Author Topic: No fire, but looking for some help getting my life+finances in order!  (Read 4236 times)

Onomatopoeia

  • 5 O'Clock Shadow
  • *
  • Posts: 15
  • Location: Boston, MA
Hey everyone! I've been lurking for a while and finally made an account. I have a few questions about specific areas that I want to become more badass in. I'll list them first and then give some more background. I'm 27 years old by the way.

  • I own a bicycle but it lives at my parents house. I live in a tiny apartment and don't really have space to hang the bike. Even if I mounted it completely flush on the ceiling, I'd have a hard time getting it up and down because I'm 5 feet tall. I see bikes locked up on random poles outside, but I would only use the bike on weekends and am not sure if it's ok to leave for potentially long periods of time (also, winter is coming). Where do city people store bicycles?
  • Last year I put money into a Roth IRA for 2012 and 2013. I figured I should do Roth because I qualify for it and may not qualify forever. Does this sound like the right option for me for 2014?
  • How much should I keep in my checking account? All money that's not currently in my checking account lives in a Vanguard Index fund.
  • Should I max out 401k contributions if ER is my goal?
  • I am getting rid of my Bank of America checking/savings account and transitioning to Ally. Is it ok if I cancel my BoA credit card? It has a 13k limit and is my longest form of credit. I use it every month for the points and pay it in full at the end of the month. I also got an Amex Blue Card this week for the 6% cash back on groceries and 3% on gas.
  • Are my investments ok if we might look to put a down payment on a house in two years? Should I move some from stocks into bonds or something else?
  • Any recommendations for where to trim more fat?

Income: $2500 a paycheck (after tax) from my steady engineering job. $5000 a month, but since it's biweekly 2 months have 3 paychecks.

Goal: I really love the idea of ER. I haven't liked working since I started and have always dreamed of not having to work. I would never get bored if I was able to retire early and would love to spend more time with any future kids we have. If I did ER, I'd probably do (fun) things to make additional money. The goal is to be to ER as soon as possible. There's a big part of me that is skeptical about whether I'll be able to achieve this goal.

Assets:
  • $15,000 in my checking account.
  • $61,000 in my 401k (currently put only 4% that my employer matches)
  • $30,000 in a Vanguard Index Fund.
  • $12,400 in a Vanguard Index Fund Roth IRA.
  • Can't be considered an asset yet, but ~$100k in stocks that I'll get over a 4 year vesting schedule assuming I stay with my employer.

Liabilities:
  • Toyota Yaris: less than $1000 left in payments before I own it completely. 0% interest

Expenses: I'm going to list my average monthly expenses for the last few months only because before that, things looked much worse and included *necessary* things like wash and fold laundry, house cleaner, many nights out eating, coffees, etc.
  • $1850 a month in rent. Live in a small one bedroom apartment in the city, my boyfriend is able to walk to school, and comes home during the day to walk the dog (when we lived in a different city, so much money was wasted on a dog walker!). I drive to the 'burbs for my work. There isn't really a way to get there via public transportation, and biking would be too far for me to do round trip every day (18 miles each way).
  • Car payment: $200 a month, this will be gone in a few months.
  • Utilities: $30 a month for cooking gas and electric (heat and water is included in rent)
  • Food: $450 a month on groceries for two, fast meals out, and a handful of times out with friends. This is the biggest category we're working on now.
  • Medicine: $54 a month unfortunately, nothing I can do to get rid of this expense. I order it by mail to get the cost down the most possible.
  • Gym: $20 a month, and $150 will be reimbursed for the year by my health plan.
  • Laundry: $30 a month (kind of a guess, hard to keep track of because of coins, also my boyfriend picks up this expense sometimes.) I'd love to be able to do it at home, but the apartment is so small and there are no W/D hookups. I've been thinking about getting a portable washer from craigslist though.
  • Gas: ~$230 a month on gas, which usually includes one 10 hour round trip drive to see family. Taking a bus would be cheaper, but dogs aren't allowed :(
  • Dog: ~$50 a month (maybe more?), $20 of it is on food, the rest is an estimate to budget for vet and grooming costs.
  • Fun with friends: I've been able to cut down my entertainment expenses a lot, but I still have this category hovering around $200 a month due to "Doing Things With Friends."
  • No cable or phone expenses (phone picked up by work). Boyfriend pays for internet service.
  • Small/random things paid for by my boyfriend who is also working on his frugality. He's in school for another 1.5 years and will come out without debt, currently has $70k in a 401k from his old employer and about $20k in the bank in cash.
  • Clothes/shopping: Haven't spent much in this category recently, but will be as frugal as possible when I need stuff in the future.
« Last Edit: November 03, 2013, 07:39:02 PM by Onomatopoeia »

Zamboni

  • Handlebar Stache
  • *****
  • Posts: 2492
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #1 on: November 03, 2013, 04:40:42 PM »
Sounds to me like you're doing very well in getting started with stashing money!  Congrats!

A bike can be hung vertically from a hook in a really small space.  One of my friend's roommate did it in their oh-so-tiny dorm room back in the day, so I'm sure you could fit it if you wanted it in the spring.  No need to fetch it before then.

Staying in a small place is a great idea to keep expenses down.  I used to live in Boston and know that rent sounds horrible but just might be normal.

I'd vote for bumping the up 401k contribution gradually over time and staying with your employers for 4 years to get the stock options.  If you eventually RE, then you can plan out rolling it into an IRA and then using the Roth pipeline to get at the money.

Especially since you want to be able to stay home with future children, save, save, save now!

Empire Business

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #2 on: November 03, 2013, 06:02:08 PM »
Way nice job.

I agree, max the Roth and try to bump up the 401k over time since you're already doing enough for the match on it.

Is checking going to be interest bearing at all?  Even so at today's rates I probably wouldn't bother leaving such a big chunk in there.

If the BoA credit card doesn't have an annual fee, I would definitely leave it open and use it once in a while to keep it active.  The older accounts help your scores for many years to come.  American Express also has fraud detection algorithms which seem to have a hair trigger at times, so don't leave home without a backup.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3176
  • Age: 37
  • Location: Texas
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #3 on: November 03, 2013, 06:10:45 PM »
You're doing really well.  The only burning question I have is do you love to live in the city and want to stay there?  You have something many people would kill for, an office out in the suburbs.

Zamboni

  • Handlebar Stache
  • *****
  • Posts: 2492
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #4 on: November 03, 2013, 06:57:48 PM »
As another poster mentioned, you might want to seriously consider checking out rentals very close to your job.  Are any of them closer to the commuter rail or T-stations?

I did a similar commute (from Back Bay to Lexington, MA) for a year for my co-op job.  Then some friends got a townhouse in Waltham and I was able to share a room; rent went from ~$1000/month even sharing a bedroom with a roommate to exactly $300/month (again with roommates, this time 5 people in a 3 bedroom place), but in Waltham I was less than 2 miles from my job.  So then I had to commute back into Boston to school some parts of the year, which wasn't bad as the apartment complex had a free bus to the T-station in the mornings and evenings and back then T-passes were cheap ($30/month).

If you lived much closer to work, then you could go home at lunch to let out the dog.  Your boyfriend, if he lives with you, would have to commute in for school, but the rent difference will probably more than make it worth it.  Are T passes cheaper for students?  In the burbs you will have much more space for less money and likely a washer/dryer.  There will also be nice places to walk your dog, although you might have that now already as there are many parks in town.  I also commuted from Norwood into Boston for a year and it wasn't bad at all (the commuter rail trains are really nice and there was a station walking distance from the apt.)

Onomatopoeia

  • 5 O'Clock Shadow
  • *
  • Posts: 15
  • Location: Boston, MA
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #5 on: November 03, 2013, 07:37:25 PM »
@Zamboni I'll look into hanging the bike again comes spring. I've already cut down unnecessary driving and getting my bike here would help with things, but all stores I need are within walking distance. I didn't know there was a way to get money out of a 401k early! Looks like I have some more reading to do...

@Empire The account I opened is an interest checking account. I'm thinking about putting anything over $7500 at the end of the month into my Vanguard Index Fund. While I think that's sufficient, I worry that it's too risky to do because it's all stocks.

@chasefish + @Zamboni The T doesn't get close to my job but commuter rail gets close. We do love living in the city, and it was also important for us to be close to his school since he has an irregular schedule, impromptu group work, etc. It really is a good point though, it could be where I find the most potential savings. I'll do some research about rents near work and see just how much the difference could be.

capital

  • Bristles
  • ***
  • Posts: 451
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #6 on: November 03, 2013, 07:47:13 PM »
I live in NYC and keep my bikes on one of these things:
http://www.amazon.com/Delta-Michelangelo-Two-Bike-Gravity-Stand/dp/B000ACAM38/ref=sr_1_22?s=sporting-goods&ie=UTF8&qid=1383532705&sr=1-22&keywords=bike+stand
If you want to keep a bike outside, you'll need a beater bike, a very good U-lock or Krytonite chain, and a willingness to accept the bike is likely to be stolen within the next couple years. And a Boston winter would not be good for the bike.

I keep my other 6000 bikes outside in racks around the city, and access them using a keyfob. You can do the same in Boston:
http://www.thehubway.com/how-it-works

But, after paying a lot of money to live in a neighborhood with great walkablility and mass transit access, biking isn't a money-saving necessity like it is in less-walkable areas. I do it because it is fun.

There is no reason to cancel a long-held credit card, as it does indeed help with your credit score. Just leave it open.

If you don't like a the volatility of a pure stock index fund, consider adding in a bit of bond holdings, as Vanguard themselves does for their target 2050 fund:
https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT#tab=2
« Last Edit: November 03, 2013, 07:48:57 PM by ehgee »

dadof4

  • Stubble
  • **
  • Posts: 179
  • Age: 44
  • Location: Portland, OR
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #7 on: November 04, 2013, 11:25:52 AM »
Good job so far!
You're living frugally, saving well and investing what you're saving.

There really isn't a lot of fat to trim outside of that hog of a rent. Keep on keepin' on.

------------
I hesitate to say it and you didn't ask, but if you were my daughter I would say this. You're in an uneven financial relationship with the BF. You're basically putting him through school (covering the rent and most of the household expenses), making a sacrifice to live close to his school (involving a much higher rent and a long commute for you). If the relationship goes south 2 years from now, he will walk away with his high checking balance, 401k, and no debt. As long as you're aware and comfortable with this, it's OK.
Relationships and financial dependence are a tricky subject, so I'll leave it at that.

Onomatopoeia

  • 5 O'Clock Shadow
  • *
  • Posts: 15
  • Location: Boston, MA
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #8 on: November 04, 2013, 06:24:58 PM »
@ehgee, that's pretty cool and not too expensive. I'm going to measure some places in my apt so I'm ready for spring.

@dadof4, it's cool, I expected somebody to bring this up. We have a great relationship and had a serious discussion before he started grad school. He didn't expect me to pick up the tab, he was willing to take out loans for living expenses and pay them back in his first year working (the typical compensation package coming out of this program is more than I currently make). I cringe at the thought of loans! We plan on being hitched before he's done with school.

kh

  • 5 O'Clock Shadow
  • *
  • Posts: 46
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #9 on: November 05, 2013, 03:52:50 PM »
This is so weird, are you me? Also 27f, same income (scientist), same rent, comparable savings, although I don't have that monster equity position, well done! Putting a beau through grad school as well.

Assuming the taxable account is for the house down payment, that's a risky allocation for funds needed 2 years from now. Also consider that being single, no kids, and renting at your income level, you could hardly be in a higher tax situation, so any extra 401k contributions are hugely beneficial.

Onomatopoeia

  • 5 O'Clock Shadow
  • *
  • Posts: 15
  • Location: Boston, MA
Re: No fire, but looking for some help getting my life+finances in order!
« Reply #10 on: November 05, 2013, 06:02:51 PM »
That's funny kh, imagine how nice it'll be when they're done with grad school :)

I've been funneling most of my savings into the taxable account. I think I'd like to get a house in a couple of years, but I'm not sure when and where I'll be looking to buy. I sometimes think about taking some of that and putting it in less risky allocations, but then I also won't reap the potential gains. Hard decision for sure!

Do you know of a good 401k calculator? I'd like to estimate what would happen to my paycheck if I put the maximum $17,500 in my 401k. I found a calculator that gets me close, but it doesn't take into account the 4% I already put in.

http://fc.standardandpoors.com/ondemand/analytics/compute.vm?hnd=2&client=adp