Author Topic: New Mustachian looking for advice  (Read 1582 times)

PencilThinStash

  • Stubble
  • **
  • Posts: 191
  • Age: 28
  • Location: Chicago Suburbs
New Mustachian looking for advice
« on: December 18, 2014, 12:06:10 PM »
Hi all,

First off, Iíll warn you that Iím long winded and use way too many parentheses when I type. Apologies in advance.

First time poster here, but been lurking for 2-3 months. Discovered MMM about 6 months ago, and while Iím nowhere near hardcore-Mustachian, yíall are amazing and inspiring. Done decently on my own (up to a 25% savings rate now), but have hit a wall and figured it was time to join the community and ask your advice to see what improvements can be made.

A little background before I start sharing specific numbers: Iím 24 years old and just moved to Atlanta for a new job a few months ago. Living in a 450 square foot studio thatís a half mile walk from the grocery store and 4 miles from the office (location and size were heavily inspired by MMM and a handful of minimalism blogs). Bike occasionally, but not nearly enough. Locked into the apartment lease until August, and while I adore living alone, Iím considering finding a roommate and moving at that point to cut back on rent costs.

Iím an extremely lucky winner of the Ovarian Lottery, was blessed with parents who were capable of paying for my college education and allowed me to graduate without a nickel of debt. Itís the greatest gift Iíve ever received in my life, and Iíll never be able to thank them enough for that freedom. Still leech off their health insurance, unfortunately. Company pays for my cell phone bill. Drive a 2006 Civic with about 110k miles on it. Iíve always given away 10% of my gross income, which partially comes from a religious background Ė Iím aware some of you will disagree with it, and that itís adding years to my working career, but it keeps me in a good place mentally and allows me to throw some bite behind the causes I support, instead of being a pathetic hashtag activist. Everything else in the budget is semi-negotiable, but giving is set in stone. Most of my current saving goes into the company 401k so that I can use a Roth conversion ladder on it someday. After taxes, investing, and giving, I calculate that Iím living off roughly 45% of my 49k salary. Posting today to see if any of you have ideas that can help make that number go even lower.

The current numbers, based on a biweekly paycheck:

Gross: $1884.62
401k: $414.62
Dental (Pretax): $6.62
Vision (Pretax): $2.93

Net Pay: $1104.31
Giving: $188.47
Vanguard: $58.84

Working Budget: $857.00

Bills/Semi-Fixed - $550
430, Rent/Water/Sewage
30, Electric/Gas
40, Insurance
10, Laundry
25, Internet/Cable (bundled, cheaper than internet alone)
15, YMCA (I know, wasteful. I really enjoy lifting weights, and a squat rack wonít fit in my apartment)

Negotiable - $307
120, Food
50, Entertainment (largely booze, should be cut back)
30, Gas
10, Upgrades (a holdover from the days before minimalism caught my eye, been too lazy to chop)
10, Clothing
7, Haircuts
5, Misc (cleaning supplies, tooth paste, etc)
75, Car

*A note or two: I usually donít spend the full amount in the Food/Entertainment/Gas categories (travel for work pretty regularly, comes out of the companyís pocket), and roll any leftover into the Vanguard account when the next paycheck arrives. I let Clothing/Haircuts/Misc build up over time until theyíre large enough to be useful. Car builds up in a separate account, it covers occasional maintenance and will go toward another (used) car whenever the Civic dies. When 3-paycheck months roll around, most of the $550 Bill section of the 3rd paycheck goes to Vanguard, though I do splurge some of it.

As for estimated assets:
12k, Vanguard Index Funds (Total Market Stock/Bond, and dipping a toe in REIT)
3k, Vanguard IRA (traditional, rolled over from my last job)
2k, Current company 401k
4k, Savings account (roughly 50/50 car savings and slowly growing down payment on a house - prefer to hold in cash rather than risk market volatility)
5k, Emergency Fund (Expenses could be cut to $1250 a month if I lost my job)

No side income, but real estate sounds tempting. I like the idea of buying a house I can afford by myself, then getting roommates to pay down the mortgage faster. Like I said earlier, though, Iím locked into my lease until August. Also, not a huge fan of Atlanta (originally from Chicago area and donít do well in heat) and donít plan on staying longer than two or three years, so buying right now isnít the best call.

So, Mustachians: What can I improve on? What am I overlooking that deserves a solid face punch? Hit me!

Leanthree

  • 5 O'Clock Shadow
  • *
  • Posts: 64
Re: New Mustachian looking for advice
« Reply #1 on: December 18, 2014, 01:22:38 PM »
So on the giving front, it is reasonably tax inefficient to donate at a level below the standard deduction (how you are doing it) that it likely makes sense to wait and do it in chunks a few times throughout your life, gifting unsold stock so that the cost basis resets. In addition, it makes more sense to do so when you have a higher income. See this as a way of giving more in your lifetime versus the 10% per year mantra. You could literally have a brokerage account titled "For Charity" that you put 10% into per year and only donate it when the deduction amount is 50% of your adjusted gross income (the max limit for a calendar year). The only negative I could see is if you go bankrupt that creditors could come after it. On the plus side it might get you a lower interest rate on your mortgage.

For the rest of it, getting in good habits now is more important than the ultimate dollar amount. Find a roommate if it is cheaper. Ideally, find someone who can share your bed*. Work on getting a raise at work, in your first few years out of college your value to an employer increases far faster than at any other point in your life. My income went up 4x in my first 6 years out of college while my expenses are just about the same. Went from a ~15% savings rate to a 67% savings rate now.

*sort of a joke, don't force it.

PencilThinStash

  • Stubble
  • **
  • Posts: 191
  • Age: 28
  • Location: Chicago Suburbs
Re: New Mustachian looking for advice
« Reply #2 on: January 14, 2015, 11:07:33 AM »
Thanks for the input, Leanthree. I'll admit, whenever tax season rolls around, I do wonder if there's a way to do the charity bit more efficiently.

Not that the reason for giving should be related to tax deductions, obviously, but an extra perk there wouldn't hurt. Definitely something I need to give more thought to.

Find a roommate if it is cheaper. Ideally, find someone who can share your bed*.


Hahaha already working on that one

EarlyStart

  • Stubble
  • **
  • Posts: 115
Re: New Mustachian looking for advice
« Reply #3 on: January 14, 2015, 10:49:28 PM »
Hi all,

First off, Iíll warn you that Iím long winded and use way too many parentheses when I type. Apologies in advance.

First time poster here, but been lurking for 2-3 months. Discovered MMM about 6 months ago, and while Iím nowhere near hardcore-Mustachian, yíall are amazing and inspiring. Done decently on my own (up to a 25% savings rate now), but have hit a wall and figured it was time to join the community and ask your advice to see what improvements can be made.

A little background before I start sharing specific numbers: Iím 24 years old and just moved to Atlanta for a new job a few months ago. Living in a 450 square foot studio thatís a half mile walk from the grocery store and 4 miles from the office (location and size were heavily inspired by MMM and a handful of minimalism blogs). Bike occasionally, but not nearly enough. Locked into the apartment lease until August, and while I adore living alone, Iím considering finding a roommate and moving at that point to cut back on rent costs.

Iím an extremely lucky winner of the Ovarian Lottery, was blessed with parents who were capable of paying for my college education and allowed me to graduate without a nickel of debt. Itís the greatest gift Iíve ever received in my life, and Iíll never be able to thank them enough for that freedom. Still leech off their health insurance, unfortunately. Company pays for my cell phone bill. Drive a 2006 Civic with about 110k miles on it. Iíve always given away 10% of my gross income, which partially comes from a religious background Ė Iím aware some of you will disagree with it, and that itís adding years to my working career, but it keeps me in a good place mentally and allows me to throw some bite behind the causes I support, instead of being a pathetic hashtag activist. Everything else in the budget is semi-negotiable, but giving is set in stone. Most of my current saving goes into the company 401k so that I can use a Roth conversion ladder on it someday. After taxes, investing, and giving, I calculate that Iím living off roughly 45% of my 49k salary. Posting today to see if any of you have ideas that can help make that number go even lower.

The current numbers, based on a biweekly paycheck:

Gross: $1884.62
401k: $414.62
Dental (Pretax): $6.62
Vision (Pretax): $2.93

Net Pay: $1104.31
Giving: $188.47
Vanguard: $58.84

Working Budget: $857.00

Bills/Semi-Fixed - $550
430, Rent/Water/Sewage
30, Electric/Gas
40, Insurance
10, Laundry
25, Internet/Cable (bundled, cheaper than internet alone)
15, YMCA (I know, wasteful. I really enjoy lifting weights, and a squat rack wonít fit in my apartment)

Negotiable - $307
120, Food
50, Entertainment (largely booze, should be cut back)
30, Gas
10, Upgrades (a holdover from the days before minimalism caught my eye, been too lazy to chop)
10, Clothing
7, Haircuts
5, Misc (cleaning supplies, tooth paste, etc)
75, Car

*A note or two: I usually donít spend the full amount in the Food/Entertainment/Gas categories (travel for work pretty regularly, comes out of the companyís pocket), and roll any leftover into the Vanguard account when the next paycheck arrives. I let Clothing/Haircuts/Misc build up over time until theyíre large enough to be useful. Car builds up in a separate account, it covers occasional maintenance and will go toward another (used) car whenever the Civic dies. When 3-paycheck months roll around, most of the $550 Bill section of the 3rd paycheck goes to Vanguard, though I do splurge some of it.

As for estimated assets:
12k, Vanguard Index Funds (Total Market Stock/Bond, and dipping a toe in REIT)
3k, Vanguard IRA (traditional, rolled over from my last job)
2k, Current company 401k
4k, Savings account (roughly 50/50 car savings and slowly growing down payment on a house - prefer to hold in cash rather than risk market volatility)
5k, Emergency Fund (Expenses could be cut to $1250 a month if I lost my job)

No side income, but real estate sounds tempting. I like the idea of buying a house I can afford by myself, then getting roommates to pay down the mortgage faster. Like I said earlier, though, Iím locked into my lease until August. Also, not a huge fan of Atlanta (originally from Chicago area and donít do well in heat) and donít plan on staying longer than two or three years, so buying right now isnít the best call.

So, Mustachians: What can I improve on? What am I overlooking that deserves a solid face punch? Hit me!



Honestly, I think you're doing a great job. You're saving about half of everything on a $49k salary. The items that could be considered more than necessary are pretty small, so that's really your call about how much utility you get out of each. I personally wouldn't beat myself up over $50/month entertainment. I think the key will be maintaining your current spending level (approximately) as you earn more income. If you do that, I'd imagine you'll have no issues meeting your goals. It's good to see another young person doing a lot to save and accumulate. I'm 22, and it feels like there aren't too many of us in the frugal camp.