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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Onomatopoeia on November 03, 2013, 04:17:56 PM

Title: No fire, but looking for some help getting my life+finances in order!
Post by: Onomatopoeia on November 03, 2013, 04:17:56 PM
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.


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:
Liabilities:
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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Zamboni 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!
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Empire Business 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: chasesfish 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Zamboni 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.)
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Onomatopoeia 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: capital 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
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: dadof4 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Onomatopoeia 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: kh 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.
Title: Re: No fire, but looking for some help getting my life+finances in order!
Post by: Onomatopoeia 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