Author Topic: I'm about to make a lot of money. Help me be a smart Mustachian!  (Read 10478 times)

ommmmaggie

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I'm about to make a lot of money. Help me be a smart Mustachian!
« on: November 16, 2014, 11:34:03 AM »
Hey everyone! This is my first post on the forum and I need your help. I'm about to start a job where I'll be making really good money for the next ten months - just over $2100/wk gross which is a lot of money in my field (stage actress). I want to make the most of this opportunity to set me up for Mustachian living and future prosperity. My expenses are low because I'll be living on the road and not maintaining a residence anywhere. I have some debt to pay off and then I want to know the best way to deal with the rest. Here's the rundown:

CURRENT DEBT TODAY:
Car payment: $4,015.95 ($336.06/mo @ 0.9% interest, 11 payments left)
Student loan: $20,399.96 ($190.73/mo @ 3.5% interest, years of payments left)
Parents: $11,708.56 (currently paying $25/mo)
Friend: $700 (not currently paying this back - it was given as a gift but I want to repay it when I'm able)

OUCH.

CURRENT EXPENSES MINUS DEBT REPAYMENTS:
Around $1000-1500/mo

CURRENT SAVINGS:
Prudent reserve: $1000
SEP-IRA: something like $6000 (clearly I have not kept close watch)

I will be setting aside a few thousand dollars for some lifestyle upgrades, like some new good-quality clothing, probably a new Mac (mine is 5 years old and the pinwheel of death is showing up more and more frequently), and a couple of courses that I've been wanting to take. The rest I want to save/invest/whatever will be smartest.

It's also possible that I will receive a payout from the sale of a family business mid-year, which will be $36,000.

Anyone have ideas on how to use my money? Books to read? Ways to become a financial ninja?

Thanks!
« Last Edit: November 16, 2014, 11:53:29 AM by ommmmaggie »

madgeylou

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #1 on: November 16, 2014, 11:49:38 AM »
Hey good for you! It's not so common for actors to make that kind of scrilla! You're smart to think about what to do with it now.

I would give you 2 pieces of advice:
- pay off all your debts first
- read MMM's blog from the beginning

That should be a good lace to get started anyhow. Good luck!

chasesfish

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #2 on: November 16, 2014, 11:55:00 AM »
If you're on the road for 10 months, can't you sell your car?  Eliminate the debt and don't have to pay for car insurance and eat the depreciation

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #3 on: November 16, 2014, 12:00:54 PM »
Good question, chasesfish! Since I have so few payments left and I'll need the car after the tour, I'm going to keep it and a friend is going to use it for the year. He'll pay the car insurance and maintenance.

KittyFooFoo

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #4 on: November 16, 2014, 12:06:43 PM »
Congratulations!  A six figure salary definitely goes a long way, especially when your expenses are low as balls.

General recommendations include:
1) Save up enough cash to cover 3-6 months of expenses as a first priority--this is your first line of defense against financial emergencies. Having this money in the bank feels awesome, and buys you way more options.
2) no clue if you get retirement benefits as a stage actress, but if you do, max it out, especially making sure to get any employer match.
3) resist the urge to go out and snap a fancy apartment, car, and eat out a ton. Trust me, this can be tempting as fuck when you first make a big salary. But if you can keep these three big budget items low, you'll already be doing great.
 
Some people get good tailored advice by posting more details about their living details and a itemized monthly budget.

Good luck!

mxt0133

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #5 on: November 16, 2014, 12:11:20 PM »
I'm also in favor of getting rid of you debt, just because you income is very irregular.  Not having debt will will give you more options in the future.  With that said I would prioritize increasing your emergency fund to something like 6-12 months of expenses, again because of your irregular income.

Just remember that 2100/wk will not be as much as you think it will because it will really bump up your taxes.  I would recommend projecting your income taxes and making sure you take those into account if taxes are not taken out of your pay.  I don't know how stage actress/actors are paid.

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

Gin1984

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #6 on: November 16, 2014, 12:22:13 PM »
What will you weekly spending be like?  Honestly, I'd put as much as you can into your student loans.  You can pay those off, with this job!

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #7 on: November 16, 2014, 12:27:56 PM »
Yeah, my first thought when I got the job was to pay off all my debt and sock the rest away. I'm just not sure the best way to maximize that money that I save.

Gin 1984: my weekly spending will not be much, hotel and food, and that will be covered by a $128/day per diem on top of my salary.

mxt0133 and KittyFooFoo: an emergency fund is a great idea, looks like I should probably have $12,000-18,000 in that fund.

I have a pension through the actors' union and that will be funded during the tour but I'm not sure if I can contribute more to that, and/or if there are other retirement options available - I'll check that out. I can also contribute to my SEP-IRA, can't I? I mean, I'm technically employed by the production but as an actress I would still be considered self-employed, wouldn't I?

KittyFooFoo, I'll see if I can quick put together a monthly spending plan and post it here.

Thanks everyone!

Goldielocks

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #8 on: November 16, 2014, 12:29:40 PM »
First paycheck, pay off friend..

Next, your paid for living accommodation is worth up to $1000 per month in normal working salary.  So pretend that you are bringing home $2100 x 4.1 weeks / 1.25 (taxes)+ $1000 per month.
That is about $7900 per month.

Now what saving percentage do to want to see?  Do you need to save to tide yourself over for a year without work when this runs out?

I recommend thinking about all you want to pay for including:
Health insurance
Parents
Saving for long term personal use items ( a few good clothes, PC).
Saving for a gap year of minimum wage in future.
Student loans.
Retirement.

If this were me, I would : 
Put the car into storage for 10 months. I assume this is a vehicle worth less than $8000.
Talk to parents and let them know you will pay in full when the family business is sold.  Or pay them back at $2000 per month.  They know best about the business, I presume, so may accept that.
Put rest of business money into retirement acct. When you get it,  Or roth style acct, but No touching. 

Save 70% of take home ($4800)
Use that 70% to save for courses, living expenses after. Retirement at only $500 per month.

Use 30% $2100, for my monthly use, clothing, car payment, PC saving at $300 per month,   student loan minimums( no defferal!  And I assume very low interest here, to justify delaying full repayment). Check out a lot of funky thrift stores for clothes.  The more you look , the better clothes you find.

Kill all monthly costs.  Be ruthless.  Keep a very low costphone, basic internet or free WiFi for pc only.  Kill car payment by selling car if you could trade down to a $6000 car later and pull money out now for your courses and PC withimn the year.  You will not want a car payment when this is over in 10 months.  You will want to build your skills, network and resume to help get that next employment.  Set a strong goal to this end.  This includes the ability to not work for several month while you agressively pursue new work in your field.  Everything you do in the next 10 months should target helping or at least not impeding that goal.

But...
Have fun, you decide how to spend your 30%.  It really doesn't matter if you eat out or  buy more clothes new, or keep fancy internet, if you keep to 30% of your salary.

Killing car payment and paying parents will give you a lot more freedom
 Good luck!



GardenFun

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #9 on: November 16, 2014, 12:40:34 PM »
Here's a top-line view of the next 10 months:

Gross Income: $91,000 (wow!) 
Net Income:  $65,000  (Ballpark figure.  Any CPA's have a better estimate?)
Expenses:  $15,000 (Using the $1500/month)
Available money:  $50,000
All Debts:  $37,000
Money still remaining:  $13,000

You can be debt-free in 10 months, plus have $13,000 left.  One option is to use $5500 for an IRA, spend $2000 on items you want, leaving you $5500 for the emergency fund.

If you can make at least $1500/month after this 10-month job is complete, pay off all the debt.  If that level of income is not stable, then make sure your emergency fund contains at least $9000 (which theoretically would mean you could pay off over 90% of your debts). 

I tried to keep everything on the conservative side so the final amount may be higher.  That pads your emergency fund even more. 

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #10 on: November 16, 2014, 12:44:38 PM »
Wow GardenFun, that just put a lot into perspective for me. I won't have as much money remaining as I was hoping, but with the family business payout it's still a good chunk of change.

DAMN, DEBT IS A DIRTY BITCH.

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #11 on: November 16, 2014, 12:59:38 PM »
goldielocks, thank you for your answer even though it made my head hurt with all the badassity!

Just curious - my car is a 2010 Honda Fit which I bought new and now has a Blue Book value of $9,304. The plan is to let my friend use it and he will pay car insurance and maintenance. Why would you put it into storage, assuming that it is valued at less than $8,000?

Ricky

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #12 on: November 16, 2014, 01:07:32 PM »
Wow GardenFun, that just put a lot into perspective for me. I won't have as much money remaining as I was hoping, but with the family business payout it's still a good chunk of change.

DAMN, DEBT IS A DIRTY BITCH.

Assuming you're filing single, I calculated you'd have roughly $72k net income based on tax brackets for 2015. So, maybe the situation is a little better. Plus, he didn't include the sale of your family business windfall. Also, it's not like you have to get rid of all of that debt immediately. All debt is not bad debt. Maybe you can work something out with your parents. I'd pay half of the student loans back and invest the rest. 3.5% is still really low.

Gin1984

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #13 on: November 16, 2014, 01:16:01 PM »
Are you starting the job in 2014 or 2015?

Ricky

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #14 on: November 16, 2014, 01:21:22 PM »
goldielocks, thank you for your answer even though it made my head hurt with all the badassity!

Just curious - my car is a 2010 Honda Fit which I bought new and now has a Blue Book value of $9,304. The plan is to let my friend use it and he will pay car insurance and maintenance. Why would you put it into storage, assuming that it is valued at less than $8,000?
Calculate your depreciation a year and also tack on X amount per month else you're getting screwed.

Gin1984

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #15 on: November 16, 2014, 01:25:09 PM »
Next question, where do you live when not on the road?

plainjane

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #16 on: November 16, 2014, 01:30:10 PM »
Gin 1984: my weekly spending will not be much, hotel and food, and that will be covered by a $128/day per diem on top of my salary.

Given where your job will be taking you, will this be enough to cover all the hotel & food costs?  You should look at what your costs actually will be on the road. (Keeping in mind that you may not have fridges or easy cooking facilities and so will need to rely on more costly food options that are close to hotels.)  Also not mentioned here, do you have other things that will be coming out of your paychecks?  E.g. an agent, union fees, etc.

Is there any chance that this won't go the full 10 months?  If there is a chance, you should consider (after paying off your friend) whether to build an emergency fund _first_, then simultaneously attack the debt & work on the long term savings.

This is a great opportunity financially, and I hope professionally too.

Catbert

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #17 on: November 16, 2014, 01:45:21 PM »
I think you've gotten some good advice.  I'll second the notion of paying back your friend $700. with your very first paycheck. 

Leverage your $128 per diem.  I'm sure it's easy on the road working nights to fall into eating and drinking out with the rest of the cast and spending all your per diem and more.  Try to figure ways to save some of this money.  There are several threads here about "hotel room food" with suggestions of food and meals that can be easily prepared in a hotel room.   

Chrissy

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #18 on: November 16, 2014, 01:51:25 PM »
Production contract?  I think you guys have access to the AEA 401k.  I know the LORT folks do...  I would max it out if possible, but be sure to check out your options to roll it over when the tour is finished.  When I contributed to it, years ago, the fees were very high, and it was all gone before I ever knew anything about rolling it over to my own institution.

Are you sitting down anywhere?  You might be able to rent a furnished apartment on your own, and pocket the rest of the per-diem as well.

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #19 on: November 16, 2014, 02:00:26 PM »
So much great advice and questions! Thanks everyone.

Gin 1984: I'll start the job sometime in December, so 2014. When I'm not on the road my address is in Mill Valley, CA but I don't have a permanent residence. Just a storage unit. Actor's life. I have considered whether or not it would be wise to invest my tour savings in a house in NY so that I have a permanent residence that I can rent out when I'm on the road. Mustachian views on this?

Ricky: thanks for the help regarding take-home. I'd like to hear more about the benefits of paying off all debt vs keeping some.

plainjane & mary w: I think the per diem will be enough to cover costs, but I'm not sure. Last time I did a tour (15 years ago) I often roomed with other castmates to split the cost of hotel rooms. And this time around I hope to find ways to make the most of the hotel fridge and coffeemaker. I'll check out the threads about hotel room food. No agent fee coming out of my paycheck, but 2% union working dues. I will be contracted through Sept 27th but right now the tour is publicly scheduled only through Aug 17th so I suppose there's a chance the contract could end early. It's a hot show though, so most likely more dates will be added.

Chrissy: yep, production contract. There's one 5-week sit-down next summer, other than that it's a week per city. I'll check out the AEA 401k - didn't know anything about it! I just checked and under a production contract there's a 3% employer contribution which is awesome, plus the employee can contribute up to 85% of income - I don't think I'll go that high, though... :) What would be a good strong contribution to make?

I don't currently have health insurance and once I have 12 weeks of this contract under my belt I'll be eligible for incredible health insurance through the union - $99/qtr for great coverage. That won't kick in until two months after I reach those weeks, though - so I'm looking at April. Health insurance was costing me $275/mo until I let it lapse in August due to low income, but now I'll be eligible for lower coverage starting in Jan through Obamacare because I made very little in 2014 - about $19k as of today. I know I should have it even though I have an irrational resentment toward paying for it. Thoughts?

I can't wait to pay back my friend. Definitely a first paycheck priority!
« Last Edit: November 16, 2014, 02:09:04 PM by ommmmaggie »

GizmoTX

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #20 on: November 16, 2014, 02:24:53 PM »
Look into what's called short term health insurance to get you thru the months until you are eligible for your union health insurance. It's likely to be less than Obamacare plans & you are not obligated for a full year.

Chrissy

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #21 on: November 16, 2014, 02:47:30 PM »
Okay, well, maybe get a furnished studio for the sit-down and/or split with castmates for the other parts of the tour... once you've got some relationships established, of course.

Health insurance.  Get it temporarily until the union coverage kicks in.

Don't pay off the student loans.  The interest rate is so low, you would do better putting any extra money in the market.  Do pay off your friends and family, and get that emergency fund going. I'd do a full 12-months of expenses because entertainment careers are unpredictable, around $17,000. If you used the business sale proceeds for debt and EF, you'd still have around $7,000.

You can only contribute $17,500/yr to a 401k.  A 21% contribution should get you there in the 10 months you think this contract will last.  It's the equivalent of about $12,000 in take-home pay.  Plus, you'll get the additional contribution from your producers. 

For left over cash, I suggest opening an account with Vanguard, and buying an index fund.  Read this series on stock investing for more education... http://jlcollinsnh.com/stock-series/

Don't buy a house unless you can pay cash, or pay so much that the mortgage is VERY so low and you could still make the payments even if you were low-income again.

iris lily

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #22 on: November 16, 2014, 02:57:23 PM »
...I have considered whether or not it would be wise to invest my tour savings in a house in NY so that I have a permanent residence that I can rent out when I'm on the road. Mustachian views on this?

...

My gut instinct is NO.

You are a gypsy. You can make that work for you if you keep loose and free with very few possessions. Don't let crap tie you down. Crashing on friends' sofas, renting a room from someone, that's the lifestyle to continue. Pay off all of you debts, contrary to PP there is no good debt. Interest is The Enemy.

I don't see how you can buy a house anyway, how would  you keep up the mortgage payments during periods of unemployment? And renting months at a time, to coincide with you being on the road--not sure how practical that is.

For you, sweetie, investing in index funds is the best way to go so that when you are a little old lady, you will have some assets.

madgeylou

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #23 on: November 16, 2014, 03:31:27 PM »
...I have considered whether or not it would be wise to invest my tour savings in a house in NY so that I have a permanent residence that I can rent out when I'm on the road. Mustachian views on this?

...

My gut instinct is NO.

You are a gypsy. You can make that work for you if you keep loose and free with very few possessions. Don't let crap tie you down. Crashing on friends' sofas, renting a room from someone, that's the lifestyle to continue. Pay off all of you debts, contrary to PP there is no good debt. Interest is The Enemy.

I don't see how you can buy a house anyway, how would  you keep up the mortgage payments during periods of unemployment? And renting months at a time, to coincide with you being on the road--not sure how practical that is.

For you, sweetie, investing in index funds is the best way to go so that when you are a little old lady, you will have some assets.

Totally agree. If you had a stable job you could expect to keep for a while, I would suggest investing before paying off your SLs, too, but you don't. You could have another $19k year next year, in which case future you will be REALLY glad that past you cleared all the debts so you can actually keep that $19k rather than have to send it back to the bank.

Gin1984

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #24 on: November 16, 2014, 03:42:46 PM »
...I have considered whether or not it would be wise to invest my tour savings in a house in NY so that I have a permanent residence that I can rent out when I'm on the road. Mustachian views on this?

...

My gut instinct is NO.

You are a gypsy. You can make that work for you if you keep loose and free with very few possessions. Don't let crap tie you down. Crashing on friends' sofas, renting a room from someone, that's the lifestyle to continue. Pay off all of you debts, contrary to PP there is no good debt. Interest is The Enemy.

I don't see how you can buy a house anyway, how would  you keep up the mortgage payments during periods of unemployment? And renting months at a time, to coincide with you being on the road--not sure how practical that is.

For you, sweetie, investing in index funds is the best way to go so that when you are a little old lady, you will have some assets.

Totally agree. If you had a stable job you could expect to keep for a while, I would suggest investing before paying off your SLs, too, but you don't. You could have another $19k year next year, in which case future you will be REALLY glad that past you cleared all the debts so you can actually keep that $19k rather than have to send it back to the bank.
This is why I say pay off your SLs.  You don't know how much you'll make.  Since you are getting money in 2014, that will probably be a low income year compared to 2015, so run your numbers and decide if that money should be Rpth or additional 401k.  Nevertheless get health insurance, and beef up your EF.

Zamboni

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #25 on: November 16, 2014, 04:45:18 PM »
Congratulations on your steady employment for the near term!

My parents are both professional musicians.  Here is the advice they gave me when I got my first job:

"You better save some of that money, because you never know where you're gonna get a job this good again."

I think you should pay off all of your loans and live very very cheaply this year.  You're already living in hotels, which many people would consider a luxury because you never have to clean a dwelling.  You already get a per diem for food (I hope your per diems are enough, by the way.  Some hotels will cost more.  Consider splitting the hotel room with another person on the tour to save money.)  Save the rest.  Resist the urge to fritter it on fancy clothes, rich food, and fast men.  ;-)

Bear this in mind:  actresses are in the highest demand when they are relatively young and beautiful.  You need to make and save your "old" lady money now.  Read the latest MMM post on investing in your future self.  An extremely small minority get these female stage jobs past 40.  It could be you, because I'm sure you're completely fabulous, but the odds say the roles will dry up.  Save it all if you can.

expatartist

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #26 on: November 16, 2014, 05:04:57 PM »
Re. a house in NY: agree w/other posters it's not the best idea, unless A) you'd pay cash, and B) you'd want to retire there. Property taxes in NY state can be high. Since you'd be managing remotely, 10%+ of any profits would go to the management company.

Mother Fussbudget

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #27 on: November 16, 2014, 05:43:38 PM »
My advice:
1) Invest in a $30 rice cooker from CostCo for the road, and check out rice cooker recipes / recipe books.  You can cook almost anything in one and carry them anywhere - Roger Ebert lived his life on-the-road, and wrote an interesting rice cooker cookbook.  It's a rice cooker, Steamer, and Slow-cooker (Crock Pot) in one device.
2) Pay your friend $700 first.
3) SELL your 2010 Honda Fit, pay down the debt, and put anything left over toward your other debts.  Ask your friend who wants to use it if they'll buy it for $9000.  When you get back from the road, buy a mustachian USED car for cash.
4) Pay down debts & save equally - 50/50 paying off the highest interest loans first.
5) Save in the 401K-like investment mentioned by others in the comments.
6) Once you max out your 401K contributions, begin trying to max out a Roth IRA - pre-tax if possible. Open an IRA/Roth IRA account at Vanguard and contribute up to the annual limit.  Invest in the Vanguard Total Stock Market Index Fund (VTSAX or equivalent fund).
7) After the IRA limit, put the savings in a standard taxable account, buying the same VTSAX or equivalent.
8) (also should be point zero) - HAVE FUN!  Make that character your own, and inhabit her skin for every performance.
« Last Edit: November 17, 2014, 10:24:12 AM by Mother Fussbudget »

CommonCents

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #28 on: November 16, 2014, 05:48:36 PM »
What happens if your friend is in an accident with the car while you are gone?  Talk to him about it - perhaps set in advance an amount he'll pay you for the value of the car if that happen (and he'd get any insurance payout)?  And get the agreement in writing!

Agree your field is uncertain, so it's really important you save for the rainy day/future.  I'd be cautious about the classes (will you have time?  Are they career oriented to help you get better?), and try to keep the clothes under control.  Look at the Black Friday ads for a laptop.

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #29 on: November 16, 2014, 06:14:11 PM »
Thanks again everyone! Lots to take in and organize in my head. I appreciate all the input.

Zamboni

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #30 on: November 16, 2014, 07:00:45 PM »
One book on investing and money management that's pretty good is Millionaire Teacher by Andrew Hallam.  My local library had a copy.  He addresses several items about starting from zero including cars, saving, investing, and it's geared for people who are new to the whole concept.  His advice on index investing aligns pretty well with MMM.

I'm in the camp that you should sell the car if you can cover what you owe.  Is your friend just driving it on a short trip once a week to keep the battery from dying, or will this be his primary car for the next 10 months?  If it's the former, then maybe it could work.  If the latter, then he needs to provide you some money to cover depreciation and wear and tear.  Mileage does devalue a car, after all, which is why all companies reimburse much more than gas money if an employee drives his or her own car on a business trip.  You can then save the money that would go to payments.  People often sell cars when they are heading overseas for a stint; your situation is no different.

RedMustache

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #31 on: November 16, 2014, 07:53:12 PM »
I'm stuck on the car...  unless this is the friend that gave you $700, I would expect him to make some kind of car payment to you.  What if he took the car across the country and put 20,000 miles on it?  1000 miles a month isn't that hard to do, and it's going to further depreciate your vehicle and make the repairs that much sooner for you. And if it is the friend who gave you the $700, well, I'd take $700 off the bill during the time he's using it.

Pay off the debts and get an emergency fund going.  Great advice in the thread.

 

MacGyverIt

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #32 on: November 16, 2014, 09:54:54 PM »
Leverage your $128 per diem.  I'm sure it's easy on the road working nights to fall into eating and drinking out with the rest of the cast and spending all your per diem and more.  Try to figure ways to save some of this money.  There are several threads here about "hotel room food" with suggestions of food and meals that can be easily prepared in a hotel room.

+1 -- if you can make your own hotel arrangements, try to stick with the same low cost hotel chain. You'll soon accrue enough bonus points to get access to any sort of executive lounge option/free breakfast which could mean free bfast and at least fresh fruit/snacks for dinner as well as potential bonus points you can later cash out as a gift card for something useful (Best Buy or Amazon gift cards for an opened box new computer -- always buy open box if you can't buy used from eBay! Like a car, don't pay for a new computer!!)

Also, if you are staying in one hotel for a longer than average stay, some managers are willing to negotiate a lower charge for the room -- especially if you are already a rewards points accruing "valued guest".

Goldielocks

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #33 on: November 16, 2014, 11:30:27 PM »
goldielocks, thank you for your answer even though it made my head hurt with all the badassity!

Just curious - my car is a 2010 Honda Fit which I bought new and now has a Blue Book value of $9,304. The plan is to let my friend use it and he will pay car insurance and maintenance. Why would you put it into storage, assuming that it is valued at less than $8,000?

If it is much over $8000 it could make sense to sell and then buy a replacement for $6000 or so.

I am on the fence for selling mine.  I put it in storage when we can go to one car already.  But I know the car, and we will have three drivers in the family soon, and I would likely replace it with a similar car cost.  If I could get $10 or $12k for it, I would definitely sell.

Storage means minimal or no insurance, and I have a garage, so all OK.

I don't think it would lend it to a friend, unless they are also paying me $.20 per mile wear and tear, plus they pay insurance, gas ,and maintenance.  Not to mention giving a damage deposit to cover an insurance deductable.




CommonCents

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #34 on: November 17, 2014, 06:55:24 AM »
One more thing on the car - make sure you both understand what maintenance is. Does it include oil changes?  Annual inspection fee?  Regular car washes? Fixing everything the mechanic recommends or just what he thinks necessary?  He might ignore getting a sound checked out. You might decide not to replace something if it's your car, your decision, but where (if any leeway) does he have?  The more details you work out in advance, treating this as a business transaction, the smoother it'll go.

ommmmaggie

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #35 on: November 19, 2014, 11:02:44 AM »
All right y'all, I'm back with more questions.

First though, thanks for kicking my ass a bit about the car. I'm going to keep it and I'm talking to my friend about working out a situation that will feel more equitable. We'll get it in writing. I also got short-term health insurance which is costing me half of what my last policy was costing me, so woot! Thanks Gizmotx for that suggestion.

OKAY! So my next question is about timeline and allocating my savings/investments. Here's the rundown. By the way, I'm a 41-year-old single female, in case that has any bearing on what's best.

401(k): I've never had one before, but I signed up to have 10% automatically deducted from my paycheck on the tour. I believe there is an employer contribution of 3%. I was afraid to have them deduct more until I can see an actual paystub and know how much the take-home is. But I can probably change that amount easily.

I currently have both a Roth IRA and a SEP IRA. Both are housed at Calvert at the moment, and I'm looking into transferring them both to Vanguard. That's what I should do, right?
Roth: $8,739.86
SEP: $2,787.28

I also have a pension with Actors' Equity that will currently pay me a little over $300/mo starting at age 65. After this tour that amount should be double, and will continue to rise as I work more over the years, of course.

I don't have a money market deposit account but was reading about them in a Suze Orman book and thinking that might be a good thing to have.

I have several savings accounts with Capital One 360, earning an awesome 0.75% APY.

Okay, so given all that:

1. Paying off debt comes first, right? While I'm paying off debt, how much should I be allocating to my emergency savings fund? 50/50 split, or should I be dumping everything into my debt until it's gone?

2. Where is a good place to house my emergency fund? Would an MMDA be a good place for that to sit?

3. Once the debt is gone and my emergency fund is fully funded ($15,000 is my goal), how should I allocate the rest of my savings?

Teach me, fellow Mustachians. Thanks!
« Last Edit: November 19, 2014, 11:07:05 AM by ommmmaggie »

Gin1984

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #36 on: November 19, 2014, 12:20:12 PM »
1) Depends on what you feel comfortable with.   Personally, I'd do the math on how much you will get, instead of waiting because that is always an approximate.  Then I would max out your 401k, keep enough to survive for a month, then pay down your debts fast.  I assume you can find a basic job within a month of getting back home.  If that is not true, figure out how long it would take, divide it by the amount of time left (after you have saved the money for a month-$1500) and save that along with paying the debt down. 
2)I'd put it is capital 1 360 to get the extra money from a referral, then move it to sallie Mae bank.  But that is because I like those  online banks. 
3) Depends on when you want to retire, how stable you think you are, etc.  If I had the money I'd be putting it in a 401k then a Roth IRA, but I am slightly different that people here.  Some prefer 401K then traditional IRA, until you no longer can access both.

GardenFun

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #37 on: November 19, 2014, 01:57:35 PM »
1.  If the tour money is guaranteed, I would pay off my debts first, then build up the savings.  If there is a chance something could go wrong (i.e. injury) and you lose the rest of the pay, I would build up the emergency fund first.

2.  I would combine all your savings accounts into one account, preferably an account that pays a good interest rate.  Money Markets can have higher minimum balance requirements so keep that in mind.  Simplicity is your friend. 

3.  To second Gin1984's Roth IRA preference, you can also access the principal from a Roth without incurring penalty, as long as the fund is open for 5 years.  If you may need it sooner, open a taxable index fund with Vanguard or Fidelity. 

I would keep it to four main investments:
1. 401k
2. Roth/SEP IRA's at Vanguard
3. Savings/MM Account for emergency fund
4. Taxable mutual fund account at Vanguard or Fidelity
    - Some people like to keep their retirement vs. taxable money separate, some don't mind keeping it at the same place.


FarmerPete

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Re: I'm about to make a lot of money. Help me be a smart Mustachian!
« Reply #38 on: November 20, 2014, 07:23:01 AM »
Sell the car.  Sell it to your friend.  Offer to write a contract where they can sell the car to you for full KBBV in 1 year.  If your friend isn't interested, then sell it to anyone with cash.  A car sitting for 1 year needs to be stored properly, and that costs $$$.  It's also depreciating.  Why pay money to store an item that will depreciate?  Sell it, stock that money away and use it to buy a car in 10 months.

For retirement, you're going to have a very high tax rate due to the large paychecks.  By maxing out your 401k, you'll get to keep a much larger percentage of the remainder.  So for instance, you're probably going to be in the 25-28% marginal tax rate bracket.  That means that if you max out your 401k, for every dollar that you put in your 401k, it'll only cost you ~$0.75 from take home pay.  For savings, don't forget that you can add to an IRA and/or Roth IRA in 2014 and 2015.  You have till April 15th 2015 to add to your IRA/Roth IRa for 2014.