Author Topic: Reader Case Study: Deciding whether to grow a mustache  (Read 10354 times)

huadpe

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Reader Case Study: Deciding whether to grow a mustache
« on: November 14, 2013, 10:26:01 AM »
So I am looking for some advice or encouragement as to whether I should move from where I am to a more full-blown mustachianism.  Fortunately, echoing MMM's most recent blog post, I'm coming at it from a position of strength, so I can make the choice for myself.

I currently make about $60,000 a year in income on a 1099, with taxes taking around $13-14k of that, for a net income around $46,000/yr.  I have about $32,000 in savings, with $10,000 in an emergency fund, and most of the rest invested in low-fee index funds.  Mostly in a Roth IRA, but some in a taxable account since I've maxed the Roth the past couple years.  A bit of the $32,000 is also in checking/savings for day to day expenses as well as saving for paying my quarterly estimated taxes and any taxes owed with my return.

My spending is way above where it has to be, but still about $1000 a month less than my income.  That's an average though, as my income can vary by as much as $3000 a month.  I have no debts whatsoever.

My current fixed bills are:
$500/mo - rent
$160/mo - car ins
$45/mo - cell phone (Ting)
$8/mo - netflix

Estimated basic recurring costs (average of last year on mint):
$200/month gas
$50/month tolls, public transport, and miscellaneous transport (i.e. the time I landed at 3 am at the airport and needed to take a cab).
$30/month car maintenance and repairs.
~$800/month food expense. I don't track carefully since I do it mostly with cash, but I'd say it's probably quite high.  $800 is my estimate.
~$600/month travel expense.  My boyfriend lives in Mississauga Canada, and I fly up to see him about every 3-4 weeks.  I also rent a car when I'm up there, as he doesn't drive and a car rental is actually cheaper than roundtrip cabs.
~$400/month miscellaneous spending, including clothing and other sundries.

Now, please, before you rip my bloated budget to shreds, the question I have is should I move towards early retirement or not.  I'm 25 years old, and with my current pace of savings, on track for a quite comfortable retirement around the "normal" retirement age or a bit earlier.  I work in a professional environment where I enjoy my work reasonably well and have pretty wide latitude in making sure things get done.  I have been reading MMM and find it pretty interesting, but I also enjoy, y'know, spending money on stuff I want.  For example, my b/f and I took a last minute trip to Vegas in Sept. which was really fun.  And I like going out to nice restaurants and such. 

So I guess the question is, if I'm not desperate to stop working, and am not spending beyond my means, what is the big pull of going to a fully mustachian lifestyle?

smalllife

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #1 on: November 14, 2013, 10:38:13 AM »

Now, please, before you rip my bloated budget to shreds, the question I have is should I move towards early retirement or not.  I'm 25 years old, and with my current pace of savings, on track for a quite comfortable retirement around the "normal" retirement age or a bit earlier.  I work in a professional environment where I enjoy my work reasonably well and have pretty wide latitude in making sure things get done.  I have been reading MMM and find it pretty interesting, but I also enjoy, y'know, spending money on stuff I want.  For example, my b/f and I took a last minute trip to Vegas in Sept. which was really fun.  And I like going out to nice restaurants and such. 

So I guess the question is, if I'm not desperate to stop working, and am not spending beyond my means, what is the big pull of going to a fully mustachian lifestyle?

1. Ignoring  your budget
2. Do you want to retire early?  If no, continue as you are.  If you at least want the option (say if you get tired of work in 10 years), that isn't possible without laying the groundwork.

Bruised_Pepper

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #2 on: November 14, 2013, 10:50:55 AM »
So I guess the question is, if I'm not desperate to stop working, and am not spending beyond my means, what is the big pull of going to a fully mustachian lifestyle?

I think the great benefit of going Mustachian is that you're still able to live a cushy life with everything you love, but still spend less money doing it.  All you have to do is get a little creative or put in a bit more effort.  You said you like going out to nice restaurants...why not just learn to be a gourmet cook yourself?  Then you can have nice food every meal and not have to pay a service premium to get it.  Assuming you flew to Las Vegas, simply planning the trip 6 weeks to 2 months out would save you a ton of money on plane tickets rather than going last minute. 

You can have it all, or you can have it all, spend less and save more. 

Spudd

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #3 on: November 14, 2013, 10:59:26 AM »
I enjoyed my work too, at the beginning. 15 years later, I now think it sucks. Mainly because the corporation has morphed the way they do things, so all the things I enjoyed have been outsourced.

I wish I had saved more earlier, because then I would be able to quit this job and do something I actually like. As it is, I'm scrimping hard-core for a few more years and then I'll be able to go.

Having a low-cost lifestyle and high savings gives you a heck of a lot more freedom.

catccc

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #4 on: November 14, 2013, 11:18:37 AM »
The career you reasonably enjoy could get old, esp given you are 25 and haven't been at it that long, assuming you started this career after a few years in college.  If your budget continues to grow with your income, you will be "stuck" working and therefore no longer in a position of strength.  So consider the future.  If you truly see things remaining constant, you needed bother with a mustache.  But on the off chance (or, I think, likely chance) that things change, having a stash will grant you a much stronger position of strength.  Think about what you want to do in the future- own a home, start a family, travel to more exotic destinations than Las Vegas?

I had relatively low expenses between 23-27, and had 100K socked away by 27.  I indulged sporadically, mostly travel.  Still, I wish I had managed it even better!  Now at 34, I'm married now and my spouse stays at home with our 2 kids, and we are still working at the stash!  For me, work is not so enjoyable when you have to leave your loved ones behind to do it every day.  This is very different from when I was single and my partner and I were long distance.  I didn't miss him during the week because I only saw him on weekends, anyway.  And we didn't have any kids, so they weren't there to miss.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #5 on: November 14, 2013, 11:33:50 AM »
I think the great benefit of going Mustachian is that you're still able to live a cushy life with everything you love, but still spend less money doing it.  All you have to do is get a little creative or put in a bit more effort.  You said you like going out to nice restaurants...why not just learn to be a gourmet cook yourself?  Then you can have nice food every meal and not have to pay a service premium to get it.  Assuming you flew to Las Vegas, simply planning the trip 6 weeks to 2 months out would save you a ton of money on plane tickets rather than going last minute. 

You can have it all, or you can have it all, spend less and save more.

The last minute Vegas trip was actually super cheap - we probably wouldn't have gone if it was pricey (It was about $400/person for roundtrip flight and 3 nights at a super fancy-pants hotel).  I do figure myself a pretty good cook, but I spend a lot on fancy ingredients sometimes too (e.g. $15/lb swiss gruyere for the onion soup I made last night).  Protip: do not make french onion soup for a weeknight meal unless you like dinner at 9pm.  Most of my meals out are either a fancy date night dinner with David when I go to visit or $5-10 for lunches while I'm at work.

Maybe I am mustachian and don't realize it. I just feel like I read about the levels of thrift on this form and see myself not matching them, and thus feel like I'm missing something.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #6 on: November 14, 2013, 11:38:46 AM »
I enjoyed my work too, at the beginning. 15 years later, I now think it sucks. Mainly because the corporation has morphed the way they do things, so all the things I enjoyed have been outsourced.

I wish I had saved more earlier, because then I would be able to quit this job and do something I actually like. As it is, I'm scrimping hard-core for a few more years and then I'll be able to go.

Having a low-cost lifestyle and high savings gives you a heck of a lot more freedom.

The career path I'm on is towards self-employment and owning my own firm, so I hope I'll still enjoy it 15 years down the road.

I agree about the freedom point.  I am just not sure how much the returns diminish at scale.  E.g. right now I have enough freedom where I can survive a year of unemployment pretty much fine.  That's an okay cushion for job changing, but still has risk involved.  The second year's worth of savings makes the cushion better, but the marginal impact on my psychic wellbeing is way below the first.  I am trying to figure if there's an inflection around the "forever" mark where things change.  I'm not certain, and so I'm trying to seek more helpful comments like yours.  Thanks by the way.

Eric

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #7 on: November 14, 2013, 11:38:58 AM »
You're 25.  If you work until "regular" retirement age, you're looking at 40+ years of work.  A lot of things can change in 40 years.  If you're like most people, you'll have many different jobs, and many different bosses.  Saving more now will not only put the power of compounding on your side, it will put you well on your way to having F-U Money.

http://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/

JohnGalt

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #8 on: November 14, 2013, 11:39:05 AM »
I'll echo everyone else in saying that at 25, it's going to be hard to judge what you'll feel like 5, 10, 15, or 20 years down the line. 

At 25 I was basically in exactly the same spot you're in now.  Made about the same money, enjoyed working and figured that as long as I was spending below my means, I was doing pretty well. 
A couple years later - I was making even more money and working for a better company and, by 25 year old me's standards, should have been ecstatic.  However, I started getting bored at work and have since realized that there are many other things I'd rather spend my time doing.  Luckily, I was like you and stayed out of debt (mortgage aside, but I've since sold the house - definitely regretted buying it.  If you're on the fence, don't lock yourself into anything) and had already started saving a decent amount so it wasn't hard to shift gears.  But, had I done even just a little shifting a few years sooner, I'd be pretty much done with full time working (phase 1 of my plans is to save enough that my investments cover my bare minimum expenses) and moved onto my next phase (work part time to cover bare expenses + extras, let phase 1 savings grow until working is fully optional).  Sure I'm only talking about a couple years difference, but those couple years feel like a long time now that I'm ready to be done. 

My advice - Enjoy life.  Keep making the good decisions you're already onto (no debt, living below your means).  Just add in an inquisitive nature to your expenditures.  Don't just spend because "I can afford it without going into debt so I must be doing alright".  If you at least examine where your money is going, you may find easy ways to optimize that won't really cost you any enjoyment.  Future you will appreciate any such improvements while current you will continue to be happy and enjoy life. 

This site isn't about an all or nothing attitude where you're either cutting every expense possible with a singular goal of retiring as soon as possible or you're an "anti-mustachian" (I really hate that term by the way).  It's about living an examined life where decisions are made consciously because you believe they'll improve your life overall - not just because it's what is expected of you or is the commonly accepted recipe for life. 
« Last Edit: November 14, 2013, 11:46:59 AM by JohnGalt »

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #9 on: November 14, 2013, 11:46:29 AM »
The career you reasonably enjoy could get old, esp given you are 25 and haven't been at it that long, assuming you started this career after a few years in college.  If your budget continues to grow with your income, you will be "stuck" working and therefore no longer in a position of strength.  So consider the future.  If you truly see things remaining constant, you needed bother with a mustache.  But on the off chance (or, I think, likely chance) that things change, having a stash will grant you a much stronger position of strength.  Think about what you want to do in the future- own a home, start a family, travel to more exotic destinations than Las Vegas?

I had relatively low expenses between 23-27, and had 100K socked away by 27.  I indulged sporadically, mostly travel.  Still, I wish I had managed it even better!  Now at 34, I'm married now and my spouse stays at home with our 2 kids, and we are still working at the stash!  For me, work is not so enjoyable when you have to leave your loved ones behind to do it every day.  This is very different from when I was single and my partner and I were long distance.  I didn't miss him during the week because I only saw him on weekends, anyway.  And we didn't have any kids, so they weren't there to miss.

Thanks for this - I think you are coming from a spot very similar to mine.  If you don't mind me asking a personal question, from how you phrase things (and the relative infrequency in American society of stay at home dads), it sounds like you may be in a same-sex relationship?  I am gay myself, and so I was wondering if you had any perspective on being a stay at home parent in that situation, since it is culturally unusual.  If I'm wtong about that, sorry for making wrong assumptions, though I'd still appreciate the perspectives on stay-at-home-dadness in a straight relationship!

Bruised_Pepper

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #10 on: November 14, 2013, 11:47:48 AM »
My advice - Enjoy life.  Keep making the good decisions you're already onto (no debt, living below your means).  Just add in an inquisitive nature to your expenditures.  Don't just spend because "I can afford it without going into debt so I must be doing alright".  If you at least examine where your money is going, you may find easy ways to optimize that won't really cost you any enjoyment.  Future you will appreciate any such improvements while current you will continue to be happy and enjoy life.

Well said.

I do it because I don't ever want to HAVE to work again.  I like my job, but I don't want to be obligated to do it when I'd rather sleep in or do something just for me.  Do you love your job?  The Bruised_Pepper test to know if you love your job: would you do it for free?  If not, consider what you'd rather be doing with your time.  Wouldn't you rather have an extra 25 years to do that full-time?

TrMama

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #11 on: November 14, 2013, 12:08:32 PM »
Do you want kids? If yes, would you like a nice long parental leave? Do you want to buy a house eventually? Either of those goals are vastly more attainable if you have a big stash saved up.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #12 on: November 14, 2013, 12:10:39 PM »
I'll echo everyone else in saying that at 25, it's going to be hard to judge what you'll feel like 5, 10, 15, or 20 years down the line. 

At 25 I was basically in exactly the same spot you're in now.  Made about the same money, enjoyed working and figured that as long as I was spending below my means, I was doing pretty well. 
A couple years later - I was making even more money and working for a better company and, by 25 year old me's standards, should have been ecstatic.  However, I started getting bored at work and have since realized that there are many other things I'd rather spend my time doing.  Luckily, I was like you and stayed out of debt (mortgage aside, but I've since sold the house - definitely regretted buying it.  If you're on the fence, don't lock yourself into anything) and had already started saving a decent amount so it wasn't hard to shift gears.  But, had I done even just a little shifting a few years sooner, I'd be pretty much done with full time working (phase 1 of my plans is to save enough that my investments cover my bare minimum expenses) and moved onto my next phase (work part time to cover bare expenses + extras, let phase 1 savings grow until working is fully optional).  Sure I'm only talking about a couple years difference, but those couple years feel like a long time now that I'm ready to be done. 

My advice - Enjoy life.  Keep making the good decisions you're already onto (no debt, living below your means).  Just add in an inquisitive nature to your expenditures.  Don't just spend because "I can afford it without going into debt so I must be doing alright".  If you at least examine where your money is going, you may find easy ways to optimize that won't really cost you any enjoyment.  Future you will appreciate any such improvements while current you will continue to be happy and enjoy life. 

This site isn't about an all or nothing attitude where you're either cutting every expense possible with a singular goal of retiring as soon as possible or you're an "anti-mustachian" (I really hate that term by the way).  It's about living an examined life where decisions are made consciously because you believe they'll improve your life overall - not just because it's what is expected of you or is the commonly accepted recipe for life.

This is very well said.  I think part of what's been throwing me is that there's a tendency to use moralistic language regarding levels of expenditure above the minimum required, and I feel like when I look at where I want to spend money (e.g. seeing my b/f frequently means lots spent on flights), that I'm being wrong somehow, even if they are considered choices.

WageSlave

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #13 on: November 14, 2013, 12:28:58 PM »
Maybe I am mustachian and don't realize it.

I don't think so.  :)  Better at personal finance than the average American, yes.  But far from MMM's level of thrift and optimization.  (And in the spirit of full disclosure, neither am I.)

The Bruised_Pepper test to know if you love your job: would you do it for free?  If not, consider what you'd rather be doing with your time.

Whether or not FIRE is being considered, I think everyone should do this thought experiment.  If your unknown billionaire uncle dies and passes his fortune to you, will you continue to do your job for free?

And even if your answer is "yes", can you say with certainty that you'll continue to love it for 30+ years?  Will you feel the same, will your employer be the same, etc etc?  I think there are far too many dynamics involved for anyone to say that he'll still love his job after 30+ years.

Perhaps another spin on this is as follows: the non-free things you love to do, the "better things in life" you enjoy, like dining out, fancy hotels, whatever: do you need to experience them all, right now, as much as possible?  If you're looking at 30+ years of work, then you certainly have 30+ years to enjoy all that life has to offer.  How much do you need, and how often do you need it?  And do you want it all now, so that when the next thing comes along, you indulge in that as well?

There's the thrifty stoic on one end and the debt-fueled consumerist on the other.  I don't think it has to be an all-or-nothing proposition.  Clearly, right now, you're somewhere in the middle.  Why not challenge yourself to move a little closer to the thrifty side?  Start small, start simple: one less eating-out per month, one less car trip per month, etc.

You're 25.  If you work until "regular" retirement age, you're looking at 40+ years of work.

The typical working career is more years than the number of years you've been alive.  You're looking at a length of time longer than your whole life to this point.  You can imagine 30+ years in an abstract since, but what does 30+ years really feel like?  Only someone who's lived longer than that can say for sure.  You could even argue that your "adult age" is actually 25-18 or something similar, since it takes everyone many years to reach intellectual and emotional maturity.

At 25 I was basically in exactly the same spot you're in now.  Made about the same money, enjoyed working and figured that as long as I was spending below my means, I was doing pretty well.

Me too.  I might have even answered yes to the "would you do this job for free question".  But then I got a new boss, and things continually got increasingly less fun.  About the time I was wondering what my next move was going to be, my friend invited me to come join his startup.  I was miserable, and just about left, but they paid me enough to stay.  Eventually, things turned around and I really got to like the job.  And then I was given a decision which direction I wanted to take my role.  My boss pushed me in a direction that I have since regretted taking.

But it's been about two years now since I discovered ERE and MMM, and I find much comfort in working towards a future where I can do what I want with my time.

the fixer

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #14 on: November 14, 2013, 12:31:20 PM »
I feel like being "on track" for a traditional retirement at 25 may be an exceptional thing in our society, but it's still not great. Most people at 25 are hardly saving anything, essentially they are relying on things to get better for them through their working life. Your plan isn't as bad, but it still has a big assumption: things can't get worse for you or you'll be in trouble.

There are lots of ways people can seriously mess up financially. MMM and jlcollinsnh both have horror stories of real estate/business investments gone bad, and I have more of these stories I could tell from my family. Increasing cost of healthcare should be better thanks to Obamacare but with the political mess that law is in there's no guarantee it's going to work. And 7% average real returns in the stock market are predicted from past performance, but while there are good intuitive arguments for future long-term returns to at least be close to this there's no guarantee.

If you build some more safety margins into your plan, even a small one like saving 30% more than your target each month, you will be in a much better position to handle the above challenges, or others which none of us see coming yet. Having some more discipline on your expenses (aka flexing your frugality muscle for its own sake) will also prepare you to dial back your lifestyle if you are forced to one day.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #15 on: November 14, 2013, 01:10:00 PM »
Maybe I am mustachian and don't realize it.

I don't think so.  :)  Better at personal finance than the average American, yes.  But far from MMM's level of thrift and optimization.  (And in the spirit of full disclosure, neither am I.)

The Bruised_Pepper test to know if you love your job: would you do it for free?  If not, consider what you'd rather be doing with your time.

Whether or not FIRE is being considered, I think everyone should do this thought experiment.  If your unknown billionaire uncle dies and passes his fortune to you, will you continue to do your job for free?

And even if your answer is "yes", can you say with certainty that you'll continue to love it for 30+ years?  Will you feel the same, will your employer be the same, etc etc?  I think there are far too many dynamics involved for anyone to say that he'll still love his job after 30+ years.

Perhaps another spin on this is as follows: the non-free things you love to do, the "better things in life" you enjoy, like dining out, fancy hotels, whatever: do you need to experience them all, right now, as much as possible?  If you're looking at 30+ years of work, then you certainly have 30+ years to enjoy all that life has to offer.  How much do you need, and how often do you need it?  And do you want it all now, so that when the next thing comes along, you indulge in that as well?

There's the thrifty stoic on one end and the debt-fueled consumerist on the other.  I don't think it has to be an all-or-nothing proposition.  Clearly, right now, you're somewhere in the middle.  Why not challenge yourself to move a little closer to the thrifty side?  Start small, start simple: one less eating-out per month, one less car trip per month, etc.

You're 25.  If you work until "regular" retirement age, you're looking at 40+ years of work.

The typical working career is more years than the number of years you've been alive.  You're looking at a length of time longer than your whole life to this point.  You can imagine 30+ years in an abstract since, but what does 30+ years really feel like?  Only someone who's lived longer than that can say for sure.  You could even argue that your "adult age" is actually 25-18 or something similar, since it takes everyone many years to reach intellectual and emotional maturity.

At 25 I was basically in exactly the same spot you're in now.  Made about the same money, enjoyed working and figured that as long as I was spending below my means, I was doing pretty well.

Me too.  I might have even answered yes to the "would you do this job for free question".  But then I got a new boss, and things continually got increasingly less fun.  About the time I was wondering what my next move was going to be, my friend invited me to come join his startup.  I was miserable, and just about left, but they paid me enough to stay.  Eventually, things turned around and I really got to like the job.  And then I was given a decision which direction I wanted to take my role.  My boss pushed me in a direction that I have since regretted taking.

But it's been about two years now since I discovered ERE and MMM, and I find much comfort in working towards a future where I can do what I want with my time.

Thanks, there's some really good stuff here.

WageSlave

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #16 on: November 14, 2013, 01:24:08 PM »
Since you posted a budget, someone needs to do a little facepunching.  :)

My current fixed bills are:
$500/mo - rent
$160/mo - car ins
$45/mo - cell phone (Ting)
$8/mo - netflix

Estimated basic recurring costs (average of last year on mint):
$200/month gas
$50/month tolls, public transport, and miscellaneous transport (i.e. the time I landed at 3 am at the airport and needed to take a cab).
$30/month car maintenance and repairs.
~$800/month food expense. I don't track carefully since I do it mostly with cash, but I'd say it's probably quite high.  $800 is my estimate.
~$600/month travel expense.  My boyfriend lives in Mississauga Canada, and I fly up to see him about every 3-4 weeks.  I also rent a car when I'm up there, as he doesn't drive and a car rental is actually cheaper than roundtrip cabs.
~$400/month miscellaneous spending, including clothing and other sundries.

Net income: $46k/year or about $3833/month.  Expenses total $2793/month or $33.5k/year.

The thing that jumps out at me is the car-related expenses.

$200/month in gas.  Assume gas is $4/gallon, that means you're using 50 gallons/month.  If your car gets only 20 MPG, that implies you're driving 1000 miles/month.  Assume 20 working days per month, and you average 50 miles/day, implying your job is 25 miles from where you live.  (This is rough analysis - assume you don't drive anywhere but to work.)

If gas is $3.75/gal and your car gets 30 MPG, that works out to 1600 miles/month or 80 miles per working day!

You could argue that your apartment costs only $500/month, but I would argue that you have to add in all your car-related expenses, so another $390/month (gas + insurance + maintenance).  Not to mention, your time is worth something.  Move closer to work, period.  Your rent would have to go up dramatically to compensate for both car-costs and your time cost.  And read Your Money or Your Life to get a better feeling of what your time costs (or how the long commute is significantly lowering your effective per-hour wage).

What about that car insurance?  Are you driving a luxury car?  Do you have full-on comprehensive and collision coverage, with all the goodies like roadside assistance?  Even if you don't want to retire early, I see no reason why anyone should buy anything more than the legal minimum in car insurance, and drive a car that they can afford to otherwise "self-insure".  I.e., you should have a big enough stache that you can completely replace your car out-of-pocket without affecting your finances too greatly.  The cheaper your car, the easier this is.

As a single person with no kids and presumably no pets, you'll have a hard time persuading this crowd that you need anything more than a pretty humble, very high MPG vehicle.

One of the most eye-opening concepts MMM presented to me is just how expensive cars are.  Growing up, I just thought cars were a way of life.  But if you take the time to do a car cost analysis, you'll find that they are really expensive.  Luxury cars with poor MPG (and premium fuel only requirements) are outrageously expensive, but even frugal, 10-year old MMM approved high-MPG cars are far from cheap.  I have a car I now realize I should have sold years ago---it rarely gets used, and I truly haven't needed it in a long time.  Carmax offered me $2k for it.  Simply keeping it legally driveable (but not actually driving it) costs me $320/year for insurance plus $100/year title renewal plus $65/year city sticker.  That's nearly 25% of it's value, year after year, before I've even filled up the tank!

As for travel expenses: are you at least taking full advantage of rewards-based credit cards and/or airline programs?  Plan in advance, strategically schedule to maximize points/miles, take weird off-hour flights, etc.  I've never traveled much, so don't have too much experience, but I've seen a few people on this forum make some impressive posts on their creative use of credit card points and frequent flyer miles.

$800/month for food is borderline obscene.  Are you including dining out in this, or just meals at home?  In my own accounting I distinguish between the grocery store and dining out.  If your number includes dining out, it's maybe not as bad.  But if that's a pure grocery expense, look out!  I feed a family of four for less than that, and that includes an indulgent share of convenience foods.  Start simple: dine out one less time per month, or start taking your lunch to work one or more times per week.

Take a little time to play with tables of numbers, where you change how much you make, spend, and save every year, and also add in the compound interest.  You already know the conclusion: save early and safe often to maximize your long-term value.  The "magic" of compounding is from time, so the earlier you can start saving, the more "magic" you get.  But if you can save say another $500/month, what does that do to your FIRE timeline?  I suspect you have some low-hanging fruit in your budget: areas where you can save with minimal or no impact to your lifestyle.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #17 on: November 14, 2013, 02:00:06 PM »
Since you posted a budget, someone needs to do a little facepunching.  :)

My current fixed bills are:
$500/mo - rent
$160/mo - car ins
$45/mo - cell phone (Ting)
$8/mo - netflix

Estimated basic recurring costs (average of last year on mint):
$200/month gas
$50/month tolls, public transport, and miscellaneous transport (i.e. the time I landed at 3 am at the airport and needed to take a cab).
$30/month car maintenance and repairs.
~$800/month food expense. I don't track carefully since I do it mostly with cash, but I'd say it's probably quite high.  $800 is my estimate.
~$600/month travel expense.  My boyfriend lives in Mississauga Canada, and I fly up to see him about every 3-4 weeks.  I also rent a car when I'm up there, as he doesn't drive and a car rental is actually cheaper than roundtrip cabs.
~$400/month miscellaneous spending, including clothing and other sundries.

Net income: $46k/year or about $3833/month.  Expenses total $2793/month or $33.5k/year.

The thing that jumps out at me is the car-related expenses.

$200/month in gas.  Assume gas is $4/gallon, that means you're using 50 gallons/month.  If your car gets only 20 MPG, that implies you're driving 1000 miles/month.  Assume 20 working days per month, and you average 50 miles/day, implying your job is 25 miles from where you live.  (This is rough analysis - assume you don't drive anywhere but to work.)

If gas is $3.75/gal and your car gets 30 MPG, that works out to 1600 miles/month or 80 miles per working day!

You could argue that your apartment costs only $500/month, but I would argue that you have to add in all your car-related expenses, so another $390/month (gas + insurance + maintenance).  Not to mention, your time is worth something.  Move closer to work, period.  Your rent would have to go up dramatically to compensate for both car-costs and your time cost.  And read Your Money or Your Life to get a better feeling of what your time costs (or how the long commute is significantly lowering your effective per-hour wage).

I get about 25mpg and drive ~10mi to work.  Most of that gas is on the 2-3 times a year I drive ~500mi up to Canada to see the boyfriend, as well as an occasional trip to Boston to see friends I have there.  The most recent of these was around the July 4/Canada day holiday and involved another ~500 miles (r/t) to and from Massassauga Provincial Park for an awesome canoeing and camping trip.  If you're ever near there, it is a really amazing place, especially because all of the campsites are only accessible by canoe, so you get a really secluded effect.  A few are even on their own islands.

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What about that car insurance?  Are you driving a luxury car?  Do you have full-on comprehensive and collision coverage, with all the goodies like roadside assistance?  Even if you don't want to retire early, I see no reason why anyone should buy anything more than the legal minimum in car insurance, and drive a car that they can afford to otherwise "self-insure".  I.e., you should have a big enough stache that you can completely replace your car out-of-pocket without affecting your finances too greatly.  The cheaper your car, the easier this is.

As a single person with no kids and presumably no pets, you'll have a hard time persuading this crowd that you need anything more than a pretty humble, very high MPG vehicle.


I have a '05 sonata I got a few years back for $8200 with pretty low mileage.  My insurance is liability only.  I'm young and in NY, so it's expensive.  Also I kinda was at fault in the accident resulting in my purchase of the Sonata, so my rates aren't the best.

Quote


One of the most eye-opening concepts MMM presented to me is just how expensive cars are.  Growing up, I just thought cars were a way of life.  But if you take the time to do a car cost analysis, you'll find that they are really expensive.  Luxury cars with poor MPG (and premium fuel only requirements) are outrageously expensive, but even frugal, 10-year old MMM approved high-MPG cars are far from cheap.  I have a car I now realize I should have sold years ago---it rarely gets used, and I truly haven't needed it in a long time.  Carmax offered me $2k for it.  Simply keeping it legally driveable (but not actually driving it) costs me $320/year for insurance plus $100/year title renewal plus $65/year city sticker.  That's nearly 25% of it's value, year after year, before I've even filled up the tank!

As for travel expenses: are you at least taking full advantage of rewards-based credit cards and/or airline programs?  Plan in advance, strategically schedule to maximize points/miles, take weird off-hour flights, etc.  I've never traveled much, so don't have too much experience, but I've seen a few people on this forum make some impressive posts on their creative use of credit card points and frequent flyer miles.


I'm pretty good with frequent flyer programs.  I generally can't do a lot of off-hour flights since I am trying to maximize my time with David vs. time taken off work.  But I generally shop around and get good deals.  I am generally flexible about which weekends I travel to see him, so that gives me some flex in shopping.  Plus the best flights for me are the late fri night and late sun night flights, which aren't the most popular.

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$800/month for food is borderline obscene.  Are you including dining out in this, or just meals at home?  In my own accounting I distinguish between the grocery store and dining out.  If your number includes dining out, it's maybe not as bad.  But if that's a pure grocery expense, look out!  I feed a family of four for less than that, and that includes an indulgent share of convenience foods.  Start simple: dine out one less time per month, or start taking your lunch to work one or more times per week.


This is all food all sources, and is probably a high estimate.  It is definitely one of the areas of my budget where I can trim the most though.

Quote

Take a little time to play with tables of numbers, where you change how much you make, spend, and save every year, and also add in the compound interest.  You already know the conclusion: save early and safe often to maximize your long-term value.  The "magic" of compounding is from time, so the earlier you can start saving, the more "magic" you get.  But if you can save say another $500/month, what does that do to your FIRE timeline?  I suspect you have some low-hanging fruit in your budget: areas where you can save with minimal or no impact to your lifestyle.

I have fiddled with FIREcalc quite a bit. Doing some fiddling right now, with my current savings pace, I would be able to retire around 2040 (age 52).  $500/month changes that to 2036 with no corresponding spending change.

brewer12345

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #18 on: November 14, 2013, 02:19:55 PM »
Let's be clear: geting to FIRE requires a lot of drive and personal sacrifice.  No getting around it.  If you don't have a strong desire to do so, you will be setting yourself up for pointless misery for many years.  However, there is a cost: if you decide not to bother at your current age, you are pretty much making a choice that you will have to live with for at least a decade, probably the rest of your life.  So I suggest that you do some navel-gazing and decide whether you are really ready to work at least the next 30 years, or whether you would like to be able to bail sooner.  Everyone has to make this decision for themselves, the best you can do is be conscious of the decision you are making.

catccc

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #19 on: November 14, 2013, 02:20:20 PM »
The career you reasonably enjoy could get old, esp given you are 25 and haven't been at it that long, assuming you started this career after a few years in college.  If your budget continues to grow with your income, you will be "stuck" working and therefore no longer in a position of strength.  So consider the future.  If you truly see things remaining constant, you needed bother with a mustache.  But on the off chance (or, I think, likely chance) that things change, having a stash will grant you a much stronger position of strength.  Think about what you want to do in the future- own a home, start a family, travel to more exotic destinations than Las Vegas?

I had relatively low expenses between 23-27, and had 100K socked away by 27.  I indulged sporadically, mostly travel.  Still, I wish I had managed it even better!  Now at 34, I'm married now and my spouse stays at home with our 2 kids, and we are still working at the stash!  For me, work is not so enjoyable when you have to leave your loved ones behind to do it every day.  This is very different from when I was single and my partner and I were long distance.  I didn't miss him during the week because I only saw him on weekends, anyway.  And we didn't have any kids, so they weren't there to miss.

Thanks for this - I think you are coming from a spot very similar to mine.  If you don't mind me asking a personal question, from how you phrase things (and the relative infrequency in American society of stay at home dads), it sounds like you may be in a same-sex relationship?  I am gay myself, and so I was wondering if you had any perspective on being a stay at home parent in that situation, since it is culturally unusual.  If I'm wtong about that, sorry for making wrong assumptions, though I'd still appreciate the perspectives on stay-at-home-dadness in a straight relationship!

It's not too personal (for me, at least), and you needn't apologize about making assumptions.  It's actually refreshing.  I am a straight lady, married to a straight man.  Still, your assumption makes me smile, because I dislike that the default often is to think that couples are all straight and stay at home parents are all moms.  So I have a tendency to phrase things un-gendered-ly, especially in forums when it isn't obvious what my gender or sexual orientation are.

Stay at home dad-ness is pretty cool, IMO.  I actually took a turn at SAHM-ness for a year after our 1st was born.  It didn't make sense money wise, but I disliked my job at the time, and we had this tiny apartment (with tiny rent!) and it was a now-or-never kind of chance for me.  The fact that we've both done the SAHP thing is great.  I know it's crazy, and if occasionally the house is in shambles when I come home and DH has zero dinner ideas, I'm okay with it.  I love that he gets to be involved with school stuff (our oldest started kindergarten this year) and is just really involved in raising our kids.  Not that I'm not involved, but it's definitely different given societal norms.  In any relationship, straight or gay, I just think it is important for the non-SAHP to understand that the SAHP is doing really important work, and for each to appreciate the other's contribution to the family.   Sometimes I worry that people that don't know my husband think he's some kind of pushover or I'm some kind of power-bitch with our situation.  But it's not true, so they can think what they want, I guess...

btw, long distance for us was just a 2.5 hour drive.  Good luck to you!

randymarsh

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #20 on: November 14, 2013, 02:46:13 PM »
One thing to consider is that even if you have a decent job now, that entire occupation may not exist in 30 years! Technology moves so fast. Of course I think most MMM readers would be able to adapt, but still, I like the idea of not having to work in case things change so much that I'm not forced into going back to school at 45 when I really don't want to.

Albert

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #21 on: November 14, 2013, 03:33:49 PM »
There is no such thing as a completely risk free decision, that's probably the first thing we all need to accept.

As for FI it would take a serious long term effort for sure particularly if your income doesn't increase significantly. I myself started to work seriously on it only few years ago (I'm in my mid 30-ties), but I am taking a slow route aiming for FI at 50-55. I do love my job after all! You can try the same and then accelerate later on if you find that working life is not really for you. You are so young that it won't be too late in another decade.

Your budget is not awful, but what stands out to me are high travel expenses and high food costs which are somewhat balanced with very low housing costs. I bet you could save an extra $500 with hardly any sacrifice.

JohnGalt

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #22 on: November 14, 2013, 05:54:53 PM »
I'll echo everyone else in saying that at 25, it's going to be hard to judge what you'll feel like 5, 10, 15, or 20 years down the line. 

At 25 I was basically in exactly the same spot you're in now.  Made about the same money, enjoyed working and figured that as long as I was spending below my means, I was doing pretty well. 
A couple years later - I was making even more money and working for a better company and, by 25 year old me's standards, should have been ecstatic.  However, I started getting bored at work and have since realized that there are many other things I'd rather spend my time doing.  Luckily, I was like you and stayed out of debt (mortgage aside, but I've since sold the house - definitely regretted buying it.  If you're on the fence, don't lock yourself into anything) and had already started saving a decent amount so it wasn't hard to shift gears.  But, had I done even just a little shifting a few years sooner, I'd be pretty much done with full time working (phase 1 of my plans is to save enough that my investments cover my bare minimum expenses) and moved onto my next phase (work part time to cover bare expenses + extras, let phase 1 savings grow until working is fully optional).  Sure I'm only talking about a couple years difference, but those couple years feel like a long time now that I'm ready to be done. 

My advice - Enjoy life.  Keep making the good decisions you're already onto (no debt, living below your means).  Just add in an inquisitive nature to your expenditures.  Don't just spend because "I can afford it without going into debt so I must be doing alright".  If you at least examine where your money is going, you may find easy ways to optimize that won't really cost you any enjoyment.  Future you will appreciate any such improvements while current you will continue to be happy and enjoy life. 

This site isn't about an all or nothing attitude where you're either cutting every expense possible with a singular goal of retiring as soon as possible or you're an "anti-mustachian" (I really hate that term by the way).  It's about living an examined life where decisions are made consciously because you believe they'll improve your life overall - not just because it's what is expected of you or is the commonly accepted recipe for life.

This is very well said.  I think part of what's been throwing me is that there's a tendency to use moralistic language regarding levels of expenditure above the minimum required, and I feel like when I look at where I want to spend money (e.g. seeing my b/f frequently means lots spent on flights), that I'm being wrong somehow, even if they are considered choices.

I'd imagine that very few members of this community are anywhere closet to "levels of expenditure above the minimum required."  The community can be somewhat dogmatic at times with the budget face punches for anything over that bare minimum.  I, personally, think that's silly.  Poor decision making processes deserve face punches, not budget line items. Everyone needs to find their own comfort equilibrium that maximizes the net present value of how they spend their time/money.  There is nothing inherently wrong with working full time you're entire life or inherently good about never working your entire life.  The point is to think about your decisions and their (range/likelihood of potential) consequences and act accordingly.   

StarryC

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #23 on: November 14, 2013, 06:09:28 PM »
One thing I think of is about this example: http://www.daveramsey.com/article/how-teens-can-become-millionaires/lifeandmoney_kidsandmoney/ 

If you can save now (without causing yourself trouble), you should.  Because there might be a time in 5 years or 10 years when you can't save: unemployment, starting a new business, higher than expected health expenses, or whatever.  Even if you just leave the money, and stop adding, it will probably keep growing.

JohnGalt

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #24 on: November 14, 2013, 06:38:42 PM »
One thing I think of is about this example: http://www.daveramsey.com/article/how-teens-can-become-millionaires/lifeandmoney_kidsandmoney/ 

If you can save now (without causing yourself trouble), you should.  Because there might be a time in 5 years or 10 years when you can't save: unemployment, starting a new business, higher than expected health expenses, or whatever.  Even if you just leave the money, and stop adding, it will probably keep growing.

Don't get me wrong, the idea behind this is sound... but 12% interest returns?  He's exaggerating the difference here.  Even if he wants to assume 12% average (because no one is going to find 12% interest rates, it would have to be growth rates on a riskier investment that will come with variance) nominal returns, it should really be presented as real returns (ie after inflation). 

Recreating his example but using some data from firecalc (real historical return data, 48 rolling years of returns using 1871 - 1965 as starting years with all sorts of caveats that past results don't indicate future results)...
here's the comparison I would present. 

Save $2,000 / yr for 8 years, let it grow for 40 = average of $620,000 in year 1 dollars
Save $0 / yr for 8 years, then $2,000 / yr for 40 years = average of $695,000 in year 1 dollars

Statistically - I'd say there isn't much difference between the final two numbers. 

His point should be that 1 example has only 8 years of contributions while the other has 40 but they come out the same.

If you let the $2,000 contributions grow with inflation, it just keeps getting worse for his example. 

Sorry - Dave Ramsey's dumbed down approach to finances might do some good for the masses, but I don't think it should cut it for anyone really looking to examine their choices. 
« Last Edit: November 14, 2013, 06:45:08 PM by JohnGalt »

StarryC

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #25 on: November 14, 2013, 09:06:52 PM »
I agree, 12% is pretty unreasonable. And Dave Ramsey is oversimplified.  And kind of a jerk.  And not a great personal example.  But, I couldn't quickly find a similar table that showed how savings early is worth more per $1 contributed than later savings.

But, I guess what I mean is plans don't always go as we expect, and early saving has greater returns than later savings.  How much more?  It depends.   Still, even if the end totals are exactly equal at $620,000 in scenario 1 you contributed $16,000 and got $620,000 and in scenario 2 you contributed $80,000 and got the same.

AND, if you plan on scenario 2, but instead of starting in year 8, you can't start until year 12 or 15 because of something unexpected, you'll definitely have less!  So, save more when you are young.  If you can also save more when you are older, that's awesome too!  But you only know present day you and present day your budget.  So, use the advantage of years, and present day control to it's best use.

Argyle

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #26 on: November 14, 2013, 11:21:36 PM »
Let's say you cut your monthly food expenditure to $400.  For one person that's much higher than almost anyone on these boards, I would wager, and higher than average for even non-mustachians, I'm willing to bet.  Anyway, if you saved that money and didn't do a single thing with it -- didn't invest it, just kept it under the mattress -- in ten years you'd have $48,000.  So the question is: is going to high-priced restaurants and buying the expensive cheese for the onion soup such a source of joy to you that you'd pay $48,000 for ten years of it?  I actually wonder if you'd even notice that much.  But if someone handed you a lump sum of $48,000, you'd notice all right. 

If you had invested that $400 per month at 3%, you'd have $56,576 at the end of ten years.

If you invested that $56,576 at 3% again -- a low rate -- for another ten years, and didn't add another cent to it, that money would earn you nearly $20,000 without you having to lift a finger.  At 6%, which is not an unheard-of return, the $56,576 would earn you a whopping $46,358 in interest.

So I dunno -- the higher-priced cheese, or your money earning more money for you while you take it easy?  That's really the kind of choice you're making.  Most people, truth be said, don't look at the longer term, and choose the cheese.


Ipodius

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #27 on: November 15, 2013, 02:16:57 AM »
It seems like everyone else has covered the "You may change your mind and want to retire earlier in the future" angle, so I'll focus on the benefits of having Financial Independence even if you never intend to retire.

1. With very little sacrifice, you can hugely change your long term financial situation. By front-loading your savings for 5 or 10 years, you can get enough of a portfolio that your lifetime earnings are significantly higher than otherwise. So even assuming I wanted to work as long as possible, I'd still aim for a Mustachian lifestyle in the short run so that I've got the most resources over my entire life. You can drive much fancier cars over your lifetime spending 10 years building up a car fund and then 30 years using the proceeds from that fund on top of your normal income to buy cars rather than buying the nicest car you can afford from the get go.

2. Happiness. I also think there's a huge benefit to learning to enjoy life more independently of money. The happiest people I know are those who have extra money, and who really don't need it to be happy. People who need money to be happy and don't have it are miserable. People who need money to be happy and have it can end up slaves to that money. And people who don't need money to be happy, and don't have that money? Well, they aren't as happy as category one, but often still more happy than categories two and three. Even if you end up not living this life style in the long term, having in the back of your mind that you could is a hugely liberating feeling - you don't need to worry about your career, your finances or your future as much if you know that you could live a really happy life at a much lower income level. 

3. It gives you a lot of strength and negotiating room in your career. I've noticed a strong trend that my friends who are in a position to leave their job today with very little cost to themselves get treated much, much better at work. Somehow, knowing you are in that position gives you the confidence to say no to unfair requests, and saying no to those requests re-enforces the perception that you are good at your job and deserve to be well treated. I think this only works building atop a foundation of competence and hard work that you've laid, but I think it's a very real phenomena.

I think it's a really valid choice to decide not to do these things - you are already so far ahead of the "average" person that you will be ok. But I would definitely want to keep in mind all the possibilities while making these decisions.

TrulyStashin

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #28 on: November 15, 2013, 09:12:29 AM »
Consider that deciding to become more mustachian is not an irreversible one.  You could set a goal to become 20% more mustachian over the next three months and see how it feels.  If you discover that your baseline happiness is equal to or even greater than now, then you could either plateau at that point or set the next goal.   You can stop or back up at any point.   That's a win-win.

SwordGuy

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #29 on: November 15, 2013, 09:32:33 AM »
I work in a professional environment where I enjoy my work reasonably well and have pretty wide latitude in making sure things get done. 

You are only one new boss away from working in a hellhole.  Statistically speaking, one like that will show up long before 40 years are up. :(

JohnGalt

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #30 on: November 15, 2013, 09:34:02 AM »
Consider that deciding to become more mustachian is not an irreversible one.  You could set a goal to become 20% more mustachian over the next three months and see how it feels.  If you discover that your baseline happiness is equal to or even greater than now, then you could either plateau at that point or set the next goal.   You can stop or back up at any point.   That's a win-win.

Just curious... what does "20% more mustachian" look like?

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #31 on: November 15, 2013, 09:47:15 AM »
Thanks for all the replies everyone.  I am definitely working on the food budget thing.  Mostly it was due to a habit of ordering in lunch at work which I stopped about a month ago.  I was using my averages off mint for the past 12 months, which included a lot of that.  I figure until I sort out the immigration stuff (and the great who moves where debate) with me and the boyfriend, I'll still have the travel expense, but I think that one falls into a "yes" on the is it worth it scale.

Short term, I'm gonna try to cut my expenses by another $200 a month, mostly out of food and some out of the discretionary, and see how that works for a while.  If it goes well, then cut some more.

Also: related question for people, should I change cars?

My current car is an '05 Hyundai Sonata I picked up used for $8200 a couple years back.  Current KBB is about $6300.  I average about 25 mpg with it, and drive about 18,000 miles a year, of which most is highway trips to Toronto, Boston, or the airport.  About 4000 mi/yr commuting.  It currently has 61,000 mi.

Obviously whenever I do change cars I will be getting something more efficient, but I'm concerned about getting something that's reliable enough to make the long trips I do, since the Sonata is still performing well.  Is it worth car shopping now, or should I eke more out of the Sonata before changing?

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #32 on: November 15, 2013, 09:49:45 AM »
I work in a professional environment where I enjoy my work reasonably well and have pretty wide latitude in making sure things get done. 

You are only one new boss away from working in a hellhole.  Statistically speaking, one like that will show up long before 40 years are up. :(

We currently have a plan to transition the business to where I own it and am the boss (it's just two of us and he's 73).  So if the boss makes it a hellhole, I'll have only the mirror to blame.

TrulyStashin

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #33 on: November 15, 2013, 10:44:14 AM »
Consider that deciding to become more mustachian is not an irreversible one.  You could set a goal to become 20% more mustachian over the next three months and see how it feels.  If you discover that your baseline happiness is equal to or even greater than now, then you could either plateau at that point or set the next goal.   You can stop or back up at any point.   That's a win-win.

Just curious... what does "20% more mustachian" look like?

That's for OP to decide.  Sounds like s/he is moving in that direction by examining the food budget.

WageSlave

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #34 on: November 15, 2013, 12:51:09 PM »
Also: related question for people, should I change cars?

My current car is an '05 Hyundai Sonata I picked up used for $8200 a couple years back.  Current KBB is about $6300.  I average about 25 mpg with it, and drive about 18,000 miles a year, of which most is highway trips to Toronto, Boston, or the airport.  About 4000 mi/yr commuting.  It currently has 61,000 mi.

I don't think it's a clear-cut decision, as I'd say everything except the MPG would be MMM-approved.  It's not like you're coming from a financed luxury SUV that takes only premium fuel and gets 17 MPG.  :)

One solution is to look into hypermiling and other fuel-saving techniques.  In other words, can you improve your current car's fuel economy without buying a new car?  If you have roof rails, remove those, remove anything that takes up extra weight, if you're really hard-core disable power steering, stop using the AC, etc.  And of course, driving style can improve things as well.  Looks like your MPG is typical although at least one person is getting 30 MPG.

Before I realized my family didn't need two cars, I was thinking of replacing my car with something like a Honda Fit.  Statistically, reliability should be top-notch, and 33 MPG should be easily attainable (at least for 2009 and newer).  With mileage comparable to your Sonata a 2009 or newer Fit would be around $10k (in Chicago; probably better deals to be had for the patient/clever).  If you're willing to get a higher-mileage Fit, you could probably just about make a break-even trade.  (Not saying the Fit is your best bet, just using it as an example, as I was looking at it a few months ago.)

Just for kicks: 18k miles/year at 25 MPG = 720 gallons of gas per year.

Improve your MPG to 33 MPG and you're down to 545 gallons of gas per year.  If gas is $4.00/gallon, that's a savings of $700/year.

If I remember correctly, I think MMM gets 40 MPG or better with hypermiling tactics in his Scion xA.  40 MPG would bring you down to 450 gallons of gas per year, and at $4.00/gal, represents an annual savings of $1080.

If you could do a trade where you didn't spend any money, but could keep all other parameters the same or better (mileage, reliability, insurance, etc), but improve your MPG, it's probably worth doing.

If you have to spend money (e.g. my Fit example), then you need to think about how long you'll have this car and how long you'll be driving this much.

huadpe

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #35 on: November 15, 2013, 01:39:30 PM »
Also: related question for people, should I change cars?

My current car is an '05 Hyundai Sonata I picked up used for $8200 a couple years back.  Current KBB is about $6300.  I average about 25 mpg with it, and drive about 18,000 miles a year, of which most is highway trips to Toronto, Boston, or the airport.  About 4000 mi/yr commuting.  It currently has 61,000 mi.

I don't think it's a clear-cut decision, as I'd say everything except the MPG would be MMM-approved.  It's not like you're coming from a financed luxury SUV that takes only premium fuel and gets 17 MPG.  :)

One solution is to look into hypermiling and other fuel-saving techniques.  In other words, can you improve your current car's fuel economy without buying a new car?  If you have roof rails, remove those, remove anything that takes up extra weight, if you're really hard-core disable power steering, stop using the AC, etc.  And of course, driving style can improve things as well.  Looks like your MPG is typical although at least one person is getting 30 MPG.

Before I realized my family didn't need two cars, I was thinking of replacing my car with something like a Honda Fit.  Statistically, reliability should be top-notch, and 33 MPG should be easily attainable (at least for 2009 and newer).  With mileage comparable to your Sonata a 2009 or newer Fit would be around $10k (in Chicago; probably better deals to be had for the patient/clever).  If you're willing to get a higher-mileage Fit, you could probably just about make a break-even trade.  (Not saying the Fit is your best bet, just using it as an example, as I was looking at it a few months ago.)

Just for kicks: 18k miles/year at 25 MPG = 720 gallons of gas per year.

Improve your MPG to 33 MPG and you're down to 545 gallons of gas per year.  If gas is $4.00/gallon, that's a savings of $700/year.

If I remember correctly, I think MMM gets 40 MPG or better with hypermiling tactics in his Scion xA.  40 MPG would bring you down to 450 gallons of gas per year, and at $4.00/gal, represents an annual savings of $1080.

If you could do a trade where you didn't spend any money, but could keep all other parameters the same or better (mileage, reliability, insurance, etc), but improve your MPG, it's probably worth doing.

If you have to spend money (e.g. my Fit example), then you need to think about how long you'll have this car and how long you'll be driving this much.

Thanks for the analysis.  I think the issue for me is that reliability is a factor at risk.  I know my car is reliable, but I won't know that of any car I might buy (and buyers of my car won't know it's reliable, pushing down the price I can get for it).  Moving to a $10,000 car would cost me $10900 with tax and title fees, so that would have to save me almost $1000 a year in gas to break even over 5 years.  Taking a $4/gal assumption, I'd have to be right around 40mpg to break even on 5 years, which would leave me with a car with 150k miles on it.

With the risk re: reliability I think it's close but I'm better off running this for a few more years at least.  Plus I expect my miles/year to drop a lot in the future once I'm not making frequent road trips to another country.

Thanks again for doing some math/research for me :)

CommonCents

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Re: Reader Case Study: Deciding whether to grow a mustache
« Reply #36 on: November 15, 2013, 01:57:16 PM »
For me, a stache means freedom. 

Freedom to stay at a job or to go and retire, volunteer or take a lower paid job.  Freedom to do more of what I enjoy, whether that's eating out or travel.  Freedom to help others such as family if they need it.  Freedom to upgrade my life later when it means more than that coffee does now (e.g. having a family is more expensive).

A stache gives me choices I wouldn't otherwise have.

Does your bf travel to you?  Do you split the expenses?