Author Topic: Reader Case Study- Computer Nerd with no clue.  (Read 8015 times)

azman

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Reader Case Study- Computer Nerd with no clue.
« on: September 09, 2015, 08:28:35 PM »
Hi MMM Community,

Here is my first attempt at a case study. I found this site while researching betterment.com and found the information to be useful. I'm far from living the lifestyle of Mr. Money, but I'd like to learn how to retire early. I'm currently 32 and my life goal has been to retire by the time I'm 50 but I never put much thought into how I could do it.  After I started reading Mr. Money's posts I realized that I have a lot of room for improvement and maybe I could retire sooner.

I'm running out of time for tonight so I will need to finish this post tomorrow.

CategoryMonthly
Comments
Annual
Salary/Wages for person #1$8,833$106,000
Pretax Health Ins.$333$3,996
Pretax Vision/Dental Ins.$14$168
HSA/Pension$33$390
FICA base salary/wages$8,454$101,446
401(k) / 403(b) / TSP / etc.$795Room to increase?$9,540
Employer Match$530$6,360
Income subject to IRS tax$7,659$91,906
Federal Total Income$7,659$91,906
Federal tax$1,4332015 rates, S, stand. ded., 0 exempt.$17,195
State/City tax$407Guess, using 5.70% * Fed. Taxable$4,880
Soc. Sec.$524Assumes 1 earner paying$6,290
Medicare$123$1,471
Total income taxes$2,486$29,835
Income before other expenses  $5,173$62,070
Monthly Average Expenses:
Mortgage$550$6,601
Property Tax$91$1,092
Mortgage Insurance$72$862
Beauty Shop$5$60
Cable TV$14$168
Car Insurance$75$900
Car Maintenance, Registration, etc.$460$5,520
Clothing/Shoes$30$360
Dining (Pizza, Restaurant, etc.)$560$6,720
Electricity$100$1,200
Emergency Fund$2,167$26,000
Entertainment$125$1,500
Fuel/Public Transport$70$840
Gas/Oil for heating$12$144
Groceries$115$1,380
Hair Care$25$300
Home Alarm System$40$480
Internet$55$660
Landscaping/Yard work$60$720
Phone (cell)$90$1,080
Subscriptions (paper/magazines/etc.)$15$180
Water/Sewer$40$480
Wine/Beer/Tobacco$50$600
Non-mortgage total$4,271$51,246
Other tax-advantaged investments:
Roth IRA$350Room to increase?$4,200
Total Expense$5,171$62,048
Total to invest$2$23
Summary:
"Gross" income$8,833$106,000
Income taxes$2,486$29,835
After-tax income$6,347$76,164
IRA+401k/403b/TSP/457 (Savers' credit)$1,145$13,740
Living expenses$5,200$62,402
After-tax investable$2$23
Time to FIRE?:
Time to FIRE18years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments6.00%percent
Real, after tax, return on taxable investments5.10%percent
Expected retirement total tax rate10.00%
Current Savings
Taxable$73,000
Tax-deferred (e.g. trad. IRA/401k)$56,000
Roth$19,000
Projected Savings at Retirement
Taxable$366,820
Tax-deferred (e.g. trad. IRA/401k)$651,243
Roth$184,036
Total projected stash$1,202,099
Projected Expenses in Retirement
Non-loan, non-work expenses$51,246
Income taxes$5,694
Total$56,940
Stash needed for retirement @4.0% SWR$1,423,510
Need $221,411 more.


Filing Status11=S, 2=MFJ
# of earners1
Total Income$91,906
Std. Deduct.$6,300
Act. Deduct.$6,300
AGI$91,906
MAGI$91,906
Taxable$85,606
Tax$17,195
Savers' credit$0
Tax after n-r credit$17,195
Child Tax Cred.$0
EIC$0
Net Tax$17,195
Monthly$1,433
State tax$4,8805.7%
Prop tax$1,092.%
Item. Deduct.$5,972
« Last Edit: September 09, 2015, 08:51:06 PM by azman »

Thegoblinchief

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #1 on: September 09, 2015, 08:37:53 PM »
You should be taking full advantage of the 401(k) instead of filling it about half what you're allowed. At your income tax efficiency is huge.

Why such a high emergency fund? Especially since (I think) you're single?

Why is food skewed so heavily to eating out instead of groceries? Learn to cook a little for yourself and the overall food should slash in 1/2 easily.

Your cell plan is expensive.

$25 for hair care? Guy or girl? Small amount but either way that category seems a little silly.

Travis

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #2 on: September 09, 2015, 08:54:27 PM »
First off, thank you for being so thorough with your numbers.  What are you doing with your car that requires setting aside $460 a month in maintenance?  Is a car payment in there?  If so, what kind of car and how much do you owe on it? The eating out numbers are insane. The amount you're throwing down at restaurants could feed a family of five at the grocery store.  What kind of yard do you have that requires hiring out to maintain it?

Bracken_Joy

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #3 on: September 09, 2015, 08:57:46 PM »
$90 cell and $40 landscaping jump out to me. I recommend: IP Daley's superguide http://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/

As for the landscaping, may I intro- the power of insourcing! http://www.mrmoneymustache.com/2011/09/13/domestic-outsourcing-practical-or-wussypants/ and http://www.frugalwoods.com/2015/03/16/how-insourcing-strengthened-our-marriage/  (I think the frugalwoods post still has a lot to offer even if you're single).

But yes, that dining out budget is INSANITY if you want to reach FIRE. Especially for one person.

MDM

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #4 on: September 09, 2015, 09:03:13 PM »
azman, welcome to the forum.

Good comments already by Thegoblinchief, Travis and Bracken_Joy.  Did you adjust the e-fund contribution to make expenses = income?  If so you are being too conservative.  Plan to invest that money instead (after establishing some amount of an e-fund).

Why a Roth IRA when you are in the 25% bracket?

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #5 on: September 10, 2015, 12:58:40 AM »
Hi Thegoblinchief,

I need to look into the 401k rules again for some reason I was thinking the max was 18K with employer matching combined. It sounds like I can change my 401k contribution to ~17% next year if I don't have to worry about employer matching impacting the total. I can adjust my current contribution and do a catch up for the rest of the year.

My emergency fund is high because it is currently just my savings account. I don't know much about investing so I have just left it in cash. I have 17k in my checking account that I can using for an emergency. Should I move most of my savings account to something like Vanguard? I just started a betterment account with 1k and 100 a month deposits, but I'm not sure I want to continue using it if most people just use Vanguard for the lower fees.

I can make some adjustments to my dining. Part of that expense is lunches so that is a pretty easy fix to just bring my own.

I'll look into a new cell phone plan and see if I can get a better deal. Right now I have T-mobile. I need something with reliable service since I use it for work and I'm on-call 24/7 two weeks a month. I just started a new job recently and they didn't mention reimbursement so I can look into that.

The haircuts can be cheaper a guy. They are normally about $13-14 with a $10 tip.

Thanks for the advice.

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #6 on: September 10, 2015, 01:13:40 AM »
Hi Travis,

The car maintenance is including a $400 car payment and the rest was for registration/tires/oil changes. I owe $9700@2.9% on a 2013 Genesis Coupe. I should have paid this off a long time ago, but just have this fear of needing cash for something that I need to get over.

My yard is about 15,000 sqft with 3 trees and 4 bushes. I can remove this expense since it just a luxury.

Thank you for reviewing!

Hi MDM,

I need to read up on IRA. I have always been confused on how and when to use one. I went with a Roth IRA since I could pull out the initial investments if needed and sounded less complicated. Can I make the 18k max contributions and the 5.5k IRA contributions? I don't think I have an option for an IRA at work so I'm assuming it would be created with after tax money and a tax write off at the end of the year?

Hi Bracken Joy,

I will read those articles tomorrow. Thank you for pointing them out. I realize I need to get the dining out back under control. I can fix that with bringing my lunch to work and eating at home with my gf instead of out every weekend.

Thanks again everyone,
Azman
« Last Edit: September 10, 2015, 01:24:37 AM by azman »

Thegoblinchief

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #7 on: September 10, 2015, 05:30:09 AM »
401(k) limit doesn't include employer match or profit sharing contributions. If you need help picking options, you can post all the funds available in your plan and folks can help (either in this thread or a new thread started in the investing subforum).

There's no right answer when it comes to an e-fund. Some around here barely keep a month, preferring to send everything to investments or debt retirement as quickly as possible. Some keep 3, 6, or up to 12 months. Cash playing defense can allow you to capitalize on a buying opportunity, whether real estate or equities, but there's an opportunity cost in lost returns by leaving it in cash with interest rates so low. Decide for yourself how much cushion YOU want and go from there.

Personally I have 1 month currently but the goal is to slowly build that to 3 months. My wife (sole earner) has a very secure job but with kids our expenses can vary widely month to month. I like having some cushion to absorb irregular expenses.

For investing, a great beginner resource is this:

http://jlcollinsnh.com/stock-series/

K-ice

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #8 on: September 10, 2015, 06:21:37 AM »
I noticed about $150K in savings. Nice!

A real rate of return of 6% was mentioned (tax deferred) but then there was no investment income.

If you want to FIRE, at your stage, this should be about $9K in extra income for all savings.

You mentioned you are new to inventing so how is that 6% generated? 

Thanks for clarifying the car loan details.
But you are missing a liabilities section.

What is your mortgage?  Initial, current, rate, years...  Also, your mtg insurance is high. I paid about $75 but for a $2000 pmt.

Or maybe this is home insuranc. I'm not sure.

You are single, so is this mortgage insurance necessary? It is likely a bank upsell & you could get better life insurance elsewhere if that is what you want.

That's all I have to add. Nice case study.

MDM

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #9 on: September 10, 2015, 06:46:20 AM »
Can I make the 18k max contributions and the 5.5k IRA contributions?
Yes!

Quote
I don't think I have an option for an IRA at work so I'm assuming it would be created with after tax money and a tax write off at the end of the year?
Yes again!  E.g., see https://investor.vanguard.com/ira/how-to-open-an-ira.

ETA: Opah is correct, you cannot the IRA with your income.  Either get married ;) or settle for the Roth.
« Last Edit: September 10, 2015, 10:02:43 AM by MDM »

opah

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #10 on: September 10, 2015, 07:56:05 AM »
Be careful with the traditional IRA - at your income your contributions are not tax-deductible since you have a 401k plan offered through your work. This is a reason why I went with a Roth despite having a high income, it was my only way to get into Vanguard in any tax-advantaged sense. And maybe that was your reasoning also...

http://www.irs.gov/Retirement-Plans/2015-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-Covered-by-a-Retirement-Plan-at-Work

If you're trying to minimize taxes now, max out the 401k.

zolotiyeruki

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #11 on: September 10, 2015, 08:15:02 AM »
I'm a 35yo computer nerd with a same-ballpark income (although I also have a big family).  You've got some great opportunity to ER with that kind of income!  Here's what I suggest:
1) max out your 401k
2) contribute the max to a traditional IRA.  I've been very impressed with Vanguard--a few years ago, I gave them a call to set up an IRA, and it was super, super easy. Nevermind, I forgot about the lower phase-out income for single earners
3) use your currently-going-into-emergency-fund money for #1 and #2.  If you have more left over
3) quit eating out so much.  I'm sorry, but that's ridiculous.
4) your grocery bill seems high for one person.  Are you in a HCOL area?
5) I hope that for $75, your car insurance is comprehensive.
6) Mortgage insurance?  As in PMI?  If so, you need to pay down your mortgage to the point where you can get rid of that.
7) You've got some low hanging fruit here: subscriptions, cell phone, landscaping, internet.  Call your ISP and threaten to leave, and they should offer you a deal.

You have the potential to *easily* be socking away $2500 more per month than you currently are, and with a little bit of stretching, you could get that to $3k/mo.  When you count the 25% additional savings due to reduced tax liability on the additional 401k and IRA contributions ($18k + $5.5k), that's another $500/mo you'll be saving.

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #12 on: September 10, 2015, 01:53:56 PM »
Theglobincheif thanks for the link I will check it out. I'm hoping to keep my emergency fund down to 6 months once I figure out where and how to invest my savings correctly.

MDM and Opah thanks for the advice. I've been married once so I think I will stay single with a gf for awhile :)

K-Ice,

I will fill in more information tonight and fix the FIRE section since I just left it default.

Zolotiyeruki,

In #3 are you suggesting taking my after tax cash and max out my 401k today? My current plan is to change my contribution % for the rest of the year to hit 18k.

My grocery bill is high because I had no goal and vision so I didn't care to keep track of it. Once I set some goals for myself I shouldn't have an issue cutting it by 75%.

I'll check what my car insurance covers.

The mortgage insurance is the PMI since I only put 5% down. I think it would be a good idea to pay it down.


zolotiyeruki

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #13 on: September 11, 2015, 10:08:25 AM »
In #3 are you suggesting taking my after tax cash and max out my 401k today? My current plan is to change my contribution % for the rest of the year to hit 18k.

My grocery bill is high because I had no goal and vision so I didn't care to keep track of it. Once I set some goals for myself I shouldn't have an issue cutting it by 75%.

I'll check what my car insurance covers.

The mortgage insurance is the PMI since I only put 5% down. I think it would be a good idea to pay it down.
No, the "max your 401k" comment is all pre-tax.  With your high income and single filing status, you need to cut your taxable income as much as possible.  So you're on the right track by changing your contribution up to the maximum pre-tax that's allowed.

Tracking your spending is the first step towards saving.  DW and I didn't have a budget at first when we got out of college.  When we finally started tracking our spending, we realized suddenly that we had been going out to eat a LOT more than we thought. You're already on a good path--you're tracking your spending, so you know where the money is going.

It wouldn't surprise me if you have comprehensive, on a newer car like that.  With your emergency fund, though, you can probably drop down to the minimum liability coverage and save a bunch.

I'd accelerate your mortgage paydown until you have  more than 20% equity, then ask your lender to cancel the PMI.  That's just money down the drain for you.

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #14 on: September 12, 2015, 01:55:34 AM »
Quick Update.

I called T-mobile yesterday and lowered my bill to ~$57 for now, but I'm looking into ptel or having my employer take over my cell plan. I've adjusted my 401k contributions to 22% for the rest of the year.

I've been reading http://jlcollinsnh.com/stock-series/ and I'm enjoying the information there. I need to rollover my old 401k to a IRA with Vanguard and I'm thinking with going 90/10 VTSAX/VBTLX.

I looked into my PMI and it is costing me about $852 a year. I estimate I need to pay down 12-15k to remove it. I'm thinking it is best to just make a lump sum of the amount needed now. Does anyone have experience with this? Is there any key things to ask the lender? I'm guessing they won't be very helpful since it means less money for them.

Once again thank you everyone for the advice. I have a lot more changes I need to make, but I feel like I'm starting to build some goals.

Thegoblinchief

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #15 on: September 12, 2015, 05:26:46 AM »
If you ask the lender, they will tell you what the terms for dropping the PMI are. Mine couldn't tell me over the phone but sent me a letter a few days later.

Not sure if mine was typical terms, but I can ask to have mine taken off once the principal is at <80% of the original LTV, at which point (sigh) I'll still be underwater on our house.

projekt

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #16 on: September 12, 2015, 05:41:12 AM »
One thing about your retirement/FI target: the money you're socking away into your emergency fund does not count as an expense and it will not be reflected in the retirement expenses. Right there you've cut your target in half, and you'll be saving quicker to reach it.

Read the Mad FIentist. He might help you understand the benefits of various approaches to savings.

Moostache

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #17 on: September 12, 2015, 05:48:08 AM »
I need to look into the 401k rules again for some reason I was thinking the max was 18K with employer matching combined. It sounds like I can change my 401k contribution to ~17% next year if I don't have to worry about employer matching impacting the total. I can adjust my current contribution and do a catch up for the rest of the year.

At your age the actual 401k limit, including employer match, is 53K, assuming your employer will allow you to contribute after-tax dollars once you hit your  personal 18K limit.  If your employer allows in plan conversion of after tax dollars to roth then this allows you to actually contribute up to 29K per year into a roth, which is referred to as mega backdoor roth.  Dig around here - I know there is a post about that somewhere. :)

The 29K is based on you mentioning that your employer is currently matching your contributions with a 6K contribution. If they go higher then it whittles away at the upper limit you can contribute in after-tax dollars.
« Last Edit: September 12, 2015, 05:50:11 AM by Moostache »

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #18 on: September 26, 2015, 12:27:56 PM »
So I've made some adjustments.

I paid down my principal on my house to remove the PMI. I made some adjustments to my car insurance to save about $150 a year. I switched my home insurance from State Auto to Geico and should save $290 a year. I found out my work pays for my cell and $50 for internet. I'm still working on my budget going forward, but I think I can retire in about 8.5 years now. I'm currently all in with VTSAX/VTI in my IRA, ROTH IRA, and taxable. The 401k is in all low cost Vanguard funds(VIMAX,VSMAX,VFIAX).



CategoryMonthly
Comments
Annual
Salary/Wages for person #1$8,833$106,000
Pretax Health Ins.$218$2,620
Pretax Vision/Dental Ins.$14$168
HSA/Pension$275$3,300
FICA base salary/wages$8,326$99,912
401(k) / 403(b) / TSP / etc.$1,500At maximum$18,000
Employer Match$530$6,360
Income subject to IRS tax$6,826$81,912
Other ordinary income$2$24
Federal Total Income$6,828$81,936
Federal tax$1,1922015 rates, S, item. ded., 0 exempt.$14,301
State/City tax$267Guess, using 4.24% * Fed. Taxable$3,207
Soc. Sec.$516Assumes 1 earner paying$6,195
Medicare$121$1,449
Total income taxes$2,096$25,151
Income before other expenses  $4,732$56,785
Monthly Average Expenses:
Mortgage$607$7,284
Property Tax$44$532
Home/Rent Insurance$31$372
Beauty Shop$5$60
Cable TV$14$168
Car Insurance$60$720
Car Maintenance, Registration, etc.$50$600
Clothing/Shoes$30$360
Dining (Pizza, Restaurant, etc.)$250$3,000
Electricity$150$1,800
Entertainment$175$2,100
Fuel/Public Transport$70$840
Gas/Oil for heating$15$180
Groceries$155$1,860
Hair Care$20$240
Home Alarm System$30$360
Internet$7$84
Landscaping/Yard work$60$720
Subscriptions (paper/magazines/etc.)$15$180
Travel/Vacation$150$1,800
Water/Sewer$40$480
Non-mortgage total$1,371$16,456
Loans:
Car Payment$400$4,800
Other tax-advantaged investments:
Roth IRA$458Room to increase?$5,496
Total Expense$2,836$34,036
Total to invest$1,896$22,749
Summary:
"Gross" income$8,835$106,024
Income taxes$2,096$25,151
After-tax income$6,739$80,873
IRA+401k/403b/TSP/457 (Savers' credit)$1,958$23,496
Living expenses$2,486$29,828
Non-mortgage loans$400$4,800
After-tax investable$1,896$22,749
Time to FIRE?:
Time to FIRE8.5years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments6.50%percent
Real, after tax, return on taxable investments6.50%percent
Current Savings
Taxable$40,000
Tax-deferred (e.g. trad. IRA/401k)$53,000
Roth$28,500
Projected Savings at Retirement
Taxable$353,437
Tax-deferred (e.g. trad. IRA/401k)$355,833
Roth$108,535
Total projected stash$817,805
Projected Expenses in Retirement
Non-loan, non-work expenses$16,456
Change in spending after RE$7,200/year
Total$23,656
Total loan principal due at FI$80,149
Stash needed for retirement @4.0% SWR$671,560
Have $146,246 extra.


Filing Status11=S, 2=MFJ
# of earners1
Total Income$81,936
Std. Deduct.$6,300
Act. Deduct.$7,909
AGI$81,936
MAGI$81,936
Taxable$74,027
Tax$14,301
Savers' credit$0
Tax after n-r credit$14,301
Child Tax Cred.$0
EIC$0
Net Tax$14,301
Monthly$1,192
Mtg. Int. (approx.)$4,170.%
State tax$3,2074.24%
Prop tax$532.%
Item. Deduct.$7,909
« Last Edit: September 26, 2015, 12:46:33 PM by azman »

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #19 on: September 26, 2015, 01:06:03 PM »
I plan on making more adjustments to my budget over the next couple months so I can save more. The goal is to be in under budget each month and set new goals for the next month.

I've started looking into selling my car for a used Ford Focus to get rid of my car payments. I switched jobs in June and it cut my commute by 30 miles each day. I lost about 9k, but my new job is a lot less stressful and I have a ton more free time.

I've managed to lose a couple pounds over the last couple weeks by bringing my own lunches and making my own dinner.

K-ice

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #20 on: September 26, 2015, 02:53:12 PM »
Great progress. It looks like your expenxes are almost 1/2 of what they were.

MDM

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #21 on: September 26, 2015, 04:16:35 PM »
So I've made some adjustments.
Indeed you have - well done!
You even have a slight amount more net income, as you get to take 1 exemption for yourself in figuring taxes.  This is the Form 1040 exemption, not the number of W-2 allowances.

Quote
I'm currently all in with VTSAX/VTI in my IRA, ROTH IRA, and taxable. The 401k is in all low cost Vanguard funds(VIMAX,VSMAX,VFIAX).
Certainly defensible, and may well be optimal.
If you get in a contemplative mood, consider adding some amount of bonds to your allocation.  The 8.5 years to FI is a little on the short side to "guarantee" (not that such a thing ever exists) outperformance by a 100% stock portfolio. 

dess1313

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #22 on: September 26, 2015, 05:26:46 PM »
What's your mortgage principle/term/interest rates?  now that you have your 20% down (great job) can you do anything to reduce your interest costs?

Fantastic changes made, so far.  Keep it up!

MBot

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #23 on: September 26, 2015, 05:47:27 PM »
Changing your "time to FI" from 18 years to 8.5 years thus far is pretty amazing! Good stuff.

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #24 on: September 26, 2015, 07:29:10 PM »
Thank you for the comments everyone.

MDM,
 
I was originally going to go with 90/10 VTSAX/VBTLX but I figured I could be more aggressive now and re-balance in the future.

Dess1313,

Principal is 108k, 30yr term(scheduled til 1/2038), 3.875% interest rate.



dess1313

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #25 on: September 27, 2015, 01:14:41 AM »
oh a mortgage like that will easily be devoured by a few extra payments or prepayments.  No sense running it all the way till 2038 if it meant your FI date could be improved without it.  Is it able to be refinanced now you've got your 20% down?  That will save you a few $

azman

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #26 on: September 27, 2015, 01:56:03 PM »
I'm not sure I could get a much lower rate than 3.875% and add in the cost of a refinance.

Does anyone else think refinance is a good idea?

My current plan is to invest my extra income instead of trying to pay down my mortgage.

dess1313

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #27 on: September 27, 2015, 03:51:03 PM »
not sure what your rates/terms are, because canada is a bit different i think.  it would ONLY be worth it if it saves you enough money down the road to overcome the costs to do it now.  30yrs just seems a bit long if you're planning FI before it ends.  i think you mentioned 8 years till possible FI in one of your posts

Lady Fordragon

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #28 on: September 28, 2015, 11:16:28 AM »
Great job so far on cutting down your expenses! 

A couple of things:

$175/month for entertainment seems a bit high.  What falls under this category?  Also, if your gf is up for the task, you might want to consider having her cut your hair instead.  I've been cutting my husband's hair for ~4 years now for the low cost of a $26 electric razor set.

AK

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #29 on: September 29, 2015, 06:01:24 AM »
In case you don't know, funds in an HSA can be invested too so that can help towards retiring earlier too. Also, you can select which HSA provider to use and not just the one your employer suggests. I use HSAbank with TDameritrade and buy VTI ETF shares. The Madfientist has an awesome article on HSAs being the best retirement account.

Sibley

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #30 on: September 29, 2015, 09:15:38 PM »
Hey, you're making progress, excellent! Some notes from me, I've left some things off that others have already mentioned. Sorry if I missed something, I'm tired.

Beauty Shop   $5 - you're a guy? Buy some clippers, watch some youtube videos, and cut your own hair.
Clothing/Shoes   $30   - do you actually need clothes? or do you have plenty of clothes, but half of them don't fit or you don't like so you can't find anything to wear and you just buy new ones?
Electricity   $150 - wow. that's high. anything you can do to cut that down?
Hair Care   $20   - see above. and why do you have 2 line items anyway?
Home Alarm System   $30   - my opinion of alarm systems is pretty simple. You don't need an alarm system. Either you need bars on your doors and windows (or just move to a safer area), or you need therapy for your unreasonable fears. So, bars or therapy?
Landscaping/Yard work   $60 - why can't you do your own yard work?
Subscriptions (paper/magazines/etc.)   $15   - my library has some pretty awesome things. I can read all the magazines I want, for free, on my phone/computer. Look into it maybe.

jeromedawg

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Re: Reader Case Study- Computer Nerd with no clue.
« Reply #31 on: September 30, 2015, 12:01:14 AM »
I'll reiterate what others have said.

- there are cheaper phone options out there (republic wireless, ting, pageplus, freedompop, etc etc etc)
- landscaping/yardwork? Seriously, just DIY it - save money and get some exercise
- beauty & hair - for a guy this is pretty simple: just rough it or DIY it. Even if you're a girl, you could try DIYing it.
- home alarm - I'm pretty sure there are cheaper options out there based on how much monitoring/coverage you need. If you're in a safe area or have neighborhood watch, this probably isn't much of a necessity. You could even DIY/build your own system for relatively cheap (maybe a few hundred bucks startup but DIY email/text alerts) - http://www.alarmdecoder.com/... if you're a computer nerd, this probably will be up your alley
-  entertainment - what kind of "entertainment" costs you that much per month? Just curious.. is it more so just averaging out vacation/quick getaway costs annually or something?
- cable tv - just stick with OTA, IMHO.
- newspaper/subscriptions - just go to the library or settle with getting your news and stuff online. Or only sign up when there are free subscriptions offered (they exist you just have to look)
- dining - that is quite a lot to be spending eating out. I'm guessing you eat out for lunch at work every day? And probably for dinner too? Learn to cook and bring your own lunch. Even if it's pb&j or pita and hummus... feeling 'hungry' and not needing to eat is actually OK
- 401k - definitely max it out. I made the mistake of not doing this and regret it. Anything that can be considered a tax shelter you should take advantage of and max out to the fullest while you can. Everything else is secondary.