Life Situation:
My SO and I are in our late 20s, unmarried. We live in NYC, both working at different tech startups. I bought a condo in 2010 when the market bottomed out, and now the value has almost doubled. Ideally, we'd like to work for 5+ more years before having kids, then possibly move to a city with a lower cost of living, using profits from the condo sale to buy a cheaper home. We also have 2 cats and will probably end up with 2 or so kids. Aiming to be FIRE by our mid 40s.
Gross Salary/Wages:
My Yearly Income: $100,000/yr
His Yearly Income: $75,000/yr + 15% bonus
Total Income: $186,000
Monthly Income: $15,500
Pre-tax Deductions:
Transit + Dental: $177
Pre-tax 401k: $3,000 (both maxing)
Taxes: $3,931
Total Deductions: $7,108
Net Pay: $8,392
Current Expenses (YTD Average from Mint):
Mortgage: $1,451
Property Tax + Insurance: $84
Common Charges: $276
Groceries: $288
Restaurants + Bars: $881
Shopping + Gifts: $421
Travel: $638
Parking: $175
Car Insurance: $138
Gas + Tolls + Taxis: $86
Phone: $70
Internet: $77
Netflix: $8
Electric + Gas: $167
Gym: $60
Tennis Classes: $172
Entertainment: $106
Pets: $28
Misc (ATM withdrawals): $200
Total Expenses: $5,326
Savings Rate:
Net Savings after expenses: $3,066
401k Contributions: $3,000
Mortgage Principal: $583
Total Savings: $6,649 (58% of Net Pay + 401k)
Assets:
Cash: $20,000
Taxable Brokerage Account: $40,000
401k: $73,000
Roth IRAs: $23,000
HSA: $5,000 (no longer eligible to contribute)
Total Assets: $161,000
Real Estate:
Condo: $600,000 (similar unit sold for this amount, originally paid $320,000)
Liabilities:
Mortgage: $230,000 remaining, 4.375% for 30 years, paying extra $200/mo to pay off 10 years sooner (by FIRE)
No student loans
No car payment
Net Worth: $531,000
Expected ER Expenses:
Want to try to keep the same. Home will be paid off, but we’ll have more expenses due to kids and health insurance.
Specific Questions:
I wasn’t sure if I should do this as a Case Study or Journal. Mainly just want to see if anyone relates to our situation of living in a high COL area and wanting to enjoy it while it lasts.
1) Is there anything glaringly obvious that we should be doing to cut expenses (other than the below)?
Having now written out our expenses, it’s obvious we aren’t the most frugal. We like to splurge on experiences like dining, travel, and tennis. Tennis has been a recent development that was hard at first for me to stomach the $172 per month. My SO has found that tennis is his only real enjoyable way to work out. Playing on NYC Parks public courts costs $30/hour (or $400 for yearly permits) and are first-come-first-served, so we’ve opted to take group classes that cost $30 per person.
Another glaring expense is $313 per month for the car. If we did the math, we’d probably save by getting rid of the car and renting when we need to. We drive the car to the grocery store, go on hiking/ski/beach trips, and visit family 3 hours and 7 hours away (which saves on flights for us + cats). I feel like I would see family less if I had to decide each time to pay for a rental or airfare.
It’s hard to say what all of the shopping expenses are for. We’ve been to 3 weddings this year so that was $300 in gifts. My SO is into tech so he has some personal projects going on that require a bit of hardware. It seems like it’s mostly electronics, random Amazon purchases, clothing, and sporting equipment.
We do spend a lot on restaurants and bars, but we also cook most of our dinners at home. We also get about half of our work lunches for free, so we typically buy lunch out with coworkers on the other days. Unfortunately in NYC, dinner and drinks out is the best way to socialize with friends. When your home is teeny and your friend works in Jersey and lives in different borough, you tend to meet out somewhere. And as we see it, we are young and want to enjoy NYC for the short time that we’ll be here. When we move to a lower COL, expenses like dining, housing, and parking will all be slashed.
Now on to some things we HAVE done to cut costs. We cut cable a few months ago, so that went from $137 to just $77 for Internet. Now we use Netflix, an antenna, and have a collection on Plex. We dropped SO’s gym membership once we discovered he really hated it. My gym is super cheap ($30/month), but I also occasionally do a class like SoulCycle with a friend. We bought a Nest thermostat, and that’s cut our electric and gas by about $12 per month (1 more year and it will have paid for itself). For the phones, this year we joined a family plan with friends.
2) Do you have any tips for ways to cut costs while traveling?
On our most recent vacation, I canceled our hotel reservation and rented a tent at a campsite. This cut the lodging cost in half. On our last overseas trip, we paid out of pocket without using any miles, so I’ve recently gotten interested in churning so that we can do a nice trip next year using miles.
3) What would you change about our investments?
We recently upped our 401k pre-tax contribution to the max. We also intend to each contribute the max to our Roth IRA each year. For these we picked Vanguard Retirement Funds for different years. Since we want to be FIRE by about 2030, would it make sense to pick the Vanguard 2030 fund?
Any extra savings we’ve put into taxable accounts with VTSAX (65%) and VTIAX (35%). Not sure if we should be in Bonds and REITs, or if we are ok with just having those covered by the small percent in our tax-advantaged accounts. I guess I feel like we are so far away from retirement that I’m ok with this risk.
I am excited to go from lurking to posting. Thanks for any input!