Author Topic: Reader Case Study - Single, Low-Income, Long-Distance Rel.  (Read 2835 times)

Lauran75

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Reader Case Study - Single, Low-Income, Long-Distance Rel.
« on: October 19, 2013, 03:16:44 PM »
I am a 37 (almost 38) single female. I am currently in a long-distance relationship with someone who is 1200 miles away, but am planning on moving to his state in June. I am a school librarian at a mission school for Native Americans and it is my third year here. I have been reading MMMs blog for about six months (I think.)

Income: $22,340/yr
Variable income from various rewards sites (all of which I use to purchase books for the library - this is my compromise from spending actual income)

Pd every two weeks - approx. $725
Expenses:
Rent/Utilities - $0 (housing/utilities part of compensation)
Phone: $74/mo *
Internet: $34/mo
Car Insurance: $320/6 months
Groceries: $200/mo
Pet care: $50/mo (food and vet savings)
Gas: $60-90/mo
Car payment: $300/mo*
Tithe/Offering: $170/mo
ROTH: $200/mo
Netflix: $8.32/mo
Fun Money/Entertainment: $40/mo
Clothing fund: $10/mo
Gift fund: $10/mo
Medical: $50/mo ($24 monthly prescription, rest savings towards co-pays)
Household/Misc.: $30/mo

Remainder - general savings (car replacement, LDR expenses, eventual funding of taxable Vanguard account, etc.)

Assets:
Emergency Fund:$5,000
Fluid savings: $3200 (money set aside for bi-annual expenses, vet, etc.)
Target Retirement 2045 ROTH 1 - $8,977 (this is where the $200/mo goes to)
ROTH 2  - $19,689.26 (this is comprised of one stock which I inherited)
Traditional IRA - $3,000 (Money I had originally put into a bank IRA back in 1998, and finally rolled over into a Vanguard acct a few months ago.)
Traditional Brokerage IRA: 8,789.26 (all invested in one stock - rolled over from former employer)
403(b) - $22,000 (from a previous job)
Stock Acct 1: $5,047 (from my own money invested in stock)
Stock Acct 2: 45,343.30 (stock from inheritance)

No retirement options are available from my current employer.

Liabilities:
Car loan: $1,900 at 1.99% - 2010 Toyota Yaris - bought Nov, 2012 when my fully paid for 97 Honda Civic died.  Base payment is $156.

I fully intended on having this loan paid off by December of this year. However, in March I reconnected with a previous boyfriend. So instead of third paycheck months and summer school income going towards this loan, it has either gone into the liquid savings or it has paid for travel expenses. We are taking turns seeing each other, but whether it's me going out  there, or him coming out here, it is expensive. For me it is a worthwhile cost to see if this is going to be long-term. Plus I know it has an end in sight. I will be moving as near as I can find a job in June. The area where he lives I like, so whether or not he and I work out long term, it is still a move I  would consider making.

Car Insurance/Stocks
- Nine months ago the stock I'm invested in (mainly inherited stock) was worth 20% of where it is now. Two months ago when it was time to renew my car insurance, I decided to up my car insurance limits as high as I could. My thoughts being that if I were to get into an accident (at fault) that I now actually have real assets that could be gone after.

Why I opted for a newer model car
-- I live in the middle of the desert. While it is only a mile to where I work, it is 45 miles to the church I attend and 40 miles to the nearest reasonably priced grocery store. Between most exits it is ten miles of desolate desert. When my Honda died, I was extremely fortunate that it happened in the daytime and I was able to make it off the highway onto an exit ramp.

The stock
- 90% of the one stock I own was inherited from my dad. When he passed, my younger  brother without hesitation told me to take it - he'd take the motorcycle. The one request he had of me was that I not sell it without discussing it with him/our uncle (who's the one that got us all into this one particular stock.)

My cell phone
- I have an iPhone 4S and am with ATT. I just upgraded my phone from a 3GS in February. Where I live now is in the middle of nowhere in a town of about 1,500 people. I have looked at Ting, but could not stand the Android phone I tested with it. I use the GPS function on it constantly for running/walking in the area. Otherwise I maybe use 200 minutes/mo and 200 texts +however many iMessages (most of my family also have iPhones.) In June when I move I'll be in an area with much better choices as to coverage companies and plan to switch to a cheaper plan pronto.


My future plan:
I hope to be able to find a school librarian job within a few hours or less of where my bf is (preferably in the same city - I really like where he lives.)  Any job at a public school with my degrees/experience (MA in Library Science, 11+ yrs teaching) should easily double my current income. The state/city I'd be moving to has a fairly low cost of living. So my plan is for at least the first year to rent the smallest apartment I can (hopefully less than $400/mo - for reference, my bf lives in a 2br for $475/mo) and then sock as much as I can to my ROTH and the 403(b) offered by my employer. After that, if things are still going well, then I may be getting married.

If we do get married, then the plan is to purchase a home/land in the country (he's priced it out, and found ones that fit what he's wanting for $30k and less.) I'm perfectly happy with the idea of country living. If however, things don't go well and we don't get married, then I plan to continue living as simply as possible and retire by 50. (I don't think I'd want to live in the country by myself, but I could be happy in a small apartment in the city near the awesome park.) (I've lived all over the US, this state would make my 11th state.)

Okay, so to my questions:
Car Insurance - I'm questioning whether or not it really is necessary for me to have my car insurance limits maxed out or not. Do my assets really warrant that?

Stocks - Of the money I personally invested in this one stock, I sold enough to recoup that amount four months ago. Seeing so much of my networth based on one stock makes me really, really nervous. A part of me really wants to sell some of it at least and put it into something more .. secure. I don't want to cause any issues with my brother, especially since he rightfully could've asked for half of the stock (he's heavily invested in this stock himself - in fact my dad's whole extended family pretty much is.) I'm just not sure that there ARE other investment vehicles that would be more secure AND still offer good growth value. I'd really hate to sell it and see the stock go up another $20 or $100... (Of course the reverse is true too... if I keep it and it goes down $100 ..) Since it is inherited stock I think I feel a bit of an obligation to my dad - this is what he wanted to use his money for ...  I guess I am just really conflicted on where to go with it - if anywhere.

LDR expenses - It is a 16 hour one-way roadtrip, which for me includes a night at a hotel because I just can't drive more than 9 hours in a day. So in pricing out other options, traveling by plane for short trips (3 day weekend), or by Greyhound for a week+ trip are my next best options. We talk 3x  a week on Skype and stay in contact via email and text the remainder of the week. We've done the thing where we met half-way and stayed at a hotel and split expenses. None of these options are very inexpensive. My question in all of this is, if you have been in a long-distance relationship, how did you make it work? Especially with the expense? (For what it's worth, I've known this person for ten years.)

Groceries - I know this is a lot for a single person. I used to be able to keep it to $120/mo but it's gotten more and more difficult. This does include some fast food, which is a habit I'm working on eliminating - it was a nice treat whenever I'd go into "town.")

Thank you in advance for any ideas/advice/suggestions.




lhamo

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Re: Reader Case Study - Single, Low-Income, Long-Distance Rel.
« Reply #1 on: October 19, 2013, 05:22:59 PM »
Some thoughts on your specific questions:

1)  Car insurance -- I don't think you need to be covered to the maximum limits.  Assuming you are a careful driver who doesn't habitually drink and drive, drive when overly tired, or even drive very much (major trips are to church and back and to visit BF, correct?), driving on roads without a lot of traffic, I think the chances of you having an accident, especially one where you are at fault, are minimal.  I have never had more than the minimum amounts of insurance required by law.  that is what I would go with.  If you are really concerned about liability, you might want to see if an umbrella policy is a cheaper way to get it.  But I don't think your assets warrant it.

2)  Stocks.  When faced with an issue like this, I like Suze Orman's approach.  Can't decide between A and B?  Put 1/2 the money into A and 1/2 the money into B.  I wouldn't worry about what your brother thinks.  It isn't his money anymore -- he released claim on it when he took the motorcycle.  Do what makes you feel comfortable.  Yes, it is risky to have your assets tied up in one stock.  Not a plan that most Mustachians would recommend.  I'd sell at least 1/2 and put it in a good index fund -- I'm partial to Vanguard's target retirement funds myself, as they are "set it and forget it" type investments that are very easy to work with and you don't have to worry about rebalancing, etc.  Fees are a bit higher than their other index funds, though, so you might want to look at those.  Disclosure:  I am a Vanguard shareholder/owner.

3)  Long distance relationship issues:

How often do you REALLY need to see each other to keep this going?  My DH and I managed a long distance relationship for over two years, and it was REALLY long distance -- we had the Pacific Ocean between us.  And this was in the early internet days when it was a major chore for me to even get/send emails -- I had to bike an hour across town to the nearest university that had a public internet center.  We had a 10 minute phone call once a month (all we could afford -- this was before IP internet calls, skype, etc).  He came to visit me once about 8 months into my stay (that was the trip where he proposed/I accepted/I met his family) and stayed about 2 months, then I went back about 8 months later for a couple of months to address some health issues (that was when we got married), and then he came again near the end of my stay.  It was hard, really hard, but we made it work.  We didn't really have any choice if we wanted to stay together.  As relatively poor graduate students with research/dissertations to finish, we just did what we needed to do.  Married going on 17 years now with two great kids, I'd say it worked out. 

I think in this case you are willing to uproot your life to move closer to him, so maybe he can do a little bit more of the sacrificing during this period when you are separated.  Maybe suggest something like "I really want to be on better financial footing before I make this move.  I want to at least get the car paid off.  Can we work together to find a way to minimize the cost of our time together, maybe sacrificing a weekend together here and there, so that I can meet that goal?"

Hard to know from your description how he would react to a suggestion like that.  Big underlying issue:  Where is BF on the Mustachian spectrum?  Is he a spender or a saver?  This might be a good way to start looking at that aspect of your compatibility.

Frankies Girl

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Re: Reader Case Study - Single, Low-Income, Long-Distance Rel.
« Reply #2 on: October 19, 2013, 06:16:43 PM »
I also wonder why you're doing all the driving/visiting the boyfriend... you don't say just how often, but I'd say once a month meetups (meaning you're only paying every other month) would be a better deal, and technically I'd probably cut back even more if it was me. I've been in long distance relationships, and we didn't see each other but once every 6 months for two years. And this was before skype, so there was lots of writing and phone calls. If you've known each other for over 10 years, I'd question the reason why you'd need to see each other multiple times during a month (if that is the case), and wonder if you could just rein it back a bit (once every 3 months? Then you're only paying for a trip yourself every 6 months) to get your financial ducks in a row. It's not like it would be forever and would make your meetups that much more meaningful.


Definitely agree you can reduce your insurance to the minimum requirements (still have full coverage as it's a new car, but just enough insurance to make sure if your car is totaled, you'd get enough to replace).

The inherited stock. I also agree that it is yours, and you should do what you think is best with it. I inherited a substantial amount from my father recently, and I understand about it coming with a bit of responsibility due to where it came from, but your dad is gone and I'm sure he'd want you to put the money into investments that you like and feel comfortable with.

If it is in your name only, then what your brother thinks or wants has no bearing - you need to let that go. He chose the motorcycle, and that's what he got, unless you want to give him something (and keep in mind that if it IS all in your name, giving him anything counts as a gift from you to him, and you'll need to look into the tax ramifications for gifting).

Basically, when I inherited, I was really freaked out and had no clue about investing other than the basic stuff I had in my 401K. I started reading and found both MMM and JLCollins, and I now have my portfolio set up with index funds. I suggest you do read up on how to invest, and here's a few excellent posts that really helped me:
http://jlcollinsnh.com/2011/06/14/what-we-own-and-why-we-own-it/
http://jlcollinsnh.com/stock-series/    SHOULD BE REQUIRED READING
http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

There is really no reason to overcomplicate investing. Educate yourself, then take control of your investments. Once you understand how the investment angles all work, you won't be as nervous about investing - especially in index funds, and you won't worry if the stocks go down or trying to get the "right" stock or bond. There will always be down events in the market, and sometimes you'll lose a little money, but the market does always go up, and once you get over the initial awe and fear of investing, it's soooo much better. (I am amazed when I read some of my first posts on here about how scared I was about stocks and managing my own portfolio, so definitely been there)
« Last Edit: October 19, 2013, 06:23:30 PM by Frankies Girl »

Lauran75

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Re: Reader Case Study - Single, Low-Income, Long-Distance Rel.
« Reply #3 on: October 19, 2013, 08:13:13 PM »
Thank you both for your replies.

I really hadn't been too sure about the car insurance thing, but it just was a new thing for me to see my networth so high. I went ahead and changed my coverages, and now my premium is back to $220/6 months. I definitely don't do a lot of driving other once or twice a week trips to town, and one trip to bf's state this past summer and the one trip where we met half-way. And yes, I have a very good driving record. :) (I don't drink ever, so definitely no drinking and driving, unless I'm drinking water! :D )

Since getting back together in March, bf and I have seen each other 4 times. The first time we met half-way, the second time was summer, so I went there; the third time bf came here; and the 4th time I flew out there for a long weekend. He'll possibly be coming out here for Thanksgiving, and then I'll be going out there for Christmas (part of Christmas actually, because the first week I'll be in CA with relatives then taking the Greyhound to bf's.) It's working out to about every six weeks or so. My Christmas trip is already set (tickets bought to CA and bus tickets.) Maybe second semester we could extend the time between,, especially since I'll be moving there in June. I have spring break in March - we could do another half-way meet-up (he wants to do some fishing in CO, so it might be possible by then.) Then in June I'd want him to  come here and help me with my move. :)

I won't really be uprooting my life just for him. I love my job here and the people here, but am not happy with the church (it's the only one in the area of my faith, so I put up with it for now.) So with or without the relationship, I would be strongly considering moving - especially to an area with more choices in church families.

He's definitely a saver, and in some ways more frugal than I am. (Although he's in love with his cable, whereas I haven't had cable in 6+ years?)

As far as the stock.. I could see selling maybe $20k of it and investing it in one of Vanguard's funds. Part of my hesitation on that is two-fold - 1. Losing the Saver's Credit on my taxes; and 2. Capital Gains tax.  I also kind of would question on how to time the sale . .. the stock dropped nearly $20 last week and has now regained $13 or so back.
Last year I sold a portion of the stocks and then moved it into a Traditional IRA where I rebought the stocks (before I realized I could have just moved the stocks ... doh!) It wasn't a large amount, so the capital gains on it was negligible (and it provided me with the full saver's credit.) Also, I guess I'd be curious how I would move that large amount of money from the current brokerage to Vanguard. I've rolled over IRAs from one place to another before, and sold stock only to move it within the same company - but moving that kind of sum from one brokerage to another that is in cash?

Thank you both again for your responses. (I didn't get any emails letting me know I had responses, otherwise I would've replied sooner.)

Frankies Girl

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Re: Reader Case Study - Single, Low-Income, Long-Distance Rel.
« Reply #4 on: October 19, 2013, 09:56:41 PM »
You don't necessarily have to move your investments, but if you do, it's actually really easy. If you go with Vanguard, give them a call, and they'll walk you through the process. I've moved a few accounts recently and it really was just fill out a few pages and email them and then they took care of the rest.

Good that your boyfriend is frugal too. It's a whole lot harder when you have a significant other that isn't on board.