Author Topic: Making the leap into the MMM lifestyle  (Read 5257 times)

takara159

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Making the leap into the MMM lifestyle
« on: April 04, 2013, 09:18:04 PM »
First off hello to everyone. I am a newbie to this forum and to the MMM lifestyle but my new wife and I are embracing it fully. A friend of ours introduced us to the blog right before he quit his job and became FI. So while he and his wife are living the laid back lifestyle, we toil away in our cubicles. So we are on a mission to catch up to them. Below is a little insite into our current situation and would appreciate any suggestions from the community on what we can do to improve things even further.

The Good:
I earn about $140k gross income
Wife earns about 60k gross
We have about $250,000 in investments + $150,000 in cash sitting a money market.
Contributing the max matching to my 401k
Reduced my dining out monthly expenses from $500 down to about $50
Wife is saving 100% of her income , is consolidating all her 401k and IRAs from previous jobs into a Vanguard IRA.
I am saving about 50% of my income and moving it into Vanguard Index Funds
I take the bus to work every day.
We have one car that's completely paid off and it takes us to the transit center and to Costco on the weekends.
Nearly every financial decision right down to buying a cookie at Specialties is analyzed and weighted before being executed
Wife has rental property that rakes in a few extra dollars after we factor in the mortgage on the property.

The Not So Good:
I still have a car that's financed albeit at a 2.5% interest rate and with a monthly payment of $314 . Trying to sell it so we can throw that money into more investments.
I have a mortgage that's underwater by about 30k at the moment making a $1700 a month payment
« Last Edit: April 06, 2013, 01:29:40 PM by takara159 »

MtnGal

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Re: Making the leap into the MMM lifestyle
« Reply #1 on: April 05, 2013, 09:13:56 AM »
Congrats on changing to a more mustachian lifestyle. You two are much further ahead than I am, so perhaps I shouldn't be giving advice. My only question is why have you not paid off the car to stop paying interest? Unless you have found some amazing Money Market, I doubt you are making 2.5% on it. With 150k there, why not pay off the loan and then sell it? You'll have less hassle at the time of sale trying to get the title to the buyer.

Otherwise, you are doing great. Keep up the good work!

sherr

  • Pencil Stache
  • ****
  • Posts: 687
  • Age: 34
  • Location: North Carolina
Re: Making the leap into the MMM lifestyle
« Reply #2 on: April 05, 2013, 11:28:52 AM »
Congrats on changing to a more mustachian lifestyle. You two are much further ahead than I am, so perhaps I shouldn't be giving advice. My only question is why have you not paid off the car to stop paying interest? Unless you have found some amazing Money Market, I doubt you are making 2.5% on it. With 150k there, why not pay off the loan and then sell it? You'll have less hassle at the time of sale trying to get the title to the buyer.

Otherwise, you are doing great. Keep up the good work!

I agree.

I would actually go so far as to say do the same thing for the mortgage. You should either invest the Money Market money in something that gets significant interest (like an index fund tracking the S&P 500 for example) or use it to pay off debts. Having it just sit there seems like a waste to me.

Edit: adding link to relevant article:
http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/
« Last Edit: April 05, 2013, 11:31:17 AM by sherr »

directionseeker

  • Stubble
  • **
  • Posts: 107
  • Location: Singapore
    • Let's Retire!
Re: Making the leap into the MMM lifestyle
« Reply #3 on: April 06, 2013, 06:55:24 AM »
You might want to get creative and learn some other skills that helps to decrease your need for more money and enhance your life. I first read this idea from the Early Retirement Extreme book.

The idea is learn more life skill that spread across various area of your life. The purpose is not to become expert in so many area (you won't be able to do it anyway) but to educate yourself until an acceptable skill level. With your new skill at that new area of life, you will reduce your needs for more money and at the same time might be able to help other people (building some social bonding at the same time).

These are my opinions on your situation and I hope I have provided you an alternative thinking on where you go from here onwards.

meadow lark

  • Magnum Stache
  • ******
  • Posts: 4827
Re: Making the leap into the MMM lifestyle
« Reply #4 on: April 07, 2013, 01:04:23 PM »
Sounds like you were doing well before finding MMM - things will accelerate now!  Welcome!

Prob8

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Making the leap into the MMM lifestyle
« Reply #5 on: April 07, 2013, 03:55:14 PM »
If you haven't done so already, start at the first MMM post and work your way forward.  Along the way you will find a variety of tips to save money and focus/change your state of mind.  It sounds like you have high savings rate already but you might want to look at each expense in your budget to see if it can be reduced or eliminated. 

I also agree with some of the other commenters regarding having that much money in a money market.  If you aren't sure what to do with it . . .eliminate your debt or check out some of the blogs by guest writers on MMM's site (Jim Collins and Brandon Turner come to mind).

You are well on your way and good luck on the journey to FI.

A440

  • Stubble
  • **
  • Posts: 100
Re: Making the leap into the MMM lifestyle
« Reply #6 on: April 07, 2013, 08:49:48 PM »
If there is any chance you might want to do a back-door Roth, then your wife would need to consolidate her previous retirement savings into some sort of 401k--it could be a solo 401k, if she has any self-employment earnings or even into her current employers 401k, if the fees are reasonable.  How useful the back-door Roth would be would vary.  If you want to become FI in 5 years and never work again, then maybe less useful.

Southern Dude

  • 5 O'Clock Shadow
  • *
  • Posts: 52
  • Location: Wichita, KS
Re: Making the leap into the MMM lifestyle
« Reply #7 on: May 08, 2013, 12:07:49 AM »
First, definitely put the cash in the money market to better use. That's too much cash to have sitting around when you're trying to grow the nest egg.

Second, I wonder if its time for your wife to say goodbye to the cubicle life and pursue other more mustachian pursuits? You already have a decent $400k warchest built up, and if you stick to mustachian principles, I think the both of you could easily live off your salary and continue to save a good chunk. In addition, while enjoying the fact that she no longer has to work a 9 to 5, your wife can explore other ways to generate passive income.

My cousin's family unit went this route and it has worked out great. His wife quit her full time job two years ago to focus on buying and managing rental properties. She now manages a number of properties which are paying for themselves while at the same time generating a modest income stream. Once they reach a second "tipping point" he can quit his job and join the rental-property project, or perhaps pursue something completely different.

While you work a bit longer, she could make the leap and blaze the path...

Starstuff

  • 5 O'Clock Shadow
  • *
  • Posts: 92
  • Age: 30
  • Location: Ohio
Re: Making the leap into the MMM lifestyle
« Reply #8 on: May 08, 2013, 07:27:10 AM »
Have you attempted a refi or modification of your current mortgage? If it was originated before June 2009 and is owned by Freddie/Fannie you could refinance even though you're underwater. Or, call your bank and ask if they'll modify your loan to get a better rate.