Author Topic: Just accepted the most Mustachian Job I could find  (Read 7673 times)

tcozy13

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Just accepted the most Mustachian Job I could find
« on: April 30, 2015, 02:48:25 PM »
Quick background on me:

I'm a 24 year old single male, I've been working in the IT industry for 2 years at a large corporation.  My current income is $55k a year. 

I found MMM last year and got hooked.  I've learned so much reading the articles and the forum.  I decided the next job I got would be the most mustachian possible.

The new job is a sales job, I will earn $60k a year in salary.  I also have the potential to earn an additional $10k a quarter in commissions. 

I get a company car with insurance and gas paid.  I plan on selling my current car and investing the $8K in Vanguard funds.  I'll rent an apartment where I can bike / walk for personal needs.

I'll also have a paid for cellphone (monthly savings of $70).

I get meals paid for since I'll be traveling so my food costs should be low.

Finally, I get to work from home every week.  This is big since I'll save time commuting and getting ready for work.

To top it off, I get a $5k bonus for signing my name. 

I'm already maxing Roth IRA, and most of my Roth 401k, and some HSA.  With the new job I'll be able to max Roth IRA, Roth 401k, HSA, and then the rest goes to VTSX.

Anyway, thanks for celebrating with me, I really can't talk figures with anyone else.

Gone Fishing

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Re: Just accepted the most Mustachian Job I could find
« Reply #1 on: April 30, 2015, 02:54:00 PM »
Congratulations!  Sales can be tough, but can also be very rewarding if you are good at it and give you a big boost in your career even if you just do it for a few years.   

CabinetGuy

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Re: Just accepted the most Mustachian Job I could find
« Reply #2 on: May 01, 2015, 06:55:09 AM »
Wow. Congrats!  Wish I had found MMM when I landed my first good paying gig.  Instead I spent it all while I was earning it! 

Jon

velocistar237

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Re: Just accepted the most Mustachian Job I could find
« Reply #3 on: May 01, 2015, 07:41:02 AM »
I'm already maxing Roth IRA, and most of my Roth 401k, and some HSA.  With the new job I'll be able to max Roth IRA, Roth 401k, HSA, and then the rest goes to VTSX.

Curious why Roth and not Traditional? You're in the 25% tax bracket.

Lucky Girl

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Re: Just accepted the most Mustachian Job I could find
« Reply #4 on: May 01, 2015, 08:13:18 AM »
Congratulations!  Great that you are starting on the path so early!

tcozy13

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Re: Just accepted the most Mustachian Job I could find
« Reply #5 on: May 01, 2015, 10:01:29 AM »
Velocistar237, good question.  I started learning about finance from Dave Ramsey. I know his reputation on this forum, please don't stone me ha.  When I started on the journey I followed what he said which is go Roth if you're younger.  After last tax bill I've been learning more about the differences between Roth & Traditional.  My thoughts.

1. If I want to retire early then I can pull out my Roth contributions without penalty. This flexibility is awesome.  Now I know I could use the roth ladder technique that MMM recommends, however, that takes foresight and planning (I can be spontaneous) and I'm still learning what that all entails.

2. I've got personal goals (start my own business) that I'm hoping / planning on earning more later on in life than I do now.  Thus, lower tax bracket now vs future.

Thats really it, I'd love to hear your opinion / knowledge on what  I should change.  I know I'm missing out on an automatic 25% return which hurts.
 

velocistar237

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Re: Just accepted the most Mustachian Job I could find
« Reply #6 on: May 01, 2015, 10:34:32 AM »
1. If I want to retire early then I can pull out my Roth contributions without penalty. This flexibility is awesome.  Now I know I could use the roth ladder technique that MMM recommends, however, that takes foresight and planning (I can be spontaneous) and I'm still learning what that all entails.

2. I've got personal goals (start my own business) that I'm hoping / planning on earning more later on in life than I do now.  Thus, lower tax bracket now vs future.

It sounds like you're taking the right approach to making the decision. There's the tax amount aspect and the accessibility aspect.

On the tax side, you're paying tax on the marginal rate on your current salary (20-25%) for a Roth, vs. (potentially) tax on the total rate on your future expenses (10-15%) for the Traditional. Notice the marginal vs. total difference. When you withdraw, you'll get the standard deduction and pay tax in each bracket up to the amount you withdraw.

You're right that with the Roth, you can access the principal without penalty. However, you'll also have savings in a taxable account to give you the flexibility to strategize on your withdrawals. Worst case with a Traditional account, you could just eat the early withdrawal penalty. For example, if your annual expenses are, $25K, then the tax for a single person would be $3300 plus a $2500 penalty, or a total tax of 23%. That's still better than the Roth, and just as flexible.

One final, less-important point: with the Roth, you can't touch the earnings without penalty until age 59.5. With a Traditional account, you can access them after you roll them over into a Roth.

Gin1984

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Re: Just accepted the most Mustachian Job I could find
« Reply #7 on: May 01, 2015, 10:37:43 AM »
You can also mix it up.  Max out a traditional 401k and a Roth IRA.  Best of both worlds and you can use the pipeline over five years to get money out of the 401k if you need.

tcozy13

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Re: Just accepted the most Mustachian Job I could find
« Reply #8 on: May 01, 2015, 10:45:49 AM »
So Close, the nice thing about this sales job is it is not finding new customers.  It's about training and helping our current customers sell more, very much like an account rep. 

Thank you Gin and Velocistar237 for the knowledge, I'm going to review all my contribution amounts and accounts and make adjustments before that new paycheck comes in : )

Gone Fishing

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Re: Just accepted the most Mustachian Job I could find
« Reply #9 on: May 01, 2015, 01:53:37 PM »
Read the links in my signature line below for some good Roth vs Traditional information.

aschmidt2930

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Re: Just accepted the most Mustachian Job I could find
« Reply #10 on: May 02, 2015, 03:11:13 PM »
Congrats, that's an incredible benefits package, and a very good base for a sales job.  You're definitely on the fast track to freedom.

forummm

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Re: Just accepted the most Mustachian Job I could find
« Reply #11 on: May 03, 2015, 01:52:30 PM »
You're on the right track! I started my Roth when I had very low income (and low tax rate) and just stuck with it even when my income increased. Looking back at it now, I regret paying all those taxes instead of putting it into a traditional. And I even did a taxable rollover into my Roth at one point when I left a job. Oh well--live and learn. Now we make just a bit too much to do the traditional, which is annoying.

tcozy13

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Re: Just accepted the most Mustachian Job I could find
« Reply #12 on: May 04, 2015, 07:21:53 AM »
Congratulations on the new position.  Change is always good to continue to grow personally and professionally. 

Is the 60K a base salary and then you get your bonus after that or does that include typically bonuses you may get?

60K is base salary, I can earn 10K a quarter depending on the bonuses.  So the plan is to work really hard and earn those bonuses, and sock that money away : )

Candace

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Re: Just accepted the most Mustachian Job I could find
« Reply #13 on: May 04, 2015, 07:34:10 AM »
Remember, the max *total* contribution to the Roth *plus* the traditional is unchanged regardless of contributing to two accounts (i.e., you don't get to double your contributions due to having two). I think the total is $5,500 per year. If you over-contribute it can be a mess to sort out later.

Frugal_NYC

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Re: Just accepted the most Mustachian Job I could find
« Reply #14 on: May 05, 2015, 09:01:08 AM »
Great job!  Fellow 24 y/o here - only difference between us is I use the regular 401K coupled with a Roth IRA. 

I'm always a little jealous of sales people - I make higher base then you but I don't get bonuses (or I get a 5% year-end one) so it's kind of hard to always stay motivated when you don't see immediate returns on your hard work

tcozy13

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Re: Just accepted the most Mustachian Job I could find
« Reply #15 on: May 05, 2015, 09:14:21 AM »
Great job!  Fellow 24 y/o here - only difference between us is I use the regular 401K coupled with a Roth IRA. 

I'm always a little jealous of sales people - I make higher base then you but I don't get bonuses (or I get a 5% year-end one) so it's kind of hard to always stay motivated when you don't see immediate returns on your hard work

Awesome to see another person my age.  I was in IT for my first two years, it was a  good base salary. The constant "carrot" of a good bonus will be good for me, I'm pretty competitive.  I think I'm going to change my allocation to same as you, traditional 401k and Roth IRA. 

Frugal_NYC

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Re: Just accepted the most Mustachian Job I could find
« Reply #16 on: May 05, 2015, 09:26:35 AM »
Great job!  Fellow 24 y/o here - only difference between us is I use the regular 401K coupled with a Roth IRA. 

I'm always a little jealous of sales people - I make higher base then you but I don't get bonuses (or I get a 5% year-end one) so it's kind of hard to always stay motivated when you don't see immediate returns on your hard work

Awesome to see another person my age.  I was in IT for my first two years, it was a  good base salary. The constant "carrot" of a good bonus will be good for me, I'm pretty competitive.  I think I'm going to change my allocation to same as you, traditional 401k and Roth IRA.

I've also been reading a lot regarding regular IRA > Roth IRA for FIRE individuals but I think it's far to early for me to predict that I will benefit from that.  I would like to become financially indepent as early as possible but I think I will always have a desire to make money in business in some fashion so I value the Roth to complement the regular 401K

unmetamorphosed

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Re: Just accepted the most Mustachian Job I could find
« Reply #17 on: May 05, 2015, 01:54:25 PM »
You're on the right track! I started my Roth when I had very low income (and low tax rate) and just stuck with it even when my income increased. Looking back at it now, I regret paying all those taxes instead of putting it into a traditional. And I even did a taxable rollover into my Roth at one point when I left a job. Oh well--live and learn. Now we make just a bit too much to do the traditional, which is annoying.

Can I ask what you would have done differently? You mean having a traditional IRA instead of of Roth? I ask because I'm currently in a similar position (just starting out, lower income/lower tax bracket, with a Roth). The more I read into the tIRA vs Roth debate, the more I think I should have opened a tIRA...

Matthew Olszewski

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Re: Just accepted the most Mustachian Job I could find
« Reply #18 on: May 05, 2015, 02:04:50 PM »
Congratulations and good luck with your new venture. It's nice that you took the initiative, certainly in addition to the earnings you gain considerable experience that will pay off in the future.