Author Topic: Where to save more money  (Read 5490 times)

FastStache

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Where to save more money
« on: July 11, 2013, 01:01:52 PM »
My goal is to become FI in a little over 10 years.

Currently saving about 2500 on a average a month. I just started becoming mustachian. I'm working on selling some things around the house to help with my savings.

Current about in bank - 8700
401K - 57K (pre-tax contributions)

Short terms goals
Save up for a down payment on a rental property. Looking to need about 10-15 K for this.

Current retirement contributions
1st account 8% + 4% match
2nd account - 4% company puts in

I want my money to be liquid in the short term, so should I open up a Roth IRA and max it out per year? I've done some google searches on this, but the information varies like crazy.

Rebecca Stapler

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Re: Where to save more money
« Reply #1 on: July 11, 2013, 01:44:28 PM »
How old are you and what percentage of your income are you saving?

I know those sound like personal questions, but they do affect where you put your money and whether your 10-year plan is sustainable.

FastStache

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Re: Where to save more money
« Reply #2 on: July 11, 2013, 03:02:02 PM »
I am 29 and I am currently currently netting 6400 a month, save about 2000 each month to the bank/debt and contribute about 850 to my 401k with the employer match.  I would say 45% is a safe number.

Rebecca Stapler

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Re: Where to save more money
« Reply #3 on: July 11, 2013, 07:59:44 PM »
Living on 55% of your income is great! How much debt are you paying down, and what's the rate?

When you say you want your savings to be liquid ... do you mean that you want to access it quickly and you expect to access it or that you want it for an emergency? For the latter, I like how you can take the principal out of a Roth IRA if you ever needed it, but I really don't ever WANT to do it until I'm retired. KWIM?

If you really want us to show you how to save more money, post your budget!

FastStache

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Re: Where to save more money
« Reply #4 on: July 15, 2013, 02:58:34 PM »
Debts
Car - 27K 2.6% (was upside down and rolled high interest rate loan into car purchase)
Studen loan #1 - 1100 6.8%
Studen loan #2 - 5600 6.8%
CC - 2400 no interest until 6/14
House - 186K 3.65%

House - worth about 225K, last appraisal was in January before market upswing at 210K
401K - 58K

Budget
Mortgage/Taxes/PMI/Insurance = $1,380.00
Cell Phone = $85.00
Garbage = $18.00
HOA = $75.00
Lawn Care = $45.00
Alarm = $38.00
Internet = $55.00
Insurance = $300.00
Car Insurance = $155.00
car maint. = $80.00
med/Dent/Vis = $60.00
Home maintenance = $100.00
gifts = $25.00
Education = $15.00
Business = $20.00
Groceries = $400.00
Gas/Tolls = $280.00
dining out = $20.00
Electricity = $150.00
Water = $45.00
Baby = $250.00
Car = $427
Student loan - $47
Studen loan - $95

My budget isn't the greatest, but I am running pretty slim on most things except the loans.

Stuff that would give me pretty ROI is paying off the rest of my studen loans, but the balances aren't too high anymore. Also, paying down the house until PMI is removed. I'm kind of against this at the moment because I plan on getting a new appraisal in the near future to take advantage of the increased housing prices.

My goal is to save up for a rental at the moment, so I'm trying to find something to give me a tax benefit or good ROI in the short term.

destron

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Re: Where to save more money
« Reply #5 on: July 15, 2013, 07:01:16 PM »
Debts
Car - 27K 2.6% (was upside down and rolled high interest rate loan into car purchase)
Studen loan #1 - 1100 6.8%
Studen loan #2 - 5600 6.8%
CC - 2400 no interest until 6/14
House - 186K 3.65%

House - worth about 225K, last appraisal was in January before market upswing at 210K
401K - 58K

Budget
Mortgage/Taxes/PMI/Insurance = $1,380.00
Cell Phone = $85.00
Garbage = $18.00
HOA = $75.00
Lawn Care = $45.00
Alarm = $38.00
Internet = $55.00
Insurance = $300.00
Car Insurance = $155.00
car maint. = $80.00
med/Dent/Vis = $60.00
Home maintenance = $100.00
gifts = $25.00
Education = $15.00
Business = $20.00
Groceries = $400.00
Gas/Tolls = $280.00
dining out = $20.00
Electricity = $150.00
Water = $45.00
Baby = $250.00
Car = $427
Student loan - $47
Studen loan - $95

My budget isn't the greatest, but I am running pretty slim on most things except the loans.

Stuff that would give me pretty ROI is paying off the rest of my studen loans, but the balances aren't too high anymore. Also, paying down the house until PMI is removed. I'm kind of against this at the moment because I plan on getting a new appraisal in the near future to take advantage of the increased housing prices.

My goal is to save up for a rental at the moment, so I'm trying to find something to give me a tax benefit or good ROI in the short term.

Personally, I would focus more on paying off those student loans because the interest rate is quite high -- 6.8% -- and that is a guaranteed 6.8% savings rate.

Your vehicle expenses seem very high and good place to attack. $155 + $80 + $280 is a lot of money. I also don't see your car loan costs in the line by line breakdown, so that is $515 plus whatever your note is. If you really want to make some fast progress on your net worth, if you have an expensive car, getting rid of it can save you a TON of money. Not only will your car payment go away, you will pay less for insurance and possibly less for gas. Cars can be a huge cost once you break down how much you actually spend on it.

Your cell phone bill is high, but not outrageous if it is for two people. Buying yourself out of your AT&T/Verizon contract and going with an MVNO can save you $50/month.

For your house expenses, I would question your need for outside lawn care and an alarm service. Even assuming the prices don't go up, that will cost you $14,366 over 10 years. (http://mustachecalc.com). $150/month for electricity seems awfully high as well although I cannot comment on the cost / needs in your area.

What is the difference between "insurance" at $300 and "med/dent/vis" at $60?

smalllife

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Re: Where to save more money
« Reply #6 on: July 15, 2013, 07:24:52 PM »
Debts
Car - 27K 2.6%
Studen loan #1 - 1100 6.8%
Studen loan #2 - 5600 6.8%

CC - 2400 no interest until 6/14
House - 186K 3.65%

....

My goal is to save up for a rental at the moment, so I'm trying to find something to give me a tax benefit or good ROI in the short term.

The best way to prepare yourself for a rental is to prepare yourself for when things go wrong with a rental.  In that light I would pay off both student loans before thinking about saving up for a down payment on a rental (6.8% vs. .8% returns . . .). 

FastStache

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Re: Where to save more money
« Reply #7 on: July 15, 2013, 08:57:15 PM »
Debts
Car - 27K 2.6% (was upside down and rolled high interest rate loan into car purchase)
Studen loan #1 - 1100 6.8%
Studen loan #2 - 5600 6.8%
CC - 2400 no interest until 6/14
House - 186K 3.65%

House - worth about 225K, last appraisal was in January before market upswing at 210K
401K - 58K

Budget
Mortgage/Taxes/PMI/Insurance = $1,380.00
Cell Phone = $85.00
Garbage = $18.00
HOA = $75.00
Lawn Care = $45.00
Alarm = $38.00
Internet = $55.00
Insurance = $300.00
Car Insurance = $155.00
car maint. = $80.00
med/Dent/Vis = $60.00
Home maintenance = $100.00
gifts = $25.00
Education = $15.00
Business = $20.00
Groceries = $400.00
Gas/Tolls = $280.00
dining out = $20.00
Electricity = $150.00
Water = $45.00
Baby = $250.00
Car = $427
Student loan - $47
Studen loan - $95

My budget isn't the greatest, but I am running pretty slim on most things except the loans.

Stuff that would give me pretty ROI is paying off the rest of my studen loans, but the balances aren't too high anymore. Also, paying down the house until PMI is removed. I'm kind of against this at the moment because I plan on getting a new appraisal in the near future to take advantage of the increased housing prices.

My goal is to save up for a rental at the moment, so I'm trying to find something to give me a tax benefit or good ROI in the short term.

Personally, I would focus more on paying off those student loans because the interest rate is quite high -- 6.8% -- and that is a guaranteed 6.8% savings rate.

Your vehicle expenses seem very high and good place to attack. $155 + $80 + $280 is a lot of money. I also don't see your car loan costs in the line by line breakdown, so that is $515 plus whatever your note is. If you really want to make some fast progress on your net worth, if you have an expensive car, getting rid of it can save you a TON of money. Not only will your car payment go away, you will pay less for insurance and possibly less for gas. Cars can be a huge cost once you break down how much you actually spend on it.

Your cell phone bill is high, but not outrageous if it is for two people. Buying yourself out of your AT&T/Verizon contract and going with an MVNO can save you $50/month.

For your house expenses, I would question your need for outside lawn care and an alarm service. Even assuming the prices don't go up, that will cost you $14,366 over 10 years. (http://mustachecalc.com). $150/month for electricity seems awfully high as well although I cannot comment on the cost / needs in your area.

What is the difference between "insurance" at $300 and "med/dent/vis" at $60?

Cell phone is for 4 people and the bill is usually 67 with taxes and everyone with Ting. The big cost saver is not using any data.

The car note was included, but you are right the costs are high.  There are two drivers in the house and two cars. I have looked at my past driving costs and have used those numbers. Some things I am doing to reduce my cost is to work all my hours in 6 days instead of 7. I get paid overtime. Also, I am driving like a granny every I go. Also, by reducing the number of times I drive to work I will save another 15 bucks a month. I currently have Geico insurance, and if anyone has any suggestions on this I am open. I estimated 80 dollars because I will have to get two new tires this year.

I am open to getting a different car. It does seem to be a net worth killer.

I agree the electricity is high and I have been trying to reduce it. The a/c has been run way too low and I'm trying to get everyone in the house on board with operating at a higher temperature.

The lawn care is 17 bucks per cut and I have a quarter acre. If I can find more time, I certainly am open to doing it. I'm getting a masters, working 60+ hours and helping take care of a newborn.

With the alarm I need to pull the trigger and get the 10 bucks a month service with safe mart.

I pay 300 a month for health insurance and then I estimate 60 dollars more between getting glasses, paying deductibles, etc.

Rebecca Stapler

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Re: Where to save more money
« Reply #8 on: July 19, 2013, 02:20:50 PM »
At your savings rate ($2500/mo), it's only going to take you 4 months to get rid of your SL and CC debt. That seems like a great idea to me -- it will increase your stability by decreasing your monthly debt payments (not to mention the fact that you will no longer be accruing 6.8% interest).

As for the newborn -- what are you spending $250/month on? If it's diapers, I strongly suggest looking into cloth diapers. If it's formula, I strongly suggest the generic brand at Target or wherever you usually shop (formula is highly regulated, so the generic kind has the minimum nutrients that baby will need -- buying cheaper doesn't mean you are depriving baby of anything). If it's gear / toys, I strongly suggest waiting to buy things that aren't necessary and going to a semi-annual consignment sale. You can find some near you at www.consignmentmommies.com.

Will you be paying for childcare soon?

FastStache

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Re: Where to save more money
« Reply #9 on: July 19, 2013, 03:07:29 PM »
I think I will be paying off the student loan debt off first.

The 250 is going towards wipes, clothes, diapers and some bigger purchases like high chairs, swings etc.

I do want to give cloth diapers a try.

I will not be paying for child care soon, and the baby is breastfed.

I have been selling some stuff on craigslist/amazon to help jump start the savings even more! Once I hit 4 months of savings I will start shifting some of the money towards the student loan.

Rebecca Stapler

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Re: Where to save more money
« Reply #10 on: July 20, 2013, 08:07:10 PM »
I think I will be paying off the student loan debt off first.

The 250 is going towards wipes, clothes, diapers and some bigger purchases like high chairs, swings etc.

I do want to give cloth diapers a try.

I will not be paying for child care soon, and the baby is breastfed.

I have been selling some stuff on craigslist/amazon to help jump start the savings even more! Once I hit 4 months of savings I will start shifting some of the money towards the student loan.

Make a list of those bigger purchases that you anticipate wanting in the next 8 months, and get in on the pre-sale at a local, bi-annual consignment sale. You will see yourself spending less than $100 for all the stuff you "need."

There are a lot of cloth diaper users on this forum, feel free to ask questions. I think MMM recommends a company that has a 30-day cloth diaper trial. I haven't used them, I just bought dipes outright, but I wish I'd tried a few brands first with a trial. The sooner you start with it, the more $$ you'll save! (do you have a washer/dryer at home? That's the only thing I think is necessary for using CDs)