My wife and I converted to mustachianism 2 years ago (when we found out we were pregnant) and sorted our finances out drastically to a place I never thought we could achieve in such a short period of time.
We are now in a place where we are quite happy as we save almost 50% of our net salaries, despite living in central London, which is one of the top 3 highest COL in the world (which is also the reason our salaries are v good).
I really think there is not much fat to trim at this point; trust me, it was very bad before !! But you guys are the experts, so I'd be interested to get your views.
Monthly income net of tax - $26,500
That includes our current base salaries + incentive comps average over the past 3 years
Monthly expenses - $13,100
$6,360 - Mortgage
$275 - Property tax
$300 - Utilities (W/G/E)
$75 - Internet/TV/Phone
$250 - car maintenance and insurance (gas is paid by employer)
$960 - Grocery / baby essentials (milk/diapers etc...) - 12months avg
$400 - Restaurants / outings (roughly 1ce a wk on avg, also includes takeaway)
$300 - Travelling / holidays
$700 - Discretionary (clothing, house maintenance, gifts, hair cut etc...)
$2,700 - Full time nanny (she also takes care of the house - nursery would save only $700 a month and we'd have to pay a cleanerfor roughly 400/500 a month)
$1,500 - unsecured debt repayment (should be paid off within 24months)
Net ~ $13,400 a month or $160,000 a year, which is roughly what I saved last year across the pension, taxable accounts.
Few considerations:
- At this point, we are not willing to relocate to a lower COL area.
- If we were renting vs. owning, we'd save $2k a month vs our mortgage, but rent inflation has historically been around 5% a year, and we would also miss on the appreciation of the london real estate market + the equity we are building
- We will consider nursery in 12months, when the baby turns 2yr as the cost then drops significantly (prob by $1200 a month), and by then she will be bi-lingual - which is a big reason for having the nanny (speak same foreign language than my wife)
- Food isn't cheap in the UK, but even less in London. We don't shop at whole food, far from it, and that only includes dinners for the week and week end meals as we both are fed by our employers for free at work.
- When the unsecured loan is paid off, we would save the extra $1,500 a month, or invest it in a buy-to-let property outside of London.
Thanks for any feedback you have