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Old 03-11-2016, 03:15 PM   #21
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I just don't see how I can feasibly save 20-25% a year of my income and still afford to live here.

What is a FIRE lifestyle?
If you want to be Financially Independent, and Retire Early. If you want to go to 67, you have enough. If you want out earlier than 60, it may be tough.

Lots of kid expenses yet. College, weddings, life.
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Old 03-11-2016, 03:20 PM   #22
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This is my most recent pay stub. Note: there is no PII in this screenshot and "Geoff Blinks" is not my real name in case a mod is inclined to delete it.

A few notes:
- Medical / Vision / Dental is paid bi-weekly
- This does not include 2 Fed Exemptions (adjusted today)
- My 401K doesn't kick in until after 1 yr of employment
- $1K in child support (which is post-tax) is not shown here. This will double by summers end.
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Old 03-11-2016, 03:23 PM   #23
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Good news on the rental cash flowing. As I said - we looked at purchasing rental(s) and found it impossible to find cashflowing ones.

The biggest factor is to watch your spending. I found that the more I diverted to saving, the more I learned to live well on less... Which helps the retirement budget when you retire in the future. Look at recurring expenses as your easiest way to trim the budget... Cell phones- do you need to go with the high end/expensive companies like ATT and Verizon - or can you get by with t-mobile, ting, etc. Cable/internet - if you haven't already, call and complain and threaten to cancel... when you finally get transferred to a retention specialist you'll get a more favorable price. (This has to be done annually.) Do you need HBO and Netflix and Amazon Prime... pick one. Watch how much you spend eating out... and if you do eat out - get doggy bags so you can take the leftovers for lunch the next day. Get a nice water bottle and fill it, rather than buying plastic disposable water bottles. Make coffee rather than swinging by starbucks every day....

I'm not saying all of the above applies... but those are all things that I looked at and had a pretty big budget impact once I made some minor lifestyle changes.
We don't pay for cable. We pay $7.99 a month for Netflix and another few bucks for Hulu. We have Amazon Prime but it pays for itself in free shipping as we buy all of our household goods on subscription, pushing our savings even further and freeing up our time.

We eat out for lunch 2x times a week and go out for dinner once a week.

For cell phones: we pay about $120/month combined.
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Old 03-11-2016, 03:48 PM   #24
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What I suggest that you do is to analyze your past spending and develop a budget as to what you reasonably expect to spend to support your current lifestyle and what would be left to save. Given that you are young and live in a high COL area you may not be able to save 20% but if you can increase your savings over time it will benefit you. Also, the very exercise of doing the budget will allow you to see where you money is going and what you might be able to do to increase your saving without cramping your life too much.

Heck... just today you have figured out that you needed to adjust your exemptions for withholding which will put more money in your pocket every two weeks.

When I was your age I found it easiest to just have my savings taken out of my pay... if money went into my local bank account it inevitably was spent... pay yourself first.
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Old 03-11-2016, 03:50 PM   #25
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What I suggest that you do is to analyze your past spending and develop a budget as to what you reasonably expect to spend to support your current lifestyle and what would be left to save. Given that you are young and live in a high COL area you may not be able to save 20% but if you can increase your savings over time it will benefit you. Also, the very exercise of doing the budget will allow you to see where you money is going and what you might be able to do to increase your saving without cramping your life too much.

Heck... just today you have figured out that you needed to adjust your exemptions for withholding which will put more money in your pocket every two weeks.

When I was your age I found it easiest to just have my savings taken out of my pay... if money went into my local bank account it inevitably was spent... pay yourself first.
I didn't just figure out that I needed to adjust my withholding. It's my 2nd check from the new gig and I just realized they did not set the withholding correctly.

I have a pretty solid budget and manage it closely using mint.com.
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Old 03-11-2016, 03:54 PM   #26
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Oh.... misunderstood what you wrote before. Sorry.
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Old 03-11-2016, 04:25 PM   #27
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Just keep plugging away.
As pb4uski posted - pay yourself first and learn to live on the balance. With an income like yours you should be able to put some in 401k, etc.
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Old 03-11-2016, 04:36 PM   #28
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I think things will be easier once you can start contributing to your 401K since you will be paying less for taxes once you shelter some money in there.

I was making about the same as you working in Northern CA before I left to retire. I was putting the max amount (with catch-up) in my 401K, plus saving about 25K after-tax in addition, so even if you deduct the child support cost, you should be able to save a bundle, although, I don't know your spending habits, so it all depends on that. (I tightened the belt big time in the last 10 years of my wo*king years to achieve FIRE.) My yearly expense was about 53K (and almost half of that was for the apartment rental.)
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Old 03-11-2016, 05:11 PM   #29
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I have never ever looked back and thought to myself, "Gee, I wish I hadn't saved so much". Save as much as you can now. My wife and I are putting away 91K this year (and last year too). Believe me you will appreciate it when your portfolio starts to take on a life of its own. We make less than you and your wife combined (but not much).

I just wish I was more aggressive with my savings at 32 instead of waiting until I was 40. Almost everybody here will tell you that.
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Old 03-11-2016, 05:12 PM   #30
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Originally Posted by geoffblinks View Post


This is my most recent pay stub. Note: there is not PII in this screenshot and "Geoff Blinks is not my real name (in case a mod is inclined to delete it).

A few notes:
- Medical / Vision / Dental is paid bi-weekly
- This does not include 2 Fed Exemptions (adjusted today)
- My 401K doesn't kick in until after 1 yr of employment
- $1K in child support (which is post-tax) is not shown here. This will double by summers end.

If you are getting paid bi-weekly (26 paychecks per year), then your monthly net is actually $3238.69 * 26 / 12 = $7017.16.

Your housing cost is $2150 / $7017 = 30% of net, so that's not particularly out of line. It's more than you paid in Boston, but presumably you earn more in CA too. Also, you have lower energy costs, lower food costs, need less clothing, etc. Overall, cost of living in Los Angeles is not going to be more expensive than Boston. (Actually a search I just did gave me Boston as 6% more than LA, though having your own house there does change the equation.)

What is "Ee Reimbursemen"? That is costing you over $6K per year. Can you reduce that?

Your max 401K contribution will be $673.08 per check. You may get a raise before you can start contributing. You could also look at directing the positive cash flow from the Boston house into that. It might be better to save than to pay down the debt right now.

The $2K in child support is high. That alone is going to be 28.5% of your net, but yeah, kids are expensive. Supporting them from afar is even more so. Can the child live with you for part of the year and you not pay child support for those months, or collect it from the other parent?
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Old 03-11-2016, 05:22 PM   #31
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If you are getting paid bi-weekly (26 paychecks per year), then your monthly net is actually $3238.69 * 26 / 12 = $7017.16.

Your housing cost is $2150 / $7017 = 30% of net, so that's not particularly out of line. It's more than you paid in Boston, but presumably you earn more in CA too. Also, you have lower energy costs, lower food costs, need less clothing, etc. Overall, cost of living in Los Angeles is not going to be more expensive than Boston. (Actually a search I just did gave me Boston as 6% more than LA, though having your own house there does change the equation.)

What is "Ee Reimbursemen"? That is costing you over $6K per year. Can you reduce that?

Your max 401K contribution will be $673.08 per check. You may get a raise before you can start contributing. You could also look at directing the positive cash flow from the Boston house into that. It might be better to save than to pay down the debt right now.

The $2K in child support is high. That alone is going to be 28.5% of your net, but yeah, kids are expensive. Supporting them from afar is even more so. Can the child live with you for part of the year and you not pay child support for those months, or collect it from the other parent?
Ee Reimbursemen is a one-time deduction from an overpayment in my last check.

Re: Child support. Nope. She has me by the balls. Texas is very much biased towards the mother and I'd have to damn near prove she does crack and is abusive in order to get more visitation and lowered support. In addition, every three years she can request a review my income and adjust it to the court-ordered maximum.

They could care less that she doesn't work, is re-married with other kids, lives with her family, doesn't spend the money on my daughters well-being. They just don't care. They DO care if I don't pay and are quick to issue a warrant for my arrest if I don't! (which has never happened thank goodness).

As far as she and the state are concerned, my only value as a father is to write a check. This is unfortunate as it is distorting my 13 yr old daughters view of the value of men and fathers in general...but that's a whole other issue.

So yea...five more years and I'm free from that and can have my finances and my relationship with my daughter restored.
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Old 03-11-2016, 06:03 PM   #32
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I would like to share my financial situation with you in hopes that you can help me evaluate and formulate a solid investment strategy.

Here are my current holdings:
  • $28K in Money Market Savings
  • $13K Roth IRA $10K in Wealthfront (90% stock / 10% bonds)
  • $3.5K in Betterment (90% stock / 10% bonds)
  • $2.5K in Acorns.com (90% stock / 10% bonds)
  • $46K in Fidelity Rollover IRA - Me
  • $20K in Fidelity IRA - Wife
  • No debt. I make about $150-175K yr

I have one rental property out of state worth $315K conservatively with a $180K balance on 1st and $9K balance on HELOC.

Wife and I are about 35 yrs in age. We have very little debt.

I'd like to know: Am I on track for retirement? What, if any, additional investments could I make that would be financially responsible or should I just keep saving?

Thanks!

You need to start playing catch up. You should have probably 2-4 times your income saved by that age, unless it just jumped up.

I'm 37, 550 saved. Make probably less than you do. It varies.




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Old 03-11-2016, 06:48 PM   #33
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You're pretty much my double except I'm 41 and my child support is less than your's (but I did have a hefty alimony at one point). I'm also in SoCal, make a bit less than you and my mortgage is approx what your rent is. The divorce without a question set me back 10 yrs financially (I calculated what I had to divide up, sell, time lost, lawyer fees etc).

At 32 you have lots of time on your side. What is your target retirement date/expenses?

After the dust settled from the divorce to get back on track I've been maxing out the pre-tax savings, and I invest $2k per mo in a Vanguard account I opened a couple of years ago- these are automatic payments. To give this a bit more numbers in 2013 at the age of 38 I think I had $240k to my name with not a lot of equity. I just passed the $430k mark (and $200k in home equity but I don't really count this) and hope to cross the $500k mark next year. My goal is to be FI by 50, it'll be close but we'll see. I'm happy to post my expenses etc if that helps you but I spend approx $55k per year and a big chunk of that is mortgage.
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Old 03-11-2016, 07:50 PM   #34
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You're pretty much my double except I'm 41 and my child support is less than your's (but I did have a hefty alimony at one point). I'm also in SoCal, make a bit less than you and my mortgage is approx what your rent is. The divorce without a question set me back 10 yrs financially (I calculated what I had to divide up, sell, time lost, lawyer fees etc).

At 32 you have lots of time on your side. What is your target retirement date/expenses?

After the dust settled from the divorce to get back on track I've been maxing out the pre-tax savings, and I invest $2k per mo in a Vanguard account I opened a couple of years ago- these are automatic payments. To give this a bit more numbers in 2013 at the age of 38 I think I had $240k to my name with not a lot of equity. I just passed the $430k mark (and $200k in home equity but I don't really count this) and hope to cross the $500k mark next year. My goal is to be FI by 50, it'll be close but we'll see. I'm happy to post my expenses etc if that helps you but I spend approx $55k per year and a big chunk of that is mortgage.
Thank you. I would love to hear how you manage to put away $2k / month as well as see your income/expenses. Do you own your home?

One of the things we're struggling with is that we want to buy a home here in LA but saving 20% or even 5% is going to take forever when, as evident by all of the posts here, we're behind and not saving enough for retirement.

This thread has me worried to say the least.
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Old 03-11-2016, 07:54 PM   #35
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You need to start playing catch up. You should have probably 2-4 times your income saved by that age, unless it just jumped up.

I'm 37, 550 saved. Make probably less than you do. It varies.

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How did you get to 550? Were there any major cash in-flows like inheritances or bonuses that helped speed things up? Is that inclusive of real estate?
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Old 03-11-2016, 07:56 PM   #36
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I don't know how many hours a week your DW works as a realtor ,but if you want to get ahead money wise, she should think about a career change and a better paying job. All of her earnings can go to savings...
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Old 03-11-2016, 08:00 PM   #37
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I don't know how many hours a week your DW works as a realtor ,but if you want to get ahead money wise, she should think about a career change and a better paying job. All of her earnings can go to savings...
She does it full-time and we are thinking about this. The thing about her career is that we are already adjusted to essentially one income. If she can continue to double her closing as she has done over the last two years, she is going to help us greatly accelerate our earnings/savings. The question is, will she be able to and how long will it take...

She has her Masters in Special Ed and that isn't a field that makes a lot of money so even if she does switch careers at her age, it's not necessarily going to yield a substantial change in income.
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Old 03-11-2016, 10:06 PM   #38
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I think you're approaching savings all wrong.

You seem to be saving based what you have left rather than saving first and getting by with a lifestyle based on you have left after saving for retirement first.

Make your retirement savings your top priority. Chuck 20. percent of gross into either 401k or IRA or taxable. That's 36 k per year or 3k per month. 18k in 401k for you and wife would do it. If wife can't do 401k then do Roth and traditional IRA's. Try to get 30k per year in there minimum.

Now pay your other bills in what ever priority order that you decide.

When the money runs out, items that didn't get funded get cut.

The concept is called zero based budgeting and it works.

Pay yourself first.

Period end of story.

Put on the big boy pants - Don't sniffle about how expensive it is or how hard it is in SoCal. There are trade offs for every place one chooses to live

Now, If You want results, that's what it's gonna take. Good habits. Income will grow. Don't inflate the lifestyle.

Dare to be different. Normal people work til they're 67 ...
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Old 03-11-2016, 11:28 PM   #39
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She has her Masters in Special Ed and that isn't a field that makes a lot of money so even if she does switch careers at her age, it's not necessarily going to yield a substantial change in income.
She's making $35k right now, and from what you say, spending it all on the costs associated with being a realtor. She's working, but not contributing.

Will she make a ton of money as a special ed teacher? The median salary for a highschool special ed teacher is $56k, for 9 months of work per year, without offering to teach summer school. But you're looking at it wrong anyway: It is not what you earn, it is what you keep.

She can work just about anywhere in the US and the work is stable, public sector, employment. The tax advantages of the public school system can be pretty impressive: 403b, 457b, pension. Depending on the district she can tax shelter nearly $50k a year. Thats $50k a year, into savings. You asked a previous poster how they managed to save $2k a month. That right there is how you save double that - and we haven't even gotten to your income yet, and you haven't had to modify your life style at all.

The above poster is absolutely correct, hike up your britches and figure out how to save as much as you possibly can. Don't figure out how much you can save based on how much you're spending, figure out how much you can spend based on what you want to save.
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Old 03-11-2016, 11:54 PM   #40
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Thank you. I would love to hear how you manage to put away $2k / month as well as see your income/expenses. Do you own your home?

One of the things we're struggling with is that we want to buy a home here in LA but saving 20% or even 5% is going to take forever when, as evident by all of the posts here, we're behind and not saving enough for retirement.

This thread has me worried to say the least.
It's all about setting goals and priorities so I don't think you need to worry per se but instead get serious about your financial goals. From an income perspective you're in a great shape- better than most and you still have time on your side -but don't let it get away.

As to your question- I do own my own home and was fortunate that I was able to buy my ex out of it. My first house required me to commute 45 miles one way but it was the only way I could buy a starter home. My second home required me to commute 60 miles one way, but it was a nicer and bigger house than the first and suited me and the ex better for starting a family. After selling those (in my mid thirties) we rented for a bit and when the market dipped I bought my current house closer to work and in a nicer part of town. One of my criteria was that I'd be able to afford the mortgage and run the household if the ex lost her job. Well she didn't lose her job but the end result was the same (worse because of alimony and child support) lol. A couple of years of ramen noodles and Del Taco's bean and cheese burritos later once the alimony disappeared things improved. I consider myself lucky that nothing worse happened like a job loss though it kept me awake many nights wondering if I made the right choice keeping the house on a single income and very little post-tax savings. Many years later I still worry but I have enough that I can sustain a job loss for a while without losing the roof over my head.

Anyway, I won't bore you anymore- here are my fixed expenses:

Mortgage: $2k
Utilities: $250
Transportation: $600 (includes gas, dmv fee, insurance and AAA)
Food: $700 ($400 groceries, $300 eating out)
Child support: $480
School expenses: $250 (pre/after school care)
Cell phone: $25 (+work provides $50 stipend)
Amazon Prime, Netflix = $20
Total: $4325 x 12 = $52k per year (take home is approx $85k so not difficult to save $2k per month)

I didn't include things like entertainment or hobbies etc but that varies- usually trips with DD and visiting family out of town etc. Also didn't include the cost of home maintenance- some years it's zero, other years it's quite a bit. Hope this helps.
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