I recently found MMM (came for the YNAB code, stayed for the sheer awesomeness). I’m working my way through the archives and it’s got me thinking and thinking....and thinking. To the point of Decision Paralysis when it comes to the extra money I have to “save” thanks to paying off my student loans (BS &MS - also paid off 1 month ahead of my goal time of 5 yrs) and a recent promotion with pay raise. Before MMM, I was planning on putting towards my safety net (aka emergency fund), increasing charitable contributions, and paying off my mortgage early. after MMM, FI sounds like the way to go so I have more time/freedom and now I don’t know how to proceed - to many options!!! so for the details:
Family: Just me (oh and a few fur kids)
Income*:
Gross pay: $5,300/month (for being a cube monkey [in engineering])
Take Home Pay: $3,600/month (difference from taxes [$1300], health insurance [$90], HSA [$20], 401k to get maximum employer match [$260]; stock purchase [$30])
Current Monthly Budgeted** Expenses*: $
2,600 (breakdown below)- Mortgage - $950 (includes $560 principal and interest [mostly interest - yuck], $240 taxes, $80 mortgage insurance, $70 homeowners insurance) - interest is 4.625% and opened 6/2011
- Utilities - $130
- Car Insurance/Maintenance/Fuel - $120
- Cell Phone - $80
- Internet - $20
- Home Maintenance - $50
- Food - $240
- Pets - $100
- Gym - $140
- Charity - $40
- All Other Spending - $330
- New Car Savings - $70 (after reading MMM thinking this could/should go away)
- Extra Mortgage Payment - $80
- Roth Funding - $50
- Travel - $200
“Extra” $$$ (Take Home - Budgeted Expenses): $1,000
Assets*:
$148K (breakdown below)- Checking - $7.6K
- Safety Net - $3.4K(about half in CapitalOne savings and other half in Betterment [30% stock/70% bonds])
- 401(k) - $34k
- Roth - $12K
- HSA - $1.5K
- Company Stock - $1.5K
- House (Zillow Estimate) - $88K
Liabilities*:
$102K [/size](breakdown below)- Mortgage: $101K
- Reward CC (paid in full monthly): $1K
Specific Question(s): Where do I put the “extra” $$$ (E$)?
- Safety Net (this is where most is going now - but MMM is making me question this)
- Mortgage
- 401(k)
- Roth
- FI/FU Money
- Other ???
My current thoughts (if no more to safety net contributions):
- 100% of E$ to mortgage until can get rid of mortgage insurance gone
- Once mortgage insurance gone:
- 20% of E$ to mortgage
- 50% to retirement accounts (max roth then increase 401k)
- 30% to FI/FU money
Now I’m looking to MMM-forum dwellers for your insight, wisdom, and (if needed) face punches.
I just did a search of the forums and see similar topics/questions asked but I’m still posting because it may be seen by those that will give me just the shove/face punch I need.
* Rounded for conservatism - income/assets down, expenses/liabilities up
** I hate the word budget since it has a negative connotation of telling you what to do with your money... In reality I treat it as me (as boss) telling my green employees what to do.... and “green employee work plan” isn’t something I’ve ever heard used and may be a bit wordy for use here.
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Edit 1 (2015-02-22) - Formatting, added mortgage interest details, other clarifications based on replies