Case Study: Valens

[Valens]

Age: 40
No kids
Location: Toronto

Income: 130K Gross

Assets
====
$30K emergency fund
$10K in index ETFs

Expenses
======
Rent: 1800
Car: 865
Groceries: 600
Internet: 120
Cell phone: 145
Insurance: 220
Gym: 65
Gas: 50
Apple Music: 10
Amazon Prime: 10
Grooming: 100

I think I could save about $4200/month max.

I posted in the Ask a Moustachian forum here last year: https://forum.mrmoneymustache.com/ask-a-mustachian/looking-for-feedback-on-a-'no-retirement'-retirement-strategy/

I made some improvements since then, expanded the emergency fund from $10K to $30K, got rid of my debt and invested $10K in the market. What now?

[meandmyfamily]

Your car costs are crazy high!  Do you have to have a car in Toronto?  Groceries and grooming also could be cut for 1 person!  What about retirement?

[brooklynmoney]

As a recent car owner for the first time, I really want to know what I’d of car has an $850 a month payment??!!

[former player]

Three thoughts.

First is that you are in a rent-controlled apartment you don't much like. Can you buy it for cheap and sell it on more expensively? Or would your landlord buy you out of your right to pay rent at under market rates?  Either of those might make it financially worth your while to then find somewhere you like better.

Second is that saving and investing isn't about the money you save changing your life, it's about the money you save and invest making it possible for you to change your life.  So no, for most of us the way of the mustache isn't going to turn us into the playboys of the western world.  But turning your extra cash into investments and letting them grow while you get on with the rest of your life will give you options in life for which your future self will thank your current self.

Third is that you are optimising your income so as not to pay into state entitlements.  Have you actually done the math to work out whether there is a level at which you can declare income and pay into your state entitlements accordingly which is as good or better than the financial return you can get in the market?  I mention this because at some price points state benefits can be a very good return and if you can optimise your declared income to hit that spot it would be a worth while exercise.

[maisymouser]

Serious question, you posted in November that you were 38 and it's August and you're now 40... did the pandemic age you more than 9 months? :)

[ysette9]

As others have said, your cell phone, internet, and car expenses are really high. I know in the US internet is unusually high for the developed world, but even then $100/mo is usually too much. You can get good cell service in the US for $15/mo. You can scan this to see if there are resources that are specific to Canada: https://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/

What kind of a car do you have? Are you a car person or is this just transportation? Most people here would advise to get rid of the expensive car and buy something used in cash to not have a payment, especially not one that high.

What are your goals? Figure out what the life you want to live looks like and then match your financial goals to support that vision.

[Christof]

I don‘t understand.... You could save 4K, yet last year you only had 2.5 months saved up, despite being more then half way through to retirement. This year you have added another 5 months. What happened to the rest of the money? This year, if we talk about just 2020, not a full year even, you should have added another 12,000....

[Freedomin5]

Why do you not have An RRSP or TFSA? With your income level, you should be putting savings into an RRSP first to offset your income and lower your taxes. Then, after maxing out your RRSP, you should be filling up your TFSA.

Check out the Investment Order thread to get a sense of what to do in what order. There is a post in the thread specifically for Canadians.

Rent seems reasonable given that it’s Toronto we are talking about. Your car expenses seem high. Do you have a car payment?

[maisymouser]

Yeah, I am also a bit confused, as you list your expenses as effectively 48k/year but you have a gross income of 120k/year. Where is/has the rest of your money been going? Do you have other categories not listed like travel, renter's insurance, eating out that are being left out because they are not mandatory expenses but you plan to cut them?

Being new to the forum and to the FIRE concept in general (as evidenced by your other thread), it might be helpful to provide some history on your relationship with money and/or what has prevented you from investing for retirement in the past.

[zolotiyeruki]

Yeah, I am also a bit confused, as you list your expenses as effectively 48k/year but you have a gross income of 120k/year. Where is/has the rest of your money been going? Do you have other categories not listed like travel, renter's insurance, eating out that are being left out because they are not mandatory expenses but you plan to cut them?

Well, OP says he could save $4200/mo max, which comes out to $50,400/year.  The rest, I'm assuming, is taxes.