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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: SpicyMcHaggus on June 11, 2014, 12:20:05 PM

Title: Request: review my finances
Post by: SpicyMcHaggus on June 11, 2014, 12:20:05 PM
I turn 31 this month.
I was sort of a late starter, as I dropped out of college before going back in 2008 and didn't really start my "career" until 2011.
I worked full time during school and frequently had 2 jobs to pay living expenses and tuition in full. When I graduated, I owed nothing and had zero debt. I had sold my car previously, and accepted a job requiring a vehicle. I also love cars. I bought a used car that was unreliable, and once the job was "secured" traded it on a brand new truck, which was still a good deal (22k OTD) but not MMM. I recently realized I didn't need it, and sold it, pocketing a good lump of cash. I purchased a much cheaper Saab, and sold it a month later for $1k profit. I now have a 2001 Saab that was $2000. I have also sold my motorcycle for $4400 and am looking for a much cheaper one.  Over the past 3 years, I have been trying to make more money, as I believe I have already cut spending pretty well. See my monthly budget below:

$170 Gasoline for commute and business activity
$100 Dining out / entertainment
$1200 Mortgage (almost entirely covered by rental income)
$50 lunches from supermarket near work
$100 car insurance
$30 clothing (my wardrobe contains many items from highschool that need replacement badly. I buy a few shirts at the goodwill each month and donate my much older, rattier items)
$100 misc slush fund.
=$1750, or around $650 if you include rental income

I have been aggressively contributing to an individual TDAmeritrade account as I have maxed my 401k match and IRA contributions. In this TDAmeritrade account, I am buying high dividend producing stocks and funds.  Current net worth is about $200k. My goal is to have about $30k annual in stock/bond/fund investment income inside 2 years. I will continue to work until my funds reach a level of return that approximates 75% of my current annual income.

Am I missing any glaring opportunities to spend less or increase investment income? The gasoline cost should be coming down soon, as my 2nd home sold, so I won't be driving out to it for work and commuting. The dining out I would like to keep around 100. My GF and I like to let go once or twice a month.
I have been looking into index option spreads to further leverage my investments, as well as flipping some homes (finished first flip last month).  I buy, fix and sell cars as a side hobby, but I do it because I love cars, not for the money.
Title: Re: Request: review my finances
Post by: gimp on June 11, 2014, 12:35:40 PM
Do you pay for health insurance?
Title: Re: Request: review my finances
Post by: SpicyMcHaggus on June 11, 2014, 12:41:10 PM
I do; but rarely use it. It was more important to have when I was riding a motorcycle. I think my cost over the federal penalty for not having insurance at all is only around $300-400 per year. Worth it to me for catastrophic coverage.
Title: Re: Request: review my finances
Post by: gimp on June 11, 2014, 12:46:15 PM
So does it enter your monthly budget?

Have you considered an HSA? Extra method to save money tax-free. Downside of course is that you have to get sick to use it...
Title: Re: Request: review my finances
Post by: SpicyMcHaggus on June 11, 2014, 01:07:01 PM
I generally do not consider pre-tax deductions in my monthly budget. While I can control them, I wouldn't go without my health insurance (good way to be bankrupt!) or 401k.

I don't use an HSA because I have been to the doctor once in 5 years for a checkup, where I was told the normal things: exercise more, eat healthier.
Title: Re: Request: review my finances
Post by: GRSConstruction on June 11, 2014, 08:03:41 PM
What about groceries, utilities (elec, gas, water, sewer, trash), auto insurance, cell phone, Internet, etc? I'm confused, are these not part of your monthly budget/expenses?
Title: Re: Request: review my finances
Post by: hexdexorex on June 11, 2014, 09:38:43 PM
I think you are doing well. Your car insurance seems a bit high...and a higher mpg might work well in the future.

Why are you focusing on high dividend stocks? Honestly for companies I want to hold forever I would rather they buyback shares instead....for tax reasons.
Title: Re: Request: review my finances
Post by: lazysundays on June 13, 2014, 06:16:07 PM
Have a look into ynab software. You are missing many categories like Xmas fund, car maintenance, home maintenance, what about utilities, car insurance.  Without accounting for everything in your monthly budget and putting $ aside for the rare bills, you will not have enough cash flow or you will constantly feel like you have $ leaks.
Title: Re: Request: review my finances
Post by: little_owl on June 14, 2014, 05:23:04 AM
I agree with others that this is a slice of your spending, but not a full budget.  However, on what you provided, I would eliminate the $50 lunches - that is an unnecessary expense.

The other opportunity here I see is your health.  If you were told 5 years ago (at 25/6) to eat healthier and exercise more, that suggests you can invest more effort in your physical net worth if you will.  Many are at their peak fitness in late teens through late 20s, so if that was your doc's advice I do get a bit worried.

How much are you able to save each month?  I ask because I am 32 and am not quite generating 30k annually through my investments, but my net worth is substantially higher than yours.  So, are you slugging $10k monthly or something to get there?

You have trimmed the fat from many categories ifthey are genuinely $0 (gifts, etc.) however I agree that using sometng like Mint, YNAB, or Quicken to track spending could be really enlightening!

Very cool about your side hustle, that is a useful skill to have!  Neat stuff.
Title: Re: Request: review my finances
Post by: SpicyMcHaggus on June 18, 2014, 04:23:45 PM
@little_owl: I do have mint, and have been using it since I discovered it in March to track spending.
To address the lunches, that's $50 spent on groceries to feed me lunch for the month. I go and buy some sale items, and occasionally splurge on the $5 sushi tray on 1/2 price Mondays.

My net savings per month looks to be about $1400 / month. Mint is hard to trust in this area because I have large withdrawls (buy car/motorcycle/house) and then a larger deposit a few months after(selling same item).

I was a late starter, having only graduated from college (debt free!) in 2011. I didn't really start my "real" job until late 2011, so the majority of this has been built since then.

Physical health is something that should be addressed, regardless of the financial cost. Chicken breast, vegetables, etc, all much healthier than the frozen meals, canned soup, etc that I sometimes have.

@lazysundays: As part of the agreement between my roommate and I, he gets a deal renting the empty room on my side of the duplex that I own, in exchange for paying the utilities. I would sweat it out in summer, and wear a hat in winter, while he likes it 70* no matter the conditions outside. I'm not complaining, I just am not willing to pay for it. I throw him a few dollars if I've been unusually un-thrifty with the lights.

car maint: I do my own work. If the $2000 car I own has a major issue, it is not worth repairing. I plan to sell it for $3500 when I have touched up the small details (paint chips, blown speakers, etc).
home maint: Again, I do my own here. In the 6 months of owning the duplex, total repair bill has been $12, for tools and replacement toilet float. A lateral drain clogged, but was covered under the water backup portion of insurance. I remedied the situation and pocketed the difference.
Xmas fund: Only 3 people to buy for. I am not a huge gifter like my ex. She would spend over $1500. I purchase or make simple things. This year, Dad may get a fine bottle of scotch, and the GF will get something reasonable. Price does not make nice.

There is plenty of cash set aside. Probably too much. I am looking at how to allocate an additional $15,000 from savings into investments this quarter.

Groceries are probably $50/ month. I just bought food for lunch at work for this month and it was $32. Since I cook for my GF most nights, I rarely purchase food for home.

Water: I have not received a water bill for this quarter at my duplex yet, so am not sure what that will be. According to previous owner, I can expect it to average around $40/month.

Cell: My cellphone is paid for in full thru the end of the contract, and at the time of that posting, internet hadn't been installed. Time Warner came by, and it's $48/month, but the neighbor downstairs has it, and I have offered her $10/month to use her wireless.

@hexdexorex: That is a high estimate. When I had a new truck, it was a little less than 100 / month, but now that I also have a motorcycle and an old car, I would say it is still around that. The benefits of living in a large metro area.
Div stocks: I've been focusing on these as it I have an ETF that returns around 11% in dividends, and still has growth. I've owned it a few months now, and the growth profit has already eclipsed the dividend payments. I am looking into options, growth stock, market indexes, and more multi-family housing as avenues to put the money to work.

I think I know how to save; But leaving it in an account to rot is not an option for me, I need it to work for me(seeking investments). I don't feel that I'm wasteful or careless with what I earn. Surely there are opportunities for saving a pinch here and there, but not thousands.  If there's any holes to be poked in my spending or investments, I want to hear them.