Author Topic: 1 step forward, into quicksand.  (Read 3869 times)

jj1800

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1 step forward, into quicksand.
« on: July 22, 2019, 05:39:11 PM »
So I have been lurking for a couple years now and even posted a little on another acct, and it doesn't seem like I am getting any better at saving money, never mind be able to become mustachian. I haven't been losing money like in the first part of my life due to 0 financial literacy growing up etc. This is is pretty silly that I feel like I have made improvements but I assume this will make most of y'all sick to read.

To jump in:
M(28)
Live with GF(28) who is way better off(has a great 401K, no debt, $100K+ in savings)

Income after taxes:
$33408 gross
$12000 gross in commissions(this varies by month, but this month was $1300)

I average $20-25/hr driving Uber/Lyft part-time(have not been doing this because just got burnt out working 70+ weeks with school)
I am aiming to only do 20/hrs/week:
$1600/mon
Breakdown of uber
Gas Spent: $480
Car Expense: Tires $508(80K tires from Les Schwab, one blew so I had to replace them all)
Earned: $5700 in 7months.
10Kmi driven, most for ridesharing

(Side note on Uber: I know that MMM and many others do not think this is a good idea, I have weighed the pros/cons on this and believe it is worth it. Like any independent contractor you are responsible for being successful as a driver and maximizing earnings. I believe I have done this by the car chosen, times driven, tips earned etc. I would prefer not to get any facepunches on this specific topic, there are plenty of other options, like a lot)

My goal between commissions and driving is to top $5k after taxes. This is far more than I have ever made and yet it still feels like it goes in one side and out the other. To make matters worse I am attempting to start a business in 18 months and I have to be saving/have good financial acumen by the point.

Expenses are pretty large and I am not sure which I should put on hold till after the business is up and running in 2-3 years.

Hello so I wanted to break the debts down in a simpler way so they are easier to read:
Student loans from federal gov:
$33410 @ 5.25% interest is deferred while taking 6 credits or more

State student debt:
$5348 @ 12.5% no deferrment

Car loan
$10748.59 @ 15%
Min Pay $263/mon

Mortgage
$134,000 @4.75%
Min pay 767/mon

Monthly Expenses:
HOA $375/mon

Internet: $43/mon

Insurance: $224/mon

Subscriptions:
Netflix: $11.99/mon
Youtube: $9.99/mon
Amazon: $5.99/mon
PocketGuard: $3.99/mon

Credit Cards: $1046

Student Accounts: $5348 at 12%
Toyota Prius Purchased because old car died: 10748.59 at 15% and 263/mon min
(I know it's insane for this forum, but having a car that I can trust to turn on each morning is necessary to get to work etc. and I plan to pay it off quickly by using it for Uber[$5500 made since Jan])
Mortgage: $1000/mon (Me and the gf are doubling up on payments to get it paid off more quickly, at this rate it will take 8 years)
HOA Fee: $375/mon (It's shitty but we almost got hit with a loss assessment because the complex pool started leaking on to the street)
Internet: $43/mon(had to haggle for 75min with Comcast to get the cheapest. They charge $13/mon for modem rental, I haven't gotten a replacement purchased just yet.)
Insurance: $224/mon
  Prius: 93.24
   $1million Umbrella: 10.33
   Life Ins for me and Gf: $72/mon
   Disability for me and Gf: 37.58

Entertainment:
$9.99 for Youtube premium

$11.99 Netflix

$5.99 for AmazonPrime

Education:
I am still trying to average 6 credits per term which is approximately $375/mon
I will try to go to a less expensive school and where it will be approximately 175$/mon
Student loans: 33,421
While I am in school the interest on these is deferred. Otherwise the payments are $300/mon at 5.25% It creates a weird situation where it is essentially better to be in school then out.
Student loans 5348 at 12%
These are a major focus and accrue interest regardless.
$86/mon but obviously I want to knock this out asap.

$1086 in credit card debt that will go away in the next paycheck or two. I have about $2500 in available credit that I use as an emergency fund.

$200/mon for groceries over the last 3 months.
$100/mon for fuel/car costs (have a service contract that came with for no charge for any major repairs for 10K more mi)
$59.99 for Gym. I have a home gym now

$200/mon for fun. This varies a lot(took an anniversary trip that was $300+)
3.99 for budgeting app. I have been using the PocketGuard app for tracking expenses for about 2 months now. It is fantastic because it tracks CCs, cash and even Venmo. It uses AI like YNAB but is much better at it and can show the data in a variety of ways. It also allows you set goals for budgeting, debt payment etc.

I think if I could coalesce my questions into one idea is how do I get ahead? I am looking at this and immediately seeing areas that I need to improve drastically, but many things could be worse. I have tried working 70+ hrs/week but then I am stressed or will miss payments which hurt me further, or I lose self-control and spend "comfort money". How do you work 70+hrs a week, be exhausted but still manage your money correctly and stay motivated. It seems almost impossible.

Basically I am just tired of feeling like I have to spend money for things that will hurt me in the long run. For example, bachelor party that was planned last minute and now will cost $400. It's not because of other people either. I feel like I am trying to play catch up for all the mistakes I made as an 18-21 year old in school. And the harder I work to try to catch up the more shit comes up. Example: Because I am making enough money now, the student loan servicer is now forcing me to either stay in school or pay 300/mon and accrue 5.25% interest. And the harder I work to get ahead the more money I spend to pay off old mistakes and it feels like I am no further ahead then two years ago.
I know I am lucky to have a house, be able to make 60K after taxes considering how I grew up but the mo money mo problems is my exact mood right now.

The biggest reason I am trying to start over on the mustachianism system is that I am finally able to take a breath from the last year and focus on the next project. Backstory: About 5 years ago I was living out of a van that I drove for work(not by choice). Working for a very unscrupulous boss who paid solely on commission that the people I managed made. Meaning I made nothing because buying them lunch and fueling the van completely ate up any income I earned. It wasn't a specifically conscious decision but I decided to change everything and over time the HOW has settle into three stages.
Stage 1: Just get a place to live, and food to eat. I became a wildland firefighter and actually did fairly well, except all the money was gone as soon as I made it. After two years of this I realized I needed a better career because WWF is not sustainable. You are gone for six months out of the year and the other six months you are unemployed.
I decided to try and go back to school or find something that would pay year around and allow me to grow.

Stage 2: Be at the same level as a modern American. This is where I am at now. I have a less than 10 years old reliable car, own a house, make above average money etc. This last year has been a whirlwind but I need to work harder and faster if I am going to get where I want to be. Looking at government statistics, there's about a 90+% chance I will never make it to stage 3.

The purpose of getting my own business is to move into Stage 3. This is where I believe a lot of mustachians are: no debt, 100K+ invested, on a clear path to FI. In order to get to Stage 3 I have to save up approximately $20K, take over a business from the previous franchisee, greatly succeed for a year to be given a permanent contract, then focus on actually generating income until I get to the goal range which is approximately $200K/year. The timeline on this is 36-48 months minimum. In 8 months I have the opportunity to start this process, I have gotten so much better at managing my finances(yes it could be worse than this) but I have also slipped back into shitty old ways a lot and I can't do that anymore.

I feel lot of pressure as well to stay in school from the GF's family(they are in order of closest relation: doctors, lawyers, tech millionaires, engineers, and CDC researchers. It's great...). I want to finish engineering(environmental/energy systems) but it's really just not feasible right now. Does anyone know how to deal with this kind of situation without embarrassing the GF?
« Last Edit: July 23, 2019, 06:01:30 PM by jj1800 »

fell-like-rain

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Re: 1 step forward, into quicksand.
« Reply #1 on: July 22, 2019, 06:42:38 PM »
Thereís a lot to pick apart here, but Iíll focus on a couple points. The first is that the costs you listed come to a little less than $3,000 a month, which is a good bit less than your income. Thereís some stuff like the card debt and the loans that you may be paying extra on, but based on just these numbers, you should have a healthy surplus. Which implies that thereís a lot of money going to unexpected big things like this bachelor party, or else the ďdeath by a thousand cutsĒ of unconscious buying takeout and amazon crap and such thatís not being tracked.
My second point is that youíre spending a pretty huge amount on housing, in a way that may not align with your priorities. It sounds like youíre focused right now on getting educated, getting out of debt, and having your own business, which doesnít jive well with spending tons of cash to pay off your mortgage early in a swanky HOA. And that leads me to speculate that this is something your girlfriend wants, and youíre along for the ride because you donít want to ďembarrassĒ her. So if that is the case, could you find a compromise where youíre still working towards that paid-off house but you redirect some of the extra cash towards your debts?

Peachtea

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Re: 1 step forward, into quicksand.
« Reply #2 on: July 22, 2019, 07:56:50 PM »
The purpose of getting my own business is to move into Stage 3. This is where I believe a lot of mustachians are: no debt, 100K+ invested, on a clear path to FI. In order to get to Stage 3 I have to save up approximately $20K, take over a business from the previous franchisee, greatly succeed for a year to be given a permanent contract, then focus on actually generating income until I get to the goal range which is approximately $200K/year. The timeline on this is 36-48 months minimum. In 8 months I have the opportunity to start this process, I have gotten so much better at managing my finances(yes it could be worse than this) but I have also slipped back into shitty old ways a lot and I can't do that anymore.

This is frightening. Donít do this. Do you really think someone making 200k a year or had an expectation that with hard work they could make 200k a year would sell their contract for 20k? No! You are throwing away 20k that could be used to pay down debt and start investing. You donít need a business to get to FI, you can do it with a normal job. And if youíre in the financial situation you are, you shouldnít be opening a business. Side hustle that requires a couple hundred initially while you slowly scale up? Fine. So many franchises are scams. Even the ones that arenít, are not necessarily profitable. Run donít walk away from franchises when you know nothing about business.

Heck, in-laws have high level management skills + oneís a partner level attorney + they are both extremely motivated and hard working and still are not making much on their repuatable franchise. Both work full time plus MIL spends ton of time on business, probably at least another 30... and this is after a few years of 60+ hours at just the business in the beginning. Theyíre consider a ďsuccessĒ in the franchise brochure world because they havenít defaulted. Thatís antidotal, but the statistics on fail rates - more than independent businesses - and profits are just as bad. The very bad have like 90% fail rates, and those with really low fail rates usually have million dollar + investment requirements. Donít be a statistic.

Why is finishing your degree not really an option? Too many hours working? Cut your time doing Uber. Thatís short term thinking rather than big picture. Working full time, making 42k a year, going to school part time to finish a degreee, and cutting expenses is a prefectly fine place to be in and one that after school can put you in a really solid place. Donít get caught up in get rich quick schemes to try to impress GF family.

Speaking of GF... you co-own the house? As in both names on mortgage? If not, you should pay her rent and thatís it (for house, obviously you should split other expenses like groceries and internet). If joint, you need to discuss the paying ahead strategy. Itís probably a bad one regardless - see the countless posts on here about why itís better to invest that money instead of pay down mortgage early. But you cannot afford to pay a mortgage down early when you have INSANE student loan and car interest rates (12 and 15%). All your extra money needs to go to those. Pre-paying mortgage is hurting you. If GF wants to spend her money on it fine, but then she has to be okay with her ďputting in moreĒ to an asset you both own 50/50.

$200 a month for fun + all those subscripts is a lot in your financial situation. Keep tracking your expenses and then maybe do a more traditional case study listing all expenses in details for cuts. But until car and 12% SL is gone, you should cut everything you possibly can. Then add back some wriggle room while you start saving a real emergency fund and then investing in either 401k at work if you have one or an IRA. Probably Roth IRA at your current income level but there are also lots of posts on Roth traditional iras. 

jj1800

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Re: 1 step forward, into quicksand.
« Reply #3 on: July 22, 2019, 08:03:25 PM »
Thereís a lot to pick apart here, but Iíll focus on a couple points. The first is that the costs you listed come to a little less than $3,000 a month, which is a good bit less than your income. Thereís some stuff like the card debt and the loans that you may be paying extra on, but based on just these numbers, you should have a healthy surplus. Which implies that thereís a lot of money going to unexpected big things like this bachelor party, or else the ďdeath by a thousand cutsĒ of unconscious buying takeout and amazon crap and such thatís not being tracked.
My second point is that youíre spending a pretty huge amount on housing, in a way that may not align with your priorities. It sounds like youíre focused right now on getting educated, getting out of debt, and having your own business, which doesnít jive well with spending tons of cash to pay off your mortgage early in a swanky HOA. And that leads me to speculate that this is something your girlfriend wants, and youíre along for the ride because you donít want to ďembarrassĒ her. So if that is the case, could you find a compromise where youíre still working towards that paid-off house but you redirect some of the extra cash towards your debts?
Hey thanks for looking through it all.
Yes there is a lot of surplus. And there definitely have been some unnecessary purchases. A big part has been paying off current school term/old debts but it's managing the money once I have it that's confusing even if I'm consciously being frugal. Do I spend it on one debt and knock it out like Dave Ramsey talks about? Or should I widdle away at all the debts at once? Should I avoid paying on the mortgage till later? But I really don't want her to have pay more than me, I'd feel like I'm taking advantage.

The extra on the house is because my brother went through foreclosure so I equal her in being paranoid about that. Which I know doesn't make sense but I feel like I can get rid of everything else but the student loans if I focus better. And those aren't generating interest while I'm taking classes which is nice.

WalkaboutStache

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Re: 1 step forward, into quicksand.
« Reply #4 on: July 22, 2019, 10:25:20 PM »
Dude, listen to yourself (just the highlights):

"I drive an Uber, but don't facepunch me about it because, despite the fact that this very site contains a fairly detailed case study about how it doesn't really work, I am smarter than the average bear and it will work for me.

My most expensive debt is the Prius I drive so I can work for Uber to drive to work.  Totally worth it at 15% a month - hey, some credit cards charge 18%.  Like I said, I am making this work.

Life insurance because you can never be too careful once you are past 25. I (don't?) know that there is another article somewhere about overinsurance, but I am trying to protect my girlfriend from losses if I stop making money from Uber.

I am going to school, driving aforementioned Uber, working a regular job AND starting a business.  Once I plow 20K into it this thing is really going to take off.  By then I will have weaned myself off my sleeping habit and things are really going to get going at the go stage (AKA Stage 3). That will allow me to drop that silly engineering degree  for which I owe a ton of money in loans that will hit my face like a brick shithouse falling down from space once I drop out. 

In my free time, I like to take long walks on the beach and watch a ton of TV.  So much so that I have 3 different subscriptions, and even pay for YouTube."

Reality check, my friend.  Sort your stuff out (start with the above).  You sound like you think you can beat the system (whatever that system is), but your post reads like a string of bad decisions past, current, and future. Stop poking about, get a cheaper car, lose the money sucking entertainment expenses, focus on your degree and throw everything you can at your loans.

Your hair is on fire (read that article) and if you don't shape up you will lose your solvency (you probably are not solvent on your own) AND your girlfriend.
« Last Edit: July 22, 2019, 10:28:54 PM by WalkaboutStache »

Freedomin5

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Re: 1 step forward, into quicksand.
« Reply #5 on: July 22, 2019, 11:05:20 PM »
What is your mortgage interest rate? If it is less than 12%, you should not be making extra mortgage payments. You should be directing any and all extra money towards the higher interest loans. In what order? Mathematically speaking, it makes most sense to start with the highest interest loan, then work your way down to the lowest interest loan.

Consider moving to a cheaper apartment. Your HOA fee is high because you have a swimming pool. Get an apartment that does not have a fancy swimming pool. Your HOA fees will be substantially lower. At a monthly salary of $3000+ per month, you cannot afford a place with a pool. Heck, our monthly net income is about 4x your income, and Iím unwilling to pay HOA fees for a pool. Iím using the YMCA/community pool if I want to swim.

Youíre working hard but it feels like youíre not getting ahead because all the money youíre making is going towards paying interest. Sort out your finances first before adding financial complications like a new business into the mix. Donít take on ANY new debt until youíve paid off your car and your 15% student loans. Finish school. Donít drop school part way and jump to the next ďlatest and greatest sure to make you money established businessĒ.

Youíre trying to juggle too much, and youíre not prioritizing. You need to stay laser focused on a couple big things.  If I were in your shoes, I would:

1) Finish engineering degree with the idea that I can get a better paying job.
2) Continue current full time work.
3) Knock out the 15% and 12% loans.
4) Find a cheaper place to live.

I would NOT:
1) Prepay the mortgage
2) Start a business
3) Go to $400 bachelor parties (even if it were my own party)
4) Go on trips and vacations that cost more than $50
5) Pay for gym membership - go jogging/hiking instead
6) Use my credit card (even though you pay it off each month, that is money that is NOT going towards student loans and car loan)
7) Take a $300+ anniversary trip ( see #4)
8) Have kids at this moment until Iím on more solid financial footing (not sure if youíre planning to have kids)





FI45RE

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Re: 1 step forward, into quicksand.
« Reply #6 on: July 23, 2019, 08:09:34 AM »
Dude, listen to yourself (just the highlights):

"I drive an Uber, but don't facepunch me about it because, despite the fact that this very site contains a fairly detailed case study about how it doesn't really work, I am smarter than the average bear and it will work for me.

My most expensive debt is the Prius I drive so I can work for Uber to drive to work.  Totally worth it at 15% a month - hey, some credit cards charge 18%.  Like I said, I am making this work.

Life insurance because you can never be too careful once you are past 25. I (don't?) know that there is another article somewhere about overinsurance, but I am trying to protect my girlfriend from losses if I stop making money from Uber.

I am going to school, driving aforementioned Uber, working a regular job AND starting a business.  Once I plow 20K into it this thing is really going to take off.  By then I will have weaned myself off my sleeping habit and things are really going to get going at the go stage (AKA Stage 3). That will allow me to drop that silly engineering degree  for which I owe a ton of money in loans that will hit my face like a brick shithouse falling down from space once I drop out. 

In my free time, I like to take long walks on the beach and watch a ton of TV.  So much so that I have 3 different subscriptions, and even pay for YouTube."

Reality check, my friend.  Sort your stuff out (start with the above).  You sound like you think you can beat the system (whatever that system is), but your post reads like a string of bad decisions past, current, and future. Stop poking about, get a cheaper car, lose the money sucking entertainment expenses, focus on your degree and throw everything you can at your loans.

Your hair is on fire (read that article) and if you don't shape up you will lose your solvency (you probably are not solvent on your own) AND your girlfriend.

Basically, this.

The good: You're 28. Plenty of time to play catch-up.
The not so good:
1) You have a 15% note on a car?!? That's insane. A reliable vehicle can be had for much less. You've activated your Purchase Justification Machine.

2) Starting a business is just going to be *one more thing* to have to deal with. You don't have a surplus of money if you have debt. How are you going to invest in your business while also juggling all your debt?

3) Speaking of debt, do you have $5,348 in student loans, or $33,421? You state both.

4) You're paying $3.99 a month for a budgeting app. What's wrong with Mint or Personal Capital? They both track all the accounts you could possibly need.

5) What is your mortgage rate? If it's anywhere near the national average, you shouldn't be paying extra toward your mortgage, especially when you have a 15% car note.

I would take a step back from all this and figure out what you need to prioritize in the next 6 months.

Basenji

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Re: 1 step forward, into quicksand.
« Reply #7 on: July 23, 2019, 08:12:47 AM »

Mortgage: $1000/mon (Me and the gf are doubling up on payments to get it paid off more quickly, at this rate it will take 8 years)

$200/mon for fun. This varies a lot(took an anniversary trip that was $300+)

Basically I am just tired of feeling like I have to spend money for things that will hurt me in the long run. For example, bachelor party that was planned last minute and now will cost $400. It's not because of other people either.


Don't see the mortgage rate but it makes no sense to pay it off fast simply because (as you wrote later) your brother went into foreclosure. So? If it hurts your ability to save and doesn't make logical sense, then you are making a financial mistake.

For the bolded things, if you are tired of spending money, don't spend it. But you write like you have no choice in the matter. Your post is all over the place which means your thinking is all over the place. You are concerned with other people's situations and other people's opinions. I think you need to rewrite your case study very clearly, give all the numbers (per the guidelines) and do NOT add justifications for spending or your choices. Then people can help you figure out your next steps.
« Last Edit: July 23, 2019, 08:16:12 AM by Basenji »

JestJes

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Re: 1 step forward, into quicksand.
« Reply #8 on: July 23, 2019, 09:33:02 AM »
I see a lot of myself in this post. You came from a poor family and you are afraid you will slip into poverty unless you work yourself to death. Please give yourself a break.

 You make decent money and you should be focusing on paying down your debts and saving for your future instead of starting a business. You can only work so many jobs at a time.

Don't compare yourself to your girlfriends family. I get it. My boyfriends parents have a beach vacation home and my (birth) parents are often homeless. It doesn't mean that you are any less of a person. If you girlfriend makes you feel like that then that is a huge red flag. If she is not putting all this pressure on you, but you are doing it to yourself, I'm sure this is not making you a fun person to be around.

Make a clear debt repayment plan, get your lady on board and tell everyone else you can't afford it. Have you bachelor party in your back yard or a that fancy pool that you pay so much for. You friends are there for you, not the drinks or the strippers. If you find this is not the case, finds new friends.

seemsright

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Re: 1 step forward, into quicksand.
« Reply #9 on: July 23, 2019, 10:12:17 AM »
Time to get out a pen and paper. You are trying to do all of the things at the same time. You are spinning.

You need to prioritize ASAP. Look at your goals in order what do you need to do first then second and so on. Write it all down. Post on your mirror or fridge so you see it every day.

I am not saying you cannot do a few things at the same time. But you need to put all of your energy into what is most important first.

You also need to look at your entire picture and run your numbers because my guess is after costs and taxes you are not making much if any money at all driving Uber and that time is taking you away from what you could be accomplishing...ie relationship with GF, kicking ass grade wise in your classes, taking more classes to finish your degree, working on your business.

SwordGuy

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Re: 1 step forward, into quicksand.
« Reply #10 on: July 23, 2019, 10:22:55 AM »
OP, I'm going to ask you to do one of two things:

1) Please follow the very good advice you are getting, or

2) If you choose to continue your current plans, please do a write up and update us.  I suggest the title for the thread might be, "How I shot myself in the foot - 10 times."    Seriously, this has the makings of a slow moving train wreck.

six-car-habit

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Re: 1 step forward, into quicksand.
« Reply #11 on: July 23, 2019, 12:07:49 PM »
 1.  Forget about the living out of a van, working sales routes or whatever, and making no money , that can't be changed. It built character. Hopefully you had some romantic liason in the van you can look back on happily.

 2. On the continued going to school in order to not have to pay back loans. Maybe it is different nowadays, but back in my school days, if you had a "deferment" of payments, it did not stop interest from accruing on the loan, only the need to make payments, the interest portion was still building up...

3.  Who owns the house ?   Are you and the girlfriend both on the mortgage paperwork ?  Are both your names on the monthly bill ?

  I've been putting extra to my mortgage every month since we got it, years ago. At this point we probably have 1 full year worth of payments "prepaid" on principal.
  Guess what ??   My next payment is due August 1st , and if it's late, there is a $80 fee !!
         My mortgage , like yours probably , is not like a car loan, where you can drive back the due date for the next payment by prepaying.  Do you understand this - ? think about it.   I pre-paid the principal on my automobile loan, to the point where i did not have a payment due until 2021.   That is not how a mortgage works, they expect a payment each and every month, because there is escrow [ taxes / insurance] involved, as well as the actual terms being different than a "simple" loan.
   Understand the difference - your brother got the house foreclosed because he quit making monthly payments. 
   If i quit making payents monthly, it's just as likely they could try to put me into foreclosure, even though my principal balance is $10K less than it would be if i just made the minimum monthly payment all these years.

  You should be putting the "extra" into knocking down your $5K or $33K student loans instead.  If your girlfriend wants to make extra principal payments with her money don't argue it, but your $$ should be going to your outstannding debt....

red_pill

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Re: 1 step forward, into quicksand.
« Reply #12 on: July 23, 2019, 12:28:07 PM »

 Looking at government statistics, there's about a 90+% chance I will never make it to stage 3.

The purpose of getting my own business is to move into Stage 3. This is where I believe a lot of mustachians are: no debt, 100K+ invested, on a clear path to FI. In order to get to Stage 3 I have to save up approximately $20K, take over a business from the previous franchisee, greatly succeed for a year to be given a permanent contract, then focus on actually generating income until I get to the goal range which is approximately $200K/year. The timeline on this is 36-48 months minimum. In 8 months I have the opportunity to start this process, I have gotten so much better at managing my finances(yes it could be worse than this) but I have also slipped back into shitty old ways a lot and I can't do that anymore.


There are literally infinite ways to get to stage 3, most of which do not involve you having to buy a business.  And the probability of achieving "stage 3" is 100% if you do a few simple things. 

 I  find it interesting that you've identified this complex four year plan to get to "stage 3", and yet you haven't quite managed to buy a modem so you can stop renting one.   Get what I'm saying? Im betting there is more to the story here that you haven't disclosed.  Or your confused way of laying out your finances just makes it all hard to see. 

For you, yeah do the Dave Ramsey snowball.  Stop putting in extra on the mortgage.  Pay off the credit card first.  Then the smaller student loan. Then the car loan. 

Also, your case study is as confusing as your frenetic thought process... you dont even have a full list of your liabilities.  How much is each loan? What is the interest rate of them all? There is a lot of missing information. 

jj1800

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Re: 1 step forward, into quicksand.
« Reply #13 on: July 23, 2019, 06:23:47 PM »
Hey all I really appreciate some of the facepunches. I did this because I was getting so frustrated with having the money go right in and out that I was getting demotivated to even put extra effort into work, driving etc. Things have been so crazy this last year(moved to a higher COL area, changed offices twice, moved in with gf, bought a car, and a house, school etc.) that I let go of a grasp on the spending. Having more money didn't help, it's honestly shocking to me that I spend 40/mon on subscriptions. It's  nothing but it's so stupid.

1.  Forget about the living out of a van, working sales routes or whatever, and making no money , that can't be changed. It built character. Hopefully you had some romantic liason in the van you can look back on happily.
Haha no, it was not a cool van, more like a creepy van
 2. On the continued going to school in order to not have to pay back loans. Maybe it is different nowadays, but back in my school days, if you had a "deferment" of payments, it did not stop interest from accruing on the loan, only the need to make payments, the interest portion was still building up...These are actually deferred fully, or at least the majority, I'll have to research more but there is only $2000 in interest and I have had them for close to 9 years. When I talked with them last year, 2/3rds were being deferred. Definitely need to confirm

3.  Who owns the house ?   Are you and the girlfriend both on the mortgage paperwork ?  Are both your names on the monthly bill ?Yes both of our names are on the title.

  I've been putting extra to my mortgage every month since we got it, years ago. At this point we probably have 1 full year worth of payments "prepaid" on principal.
  Guess what ??   My next payment is due August 1st , and if it's late, there is a $80 fee !!
         My mortgage , like yours probably , is not like a car loan, where you can drive back the due date for the next payment by prepaying.  Do you understand this - ? think about it.   I pre-paid the principal on my automobile loan, to the point where i did not have a payment due until 2021.   That is not how a mortgage works, they expect a payment each and every month, because there is escrow [ taxes / insurance] involved, as well as the actual terms being different than a "simple" loan.
   Understand the difference - your brother got the house foreclosed because he quit making monthly payments. 
   If i quit making payents monthly, it's just as likely they could try to put me into foreclosure, even though my principal balance is $10K less than it would be if i just made the minimum monthly payment all these years.

  You should be putting the "extra" into knocking down your $5K or $33K student loans instead.  If your girlfriend wants to make extra principal payments with her money don't argue it, but your $$ should be going to your outstannding debt....
This is a hard pill to swallow. I really wanted to make extra payments on the mortgage, I will see about doing something less until I get rid of the high interest student loans and car loan. I feel like it effects the dynamic of our relationship for her to be paying more for the mortgage. I just don't want to feel like I am taking advantage of her. She already put more down and I am making a larger payment (She pays the min payment and I put in the extra $1000) so we will even out in about a year.
« Last Edit: July 23, 2019, 06:25:19 PM by jj1800 »

jj1800

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Re: 1 step forward, into quicksand.
« Reply #14 on: July 23, 2019, 06:44:05 PM »
Time to get out a pen and paper. You are trying to do all of the things at the same time. You are spinning.

You need to prioritize ASAP. Look at your goals in order what do you need to do first then second and so on. Write it all down. Post on your mirror or fridge so you see it every day.

I am not saying you cannot do a few things at the same time. But you need to put all of your energy into what is most important first.

You also need to look at your entire picture and run your numbers because my guess is after costs and taxes you are not making much if any money at all driving Uber and that time is taking you away from what you could be accomplishing...ie relationship with GF, kicking ass grade wise in your classes, taking more classes to finish your degree, working on your business.

Ok this is very helpful. I am looking for a way to simplify things without losing focus on the long term goals. How do you do it? There's so many important decisions to make on a daily basis, how does anyone prioritize successfully and maximize efficiency?



The purpose of getting my own business is to move into Stage 3. This is where I believe a lot of mustachians are: no debt, 100K+ invested, on a clear path to FI. In order to get to Stage 3 I have to save up approximately $20K, take over a business from the previous franchisee, greatly succeed for a year to be given a permanent contract, then focus on actually generating income until I get to the goal range which is approximately $200K/year. The timeline on this is 36-48 months minimum. In 8 months I have the opportunity to start this process, I have gotten so much better at managing my finances(yes it could be worse than this) but I have also slipped back into shitty old ways a lot and I can't do that anymore.

This is frightening. Donít do this. Do you really think someone making 200k a year or had an expectation that with hard work they could make 200k a year would sell their contract for 20k? No! You are throwing away 20k that could be used to pay down debt and start investing. You donít need a business to get to FI, you can do it with a normal job. And if youíre in the financial situation you are, you shouldnít be opening a business. Side hustle that requires a couple hundred initially while you slowly scale up? Fine. So many franchises are scams. Even the ones that arenít, are not necessarily profitable. Run donít walk away from franchises when you know nothing about business.

Heck, in-laws have high level management skills + oneís a partner level attorney + they are both extremely motivated and hard working and still are not making much on their repuatable franchise. Both work full time plus MIL spends ton of time on business, probably at least another 30... and this is after a few years of 60+ hours at just the business in the beginning. Theyíre consider a ďsuccessĒ in the franchise brochure world because they havenít defaulted. Thatís antidotal, but the statistics on fail rates - more than independent businesses - and profits are just as bad. The very bad have like 90% fail rates, and those with really low fail rates usually have million dollar + investment requirements. Donít be a statistic.

Why is finishing your degree not really an option? Too many hours working? Cut your time doing Uber. Thatís short term thinking rather than big picture. Working full time, making 42k a year, going to school part time to finish a degreee, and cutting expenses is a prefectly fine place to be in and one that after school can put you in a really solid place. Donít get caught up in get rich quick schemes to try to impress GF family.

Speaking of GF... you co-own the house? As in both names on mortgage? If not, you should pay her rent and thatís it (for house, obviously you should split other expenses like groceries and internet). If joint, you need to discuss the paying ahead strategy. Itís probably a bad one regardless - see the countless posts on here about why itís better to invest that money instead of pay down mortgage early. But you cannot afford to pay a mortgage down early when you have INSANE student loan and car interest rates (12 and 15%). All your extra money needs to go to those. Pre-paying mortgage is hurting you. If GF wants to spend her money on it fine, but then she has to be okay with her ďputting in moreĒ to an asset you both own 50/50.

$200 a month for fun + all those subscripts is a lot in your financial situation. Keep tracking your expenses and then maybe do a more traditional case study listing all expenses in details for cuts. But until car and 12% SL is gone, you should cut everything you possibly can. Then add back some wriggle room while you start saving a real emergency fund and then investing in either 401k at work if you have one or an IRA. Probably Roth IRA at your current income level but there are also lots of posts on Roth traditional iras. 

So it seems like the Dave Ramsey method is the simplest for now. Get rid of the CC, then 12.5% student loans, then car, then federal student loans, then house.
Cut expenses and spend less. I can do that.

So do not put anything towards savings, IRA, etc?

As far as taking over the business, I did not include enough info so let me explain it all and tell me if I am still crazy(it's definitely possible).
It's a 100 year old corp with a great reputation
I will not accept a new franchise spot, I would only take over for a retiring owner. A lot of boomers are retiring right now so they have a big shortage coming up for people to run the locations.
The way it works is that when you retire you turn over the business and your clients to the corp and they put in someone new to run it. It's a combination of branch manager and owner. It's a permanent contract that cannot be terminated unless the owner does something illegal or retires themselves.
I would inherit 1-2000 clients making monthly payments and build off of these.
I currently work in the industry and work with an owner who is in his first year right now. I am currently in the top 10 of probably 1000 team members in my metro area, although I know managing is different than selling. I am currently training with my boss to be a better manager, run the admin side, etc. The 20K is of my own money, but I will get approximately 50K in seed money between my current boss(he gets a bonus if I succeed) and from the company. The business itself is recession proof, which is why I chose it. It's not volatile like real estate nor does it require a continuous sales push like some of the other things I have seen. A lot of successful corporate salesmen, store managers and lawyers actually go into it because it's so simple and allows them to run other businesses after several years.

As far as school, I would continue to be part-time in school, with a break during that first year as an owner. I have tried school full-time, but the classes that I need are not available at the times I need them, the cost is too much on my small salary, and the stress weakens my performance at work.
« Last Edit: July 23, 2019, 08:08:08 PM by jj1800 »

Freedomin5

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Re: 1 step forward, into quicksand.
« Reply #15 on: July 23, 2019, 06:49:22 PM »
How are you taking advantage of her by paying down your highest interest loans instead of BLEEDING MONEY through your 12% and 15% interest loans?!

You mentioned a bachelor party, so Iím guessing you guys are getting married sometime in the future. That means that at least part of your finances and expenses will be shared. By paying off your high interest loans, youíre making more money available to defray those shares expenses.

If you think itís not fair for her to pay the minimum mortgage without you contributing extra, then each of you should pay half of the minimum. There, now youíre both contributing the same amount towards the mortgage.

With regard to prioritizing, several posters have already told you what to prioritize first, but in summary: 1) 15% and 12% loans and credit card. Get those out of the way, and we can make suggestions on what to prioritize next

As several posters have already mentioned, you need to Prioritize. Youíre getting distracted by relationship dynamics. You need to sit down with your gf and work out a common financial plan ó One financial plan for the both of you. Youíve made the decision to link your lives together ó this includes your finances.

jj1800

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Re: 1 step forward, into quicksand.
« Reply #16 on: July 23, 2019, 08:02:40 PM »
I see a lot of myself in this post. You came from a poor family and you are afraid you will slip into poverty unless you work yourself to death. Please give yourself a break.

 You make decent money and you should be focusing on paying down your debts and saving for your future instead of starting a business. You can only work so many jobs at a time.

Don't compare yourself to your girlfriends family. I get it. My boyfriends parents have a beach vacation home and my (birth) parents are often homeless. It doesn't mean that you are any less of a person. If you girlfriend makes you feel like that then that is a huge red flag. If she is not putting all this pressure on you, but you are doing it to yourself, I'm sure this is not making you a fun person to be around.

Make a clear debt repayment plan, get your lady on board and tell everyone else you can't afford it. Have you bachelor party in your back yard or a that fancy pool that you pay so much for. You friends are there for you, not the drinks or the strippers. If you find this is not the case, finds new friends.

Yes exactly. It is a good friends bachelor party. Which is so frustrating to me, I actually have money and my passport(long story) and now I feel like I'm wasting it to go to Mexico last minute to support my buddy which would be great but that money is supposed to be paying down debt. It feels like I missed something, it feels worse to say no to something like that when you have the money to do it then it does if you literally can't afford it.

And yasss on the bf situation. She has been great about it for the record, and so has her family. And I'll see your "parents who are sometimes homeless" and raise you: 'parents who live in a broken down RV and will not move into a simple 1 bdroom apt. This despite the fact the monthly cost is the same, they are getting old and living in an RV is dangerous for them(poor heating, mold, fire risk, cramped, rickety steps/ladders to the roof etc...) and extremely uncomfortable(no real stove, one chair, no real bed). But they won't leave because they supposedly have stuff they are planning to fix up and sell even though it is rusted junk after 30 years of not being used.' *facepalm*

How are you taking advantage of her by paying down your highest interest loans instead of BLEEDING MONEY through your 12% and 15% interest loans?!

You mentioned a bachelor party, so Iím guessing you guys are getting married sometime in the future. That means that at least part of your finances and expenses will be shared. By paying off your high interest loans, youíre making more money available to defray those shares expenses.

If you think itís not fair for her to pay the minimum mortgage without you contributing extra, then each of you should pay half of the minimum. There, now youíre both contributing the same amount towards the mortgage.

With regard to prioritizing, several posters have already told you what to prioritize first, but in summary: 1) 15% and 12% loans and credit card. Get those out of the way, and we can make suggestions on what to prioritize next

As several posters have already mentioned, you need to Prioritize. Youíre getting distracted by relationship dynamics. You need to sit down with your gf and work out a common financial plan ó One financial plan for the both of you. Youíve made the decision to link your lives together ó this includes your finances.

Yes this does make sense. I'll talk to her about it tonight. I think I will do the CC, then 12% then 15% Dave Ramsey style.
« Last Edit: July 23, 2019, 08:10:55 PM by jj1800 »

six-car-habit

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Re: 1 step forward, into quicksand.
« Reply #17 on: July 23, 2019, 11:24:52 PM »
 ***If you think itís not fair for her to pay the minimum mortgage without you contributing extra, then each of you should pay half of the minimum. There, now youíre both contributing the same amount towards the mortgage. *** , This-  what Freedomin5 said.

  If you feel you have to contribute more to make up for the $$ she put toward the downpayment, how about minimum payment on the house and a few hundred $$ a month [ from you ] that you set into a joint account - this account is strictly for "Future house fixes / emergency money"  . I think she might take this idea very well - and if you need a roof, or a new fridge/ washer/dryer/ whatever --- well , Hey, heres the money that JJ1800 set aside....-- believe me something will come up , and she'll be happy you suggested this.

 Also i'm not going to dig into the specifics of your spending breakdown, but put Something toward an IRA / Retirement fund.... don't be a dumbass like me and waste the first 10 years of adult employment not putting anything away for the future.....

ItsALongStory

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Re: 1 step forward, into quicksand.
« Reply #18 on: July 24, 2019, 07:32:43 AM »
Quote
it feels worse to say no to something like that when you have the money to do it then it does if you literally can't afford it.

that's the point, it's not because you account balance exceeds the cost of the trip that you 'have the money'.

You are so deep into this debt spiral that you absolutely need to prioritize other stuff.

seemsright

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Re: 1 step forward, into quicksand.
« Reply #19 on: July 24, 2019, 09:43:09 AM »
Time to get out a pen and paper. You are trying to do all of the things at the same time. You are spinning.

You need to prioritize ASAP. Look at your goals in order what do you need to do first then second and so on. Write it all down. Post on your mirror or fridge so you see it every day.

I am not saying you cannot do a few things at the same time. But you need to put all of your energy into what is most important first.

You also need to look at your entire picture and run your numbers because my guess is after costs and taxes you are not making much if any money at all driving Uber and that time is taking you away from what you could be accomplishing...ie relationship with GF, kicking ass grade wise in your classes, taking more classes to finish your degree, working on your business.

Ok this is very helpful. I am looking for a way to simplify things without losing focus on the long term goals. How do you do it? There's so many important decisions to make on a daily basis, how does anyone prioritize successfully and maximize efficiency?

 

You have to look at the end goal and then work backwards. Forget trying to prioritize successfully and maximize efficiency. Just Prioritize your goals and get after them.

You are trying to make all of the goals and over think on how to do it the best way possible that you are not working on them. Stop thinking. And start doing. You need to write down your goals in order of what is important to you today...next year they may be different. But if you do not stop overthinking and start working you will NEVER get to any of your goals.

LifeHappens

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Re: 1 step forward, into quicksand.
« Reply #20 on: July 24, 2019, 10:07:57 AM »
You have to look at the end goal and then work backwards. Forget trying to prioritize successfully and maximize efficiency. Just Prioritize your goals and get after them.

You are trying to make all of the goals and over think on how to do it the best way possible that you are not working on them. Stop thinking. And start doing. You need to write down your goals in order of what is important to you today...next year they may be different. But if you do not stop overthinking and start working you will NEVER get to any of your goals.
All of this. OP, you are letting perfect be the enemy of the good. Just do one thing. Do it well enough (doesn't have to be perfect) and move on to the next thing. From your writing it seems like your brain is moving at a million miles an hour and you can't ever pick a direction for all the spinning. Just pick one thing for now. If it helps you, come back here and let everyone know how it went, or better yet start a journal.

Best wishes. You can do this.

tomorrowsomewherenew

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Re: 1 step forward, into quicksand.
« Reply #21 on: July 24, 2019, 01:51:22 PM »
I'm a little confused, what are you studying right now? Engineering? If that's the case, then I would just do what it takes to finish the degree and get a job in that field. It doesn't make sense to keep making $30-$40k, when you could buckle down for a year or two and be making two to three times that amount in five years. Even if you add to your student debt, you'll be much better off.

Oh, and stop wasting time with Uber. Focus on finishing your degree and your regular job. That's plenty for now.

jj1800

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Re: 1 step forward, into quicksand.
« Reply #22 on: July 25, 2019, 09:17:26 PM »
So I am studying engineering on the side. But the reason I'm not going full time is that I can't afford to do it. It would take 3ish years and probably 40K in debt just in tuition. But I can't take classes during the day and work full-time. So then you have a min of 10K a year for living expenses, books, etc. So now 70K more in debt for a job that will pay 65K starting. OR I can keeping going part-time, and I can make 50K a year. Even if I don't take over my own business, I could easily make 80K just by being the office manager in 3 years. My boss would love to keep as most people who are even a little good move on to ownership. Also I actually like some aspects of my job and don't come home hating life, which I cant say for my friends in civil engineering.

If I do succeed in ownership, after a one year break I can make as much as I work and have complete freedom to go to school full time and be able to come and go as I need.

You have to look at the end goal and then work backwards. Forget trying to prioritize successfully and maximize efficiency. Just Prioritize your goals and get after them.

You are trying to make all of the goals and over think on how to do it the best way possible that you are not working on them. Stop thinking. And start doing. You need to write down your goals in order of what is important to you today...next year they may be different. But if you do not stop overthinking and start working you will NEVER get to any of your goals.
All of this. OP, you are letting perfect be the enemy of the good. Just do one thing. Do it well enough (doesn't have to be perfect) and move on to the next thing. From your writing it seems like your brain is moving at a million miles an hour and you can't ever pick a direction for all the spinning. Just pick one thing for now. If it helps you, come back here and let everyone know how it went, or better yet start a journal.

Best wishes. You can do this.

Yeah I was thinking I would do that. It'll keep me accountable which is a big problem.

tomorrowsomewherenew

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Re: 1 step forward, into quicksand.
« Reply #23 on: July 28, 2019, 07:48:47 AM »
Ok, it sounds like you are just starting your degree. $40k for 3 years of tuition seems high to me. Can you tell us where you're located? Is there another school you could attend for less money?

Also, in order to get more money for school, I'd pay the mortgage as scheduled and not make double payments. It doesn't make sense to put in all that money right now.

FireSeekerLondon

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Re: 1 step forward, into quicksand.
« Reply #24 on: July 28, 2019, 10:19:54 AM »
I think you are getting some really good and specific advice and ideas here.  In terms of overall strategy it seems that you are finding it difficult to see the wood for the trees and I wonder whether a focus on simplifying your affairs would be helpful.  Your lives seem very complicated and stressful and it can be difficult in those circumstances to find a way through that really works for your family.  I'd focus on getting rid of bills/jobs/side hustles that don't pull their weight in terms of value (i.e. what they cost/bring in in the context of what you and your family get out of them).  You and your partner seem to be able to talk all this stuff through really well, which I think is really important.

SunnyDays

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Re: 1 step forward, into quicksand.
« Reply #25 on: July 29, 2019, 06:47:59 PM »
I think you are trying to do too much at once, which I can understand if you are trying to make up for lost time.  But, as they say, Rome wasn't built in a day, so slow down and do the obvious, basic things first, which other posters have listed for you.  Calm down and just do one step at a time and you will get there.  You're young and have lots of time.  Don't make things any more complex than they need to be.

jj1800

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Re: 1 step forward, into quicksand.
« Reply #26 on: August 01, 2019, 04:44:12 PM »
https://forum.mrmoneymustache.com/journals/*something-something*-journey-to-fire-from-poverty-statistically-a-4-chance/

So I did start a journal and knowing how much it bothers me for people to see me fail it should push me to stick to the budget etc.
I got some of those debt free charts as well for motivation.

I think you are trying to do too much at once, which I can understand if you are trying to make up for lost time.  But, as they say, Rome wasn't built in a day, so slow down and do the obvious, basic things first, which other posters have listed for you.  Calm down and just do one step at a time and you will get there.  You're young and have lots of time.  Don't make things any more complex than they need to be.

Yes this is the plan, I know I can't push myself to far because I have burnt out in the past. I am hoping to find that sweet spot of forward motion with going so fast I fly off the rails.