Hi from SF!

[norcaldreamer]

Hi all,

I’ve been lurking for about a month now, but decided it was time to register. This forum has been so inspiring and there is so much useful advice!

My boyfriend and I are a gay couple in our late 20s living in the San Francisco Bay Area. We currently earn relatively high salaries (approximately $400K/year combined) but our jobs are fairly stressful and we work long hours. We do not plan on having kids, and we hope to transition out of our current careers into less stressful, more sustainable work sometime in the next ten years.

We live below our current means, but we are not ultra-frugal. We have a small house in the suburbs, we drive fairly old cars, and we love good bargains. However, we love to travel and eat out. I would guess we spend roughly $60-70K a year, which includes about $20K a year in mortgage payments.

Currently, we have roughly $300K in retirement accounts and $50K in cash. We also have a $400K mortgage, and I have $30K in student loans. I graduated from professional school last year with $80K in loans but have been putting most of my monthly income into repaying them. We do not have any other debt.

Our goal is to live off my boyfriend’s base salary, and save both his bonus and my salary. We have been maxing out our retirement accounts, but I am planning to open up a taxable joint account at Vanguard for additional investments. In addition, we are hoping to pay off my student loans in the next year (they are at 5%) and also pre-pay a large chunk of the mortgage.

I look forward to learning more from everyone here and hopefully, one day, being able to FIRE!

 

[steelyman]

Welcome to the forum!

 

[Nodak]

Welcome

 

[FIREd]

Welcome!

It looks like you guys are on the right track.

 

[MBAustin]

Welcome! There is lots of good information, advice, and encouragement on the board. We look forward to you adding to it as well

 

[ladypatriot]

Hi all,





Currently, we have roughly $300K in retirement accounts and $50K in cash. We also have a $400K mortgage, and I have $30K in student loans. I graduated from professional school last year with $80K in loans but have been putting most of my monthly income into repaying them. We do not have any other debt.

Our goal is to live off my boyfriend’s base salary, and save both his bonus and my salary. We have been maxing out our retirement accounts, but I am planning to open up a taxable joint account at Vanguard for additional investments. In addition, we are hoping to pay off my student loans in the next year (they are at 5%) and also pre-pay a large chunk of the mortgage.

I look forward to learning more from everyone here and hopefully, one day, being able to FIRE!

Hi, and welcome to the forums! I think you'll find all the advice and information you need here if you want to RE.

It's encouraging to see young people (and to me you are young because I'm old enough to be your mother!) putting some thought into LBYM, paying down debt, and investing.

Good luck!

 

[Webzter]

Welcome! Looks like you're easily well on your way; especially given your income to expenses ratio... so, set a target for money and start thinking about what that transition will be to (since you already know what it's away from) and if it's both of you at the same time or if one of you will be transitioning first.

 

[chris2008]

I would guess we spend roughly $60-70K a year,

When it comes to ER planning it is better to know than to guess.
I would recommend to track expenses exactly and in writing. It may seem to be a bore at start but it provides a lot of insight. You could create categories and consider if your expenses in each category really are worthwile or try to beat the expenses of the month before while maintaining the level of satisfaction.

 

[norcaldreamer]

Thanks all for your replies! I have been reading lots of books and trying to learn about different types of investment accounts, indexing, taxes, etc. There is a lot of useful information both here and on the Bogleheads website. My boyfriend is actually an investment banker, but he knows virtually nothing about personal finance and the logistics of investing our own money.

Chris 2008 – I am actually a huge fan of tracking our expenses and cutting costs, and I am slowly converting the BF to the idea of FIRE. His approach to saving for retirement used to be “earn more” rather than LBYM, and although he doesn’t spend much money (other than on restaurants and travel), he hates the idea of living on a "budget" or tracking our spending too closely.

After taxes, 401(k), health insurance and other deductions, the BF’s base take home pay is roughly $80K, so our current approach is to use $1,500 of that every month to pay down debt and then spend what's left over. It’s not a perfect solution and I am sure there is still quite a bit of waste we could cut out, but it avoids any tensions that would otherwise arise.

 

[Gumby]

I am actually a huge fan of tracking our expenses and cutting costs, and I am slowly converting the BF to the idea of FIRE. His approach to saving for retirement used to be “earn more” rather than LBYM, and although he doesn’t spend much money (other than on restaurants and travel), he hates the idea of living on a "budget" or tracking our spending too closely.

Just because you track your expenses doesn't mean that you need to be limited in any way. I have been tracking our expenses for years. I estimate in advance how much we will spend in a given year, but if we go over that amount it is no big deal. We spend money as and when we want to. I just like to know where and how much, so that I can best plan for retirement.

 

[norcaldreamer]

Just because you track your expenses doesn't mean that you need to be limited in any way. I have been tracking our expenses for years. I estimate in advance how much we will spend in a given year, but if we go over that amount it is no big deal. We spend money as and when we want to. I just like to know where and how much, so that I can best plan for retirement.

That sounds like a good approach! May I ask what you all use for tracking your expenses? I just signed up for Mint.com but am not sure how that compares to Quicken or other personal finance software.

 

[Webzter]

We use Quicken... mostly because it's what we've been using for the last 4 years (MS Money before that).

I'm also trying out You Need a Budget but, since I already own Quicken, I'm on the fence (price is nice and it is excellent for budgeting).

I do plan to try Mint.com as I hear nothing but rave reviews about it.... I know some might be concerned about having bank stuff consolidated in a central spot, but I'm comfortable enough with them.

 

[Gumby]

That sounds like a good approach! May I ask what you all use for tracking your expenses? I just signed up for Mint.com but am not sure how that compares to Quicken or other personal finance software.

I created my own spreadsheet on Excel. It's not that hard to do and you can customize it to fit your own situation. The hardest part is thinking about all the different things on which we spend money. The things for which you receive a monthly or quarterly bill and write a check are easy. It is also not too difficult to sit down with the credit card bill (we use Amex almost exclusively) once a month and divide up the entries by category, such as "gas", "grocery", "restaurant", "wine" etc. (Amex gold card will do it for you, but I find their allocation doesn't match mine). The hardest part is all the cash expenses, such as the dry cleaners, haircuts, lunch at the office, movies, etc. I tend to hoard cash receipts in my jacket pocket and then on top of the dresser until the weekend and then I enter a bunch of things at once. It took me a few years to refine/add categories so that we didn't end up with a huge "miscellaneous" amount.

 

[Rich_by_the_Bay]

Welcome to the board. I found the books by Solin to be particularly useful.

And become good friends with FireCalc.

 

[Moemg]

Welcome ! I love the San Fran area !

 

[chris2008]

About motivating a spouse: Sometimes it helps to discuss long term goals that would help the reluctant one or both partners and calculate how small sacrifices today and tomorrow contribute to this goal in the long run.
In our case, we have 6 years age difference between us. So our long term goal was to retire together at the earliest point in time that provided a pension + health care for DH and to do this with enough funds for travelling and fun.
Our detailed overview of expenses, monthly balance sheet and projections helped to realize that such ER is possible.
For other people this could be a sabathical or a change of careers or... or...

 

[Alan]

.....We currently earn relatively high salaries (approximately $400K/year combined) but our jobs are fairly stressful and we work long hours. ......


....Our goal is to live off my boyfriend’s base salary, and save both his bonus and my salary. We have been maxing out our retirement accounts, but I am planning to open up a taxable joint account at Vanguard for additional investments. In addition, we are hoping to pay off my student loans in the next year (they are at 5%) and also pre-pay a large chunk of the mortgage.

Thanks all for your replies! I have been reading lots of books and trying to learn about different types of investment accounts, indexing, taxes, etc.


....After taxes, 401(k), health insurance and other deductions, the BF’s base take home pay is roughly $80K, so our current approach is to use $1,500 of that every month to pay down debt and then spend what's left over. It’s not a perfect solution and I am sure there is still quite a bit of waste we could cut out, but it avoids any tensions that would otherwise arise.

I think you are in great shape. If setting a specific budget is likely to cause any friction with the BF then I don't see any reason to do so at the present time since you are both obviously living a good lifestyle on $80k/year and saving lots of money for ER. By ring-fenching your income and saving it, you are already living within a budget - whether or not you call it a "budget".

Welcome to the site.

 

[norcaldreamer]

Thanks, everyone! I spoke with the BF yesterday, and we are going to try tracking our expenses starting next month. I set up an Excel spreadsheet that I've started filling in with our fixed expenses, and I'll try to add the discretionary expenses once a week. Part of me doesn't really want to know how much the BF spends on eating out every week, but I've promised him that I'll try not to be a nag. Hopefully, this tracking system works, but if it ends up causing tension, we might have to go back to our old system.

 

[Meadbh]

Welcome to the forum! San Francisco is one of my favourite cities.

You two are doing great if you are this organized in your 20s. Do the budget, but use it as an information gathering tool. If all is well, no need to obsess about entering every receipt on an ongoing basis. If your BF is spending too much money and time in restaurants, I would be more worried about his waist circumference and salt intake than about your finances, LOL!

It seems you own your home. Is it jointly owned? You seem to be the higher earner if BF's take home pay is ~$80K. My risk management antennae are up. What if you guys break up? Do you have a prenup or similar agreement? Who gets the dog? The tchotchkes? The home?

 

[Webzter]

Part of me doesn't really want to know how much the BF spends on eating out every week, but I've promised him that I'll try not to be a nag.

Well, if it helps, one potential fix might be to either just have a 'misc' category on the budget or maybe separate accounts for spending like this (just set up a second checking account with direct pay from a paycheck so it's not even noticeable).

If he eats lunch out 300 times a year and spends an average of $15 a meal, that's just 5% of his take home pay. Sure, that's 5% more you could be saving, but it's probably not worth increasing any relationship stress over.. and that includes either bottling it up inside and resenting him or blowing up at him and having him resent you

 

[brianinsf]

norcal,

Welcome from SF and a member of the family. I recommend using mint for the budgeting. once you set it up it's pretty much no work other than making sure things end up in the correct budgets. If you use CC's or Debit Cards for most transactions it's painless. Cash is a bit more of a pain in the a$$. Using CC or DC should allow you track things painlessly.

I'd stick with paying off the student loans but leave the mortgage alone mainly for the tax write-off and allow you put savings in the taxable accounts. When it gets closer to ER you can look into paying off the rest of the mortgage if you want.

Brian

 

[obgyn65]

Welcome.

 

[norcaldreamer]

Thanks, everyone!

Meadbh - We don't have any joint property or DP agreement, so a joint taxable investment account would be our only joint property. The BF was the primary income-earner while I was in professional school (graduated last year), so he bought the house with his own money. Dealing with the gift tax consequences of re-titling the house would be a mess, so we figured we'll wait for the day that marriage is finally legal for us (hopefully soon!). Now that I'm working, I make a higher base salary than he does, but a substantial chunk of his total compensation is in the form of an annual bonus. We try to treat the bonus as a windfall rather than counting on it for our day-to-day planning.

Webzter - I agree! I grew up with very little, so I am extremely uncomfortable spending lavishly, which led to some chafing in the past. He probably spends about $500 a month on "fun" meals, which isn't too bad in the grand scheme of things. Nowadays, he's gotten better at exploring places with other foodie friends, so I tend to skip out on the more expensive meals. It gives him more freedom to try new foods and cuts down on costs (since I am not joining in), so we are both happier.

BrianInSF - Thanks for the suggestion. I just started using mint.com and it has been wonderful! The student loans are high on my priority list, and $3K a month should get rid of them within a year. However, our mortgage is a 5/1 ARM, so I'd like us to pay down enough of the principal to re-fi into a 15 year fixed within a few years (right now, the principal is too high for us to be comfortable with the monthly payments on a 15-year mortgage). Also, since the mortgage is in the BF's name and the loans are in my name, I thought it'd only be fair to have him put his extra money into his obligations rather than mine. Once the loans are paid off, I'll probably put that extra $3K/month into a taxable investment account so we can earn a higher return than we can from prepaying more into the mortgage.

 

[BradMM]

Welcome to the board. I found the books by Solin to be particularly useful.

Not to hijack the thread but tell me more about the book. Useful in what way?

Norcaldreamer, WELCOME!!! 20's.... Sheez.... I've got underwear that old!