Case Study: Most antimustachian poster ever?

[Astromarine]

[EDIT] - This is a cleaned up, much less confusing and more informative than my original post. It might be that it'll make the first thirty or so replies read funny, in that case I apologize to the people that patiently answered my original diatribe. Especially swissmade, for helping me figure out the parallels between swiss systems and US ones.

Hi. I've found MMM only about a couple weeks ago, been devouring everything since the beginning since, and I actually feel like crying a little bit. I'm 38 years old, SO's 37. We were working for very little in Portugal until our mid-twenties, then we got a golden opportunity to come live and work in Switzerland. Our job has paid a shitton of cash for years. But we've made a bunch of really silly financial mistakes, which all served to effectively zero out our cash reserves each time. The last of these was two years ago, so we've gotten a bit of cash back. But until Mr Double M came along, we wasted so much money on random shit, videogames, buying expensive crap as therapy, etc that the reserves I have right now to plan my future with are relatively low. Also at 38 I'm not sure I can call my plan "early" retirement anymore, my current hope is that I can do it by 45. I have a newborn son, a bunch of fat I can cut off my expense sheet, and an amazing salary that can (hopefully) help me get there that soon. We'll see.

So here's my current financial situation. Note that this is after I've made some changes already to become more Mustachian, while some special circumstances (inlaws living with us for a few months now, taking care of groceries themselves) mean that other info needs to wait a while before I have actual data. So it's the situation *now*, not the situation that led me to this place.

All values are in CHF, but it's enough of an equivalency to USD that you can just take it at that.

Income:
Salary for both of us (after taxes)  210,000

Notes: our salary is our only source of income. Our 'roth' and '401k' appreciate, pay dividends, and compound, but it's all automatically reinvested so it's not real disposable income, just a thing that makes 65 year old me richer.

Expenses (yearly):
car insurance      2450
tv tax             460
Heat               1200
health insurance   6500
Tire change        240
Yearly Inspection  540
accountant         300
road tax           360
rent               33000
Net/TV/Phone       1300
gas                1300
club membership    1200
Gym Membership     1200
Groceries          12000

Total              62050

Notes: Groceries are estimates. The problem with the way I was living my life up until VERY recently is that I didn't have a clue where the money was going. Videogames, expensive crap, gadgets, restaurants/takeout/lattes/etc were basically melting our money. Now it's getting slowly but surely nailed down, so without the stupidity hemorrage, I have about 70k or so I can save extra per year.

Savings (yearly):
2 pillar (401k)   12000
3A pillar (roth)  13632
3B pillar (roth)  26712
Low Risk Funds    24000

Total:            76344

Notes: This is the automated saving I had going before finding MMM. Some like the 401k come from way back, others I've started much more recently (I've started buying funds a couple months ago).

Assets:
fully paid Mazda CX-7  30000
roth                   200000
Funds                  5000
401k                   150000(?)
Funds in son's name    100000

Notes: I *have* money on my 401k, but I'm not sure how much. Statements are yearly, I'll get mine in a few weeks. But it should be around that.

 
Liabilities:
None. Thankfully, even though I've spent money like an absolute idiot, I've never believed in getting into debt for anything. My car is fully paid, I rent an apartment, my credit cards are fully paid each month, etc.

Goals/Questions:
My goal is to get financial independence and leave the desk I'm nailed to. This is going to take a while, because (as it's visible from the discrepancy between by large income and my low assets) I'll be starting mostly from scratch. In the past few weeks I've slimmed down considerably already (my expenses were about 2k a month higher than this before I started reading MMM) and have finally relinquished the stupid attitude I had, where I was an engineer, not an economist, knew nothing about money and was fine that way because my salary was so big I didn't need to care. The expenses can still be cut considerably, and as you saw I have 70k I can save per year. Future should be OK if this was all.

But now there's the newborn. All these plans and such are assuming my wife and I worked 100%. But neither of us want that now, we'd like to not completely miss our son's early years. So that means reduced income. I don't think we can afford for one of us to quit entirely (and to be frank we don't want to) which means a babysitter. We also finally started talking about our apartment, the rent, a new house, and slowly losing the fear of real estate that our previous costly mistake raised in us.

This is then the reason I'm writing this: I'm too new at this shit to be able to add all this new information to my plan. Can you more experienced people guide me through the near future? What should i do to keep my goal of FI at 45? Should we get the babysitter, do you think we can still do it if one of us drops out of work, any advice? I've read the MMM articles on how little a baby costs, but that's not my fear. He was already retired and FI when he had the kid, I have to now start planning for mine with this extra difficulty added on. Also, what about renting vs owning? If I do own, I expect the advice is to keep paying just the interest and invest the money on investments that pay more than the interest rate? Or would it be better to stay where I am, and ammass a big enough stash that I can just buy a house by the time I retire?

Thank you all for your responses so far, and I hope this edited post clarifies and crystallizes what I actually mean to ask.

[netskyblue]

HOW are you spending 2k in groceries a month?  How can two people even EAT that much?!  I'm thinking you could be eating prime cuts of grass-fed meat, and 100% organic produce for WAY under $1000.  2k is more than I earn in a month, and I eat well, local & fresh when I can.  I'm boggled!

[swick]

Welcome to the forums!

The great news is you have an awesome income and no debt.

The first thing you need to do is break down your current spending. At least in your post, you have it all lumped together, which makes it very difficult to see how to make chances, and in your case, a lot of little changes would add up to some serious coin.

You might also want to set up a budget or spending plan. If you have lots of extra money that is just being "blown" then having spending categories might be useful for you, as well as writing down all your purchases. It would also probably help to build savings categories into your budgets and treat them like a bill.

[Astromarine]

netskyblue: we DO buy too much on expensive food and whatever, but also remember that: http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Switzerland&country2=United+States

Swick: yeah, I realize that it's all a bit fuzzy at the moment. I'm taking care of it, but it's literally a case of me not actually *knowing* any of the specifics. This is a problem when you have the income but don't have a plan to keep it. It just flows, and you don't pay attention to where, and you don't keep in your head how much you've spent on what because, y'know, you don't need to. We've never actually *ran out* of money, we always have enough to pay for every stupid mistake or unconscious expense we make, so I just never bothered to figure it out until now.

I don't think I want a budget, (as in, future planning) because my plan is just to grow a bigger and bigger mustache every month, up until I don't have much more fat to cut. What I *do* need is a transaction recording, so that I know where it WENT, rather than where it should go.

[ZiziPB]

I don't think I want a budget, (as in, future planning) because my plan is just to grow a bigger and bigger mustache every month, up until I don't have much more fat to cut. What I *do* need is a transaction recording, so that I know where it WENT, rather than where it should go.

I think you need both but you should start with keeping track of the money you spend for a couple of month.  I mean write down on paper or record using some app every single $ (or CHF, in your case) you spend.  Then build a budget based on that, post here and ask for advice.  It is mundane but until you do that, there is no way you can change your spending habits.

[Guizmo]

With that much income, you'll be golden once you clean up your act. Now checking that index tool you linked I put in a link for NYC, where I used to live and Basel, since I have heard of FC Basel and couldn't for the life of me remember the more famous Geneva. Anyways, it seems like it is a wash about as expensive when you include rent. I lived in NYC with higher taxes on 40k. Once you figure out where the fat is, you should be able to trim it pretty easily. Regarding your living situation, with rent that high, that might equal about a 500-600k mortgage. You might be able to buy something for the same amount as you are renting. Maybe it works, maybe it doesn't this back-of-napkin calculation tells me that you should do the math and see if it makes sense for your family. Boa sorte!

[Astromarine]

Izeve: sure. My plan IS to update this thread with as much information as I can, since a big part of my mustachio grooming right now is finding out that exact information. That's why my first few questions were about general strategy related to my car, my rent/buy quandary, and my work/educate uncertainty.

[gimp]

I agree with what others have said regarding your first priority.

In december, you must track every single dollar you spend. Not "$100 on groceries" but "$2.50 on packaged ham, 200g; $4 on cheese, 250g; $1 on milk, 1L" etc. Every individual item or bill with as much detail.

I guarantee that after a month (more likely a week) you'll figure out how to cut your spending noticeably. "I just spent $11 on X in small, fancy, convenient packaging when the same thing can cost $3 in a single half-kg package."

[ZiziPB]

That's why my first few questions were about general strategy related to my car, my rent/buy quandary, and my work/educate uncertainty.

Until you know the exact numbers "coming in" and "going out", there is no way to answer general questions either.  Keep the car, continue renting (in other words, don't make any drastic changes (other than stopping spending 1800 per month on computer games ;-)) until you figure out the details of your financial situation.  The last thing you want is to make some big changes (like buying a new car or house) on impulse and then realize that it was not a good decision given your particular situation.  You have only been reading MMM for 3 days ;-)

[huadpe]

Obviously the answers to the above questions are much more important, but inquiring minds want to know:

What the heck did you buy for 1800 CHF worth of video games?!  Did you get both a PS4 and an Xbox1 or something?

Edit to add something helpful:  I don't know if Mint or an equivalent exists for Switzerland, but I bet you can get some detail just by going over credit card statements and the like.  Ideally you'd like something that does it automatically since that's easier and more accurate, but it'll be worth it to try and autopsy your prior spending. 

[willn]

I don't think I want a budget, (as in, future planning) because my plan is just to grow a bigger and bigger mustache every month, up until I don't have much more fat to cut. What I *do* need is a transaction recording, so that I know where it WENT, rather than where it should go.

respectfully, let me shout "WRONG ANSWER!"

A budget is you telling your money what to do moving forward.   It is an invaluable tool when you are starting out on this to develop goals and stick to them.  It is a chance for you and your family to decide where you want to be, not where you went.  It is a communication tool so that you and your spouse are deciding together and working together on those decisions.

Goals don't work unless they are specific, measurable, achievable, and have  time limit. That's pretty much a budget right there.

Tips: be flexible, realistic, and listen to each others wishes. Compromise. Don't cut out all comforts just because you feel stupid now about past spending.  Life is still to be lived in the present.  Do a monthly budget, meet two weeks later to see how you did, and make adjustments if necessary.

Don't worry about fancy tools to do it.  A legal pad stuck to the refridgerator with income at the top, expenses subtracted one after the other until you get to zero--zero because you are accounting for every penny into savings, investment, etc.

And congratulations.  You are now an adult.  I was older than you when I did the same, by the way.

[StarryC]

Yes, keep track.
Yes, you need a budget.

"Pay yourself first."  The key to this is having a budget.  So if you want to save, you need to put that money in a savings account immediately upon receiving it so it doesn't look like it is just "there" to "spend" and flow out on whatever.  But how much can you put in the savings account?  You only know if you have a budget!

For now, I would say your budget should include:
Income: $17,500 (A MONTH)
Rent: $2,800
Food: $2,000
Health Care: $500
"Utilities": $1,000 (you should break that up and figure out where it is going)
Buffer for learning: $2,000.  That is, $200 a week each to spend wherever, and $400 to keep for that thing you forgot.

Expenses: $8,300. The median income in Switzerland is 75,000 CHF.  By living on $8,300 a month you are living substantial better than more than half of people.

Savings: $9,200.  If you get paid on 11/29 or 12/2, create an account for savings that is just cash or "money market" Probably 1% interest with no risk.  Put $9,200 in it on the day you get paid.  Try to live on the rest.  ($8,300).  Track it.  If you succeed, and believe you can continue succeeding, you are fine.  You'd be saving 50% of your income, and be able to retire in 17 years, at 55.  If you want to further optimize, you can do that, and get your work time shorter.

[Russ]

I disagree that you *must* have a budget, although they can be helpful tools. I agree that you need to know exactly where your money's going in order to most effectively make changes. You can do this post-spending with Mint, a notebook, etc.

Also, my car is 2 years old, bought new, and does something like 23-25 mpg. Should I sell it and buy a worse car, even though it's fully paid?

Step one is to not automatically think of "less expensive" as "worse"

[Cinder]

I'm not sure if you have anything like mint.com that would work for where you are, but I'm sure any of the other budget/accounting software (Quickbooks, Quicken, GnuCash, YNAB) would work, as well as just copying it down into a spreadsheet (Excel, Google Docs). 

Your Bank/Credit cards should have some way to download your bank statements that can be imported into some of the programs.  If you have any specific questions about setting up a spreadsheet, importing historical data, etc, I'm sure people here will chime in to help.

I'm glad you've woken up, and can begin to get your life on track!

[netskyblue]

Also, my car is 2 years old, bought new, and does something like 23-25 mpg. Should I sell it and buy a worse car, even though it's fully paid?

I wouldn't at this point.  The biggest amount of depreciation has already happened, any interest you may have owed has already been paid in full.  I don't personally think it would be wise to throw away 10 years of driving potential, and many years that should require only very minor maintenance, for for the few thousand you might come out ahead right now.  Especially at your income level.  4-6k isn't going to make as big of a deal in YOUR financial future as it might to someone making a tenth of what you earn.

I, too, bought a brand-new car 2.5 years ago.  I don't regret it, but it's not something I would do again.  Just one of those once-in-a-lifetime things.  Mine is paid off as well, and I intend to drive it for a good 10 years, provided nothing happens to it.  When the time comes to replace it, I'll probably choose something 3-5 years old, low mileage if I can get it.

[meadow lark]

Congratulations on becoming a father!  Your life is in a whirlwind of change right now.  I would move kind of slow. (I am gonna make a bunch of assumptions in this post, so tell me if I am wrong.) This may not be a great month for your wife to try to change everything about how she interacts with money.  I would say, your hair is not on fire.  Even without trying too hard you have proven you can live within your means (no debt), so lower your means.  I like the idea of just pulling out money when you get paid and putting it into a checking account.  But don't start with half your paycheck!  Pull out $1000 this month.  See how it goes.  DO NOT FIGHT WITH YOUR WIFE ABOUT iT.  That is not what she needs right after having a baby.  Just in case you, or someone else reading this, doesn't know, pregnancy and the year after birth are hard times for women to make changes.  We are programmed by nature to be conservative during this period as a way to protect ourselves and our babies.  Even when the conservative choices don't make sense!  If your wife is interested in making changes, great.  If not, make small ones.  Next month pull out $2000 and put it away.  This current energy, enthusiasm, and desperation is probably related to being a new father - excellent!  Your new job is to become financially responsible.  I know you can do it!  But get some sleep too.

[Astromarine]

Hi guys, thanks a lot for all the helpful posts!

I'll try to answer a few questions (without referring to individual posters because yaaargh so many!)

I asked my wife and apparently we DON'T eat on 2k from the supermarket. (her words: OF COURSE we don't are you nuts?) However, we end up spending about that per month anyway on food, purely because we eat out so often At 40 bucks per meal minimum for both, with 60 or 80 buck meals being not that uncommon, it's a huge waste of money.

I also forgot to mention (will add this to the first post): That Assets line is constantly growing. I've been putting 2k in there every month for a while, after stumbling into the MMM site we already upped it to 5k a month. it's MUCH lower returns than the Vanguard 500 or the other usual suggestions, and I have a meeting tomorrow with my bank manager to switch to something closer to it. It's going to continue to go up as I look into my finances and make more cuts on the stupid side of the balance sheet.

Also, relax. I'm fully on board with the savings side of this blog, and so's the wife. Like I said, I have a TON of stuff I can cut without even breaking a sweat. And both of us are on board with trying to make it with 8k a month or less. It's only at that point that I'll even have to consider serious mustachian levels of frugality. That's for much later, because as Meadow Lark points out, year one of the kidpocalypse is not when I should do anything drastic.

As for my initial questions: A couple people mentioned the car, and I think I'm gonna do what netskyblue said and keep the car and consider it a sunk cost, while at the same time reducing its usage as much as possible. Thanks guys.

The other stuff is what REALLY concerns me. I look at all you whippersnappers retiring in your mid 30s, and I just feel like I lost a HUGE opportunity. Starting with a great income but relatively low assets, at my age, I feel I need to kinda have a sound plan from the start, as I won't get too many chances to retire before 65 if I fuck up the first try. This is what I'm trying to nail down.

Sticking only to that, and forgetting a bit my absurd habits of the past:

I have a newborn son (not home yet, still at hospital. preemie. Thanks for the thoughts, Meadow). I want to be with him and so does the wife, but I'm at the same time trying to make a plan for early retirement that kind of hinges on us keeping our jobs to fund it.

let's for simplicity say that I can live on 8k a month at my current place, a rental that goes for 3.5. I have (say) 150k in a funds account I can access at will to deposit or withdraw, and I can put let's say 9k a month into it. What should I plan to do (not in a rush, of course, but everybody needs an initial plan) regarding my wish for early retirement, my kid, and the fact that I live in an expensive rental? Should I plan to buy a house? (call it 2.8% interest atm)? Should I stay for now and just focus on growing my investments until I can make them able to support this rent? Should one or both of us sacrifice income to stay with our son, but sacrificing the speed of our exit from the job market?

Thanks all again for all the help. I'll work on getting those specific for you guys.

[Guizmo]

To retire early, with your income, and debt levels should still be very feasible. You need to, not to beat a dead horse here, but spend less and have assets that produce income. What I am personally aiming for is primarily rental income from properties and dividend income from stocks. Once I hit regular retirement age, I will seek to start receiving payments from my 401k and if I continue in the job I have now for 10 years, perhaps a small pension.

Not sure how it is in Switzerland, but if you do wish to retire early and are not able to access assets meant for retirement like in a 401k or pension (whatever equivalent they may be) until you are way older then you have to start saving in investment accounts not specifically meant for retirement like our taxable investment accounts. You'll be able to invest in stocks that pay dividends, etc and when you have enough you can potentially retire.

[Astromarine]

To retire early, with your income, and debt levels should still be very feasible. You need to, not to beat a dead horse here, but spend less and have assets that produce income. What I am personally aiming for is primarily rental income from properties and dividend income from stocks. Once I hit regular retirement age, I will seek to start receiving payments from my 401k and if I continue in the job I have now for 10 years, perhaps a small pension.

Not sure how it is in Switzerland, but if you do wish to retire early and are not able to access assets meant for retirement like in a 401k or pension (whatever equivalent they may be) until you are way older then you have to start saving in investment accounts not specifically meant for retirement like our taxable investment accounts. You'll be able to invest in stocks that pay dividends, etc and when you have enough you can potentially retire.

to be honest I don't really know what a 401k is, but we do have some stuff for retirement. Including an account we can put money into that will compound to supplement the minimum retirement plan that the state guarantees. For years now I've maxed the amount on that every year, for both me and the wife.

As for rentals properties, I'd be up for that, but again the market here is kinda ridiculous. I haven't look at rental properties specifically, as those are a different animal from houses I'd actually live in, but in the place I live in, a house worth the move would probably start at 800k. Prices are insane.

[kkbmustang]

I just wanted to hop on to say congrats on the new baby. Being a mom to a preemie is something with which I am intimately familiar and, not that you asked, but I want you and your wife to know that the first days home for mom while baby is still in the hospital are emotionally exhausting and gut wrenching. I'd agree with Meadow Lark that even if she agrees with you in theory, perhaps be prepared to cut her (and yourself!) some slack if she blows the food budget on takeout or whatever.

I think getting through a traumatic birth and 3 weeks in the NICU was like someone ripped my heart out and punched me in the gut while simultaneously rubbing salt in open wounds. In other words, it SUCKED. It is by far the hardest thing I've ever done and I've been through some serious life-or-death shit.

Good luck to you both. You're in a great financial position from an income generation perspective and you'll get it sorted out. My husband and I found MMM a little over a year and a half ago and we're 40 and 43 respectively. Being aware and willing to take action is a huge first step. Welcome to the forums.

[happy]

LOL you're all youngsters. Look its never too late.

I think your first step should be to learn to scrutinise everything you spend money on. Do you really need to buy it? Could you buy it cheaper, get it secondhand, better still get it free from Freecycle, make do with something you've already got or go without? 
Look at every bill that comes...how could you spend less on electricity? Etc.

Some of us budget, some of us don't. Some of us track, and some of us don't.  Personally I track intermittently. It was helpful to get everything written down that I spend money on in a year, so I could look at what I could cut.

I think you should accumulate some stash before you buy a house, so as to minimise your mortgage. Do the maths on renting versus buying. Don't be afraid to rent if that works out best. Look at your local market and take that into account - it is overvalued or under valued?

Regarding the car, I would also plan to keep it for a very long time and minimise its use. If you had bad debt I would say sell it but you don't. Just don't sell it in 5 years and buy another new one.

Finally I would have fun figuring out your retirement goals. How much will you need? How long will it take? Do you want to work less now to be with your child and take longer to get there? Or go flat out? If you can put some concrete numbers to these questions, it might help you decide.

[Left]

hm, it's an odd method, but could you not make a budget then each time you get paid (not sure how often). put 40% of it into savings before spending any of it. After that, you have 60% of the income to spend. If you try to do like you are now, you'll run out and be forced to go without it. I'm not suggesting you go without food/house until the next paycheck because you are "out" of spending money. But why not act like you are? If you run out of "food" money, then eat only beans/rice until the next paycheck. If you run out of "house" money, then you have to give up the TV/internet until the next paycheck. If you run out of "gas" money, you can only go to work in car and to buy food, no other car usage. You'll eventually learn how to budget because you don't like these "punishments".

It might be easier for me since I'm single and I don't feel bad about depriving myself of "luxery" food, TV... I don't know how I'd feel if I had to force my wife to do it if she wasn't on board. And I wouldn't force a baby to go without food either :S

[Astromarine]

If you run out of "gas" money, you can only go to work in car and to buy food, no other car usage.

Please. I bike to work now. :D

Though I do need the car every day. Newborn's in a hospital around 30 miles away.

[Left]

hm then you won't run out of gas money :) And you can pocket the extra then and put it into savings...

[Pixelshot]

Congrats new dad! I am a father of a 3-year old and love it. I spend most of my days with him (my wife works full time) and we are trying to work toward some kind of shared-work/shared-parenting situation so that we both can spend as much time with him as possible. Totally worth the sacrifices, even though they don't feel like sacrifices.

One tip that I thought was worth sharing that has helped me a lot (I'm also a new MMM reader):
Get a credit card that you and your wife use for ALL of your expenses (or at least all possible). I use the American Express Blue Cash Preferred. I don't know what the Swiss equivalent would be but it has a cash back incentive (6% on groceries, 1% on everything else) so I get a few bucks every month for using it. Then, and this is important, immediately set up the credit card to pay the statement balance every month (I have it pay from our savings account, which is added incentive to keep the costs down). This way you will never be charged for using the card. Then, also important, set up the credit card to email you every month with a statement summary that shows you how much your statement balance is/was. For me, it is important that this email alert has ONLY the statement balance number, and not the individual expenses, which would be distracting.  If you can sign up for an American Express BCP, I recommend it.

This system has done a couple of things for us:
- eliminates the use of cash, which often flies out of my wallet (my wife is particularly bad with this, bless her heart)
- shows me, every month, the total amount of flexible expenses in one easy number. I then gasp and think, how can I get that down?
- I get a few dollars back on money that I was going to be spending anyway, without any cost.

The key with this approach is to 1) autopay the balance every month so there's no risk of added expense, and 2) to force yourself (and your wife) to ONLY use that card for everything. This is easy since I know I'm going to get a few dollars in cash back. If I use multiple cards, it's much harder to get the big picture, and I lose the effect.

The main thing I gain is the monthly email with the statement balance which is a good measuring stick.  Good luck!

[netskyblue]

I don't keep my CC on autopay, I have it send me a notice 10 days before the due date, and I pay in full when I get the reminder email.  I do this because I once had my credit card hacked or the # stolen or whatever.  A bunch of fraudulent charges happened, and I was lucky enough that my CC company recognized them suspicious and shut down my card without allowing them to go through.  (I found out when I tried to use it and it was declined, a couple days after the fraudulent charges.) 

If they HAD gone through, and if I had it on autopay, I may have run into trouble with the amount of money in my bank account.  If not overdrawing, then seriously scrambling to get my money back from my CC into my account so I could pay the bills.

Now I make sure all the charges are legitimate 10 days before my due date, and schedule my payment to go through a couple days before it's due.

[Pixelshot]

Sure, I see how that might be safer. For me, the tradeoff for convenience is worth the risk. I'm MUCH more likely to forget to make the payment on time.

[Left]

you could automate it by using another bank account to pay with. I rather pay it myself, but I know people that have a separate checking account solely for credit cards. They will keep $500 minimum in it and move more to pay off the credit card when they get the bill. The $500 is just there for the minimum payment in case they are late with transferring money at least they don't incur the late fee. They just have to pay interest >.>. But at least if something happens, all that would happen is the $500 would be tied up while bank investigates the issue. And not their entire bank account.

[Pixelshot]

you could automate it by using another bank account to pay with. I rather pay it myself, but I know people that have a separate checking account solely for credit cards. They will keep $500 minimum in it and move more to pay off the credit card when they get the bill. The $500 is just there for the minimum payment in case they are late with transferring money at least they don't incur the late fee. They just have to pay interest >.>. But at least if something happens, all that would happen is the $500 would be tied up while bank investigates the issue. And not their entire bank account.

In effect, this is what I do with my savings account. I am allowed a few outgoing payments a month without a fee, and the credit card payment is one of them.

[aj_yooper]

Congratulations on the baby!  And, welcome to the Forum!  You have started 2 amazing life changing events.

Since the money is flowing and expenses can be sliced easily, concentrate on building up a considerable cash stash.  Large.  Make expense cutting a game with your wife.  This helps everything.  If you have any work related saving or investment plans, sign up and start saving more.  Get the money out of your hands so it can power up your family time.  Pretend you are back in Portugal and live that simpler life. 

Then, get started in investments by reading up at your local library. 

[Left]

you could automate it by using another bank account to pay with. I rather pay it myself, but I know people that have a separate checking account solely for credit cards. They will keep $500 minimum in it and move more to pay off the credit card when they get the bill. The $500 is just there for the minimum payment in case they are late with transferring money at least they don't incur the late fee. They just have to pay interest >.>. But at least if something happens, all that would happen is the $500 would be tied up while bank investigates the issue. And not their entire bank account.

In effect, this is what I do with my savings account. I am allowed a few outgoing payments a month without a fee, and the credit card payment is one of them.

Yes but by using your savings account, if something comes up, your entire account is tied up while it is being investigated. That's why I suggested opening an unrelated account so if it is locked up, you aren't out more than the $500/or whatever amount.

[swissmade]

Hi, I'm a long time lurker and decided to get an account, since I'm also Swiss...

to be honest I don't really know what a 401k is

For all intents and purposes, you can consider the following equal (don't know which linguistic region you're from, so using French):

• 401k = 2e pilier : major difference with the US is that you HAVE to contribute to it (unless you're self-employed, but that's a different issue). Just like with the 401k, you pay part and your employer pays part
• Roth = 3e pilier (3a) : just like a Roth, you can choose to put money here or not. If you do, it's dedictible from taxes up to a certain amount (CHF 6'739 for 2013)

I have no experience in real estate, but yes: the very high prices make it an unattractive investment. Investing in funds, however, seems more attractive due to favorable tax rules (e.g. on capital gains).

With respect to Vanguard, we don't really have an equivalent that is local. You can invest in Vnaguard at https://www.vanguard.ch/privateinvestors/indv/investments/etfs?lang=en#funds_tab but last I looked at it, it was quite annoying (e.g. need to wire money & fax transfer requests, etc.). However, many banks have funds available for investment, e.g. https://www.postfinance.ch/fr/priv/prod/invest/fund/offer.html/feed/fragment/postfinance/fragment/funds/fundDetail.jsp?valor=1493319&market=190&currency=CHF&panel=details but with slightly higher expense ratios (visible on the second tab above the pie chart)

Hope this helps, and feel free to PM me.

[Astromarine]

Completely changed the original post, with way more information, way less confusion, and a clearer set of questions. Thanks for the advice so far everybody, can you look through all that to see if it makes more sense?

SWISSMADE, thanks for you clarifications and local advice. There's a few more swiss people here in the forum, should we maybe start a thread for swiss solutions and advice to our own local issues? :)

[ZiziPB]

Completely changed the original post, with way more information, way less confusion, and a clearer set of questions. Thanks for the advice so far everybody, can you look through all that to see if it makes more sense?

You may want to clarify if the income you listed is before or after taxes.  If before, include taxes on the list of expenses.

[Astromarine]

you're right, thanks for spotting that. It was before taxes, I've changed it now.