Angrybread's Finances

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angrybread
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Angrybread's Finances

Postby angrybread » Sun Apr 17, 2016 8:39 pm

Five months ago, I finished graduate school and I have since decided to get a better handle of my finances. I'm in my late-20s and feel a little behind in all of this, but I only started working 7 months ago. So far I've managed to max out my 2015 Roth IRA contributions, and put quite a bit into my newly established 401K. I am debt free and my current financial standing is as follows:

Current Holdings
$1,825 - Cash
$1,100 - FSA
$5,955 - 401K
$6,010 - Roth IRA

Net Worth: $14,890

My income of ~$5,000/month (pre-tax) should increase at the conclusion of my probationary period 6 months from now. At my current income level, I am unable to max out my 401K. After my salary increase, I anticipate being able to maximize both my IRA and 401K contributions every year. For now, my goals and their standings for 2016 include:

2016 Goals
$335/$5,500 - Roth IRA (6%)
$850/$5,500 - 401K (15%)
$0/$2,000 __- Emergency Fund (0%)
$0/$1,000 ___- Vacation Spending (0%)

I'd like to note that vacation spending isn't really a separate savings goal, but rather a budget. I am going on two vacations this year, and I would like to limit the spending to $500 on each trip. My first vacation is about a month away. I will be gone for 2 weeks. The $500 will come from my food budget, "everything else" and per diem left over from two sizable business trips.

One thing that makes saving a bit difficult is the cost of living in my geographic region. I live in a major city and I chose to live alone and close to work. My current living situation allows me to live without a vehicle and accommodate a disability.

I realize my small emergency fund is a bit risky. After my pay raise, 6 months from now, I should be able to establish a solid emergency fund. Three months of living expenses would be roughly $7,500. For now I'm concentrating on maxing out my Roth IRA and making the minimum contributions to my 401K to maximize my employer match.

My monthly budget for the remainder of the year is outlined below:

Monthly Budget
$1,650 - Rent
$70 __ - Utilities
$200 _ - Food and Groceries
$280 _ - Everything Else
$60 __ - Traditional 401K
$240 _ - Roth 401K
$570 _ - Roth IRA
$215 _ - Emergency Fund

One thing I would like to see change by next year is a decrease in my "Everything Else" spending. Ideally It would decrease by $100. For now I'm just trying to get use to the current budget I have.
Last edited by angrybread on Sat Apr 30, 2016 7:54 pm, edited 4 times in total.

LMoot
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Re: Angrybread's Finances

Postby LMoot » Wed Apr 20, 2016 10:37 am

Welcome, and congrats on graduating and starting out debt free. Is there a reason your efund goal is so low compare to your expenses? I understand if one is in debt, but since you're debt free is there a specific strategy you're following? Most "experts" advise saving up at least a few months of expenses before maxing out retirement.

You're the prime candidate for having a solid efund. New job and HCOL area. If you've been contributing to your ROTH for at least 5 years than I can see being able to access that penalty and tax free as an efund.

Not judging! Just curious is all :)

*EDIT* - Just read where you addressed the efund so don't mind me. As long as you're aware of the risk. I'm familiar with calculated risks and understand that sometimes you just gotta go for it.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Wed Apr 20, 2016 2:17 pm

LMoot wrote:Welcome, and congrats on graduating and starting out debt free. Is there a reason your efund goal is so low compare to your expenses? I understand if one is in debt, but since you're debt free is there a specific strategy you're following? Most "experts" advise saving up at least a few months of expenses before maxing out retirement.

You're the prime candidate for having a solid efund. New job and HCOL area. If you've been contributing to your ROTH for at least 5 years than I can see being able to access that penalty and tax free as an efund.

Not judging! Just curious is all :)

I did just get done paying off a $4,000 loan. I took the loan out in October and paid it off by February.

I am thinking about buying a house or a condo and the way the loan assistant programs work create an incentive to have less than $3,000 in liquid assets. I am also waiting for a pay raise that should be coming in 5 months. By then I should know if I want to apply for the loan assistance, and if I don't I can work harder towards putting more into an emergency fund.

Right now I have a credit card with 0% interest for the next 15 months that I can use if things go wrong. I also have an FSA that I didn't mention that should be able to cover one catastrophic medical bill.

I am anticipating being phased out of Roth IRA's early on in my career so that is why I am maxing out that. I know there is the backdoor thing, but I'm not certain that will always be an option due to changing laws. I'm also contributing the max for matching to my 401K.

avocado
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Re: Angrybread's Finances

Postby avocado » Tue Apr 26, 2016 5:15 pm

Welcome to the forums. You're obviously a very smart person. After a long stint in academia, it may feel like you're behind, but in actuality, it's only by a couple of years. Get a good grip on your finances now, and you'll be caught up in no time!

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sat Apr 30, 2016 7:53 pm

Thanks everyone for the warm welcome! Well I figured I should get use to posting at the end of every month rather than the middle. April has been an interesting month. I'm very low on my liquid assets. :|

Assets
$2,605 - Cash/Savings
$1,100 - FSA
$6,200 - 401K
$6,275 - Roth IRA

Net Worth: $16,180 (+8.66%)

The amount of liquid assets I have on hand is far from ideal, once I pay my rent, I'll have $955 left. I am not worried. What I haven't shown is a solid cash cushion that I did not include in my calculations. It's a complicated situation, but the cash cushion is only mine until July/August.

How did my spending go?

Monthly Spending
$1,650/$1,650 - Rent
$73/$70 ______ - Utilities
$199/$200 ____ - Food and Groceries
-$39/$280 ____ - Everything Else
$300/$300 ____ - Roth 401K
$570/$570 ____ - Roth IRA
$495/$215 ____ - Emergency Fund

I went over budget on my utility bills (I only pay for internet and my cellphone). Hopefully next month I'll be able to shave off $3 from my cellphone bill. I use Project Fi which prorates the cost of data usage. I also technically went over budget in my Everything Else spending due to my business trips. I however was able to earn extra leading to a $319 underspending in the category. Also the business trips are reimbursed. I will set the $319 aside for my vacation.

I am putting down that I have saved $495 towards my emergency fund goal for the year 2016. My health insurance rewarded $280 for being healthy (this was unexpected!) and I already planned to contribute $215.

2016 Goals
$640/$5,500__ - Roth IRA (11.6%)
$1,113/$5,500 - 401K (20.2%)
$495/$2,000 __- Emergency Fund (24.8%)
$0/$1,000 ____- Vacation Spending (0%)*

Note: The vacation spending is a budget not a savings goal. So far I have put $319 aside to spend during my vacation.

So far it seems I'm moving along nicely!
Last edited by angrybread on Sun May 01, 2016 11:59 am, edited 1 time in total.

Masterlandlord
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Re: Angrybread's Finances

Postby Masterlandlord » Sun May 01, 2016 1:35 am

"income of ~$5,000/month (pre-tax)"
2016 Goals
$640/$5,500__ - Roth IRA (11.6%)
$1,113/$5,500 - 401K (20.2%)
$495/$2,000 __- Emergency Fund (24.8%)
$0/$1,000 ____- Vacation Spending (0%)*
Ok so goals/month...

Excellent income, but your rent 1650$/month is indeed very high. If you want to say that you spend less then either buy apartment or find a good place(not bad area with criminals) apartment with less rent.

I certainly don't understand some Europe places like UK some small town could have rent of 200-400...

However normal rent is usually 500-1000 for smaller apartments at least that is what I would call normal(though I never rent to other people so low as 500-650, but I have seen many other people do it). 1650$ is luxury apartment rent. Do you really need that big apartment while you live on rent? I would understand if you have a big family that needs big apartment.

Life should not be to frugal of course and if you want a holiday(vacation) then please do enjoy it. :)

EDIT UPDATE! I checked and some places in USA have indeed only very high rents like thousands of dollars/month then I understand.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sun May 01, 2016 4:21 am

Masterlandlord wrote:However normal rent is usually 500-1000 for smaller apartments at least that is what I would call normal(though I never rent to other people so low as 500-650, but I have seen many other people do it). 1650$ is luxury apartment rent. Do you really need that big apartment while you live on rent? I would understand if you have a big family that needs big apartment.

EDIT UPDATE! I checked and some places in USA have indeed only very high rents like thousands of dollars/month then I understand.

I wish I lived in luxury :D . But, yes rent here is ridiculously high. For $1,650 I don't even get a bedroom. I live in a studio apartment... One bedrooms apartments (in a decent neighborhood) start at $1,800 in this city. I am thinking about buying a condo, but those aren't much cheaper.

Masterlandlord
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Re: Angrybread's Finances

Postby Masterlandlord » Sun May 01, 2016 11:33 am

angrybread wrote:
Masterlandlord wrote:However normal rent is usually 500-1000 for smaller apartments at least that is what I would call normal(though I never rent to other people so low as 500-650, but I have seen many other people do it). 1650$ is luxury apartment rent. Do you really need that big apartment while you live on rent? I would understand if you have a big family that needs big apartment.

EDIT UPDATE! I checked and some places in USA have indeed only very high rents like thousands of dollars/month then I understand.

I wish I lived in luxury :D . But, yes rent here is ridiculously high. For $1,650 I don't even get a bedroom. I live in a studio apartment... One bedrooms apartments (in a decent neighborhood) start at $1,800 in this city. I am thinking about buying a condo, but those aren't much cheaper.

Ok you got me really interested as landlord. No I don't have any money to buy apartments in USA unless I start selling my investment apartments which I don't want to do for overseas buying.

I am curious in what price range ar ok
apartments
condos
that do not get some huge pipefixing or other huge repair costs at least for next 15 years? I am curious since you have so high rents then the apartments even smaller ones must be very expensive.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sun May 01, 2016 11:57 am

Masterlandlord wrote:I am curious in what price range ar ok
apartments
condos
that do not get some huge pipefixing or other huge repair costs at least for next 15 years? I am curious since you have so high rents then the apartments even smaller ones must be very expensive.


In my neighborhood a 600-700 sq/ft 1 bedroom condo would cost around $300k and the homeowner association fees range from $300-$1,000/month. Other neighborhoods a 1 bedroom can easily go for $500k+

Masterlandlord
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Re: Angrybread's Finances

Postby Masterlandlord » Sun May 01, 2016 1:00 pm

angrybread wrote:
Masterlandlord wrote:I am curious in what price range ar ok
apartments
condos
that do not get some huge pipefixing or other huge repair costs at least for next 15 years? I am curious since you have so high rents then the apartments even smaller ones must be very expensive.


In my neighborhood a 600-700 sq/ft 1 bedroom condo would cost around $300k and the homeowner association fees range from $300-$1,000/month. Other neighborhoods a 1 bedroom can easily go for $500k+

Argh I read some descriptions about condo and apartments and we have different system in Europe.

When I talk about my apartments that I rent those are in a big building inside that building are apartments and the house company takes care of all big repairs like pipefixing and general maintance. Actually for pipefixing they outsource it to other firms.

What is the indication what does go more up in price condo or an apartment? If no clear answer exist and the rents and costs for having it are the same then the condo is cheaper and more frugal option to buy.

300k? Yeah my networth is currently more then that. 500k? Now that is harder for me to hit, but possible. I will not work until I am old man and this working has to stop sooner or later so not finding it realistic that I become millionaire.

I dont feel old and I eat carnosine(slows down aging)
https://en.wikipedia.org/wiki/Carnosine and people usually guess that I am clearly younger when they meet me.
Last edited by Masterlandlord on Sun May 01, 2016 1:26 pm, edited 4 times in total.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sun May 01, 2016 1:04 pm

Masterlandlord wrote:When I talk about my apartments that I rent those are in a big building inside that building are apartments and the house company takes care of all big repairs like pipefixing and general maintance. Actually for pipefixing they outsource it to other firms.

It is the same here. That is what homeowners association fees cover. So on top of the $300K mortgage you'd pay $300-$1,000/month for additional amenities such as repairs.

Masterlandlord
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Re: Angrybread's Finances

Postby Masterlandlord » Sun May 01, 2016 1:23 pm

angrybread wrote:
Masterlandlord wrote:When I talk about my apartments that I rent those are in a big building inside that building are apartments and the house company takes care of all big repairs like pipefixing and general maintance. Actually for pipefixing they outsource it to other firms.

It is the same here. That is what homeowners association fees cover. So on top of the $300K mortgage you'd pay $300-$1,000/month for additional amenities such as repairs.

Yes and if same system then the repair costs are counted regarding how big the apartment(condo in this case) is. Thus living in 50square feet is more frugal then 60. You will likely have bigger repair costs if bigger apartment. 50 square feet is not small apartment according to me at least not now. If you have wife and kids a big family that could be another situation regarding space that you need.

One more thing the Europe "condos" or whatever you want to call them do have water that house company provides you pay a water fee for each renter or living person living in that apartment.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Mon May 30, 2016 8:01 pm

May Update

It doesn't appear that my vacation will break the bank as my networth is still increasing! Actually most of it can be attributed to market conditions and my regular contributions to my retirement accounts. I did receive a monetary gift which helped cushion my overspending.

Holdings

Cash: 3200
FSA: 700
Roth IRA: 6900
401k:  6840

Networth:  $17,640 (+9.0%)

My cash by increased $600 and that's the most exciting thing this month. It increased due to a transfer from my FSA. It took forever to process. The monetary gift also helped in this category.

Goals for 2016:
Emergency fund - 695/2000 (34.8%)
Roth IRA - 1210/5500 (22%)
401K - 1379/5500 (25.1%)

I was a little low on meeting my emergency funding due to overspending. Thankfully the $400 FSA transfer more than makes up for the missing $15.

Spending goals:
Rent: $1650/1650
Utilities: $71/70
Groceries: $75/200
Everything Else: $445/280

I'm pretty satisfied with this month's spending I underspent in groceries by $125 due to the vacation. I overspent in Everything else by $165. This makes for a net overspending of $40. I also received a graduation gift of $250 so that definitely helped cushion the overspending. I went over budget because I had some unanticipated expenses. For one i had a professional association fee of $50 come up and bought $50 worth of allergy meds. The other $65 went towards work clothes after I received my graduation gift.

I did not include vacation spending in what I had mentioned above mostly because it already had it's own separate goal. Hopefully I'm able to underspend the rest of the vacation. I had roughly $175 in unexpected lodging and transportation expenses (yay mini trip!) but overall food is cheap and I'm staying with friends. I'm really enjoying exploring Latin America. Per diem from a business trip helped cushion the blow and was the basis for my spending goal.

Vacation Spending:
$360/500

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sun Jun 19, 2016 11:00 am

The good news is, I ended underspending while I was on vacation out of the country. I always forget when traveling internationally to take into account the cost of living.

The bad news is, the month of June is a bust. I'm already $180 over my budget in the "Everything Else" category. I bought some additional articles of clothing for work ($80+) and I bought my dad a fathers day gift ($100). This is my first summer with a grown up job, so I'm a little short on grown up clothes.

I've basically $0 left in my food budget so I'll probably end up going over that as well. That's mostly because I've been fairly sick this month so I'm buying more convenience foods. My doctor has me on a medication that should make me feel better but it doesn't appear to be working.

angrybread
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Re: Angrybread's Finances

Postby angrybread » Sun Jun 26, 2016 10:43 am

When I am having a bad month, I tend to just let it all go and deal with the consequences later. So June was a really bad month, so much so that I've had to cancel my second vacation :( .

Since I do not anticipate any more spending, I will go ahead and update on my June spending.

Spending:
Rent: $1650/1650
Utilities: $69/70
Groceries: $255/200
Everything Else: $730/280

I went ~$500 over budget, ugh. Horrible. I'm going to break things down so that I have a better understanding of why it happened.

Everything Else:
  • $280 - Amazon purchases
    • $75 clothing
    • $85 new hobby
    • the rest consisted of little things that added up
  • $140 - Renters Insurance
    • I really should have had this before but hearing of my aunt losing all of her possessions for the second time in recent years due to a second fire scared me enough to be responsible
  • $120 - More clothes
  • $50 - Toiletries (tissue, toothpaste etc. I only purchase this once every few months)
  • $100 - Father's day gift
  • $20 - Transportation
  • $20 - Other Small Purchases

And I went over my grocery budget by $55 because I was sick, which led to an increase in purchases of convenience foods. My health is still not great and depending on what my doctors decide is best for my situation, I may have some expensive treatments in the near future.

The net worth update will come after June has ended. I'm not so sure I will have an increase in net worth this time around.


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