Author Topic: Reader Case Study: Ready to spend less & invest more!  (Read 9869 times)

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Reader Case Study: Ready to spend less & invest more!
« on: June 11, 2014, 09:10:31 AM »
I just discovered MMM in the beginning of April and am eager to become FI and lead a happier life. I’m using Mint and after 2 months of tracking, I have a pretty good idea where the “extra” money is going. 

About us:
27 year old female married to 26 year old male. My husband recently left a high stress, high workload job and is now working part time 1 day per week at a game store and teaching 6 days at a Boy Scout camp. I am a self-employed engineering contractor. I like my job and my current contract should be good for another 2 years. We have 2 Shetland sheepdogs and no children (but would like 1 or 2 in the future). We live in Missouri (rental).

I tend to be the more financially responsible one, but my husband is coming around. He really saw the value in funding his 401k while he was employed full time and is eager to start contributing to a Roth IRA even while working part time gigs. I also happen to know that he is keeping a higher balance in his savings that he used to – we have some combined finances, but we also keep separate accounts. I want to lead by example get him to come around, not to force him into a no-spend corner.

Right now, my biggest challenge is lessening my extra spending because I am covering the majority of our bills at this time and would like to invest my extra money, so that it’s not just sitting around in the bank tempting me to spend it on things I don't need.

Income (Monthly):
Him ~ $1,000 after tax ($200 to joint expenses, $458 ready to fund a Roth IRA, $342 left to spend/save – baby steps!)
Me ~ $6,400 pre-tax (give or take as I am paid by the hour)

I’m making estimated tax payments of $4,638 quarterly (to Federal and Missouri), so I “tax” myself $1,546 each month leaving me with $4,854. I also invest $1,505 into retirement each month to max out my accounts.

Total Income = $5,054

Budgeted Monthly Expenses (May 2014 spending):
$99 Car gas (Unusually high since we drove across MO to visit family. We’re still clown caring about, but I am trying to reduce errands to one car trip/week and ride my bike more to build up the endurance to get to/from the gym and library without a car!)
$87 Electricity (averaging 28kWh/day) [We switched to CFLs in April, bumped up the AC temp, and use more fans.]
$79 Internet/Land line phone (The land line is for my home office and is necessary. It’s written off as a business expense on my taxes.)
$32.50 Mobile phone
$36 Sewer ($20 sewer base fee; used about 4 CCF last billing cycle)
$26 Water (we used 2,992 gallons last billing cycle)
$38 Fast food/restaurants (It’s really worse than that. Some of my husband’s $340 spend/save money also buys us food out. I know we deserve face punches, lots of them.)
$360 Groceries (We can do better. There is food waste happening.)
$75 Crossfit gym
$278.91 Private Health Insurance (This includes rx copays; I could drop down a tier to lower my premium, but I’d exceed the cost difference simply by purchasing my rx out of pocket.)
$650 Rent (3 bedroom, 2 bath – one room is my home office)
$75 Pet Food (they eat grain free)
Subtotal = $1,835.50

Non-budgeted May Expenses:
$29 Oil Change
$15 Shipping Mail
$15 MMO subscription (Canceled it already!)
$58 Pet Grooming (both dogs)
$342.95 Shopping (Some home stuff, but mostly workout clothes…lots and lots of face punches needed.)
$350 Tax Prep Fees (The check cleared in May instead of April. I write it off as a business expense.)
$110 Urgent Care
Subtotal = $922

Total Expenses = $2,757.50


The Math:
$5,054 (income) – 2,757.50 (expenses) – 1,505 (retirement) = $791.50 left

It’s not good. We’re not over spending, but there should be way more left. To me, this is basically living paycheck to paycheck.

Where I think I really should be:

$5,054 – 1,787 (expenses, less gas, no eating out, no non-budgeted) – 1,505 (retirement) = $1,762 left

Can you see how I feel like I’ve completely failed? That’s nearly a $1,000 difference. I could be investing that money. I could invest that $1,000 and still have plenty of wiggle room for those annual expenses (listed below) and those unexpected, legitimate expenses (like urgent care). At least, I think I do.

Other Annual Expenses:
I don’t track these in the monthly budget because these items only happen once or twice a year, but I do have them on my home spreadsheet to have an idea of what we’re spending on them.

~$4000 Auto insurance and maintenance (assumes $0.15/mile, 7500 miles/car/year)
$135 Rental & personal articles insurance
$672 Dental cleanings (2 people, twice a year)
$232 Seasonal Dog groom (2 dogs, 4 times/year)
~$100 Vet check-up & vaccinations (2 dogs, once/year)
$180 Heartworm medication (2 dogs, 12 months)
Total Other Expenses = $5,319 per year (about $444 per month)

Liabilities:
$0 – we have no debt!

Assets:
$4,000 401k (husband)
$30,000 Roth IRA (maxing out, $458 contributed/month)
$16,000 SEP (maxing out, $1047 contributed/month up to ~$13000 this year) [2014 will be the first year I max it out]
$22,000 Heartland Value Plus Mutual Fund
$8,500 Heartland Select Value Mutual Fund
$20,000 Two 24 month CDs
$4,500 One 12 month CD
$20,000 Savings 1 (credit union)
$16,000 Savings 2 (main bank)
$40,000 Savings 3 (main bank, emergency fund)
Total Assets = $181,000

Deprecating Assets:
Cars (2) – both 2007, owned outright (considering selling his Saturn Ion)
Motorcycle (1) – 2009, owned outright (currently not up for negation)

Other Helpful Info:
My retirement accounts are managed through Pershing LLC and the investments are made into American Funds. Also, I plan to recalculate my SEP max at the end of the year and make a lump sum contribution to make sure it’s maxed out (since my income is variable).
Roth IRA: CWGIX, IGAAX, SMCWX, ANWPX
SEP: AMRMX, AEPGX, ANCFX

Questions:
1)   Where do you advise cutting spending?
        a) Shopping is obvious.
        b) Tips on wasting less food would be welcome.
        c) Other areas? Electricity? Water?
2)   Where should I invest that $1000? Into my Heartland mutual funds? Maybe some Vanguard Index funds? Advice welcome.
3)   Should we roll my husband’s 401k into a Roth IRA and pay taxes now, or just open a Roth IRA and wait until he has another full time job to roll the 401k into the new one?

Future Goals:
1)   Own a house someday
2)   Become financially independent - I'd like FU money even if I don't quit working super young
3)   Retire at 50 years old (maybe sooner? IDK)

P.S. Please don't be too angry if I don't have everything written down just right. I've operated under a budget for 5 years (since graduating college), but this is the first time I'm really taking a look at the whole situation.

Thanks for the advice. :)
« Last Edit: June 16, 2014, 10:01:09 AM by karaishere »

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #1 on: June 11, 2014, 11:44:48 AM »

Questions:
1)   Where do you advise cutting spending? Shopping is obvious. Also, tips on wasting less food would be welcome.
2)   Where should I invest that $1000? Into my Heartland funds? Maybe some Vanguard Index funds? Advice welcome.
3)   Should we roll my husband’s 401k into a Roth IRA and pay taxes now, or just open a Roth IRA and wait until he has another full time job to roll the 401k into the new one?

Future Goals:
1)   Own a house someday
2)   Become financially independent - I'd like FU money even if I don't quit working super young
3)   Retire at 50 years old (maybe sooner? IDK)

P.S. Please don't be too angry if I don't have everything written down just right. I've operated under a budget for 5 years (since graduating college), but this is the first time I'm really taking a look at the whole situation.

Thanks for the advice. :)

1) Just be smart when shopping. Include a "non budget expense" category in your budget, because random stuff always comes up (blow a tire, ointment to treat sunburn, home repair/purchase). You need to buy clothes and live, just don't be wasteful and extravagant. No need to turn into cave people, just don't be like the average American when it comes to spending and then "wondering" where all the money went.
2) Given the amount you're investing, I'd just say Vanguard index funds. I don't know what Heartland funds are, how they work, benefits/risks, so I'll defer to someone else. Remember, in the long run how much you invest is more important than what you invest in.
3) In general, it's good to keep some assets in a 401k and some in a Roth. If he were single, I'd suggest rolling everything over since you could pay barely any tax while he has low income, but since you're married it gets more complicated. Look up "pro rata" rule for Roth conversions. Basically, if you have other pre-tax accounts, the tax benefit is reduced when converting to a Roth. The only real way to get around this is to convert ALL of your pre-tax accounts and pay all that tax up front.
     - keep it simple: Keep what you have, and optimize going forward. It's good to have a mix of pre-tax and tax free (roth) accounts.

Your situation overall isn't bad at all. Zero debt (applause!!!!). In general, don't count non-liquid assets in your net worth (e.g. cars). They have liquidation value if you were to sell, but are depreciating assets.

In any case, ~$180k in assets (and net worth) is nothing to sneeze at given your ages.

From a long-term perspective, you have maybe a $12k opportunity by cutting expenses ($1k/mo like you said), but some of that is just life expenses like health care, home expenses, etc. Let's call it $10k expense opportunity if you got really frugal!

To me, it seems that income is a bigger opportunity, either in your contractor work or in husband's work. A $60k income isn't bad, but given your education, I think this could be much better. Hubby needs to get on board with being frugal and saving/investing. You/he can't afford to be spendy while he makes <$15k/yr, and you/him combined make ~$60k.

If you manage to cut your expenses by $10k, and increase your income by $10k, that's $20,000! If you avoid lifestyle inflation as your income increases further, this spread will widen and you'll be on a much more definite path toward financial goals.

To conclude, work to be mindful of spending, but no need to take draconian measures. Think about the income side of the equation as well to determine what you think is reasonable to achieve given your goals/abilities/lifestyles wishes.

Good luck!

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #2 on: June 11, 2014, 01:14:41 PM »
1) Just be smart when shopping. Include a "non budget expense" category in your budget, because random stuff always comes up (blow a tire, ointment to treat sunburn, home repair/purchase). You need to buy clothes and live, just don't be wasteful and extravagant. No need to turn into cave people, just don't be like the average American when it comes to spending and then
You're right. Random things usually do come up. I guess I was just being really hard on myself for the excessive shopping. I recognize that most of those non-budgeted things would have come up even without the shopping. BUT I will definitely work on shopping smarter. Oh, and I clarified in my original post that we rent, just to make it more obvious since you mentioned home repair.

2) Given the amount you're investing, I'd just say Vanguard index funds. I don't know what Heartland funds are, how they work, benefits/risks, so I'll defer to someone else. Remember, in the long run how much you invest is more important than what you invest in.
They're mutual funds. Anyway.... That's where I get kind of frozen. I know that over time investments will grow, but I get so stuck on which ones to choose that I'm stuck in inaction. I researched several Vanguard Index Funds in May and felt so confused.

3) In general, it's good to keep some assets in a 401k and some in a Roth. If he were single, I'd suggest rolling everything over since you could pay barely any tax while he has low income, but since you're married it gets more complicated. Look up "pro rata" rule for Roth conversions. Basically, if you have other pre-tax accounts, the tax benefit is reduced when converting to a Roth. The only real way to get around this is to convert ALL of your pre-tax accounts and pay all that tax up front.
     - keep it simple: Keep what you have, and optimize going forward. It's good to have a mix of pre-tax and tax free (roth) accounts.
THANK YOU! I've been googling for days trying to figure out what to do with my husband's retirement account. I read a little bit about that pro rata rule, and will read more later. I will leave the 401k alone for now, and have him open a Roth IRA and start putting money in it. :)

Your situation overall isn't bad at all. Zero debt (applause!!!!). In general, don't count non-liquid assets in your net worth (e.g. cars). They have liquidation value if you were to sell, but are depreciating assets. 
Thank you. I'm not going to lie, it's easy to live debt free when your parents model that behavior growing up (they always paid off credit cards in full, bought cars with cash, and they paid off their mortgage in less than 10 years). I am also very lucky to have their financial support when going through college, which set me up nicely coming out of university. I wasn't sure where to put the cars/bike. Which is funny, because I don't count them on Mint. I moved them out of the asset category for future readers from my post.

To me, it seems that income is a bigger opportunity, either in your contractor work or in husband's work. A $60k income isn't bad, but given your education, I think this could be much better. Hubby needs to get on board with being frugal and saving/investing. You/he can't afford to be spendy while he makes <$15k/yr, and you/him combined make ~$60k.

If you manage to cut your expenses by $10k, and increase your income by $10k, that's $20,000! If you avoid lifestyle inflation as your income increases further, this spread will widen and you'll be on a much more definite path toward financial goals.
I actually just raised my rate $5/hour in February. Assuming I work 40 hours per week, 50 weeks per year, I have the potential to earn $85,000 pre-tax in 2014 ($66,448 after tax). So, I do tend to focus on the lower earning months when I budget. Last year, I made $69,000 pre-tax ($51,139 after tax). I felt like my rate increase was pretty good, now not so much. Am I being under valued for someone with a 4-year engineering degree with nearly 5 years experience?

As for my husband, I agree. I am trying to bring down his spending without pushing too hard. It's a huge deal that he wants to put about half of his current income into a Roth IRA each month. Prior to April, his last two jobs were about $30,000 a year (without a college degree). That said, his part time job at the game store has the potential to move him into management where he would get to work a full week at a higher pay. The teaching at a scout camp is also temporary (June & July). He's very smart and only a few classes short of an associate's degree (I think it would be awesome if he finished it). I do want him work for his full potential, but I also don't want to push him into another job he hates. He was really depressed in March before quitting. Part of me feels like he didn't really have a chance to figure out what he wanted to do after high-school because he enlisted in the Air Force for 6 years. He got out in October 2013, started that new job in November, then quit it in April. If it's worth anything, we talk about this a lot.

Thanks for the advice rmendpara! I'll definitely get that investing & Roth stuff rolling this month.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #3 on: June 11, 2014, 01:27:01 PM »
Scanned through your responses. Before anything else, I think we all appreciate hubby's service to our country (I'll take the liberty to speak for others).

Regardless, don't get too caught up in the weeds. Make sure you get the big picture items right.

1) Income - Stay relevant in your field(s), and work hard, and invest so you don't have to take crap from a shitty employer
2) Expenses - Don't live an A lifestyle with a C income. Live a C lifestyle with an A income! Remember that taxes, housing, transportation will likely be your three biggest expenses over your lifetime. You can't do much about taxes other than invest pre-tax, and carefully do your tax returns. Housing and transportation are simple. Buy what you need, not what you want.
3) Invest - It's more important how much you invest than what you invest in. Never forget this. Of course don't invest in stupid products like dog poop mutual funds because some moron promises you 20% returns forever. If it sounds too good to be true, it probably is. Leave the professional investments for Wall Street to play with.

If you keep the basics in check, the chips will fall in place just fine.

You're on the right path. Keep at it! Good luck.

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #4 on: June 11, 2014, 01:41:23 PM »
1) Income - Stay relevant in your field(s), and work hard, and invest so you don't have to take crap from a shitty employer
2) Expenses - Don't live an A lifestyle with a C income. Live a C lifestyle with an A income! Remember that taxes, housing, transportation will likely be your three biggest expenses over your lifetime. You can't do much about taxes other than invest pre-tax, and carefully do your tax returns. Housing and transportation are simple. Buy what you need, not what you want.
3) Invest - It's more important how much you invest than what you invest in. Never forget this. Of course don't invest in stupid products like dog poop mutual funds because some moron promises you 20% returns forever. If it sounds too good to be true, it probably is. Leave the professional investments for Wall Street to play with.
I think I can remember those 3 things. One last question, are we living an A or C lifestyle? I feel like we are in the middle with a B lifestyle and a B income. Just curious what an outsider views it as. Thanks rmendpara. :)

Mrs. Frugalwoods

  • Bristles
  • ***
  • Posts: 354
  • Location: Vermont
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #5 on: June 11, 2014, 02:01:14 PM »

$38 Fast food/restaurants (It’s really worse than that. Some of my husband’s $340 spend/save money also buys us food out. I know we deserve face punches, lots of them.)
$360 Groceries (We can do better. There is food waste happening.)
$75 Crossfit gym
$75 Pet Food (they eat grain free)
Subtotal = $1,835.50

Non-budgeted May Expenses:
$58 Pet Grooming (both dogs)
$342.95 Shopping (Some home stuff, but mostly workout clothes…lots and lots of face punches needed.)
I'll give my two cents on some of your spending, but no face punching I promise :)!!
--Fast food/restaurants: If you really want to buckle down and save as much as possible, you've gotta just drop this one. Restaurants were a hard thing for me to give up, but once I saw the monthly savings, I was all about it! Have fun date nights at home instead.
--$360/month for groceries for two people isn't too bad, but you can do cheaper. We limit meat & dairy to save and buy in bulk from Costco as much as possible. And, we cook almost entirely from scratch--very little packaged food, which is almost always more expensive. It took us a few months to learn exactly how much to buy to eliminate food waste, but we've done it--keep your receipts and track quantities. I'm the ridiculous person in the produce aisle buying exactly 7 apples and 1.3lbs of shallots...etc
--Drop the Crossfit membership and workout at home. Or, could you volunteer at the Crossfit in exchange for a free membership? That's what I do at my yoga studio (free classes for receptionist and data entry work!).
--My greyhound also eats grain free and I recently discovered that Costco's Nature's Made dog food is grain-free and basically identical to the more expensive Taste of the Wild. If you have a Costco, maybe you could check this out?
--Can you groom your pups yourself? We brush our hound's teeth, trim her nails, clean her ears, and bathe her ourselves. It takes time and patience, but it's a great way to save (and it's actually pretty hilarious most of the time)
--Shopping: I recommend carefully itemizing every single purchase (for yourself, not necessarily for us) and asking yourself if there's a cheaper substitute for each item or if you really need it. Costco and Amazon are great sources for super cheap household stuff. Re. workout clothes--I have pretty much one outfit that I wear all week. No one notices and if they do, I really don't care :). I ask myself: what do I want more: this material good or FI? FI almost always wins out! Except in the case of boxed wine. I do want boxed wine more.

GregO

  • Stubble
  • **
  • Posts: 125
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #6 on: June 11, 2014, 02:18:24 PM »
2) Given the amount you're investing, I'd just say Vanguard index funds. I don't know what Heartland funds are, how they work, benefits/risks, so I'll defer to someone else. Remember, in the long run how much you invest is more important than what you invest in.
They're mutual funds. Anyway.... That's where I get kind of frozen. I know that over time investments will grow, but I get so stuck on which ones to choose that I'm stuck in inaction. I researched several Vanguard Index Funds in May and felt so confused.
I looked up all the funds you listed.  They all have ratio expenses between 0.6% and 1.1%, not great but not terrible.  But most of them also have a 5% front-end load, which means that they take 5% right off the top when you invest in the funds!  That IS bad.  Hence why people on here advocate that you invest with Vanguard index funds. 

And yes, Vanguard does have a lot of choices, but they really have just a handful of true index funds that they really are known best for.  You could simply just invest everything in VTSAX, which is the Total Market Index fund.  Then start learning more about it and you could get into more detail into which index funds you want to invest in.  A great place to start is http://jlcollinsnh.com/stock-series/.  But for now, I'd suggest you open up Vanguard funds and move all your money there, especially before you invest anymore funds.

3) In general, it's good to keep some assets in a 401k and some in a Roth. If he were single, I'd suggest rolling everything over since you could pay barely any tax while he has low income, but since you're married it gets more complicated. Look up "pro rata" rule for Roth conversions. Basically, if you have other pre-tax accounts, the tax benefit is reduced when converting to a Roth. The only real way to get around this is to convert ALL of your pre-tax accounts and pay all that tax up front.
     - keep it simple: Keep what you have, and optimize going forward. It's good to have a mix of pre-tax and tax free (roth) accounts.
THANK YOU! I've been googling for days trying to figure out what to do with my husband's retirement account. I read a little bit about that pro rata rule, and will read more later. I will leave the 401k alone for now, and have him open a Roth IRA and start putting money in it. :)
Someone can correct me here if I'm wrong, but there's no tax issues with rolling his 401(k) into a Traditional IRA as opposed to a Roth IRA.  I would always suggest rolling the money out of a 401(k) when you leave a job so that you control where it's invested and can keep track of it all in one place.  I'd suggest having your husband open a Traditional IRA with Vanguard and roll it over.  Then you can do some calculating and decide if you would rather have your husband investing in a Roth IRA or a Traditional IRA, but you'll probably decide to stick with investing new money in a Roth.

I actually just raised my rate $5/hour in February. Assuming I work 40 hours per week, 50 weeks per year, I have the potential to earn $85,000 pre-tax in 2014 ($66,448 after tax). So, I do tend to focus on the lower earning months when I budget. Last year, I made $69,000 pre-tax ($51,139 after tax). I felt like my rate increase was pretty good, now not so much. Am I being under valued for someone with a 4-year engineering degree with nearly 5 years experience?
I am a civil engineer with 6 years experience and am making a little more than 85k, but I'm in Los Angeles.  I'm not sure what the markup is that a contractor charges a business as opposed to the business having to have a salaried employee, but you need to account for it. For reference, my billing hourly rate with our company (~40 employees in California) is $150.   I would think you should bill a rate so you are able to pay all the business expenses and then have a salary left to pay yourself around $70k, which should include covering a lot of your benefits.  Don't price yourself out of work, but it should probably be something you investigate more.

GregO

  • Stubble
  • **
  • Posts: 125
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #7 on: June 11, 2014, 02:29:14 PM »
Assets:
$4,000 401k (husband)
$30,000 Roth IRA (maxing out, $458 contributed/month)
$16,000 SEP (maxing out, $1047 contributed/month up to ~$13000 this year) [2014 will be the first year I max it out]
$22,000 Heartland Value Plus Mutual Fund
$8,500 Heartland Select Value Mutual Fund
$20,000 Two 24 month CDs
$4,500 One 12 month CD
$20,000 Savings 1 (credit union)
$16,000 Savings 2 (main bank)
$40,000 Savings 3 (main bank, emergency fund)
Total Assets = $181,000

Why do you have so much money in cash and bonds?  That's $90k in cash and CDs.  I understand that you are a contract employee and want to set some money aside in case work slows down, but that's A LOT of money to have sitting on the side making ~1%.  At your current expenses, you spend a little over $3k a month.  You have enough cash set aside to live off of it for almost 3 years, I think that is way overkill.  People typically suggest 6 months, which would be $20k.  If you're saving for a downpayment for a house, then maybe you keep some of the expected downpayment.  But even then you could siphon off some of your surplus cash flow every month if you get serious about getting a house.  You don't need to have it all just sitting in a bank account waiting, I wouldn't think.

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #8 on: June 11, 2014, 02:34:48 PM »
I'll give my two cents on some of your spending, but no face punching I promise :)!!
--Fast food/restaurants: If you really want to buckle down and save as much as possible, you've gotta just drop this one. Restaurants were a hard thing for me to give up, but once I saw the monthly savings, I was all about it! Have fun date nights at home instead.
--$360/month for groceries for two people isn't too bad, but you can do cheaper. We limit meat & dairy to save and buy in bulk from Costco as much as possible. And, we cook almost entirely from scratch--very little packaged food, which is almost always more expensive. It took us a few months to learn exactly how much to buy to eliminate food waste, but we've done it--keep your receipts and track quantities. I'm the ridiculous person in the produce aisle buying exactly 7 apples and 1.3lbs of shallots...etc
--Drop the Crossfit membership and workout at home. Or, could you volunteer at the Crossfit in exchange for a free membership? That's what I do at my yoga studio (free classes for receptionist and data entry work!).
--My greyhound also eats grain free and I recently discovered that Costco's Nature's Made dog food is grain-free and basically identical to the more expensive Taste of the Wild. If you have a Costco, maybe you could check this out?
--Can you groom your pups yourself? We brush our hound's teeth, trim her nails, clean her ears, and bathe her ourselves. It takes time and patience, but it's a great way to save (and it's actually pretty hilarious most of the time)
--Shopping: I recommend carefully itemizing every single purchase (for yourself, not necessarily for us) and asking yourself if there's a cheaper substitute for each item or if you really need it. Costco and Amazon are great sources for super cheap household stuff. Re. workout clothes--I have pretty much one outfit that I wear all week. No one notices and if they do, I really don't care :). I ask myself: what do I want more: this material good or FI? FI almost always wins out! Except in the case of boxed wine. I do want boxed wine more.
Fast Food/Restaurants - I know! The worst part is we don't go for "date nights." It's my pure laziness to cook. Sometimes I'm super exhausted after work and starving and then my husband suggests the easy way out. It's not like I don't meal plan, or we have leftovers, or there aren't ingredients sitting right there in the pantry/fridge.

Groceries - I do cook from scratch, so we're doing something right (well, at least on the nights I actually cook)! Quantity is definitely the problem. I really struggle to figure out how to modify recipes for 2 people. The food waste typically happens because we end up with too much leftover and after 2 repeated ratings, it gets abandoned. I've always wondered about Costco/Sam's Club type options. I suppose I thought they'd be filled with a lot of junk food. I'll have to check out our Sam's Club.

Dogs - I wish we had a costco for that food!! I'll have to find out if Sam's does anything like that, or check the other pets stores for a lesser-expensive grain free option. As for the grooming, I'm ashamed to say that we actually do groom them (brush, bath, nails, trim the paw hairs, brush their teeth), except one area... I'm afraid of cutting them to trim up their "poop chute" (as you see, Shelties are extremely hairy and it can cause a situation back there), so we have them taken in. Wow, that's the lamest excuse I've ever read.

Shopping - I like that. FI or material item? I should put it on my wallet or something. In fact, I just wrote it on a note card to put it in that little clear plastic window of my wallet right next to the debit and credit cards. :D I'll start tracking the household goods by hand for myself.  Usually, I'm buying things like tp or soap, you know regular hygiene type items, but I will start tracking that more & price compare more.

Thank you Mrs. Frugalwoods!

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #9 on: June 11, 2014, 03:15:34 PM »
I looked up all the funds you listed.  They all have ratio expenses between 0.6% and 1.1%, not great but not terrible.  But most of them also have a 5% front-end load, which means that they take 5% right off the top when you invest in the funds!  That IS bad.  Hence why people on here advocate that you invest with Vanguard index funds. 

And yes, Vanguard does have a lot of choices, but they really have just a handful of true index funds that they really are known best for.  You could simply just invest everything in VTSAX, which is the Total Market Index fund.  Then start learning more about it and you could get into more detail into which index funds you want to invest in.  A great place to start is http://jlcollinsnh.com/stock-series/.  But for now, I'd suggest you open up Vanguard funds and move all your money there, especially before you invest anymore funds.
I've had those mutual funds since I was a teen. I didn't realize (not an excuse) they took money like that. I can see why people like Vanguard. So, would it be good to just start with VTSAX and then add other index funds once I learn more?

Someone can correct me here if I'm wrong, but there's no tax issues with rolling his 401(k) into a Traditional IRA as opposed to a Roth IRA.  I would always suggest rolling the money out of a 401(k) when you leave a job so that you control where it's invested and can keep track of it all in one place.  I'd suggest having your husband open a Traditional IRA with Vanguard and roll it over.  Then you can do some calculating and decide if you would rather have your husband investing in a Roth IRA or a Traditional IRA, but you'll probably decide to stick with investing new money in a Roth.
You're right. There aren't any tax issues with rolling a 401k to a traditional IRA. I guess I thought the Roth was a better choice because the money comes out tax free at the end. However, since I already have a Roth, maybe it would be good for my husband to have a traditional IRA. Can we roll his 401k into a traditional IRA and then open up a Roth also (to put new money into)? Is that allowed?

I am a civil engineer with 6 years experience and am making a little more than 85k, but I'm in Los Angeles.  I'm not sure what the markup is that a contractor charges a business as opposed to the business having to have a salaried employee, but you need to account for it. For reference, my billing hourly rate with our company (~40 employees in California) is $150.   I would think you should bill a rate so you are able to pay all the business expenses and then have a salary left to pay yourself around $70k, which should include covering a lot of your benefits.  Don't price yourself out of work, but it should probably be something you investigate more.
Wow, I really need to look into this. I suppose the markup for a salaried person would be providing health insurance, paying the business share of social security/medicare taxes (I pay the whole 14%, 7% for me the person, 7% for my business), and probably some level of 401k matching.

Why do you have so much money in cash and bonds?  That's $90k in cash and CDs.  I understand that you are a contract employee and want to set some money aside in case work slows down, but that's A LOT of money to have sitting on the side making ~1%.  At your current expenses, you spend a little over $3k a month.  You have enough cash set aside to live off of it for almost 3 years, I think that is way overkill.  People typically suggest 6 months, which would be $20k.  If you're saving for a downpayment for a house, then maybe you keep some of the expected downpayment.  But even then you could siphon off some of your surplus cash flow every month if you get serious about getting a house.  You don't need to have it all just sitting in a bank account waiting, I wouldn't think.
Yeah, I know. That's why I want to invest. Honestly, I'd be happy to leave the $40,000 emergency fund alone and invest the rest (and probably the CDs too once they come due). I just don't know where to start, so I haven't done anything with it.

Thank you for the advice Greg. Lots to think about and act on soon!

plainjane

  • Handlebar Stache
  • *****
  • Posts: 1675
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #10 on: June 11, 2014, 03:23:18 PM »
Groceries - I do cook from scratch, so we're doing something right (well, at least on the nights I actually cook)! Quantity is definitely the problem. I really struggle to figure out how to modify recipes for 2 people. The food waste typically happens because we end up with too much leftover and after 2 repeated ratings, it gets abandoned.

One thing to think about is how you can adjust the items so that you aren't eating the same thing over and over?  E.g. roasted veggies into soup, or pizza toppings or a curry.  If you can't think of anything, Google will find quite a bit if you give it "recipe leftover x".  The only thing it really doesn't work for dressed salad (I'm told some regions have a soup, but I've never tried that).

GregO

  • Stubble
  • **
  • Posts: 125
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #11 on: June 11, 2014, 03:37:58 PM »
I've had those mutual funds since I was a teen. I didn't realize (not an excuse) they took money like that. I can see why people like Vanguard. So, would it be good to just start with VTSAX and then add other index funds once I learn more?
Yes, that's what I'd advise.  You'd need to gather all your statements and give Vanguard a call.  They'll gladly help you move all of your money into an account with them.  Then start your very important, and very profitable, self-education on personal finance.  You and your husband should both learn about it.

You're right. There aren't any tax issues with rolling a 401k to a traditional IRA. I guess I thought the Roth was a better choice because the money comes out tax free at the end. However, since I already have a Roth, maybe it would be good for my husband to have a traditional IRA. Can we roll his 401k into a traditional IRA and then open up a Roth also (to put new money into)? Is that allowed?
Yes.  You can have both types of IRAs.  You can contribute up to $5,500 in your IRAs per person per year.  You could contribute into either one or both, but you're limited to $5,500 total in contributions across the two.  But rollovers don't count towards contributions.  Vanguard can help with your IRAs and rollovers as well.

Wow, I really need to look into this. I suppose the markup for a salaried person would be providing health insurance, paying the business share of social security/medicare taxes (I pay the whole 14%, 7% for me the person, 7% for my business), and probably some level of 401k matching.
I don't think you could touch our hourly rates, our company is very well established in our market and is able to get a premium rate in an expensive city.  And that's the rate they charge retail clients.  So if you're being contracted out to an engineering firm, it's really comparing apples to oranges.  But there's no doubt that you should look into it a lot closer.  You very well may be too low.

And yes, I think the expenses you list are the typical benefits given to an employee.  There's also the overhead from the company and probably some other expenses that you haven't thought of.  But you definitely hit the major ones.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #12 on: June 11, 2014, 06:30:55 PM »
1) Income - Stay relevant in your field(s), and work hard, and invest so you don't have to take crap from a shitty employer
2) Expenses - Don't live an A lifestyle with a C income. Live a C lifestyle with an A income! Remember that taxes, housing, transportation will likely be your three biggest expenses over your lifetime. You can't do much about taxes other than invest pre-tax, and carefully do your tax returns. Housing and transportation are simple. Buy what you need, not what you want.
3) Invest - It's more important how much you invest than what you invest in. Never forget this. Of course don't invest in stupid products like dog poop mutual funds because some moron promises you 20% returns forever. If it sounds too good to be true, it probably is. Leave the professional investments for Wall Street to play with.
I think I can remember those 3 things. One last question, are we living an A or C lifestyle? I feel like we are in the middle with a B lifestyle and a B income. Just curious what an outsider views it as. Thanks rmendpara. :)

Didn't mean that as a specific comment, just general advice (i.e. don't live above your means... not implying that you are).

Given your savings rate of around 15% (791/5,051), over the medium term something needs to improve. 15% is much better than the US avg, but let's be serious, none of us on this site wants to be average. :)

Over time, Savings = Income - Expenses. It's up to you how much you want to grow income, cut expenses, or both. If you want financial freedom, own your home, and retire by 50 (with a likely retirement of 30+ years), you will probably need to increase the savings rate to 25%+ (around $1,260/mo at current income), start investing more, and increasing the savings rate as your income rises.
« Last Edit: June 11, 2014, 06:33:15 PM by rmendpara »

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #13 on: June 12, 2014, 07:25:46 AM »
Yes, that's what I'd advise.  You'd need to gather all your statements and give Vanguard a call.  They'll gladly help you move all of your money into an account with them.  Then start your very important, and very profitable, self-education on personal finance.  You and your husband should both learn about it.

Yes.  You can have both types of IRAs.  You can contribute up to $5,500 in your IRAs per person per year.  You could contribute into either one or both, but you're limited to $5,500 total in contributions across the two.  But rollovers don't count towards contributions.  Vanguard can help with your IRAs and rollovers as well.
Time to give Vanguard a call! I am already reading a book on finance this month and will work through the MMM list. Hopefully, I can convince my husband to read up on fiance too. Thanks for all of the advice Greg! I'm really excited to take the next steps forward!

Didn't mean that as a specific comment, just general advice (i.e. don't live above your means... not implying that you are).

Given your savings rate of around 15% (791/5,051), over the medium term something needs to improve. 15% is much better than the US avg, but let's be serious, none of us on this site wants to be average. :)

Over time, Savings = Income - Expenses. It's up to you how much you want to grow income, cut expenses, or both. If you want financial freedom, own your home, and retire by 50 (with a likely retirement of 30+ years), you will probably need to increase the savings rate to 25%+ (around $1,260/mo at current income), start investing more, and increasing the savings rate as your income rises.
Sometimes I over think things, sorry. I definitely want to save way more than the US average. Thank you for the advice rmendpara!

One thing to think about is how you can adjust the items so that you aren't eating the same thing over and over?  E.g. roasted veggies into soup, or pizza toppings or a curry.  If you can't think of anything, Google will find quite a bit if you give it "recipe leftover x".  The only thing it really doesn't work for dressed salad (I'm told some regions have a soup, but I've never tried that).
Good idea. I've done that some in the past and it works well. I'll try out that google tip too next time I'm faced with a fridge full of random bits. I suppose it wouldn't work too well with one pot meals. ;) Thanks for the tips plainjane!

Mrs. Frugalwoods

  • Bristles
  • ***
  • Posts: 354
  • Location: Vermont
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #14 on: June 12, 2014, 09:21:40 AM »
I'll give my two cents on some of your spending, but no face punching I promise :)!!
--Fast food/restaurants: If you really want to buckle down and save as much as possible, you've gotta just drop this one. Restaurants were a hard thing for me to give up, but once I saw the monthly savings, I was all about it! Have fun date nights at home instead.
--$360/month for groceries for two people isn't too bad, but you can do cheaper. We limit meat & dairy to save and buy in bulk from Costco as much as possible. And, we cook almost entirely from scratch--very little packaged food, which is almost always more expensive. It took us a few months to learn exactly how much to buy to eliminate food waste, but we've done it--keep your receipts and track quantities. I'm the ridiculous person in the produce aisle buying exactly 7 apples and 1.3lbs of shallots...etc
--Drop the Crossfit membership and workout at home. Or, could you volunteer at the Crossfit in exchange for a free membership? That's what I do at my yoga studio (free classes for receptionist and data entry work!).
--My greyhound also eats grain free and I recently discovered that Costco's Nature's Made dog food is grain-free and basically identical to the more expensive Taste of the Wild. If you have a Costco, maybe you could check this out?
--Can you groom your pups yourself? We brush our hound's teeth, trim her nails, clean her ears, and bathe her ourselves. It takes time and patience, but it's a great way to save (and it's actually pretty hilarious most of the time)
--Shopping: I recommend carefully itemizing every single purchase (for yourself, not necessarily for us) and asking yourself if there's a cheaper substitute for each item or if you really need it. Costco and Amazon are great sources for super cheap household stuff. Re. workout clothes--I have pretty much one outfit that I wear all week. No one notices and if they do, I really don't care :). I ask myself: what do I want more: this material good or FI? FI almost always wins out! Except in the case of boxed wine. I do want boxed wine more.
Fast Food/Restaurants - I know! The worst part is we don't go for "date nights." It's my pure laziness to cook. Sometimes I'm super exhausted after work and starving and then my husband suggests the easy way out. It's not like I don't meal plan, or we have leftovers, or there aren't ingredients sitting right there in the pantry/fridge.

Groceries - I do cook from scratch, so we're doing something right (well, at least on the nights I actually cook)! Quantity is definitely the problem. I really struggle to figure out how to modify recipes for 2 people. The food waste typically happens because we end up with too much leftover and after 2 repeated ratings, it gets abandoned. I've always wondered about Costco/Sam's Club type options. I suppose I thought they'd be filled with a lot of junk food. I'll have to check out our Sam's Club.

Dogs - I wish we had a costco for that food!! I'll have to find out if Sam's does anything like that, or check the other pets stores for a lesser-expensive grain free option. As for the grooming, I'm ashamed to say that we actually do groom them (brush, bath, nails, trim the paw hairs, brush their teeth), except one area... I'm afraid of cutting them to trim up their "poop chute" (as you see, Shelties are extremely hairy and it can cause a situation back there), so we have them taken in. Wow, that's the lamest excuse I've ever read.

Shopping - I like that. FI or material item? I should put it on my wallet or something. In fact, I just wrote it on a note card to put it in that little clear plastic window of my wallet right next to the debit and credit cards. :D I'll start tracking the household goods by hand for myself.  Usually, I'm buying things like tp or soap, you know regular hygiene type items, but I will start tracking that more & price compare more.

Thank you Mrs. Frugalwoods!
You are most welcome! You're totally on the right track here!
Restaurants: I can relate to the coming home from work exhausted feeling--to combat that, we have extremely simple, easy to prepare meals Mondays-Thursday. Like a salad with some tofu or salmon (bought from Costco). These meals are somewhat boring, but they're easy and extremely healthy. Then, Fri-Sun, my husband busts out the cookware and makes fun, more complicated dishes. We also keep Costco frozen pizzas on hand--they're $3/pizza and really pretty tasty. They are the "food of last resort" if we just cannot face cooking or have an empty pantry after a trip. We used to get take-out in those instances, but the pizzas are yummy and an absolute fraction of the cost.

Groceries: Not gonna lie, we eat the same thing for lunch every single weekday (varies by week, but my husband cooks a huge batch every Sunday). And our Mon-Thurs dinners are pretty dang identical too. It's easier and cheaper frankly and we just don't mind eating the same thing on repeat. Costco/Sam's (I'm from the midwest so I know Sam's!) has great healthy items (we don't eat any junk food, except for those pizzas!) and we shop once a month for bulk quinoa, lentils, beans, oats, dried fruit, rice, and frozen salmon. Then, I only have to buy fresh produce on a weekly basis from the regular grocery store.

Doggies:
You're almost there! To deal with poop/blood/mucus-related dog situations, we wear disposable latex gloves (purchased from Amazon). I use a washcloth for the hound's nether regions and we wear those gloves. Anytime we see a stain, my husband says, "well, it's either greyhound poop, blood, or just some dirt...either way, get out the gloves!" P.S. I'm glad us dog mommies can commiserate about this!:)

Shopping: I was never a huge shopper, but I used to pick up little "necessities" here and there, mostly health/beauty/household-related that really added up every month. I've seriously scaled back my beauty regime--make-up, hair products, perfume, lotion--it was just too expensive! Plus I love being able to get ready really quickly now! Seeing the total amount every month and then thinking about what those items actually were (mouthwash? scented candles? face powder?!??!) helped me eliminate those expenses. I just kind of simplified everything, which ended up working well for my overall well-being and outlook on life. Sam's/Costco is my source for household items now: they come in huge packages, but are so much less expensive (I think we have 100 rolls of TP in our basement right now, but they're just a few cents per roll!)

You're doing so well! Congrats to you for posting all of this and being so receptive to feedback!

boarder42

  • Walrus Stache
  • *******
  • Posts: 7849
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #15 on: June 12, 2014, 09:30:40 AM »
we live in MO too ... 27 and 26 and have about your same amount in retirment ... only differnce is about 75k in home equity we have amassed over the same time.  You're in pretty good shape i would say.  just slowly cut the fat thats what i've done with my wife and she's starting to see the light.  i'm a 100% stock person i dont like money sitting in savings accounts or in CDs if you dont like the risk there are lower risk bond funds to split with instead of how its setup now.  Does vanguard offer a SEPP if so why not move to them to get into the lower fee equivalent of your funds.  same with the Roth IRA. 

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #16 on: June 12, 2014, 03:57:21 PM »
You are most welcome! You're totally on the right track here!
Restaurants: I can relate to the coming home from work exhausted feeling--to combat that, we have extremely simple, easy to prepare meals Mondays-Thursday. Like a salad with some tofu or salmon (bought from Costco). These meals are somewhat boring, but they're easy and extremely healthy. Then, Fri-Sun, my husband busts out the cookware and makes fun, more complicated dishes. We also keep Costco frozen pizzas on hand--they're $3/pizza and really pretty tasty. They are the "food of last resort" if we just cannot face cooking or have an empty pantry after a trip. We used to get take-out in those instances, but the pizzas are yummy and an absolute fraction of the cost.

Groceries: Not gonna lie, we eat the same thing for lunch every single weekday (varies by week, but my husband cooks a huge batch every Sunday). And our Mon-Thurs dinners are pretty dang identical too. It's easier and cheaper frankly and we just don't mind eating the same thing on repeat. Costco/Sam's (I'm from the midwest so I know Sam's!) has great healthy items (we don't eat any junk food, except for those pizzas!) and we shop once a month for bulk quinoa, lentils, beans, oats, dried fruit, rice, and frozen salmon. Then, I only have to buy fresh produce on a weekly basis from the regular grocery store.

Doggies:
You're almost there! To deal with poop/blood/mucus-related dog situations, we wear disposable latex gloves (purchased from Amazon). I use a washcloth for the hound's nether regions and we wear those gloves. Anytime we see a stain, my husband says, "well, it's either greyhound poop, blood, or just some dirt...either way, get out the gloves!" P.S. I'm glad us dog mommies can commiserate about this!:)

Shopping: I was never a huge shopper, but I used to pick up little "necessities" here and there, mostly health/beauty/household-related that really added up every month. I've seriously scaled back my beauty regime--make-up, hair products, perfume, lotion--it was just too expensive! Plus I love being able to get ready really quickly now! Seeing the total amount every month and then thinking about what those items actually were (mouthwash? scented candles? face powder?!??!) helped me eliminate those expenses. I just kind of simplified everything, which ended up working well for my overall well-being and outlook on life. Sam's/Costco is my source for household items now: they come in huge packages, but are so much less expensive (I think we have 100 rolls of TP in our basement right now, but they're just a few cents per roll!)

You're doing so well! Congrats to you for posting all of this and being so receptive to feedback!

Cooking/Groceries - We do frozen pizza too sometimes. I guess I need need to get a little more creative on having easy, fast, healthy options around for dinner time! On the plus side, my husband has been saying that he'd like help cook more once he's done working out at camp (and is home more than once a week). I don't have a problem repeatedly eating the same healthy foods all week for lunch (quinoa veggie stir fry, chickpea veggie salad, healthy chicken salad, etc.) when I purposely prep them for me (only). I suppose more food waste comes from the meals my husband enjoys (meaty, cheesy, pasta-y) that I get stuck with as lunch leftovers.

Dogs - It's not even a dog poop issue (well, it is for my husband...he barfs); I've given many a butt washes with my bare hands. I'm really just being a chicken about physically cutting their hair short near their 'area.' I'm going to give a homemade trim a try soon and when I don't start making my dogs bleed, I'll have more confidence. I would've tried yesterday, but their hair is still too short for trimming back there.

Shopping - Thankfully, I reeled in that beauty product habit in early 2013 when I realized how much crap I bought in 2012 that broke me out and that I never used. Such a waste of money. I work from home, so I rarely put on makeup or do my hair, and when I do, it's usually a little eyeliner and mascara. Much easier. I've found that embracing my hair's natural look (waves) much easier than dealing with all of that blow drying and straightening. Luckily, scented stuff has always given me massive headaches, so I never got into the whole candles, scented lotions, perfume stuff. I need to check out Sam's Club - hopefully I can resist the chips and ice cream (which are my junk food weaknesses).

Thanks for the tips Mrs. Frugalwoods. :)

we live in MO too ... 27 and 26 and have about your same amount in retirment ... only differnce is about 75k in home equity we have amassed over the same time.  You're in pretty good shape i would say.  just slowly cut the fat thats what i've done with my wife and she's starting to see the light.  i'm a 100% stock person i dont like money sitting in savings accounts or in CDs if you dont like the risk there are lower risk bond funds to split with instead of how its setup now.  Does vanguard offer a SEPP if so why not move to them to get into the lower fee equivalent of your funds.  same with the Roth IRA. 
Vanguard offers all 3 types of IRAs. I'll have to check on the SEP. I just got a notice yesterday that one of my CDs is rolling over in August, so I'll be calling in to stop that, so I can invest it instead, and once I get my Vanguard account set up, I'm definitely investing a bunch of cash! :) Ultimately, I think I want to keep the 40k emergency fund in the bank savings, invest the 16k and 20k savings soon, and invest the CDs when they come due.

4alpacas

  • Handlebar Stache
  • *****
  • Posts: 1897
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #17 on: June 12, 2014, 04:25:29 PM »
I'll give my two cents on some of your spending, but no face punching I promise :)!!
--Fast food/restaurants: If you really want to buckle down and save as much as possible, you've gotta just drop this one. Restaurants were a hard thing for me to give up, but once I saw the monthly savings, I was all about it! Have fun date nights at home instead.
--$360/month for groceries for two people isn't too bad, but you can do cheaper. We limit meat & dairy to save and buy in bulk from Costco as much as possible. And, we cook almost entirely from scratch--very little packaged food, which is almost always more expensive. It took us a few months to learn exactly how much to buy to eliminate food waste, but we've done it--keep your receipts and track quantities. I'm the ridiculous person in the produce aisle buying exactly 7 apples and 1.3lbs of shallots...etc
--Drop the Crossfit membership and workout at home. Or, could you volunteer at the Crossfit in exchange for a free membership? That's what I do at my yoga studio (free classes for receptionist and data entry work!).
--My greyhound also eats grain free and I recently discovered that Costco's Nature's Made dog food is grain-free and basically identical to the more expensive Taste of the Wild. If you have a Costco, maybe you could check this out?
--Can you groom your pups yourself? We brush our hound's teeth, trim her nails, clean her ears, and bathe her ourselves. It takes time and patience, but it's a great way to save (and it's actually pretty hilarious most of the time)
--Shopping: I recommend carefully itemizing every single purchase (for yourself, not necessarily for us) and asking yourself if there's a cheaper substitute for each item or if you really need it. Costco and Amazon are great sources for super cheap household stuff. Re. workout clothes--I have pretty much one outfit that I wear all week. No one notices and if they do, I really don't care :). I ask myself: what do I want more: this material good or FI? FI almost always wins out! Except in the case of boxed wine. I do want boxed wine more.
Fast Food/Restaurants - I know! The worst part is we don't go for "date nights." It's my pure laziness to cook. Sometimes I'm super exhausted after work and starving and then my husband suggests the easy way out. It's not like I don't meal plan, or we have leftovers, or there aren't ingredients sitting right there in the pantry/fridge.

Groceries - I do cook from scratch, so we're doing something right (well, at least on the nights I actually cook)! Quantity is definitely the problem. I really struggle to figure out how to modify recipes for 2 people. The food waste typically happens because we end up with too much leftover and after 2 repeated ratings, it gets abandoned. I've always wondered about Costco/Sam's Club type options. I suppose I thought they'd be filled with a lot of junk food. I'll have to check out our Sam's Club.

Dogs - I wish we had a costco for that food!! I'll have to find out if Sam's does anything like that, or check the other pets stores for a lesser-expensive grain free option. As for the grooming, I'm ashamed to say that we actually do groom them (brush, bath, nails, trim the paw hairs, brush their teeth), except one area... I'm afraid of cutting them to trim up their "poop chute" (as you see, Shelties are extremely hairy and it can cause a situation back there), so we have them taken in. Wow, that's the lamest excuse I've ever read.

Shopping - I like that. FI or material item? I should put it on my wallet or something. In fact, I just wrote it on a note card to put it in that little clear plastic window of my wallet right next to the debit and credit cards. :D I'll start tracking the household goods by hand for myself.  Usually, I'm buying things like tp or soap, you know regular hygiene type items, but I will start tracking that more & price compare more.

Thank you Mrs. Frugalwoods!
You are most welcome! You're totally on the right track here!
Restaurants: I can relate to the coming home from work exhausted feeling--to combat that, we have extremely simple, easy to prepare meals Mondays-Thursday. Like a salad with some tofu or salmon (bought from Costco). These meals are somewhat boring, but they're easy and extremely healthy. Then, Fri-Sun, my husband busts out the cookware and makes fun, more complicated dishes. We also keep Costco frozen pizzas on hand--they're $3/pizza and really pretty tasty. They are the "food of last resort" if we just cannot face cooking or have an empty pantry after a trip. We used to get take-out in those instances, but the pizzas are yummy and an absolute fraction of the cost.

Groceries: Not gonna lie, we eat the same thing for lunch every single weekday (varies by week, but my husband cooks a huge batch every Sunday). And our Mon-Thurs dinners are pretty dang identical too. It's easier and cheaper frankly and we just don't mind eating the same thing on repeat. Costco/Sam's (I'm from the midwest so I know Sam's!) has great healthy items (we don't eat any junk food, except for those pizzas!) and we shop once a month for bulk quinoa, lentils, beans, oats, dried fruit, rice, and frozen salmon. Then, I only have to buy fresh produce on a weekly basis from the regular grocery store.

Doggies:
You're almost there! To deal with poop/blood/mucus-related dog situations, we wear disposable latex gloves (purchased from Amazon). I use a washcloth for the hound's nether regions and we wear those gloves. Anytime we see a stain, my husband says, "well, it's either greyhound poop, blood, or just some dirt...either way, get out the gloves!" P.S. I'm glad us dog mommies can commiserate about this!:)

Shopping: I was never a huge shopper, but I used to pick up little "necessities" here and there, mostly health/beauty/household-related that really added up every month. I've seriously scaled back my beauty regime--make-up, hair products, perfume, lotion--it was just too expensive! Plus I love being able to get ready really quickly now! Seeing the total amount every month and then thinking about what those items actually were (mouthwash? scented candles? face powder?!??!) helped me eliminate those expenses. I just kind of simplified everything, which ended up working well for my overall well-being and outlook on life. Sam's/Costco is my source for household items now: they come in huge packages, but are so much less expensive (I think we have 100 rolls of TP in our basement right now, but they're just a few cents per roll!)

You're doing so well! Congrats to you for posting all of this and being so receptive to feedback!
+1 on frozen pizzas

We had a lazy restaurant problem too.  We keep Velveeta Shells & Cheese and frozen pizzas in our kitchen.  We have decreased how much we eat them, but it's nice to spend $5 (or less) on a lazy meal. 


boarder42

  • Walrus Stache
  • *******
  • Posts: 7849
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #18 on: June 12, 2014, 06:39:46 PM »
pizza stone and a thin crust palermo's sicilian pizza cant be beat... so good and you can stock up on them at 3 bucks a peice ... one pizza feeds my wife and i ... yay 3 dollar dinner

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #19 on: June 12, 2014, 08:35:35 PM »
Who knew Mustachians were such fans of frozen pizza? I guess my parents were on to something all these years!

Mrs. Frugalwoods

  • Bristles
  • ***
  • Posts: 354
  • Location: Vermont
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #20 on: June 13, 2014, 07:06:54 AM »

Shopping - Thankfully, I reeled in that beauty product habit in early 2013 when I realized how much crap I bought in 2012 that broke me out and that I never used. Such a waste of money. I work from home, so I rarely put on makeup or do my hair, and when I do, it's usually a little eyeliner and mascara. Much easier. I've found that embracing my hair's natural look (waves) much easier than dealing with all of that blow drying and straightening. Luckily, scented stuff has always given me massive headaches, so I never got into the whole candles, scented lotions, perfume stuff. I need to check out Sam's Club - hopefully I can resist the chips and ice cream (which are my junk food weaknesses).

Thanks for the tips Mrs. Frugalwoods. :)

+1 on this! I've also embraced the waves and pared down to only slight eyeliner and mascara! Go us :)

4alpacas

  • Handlebar Stache
  • *****
  • Posts: 1897
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #21 on: June 13, 2014, 10:02:21 AM »
Who knew Mustachians were such fans of frozen pizza? I guess my parents were on to something all these years!

Haha!  I actually consider my frozen pizza habit to be anti-mustachian because I could make a pizza for less.  It's one of my compromises with myself.  I need lazy food.  I'm willing to pay $1-$2 for the convenience (and it saves me $10-$15). 

I had to work late last night, and my husband made a frozen pizza instead of ordering in (I'm breaking him down). 

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #22 on: June 13, 2014, 12:11:19 PM »
Who knew Mustachians were such fans of frozen pizza? I guess my parents were on to something all these years!

Haha!  I actually consider my frozen pizza habit to be anti-mustachian because I could make a pizza for less.  It's one of my compromises with myself.  I need lazy food.  I'm willing to pay $1-$2 for the convenience (and it saves me $10-$15). 

I had to work late last night, and my husband made a frozen pizza instead of ordering in (I'm breaking him down).
It might just be about the balance of mustachian versus anti-mustachian behavior. I too know how to make homemade pizza that costs less than a cheap frozen pizza, but that doesn't help me when I'm tired or lazy and I end up eating out which definitely cost more than a frozen pizza. Right now, I'll be happy if I can get most of my actions to fall under the money-conscious side of things. :)

4alpacas

  • Handlebar Stache
  • *****
  • Posts: 1897
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #23 on: June 13, 2014, 12:20:41 PM »
Who knew Mustachians were such fans of frozen pizza? I guess my parents were on to something all these years!

Haha!  I actually consider my frozen pizza habit to be anti-mustachian because I could make a pizza for less.  It's one of my compromises with myself.  I need lazy food.  I'm willing to pay $1-$2 for the convenience (and it saves me $10-$15). 

I had to work late last night, and my husband made a frozen pizza instead of ordering in (I'm breaking him down).
It might just be about the balance of mustachian versus anti-mustachian behavior. I too know how to make homemade pizza that costs less than a cheap frozen pizza, but that doesn't help me when I'm tired or lazy and I end up eating out which definitely cost more than a frozen pizza. Right now, I'll be happy if I can get most of my actions to fall under the money-conscious side of things. :)

I'm glad other people struggle with their laziness too.   I read through the forums and people cook everything from scratch, grow their own vegetables, do their own car maintenance, keep their houses clean with such little effort, etc.; I feel like a complete failure.  I miss convenience.  A little cash for a little reprieve from stuff I dislike doing. 

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #24 on: June 13, 2014, 12:23:13 PM »
BY THE WAY...I opened an account with Vanguard today!

I put $3,000 into a small-cap index fund! Then tomorrow, once their bank validation completes, I'm going to set up automatic investing with a recurring $1,000 monthly contribution starting in July! I plan to give extra money on the months where I earn more too.

It's a start! :) :) :) :)

4alpacas

  • Handlebar Stache
  • *****
  • Posts: 1897
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #25 on: June 13, 2014, 12:27:36 PM »
BY THE WAY...I opened an account with Vanguard today!

I put $3,000 into a small-cap index fund! Then tomorrow, once their bank validation completes, I'm going to set up automatic investing with a recurring $1,000 monthly contribution starting in July! I plan to give extra money on the months where I earn more too.

It's a start! :) :) :) :)

Aweesome!  Congratulations!

Cherry Lane

  • Handlebar Stache
  • *****
  • Posts: 1710
  • Age: 1
  • Location: Virginia
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #26 on: June 14, 2014, 08:06:25 PM »
Who knew Mustachians were such fans of frozen pizza? I guess my parents were on to something all these years!

Another frozen pizza fan here, though I don't actually keep any on hand.  My problem with this is if I have it, then I'd rather eat it than prepare something else.  I guess it's a willpower issue on my part.

If you have some extra room in your freezer, you could do some make-ahead meals.  For example: I love soup.  Every fall I take a day (I call it "Soup Day", how original) and make soup.  Lots and lots of several varieties of soup.  I'll often start with a chicken, boil it with veggies to make (a) chicken stock and (b) cooked chicken.  Shred the chicken to use in chicken chile and chicken corn chowder.  Use the extra stock in other soups (roasted garlic or butternut squash or curried pumpkin or ....).  Or I'll start by stealing the hambone from a big family dinner and use it to make lentil soup and others.  I usually have something going in the crockpot on soup day, too.  Then I divide the soup into 2-serving Gladware and put all the containers in the freezer.  Over the next year, whenever I don't feel like cooking, I can thaw/heat a container of soup and eat it with some good bread:  nearly-instant, cheap, healthy meal!

DirtDiva

  • Stubble
  • **
  • Posts: 216
  • Location: Rocky Mountains
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #27 on: June 15, 2014, 06:52:32 AM »
One suggestion: if your husband's 401(k) is actually a TSP, you might want to hold on to it.  The TSP holds the lowest expense ratio index funds you can find anywhere (average 0.029%),  as well as a unique "G" fund that provides yields similar to an intermediate-term Treasury bond fund, but with the stability of principal of a money market fund, and no default risk.  There is no equivalent fund  available to the general public.

  Your husband can roll other 401(k) money into the TSP throughout his life if he chooses.

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #28 on: June 15, 2014, 10:00:51 AM »
If you have some extra room in your freezer, you could do some make-ahead meals.  For example: I love soup.  Every fall I take a day (I call it "Soup Day", how original) and make soup.  Lots and lots of several varieties of soup.  I'll often start with a chicken, boil it with veggies to make (a) chicken stock and (b) cooked chicken.  Shred the chicken to use in chicken chile and chicken corn chowder.  Use the extra stock in other soups (roasted garlic or butternut squash or curried pumpkin or ....).  Or I'll start by stealing the hambone from a big family dinner and use it to make lentil soup and others.  I usually have something going in the crockpot on soup day, too.  Then I divide the soup into 2-serving Gladware and put all the containers in the freezer.  Over the next year, whenever I don't feel like cooking, I can thaw/heat a container of soup and eat it with some good bread:  nearly-instant, cheap, healthy meal!
I love soup during the fall and winter and I often make extra to freeze. I'm not much of a fan of it during the warmer months, but I am trying to prep some cold salad type options ahead of time for these warmer days. Thank you for the ideas, Cherry Lane! :)

One suggestion: if your husband's 401(k) is actually a TSP, you might want to hold on to it.  The TSP holds the lowest expense ratio index funds you can find anywhere (average 0.029%),  as well as a unique "G" fund that provides yields similar to an intermediate-term Treasury bond fund, but with the stability of principal of a money market fund, and no default risk.  There is no equivalent fund  available to the general public.

  Your husband can roll other 401(k) money into the TSP throughout his life if he chooses.
Thank you for the advice, Dirt Diva. His 401(k) is not a TSP (it's from his civilian job, not his time with the Air Force), but we will keep this in mind if he ever works for the government again.

brooklynmoney

  • Pencil Stache
  • ****
  • Posts: 527
  • Location: Crooklyn
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #29 on: June 15, 2014, 07:46:10 PM »
I am still wearing the same running shorts I bought on eBay 5 years ago. Not used, new with tags, but way cheap. And they are all major brands and breathable. I am very tempted in this area. Would love to purchase everything at Athleta, but I literally sweat in these clothes, why do they need to be nice?

ampersand

  • 5 O'Clock Shadow
  • *
  • Posts: 42
  • Age: 31
  • Location: Oklahoma
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #30 on: June 15, 2014, 08:28:22 PM »
I hope I don't come across as redundant here but I figured I'd throw out a few things.

I'm not so much worried about your spending as your allocation of wealth. You can eat out a lot if you dont have to pay >5% in front end loading. High cash balances means you are actually probably losing money to inflation. Its great that your consolidating your accounts. Because I don't know all of your goals, I'm simply going to throw out some sources of knowledge for investing. I think the main topic you could benefit from reading up on is "Asset Allocation". The short simple book that made it click for me was "The Little Book that still saves your assets" by David M. Darst.

You've already taken the first steps my looking to consolidate your accounts. I'd suggest looking at personalcapitol.com. Its free, will pull all of your account information together, and give you suggestions on asset allocation. You have enough wealth that they will also schedule a call with you for free advice, and the solicitation of having them monitoring/updating all your allocations. I like them because the website is super easy, and they base a lot of advice on low cost index funds (generally vanguard), though I don't know if I would pay them :)

The other thing that strikes me... is you are prime to buy a house! Rather than pump cash into the market at its record highs, you could purchase a house, have an extremely low rate because of the high upfront payment, and decrease your monthly expenses. Rates are near all time lows, so whatever debt you took on would be "good debt" and your monthly cash flow would increase.

No matter what, I think you guys are in a good position. By the way, could your husband be added to your SEP, as an employee to increase his ability to save tax deferred? I don't know much about the SEP's

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #31 on: June 16, 2014, 07:20:48 AM »
I hope I don't come across as redundant here but I figured I'd throw out a few things.

I'm not so much worried about your spending as your allocation of wealth. You can eat out a lot if you dont have to pay >5% in front end loading. High cash balances means you are actually probably losing money to inflation. Its great that your consolidating your accounts. Because I don't know all of your goals, I'm simply going to throw out some sources of knowledge for investing. I think the main topic you could benefit from reading up on is "Asset Allocation". The short simple book that made it click for me was "The Little Book that still saves your assets" by David M. Darst.

You've already taken the first steps my looking to consolidate your accounts. I'd suggest looking at personalcapitol.com. Its free, will pull all of your account information together, and give you suggestions on asset allocation. You have enough wealth that they will also schedule a call with you for free advice, and the solicitation of having them monitoring/updating all your allocations. I like them because the website is super easy, and they base a lot of advice on low cost index funds (generally vanguard), though I don't know if I would pay them :)

The other thing that strikes me... is you are prime to buy a house! Rather than pump cash into the market at its record highs, you could purchase a house, have an extremely low rate because of the high upfront payment, and decrease your monthly expenses. Rates are near all time lows, so whatever debt you took on would be "good debt" and your monthly cash flow would increase.

No matter what, I think you guys are in a good position. By the way, could your husband be added to your SEP, as an employee to increase his ability to save tax deferred? I don't know much about the SEP's
Definitely not redundant advice. :) I do need to work on my asset allocation (and lean more about it). Thank you for the book recommendation! I've been meaning to sign up for Personal Capital - guess it's time to just get it done. ;) As for the house situation...we're not quite ready yet. We live in a small-ish city and it's really not the best place for engineering jobs. I expect to switch jobs in about 2 years, so I didn't really want to tie us down when that time comes... In regard to my SEP, I cannot add him to mine (it's for 1 person and I'm already maxing it out) and I cannot add him as an employee (based on how I set up my sole proprietorship) so that he can open his own SEP. But! Good idea if it worked. :) Thank you for the advice, ampersand!

wtjbatman

  • Handlebar Stache
  • *****
  • Posts: 1313
  • Age: 36
  • Location: Missouri
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #32 on: June 16, 2014, 07:24:30 AM »
Speaking to the investments part of your post(s), you seem to have a lot going on without any mention of an investment strategy or planned asset allocation. You sound like the type of person who Target Date Funds were created for. Vanguard has low expense ratio target date funds that may be worth looking into, instead of just picking a "small cap fund" like you mentioned doing. You pick the target date fund according to the year you want to retire, and let them take care of the rest (choosing asset allocation, rebalancing, etc).

By taking advantage of target date funds, you don't need anyone else to manage your investments. Effectively you are managing your own investments without having to be actively engaged. Vanguard takes care of that for you. That would cut down on the fees and expenses you are paying, some of which you might not even realize are cutting into your investment gains.

Ultimately I would recommend reading up on these types of investments more, before making any sort of investment decisions. You don't have to be an expert, or go hands on with the stock market, but you should have a better understanding of different investment types and what would suit your situation best.

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #33 on: June 16, 2014, 07:48:30 AM »
Speaking to the investments part of your post(s), you seem to have a lot going on without any mention of an investment strategy or planned asset allocation. You sound like the type of person who Target Date Funds were created for. Vanguard has low expense ratio target date funds that may be worth looking into, instead of just picking a "small cap fund" like you mentioned doing. You pick the target date fund according to the year you want to retire, and let them take care of the rest (choosing asset allocation, rebalancing, etc).

By taking advantage of target date funds, you don't need anyone else to manage your investments. Effectively you are managing your own investments without having to be actively engaged. Vanguard takes care of that for you. That would cut down on the fees and expenses you are paying, some of which you might not even realize are cutting into your investment gains.

Ultimately I would recommend reading up on these types of investments more, before making any sort of investment decisions. You don't have to be an expert, or go hands on with the stock market, but you should have a better understanding of different investment types and what would suit your situation best.
You're right. I don't know a lot about asset allocation. I chose a small cap at Vanguard because I wasn't ready to move all of my money to them all at once. My retirement investments seem to be mostly large cap and my Heartland mutual funds are mid cap, so my reasoning was to add some small cap. As for those target funds, I have been looking into to them (mostly for my husband's 401(k) rollover), but I can see they may work for me too. If it helps, my retirement accounts are the only investments I've made in the past 5 years, and yes, they're being managed by a company because I don't have the investing knowledge (yet) to do it by myself. I've had those mutual funds since I was a teen and I opened those CDs right after graduating from college, but they're basically just sitting there waiting. I really am trying to learn about all of this! I'm feeling a little frustrated because it seems that I should already know everything after two months of looking at my whole financial situation and less than a week of advice on this forum.

RetireAbroadAt35

  • Stubble
  • **
  • Posts: 222
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #34 on: June 16, 2014, 09:10:30 AM »
I was once like you in that my allocation was whack.  It was really easy to fix.

I used two articles.

First, I read Lazy Portfolios.  I decided on the Four Core.  The lazy 3-fund portfolios are good/easy too.

Then I read Bogle's tax-efficient fund placement article.

Within my retirement accounts I shifted things around directly as I can sell/buy without fees/taxes within my 401k or IRA.  For my taxable accounts, I set up my investments to fix the allocation over time.  I wanted to avoid selling and buying new funds as much as possible to minimize fees/taxes.

karaishere

  • Stubble
  • **
  • Posts: 171
  • Age: 32
Re: Reader Case Study: Ready to spend less & invest more!
« Reply #35 on: June 16, 2014, 09:37:53 AM »
First, I read Lazy Portfolios.  I decided on the Four Core.  The lazy 3-fund portfolios are good/easy too.

Then I read Bogle's tax-efficient fund placement article.

Within my retirement accounts I shifted things around directly as I can sell/buy without fees/taxes within my 401k or IRA.  For my taxable accounts, I set up my investments to fix the allocation over time.  I wanted to avoid selling and buying new funds as much as possible to minimize fees/taxes.
Thank you for the articles, RetireAbroadat35. :)