Author Topic: Mustache_Wallace Redemption (27, 26k Student Loans)  (Read 1253 times)

Ocon

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Mustache_Wallace Redemption (27, 26k Student Loans)
« on: May 02, 2018, 11:27:38 AM »
Hello All,

I was a little hesitant to come back to this thread because of how far I have fallen since the last time I posted. The guilt of falling off the wagon (really never getting on the wagon) has weighed heavily on me. No amount of disappointment from anyone here could affect me, however, as I am my own harshest critic. And so I return.

Other than changing my 401k to receive the maximum company match, nothing has changed since the last time financial freedom wise - except for one thing, my attitude. I realized that it wasn't the partying, the eating out, impulse buys, or any of that that was the problem; it wasn't even boredom like I had said before - it was addiction. I have an addiction to indifference. You work hard for a long time, make great ground, things get a little rocky and you revert right back to not giving a fuck. It's not an excuse, it is a victim mentality in way. I will no longer be the victim of my own deluded philosophies.

Frankly, I'm fed up. I'm fed up with myself. I'm fed up with the life I have been living. I'm fed up with being a sheep when I want to be a mustache.

I am ready to give this a good, honest effort. I have made some bad decisions since then, but I am already making the required changes from the knowledge I gained the last time I was on the forums, and rereading MMM's posts. I don't expect anyone to give a shit. You all helped so much last time, giving me your time and knowledge to help me with a path forward in my life. And I am forever grateful and apologetic. The time has come to put all that knowledge into practicality.

The last time I thought I was ready to change, now I know I am ready to change.

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Note: Before I was somewhat vague on my postings here. I was somewhat ashamed to give the full knowledge of my current situation because I knew the reaction would be harsh. This time, I want to be 100% fully committed to the cause.
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Current situation:

Savings
$7,582.86

401k (assuming I work two years at my company):
$10,059.48

Student Debt
$26,385.93

Net Worth
-7,873.59

Vehicle
2008 Toyota Tacoma, no payments (I know, I know). My Dad gave this to me as a gift for getting my Master's and I thought it was a great gift because it had no car payments. Ironically, I just reread Curing Your Clown Like Car Habit on MMM and he specifically mentions this vehicle as one no human should ever drive. Before I don't think I mentioned this because I knew it would get shit on. Now, I'm ready to sell it.


Based off my last ten or so paychecks:
Monthly take home:
$3281.04

I usually operate on the minimum income I will receive which is ~$2800/ month. With OT I can make a maximum of ~$4000 but that is if there is available extra hours.

Required Expenses as of July (Rent to go from $600-800 and potentially 950):
Rent: $800 (electricity and WiFi will be soon to come, I'm hoping combined this is $900) Assume $950.
Phone Bill/ Car Insurance: $215 (includes $30 for phone repayment - $630 left on payment)
Gym: $20
Groceries: $300
Netflix: $11
Spotify: $10
Medication: $10
Gas: $300
Minimum loan payment: $360

Shit that's worse than I thought.
Expenses:
$2176

Average month income: $1105.04
Minimum month income: $624.00

Now I say required expenses because last month I spent so much I actually dipped into my savings. I could elaborate on that one for you guys, but I don't see the point. I know it was all mainly stupid spending.

Actions taken so far:
I assumed my phone line from my Dad. We were paying out the ass for the phones and I couldn't justify the spending any longer. I lowered it to the $55 plan (lowest), but I'll still get fucked for May for $100 because of verizon being dumb. As for the phone (and I could use some guidance here), I have $205 in cashback already from my BoA account. I plan to open a CapitalOne Quicksilver Account (and potentially one more account) to get anywhere from $150-300 in rewards within one month that will allow me to almost fully pay off the phone for free essentially. I'm not so familiar with credit cards, etc. but I think this is a decent way to quickly get the phone bill to $55 without dipping into savings. Also, once I pay off the phone, I can ditch the line entirely if I want something cheaper.

Potential Savings $45

Rent
The increase in rent might actually prove very useful because of its location. Also, it is apparently a two month at will tenancy or something, so if we give them 60 days notice, we can move whenever we want.

Car Insurance
I was dragging my feet with the title to the truck but this month he should be able to sign it over to me giving me full control of it. I'm sure there will be some fees or something associated with this but I'll take it over, and shop for lower insurance. In short time, I plan to sell the truck to get something much more fuel efficient.

Hopefully a lot, but I've never outright dealt with insurance and car ownership so it's tough for me to estimate.

Groceries
I actually spent $298 last month on groceries which is terrible. But this was basically impulse buying diet sodas, water bottles, bagels, fiber one bars, whatever the fuck I wanted. The goal is to get this to $150 per month, including whey protein, to maintain my current bodybuilding lifestyle. I've already worked out a scheme, I think, that will keep me at or around $5 per day. If I can squeeze this even further to $100 per month and still hit my macronutrient needs this would be awesome. I'm also looking into a costco membership but that is approximately 20 miles away.

Potential savings: $150-200$

Netflix/Spotify
Cancelled. I don't even watch Netflix and only use Spotify at the gym, which I didn't before, and got along just fine.

Potential savings: $21

Medication
Nothing I can do there.

Gas
Obviously the problem here is the truck. But I recently moved to 0.4 miles from my gym, and 5 miles closer to my work (10 miles). I have a bike at my Dad's house (make sure it's still there), that I plan to ride around to the gym and for anything else that isn't the main work commute. I estimate this will save me $150 or more on gas based on mileage, mpg, etc. But we'll see. Furthermore, this new location is next to a bus stop that could take me directly to work for $1.50/ day. I could take the bus in and bike home for around $30 or so per month. It's an option to explore. I could even consider biking to work, but my endurance likely isn't good enough and I'll need somewhere to shower.

Potential savings: $150 or more

Loans

Group A
$6,474.56 @ 6.55%
Group B
$19,673.88 @ 5.96%

My goal is to pay off the $6,474.56 before July 13. That includes both a vacation (already paid for unfortunately) and a Bachelor Party (we decided against going abroad to save money). I want to focus on this debt and then look into things like HSA, IRA or just laser focus the other one too for approximately another year. I find for me the the retirement accounts can prove to be a little distracting in tearing down the debt but we'll see. Maybe I'm just being an idiot.

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I strongly believe I have the potential to cut my costs by $500 - $600/ month, or more.

With the loans paid off and the changes made, I'm hoping that even with a take home of 41k, I can save 50% (after 401k deductions). Once I hit July, and make the 100% vested status, I can proceed to push for raises, promotions, and even different a different job that could pay me more. Until July I won't consider anything, and continue to work as much OT as possible (70 hours last week).

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Of course with all his (and I know there is a lot to be desired), I must put in the work to achieve the desired result. I ask for a second chance from you guys as I demand a second chance from myself. Let me know what you think about my plan, and any tips on how to keep progressing.

dmac680chi

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Re: Mustache_Wallace Redemption (27, 26k Student Loans)
« Reply #1 on: May 02, 2018, 12:16:58 PM »
I skimmed your previous Case Study post first to get an idea what other's are suggesting. I'm new at providing advice for case studies but will offer some thoughts to think about and consider.

First off congrats on seeking help. That's the first step. Also it's good to see you have 7k in you're checking account.

Now moving on....

Can you see yourself working for two more years at your company? It seems this is a stipulation for your 401k correct?

Your net worth calculations seem weird to me. The way the math is working is the following:

Student Loans -$26,385.93 + Savings ($7,582.86) + 401k ($10,059.48) = Net-worth $-8,743.59. Not sure where you got your number of $-7,873.59.

Let's take your income which is $2,800. Don't count on overtime in your calculations and any overtime you do make throw it at your loans. Also why do you have both your avg take home pay of $3281.04 vs your minimum take home of $2,800? Is this due to overtime?

As for the phone, there's a couple things. One is to see what carrier also works in your area. Not sure what you use your phone for but I'd imagine data usage isn't terrible if your on wifi a decent amount. See if your employer would help cover your phone and also look into splitting a "family phone plan" with friends or other relatives too.

As for the car, other people will have better thoughts but start looking into what car you'd like and more importantly can afford.   

"Average month income: $1105.04
Minimum month income: $624.00"

I think by this you mean "average leftover income each month after expenses". If so I'd change this to clarify.

For groceries, you need to budget for this. Not sure if you and your gf buy groceries together but getting to $150-200 is totally doable. Also I'd recommend meal prepping especially if your working out and living a "bodybuilder lifestyle". Great way to save money by prepping meals on a weekend day once a week vs struggling for time on the weekday each day. Have you cut back on your binge drinking? I read that was a point made last year. If so great, if not that should cut some expenses too.

Good to cancel the Netflix account. See if a relative can add an account for you if you really want to but I'd imagine your time will and can be better spent.

Your plan for riding your bike to the gym is great. Very doable. Also maybe consider the bus to work too especially considering your wanting to sell the car. If your willing to maybe car free is a good idea for now while paying off debt.

I agree your first goal should be to pay off that $6.5k loan. Seems like you have a good plan with that. Remember to toss money at it like nobody's business as that and the other loan are holding you back.

Finally I'd recommend you use a budgeting app. Personally I use YNAB. Although your not terrible in spending (I've read much worse), it can help you keep accountable.


Ocon

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Re: Mustache_Wallace Redemption (27, 26k Student Loans)
« Reply #2 on: May 02, 2018, 10:05:22 PM »
I am going to answer all new posts to this in the old case study.