Hey Guys,
I'm new to the mustache crowd so I apologize if I gum up any of the protocols here. I think I've read enough of the site to know what it's all about and I'm really excited about making the shift toward more Mustachian principles. I'm gonna lay out my situation as best I can and then ask my questions at the end.
My wife and I just got married two months ago. We're 28 years old, have been together for a long time and we just returned from our honeymoon a few weeks ago. Now that we're back and settling in, we're like to adjust our finances to more Mustachian-style principles for the long haul. We live in New York City (Brooklyn) in a 2-BR apartment - more on that later.
Income: I'm a teacher at a private school here in the city. Between my salary and extra tutoring my annual salary is about $65,000 - $67,000 (gross). My wife work a fashion brand doing marketing and she makes about the same, right around $67,000.
TOTAL Annual Income: $120,000-$130,000 (gross)
Current expenses: Our apartment is in a 4-floor brownstone that my wife's father actually owns. As a result, she has no rent obligations but I pay $783/month in rent directly to her father, who is technically our landlord. That's a pittance compared to what the going rate is in the area, so we save money. Here are our other joint monthly expenses:
Rent: $783/month
Car insurance: $118.84/month
Renter's insurance: $53.17/month
Health insurance: $315/month
Monthly (Unlimited) Metro cards: $224 (2x $112)
Dental Insurance: $10/month
Digital Cable TV: $154/month
Electric: $60/month in winter, $100/month in summer
Gas: $20/month
Gym classes (my wife's): approx. $300/month
Netflix: $8/month
Charitable Donation: $22/month
Student Loans (mine only, my wife has none): $430/month
TOTAL Monthly Expenses: $2598.01
*NOTE: I've listed all of our joint expenses even though we're still at the point of paying certain things out of our personal checking accounts (Gym for her, Loans for me) rather than our joint checking account. We'll get to that later.
Assets:
USAA Checking Account (Mine): $14,483.35
Citibank Checking Account (Hers): $4,243.51
USAA Joint Checking Account (Ours): $30,000.00
USAA Savings Account (Mine, .20% APY): $20,049.51
Credit Union Savings Account (Hers, 1.1% APY): $12,464.65
TIAA-CREF 401k (Mine, I contribute 5% and my employee matches 10% for a total of 15%): $28,900.30
T. ROWE PRice 401k (hers, but she's not contributing at the moment. The matching is very small: 2-3% ): $3293.37
TOTAL Assets: $113,434.69
AVAILABLE Assets: (not in 401k): $81,241.02
Liabilities:
STUDENT LOANS
Unsubsidized Principal
$4,943.17 @ 2.080%
$19,585.29 @ 6.550%
Subsidized Principal
$7,200.61 @ 6.550%
CREDIT CARDS
No unpaid bills. I've been charging and paying off my CC bill in full every month since I was 19. My wife's the same, though she doesn't user her CC very often.
TOTAL Liabilities: $31,871.56
Specific Question(s):
1) Obviously, there's a bunch of adjusting that needs to go in with the above before we get really mustachey. I'm going to sell my car (which I never use, should get about $3000 for it). We're also going to cancel Cable and just keep Netflix. The big red flag is the student loans debt which I have been, until now, stupidly paying down with only minimum payments. That's the first thing to address of course. Now, I COULD pay it off in full by dipping into both our Joint Checking $ and my personal savings. But is that the most advisable thing? Or would it make more sense to pay off some of it and use some of that extra Savings/Checking money to invest in Vanguard, Roth IRA, etc? How do the interest % balance out? Obviously I want to get the "hair-on-fire" debt payed off ASAP but I'm wondering what the most sensible way to do it is.
2) We have quite a special NYC circumstance with the extremely low rent payment. In addition to that, my parents-in-law have made available to us the option of moving out of our apartment (in their building) and pocketing the full total of the rent money that would come from the tenant living here. Believe it or not, that's $3000/month. So we could move out to another apartment that has rent up to $3000 (but hopefully) less, live rent-free, and then pocket the difference. This feels like a no-brainer! But here's the kicker: We're also trying to get a little bit of independence from her parents who are generally pretty overbearing and might use something like this as leverage over our heads. How much is a dependency connection like that worth when the parents are very overbearing? Is it $3000/month?
3) Given my financial portrait above - what makes the most sense from an Investment standpoint? All I have at the moment is the 401ks. Mine is awesome with a 10% match for my 5% contribution, but my wife's is a pittance. I've been reading the MMM stuff on Vanguard funds and other things, but I was hoping to get some input about my specific situation here. What kind of investment profile what you suggest apart from the 401ks I'm already doing.
4) My wife's gym classes are our other major monthly expense ($300/month). At the agreement of getting her to be more Mustachian in other ways, I might have to concede these or at least a portion of them for now. It's NYC and the classes have more value to her (mental, spiritual) than just the health benefits. I know that's Anti-Mustache, but I think it's our version of his luxurious house! Thoughts?
5) My last question is about what kind of Accounts breakdown you guys would advise. I have USAA through my family and have always used and enjoyed it. But what you advise for the breakdown of accounts between the two of us? It's really important to my wife to have an account of her own that she can spend on what she likes without feeling like she's taking from our joint fund. (She works in fashion and is by no means crazy about it, but she does buy things here and there). What would you advise and with which companies? Should we aim for some cash-back cards? And does it matter if we're both on USAA or split between Citi and USAA?
Thank you SO much for reading this far. Let me know if anything else major jumps out at your from the above! I'll keep an eye on this and post back as quickly as I can.
- Dave
