Author Topic: Mustachians what would you do?  (Read 5924 times)

erwannabe

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Mustachians what would you do?
« on: May 22, 2012, 07:09:27 AM »
I will not bore with the details of why we are only just starting the MMM way now, but this is us at the moment:


- Hubby base salary is enough for 2 Mustachians to live on. (we intend to save all commissions for investments, commissions could range from $30000 - $100000 + per year before tax, he only just started so we are not sure what his realistic commissions will look like)

- I have an online hustle that earned $50000 last year.  This year thanks to changes in google etc it is only earning around $2000 a month, so under half.  I am not sure whether I should be looking for work or build new side hustle, or try to get this one back on track (the google stuff is beyond my control).

- We want to have a baby asap I realize this is not ideal for our financial goals, but it is a personal goal.  We only plan on having one (max two).  I want to be home for baby (my online hustle would allow this)

In this position what would you do?

Tips/advice?

Any Mustachian words of wisdom?

Also how do you get over the fear of riding bikes on the road?  I really do want to get into this side of Mustachianism but traffic makes me nervous.  I walk a lot.  (We have one car hubby uses 5 days to get to work).

Has anyone built their financial independence solely on real estate?
  We plan to invest in real estate so keen to hear any tips that help in this area.

« Last Edit: June 03, 2012, 11:07:21 PM by erwannabe »

grantmeaname

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Re: Mustachians what would you do?
« Reply #1 on: May 22, 2012, 07:17:14 AM »
Bakari has some excellent posts with statistics on bike safety and prescriptions for how to ride accordingly, but I can't for the life of me find them with the search tool.

KittyWrestler

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Re: Mustachians what would you do?
« Reply #2 on: May 22, 2012, 12:03:40 PM »
You shouldn't wait for baby regardless of your financial situation. Especially if it's now or never situation. Go have a baby and your family will adjust. But losing a chance to be a parent ever will make you regret. I have seen it so often. I just had one at age 38. Was I ready? no way. But we make it work. A child is priceless. You can't put dollar sign on a child.

Your biggest issue is that you don't have a stable income. It varies too much. So I would pull out a spreadsheet and calculate your minimum income you can earn. Then budget accordingly. Anything extra go to savings.. So in that scenario, you will not be surprised when your income drops and assume you can always earn more than the minimum, you can build up an asset throughout the years.

I suggest you follow Dave Ramsey's baby steps. $1000 emergency fund. Then pay off all of your consumer debt including student, credit card, car loan.. etc.. Leave only mortgage... Then build 6 months reserve, etc.. check it out.. pretty useful stuff.

Bakari

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Re: Mustachians what would you do?
« Reply #3 on: May 22, 2012, 12:34:28 PM »
Bakari has some excellent posts with statistics on bike safety and prescriptions for how to ride accordingly, but I can't for the life of me find them with the search tool.

:) thats ok, I don't mind typing again.

ERwannbe, you posted some numbers, but not enough to make specific recommendations.  Sounds like a household income in the 6 digit range though, even on years with low commission and low side hustle, so you only need to adjust your spending and you won't need to worry about baby costs derailing FI.  There is a really good thread on here called "putting off parenthood" that goes into great depth on the subject, with people weighing in with many different experiences and viewpoints.

Regardless, start cutting costs.  With that kind of income, you can lead a very luxurious life and still have a good 30-70% savings rate.  I disagree about setting a budget based on your minimum income.  Set your budget way below that.

Take that 10k and put it somewhere it will start generating at least a little passive income, and start making plans for what to do with it as it gets bigger, whether its a rental property or a dividend fund or whatever.  You'll find plenty of talk on here about that stuff.


On biking:  I don't have the statistics on hand to back this up right now, and I don't feel like searching right this moment, so you are going to have to take my word for it for now...

There are several ways a car and bike can make contact:

-bike is at intersection (or driveway) going straight, car on cross street hit or is hit by bike. 

The vast majority of the time, this is because the cyclist ran a stop sign or red light.
Solution: do not run lights/signs. 
This can also happen because the cyclist did not have a headlight on in poor visibility.  A cars headlights don't light up your reflectors from a 90 degree angle
Solution: use a bright headlight - even in daytime if visibility is poor (even cloudy / overcast)

-bike is at intersection going straight, car comes up from behind, turns right in front of bike
Solution: do not hug the shoulder.  Ride as far as a parked car away from the curb, even when there is no parked car there.

-bike is at intersection going straight, oncoming car turns left into bike
Solution: combination of the two above, use bright flashing headlight, even in daytime, and ride out in the lane where you are more visible.  Also, pay attention, and be ready to brake at all times.

-bike is riding too close to a parked car, driver of parked car opens the door and bike hits it
Solution: ride several feet to the left of parked cars

-bike is just riding along, car comes up from behind and clips cyclist
Solution: don't worry about it.  This almost never happens.  Seriously.  Of all the types of bike/car collisions, it is the least common.  For all practical purposes, it never happens.

Yet it is the one that ALL new cyclists worry about the most.

Unless a  cyclist is riding at night with no lights and no reflectors, it is pretty easy to see when you are coming up behind them.  The one place even distracted drivers tend to be looking is the road straight ahead of them.  They have plenty of time to see that you are there.  Unlike with a head-on collision, the relative speed if a bike is going 15mph and a car is going 30, is only 15mph because you are both going in the same direction.

Drivers rarely randomly swerve side-to-side when driving along a straight road.  If they did, they would be constantly clipping the mirrors of parked cars, side-swiping each other, and running up on the curb when there is no shoulder.  These things almost never happen, just like drivers don't run into cyclists from behind.

But even knowing that, its still scary, (at first), to have these giant loud 2 ton steel machines whizzing past you one foot away with a 15mph speed differential.  The only way to get over that is to just do it, and keep doing it until it feels normal.

Incidentally, one way too keep drivers from coming up way too close to you when there is no shoulder and barely enough room for both car and bike is to more more to the left.  Make them change lanes to pass you.  If you hug the curb because you are afraid of cars, drivers will take advantage of that and squeeze past. 

Ride like you have as much right to the road as a car driver - because you do!

erwannabe

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Re: Mustachians what would you do?
« Reply #4 on: May 22, 2012, 11:21:55 PM »
Thanks everyone :)

We have no mortgage as we rent, and as long as we are responsible with our money it actually works out much better financially that buying in our area.  We plan to live in a lower cost area when we are financially independent but for now, gotta live where the work is!  We can live on my husbands base salary living pretty OK Mustachian style. When this lease runs out we want to move closer to husbands work to eliminate the commute more for the time than the gas costs and so we can both go close to carless.

Theoretically my husband could move his job over to "work from anywhere" with his bosses co-operation.  He only just started, so we are allowing a year so hubby can prove himself and his value and then slowly move over to working from home (hopefully). This would be ideal as we could move somewhere really cheap but keep the same income, just gotta convince his boss to go for it :)

I am expecting reasonable income levels for the coming 6 mths/year, but I never like to count chickens before they hatch :) Which is why I have worked the budget to be based on our lowest possible income (Hubbys base salary).  The plan for all extra above this is straight into savings for investments :)

Our 10K is in a high interest savings account now (4%) we will be moving it soon to an account with 5.3% (we live in Australia, these might sound good but consider mortgages start at around 7% and our taxes are v.high).  I will probably move it to a term deposit at 6% in a few months when we know whats what with the budget.

Thanks Bakari for your info about bike riding!  I have read it through several times, I have come to the conclusion that I just need to get myself and bike and start getting out there.  Looking forward to the challenge.  Any recommendations for buying a bike?  Any time I have ridden bikes in the past I really struggle with uncomfortable seats :p any way to get around that?

Bakari

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Re: Mustachians what would you do?
« Reply #5 on: May 23, 2012, 09:58:56 AM »
Any recommendations for buying a bike?  Any time I have ridden bikes in the past I really struggle with uncomfortable seats :p any way to get around that?


YES!
Someone else on the MMM blog asked that question, and I wrote a whole article dedicated to it - so it is specifically focused on MMM reader types (frugal) who are looking to commute but know little to nothing about where to start:
http://biodieselhauling.blogspot.com/2012/01/buying-bikes-from-craigslist.html

grantmeaname

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Re: Mustachians what would you do?
« Reply #6 on: May 23, 2012, 10:12:18 AM »
The problem is, thickly-padded seats (which you would think would be comfortable, and are in the short term) are bad for long term riding. The best place for your wait to be supported is your sit bones. That's the part of your butt that hurts if you sit on a hard wooden bench or a chair. On a thickly-padded seat, the sit bones compress the padding to the point that the rest of your butt is also supporting your weight. In addition to your pelvis, then you have nerves, blood vessels, and other soft tissues bearing weight, which is bad for them in the long term. The best thing to do is buy a seat that puts all the weight on your sit bones, then ride enough to get used to it -- which may be sooner than you think.

Bakari

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Re: Mustachians what would you do?
« Reply #7 on: May 23, 2012, 11:10:21 AM »
The problem is, thickly-padded seats (which you would think would be comfortable, and are in the short term) are bad for long term riding. The best place for your wait to be supported is your sit bones. That's the part of your butt that hurts if you sit on a hard wooden bench or a chair. On a thickly-padded seat, the sit bones compress the padding to the point that the rest of your butt is also supporting your weight. In addition to your pelvis, then you have nerves, blood vessels, and other soft tissues bearing weight, which is bad for them in the long term. The best thing to do is buy a seat that puts all the weight on your sit bones, then ride enough to get used to it -- which may be sooner than you think.

Yes.
100%
Also, it should be the right width for your specific sit bones, within a couple inches. 

Bank

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Re: Mustachians what would you do?
« Reply #8 on: May 23, 2012, 11:59:45 AM »
Great post/pep talk Bakari.  At the end of June I'm due to ditch my transit pass and walk or bike to work every day through Boston traffic.  And, I have to admit, my knees are shaking slightly in my wussypants as I imagine the ways I can be killed or maimed.  This helped calm the tremors.

James

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Re: Mustachians what would you do?
« Reply #9 on: May 23, 2012, 12:34:11 PM »
Any Mustachian words of wisdom?

Also how do you get over the fear of riding bikes on the road?  I really do want to get into this side of Mustachianism but traffic makes me nervous.  I walk a lot.  (We have one car hubby uses 5 days to get to work).

Has anyone built their financial independence solely on real estate?
  We plan to invest in real estate so keen to hear any tips that help in this area.

 Excellent advice given already, so I won't repeat everything.  I especially agree on the biking, you have the knowledge you need now, just got to get out there and do it.  After a couple weeks it simply won't be an issue any more.  Yes, your butt will hurt at first but you will get past that.  Don't let nerves and a sore butt get in the way of a lifetime of health and savings. (but don't start out with 10 mile rides either)  :)
 
 Regarding the baby, if now is the time then now is the time, no problem there.  Just make sure you keep your focus and follow your plan/budget.  For many people a baby is a good excuse to spend money, I don't sense that will be a problem for you, just throwing that out there.
 
 Regarding the real estate issue, I have no problems if you are/become experts on the subject.  Real estate is a sound place to put your investments, but I would also try to diversify to some purposeful extent.  I'm not too worried about what extent that is, but make sure you research, understand, and plan for diversification, whatever that ends up being for you.
 
 Hopefully you will continue to hang out here, join in discussions, and update us with how things go.
 

erwannabe

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Re: Mustachians what would you do?
« Reply #10 on: May 23, 2012, 09:06:18 PM »
Thanks everyone :) Think I will walk down to the local bike shop today (I think they sell new and secondhand bikes) I dont really have the cash on hand to buy a bike immediately, but it will help to get an idea of cost etc.  Haha I so would have thought a cushy seat would have been better so glad I asked! 

From what I have read regarding babies/kids I have done quite a bit of research regarding costs, and I am sure we can keep it down a lot.  In Australia they also offer parental leave from the govt including those that run their own businesses,  18 weeks paid parental leave ($589 (minimum wage) max before tax per week, works out just over $10000 before tax) OR you can claim the baby bonus if you are not an earner (eg stay at home parent) and that is $5000 total (no extra tax taken out).  Anyways suffice to say that I feel $5000/$10000 is more than enough for babies first/second year with nothing extra at all!  (Based on breastfed, cloth nappies, not going crazy with buying things etc)

I have done extensive reading on real estate investing, I have been interested for quite some time but have been frustrated at our lack of funds to get started.  I realise that reading is not like doing something, but we are also lucky enough to have a friend who is FI and he got there primarily by real estate.  Our goal at the moment is to save like mad, when we have enough $ to be useable we will start looking for the right deals, unfortunately everything is very expensive where we live so will probably have to look further afield for real estate opportunities!

I think I might start a journal :) as even just posting this helped me focus a little more, and feel a bit more responsible for my own financial future.


gooki

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Re: Mustachians what would you do?
« Reply #11 on: May 23, 2012, 10:34:44 PM »
As someone who lives over the ditch in NZ, and recently had a baby I'll chip in.

The biggest loss will be the loss of one income. However by the sounds of it you may be able to maintain your business while having a child so that's great, just don't expect a whole lot of free time.

The paid parental leave is a nice bonus. My wife got 14 weeks paid at a similar level. Use this time to start scaling down your expenses if you haven't already.

As for the running costs. We're looking at $2000 per year for one baby, or approx $40 a week.

PS from my understanding housing costs in Australia are fairly high. With that in mind I'd be hesitant about recommending property investment. If it's anything like NZ you'll be lucky to find a property that'll return more that 6% per annum (%3 percent after expenses if using the 50% rule). Any capital gains would improve this return, but they're not a guarantee.

So in the mean time, I'd brush up on some other investment options, and put your savings to good use testing them out while you build up towards larger investments (be that property or anything else)

erwannabe

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Re: Mustachians what would you do?
« Reply #12 on: May 24, 2012, 12:08:55 AM »
Haha yip everything is expensive down under housing wise, or what you get for the money.  I here about these things in USA or Canada and I cant believe it is even possible to buy a house for that price, in an area you can still live/work.  Here you have to go bush to get an OK price and you will be very isolated.

Congrats on your new baby!  Yeah we have been planning this baby thing for a while, so that is why I have been focused on building alternate income streams (from home/online) rather than pursuing a job because I know that childcare/loss of income from parent staying home is the biggest financial cost to having a child.  Thanks for giving me an idea of the real cost of a baby week to week, can I ask what the $40 a week covers?


gooki

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Re: Mustachians what would you do?
« Reply #13 on: May 24, 2012, 01:00:52 AM »
Our little girl is 18 months, now. And our weekly spend hasn't changed much since she was born.

$20 is for disposable nappies and wipes.

$10 is for food.
- Free when you breast feed (my wife didn't have it easy - over supply of milk, multiple infections, and she still breast fed for one year - I'm so proud of her for this).

And the remaining $10 is for odds and ends.
- Bedding
- Clothing
- Crayons/pencils/paper

If you have family around you'll find you'll probably get about 80% of toys, clothes and books gifted to you. We also have a savings account for her which is growing steadily solely on the generosity of our friends and family.

Jake D

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Re: Mustachians what would you do?
« Reply #14 on: May 28, 2012, 12:11:13 AM »
erwannabe,
I have gained a lot of knowledge about Australian real estate investment from the somersoft forums. (it's just somersoft.com) A lot of very clever and successful people provide lots of help and feedback if you ask the right questions. Go have a look.

Nudelkopf

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Re: Mustachians what would you do?
« Reply #15 on: May 28, 2012, 05:36:20 AM »
Incidentally, one way too keep drivers from coming up way too close to you when there is no shoulder and barely enough room for both car and bike is to more more to the left.  Make them change lanes to pass you.  If you hug the curb because you are afraid of cars, drivers will take advantage of that and squeeze past.
Make that right, in Australia.

As for biking, where in Australia are you? In Queensland, it is legal to ride on footpaths, which is AWESOME cos traffic scares everyone (http://hereforlife.qld.gov.au/Be-Safe/Be-safe-on-two-wheels) You'd have to check which state you're in, but I think it's true for several other states also.
« Last Edit: May 28, 2012, 05:38:08 AM by Nudelkopf »