Author Topic: Reader Case Study - My Complete 180  (Read 6681 times)

ricky bobby

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Reader Case Study - My Complete 180
« on: December 03, 2013, 07:04:01 PM »
Hello all... long time lurker, first time poster

I stumbled across the MMM blog a while back, and I've read it daily. At the same time, I've watched my financial situation literally crumble (of my own doing). I'll start from the top.

Several months ago, my budget (or lack there of) was literally eating every dime that I was earning. No savings (literally 0!), and living way beyond my means was a real recipe for disaster. Heres a snap shot of how I was living at the time:

Rent    $1200
Power  $225 (4Bdr, 3Bth, 2 people and a dog. I know, ridiculous)
Water   $35
Cable    $120 included internet
Phone   $185 (2 phones, one for me and my son)
Truck    $585 at 22%!!! I have bad credit, much through bad choices, like the ones above
Car       $262
Insur    $128 Full coverage on the truck, GF paid the insurance on the car

Totaling $2740

Monthly income: $736 / wk = $2944

Surplus $204, which was stretched to the max to feed the two of us and the dog.  No room for ANY issue. This a prime example of living beyond your means. Sad but true. I knew that changes HAD to be made, but was in no position to make them. I couldn't put the money together to downgrade a car or to move. I felt suffocated and trapped.



In July, the girlfriend and I parted ways, and without her small income to help along, my situation fell apart. I met another woman in August, who has a much more "grounded" outlook on life than I've had. Together, we've corrected my spending habits. With a little help from her, I've been able to perform a wicked fast corrective 180.
After painfully admitting my situation, the new GF offered to make a small loan to me to help out of this situation. We made a plan, wrote a few checks, and made some massive changes in a week. Literally, all of the changes below were made in a week.


Rent    $655 -dropped the large house, and rented a 1 bedroom apartment closer to my job                                         
Power  $40 - the small apartment is much cheaper to power
Water   $0 - included in the rent
Cable    $60 - cable is included in the rent, but I retained my internet
Phone   $185 - no change. one phone still on contract, but I have an Airvoice card for the other. Need to activate it.
Truck    $0 - Sold the truck at payoff. Purchased a small, older truck for commuting
Car       $0 - Old GF took the car, and the payment
Insur    $26 - liability on the older truck

Totaling $966

Total borrowed from the new girlfriend: $2700 (Currently paying $500/mnth on it). She covered all moving expenses, including deposit, moving truck, power deposit, etc. Also, the older truck that I'm currently driving was purchased by her and loaned to me until January when I can buy my own vehicle or buy this one from her. It was an eye opener that as little as $3000 could make such a HUGE impact on my life.

Kinks in the plan:
-shortly after moving, I lost my job (that I was at for 5 years) I landed another job the same week. The commute is 25 minutes to the new job, but the pay is better.

Total income $4800/ mnth
Total bills       $966

Surplus $3834

Monthly income: $736 / wk = $2944

I've still got some work to do, and I'm working to pay back the borrowed money. I'm planning to be able to SAVE $2500 / month after all this is cleared up.

Thoughts?????

« Last Edit: December 03, 2013, 07:11:58 PM by ricky bobby »

Peony

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Re: Reader Case Study - My Complete 180
« Reply #1 on: December 03, 2013, 07:49:58 PM »
The new girlfriend sounds like a keeper! Congratulations on the stunning turnaround. I am a recent convert to the YNAB (You Need a Budget) software and urge you to consider their free 30-day trial. It might help you to make this profound change stick, organize your rainy day funds and so forth.

Cooperd0g

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Re: Reader Case Study - My Complete 180
« Reply #2 on: December 03, 2013, 07:57:18 PM »
You have made some serious adjustments. Just a couple of things I would tweak. With a 25 minute commute to the new job you should look into moving again to be closer to that one. Unless you actually NEED the truck for the job then get a more fuel efficient car. Find out how much the cancellation fee is for your phone that is still on contract. It may be worth paying that and switching it over to Airvoice as well.

Zamboni

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Re: Reader Case Study - My Complete 180
« Reply #3 on: December 03, 2013, 10:50:31 PM »
Congrats, Mr. Bobby!

Shake and bake!

CDP45

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Re: Reader Case Study - My Complete 180
« Reply #4 on: December 03, 2013, 11:12:14 PM »
Wow that's an amazing turn around! Great job on the higher salary, pay the gf back even faster due to your surplus, she's taking a big risk on you, most people would just take the money and run, square up with her ASAP.

Todge

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Re: Reader Case Study - My Complete 180
« Reply #5 on: December 04, 2013, 12:52:58 AM »
Yep. pay the GF back ahead of time and add a bit of interest - or a thoughtful gift - to the last payment. This will demonstrate to her that you are committed to the positive change she's helped you bring about AND that you a bloke who gets things done ahead of time ... Both of these are attractive qualities in a partner!

huadpe

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Re: Reader Case Study - My Complete 180
« Reply #6 on: December 04, 2013, 08:24:14 AM »
Nicely done turnaround.  I second everyone else here about paying the g/f back ASAP.  You got yourself a keeper there.

ricky bobby

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Re: Reader Case Study - My Complete 180
« Reply #7 on: December 04, 2013, 08:34:32 AM »
Thanks for the input guys!

Life is better with cash to spare.

As for the truck/fuel mileage dilemma, it's a small 4 cylinder truck. It does fairly well on my commute. I'm using about $45 in gas weekly. I think that's a fair trade off for the commute and my other running around.

On paying the GF back: As I've started this new job, and there's more cash on hand, I'll pay her back ASAP. She'll be paid off before the year is out.

One thing that I've taken away from my situation: It is amazing what just a little help can do for someone if they're willing to make changes. $3K is very little money in the grand scheme of things, but can allow someone like myself to completely change my lifestyle.

Next, I'm trying to plan a vehicle purchase for myself, since the truck is technically hers. It was bought with the intention of resale after the first of the year. It was bought cheap and it's high mileage.

Any suggestions on a budget for another vehicle? Since I'm driving a lot more than I was, I'll need something sensible with good fuel mileage. I've been crawling Craigslist looking for a deal, but I want to make sure that I'm making smarter decisions.

Also, now that I've established some better habits, what do you guys recommend as a way to start saving for retirement?

reginna

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Re: Reader Case Study - My Complete 180
« Reply #8 on: December 04, 2013, 08:36:55 AM »
Ditto what everyone else said about your gf. Great insight and change on your part!

Dezrah

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Re: Reader Case Study - My Complete 180
« Reply #9 on: December 04, 2013, 08:59:36 AM »
Iím really impressed that you found a new job only a week after unexpectedly losing the first.  That shows you are really motivated to move forward with your life.  Well done.

I was going to echo everyone elseís sentiment that you make paying your girlfriend back a big priority, but you've beaten all our expectations if you're already planning to settle before the year is out.

For retirement, I recommend you set aside money until you have $1k to put in a Vanguard Personal Account and then just pick a target retirement plan.  I was totally nervous about doing this the first time but it's really quick and easy to do.  Since you're still a bit close to the edge, allocate it as a Roth IRA so you can safely access it if serious trouble strikes.  Of course, if you're employer offers a match you should definitely do that first.

I hope you're also sharing your journey with your son.  Let him see that people make mistakes but with a little bit of help and motivation, anyone can turn it around.

Elaine

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Re: Reader Case Study - My Complete 180
« Reply #10 on: December 04, 2013, 09:30:10 AM »
Well done, that really is a 180.

Peony

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Re: Reader Case Study - My Complete 180
« Reply #11 on: December 04, 2013, 11:47:50 AM »
Regarding suggestions for a reliable car, I would start a separate thread asking for recommendations. I know that I have seen people mention used Nissan Sentras and some other models as being very good and undervalued, but I couldn't tell you how to find those posts. But I think if you put the question out there you'll get responses from the more car-knowledgeable folks.

I'll also just mention that I have now had two 2006 Scion XBs (first one was totaled in an accident) with standard transmission. Both have been/were extremely reliable. I get 30 mpg (not fabulous but not the worst), car has a timing chain so expensive belt replacement will never be an issue, and car is great for hauling stuff since the back seats fold down totally flat. My first car had about 170,000 miles when it met its untimely demise. It had given me ZERO problems, even with that many miles. I met a guy at a yard sale whose XB had 200,000 miles and had also been trouble-free.

ZiziPB

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Re: Reader Case Study - My Complete 180
« Reply #12 on: December 04, 2013, 01:41:55 PM »
I just want to congratulate the OP on the turnaround. 

And I also wanted to point out that the OP used the financial help he received in a smart way that resulted in significant reduction of his expenses.  That is very important to keep in mind.  Someone else when offered help like that may have used the money for a downpayment on a new car ("need reliable transportation for a job"...) and dig themselves even deeper into the hole.  Well done Ricky Bobby!

FIreDrill

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Re: Reader Case Study - My Complete 180
« Reply #13 on: December 04, 2013, 01:48:47 PM »
Wow! This is truly an amazing turn around and I agree with everyone else that your new gf is a keeper.  Keep up the awesome cuts!

fodder69

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Re: Reader Case Study - My Complete 180
« Reply #14 on: December 05, 2013, 08:29:56 AM »
I'll just also add great job! Keep it up and you won't get yourself into this situation again!

SunshineGirl

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Re: Reader Case Study - My Complete 180
« Reply #15 on: December 05, 2013, 08:39:34 AM »
I second the advice on trying out YNAB. It provides so much insight into how you use and value money. I second the advice about using Vanguard for your investments.

What you say about how little it really takes to turn one's life around is so interesting. You weren't in tremendous debt, but you were headed in a dangerous direction, but still, the kindness of your new girlfriend (and the trust she placed in you) has definitely enabled you to change your financial life, and hopefully your love life, too!

How fun might it be for a bunch of us to band together and help fellow Mustachians via lending club?

payitoff

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Re: Reader Case Study - My Complete 180
« Reply #16 on: December 06, 2013, 11:14:35 PM »
how did you sell your truck? were you upsidedown?

Dee18

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Re: Reader Case Study - My Complete 180
« Reply #17 on: December 07, 2013, 05:33:11 AM »
Check with your employer to see if  they have a retirement program where they will match your contributions. 

Snow White

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Re: Reader Case Study - My Complete 180
« Reply #18 on: December 07, 2013, 03:44:18 PM »
Next step: Marry girlfriend.  ;). I have a feeling she will get you both to FI as soon as possible.