I'm a newbie Mustachian, need advice please, please, please!

[.22guy]

Let me start by saying that I’m new to this site but am enjoying it a lot.  I need some direction and quite possibly a few world-famous MMM face punches.  I already live a fairly frugal, Mustachian lifestyle.  I drive a truck that is over 14 years old that I purchased new with cash.  I have an inexpensive, pay as you go Smartphone for 35 bucks a month, no cable, inexpensive internet, etc.  I have a few stupid non-MMM habits as well, I smoke a few cigarettes a day, and drink waaaaay too much soda.

Currently, I am saving for down-payment on a house and have a little over 7K in a non-interest bearing bank account.  I won’t be able to get a home loan until April of 2014 due to an unfortunate bankruptcy (embarrassing to me, I had a high-maintenance wife at the time and one income, we are divorced now).  I currently put away about 12-14% of my take-home salary in the bank after rent, expenses, child care, child support, etc.

As a teacher, I contribute to my state retirement plan but nothing extra to a 403b or anything like that.  Frankly we barely made it (technically we didn’t i.e. bankruptcy) and I’m still very much trying to get used to this whole “having money” thing while on my own.  I also have 7K in a student loan with 6.5% interest rate.

Eventually, I’d like to own my own home outright, a la Dave Ramsey.  I wouldn’t mind owning a few rentals someday as well.  The thing is I really don’t know where to go from here, where to start or what to do.   I don't know anything about stocks, bonds or any type of investing.  Like I said, I’m still new to this whole “having money” thing.  I’d like to be able to retire early, but who knows what the future holds. 

Any and all thoughts would be appreciated.  Also, good links to read and research would be great. 

Thanks in advance!

[Skyn_Flynt]

Sounds like you don't have much (liquid, accessible) savings. Since you don't have much debt either, I'd suggest thinking of ways to earn a little more. Might be a night or weekend job. I worked two jobs (sometimes three) off and on from my early 20s to early 30s. I think the extra cash made a difference in the long run by allowing me to put 25% down on my first home and keep my mortgage payments reasonable.

How big is your apartment? Do you have a spare room to rent out? Can you *create* a spare room by clearing out stuff you don't need to have? Collecting $400 a month in rent is like *working* for about $550 and paying all the FICA, Medicare, IRS, etc on top of the wages.

[marty998]

Save like mad. And find a bank account that pays interest.

Cut the soda and cut all sugar from the diet. It may sound tough to go cold turkey but its actually quite easy. Your brain will feel better within a couple of days and soon you will find every sugar hit will actually make you feel sick.

Cutting the ciggies will be harder, but every day you try to quit will save you $$$. If you really want a kick up the arse, think of it this way..."do I want my own fully paid off roof over my head, or do I want a ciggie that is contributing to killing me 4752* different ways. I can only choose one"


*Some dramatic licence may be employed in the making of this post.

[startingover]

Hey, Newby!  Welcome to the better life!  You're a teacher? What age group?  I am a teacher of pre-school- birth through 5 years.  I teach infants now; was a director of a day care but now just loving the teaching part of it.  I took a pay cut but live with a great man and make money on the side now.   We are badasses together!! 
Sorry to hear about your divorce, that's never easy. (I went thought that).  Keep paying off debt, save for your kids(how old, how many), and live!  Life is easy to live.  We need to pay our debts,  and save for later.  You need to pay it all off.   Do you have a side job?  Tutoring?  whatever?

[.22guy]

Sounds like you don't have much (liquid, accessible) savings. Since you don't have much debt either, I'd suggest thinking of ways to earn a little more. Might be a night or weekend job. I worked two jobs (sometimes three) off and on from my early 20s to early 30s. I think the extra cash made a difference in the long run by allowing me to put 25% down on my first home and keep my mortgage payments reasonable.

How big is your apartment? Do you have a spare room to rent out? Can you *create* a spare room by clearing out stuff you don't need to have? Collecting $400 a month in rent is like *working* for about $550 and paying all the FICA, Medicare, IRS, etc on top of the wages.

Currently, I am running myself absolutely ragged doing additional work at my school and have been saving that extra money where I can.  Having part time custody of my sons makes it very difficult to find a night or weekend job with the flexibility I need because of that.  Kinda the same with the roommate thing, I have strongly considered that but I want my boys to have their own space when they are with me, even though it's only about 50% of the time.

[.22guy]

Hey, Newby!  Welcome to the better life!  You're a teacher? What age group?  I am a teacher of pre-school- birth through 5 years.  I teach infants now; was a director of a day care but now just loving the teaching part of it.  I took a pay cut but live with a great man and make money on the side now.   We are badasses together!! 
Sorry to hear about your divorce, that's never easy. (I went thought that).  Keep paying off debt, save for your kids(how old, how many), and live!  Life is easy to live.  We need to pay our debts,  and save for later.  You need to pay it all off.   Do you have a side job?  Tutoring?  whatever?

I currently teach second grade, it's great and the kids are still nice and look up to their teacher. :)  I do have a million side jobs and tutoring going on right now.  I'm actually running myself into the ground with it, it's a lot to handle and prepare for on top of my regular job.  I usually work through lunch every single day in order to work on/prepare for all the side gigs.  I'm so busy during the day, I hardly have time to pee.  Literally.....

[Dee18]

Paying off your loan gives you  essentially a guaranteed 6.5% return on that money so I would pay that off and have a 6 months emergency fund before investing or thinking about buying a house.  Keep in mind that a house will take a lot more time than a rental. You sound really busy already, without that extra responsibility.  For now, you probably want to maximize savings.  (Who knows, a year or two from now you might fall madly in love with a woman who already owns a home.) In the meantime, you can think about where you really want to live and get to know the market. 

 Hopefully you can make extra money in the summer.  You could also plan to cut costs in the summer by growing a few vegetables--which might also be fun for the kids.  (I am not a very ambitious gardener, so I stick to container gardening.) 

[Skinnyneo]

Hi there .22guy!  I'm a teacher as well, but at an all girls high school in Japan.  As teachers, even of high school students, I agree that students look up to us.  Our students learn from us whether we like it or not so it's great that your sending them such a good message about saving.

On the other hand cut the smoking.  I can tell my students not to smoke till the cows come home because I don't smoke.  I do drink and therefore can only tell them to be careful about drinking and do it responsibly.  Probably not something you have to worry about too much with second graders but that image of Mr. .22guy lighting one up will stay with them.

If you can get a bike and use it everyday.  MMM has written a few blog posts on this and I wish that every other blog post was about biking.  It truly is a whole compact universe of goodness.  You get free exercise, you keep yourself healthy, you save money on gas, insurance, parking, and again you will be a good role model to your students.  I think kids grow up seeing their parents and all other adults drive so they think it is strange to ride a bike as an adult.  By biking and enjoying it I show my students you don't have to do everything like everybody else (sometimes a difficult concept to convey in Japan).

Pay off that student loan if it is only seven grand.  Like Dee18 said you're going to have a find a 6.5% investment just to be breaking even on it.  Pay it off.  Be done with it.  Don't take out any new debt.

As far as investing goes I really like the http://jlcollinsnh.wordpress.com/ view on investing.  Other's will give you different advice.  Personally I don't think any of it is wrong.  Everybody gets to invest differently.  Whatever you can invest in and sleep at night means you are making the right choice in my opinion.  The only wrong choice, I think, is to spend more than you make and go into debt for frivilous reasons like TV's or blow out vacations.  Or, if you sleep with one eye open because you don't know if your stocks are up or down.  You should own your investments not the other way around.

You're on the right path.  Just keep walking it.

[JT]

Hi Newbie

Welcome!

Firstly, I would try to push your savings out to $10K so you can pay your debt off and still have some savings.

It is simply amazing how quickly money accumulates when you're conscious of wanting to do this.

Once your debt's paid off save, save, save and get your money working for you.

If you've got no time to pee then you're working hard alright and I really get that.

The thing is, this is a little unsustainable in the long run so I would give yourself a reward here or there (ie not the smokes!!) - a free reward like give yourself the time to go for a bike ride or walk or get a friend over or have a relaxing bath or find something that will make you laugh so hard your belly hurts.

Is there some way you could work smarter?  Working your butt off is one way of increasing your income but if you stepped back and thought strategically, is there anything you could do in this space (sometimes when we've been through a lot of bad, we fall into the habits we are familiar with to get ahead - perhaps there's a different way?).

I wish you all the best - things will be hard for a little while but with your hard work and excellent attitude I'm sure you'll get ahead.