Here is my confession... thanks in advance for any badass mustachian advice
Background:
- married for 6 years
- always budgeted/tracked spending, mostly to fund a lot of travel around the world from our until recently moderate income
- no debt, no cars, no TV
Situation:
- income more than doubled over last 12-18 months
- travel and some other expenses doubled as well
- priorities are shifting away from that much travel, we want to have at least one child by the time we are 30 (we are 27 now)
- considering buying a condo within next 18-24 months in the city we currently live, some uncertainty as we have not yet decided if it is the place to settle
- do not want to own/maintain a house
Ask of the mustachians:
- please provide multiple punches in the face for overspending
- critique plan below for expenses decrease
- advise on investment opportunities
Nitty-gritty details for June 2013 through June 2014
Gross income: $136,000 (66k myself, 70k spouse)
Retirement savings in Traditional 401(k): $13,800
Retirement savings in Roth 401(k): 2,400
Retirement savings in Roth IRA: $5,500
*We've actually just started saving on retirement about 18 months ago...
Other savings: $60,000 in savings accounts
Plan for retirement savings for next 12 months:
Myself: contribute 8% to Roth 401(k), employer contributes 10% to traditional 401(k)
Spouse: contribute 4% to 401(k), max matched by employer, total 8%; $5,500 to Roth IRA
Expenses over last 12 months - the ugly part...
Place to live: $18 709
- Rent $17 725 (water, gas, heating included)
- Electricity $306
- Internet $678
Food: $8 300
- Groceries $5 318
- Lunches at work $2 982 (spouse cannot bring lunch in)
Transportation: $ 2 042
- public transit $1 340
- taxi $702
Other living expenses: $9 900 - embarrassing, we've never spent that much in our entire lives
- Household $1 279 (cleaning supplies, laundry, dry cleaning, etc.)
- Personal care $1 531 (haircuts, beauty supplies, makeup)
- Clothes $4 397
- Apartment $2 693 (furniture, décor etc.)
Other things important for us: $2 226
- Education $1 321
- Hobby $905
Other things not so important for us: $7 210 - that's another embarrassment
- Eating Out $1 935
- Entertainment $1 845
- Electronics $1 645
- Gifts $1 785
One-off: $6 186 - mostly going away for next 12 months
- Emergency family support $5 206
- Medical $642
- Non-budgeted $280
- Bank Fees $58
Travel: $27 705 - that's what we live for… at least till now
Total: $82 278
Fully paid medical insurance and cell phones are provided by employers
Cash savings accumulated over last 12 months: ~20k
Plan for expenses for June 2014-2015, assuming income remains the same
Place to live: $20 046
- Rent $19 025 (water, gas, heating included)
- Electricity $360
- Internet $661
Food: $7 064
- Groceries $5 000
- Lunches at work $2 064 (I will bring lunch, spouse still has to eat at cafeteria)
Transportation: $ 1 340
- public transit $1 340
- taxi $0 - no more cabs!
Other living expenses: $5 000 Plan to cut almost in half, mostly in clothes and decor departments
- Household $1 200 (laundry, dry cleaning, cleaning supplies etc.)
- Personal care $1 000 (haircuts, beauty supplies, makeup)
- Clothes $2 200
- Apartment $600 (furniture, décor etc.)
Other things important for us: $1 900
- Education $1 000
- Hobby $900
Other things not so important for us: $1 900
- Eating Out $600
- Entertainment $600
- Electronics $200
- Gifts $500
One-off: $440
- Medical $200
- Non-budgeted $240
Travel: $15 880 - this amount will be spent on daycare when we have a child
Total: $53 870
Target cash savings to accumulate over next 12 months: $50k
What to do with cash? Current plan for 60k sitting in savings accounts:
- Emergency fund - $17,000 at 0.75% APY savings account
- Down payment money - $43,000 - don't know where to put it for 18-20 months - will gladly take any suggestions
We want to save at least $60,000 for downpayment, with expected condo price of $300,000. The way our travel expenses are distributed over next 12 months, we will have 60k by early December. Plan is to invest everyhting we save starting from December into Vanguard index funds.
Mustachians, please comment on the revised budget and investment plan. Does it seem like going into the right direction?