Author Topic: Please Help: Any advice or guidance would be greatly appreciated.  (Read 964 times)

Chris C

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Hello Community:

First I want to acknowledge this community for being such a stand for each other.

It's truly inspirational to see a group of people coming together to accomplish their goals and being a stand for a world that works.

I'm new to the FIRE life and I'm loving what I'm learning.

That being said I have developed extreme anxiety for the first time in my life. I have doubts that I'll be able to reach financial independence.

I've put together a spending plan that will allow me to pay off all my debt in 12 months.

Once the debt is gone I'm planning on moving the $1250 a month into a Vanguard index fund.

I'd love your feedback on this plan.

Am I missing anything?

Feel free to roast me, I know I've been financially irresponsible for most of my life.

Further this whole week I've been experiencing anxiety around this stuff.

I feel like even if I cut back to the bone it's too late for me to get out early.

Age: 36
Income: $4,050/Month + $3,500 year end bonus
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401k: $120,000
HSA: $10,000
Bitcoin: $55,000 (at current price of $8,500)
Savings: $1,500
Cash: $1,000
---
Car Loan: $10,500
Student Loan: $4,300

Current monthly spending plan:
Housing: $1,000
Car Payment: $250
Student Loan: $1,000
Electricity: $150
CrossFit: $120
Internet: $75
Cellphone: $70
Audible: $15
Prime: $10
Spotify: $9
Bitcoin: $0
Entertainment: $350
Groceries: $200
Gas: $200
Supliments: $65
Misc: $61
Laundry: $50
Hair Cuts: $35
Projects & Tech: $350
Car Insurance: $50
Total Costs: $3,660
Balance: $396

Should I pay money for a financial advisor or just keep learning on my own?

Trinitysmom

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #1 on: May 30, 2019, 01:57:53 PM »
Hello, Don't panic and keep learning on your own and remember you are getting out earlier than you would have if you didn't start this journey. There are lots of people on the boards who wish they found MMM 20 years ago or even 10. All you can do is make the best decisions for you going forward from today.

Kris

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #2 on: May 30, 2019, 02:04:08 PM »
Hey!

First, it's probably pretty normal to feel some anxiety when you realize you've wasted a lot of money and now regret it. That's fine, as long as you let it spur you to future action, not paralyze you.

There are a lot of people on here who will have good advice. Better advice than me. But I will say that your current monthly spending plan has a lot of extra "flab" in it. The one thing I see that sticks out is your "entertainment" budget.

I don't know what you think of as being inside the category of "entertainment," but here's what I see:


CrossFit: $120
Internet: $75
Audible: $15
Prime: $10
Spotify: $9
Entertainment: $350
Supliments: $65
Misc: $61
Projects & Tech: $350

All of that stuff is extra "entertainment" stuff (with the possible exceptions of "misc.," whatever that is.)

Which means that the amount you've budgeted for entertainment per month is actually over $1000/month.

That's too much. Way too much.

calimom

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #3 on: May 30, 2019, 02:10:44 PM »
Hello, and welcome.

Your debt is not crushing, and you already have a nice chunk in your 401K. Can you clarify Bitcoin? It's valued at $55K and you invested $8500?

Once your car is paid off, vow to never have a car loan again.

A couple categories of your spending look high: Entertainment, and Projects & Tech. Can you clarify? You have a few too many subscriptions, some of those could possibly be suspended. I know Crossfit can be a sacred cow for people. What supplements are you spending $65 a month on?

With your year end bonus, you could have your student loan knocked out, and the car payments could be gone soon enough with extra savings elsewhere. Then you will be able to redirect those funds into Vanguard...and even a bit more if you're mindful of lifestyle excesses.

seemsright

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #4 on: May 30, 2019, 02:15:07 PM »
You can learn on your own. The more you understand your money the more control you have over your money.

I will be the first to admit I do not fully understand Bitcon. But what if you sell what you have and pay off your debt?

FIRE is not about going with out it is about taking the time and energy to determine what is important. But remember not all of the things can be important. You have spotify and amazon prime...both have music, pick one. Amazon has free books and with a bit of tweaking you can get the kindle app to read you the books via sound so Audible not truly needed (unless you have other reasons for it)

Is crossfit something you love and whatnot or could you find a gym that is cheaper that you enjoy. (I loved crossfit till I got injured and still dealing with it a few years later) You also have $350 for entertainment...if crossfit is so important use your membership more and cut your entertainment budget. 

Supplements:Why? what are you buying and consuming that real food cannot provide?

Hubby and I got to where we are with questioning every minute thing and with $25 that turned to $50 then $200 etc. Investing needs to be as important as your rent and food. And cutting your budget to find investment money now will allow you to get rid of that anxiety you have since you discovered FIRE and a different way of life. I now do not need to question every little thing, but I still do because nothing is as important as our time, freedom and health. 





reeshau

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #5 on: May 30, 2019, 02:22:21 PM »

That being said I have developed extreme anxiety for the first time in my life. I have doubts that I'll be able to reach financial independence.

I've put together a spending plan that will allow me to pay off all my debt in 12 months.

...

I feel like even if I cut back to the bone it's too late for me to get out early.

If you will be debt free in 12 months, and can maintain that pace of saving, you will reach financial independence.  As for "getting out early," what's early?  You won't get out by 35.  You could well get out by 50.  That sure beats 62, or 67, or never.

One observation on your investments:  bitcoin is 25% of your portfolio.  That is too much for any speculation.  And since bitcoin has no earnings or assets backing it, it is speculation.  Play if you want to, but scale that back to 5% of your portfolio, or less.

Finally, what are your career prospects?  One of the most powerful things you can do is increase your earnings, while holding your costs steady.  I had the same 401k balance as you did at that age.  12 years later, I am approaching $2M.  Kicking into gear in 2008 helped things, but saving has been as important as earnings.  I could quit now, but my company threw in a tour of duty in Europe.  It sounded like a good deal to me.

BicycleB

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #6 on: May 30, 2019, 02:55:39 PM »
1. Keep learning, don't worry about financial advisor.
2. Good that you listed your costs! Keep up with that. If you automate, do it well.
3. Double check your math. Those costs add up to $4060/mo in my Excel (maybe I made a typo, but...double check.)
4. I strongly support selling the Bitcoin. At least sell a couple of whole BTC to pay off the debts (8,500 x 2 = 17,000. 17,000 less 15% capital gains tax = 14,450. After state tax, very close to debt amount). Do this now!!
5. Assuming 3 and 4, plus including your bonus, it looks like you'd be at a 35% savings rate, investing about $1500/mo savings on average.
6. Based on 5, you're roughly 18 to 20 years from FI without further changes. In other words, a few days from now when your Bitcoin sale settles and you pay off the debts, you'll be on track to FI around age 55.
7. You could cut the entertainment budget above to about half, per @Kris. I speculate that after doing so, your anxiety will abate. Your savings rate would then be about 47%, thanks to savings of about $2000/mo. Get therapy if the anxiety remains.
8. Based on 7, you could FIRE in about 12 or 13 years from now - still in your 40s! I FIREd in late 40s myself, you'll  have company.

To convert current situation into years to FIRE, I am using the Savings Rate article in the table below, then subtracting some years to account for your current net worth.

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
« Last Edit: May 30, 2019, 02:59:55 PM by BicycleB »

Freedomin5

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #7 on: May 30, 2019, 05:43:18 PM »
Welcome to the forums! You took the first step to post, so youíre well on your way. Just donít get defensive or scared off by the facepunches. Keep plugging away at increasing savings rate, and youíll be FI in no time.

Once you cut the entertainment flab per the suggestions of the posters above, and sell off some of your bitcoin, which is an extremely risky investment gambling, you should also consider the following to lower your expenses even more and hit that magical 50% savings rate.

1. Lower your cellphone bill. If youíre in the states, there are some great threads on the forums on how to get your phone bill down to something like $10/month.
2. Consider getting a roommate if your place allows for it. That will halve your housing costs, just like that.

And as you move forward, donít succumb to lifestyle inflation. My guess is that your income will continue to increase over the next few years. Make sure your expenses donít increase proportionately as well.

Chris C

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #8 on: May 30, 2019, 06:39:27 PM »
You guys are awesome. I'm just digesting what you're saying...

I'm hesitant to sell my bitcoin. I've been holding it for almost 9 years and I've turned a $1,000 into almost 55k. 140k at one point!

My prediction is $100,000 bitcoin by 2020. Fingers crossed... and I get it's a huge gamble.

I have 10 years of experience as a software designer & front-end developer and I've just finished one of the hardest 7-month leadership programs in the world.

I've been looking at jobs in Washington DC for around 90-140k. Currently making around 70k.

That would go along way if I could would work remote an not have to commute into the city. I can walk to work currently.

I went ahead and put together this spending plan. It's the most extreme thing I could come up with besides living under a bridge and it accounts for selling two bitcoins and picking up a part-time teaching gig. I may even consider bartending or picking up some web design or graphic design work on the side also. I like the idea of bartending as its kinda social so I can get that interaction with other people.

Let me know if this is over the top...

Income   
---
Work: $4,056   
Teach Night Class: $450   
Total Income   $4,506
----   
Cost Categories   
Housing: $300 - Get a roommate, charge them 70% of the rent. I have a great deal on this place as I've had it for 5 years and the prices have doubled in the area.
Car Payment: $0 - Pay off with Bitcoin money.
Student Loan: $0 - Pay off with Bitcoin money.
Electricity: $50 - Turn off all and lights and split with roommate
Gym: $20 - Cancel CrossFit and use the city gym.
Internet: $45 - Get slower internet.
Cellphone: $10 - Find the MMM form post about $10 cellphones
Audible: $0 - Get a library card
Prime: $0 - Cancel Prime
Spotify: $9
Bitcoin: $0   
Night Life: $100 - Cut back on going out to eat, drinks, random concerts, games, books.
Groceries: $200   
Gas: $100   - Bike to work, gym, and groceries
Supplements: $0 - Cut out protein powder and BCAA shakes
Miscellaneous: $30 - Set Cell Phone Alarm: Don't get trash night tickets anymore.
Laundry: $0 - Do at mom's
Hair Cuts: $25 - Use the beauty school for much less
Projects & Technology: $50   - Just the basics
Car Insurance: $50   
Total Costs: $889   
Balance   $3,617   

I don't know how much of this is possible or how long it would take to get each item optimized or if it's even worth the stress...

Part of me thinks I should just focus on getting higher paying jobs and just make minor adjustments to my budget.





seemsright

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #9 on: May 30, 2019, 08:28:39 PM »
You guys are awesome. I'm just digesting what you're saying...

I'm hesitant to sell my bitcoin. I've been holding it for almost 9 years and I've turned a $1,000 into almost 55k. 140k at one point!

My prediction is $100,000 bitcoin by 2020. Fingers crossed... and I get it's a huge gamble.

I have 10 years of experience as a software designer & front-end developer and I've just finished one of the hardest 7-month leadership programs in the world.

I've been looking at jobs in Washington DC for around 90-140k. Currently making around 70k.

That would go along way if I could would work remote an not have to commute into the city. I can walk to work currently.

I went ahead and put together this spending plan. It's the most extreme thing I could come up with besides living under a bridge and it accounts for selling two bitcoins and picking up a part-time teaching gig. I may even consider bartending or picking up some web design or graphic design work on the side also. I like the idea of bartending as its kinda social so I can get that interaction with other people.

Let me know if this is over the top...

Income   
---
Work: $4,056   
Teach Night Class: $450   
Total Income   $4,506
----   
Cost Categories   
Housing: $300 - Get a roommate, charge them 70% of the rent. I have a great deal on this place as I've had it for 5 years and the prices have doubled in the area.
Car Payment: $0 - Pay off with Bitcoin money.
Student Loan: $0 - Pay off with Bitcoin money.
Electricity: $50 - Turn off all and lights and split with roommate
Gym: $20 - Cancel CrossFit and use the city gym.
Internet: $45 - Get slower internet.
Cellphone: $10 - Find the MMM form post about $10 cellphones
Audible: $0 - Get a library card
Prime: $0 - Cancel Prime
Spotify: $9
Bitcoin: $0   
Night Life: $100 - Cut back on going out to eat, drinks, random concerts, games, books.
Groceries: $200   
Gas: $100   - Bike to work, gym, and groceries
Supplements: $0 - Cut out protein powder and BCAA shakes
Miscellaneous: $30 - Set Cell Phone Alarm: Don't get trash night tickets anymore.
Laundry: $0 - Do at mom's
Hair Cuts: $25 - Use the beauty school for much less
Projects & Technology: $50   - Just the basics
Car Insurance: $50   
Total Costs: $889   
Balance   $3,617   

I don't know how much of this is possible or how long it would take to get each item optimized or if it's even worth the stress...

Part of me thinks I should just focus on getting higher paying jobs and just make minor adjustments to my budget.

This budget above is IMO a pie in the sky perfect idea. Most things are great...get a roommate, cut crossfit, etc. But the one thing that strikes me as questionable...is you doing your laundry at your Mothers house. This whole being adult thing is hard and you are trying to save some cash...if you were 20 years of age...sure makes since. But at almost 40 NO!. There are ways to have clean clothes that would not cost you $50 bucks a month...you can handwash and hang dry. But you should not tax your mothers water bill, washing machine, etc because you could. Handwash most things and bring a nice bottle of wine or a take out meal when you have to do a load or two if you go that route. But do not take advantage of her!

Chris C

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« Last Edit: May 31, 2019, 07:10:51 AM by Chris C »

Freedomin5

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #11 on: May 31, 2019, 07:04:03 AM »
If you havenít done so already, you should read ďYour Money or Your LifeĒ...for free, from the library, of course. It has some greatness questions to ask yourself before making purchases.

With regard to budget, Iím not a details person, so I tend to focus on optimizing my largest expenses rather than worrying about every little expense. So for example, I found a way to get rent down to $0 for the next three years, which was our biggest expense. The next biggest expense was private school tuition, which I also got down to $0 for the next three years. I know there are some on the forum who track every single little expense, and others who track their savings but not their expenses in detail.

And I agree with you. It makes sense to concurrently focus on maximizing income and optimizing your largest expenses.

LifeHappens

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #12 on: May 31, 2019, 08:08:12 AM »
Age: 36
Income: $4,050/Month + $3,500 year end bonus
---
401k: $120,000
HSA: $10,000
One thing I want to point out is that you are not in terrible shape at all! You have a decent start on your 401k and some money in an HSA. Both of these are smart moves.

Your cutting back to the bone budget is Too Much Too Soon! If you tried to make all those changes at once you would get so overwhelmed. Pick one area of focus and start working on that. Entertainment has already been pointed out, but you could also consider selling your current car and buying something less expensive to get rid of that debt.

The Bitcoin thing... Everyone is different, but holding Bitcoin would be a major source of anxiety for me. Since you are struggling with anxiety already, is it really in your long term best interest to continue to hold so much?

BicycleB

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Re: Please Help: Any advice or guidance would be greatly appreciated.
« Reply #13 on: May 31, 2019, 11:22:10 AM »
With the exception of the laundry, and maybe the thing about the lights, the budget looks do-able. If you're going to charge the roommate full freight, deliver full service to maintain low turnover.

Personally, I haven't done the $10 cell phone thing. For simplicity, I'll assume at least some minor fudges, resulting in an outcome of roughly $1000/mo. Adding in another $2000/year for things like auto depreciation and occasional health care costs (I assume you're healthy and employer pays premiums), I interpret the likely outcome as $14,000/year. Hell, let's add $1000/year to pay for visits to family and, if crafty, a bit of additional travel; so $15k expected spending.

That gets your savings rate close to 70% even without the side job, implying that you will be only 6 years or so from FIRE...before accounting for any wage increases. I wouldn't take any side jobs unless I wanted them. Just get the roommate, make sure your career is advancing, and learn to have fun cheaply.

You seem in part to be Always On the Go. If this is because that's the most fun way to live, fine. If it's driven by anxiety, skip the side job, make the core changes, and give yourself time to calm down. The real goal isn't financial, it's living a good life. You have the tools to ensure that your finances will support a good life. Just do the basic right things and, where possible, let the worries fade. Once the 70% savings rate is actually happening for six months or more, get counseling on any remaining worries. Your mental health is important.