The Money Mustache Community
Learning, Sharing, and Teaching => Case Studies => Topic started by: stolls_397 on October 15, 2019, 01:57:41 PM
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All:
I'd like advice on my finances. Here's my info:
1. Life Situation: 32 year-old project manager in Miami. Married, debt-free. Graduated with master's degree in 2015. (Bachelor's in 2010.)
2. Income: $107K + wife $30K
3. Assets: $40K money market savings (CapitalOne 360), ’08 Honda Accord, ’12 Honda Fit
4. 401K: $80,000 (currently set at contributing 10% of my salary per month with 3% employer match) + wife $30K
5. Rent: $1,550
6. Spending: Approx $1,600 to $1,800 per month on food, groceries, entertainment, utilities, gas, cars, etc.
After tax, I get about $6000 per month. $600 of that goes to money market savings. (So 10% of pretax goes to 401k, 10% of after tax goes to savings.)
I keep getting this feeling that I should be buying a home (“renting is throwing money away”), but we are very happy renting right now. We’re in a convenient part of town with a superb rental. Considering having kids in the next year.
Anything else that I should be doing? Do you think we're doing OK or missing something?
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First - to get a mathematical answer to whether you should buy a home, look into this tool:
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Second - your money market savings is earning 1.9% right now. When you plan on spending this money? If it's longer than a few years, consider opening a brokerage account so that you can invest it and have a much better shot and having that money grow beyond inflation.
https://forum.mrmoneymustache.com/investor-alley/investment-order/
Third - if you want more granular advice, look into the case study spreadsheet, and break down your spending into categories.
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I'm trying to figure out how you're only bringing home $6k/month on a $137k household income.
Assuming that the 10% invested only comes out of your income, and not your spouse's as well, the combined monthly paycheck for the household should look something like this:
Gross: 11,417 (8,917+2,500)
Income Tax: 1,178 (assumes no tax refund and no adjustments/credits aside from $10,700 invested annually)
Payroll Taxes: 873
Health Insurance: ?
Net: 9,365 - ?
I'm hoping that your health insurance, LTD, and any other payroll deductions aren't coming anywhere close to $3k/month. Otherwise, it looks like a huge tax refund is expected.
Your rent is reasonable for the Miami area, so I have no problem with that.
10% invested is very low. It'll take a 50+ year working career to fully fund retirement at that rate. Math: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
Your expenses seem pretty reasonable too, so I'm not sure where all of the money is going. Based on the net pay I calculated and the expenses you gave, you should be able to invest $5k-6k per month. I'm probably missing something obvious.
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OP, you might want to use the case study template to give us a more robust view of your situation, AND also tell us...what are your goals? Whether or not someone is "doing okay" depends entirely on their goals.
I mean, I can't even tell where your money is going. You say you bring home $6000 monthly after tax, and all we know is that you spend $1550 on rent, up to $1800 on other, and $600 to money market, which implies you should have $2050 left over, PLUS all of your wife's take-home pay (which I'm guessing is about $2000 a month?)
Where is all of this money going?
Do you have debts?
Again, if you provide the information from the template and share your goals, we can better help you.
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I'm sorry guys, you're right. I didn't realize something was so off here. I'll figure it out and double back.
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I'm sorry guys, you're right. I didn't realize something was so off here. I'll figure it out and double back.
Nothing like the laser dissection of the mmm forums!
Please come back to us, we're all interested now and would like to help.