Author Topic: A "not too exciting" case study  (Read 4388 times)

gggggg

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A "not too exciting" case study
« on: August 19, 2017, 09:32:22 AM »
Hi, I've been posting on these boards for a while, and suppose it's time to add my case study.

Life situation:
Single male, 42 years old, never married (nor plan to), no kids (nor plan to), no dependents. Live in central NC, in a low/med COL small town. Work for the state. In good health. Very frugal, much to my dating partners' non-delight.

Gross salary: Approximately $65,000, give or take a couple thousand (more likely give). (approx $5500, or so, a month gross paycheck)

Pre-tax deductions:
Pension: 6% of gross
401k: 5% of gross
*In addition to the above 5% contribution, I get another "free" 5% put into my 401k, by the state, not a match, just a bonus.
Dental: approx $30 a month
Parking: $15 a month

Other ordinary income:
No side hustles (need to get with it, I know)

Qualified Dividends, and long-term cap gains:
Not much at all before this past year, but since I've recently paid off everything, I've been adding to my taxable account greatly. This will be a factor in this category soon. I made about $1200 or so in taxable investment gains this year, this should scale dramatically in the future.

Rental Income:
Was approx $500 a month when my sister lived in my spare bedroom, she moved out last year, so this income is now gone. I don't want another room mate.

Adjusted gross income:
Approx $5000 a month

Taxes:
Out of each monthly paycheck, fed (including medicare and ss) is approx: 20% of monthly gross.
State is approx 4.2% of monthly gross pay
Prop tax is approx $1500 a year (house and car together)

Post-tax deductions:
Roth 401k: 10% of post-tax income
Roth IRA: Max out ($5500 a year, or approx $450 a month)

Current expenses:
Mortgage: None (paid off)
Car: None (paid off)
Other Loans: None

Monthly fixed expenses (all figures approximate, and may vary):
Electric: $60
Water/Sewer: $35
Internet: $40
Cell phone: $55 (also work phone, cannot go cheaper here)
Car Insurance: $91 a month.
Home Insurance: $34 a month
Work lawyer/lobbying group: $24
Home alarm: $15
Misc monthly fixed: approx $60 (xm radio, amazon prime, etc)
Food & Groceries: $350-400 (yes this is high, I don't really spare on the food)
Car fuel: approx $75

My total monthly expenses are normally in the $1000-$1200 range.

"Extra" monthly expenses. Mostly wants, not needs: approx $200, give or take.

Medical expenses: Normally zero, as I almost never go to the doc. This year, however, I had gallbladder removal surgery, which was 5 grand.

Assets (as of today, this varies greatly)
Checking: $3600
Savings: $1000 (used just for checking overdraft)
Money Market: $5500

Taxable brokerage: *I do the permanent portfolio in my taxable account, 25% stock, 25% bond, 25% gold, 25% cash, I like stability in my taxable.*
Vanguard etf's: $12,000 (50/50 stock/bond index)
Schwab etf's: $3000 (gold etf)
Physical Gold/Silver: $3000 (I know people hate it, but it's a very small position in my overall portfolio, and I like having some)

Tax advantaged accounts:
Prudential 401k & Roth 401k mixed: (all index funds, 70/30 stock/bond) $71,500
Prudential 457: $9250 (no longer contribute to, shifted future funds to 401)
Roth IRA: $3500 (just started the IRA this year)(Vanguard 2035 fund)
Pension: $35,000 (this is just my contribution, the actual pension value is impossible to put a number figure on, based on estimated monthly payout for 30 years in retirement, it's worth approx $1M.)
Separation allowance: I will be getting a separation allowance when I retire at 55yo. This allowance will last for 7 years, and is intended to be supplemental income before I/we hit social security age. At 62 this ceases. This has the same approximate value as a SS payout would have. I have not included this in my asset or net worth dollar figures, but it's worth about $100k over the 7 years.

Hard assets:
Home/condo: $120k (paid off) (zillow estimate)
2015 VW GTI: $18.5k (paid off)
Firearms: $2500
Musical Instruments: $750
Cash: $500

Liabilities:

No loans or liabilities, I'm completely debt free.

Total net worth as of today (not including future pension payouts):
$290,000

I don't really have a specific question, just maybe what could I do better?
Thanks!







« Last Edit: August 21, 2017, 10:42:53 AM by dcamnc »

Imma

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Re: A "not too exciting" case study
« Reply #1 on: August 19, 2017, 09:44:54 AM »
I think you're already doing pretty well. You live generally frugally, you don't have to worry about your pension, your house is paid off and you have no other debt.  What are the goals you are trying to achieve? Do you want to FIRE?

There are some things you can change: your grocery bill is high, but you know that. I'm not sure what the $30/month dental deduction is for (I'm not American so not familiar with your healthcare system) but if you're healthy, that's quite a lot. But if it's some kind of savings plan instead of an insurance-type thing, it might be a good thing to keep it so you have tax-free cash available to pay your dental bills. Even when you're generally healthy, at some point you'll likely have expensive dental work. If it's an insurance, you need to calculate if it's worth it. You have enough money on hand to pay for emergency dental work.

HildaCorners

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Re: A "not too exciting" case study
« Reply #2 on: August 19, 2017, 03:59:35 PM »
What are your goals?

Are you looking for FIRE? If so, what's your timeline, and how much "income" will you have when you begin FI, before pensions, etc. kick in?

If you're not looking to retire early, how much money will you have when you do retire? Will that cover your expected spending?

I don't see an item for health insurance. How are you covering medical expenses now, and do you have a plan to cover it post retirement?

marty998

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Re: A "not too exciting" case study
« Reply #3 on: August 19, 2017, 04:13:01 PM »
Interesting that your car insurance is 3x as much as your home insurance...

Could be valid reasons for that but it is curious.

slappy

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Re: A "not too exciting" case study
« Reply #4 on: August 19, 2017, 06:01:08 PM »
Misc monthly fixed seems quite high. Amazon should be less than $10 a month, so what is the rest? Also, do you need the home alarm?

Morning Glory

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Re: A "not too exciting" case study
« Reply #5 on: August 19, 2017, 09:38:18 PM »
Your asset allocation is way too conservative. The first thing I would do would be switch your 401k contributions to traditional instead of Roth as you will likely be in a lower bracket after retirement. Also consider switching the IRA to traditional as well, especially if you are not yet down to the 15% bracket after switching your 401k.  Mad Fientist has a good explanation of this. Then ditch the gold etf and the cash in your brokerage account. Your bond allocation is also too high considering the low rates right now. JL Collins has a good argument for going 100% stocks during the accumulation phase. Keep the shiny gold bars if you want.

Feivel2000

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Re: A "not too exciting" case study
« Reply #6 on: August 23, 2017, 05:25:11 AM »
Has any big points have changed recently?

Post-everything you have roughly 3k and you spend less than 1.5k. Where has all the money gone to?
I see no emergency fund and everything you listed under assets and post tax investments could have been bought within the last two years without any efforts.

That said, you are doing good and probably can retire with 55 without any money problems.

gggggg

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Re: A "not too exciting" case study
« Reply #7 on: August 23, 2017, 07:54:04 AM »
Has any big points have changed recently?

Post-everything you have roughly 3k and you spend less than 1.5k. Where has all the money gone to?
I see no emergency fund and everything you listed under assets and post tax investments could have been bought within the last two years without any efforts.

That said, you are doing good and probably can retire with 55 without any money problems.

Thank you.

I had been paying off my house and car the last couple of years, that's why my liquid stash isn't so high. Before that, I was a normal spendy-pants person (though not terribly in debt, more of a spend what I make, but not more than I make type). The bank account and taxable account is my emergency fund. Thanks again!