Author Topic: Reader Case Study - What to focus on next / sanity check  (Read 4894 times)

single_guy

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Reader Case Study - What to focus on next / sanity check
« on: December 26, 2014, 02:05:27 PM »
Hi all, long time reader first time poster.

Bio
Single guy in 31 living in large american city. Work 2 miles from work.

Income:
85k gross
net paycheck: 2,081
net monthly: 4,508

Current Expenses:
1. Rent & Utilities: $650
2. Gym membership: $65
3. Taxi / Uber: $50-$250 (I know this is very bad, currently focusing on keeping it sub $100)
4. Public Transport: $25-$75, depending on #3
5. Food & Alcohol: $700 [guessing $250 is alcohol]
6. Travel: $100-$200
7. Entertainment:$100
8. Health Related: $100
9. Shopping: $100

Total: $1,790-$2,240

Cell phone bill paid by work @ $70 / month
After Tax Savings Rate: $2,500 / month or 55%
Pre Tax contribute 4% to 401k at work to get full match: ~280 / month


Assets
IRA: $45.7K
$32k in 2 stocks, one large cap and 1 small cap (don't want to say which ones since the small cap is small enough to identify me to my friends), but I know it's bad.
$6k in SPY
$7.7k in cash

Post Tax Stock Account:$37k
$30k in individual stocks, mostly large caps
$6.5k in SPY

Online savings account: $67k

Checking Account: $5k
Work 401k: $4-5k, just started working their this year never check it. 90% in SPY

Debt
None, pay off CC monthly

Net Worth: $109k after tax , 50k pre tax,  ~160k combined

Thinking of opening up betterment/vanguard and start putting money into SPY consistently, but terrified that market is inflated, but I thought that in 2012 as well :/.


Questions
1. Comments on expenses (my low rent my end shoot up to $1500)
      a. also expenses have been lower as I haven't been dating, they shoot up 300/month when I do
2. Trying to get comfortable with my investment strategy, looks like I missed out on a bunch of gains, but 2009 hurt me even though I didn't sell out.
3. Though it's semi easy to save, im scared that I will never retire because my investment suck and I can't see how i could ever generate even 4%

All of my friends spend like me and have 0% savings rate, so need someone to tell me I need to badassity up a bit more!

Lastly, would love to stop having to work at 36. Switch careers to something more rewarding but less lucrative.




Cassie

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #1 on: December 26, 2014, 02:33:40 PM »
Your food bill is high so I am guessing you eat out a lot. That could certainly be greatly reduced.

neo von retorch

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #2 on: December 26, 2014, 02:41:07 PM »
First, if you want to be financially independent in 5 years, you need to increase your savings percentage. $65 for gym, various transportation costs, very high food/alcohol budget, vague travel, entertainment and shopping budgets. All of these can be kept much lower with very little "sacrifice."

Second, while it's "fun" to pick stocks, and sometimes it works out, why not take a very successful long-term strategy of investing MOST of your investable assets in broad market index funds (i.e. Vanguard VTSAX), and just a small amount in specific stocks for fun and profit? While the short-term performance is anyone's guess, historically, the broad market will get you more than 4% annualized gains in the long-term.

ruraljuror

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #3 on: December 26, 2014, 02:57:30 PM »
Any reason you're not maxing out your 401k?  Seems your savings rate would more than allow for it. 

I imagine it will be really difficult to increase savings rate (doing great already) while hanging out with spendy friends.

thedayisbrave

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #4 on: December 26, 2014, 05:53:56 PM »
If I were in your shoes, I'd focus on two things.  Maxing my pre-tax retirement accounts and cutting down that food bill.  Seriously, that food bill for one person is ridiculous. 

Oh yeah, and I'm with neogodless re: the investments.  Index funds.  If you want to play around, feel free to do so as long as the dollar amount represents 5% or less of your total portfolio.

So I guess that's three things :)

DeltaBond

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #5 on: December 26, 2014, 06:04:42 PM »
Start drinking at home instead of at bars.   Much cheaper!

This_Is_My_Username

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« Reply #6 on: December 26, 2014, 06:08:12 PM »
why do you have 70k cash  ?

that is a lot

single_guy

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #7 on: December 27, 2014, 01:34:36 PM »
Any reason you're not maxing out your 401k?  Seems your savings rate would more than allow for it. 

I imagine it will be really difficult to increase savings rate (doing great already) while hanging out with spendy friends.

I don't want to max out 401k since i can't touch that money prior to 59.5 and I expect to retire long before than.

mozar

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #8 on: December 27, 2014, 02:03:02 PM »
Google roth ladder. You can get the money out sooner.

single_guy

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Re: Reader Case Study - What to focus on next / sanity check
« Reply #9 on: December 28, 2014, 11:43:34 PM »
Google roth ladder. You can get the money out sooner.

Cool. Thanks.