Learning, Sharing, and Teaching > Case Studies
Can Mr. and Mrs. Spendy cut their way to freedom?
MrSpendy:
Putting this as a journal rather than case study, because spending is so fat that it's very obvious where cuts can be made.
EDIT: decided I won't be writing much flavor so moved to case study
This won't be overly interesting and will be a little messy. But typing things out may help with progress along the way.
Just Married, will file Jointly, no kids, HCOL Area, 28/27
Gross Salary/Wages:
Mine: ($95K + 0-70% of salary bonus, depending on company overall performance)
Hers: ~$23K Stipend
118K gross
-$18.5K 401k
-$4K HSA
$95.5K taxable income w/o bonus
taxes have been highly variable for me given that I've had substantial taxable investment gains and owed about $20K last year and we just got married, so far this year have about $10K of realized gains, but have a big loss that can offset this if i wish to realize it before year end.
But assuming no investment gains or bonus, online calculator says that taxes should be about $28K (Fica, Federal, State, Local), bringing take-home to $67K about $5,800
Normalized for no bonus, no investments
Take-home : $5,800
Spending has been super messy with wedding, honeymoon, etc.
Below is estimated of "normal" go forward that is representative of our general lavish habits.
Rent & Parking: $3,100
Restaurants $800
Travel $500
Groceries $400
Auto $600 ($316 payment on my car, $150 insurance for 2 cars, + miscellaneous)
Everything else $600
$6,000
Cars: fully paid off '07 reliamobile owned by the wife, 2010 facepunchmobile <--i used to own outright, but took a loan out a few years back when had lots of investment opportunities, it worked out, will probably get rid of the loan soon since it's no longer meaningful
Assets:
Taxable Accounts: $314K 100% stocks
private company : $50K at cost, $90K market value (it's only quasi-private)
I-Bonds : $51K
Taxable $415K
loan -$50K (used to buy company)
Car loan: $8.6K
$357K taxable net worth
All non-roths are 100% pre-tax
Work 401k : $33K stable value $9.5K employer contribution, been there a year so mix of tail end of 2016 and full 2017 + employer
Rollover IRA 1: $136K stocks
Rollover IRA 2: $81K stocks
Roth IRA 1 : $73K stocks
HSA : $6K 30 yr tsy's
Roth IRA 2 : $23K stocks
Spouse doesn't have a 401k/403b...we put money from my taxable into her old rollover and converted to roth in 2016 when she had little income
Total retirement: $349K
Total taxable + retirement: $706K
My retirement and i-bonds was "earned" in the sense that all assets in those originate from a paycheck/bonus I worked for. Not saying it was all me given that I was privileged to have no loans and high paying job after super expensive college).
My taxable net worth is not the result of frugality but instead has substantial impact of inheritance (~$200K in 2011).
I've matched market returns in taxable, but have spent a lot of money. I invest in 2-3 stocks at a time in my retirement accounts and have made mid 20's per year which is not sustainable or advisable.
My goal is to not work for the man and invest full time (it's what I love to do). I want to be financially independent with wife's income ($50-$125K when out of school/ramped up , depending on geography). At the time FIRE is not a goal of hers, but I also don't want to be in a position where my desire to not be gainfully employed makes her feel resentful or forced to work.
Breaking my addiction to luxury will accelerate this goal.
More flavor, fewer facts in the future.
Lepetitange3:
Gonna follow. Looking forward to you killing that restaurant bill ;)
MrSpendy:
yep, that's the most obvious and insane (besides rent!).
I am also considering dropping das facenpunchenmobil von Bavaria as it is a ticking time bomb of unforeseen maintenance expenditures. I can ride my bike / uberpool (in the winter...ya ya ya i know) to work for significant savings taking into account insurance and future maintanence , etc. Won't save on parking until lease expires (currently $75/month/car but that was negotiated, it's normally $150!).
I rode every day this week so far.
It's a laughable 2 miles on a gorgeous greenway.
Lepetitange3:
Do it! If Mrs drives to work, maybe she can drop you on way in winter :)
MrSpendy:
End of July (almost) Update, goal this month is to be more precise and understand where it all goes...restaurant addiction remains a real struggle
Personal Capital
July Outflows: $7,200
Reimbursable: - $500
Personal Expenses: $6,700
Rent & Utilities & Parking: $3,325
Restaurants: $1063 <---Good god....wife's birthday celebration where i paid tab and got paid back is inflating by $200
Travel (personal) $560 <--bought tickets for October family reunion + ~$50 of non work related uber
Groceries $473 pretty normal for us, don't see this as an item to cut
Auto $400 ($315 payment on facenpunchenmobil, 1 tank, AAA membership)
"Telephone" $223 (2 months of fast internet & 30 channel cable)
Clothing $170 (wife's birthday, was cool with her purchases, not normal)
Concert $150 (James Taylor = wife's favorite, we go to 1-2 concerts a year, was worth it)
Personal Care $128 ($44 haircut for me, I get it every 2 months, $43 class pass for wife, $41 nails wife)
Wedding Gifts / shower $122 (wife's best friend where she is bridesmaid)
Amazon $75 (all me, primarily investment related books and bike maintenance items)
Take home was $4,600 + $1,800 = $6,400, this represents normal rate when not contributing to 403b (already maxed).
Total NW increased from $717K to $731K for the month thanks to the market.
Hope to look better next month. Rode bike to work almost everyday, but it doesn't really save much until i get rid of the car since the costs of it sitting there (parking, payment, depreciation, etc.) outweigh cost of using it substantially. Still haven't sold it or taken steps to do so.
I recognize this could be a bit more entertaining...
I think I need to work on my withholdings: YTD Pay: $79K (salary + bonus), pre-tax deductions: $18.7K, Taxes: $23.7K
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