Longtime lurker, first time poster to the MMM forums. I am engaged and my fiancee is going to start a new job soon. I'd be interested in the MMM forums' take on our situation and what you would do in our place & why:
Current Income (both): $210k to $260k, depending on bonus
Current Debts:
House with $400k in debt @ 3.5% for 15yr. Purchased last year. A bit over $100k in equity as a down-payment, so no PMI.
No consumer debt.
Paycheck Deductions
Taxes: $50k
Witholding/Benefits: $4k
Makes Net Income Approximately $150k to $200k
Personal Spending per year:
Mortgage Interest: 14k
Real Estate Taxes: 5k
Parking at Work (downtown): 5k (ouch!)
Other Commuting Expenses: 3k for me (about 1k insurance, 2k gas & maintenance), fiancee currently has a cheap bus pass but will need a car for her new job
Utilities: 5k (TV, Internet, Phones, Electricity, Gas...generally pretty wasteful here)
Eating out: 9k (my most anti-MMM vice, eating lunch everyday and quite a few dinners out to boot)
Travel: 4k
Other discretionary (Shopping/Pets/Groceries/etc): 10k, some of this is new home furnishing but we are certainly nowhere near as tight as we could be
Total Spending: About $55k, not counting mortgage principal.
Saving:
Mortgage principal: $20k
Investment Savings: $70k (maxing retirement accounts, plus either paying extra mortgage principal or saving in brokerage account)
The saving numbers were based on last year approximately when we were at the bottom end of the income range. That comes out to saving 40-45% gross or 60-65% net, counting mortgage principal as savings.
Other Assets:
About $300k of net worth, counting home equity, retirement accounts, emergency fund, etc
My Plan: We are currently ~30yrs old and by my loose numbers if we continue to save ~$100k/yr we could probably retire within 10 years. This may get thrown off due to the fact that we will likely have a kid at some point and we would be single income for a few years (income would fall by ~$60k)...but growth in investments and potential raises could offset this to make 10yrs a reasonable baseline. I am a bit disappointed that we aren't getting this done faster, but when I'm spending $9k on eating out over the past year I guess I don't have much right to complain.
My Questions:
1) What would you do in our situation? Continue to save as is? Try to cut the fat? I toy with the idea of trimming back the most wasteful areas, but often feel like the difference between saving $90k and $100k would be small, especially since I assume that many of those expenses would be cut in retirement regardless of whether I cut them now. I am torn between the desire to save more and feeling like I'm past the point of diminishing returns.
2) My fiancee's new job is not sensible to get to by public transportation (20mins each way in a car vs. 60+ minutes by public) so she will need a car. We are considering having her use the current car that I've been driving (a 2009 Honda Civic) and either:
A) Buying a used car - My heart wants to buy something more fun/luxurious - for example, a 2008 or 2009 Lexus ES350 with high mileage would be $12k to $15k and should hopefully not have major issues since it's a Toyota.
B) Buying a new car - something boring, like another Civic. Clearly sensible, very boring.
C) Me taking public transportation - My current commute by car is 20-35mins into downtown Boston, depending on traffic. Public transportation would be 40-60mins and require a combination of bus+train, and would force me to wake up earlier. I hate mornings...my main reason for being a mustachian is that I hate waking up early and relish the idea of someday not needing to. On the other hand, the two options above have me paying ~$15k up front plus $8k/yr in parking/gas/etc.
EDIT: Just to clarify, relative to some discussion below, I am interested more in the "how did you decide how much to cut and when enough was enough?" I am quite aware of the various excesses in the budget above based on many great threads on this forum.