.  The rest of the wedding was good, but I regret the dress.  It is not just sitting in a box, after being worn once.  I wish I had bought a used dress or a white dress that was not a wedding dress.

I'm in my early 40's and been married 15 years.  My experience with both my parents, my in-laws and all my friends dealing with parents/in-laws is that sometimes they can be a real problem.  This is especially true when you have a wedding and even more so if/when you have kids - especially if you have the first grandchildren.  From both personal experience and stories from friends that is A LOT easier to set boundaries and say NO to unreasonable demands if you are independent adults - meaning they are not subsidizing you in any way.   When my mother objected to the wording of my wedding invitations and said "I'm not paying for invitations like that".  I had to gently remind her she wasn't paying for ANYTHING in my wedding and had ZERO say. 

I obviously do not know the situation with either your parents or future in-laws, but I would highly recommend paying off that loan ASAP and seriously considering about taking the $15K for the wedding. 

Exflyboy

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Re: How do we stand and what next?
« Reply #7 on: January 20, 2016, 03:45:36 PM »
I am often accused of being a little too forceful in the "face punch" department so I am going to be gentle I promise..:)

I agree with what others have said but would underline this wedding.. $28k? when you can a veritable mountain of debt compared to your incomes?... Your kidding me right?

You see there I go again..:)

but think about this $28,000 is a HUGE amount of money.. I know its normal to spend $30k these days but thats exactly the point of the greatest ER website on the planet.. I.e you don't do the same dumb sutff that everybody else does!

We got married 15 years ago for $3,000.. about $4500 in todays money.

PLEASE for the love of God... put the other $22,000 towards your debt. You will be doing yourself a huge favour... personally I'd give it to the Parents agains the $50k you owe them.

The cellphones should be $10 a month each.. I like PTEL best (at $5 amonth on a $20 flip phone), I have used Airvoice wireless (they are OK ish) and my Wife has Republic Wireless for $10 a month for unlimited talk and text.. NO you don't NEED data, we didn't even knoe what data was a few years ago.

Take the bus, cut down on groceries etc.

Get this all lined out and with 6 figure salaries you'll be FI in 15 years.

Good luck..:)

lifejoy

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How do we stand and what next?
« Reply #8 on: January 20, 2016, 07:09:06 PM »
Thanks to MMM I've been cutting my husband's hair for years now :)

And one year ago we paid for our wedding: $7000. No regrets! And I'm married to a future doctor, so I totally feel ya on the future earnings bit, but we have to live in the now. DH and I have spent the past three years tackling student loans, and they've gone from $110,000 to $10,000! You can do it!
« Last Edit: January 20, 2016, 07:11:08 PM by lifejoy »

mozar

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Re: How do we stand and what next?
« Reply #9 on: January 20, 2016, 08:55:44 PM »
My guess is you bought in Bethesda? That's the only place I can think of in Maryland where a 4 bedroom would cost that much. So you're 25 y/o, 50k "loan" from parents, not worried about a 30k wedding... My guess is that your family and/or your fiance's family is wealthy. There's nothing inherently wrong with that but I'm not sure what you are looking for from this forum.

ILostMySpoon

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Re: How do we stand and what next?
« Reply #10 on: January 21, 2016, 06:05:32 AM »
Thanks everyone that has provided their input!

My guess is you bought in Bethesda? That's the only place I can think of in Maryland where a 4 bedroom would cost that much. So you're 25 y/o, 50k "loan" from parents, not worried about a 30k wedding... My guess is that your family and/or your fiance's family is wealthy. There's nothing inherently wrong with that but I'm not sure what you are looking for from this forum.

Columbia. Neither of our families are particularly wealthy either. We are just looking for the best way to improve upon what we're currently working with right now. This is the first time either of us have lived by ourselves.

Rubic

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Re: How do we stand and what next?
« Reply #11 on: January 21, 2016, 10:27:49 AM »
The cellphones should be $10 a month each.. I like PTEL best (at $5 amonth on a $20 flip phone), I have used Airvoice wireless (they are OK ish) and my Wife has Republic Wireless for $10 a month for unlimited talk and text.

Update, ptel is now dead: http://forum.mrmoneymustache.com/welcome-to-the-forum/heads-up-ptel-is-ending-their-service

But Exflyboy's advice of switching to an MVNO is good.  I'm happy with Republic Wireless.

Exflyboy

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Re: How do we stand and what next?
« Reply #12 on: January 21, 2016, 10:54:52 AM »
Great we just signed up my MIL... They mention anything about it

their website is still active as well.. plus I didn't get any email from them about it..Hmmmm..:(