Author Topic: Reader Case Study - Just Starting Out  (Read 2228 times)

CSLifeDev

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Reader Case Study - Just Starting Out
« on: May 20, 2016, 10:12:10 PM »
Life Situation: Married filing jointly, no dependents, 24F and 26M near Lexington, KY

Gross Salary/Wages: $4,654

Pre-tax deductions:
  • 401k: $109 (only one of us has a 401k offered)
  • Health Insurance: $71
  • Pre-tax vision/dental: $15

Qualified Dividends & Long Term Capital Gains: $14 monthly

Adjusted Gross Income: $4,555

Taxes: $1,022

Current expenses:
  • Rent: $675
  • Electricity: $104 (could be lower, but our apartment has absolutely awful insulation)
  • Water: $40 (This is the flat rate for minimum usage level)
  • Internet: $59
  • Fuel: $217 (reimbursed $97 for work-related travel)
  • Groceries: $344 (working on reducing this with re-usable Keurig cups and less waste)
  • Car Insurance: $172 (age and 2 minor accidents in past year bring this up)
  • Car Maintenance & registration: ~$75 monthly
  • Christmas/Holidays: ~$50 monthly
  • Individual dental plan: $34 (This easily pays for itself for now, unfortunately)
  • Dentist: ~$25 monthly
  • Dining: $150 (we see this as a big place to save, cut back to 1/month instead of 1/week)
  • Entertainment: $260 (pre-MMM legacy. Guilt-free spending we grew into. Video games, fast food, movies, audio-books, etc.)
  • Pets: $40 (mid-grade food and litter for 2 cats)
  • Misc.: ~$50 (ice-melt, Urgent care co-pays, special occasions, etc.)
  • Subscriptions: $21 (Costco, Amazon Prime, and Netflix)

Assets:
  • 401k: $1,158.97 - VTSMX
  • 2005 Chevrolet Impala: $1,949
  • 2011 Nissan Sentra: $5,898
  • Anthem stock: $9,229.64 (this was inherited)
  • Cash: $15,824

Liabilities:
Student loans:
Total monthly payment: $139
8 years remaining on repayment
Current Principal   Rate
$1,288                   4.25%
$2,992                   3.15%
$3,386                   3.15%
$3,446                   3.61%
$1,292                   3.61%
Total: $12,404

Specific Question(s):
I just started reading MMM a month or so ago. I started from the beginning, but I've only made it up to 2012, so I may be missing some more recent relevant posts. The current budget reflects our spending habits prior to reading MMM. We are working on making this more Mustachian. I did install our own internet modem this month, bringing our Internet down from $68.59 to $58.59, and ordered a well-reviewed reusable Keurig cup to cure us of our $43 per month coffee expenses (listed here under groceries). We don't have a good rhythm for meal planning and cooking, so sometimes we wind up having to throw out spoiled food. We hate that, and that is definitely an area we will be paying more attention to. We also tend to get those easy frozen pasta bag meals, which we're trying to move away from. They were a habit developed when we were planning our wedding and had no time to cook, and didn't want to be eating fast food every night. That should bring down our grocery budget, but I have no hard numbers on how much.

We are also planning on cutting our eating out budget down to one restaurant visit per month instead of one per week, which should bring that category down to at least $50, and that would allow us to be able to eat wherever we want for that one time a month.

The entertainment budget is tricky. We haven't had shared expenses, or incomes that allowed an entertainment budget previously, so the amount was picked rather arbitrarily about a year ago and we grew into it. This is where we categorize our video games (bought on sale), fast food, movies, audio-books, replacement charger cables, etc. We got a library membership earlier this week that we hope will have a good audio-book selection to decrease that cost. My husband listens to these in the car at work. We are working on being more intentional about what we spend out of this category and optimizing it so that we only purchase specific things that we get joy out of that is greater than the freedom we lose for it. I'm hoping this will lower this category naturally, since neither of us has expensive tastes.

I just found the account where the inherited Anthem stock was stored a few months ago. My husband inherited these before we were married and I took over the finances, and I had to do some digging from dividend checks that were received. I understand that we need to move this to a much more diverse set of holdings, probably by replacing our income with it and pushing the equivalent amount into the 401k, but we live in an area that greatly favors buying over renting, to the tune of a 4 year breaking point including closing costs, according to the NYTimes calculator. So we are wanting to keep the door open for a home purchase as soon as possible. The in-laws have offered to match our down payment with the provision that we not liquidate the stocks to do so, so I'm not sure how they would feel about us temporarily withdrawing the stocks to protect ourselves from the volatility in the meantime. We are currently on track to have enough money to purchase a house with 20% down with this plan in September  for a $150k house ($15k from us for down payment, $15k from in-laws for down payment, $5k closing costs, and ~$1,300 budgeted for moving costs). Whether we should do so at that time is a little complicated, because...

My job. I've worked in IT for the same company since I graduated 2 years ago with a BA in Computer Science. I am the higher earner, earning ~$2,822 gross per month to my husband's $1,917. However, he has a standard full-time position with his company, with a 401k and paid time off for vacations and sick leave. I am eligible for my workplace health insurance due to ACA shenanigans, but as far as they're concerned I am "contracted" through an internal staffing agency. That doesn't seem to fly with the federal government any more for denying health coverage, but they still do not offer a 401k package or any paid time off for any reason for me. This has caused a fair amount of stress, because I feel extremely guilty when I stay home sick, and don't feel that I can afford to take any time off to myself, at $128 net per day. I've been told since February that they are actively working on pushing through the conversion of my position from "contracted" to FTE, which would bring a 401k with 200% matching up to 5%, a cheap and comprehensive HMO health plan ($0 deductible, $6,350 OOP maximum) and vacation time starting at 2 weeks and capping at 4 weeks per year. I don't know what the proposed salary for this would be. I currently gross approximately $34k per year, but the company is part of a publicly funded university, so the salaries are public record, and the only person in my department who actually makes that much is the secretary (all due respect for all she does for us!). My immediate coworkers make between 46-48k, with close to 2 decades of seniority, but no college degrees. They have great contempt for my degree, so I predict that I would be offered a salary of no more than 45k. The department can't afford the kind of dissent that would happen if they offered me more, since just the 3 of us manage a very large volume of work. This plus their 401k match would make the overall salary $49,500, IF I stay there for the 5 years required to vest. The job is very easy for me. When I actually put my phone away and work (which is what I prefer to do. I feel guilty on my phone), I occasionally get very involved discussions from my coworkers insisting that I am doing too much and need to slow down to avoid burnout. This baffles me because I really don't feel like I'm exerting myself at all when that happens. Sometimes I wonder if a more challenging career that paid more would be helpful for FI and personal achievement, but I'm concerned with the risks that could come with that, of winding up with a worse job that demands too much of my time outside of 40 hours for too little return. $45k seems quite low for my field, which is confirmed by looking at salaries of employees in other departments in my own organization, and $34k with no benefits honestly is starting to feel a little insulting. How do I know when to cut my losses or pay my dues?

I apologize for the wall of text. If you feel that any of the questions would be better suited to a separate post later on, please let me know. I just wanted to provide as complete a picture as possible for my initial summary.
« Last Edit: May 21, 2016, 08:50:26 AM by CSLifeDev »

MDM

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Re: Reader Case Study - Just Starting Out
« Reply #1 on: May 20, 2016, 11:56:21 PM »
How do I know when to cut my losses or pay my dues?
CSLifeDev, welcome to the forum.

Regarding the question you asked: have you explored positions at other companies? 

Thoughts on some things you didn't ask:
* Taxes seem high for that income - are you withholding too much?
* Bump some combination of his 401k and a tIRA to $2K/yr, and your tIRA to $2K/yr and you'll save ~30% on taxes (federal + state) due to the saver's credit on top of your tax bracket.

CSLifeDev

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Re: Reader Case Study - Just Starting Out
« Reply #2 on: May 21, 2016, 09:26:36 AM »
I haven't explored other companies yet. I've never really looked for a job in a situation where I could afford to be picky, so I don't really know where to start with ensuring that the next place I work has a similar or better workplace culture, and a good work-life balance. My current position has the benefit that it is only 40 hours per week, with the addition of remote on-call support on a 3 person rotation if I get brought on as an FTE. I don't have a lot of formal experience with more technical Computer Science work, as the last two years have been supporting end-users in systems, as opposed to doing any work "under the hood", so to speak. I graduated college with honors, but I have difficulty determining my relative skill level in various categories, because of my lack of field experience. My concern is that it seems like most places willing to hire at the entry-level tend to give the entry-level workers a very poor work-life balance, and not always a way out of that. I wouldn't mind putting in the time if I was sure that it would come back around to me, but I hear so many horror stories of people who just get trapped in that kind of position, and have no energy to work to get out.

Tax amounts were derived from the worksheet provided in the Case Study sticky. We don't yet have a full tax year with our current combined income to reliably draw from. I do know that our state+local tax rate is 8.55%, which is above average. We'll definitely look into the saver's credit for our savings plan after we have our down payment ready in September. Thanks!

MDM

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Re: Reader Case Study - Just Starting Out
« Reply #3 on: May 21, 2016, 12:42:57 PM »
...I graduated college with honors, but I have difficulty determining my relative skill level in various categories, because of my lack of field experience.
...
Tax amounts were derived from the worksheet provided in the Case Study sticky. We don't yet have a full tax year with our current combined income to reliably draw from. I do know that our state+local tax rate is 8.55%, which is above average. We'll definitely look into the saver's credit for our savings plan after we have our down payment ready in September. Thanks!
Not familiar with the IT field, but many here are so you might get advice from them.

Yes, the 8.55% makes the total tax look correct.  While not the highest in the nation, that does seem above average.

calimom

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Re: Reader Case Study - Just Starting Out
« Reply #4 on: May 21, 2016, 03:05:57 PM »
Kudos to you for getting a handle on your finances, it really sounds like you're making lots of good decisions regarding saving and looking at areas where you know you can improve. Agree that at least being aware of higher paying positions in your field is not a bad idea, but it looks as though life/work balance is important to you the way is is to many of us.

The matching gift from the in laws for a downpayment sounds very generous and sounds like it will inspire more savings. If I were you I'd leave the Anthem stock topic alone. While you and your husband are married and commingling finances, the stock is still essentially his. And since the in laws (who are helping with the downpayment) think it shouldn't be touched, then perhaps it should stay as is. It might be a sentimental issue, being a gift from a relative who either worked there or had some connection. It doesn't hurt having savings vehicles in different buckets, IMO. 

Keep up the good work, you and your husband are well positioned to have a great life.

randymarsh

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Re: Reader Case Study - Just Starting Out
« Reply #5 on: May 21, 2016, 10:28:48 PM »
I'm in IT and I think you should find a new job, like right away.  34K and no benefits is crazy. I guess if you live in a REALLY cheap area, the salary wouldn't be terrible. But no benefits is a joke.

IT moves fast and as such, so should salary early in your career. Unless you've only been doing password resets this whole time, you are done paying your dues. I started at 45K + great benefits right after school and now make 60K (66K with bonus) 2 years out of school. If you're a software developer, I think you should be higher than this in any mid size city.

You sound ambitious and hungry for well compensated interesting work while your coworkers just want to cash a paycheck doing very little. That's fine, but it's not your game. The biggest thing I can recommend is confidence. KNOW you're worth more! I applied for jobs I knew there was little chance of even getting an interview. Even after I got my new offer for 12K more than my previous salary, I still asked for 3K more. Got it.

CSLifeDev

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Re: Reader Case Study - Just Starting Out
« Reply #6 on: May 21, 2016, 10:53:57 PM »
Thanks for the support, everyone. It's good to hear that we're on the right track. I was raised by parents with some pretty bad financial habits (including payday loans!!) so everything has been self-taught.

I'm in IT and I think you should find a new job, like right away.  34K and no benefits is crazy. I guess if you live in a REALLY cheap area, the salary wouldn't be terrible. But no benefits is a joke.

IT moves fast and as such, so should salary early in your career. Unless you've only been doing password resets this whole time, you are done paying your dues. I started at 45K + great benefits right after school and now make 60K (66K with bonus) 2 years out of school. If you're a software developer, I think you should be higher than this in any mid size city.

You sound ambitious and hungry for well compensated interesting work while your coworkers just want to cash a paycheck doing very little. That's fine, but it's not your game. The biggest thing I can recommend is confidence. KNOW you're worth more! I applied for jobs I knew there was little chance of even getting an interview. Even after I got my new offer for 12K more than my previous salary, I still asked for 3K more. Got it.

Thank you for the advice. I'm largely "above" password resets. That's covered by our call center staff, though sometimes they slip through with poor troubleshooting and we do it just to keep things moving. Mostly I take paperwork and an unhealthy amount of uncodified tribal knowledge and convert it into HIPAA-compliant clinical systems access. Then I make sure that any system issues they have aren't caused by incorrect access after the call center does basic troubleshooting. Any true application issues get passed along from there, as we don't have the authorization or training to do anything regarding those types of issues.

My work is very analytical, high volume, and with little room for error in either direction. Too much access and we run the risk of failing an audit. Too little access and patient care is impacted. When I came onboard there was a several month old backlog even with my coworkers working late nights and weekends. My boss likes to say that when I got hired the calls stopped. So I haven't been slouching, but at the same time I don't know what avenue of IT I'm most suited for. I have a general, jack-of-all-trades, master-of-none CompSci degree from a local state college, albeit with honors, and 2 years of analytical work but functionally just involving configuring user accounts. I do feel like I would benefit from more challenging work, but I don't really know what the next logical step up would be.
« Last Edit: May 21, 2016, 11:11:14 PM by CSLifeDev »