Author Topic: Reader Case Study - One Income Insecurity, What Can We Do?  (Read 5682 times)

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 31
  • Location: North Carolina
Reader Case Study - One Income Insecurity, What Can We Do?
« on: August 20, 2014, 06:55:51 PM »
A first post and an important one! I am the sole breadwinner and right now things are fine. SO and I will be retaking our first steps into the real world and want to do it right this time. First, a little background. We're both 24. I work in tech and hate every moment of it. SO can't work (disability). First time we tried, I was fired about a year into my first position because as far as I can tell, my boss just didn't like me. Took me about 4 months and all of my savings before I got a new job. We moved into her parents house to save up before moving out again. We definitely do not want to have this happen again and we want our freedom also. I will be using our current spending along with our projected spending when we move based on past data. Facepunching will be allowed!

Income:
$5000/mo for me (taxable)
$700/mo ssdi + ssi (untaxable)
$5,700 total

Expenses:
Car (gas, insurance, maintenance) $300
Public transportation $233 ($130 of it is pretax)
Hobbies $100
Entertainment (out with friends) $50
Internet $60
2 Cell Phones $150
Food $500 (face punched myself and figure we can do this for $300)
Netflix $8
Rent + Parking $1410 (likely $950 when we move)
Medicine $12
Electricity $75

$2898 (before we move it's really $700 or so) total

Assets:
$2400 taxable account (started with money I win at a corporate event)
$1890 ROTH (in vanguard funds)
$2500 savings (moving fund)

$6790 total

Liabilities:
No debt (2 rewards cards paid off each month)

Net worth:
$6790

Estimated FIRE: 2035

Some of this stuff is pre-MMM so face punch away. SO has SSDI and SSI which gives both Medicare and Medicaid. I plan on fixing up my bike and riding it to the station every day. SO on the other hand would need a tricycle due to balance issues. These happen to be expensive but probably worth it.

So the point of this is, what can I do to not have that happen to me after we move out again? Part of it is certainly spending less than we did (something like $3700/mo!!). But beyond that, what can we do to feel comfortable financially while still keeping on track or expediting FIRE?

As a quick note, I am currently enrolled in an HSA and am ineligible for 401k until October. Next year I can max out HSA, IRA, and 401k and still have $2400/mo to live on for the two of us. Bit nervous about doing this though because of what happened in the last job.

Hotstreak

  • Pencil Stache
  • ****
  • Posts: 826
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #1 on: August 20, 2014, 09:57:42 PM »
You might want to build a large emergency fund.  Try building 6 months of expenses, and also have a low rate credit line and or credit card available in case of emergencies.  I wouldn't max your 401K until you have that much built up.  If you want to quit your line of work, don't do it until you have another gig lined up.  You should probably build your emergency fund before you start looking.

Also, cut your cell phone bills!  You are in a good position to get started, with low expenses and decent income. 

dragoncar

  • Walrus Stache
  • *******
  • Posts: 9574
  • Registered member
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #2 on: August 20, 2014, 10:18:39 PM »
Feel free to ignore me if this is too prying, but what is the nature of the disability?  Can SO do a work-from-home type side gig?

Thegoblinchief

  • Guest
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #3 on: August 20, 2014, 10:24:43 PM »
Income:
$5000/mo for me (taxable)
$700/mo ssdi + ssi (untaxable)
$5,700 total

Despite the rough hiccup you had, that's major cash. I'm retiring in 10 years at ~2/3 your cashflow.

Quote
Car (gas, insurance, maintenance) $300
Public transportation $233 ($130 of it is pretax)

$500+ total per month on transport! Seems like a lot, even with insurance roped in.

Quote
Hobbies $100

Hobbies are great. Hobbies that can pay for themselves - and then some - are even better.

Quote
2 Cell Phones $150

Which of the big 4 are you with and how fast can you cancel?

Quote
So the point of this is, what can I do to not have that happen to me after we move out again? Part of it is certainly spending less than we did (something like $3700/mo!!). But beyond that, what can we do to feel comfortable financially while still keeping on track or expediting FIRE?

As a quick note, I am currently enrolled in an HSA and am ineligible for 401k until October. Next year I can max out HSA, IRA, and 401k and still have $2400/mo to live on for the two of us. Bit nervous about doing this though because of what happened in the last job.

Well, once you have a 401(k) and HSA, your ability to save pre-tax will skyrocket. But don't leave yourself too barebones in raw cash. Take the surplus and start stuffing your Roth IRA and/or taxable accounts.

You might want to build a large emergency fund.  Try building 6 months of expenses, and also have a low rate credit line and or credit card available in case of emergencies.  I wouldn't max your 401K until you have that much built up.  If you want to quit your line of work, don't do it until you have another gig lined up.  You should probably build your emergency fund before you start looking.

I disagree. People say to keep e-fund in cash, I say keep e-fund in the market working for you - just make your e-fund at least 2x the size in case you need it right after a crash. Yes, there's downside, but with cash it's ONLY downside. Credit cards give you ~30 days of buffer for worst-case expenses.

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 31
  • Location: North Carolina
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #4 on: August 21, 2014, 04:17:55 AM »
@thegoblinchief
I'm living in NJ and working in NY. Commute is about an hour and housing quality for money spent is better in NJ than NY given options and knowledge of NY (lived there for 23 years). For this area of the country, it's expensive in general and I kind feel as if the income we have (approx 45,000 after tax @ 0 contribution) is low.

Transport is high because insurance is expensive (I live in NJ and I'm male and I'm 24 not 25), and because gas cost to go see my parents bimonthly (an hour ride). The positives of doing that trip for 2 or sometimes 3 weekends a month are that we get free dinners out and get to spend time with family (and golf at their country club too!). What I can and will be doing is bike to the train station instead of being driven (costs less than paying for parking). That will save about 50 miles of driving a week. Also, the car I have was free. It's a 2006 Honda Accord 2-door.

@dragoncar
She has CP and is deaf in one ear (the other about half so). Balance issues, inability to stand/sit for a long period of time without being in pain. We're looking at her doing babysitting because it's under the table (no loss of ssi or Medicaid).

So to sum up what people are saying: save up about $15,000 in taxable accounts and cash just in case. That is something I should be able to do it this year before starting the max train next year. Thanks very much!

Retired To Win

  • Handlebar Stache
  • *****
  • Posts: 1494
  • Age: 73
  • Location: Virginia
  • making the most of my time and my money
    • Retired To Win
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #5 on: August 21, 2014, 05:55:45 AM »
You might want to build a large emergency fund.  Try building 6 months of expenses, and also have a low rate credit line and or credit card available in case of emergencies.  I wouldn't max your 401K until you have that much built up.  If you want to quit your line of work, don't do it until you have another gig lined up.  You should probably build your emergency fund before you start looking.

I disagree. People say to keep e-fund in cash, I say keep e-fund in the market working for you - just make your e-fund at least 2x the size in case you need it right after a crash. Yes, there's downside, but with cash it's ONLY downside. Credit cards give you ~30 days of buffer for worst-case expenses.


I am in the camp of keeping emergency cash and invested capital very separate.   It would make me sick to my stomach to have to liquidate investments at a loss just because I had to have money for an emergency.  So I strongly advise keeping emergency reserves as cash instruments.

That being said, having emergency reserves is really about having liquidity.  You can have that in a mix of cash and available credit.  And that is what I have: a year's worth of expenses in a 1% interest savings account and an embarrasingly large amount of available credit.  :O

Bottom line: In your shoes, I would stick it out at the parents' until I had at least a 6-month emergency cash reserve built up.  That way your chances of having to go back to the parents later will be greatly reduced.  :)
« Last Edit: August 21, 2014, 05:58:44 AM by Retired To Win »

giggles

  • Stubble
  • **
  • Posts: 141
    • Kiva - Change the world with a $25 loan
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #6 on: August 21, 2014, 08:14:29 AM »
I don't recommend committing fraud with the babysitting.  People are all too willing to turn in SSI/SSD cheats.  Don't abuse the programs.

theonethatgotaway

  • Guest
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #7 on: August 21, 2014, 08:29:36 AM »
Well, with that commute and those costs (rent car parking and gas= about 2,000) I would get rid of the car and find a place next to the office in the city. You could walk to work or take the subway and save a lot of time commuting- about 10 Xtra hours a week. That could be another 500 per week in extra income which translates to 2000 per month. The health benefits are great too.

If you need to see your parents frequently get a car share once a month.


Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 31
  • Location: North Carolina
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #8 on: August 21, 2014, 08:36:32 AM »
I don't recommend committing fraud with the babysitting.  People are all too willing to turn in SSI/SSD cheats.  Don't abuse the programs.

Point taken. She will not work if it means losing her medical... I was very hopeful for Universal Healthcare happening, especially for people in this situation. Could be a PT worker but would lose more to do so, hence the idea behind other forms of income. Her lifetime medical expenses will be somewhere around $1MM in current dollars. I know that when we marry she will lose SSI and Medicaid, which is fine because I can push my coverage over to her to supplement Medicare... Which is the other thing. If she works for a couple of years PT, she risks losing medicare entirely. Universal Healthcare would have been much better given circumstances. Likely solution: she will not work at all despite a desire to.

greenmimama

  • Pencil Stache
  • ****
  • Posts: 718
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #9 on: August 21, 2014, 09:43:58 AM »
Have you seen these trikes? I have tried them out and they are so cool http://www.terratrike.com

Cassie

  • Walrus Stache
  • *******
  • Posts: 6987
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #10 on: August 21, 2014, 12:23:27 PM »
Until I retired 2 years ago I worked in the field and we helped people on SSDI find p.t. jobs that paid under 700/month. That way they could keep all their $ & their medical.  YOu might want to check & see what the rules are presently.

Pooperman

  • Magnum Stache
  • ******
  • Posts: 2880
  • Age: 31
  • Location: North Carolina
Re: Reader Case Study - One Income Insecurity, What Can We Do?
« Reply #11 on: August 21, 2014, 02:40:37 PM »
Until I retired 2 years ago I worked in the field and we helped people on SSDI find p.t. jobs that paid under 700/month. That way they could keep all their $ & their medical.  YOu might want to check & see what the rules are presently.

Might I ask what organization(s) I should be looking at? Where did you work?