Hi everyone,
As I mentioned in the 'introduce yourself' section, I am a 30 year old lawyer in Phoenix, AZ. I've been reading the site for some time now, and really trying to ratchet our expenses down and get serious about this. I would love any 'stash ninja advice that anyone would take the time to share!
Background: New lawyer, work at a large law firm, so I have to be somewhat presentable, which requires a more expensive wardrobe than I would normally wear. My solution so far has been to buy enough pieces to get through 2 weeks without obviously wearing the same thing (i.e., I can wear 1 black skirt multiple times, but certain shirts are too conspicuous to wear more than every 2 weeks or so). I live with my boyfriend and his 3 year old daughter. Right now, my income is our sole income, while he tries to get his business going in the new city. The upside to that is any income he does bring in is pure savings.
TL;DR: High income ($120k), somewhat of a commuter lifestyle (14 miles each way), lots of student loan debt ($97k), fairly low (though not Mustachian) living expenses ($1,250 a month ($2780 including mortgage payment). Details below.
The good (or at least not bad):
$120,000 annual salary with good upward potential in a fairly short amount of time ($140k in 2-3 years, 180k in 4-6 years, $400k plus in 8-10 years if I make partner). As a single, high income earner, I pay a ridiculous amount of income taxes (about $23k a year). So my take home, after taxes is about $88,000. Yes, I have calculated the tax savings if we were to marry- about $12k. That is the ultimate goal, but not something I want to rush into for purely financial purposes.
$5,000 in savings
$65,000 in retirement accounts (rollover IRA, and a 401k). Saving the max in my 401k ($17,500 annually as of this year).
$1,500 in a HSA (trying to get as much income away from the IRS as possible). This will max out at $3,100 annually (plus inflation), and rolls over (not a use-it or lose it like an FSA).
The bad:
$97,000 in student loans, at 7%, with $718 monthly payments. (Hello, law school. And that was an in-state school with partial scholarship. No idea how people do it with tuition at some schools over $40k a year (x3)). Before anyone gets too down on me, as it does not look like a Mustachian choice at first, getting my JD allowed me to double my income with upward growth potential that would have been near impossible without it. So, expensive considering tuition and missing 3 years in the workforce, but worth it in the long run, I think. Ok, now you can comment :)
$9500 in credit card debt at 0%. This was mostly funding my summers through law school, where unpaid legal work for "experience" is the norm in this economy, and between law school and work. Could I have gotten a part time job for the last summer? Probably. Worth risking failing the bar exam? Nope. The good news is its spread over 2 cards with 0% interest for a year. I've budgeted the $800 (approximate) monthly payments needed to pay this off within the promotional rate (and then freeze the cards for eternity like in Confessions of a Shopaholic). Or I could pay it off sooner, but I figure why if its not costing me anything extra?
2 car household. Both are paid for, but insured for full coverage (until we've saved enough to comfortably replace one should anything crazy happen). One is a 2006 small car that gets about 32 mpg. The other is a 2003 truck that gets about 16 mpg (ducking the Face Punch). I'm thisclose to keeping the truck, but getting another small car for driving to and from work (more on that in a minute). Right now, as I am the only commuter, I drive the other car and my bf keeps the truck for errands closer to home. MMM hit the nail on the head with his review of Phoenix- it is made for driving. Between the layout and the weather (110+ degrees), its not really bike friendly. I know, complainypants. Overall, gas budget is $150 a month.
The Meh (i.e., not great but I don't think it is terrible).
A $248,000 mortgage at 3.25% on a house I bought early this year. Zillow estimates it has increased almost $15k in value since I bought it (no idea how reliable that is, but that is what Mint links to). Payment (inclusive of taxes, insurance, etc.) is $1530 a month (including $250 a month in PMI that just chaps my hide-- 5 years and 80% LTV needed for that to go away- or refinance). The house is 14 miles from my office, all freeway. I've looked at the Express bus routes, which are actually fairly convenient, except that I routinely get caught up at work until all hours of the night (last bus at 6:30). One cab ride home and any savings are out the window for the month. Its also $6 a day, which is more than I spend in gas now. My schedule is flexible enough that I can generally skip rush hour (go to work later, leave later, so it only takes me about 15 minutes each way. Rush hour can be 40 mins).
Living expenses outside of mortgage and debt payments are appx $1,250 a month. This breaks down as follows:
Car insurance: $60
Gas: $150
Utilities (internet, electric, cell phones): $410 (I am expected to be reachable at all times for my work, so the prepaid cell thing makes me nervous. How does it work overseas? Any issues with coverage/accessibility? Its not like I travel to the far reaches of the globe, but I don't want an awkward conversation like "Sorry, I can't get cell service in London." Work covers my portion of our data plan ($40) and I get an 18% discount with my cell provider via our corporate discount, which brings 2 bells and whistles cell plans to $110 a month, which isn't too bad ($10 would be awesome though!)
Groceries: $325 (we switched to a paleo type diet and went WAY over this last month. I've since brushed up on MMM's grocery post and vow to do better)
Restaurants: $75 (we don't always spend this, but I like to budget it so I'm not going over if we have a meal or two out)
Gym: $25
Pool guy: $85 (I know, this is an easy one, but I'm terrified of screwing up the pool)
Pets (1 cat): $25 (he eats better than we do. There is also a horse that is being leased currently in exchange for feed (saving $250-500 a month, depending on where I'd board him otherwise))
Other: $130 (this is stuff like drycleaning, occasional daycare, etc.)
The Plan
Now that I have $5k in savings, I plan to funnel everything to paying off debt, with credit cards first, and then student loans. My mortgage is only 3.25%, so I think it makes sense to save/invest after that and pay down the mortgage later. Thoughts? On the expenses side, the pool guy is obvious, possibly a cheaper to drive car than the truck, and attack the electric bill, which has been around $150 a month for the past few months. Its already been in the 100's, so the A/C has been running during the day. If its cooler outside than the 79 degrees the air is on, I open the windows at night. I can probably only do this for a couple more weeks. It will rarely get below 100 as the low once summer is here. Blah.
Any Face Punches and/or advice are welcome. Especially in the macro picture. I feel like based on the numbers, we should have a lot more left to save ($88k take home should go a lot farther than this!). My bf is sort of on board with this, in that he's okay with cutting back our spending but he doesn't understand my obsession with it. Like now, its 1 am and I'm writing you all and reading MMM posts. Thanks so much for reading, if you've gotten this far!
-C