Jforest's Journal

[jforest]

Well, I'll start with the basics. I'm 34, I have a girlfriend and a 19 month old daughter that I support. (partially good, as my girlfriend takes care of our daughter during the day, so no costs associated there, but no income from her either.)
I have a good job, unix systems administrator. I make decent money, and I work for a stable place that won't be going away. But that job is in Boston, which is not the cheapest place to live.
I have been half-assedly heading down this path for a while. I have done some very good things, such as getting rid of my car and going all public transit/bike or car rentals as needed. this is harder with a 19 month old, so I do end up renting fairly often. Luckily with zipcar and weekend specials at enterprise it's fairly low.
lets see the breakdown of my income/spending last month, and go from there.
Before I start, I know I have a LONG way to go, but advice, criticism is expected and wanted
Income: $5726

Rent: $1100

Auto/transport: $413

Groceries: $632

Restaurants: $848

Fastfood/Coffeeshops: $202

Pets: $65

Travel: $124

RothIRA: $300

Internet: $55

Online server/backups: $70

College loan A: $268.27

College loan B: $216

Investment: $1000

Natural Gas: $40

Electricity: $40

Kids: $250
Total Expenses: $5628.27
Auto/transport: some topping up my gf's T pass, but mostly rental car, OUCH

Groceries: a huge number we're working on cutting down this month

Restaurants:an even HUGER number, cutting this HARD this month

Fastfood/Coffeeshops:also HUGE

Pets: we have 2 cats and had to buy food/litter and had one vet visit

Travel: I had a job interview in Amsterdam, had to pay some incidentals like hotel tax, train/tram, and food for the 3 days

RothIRA: nothing to say here, this is gonna stay as is I think.

Internet: fios, we don't have cable TV, just internet and use it for streaming netflix/hulu, and I use it for work

Online server/backups: run my own server "in the cloud" and pay for backups of my laptop and parents desktop on amazon s3

College loan A: Left to pay, $3500

College loan B: Left to pay, $8400

Investment: Into my schwab brokerage account, starting my ERE life.

Natural Gas: Stove and hot water are done via natural gas, this is probably the low point of this number year round.

Electricity: No AC this month at all, and honestly almost none all summer. Keeping this down for the rest of year should be easy

Kids: new clothes for the 18 month+ winter clothes season. (also new shoes, kid has wide feet, pita) We will be doing some craigslisting for clothes in the future I think. She eats big people food now, so her food is in groceries and all the rest.
So, of my expenses, the inflexible ones are: rent, RothIRA, Internet, Online server/backups, college loans, natural gas, and electricity, for a total of $2089.27 a month. Now obviously, we need food, and heat costs will be going up over the winter, but hopefully not too high.
Quick hits, We're not eating out nearly as much, and no ordering in. The grocery budget is staying at about $480 for now. I am hoping to keep the restaurants/fast food spending under 100 total, and the coffee shop under 50. I am going to move the online backups to something like carbonite, for $50 a year instaed of $35 a month. That will also be a huge win.
If I keep it to those numbers, that is spending $2634.27 a month, which, with my "normal" income of $5000 is 52.7% of my income, allowing me to save 47.3%
That is a good start, and I will aim for 50% savings.
I have two thoughts on doing that, one is to just start investing and saving now, and keep paying my college loans at the standard rate OR I can take that extra and pay off the loans in short order. Right now I am leaning towards paying off my loans quickly, to increase my cash flow. But with stocks being "low" still... I'm tempted to get going on buying some dividend producing stocks.
Also, I suppose I could NOT put money in my rothIRA either. OH I forgot to mention, my work puts 5% into a 403b for me without me having to contribute anything. Currently I have a TINY amount in my retirment accounts, $34000.
I look forward to hearing your comments!

[KevinW]

You're already planning on making several of the changes that came to mind, so I won't restate those.
A few other ideas:

- If you've decided that a Roth makes sense, shouldn't you max that our before making taxable investments? Spreading the $5k limit over 12 months comes to $416.66/mo.

- IMO, prioritize: Roth, paying down student loans, tax-deferred retirement accounts, taxable investments. So I would keep the Roth but use any spare money to pay down the loans before making other investments.

- Is the cloud server a need or a want?

- I would not consider utilities to be inflexible. It's possible to lower consumption by changing habits: pressure cooker, navy shower, etc. You have opportunities for more significant cuts elsewhere, but I wouldn't fall into the common trap of assuming that you have no control over utility costs.

[sree]

No cell phone bills? No alcohol costs?
Good move on the lack of cable. I still think you can go lower than $480 on groceries - cut out all processed food, excessively packaged food, and brand names. No drinks except water and milk. List your top few most expensive foods and cut out one or two of those.
Restaurant goal below $100 is decent.
I would lean towards buying stocks now more than paying off loans. I went hardcore on my mortgage and paid it off between 2005 and 2009. Now I somewhat regret it because I missed out on some very low stock prices.

[George the original one]

If you don't have anything in your taxable investment account yet, get it filled up to 6 months expenses before you attack the student loans.
Otherwise, you've got a good first target and have spotted the obvious savings.

[jforest]

@KevinW
A rothIRA made sense... before I started thinking about ERE. I'm not sure if it still does. I would ideally like to "retire" aka, have freedom to not be tied to my job, while still providing for my family within 10 years or so. Ideally, I'll start freelancing before then, but I've been having a hard time getting started with that. I think I need to tackle one thing at a time for now, until I get into the habit of each so to speak.
You're probably right, I should pay off those student loans before any extra investing. I just hate to "miss out" on an upswing, you know? I can get more for my money now, than if things head back up. But, who's to say that will happen either. My loans are low %, 3.5%, and 4%. I can quickly knock out the small one, which is the 4% loan incidentally, and re-evaluate from there. Maybe just push the payment up on the other one after that.
For the last few years I've been paying off debt that I foolishly got myself into in my early 20's as well as paying off my originally $75000 in college loans. I've made great strides, it's hard to make that final push I guess.
Cutting electricity in the house is possible, I know there is some extraneous light usage while I'm not home, and plenty of TV. At least I no longer have any server at home.. I moved it to the cloud.
I would say it's a need, as I run various websites off of it, and also intend to run my freelancing business off of it as well. at $35 a month, it's hardly the biggest to knock of the list, but it's possible I can remove it. When I ran a server at home, it was costing me almost that much a month in electricity... so it's hard to justify.
Also, WRT the rothIRA, I get paid every other week, and I automatically pay into the rothIRA every other week, so there is an extra 300 going in on top of what I put. But I think I need it to be 176 per payment to max it out. So you are right, there is some more thought I have to put into this. At some point I just have to pull the trigger and get going on it. It might not be the optimal solution, but getting started is better than nothing.
Thanks for the comments!

[jforest]

@sree
Work pays my cellphone, and my alcohol is included in restaurant/groceries. It's not much as we have a child, but it's probably $60 a month. (more at the restaurants when my parents are babysitting for the weekend, which is rare since they live in maine)
We mostly already buy unprocessed food, and I don't drink soda, so no money wasted there. We only buy milk and some cream for my coffee in the drink department right now.
I'm sure we can get the grocery bill lower, but we have to start somewhere!

[jforest]

@george the original one
I only have put $1200 in my taxable investment account. Getting it to 6 months (14000ish) would take a bit of work, but isn't the end of the world. Not contributing to the rothIRA would help. And not overpaying on my student loans would help too.
What is the standard way of dealing with the college loans aspect? If I do nothing and pay the minimums only, it's 3 years until they are done.
as I said before, maybe I'll just knock out that first one, the $3500 one, to have increased cashflow for the rest of the time.

[Chris]

I'll second KevinW's recommendation for the prioritization of your Roth.
A Roth IRA is a very flexible vehicle. Consider:

earnings grow tax-free

you can withdraw your contributions penalty-free

you can withdraw your earnings penalty-free in some circumstances

you are not required to start taking distributions at any age


In my opinion, the two biggest drawbacks of the Roth are the limits: $5k annual contribution, must be from earned income, and income-level phase-outs. Because of these drawbacks, I follow a "while you can, you should" mentality. Your ability to contribute may disappear in the future.

[George the original one]

At 3.5% and 4%, I wouldn't worry about those student loans, particularly if they'll be all gone in 3 years. There are plenty of investments that will yield 50-100% more than those are costing and having more than $1200 available for crisis would be smart.
RothIRA is okay. You can withdraw the money from it with no penalty (but not the gains) at a future date and there's the 72T rule if you do retire before 59-1/2. Your income currently is high enough to support these contributions.

[jforest]

@chris

@george the original one
I think you have both convinced me to max out the rothira 176 it is.
And I think george is right, I might as well get my investments going now. The loans will be gone in 3 years max anyway.
I was reading some about minimizing my costs for my brokerage account, people buy only in lots of 100? i think there is a thread here about that, I'll have to go read
Thanks guys!

[jforest]

September Roundup!
Since I only started this in the middle of September I wasn't expecting fantastic results, and that turned out to be true.
Income: $5805 ($780 from selling my camera)
Expenses:

Rent: $1100

Auto/Transport: $86

Coffee Shops: $95

Fast food: $192

Groceries: $458

Restaurants/alcohol: $588

Life insurance,long term disability insurance: $121

Kids: $70

Pets: $84

Internet: $55

Girlfriends Cellphone: $75

Netflix: $8

Virtual server: $37

Amazon S3 Backup: $20

One time carbonite 3 year payment: $139

Sending out book/dvd's to paperbackswap: $37.71

college loan a: $300

college loan b: $216

Clothes for me: $20

Yearly Dr's appoitnment: $15

3 months supply of meds: $10
Total Expenses: $3726.21
Savings?

ROTH IRA contributions: $300

Daughters college account: $100

Emergency fund: $50

into my taxable account: $331.84
Total Savings: $781.84
TOTAL: $4508.05
I use rewards credit cards for everything, so the last $1300 or so was paying off last months food, etc etc. It's hard to track it here, as I'm paying off food and such as I go. I'll work on this next month. The credit cards currently have 1200 on them, but I'm paying 900 on monday.. so we'll see how it goes. We did just buy a couple of things for our daughters room, and a new comforter as my old $90 one from 2001 was falling apart, and and had to be thrown out. So next month won't be stellar either.
GOOD things: I have my roth ira now set up to pull out about 400 a month now, 200 every 2 weeks. I also am putting 350 every 2 weeks into my taxable account now, and 100 every 2 weeks into my emergency fund. This should force me to live within my means better. This weekend was spent in a $38 dollar rental truck from enterprise moving my friend from lowell into boston. He paid gas, so that is good. He also bought me and my girlfriend a "victory dinner" for helping him move.
All in all, a start, but not a great start Hopefully october will bring better results!

[jforest]

Ok, trying to add an image, lets see!

Well the image is a bit big, but you get the idea, you can right click and view it...
Maybe I shouldn't include savings. But I'd like to see how I track month to month. Any thoughts and suggestions are welcome!

[jforest]

I'm not looking forward to posting this one. This is horribly embarrassing, and points to some major issues I'm having.
I'm just going to attach an image, and hope for the best.

Clearly, I've overspent on food. Clearly I've overspent on everything. I've declared november: "no eat out november" but we'll see how that goes.
I did well at maxing out my rothira, and putting money into my brokerage account, but instead of cutting down spending, I just kept spending like before.
If you look at my debt, you'll see it's gone up. It's gone up because I've spent money on food and such using my CC's. I think it's time to lock those up. I have been getting airline miles, but to be honest, I don't trust myself enough anymore. I have been spending wildly.
ONGOING

I'm moving my roth IRA from ameriprise to vanguard. I'm going to be investing in index funds for the most part. I have the rest of my retirement accounts at vanguard, so this will bring them all under one roof, and keep my costs low. I've done all the paperwork and sent it in, I'm just waiting on ameriprise to send the check to vanguard.
No more credit cards. Moving back to spending via debit cards. This will keep me honest. It has worked in the past, it will work again.
making more meals in advance. The biggest issue with food is my laziness. I get home from work, and there is no food ready, and I'm too tired/lazy to make anything, and my gf hasn't made anything, so I just say fuck it, and order in. A lot of this spending is me just not being happy with stuff, so I give up. There is a lot of stuff I have to deal with personally, and it shows in this spending.
Sell off from my brokerage account, pay off the CC's, so I can start from a clean slate. This sucks, and is a shame, but it's the right thing to do. I sold the stocks late last week at a nice high, so I'll be paying my short term capital gains on them, sucky again. But it needs to happen. I gotta get spending under control.
Things I did wrong

I bought a kindle. The new 79 dollar one, except I hate ads so I bought it without ads, for 109. I then of course quickly bought a couple of books, it works well, and I love it. But it is a big waste of money.
Over eating, over spending, not living within/under my means.
Things I did right

Not many here. I have been reading a ton of finance books. I read a random walk down wall street, the 4 pillars of investing, confessions of a wall street analyst, and economics explained. Thanks kindle, you've done me some good!
Please, comments and suggestions are welcome, even though I know I fucked up pretty bad this month

[dragoncar]

It doesn't seem like the end of the world -- it looks like you made a misstep, but know how to correct it.
One thing I'm confused about is the CC payment line. Is that a payment on carried CC debt, or just the payment for the month before? In other words, if you already counted "restaurants" from September, are you counting it again when you pay your CC bill in October?
If you are carrying CC debt at a generally outrageous APR, I would recommend paying that down first, and not contributing to at least some (and maybe all) of your savings funds. If the APR is high enough, I'd even consider forgoing 401k matches, tax-deductible contributions, etc.
If you are not carrying CC debt at a high APR, then I think the chart makes things look worse than they really are. For October, it looks like you essentially borrowed $1,500 from the CC companies in order to put it in retirement plans?

[LiquidSapphire]

Awareness is a big part of this battle. It's also more of a marathon rather than a sprint. The fact that you are even tracking everything is a really good start. It allows you to slowly auto correct and make slow changes to your lifestyle. For instance, November is now no eat out November. You wouldn't have done that or taken that on unless you had done all of the steps you previously took. Maybe batch cook once or twice this month (Cook once, eat all week kinda deal), if you have to, buy frozen stuff where all you do is bake or throw it in a skillet for 10 min, just get out of the habit of going out, make stuff at home, even if it is the pre processed stuff. You can work on making it healthier and from scratch, cheaper, later.
Anyway, take one or two big items, and work on those, get those to a more manageable level. Then take one or two more, work on those, etc. Keep it up! You can do it!

[jforest]

@dragoncar Yes I have been double reporting my spending on the CC, but it's the same result. I have been kinda floating one month along, and it makes it hard to track. So i am going to remove the CC from the mix, and go with that. It'll make accounting so much simpler for me
@liquidsapphire Yes, it is a marathon, and thank you for the words of encouragement!
Thank you both for the encouragement actually!
We have started ordering some of those "skillet" meals actually, and they are helping already, since they are simple. I have a slow cooker, that's my next goal, start using that. so hard to find good recipes but I'm sure I'll figure it out.
Thanks again guys!

[LiquidSapphire]

OMG Google is your friend for recipes. Lots of websites devoted to just slow cooker recipes. Lots of library cookbooks also. There are a million.
Here's one that looks super easy, 5 min of prep max:

http://greenlitebites.com/2009/01/14/ea ... ian-chili/

[bluepearl]

Hi Jforest!
There is hope! A few months ago my coffee/ fastfood/ restaurant/ groceries bills are similar to yours. And I understand the tired-from-work-don't-want-to-cook cycle. I have lived it for a few years.
The key is to do extremely simple cooking, and make your food tastier than any store bought variety (trust me, it's very easy as the bar is set very low).
I'm not a beans person So, here is a super easy recipe for baby back ribs. Practically no work is involved and I only used salt and pepper, no chili sauce and it's way better than any restaurant ribs I have had...
http://steamykitchen.com/11036-baby-bac ... -bone.html
What are some of the food you guys enjoy?
For coffee, if you are a coneisseur than perhaps a super fancy machine is a good investment...

[jforest]

@bluepearl The coffee shop is basically this little italian style "bar"
For me, it reminds me of being in italy, and that's where I'd like to live someday, so it's worth it. The little old italian men are there, plus all of them speak italian, it's pretty cool. Soccer on the TV all the time... It's worth more to me than the small price we pay every weekend to go. My daughter loves it, cause they all give her treats and play with her. And I love the cappucino and the pastry...
I'm going to cut this down ths month, to maybe 2 visits, instead of 4. I really enjoy it, so I don't want to cut it out entirely. the poitn of this life to me is to cut out stuff you don't want, so you can spend on what you DO want. I love travel, italy especially, so I am going to do what I can to make that happen.
Simple cooking is on the way, we're making chili tonight, beans, meat, veggies, yum!
I love spicy foods, indian, mexican especially, my girlfriend hates beans, and gets annoyed with them quickly, so our food budget is inflated due to that. I'd eat chicken tikka masala everynight if I could, plus a side of lentils. (daal) and some rice. YUM
I'm also a pizza fiend, not good for my waist, but so easy and tasty. My daughter also loves pizza so it's an easy win.
For coffee, I have a little moka express pot, that is simple, 3 little parts, and easy to use. Makes a decent enough "espresso" in the mornings.

[LiquidSapphire]

I love Italy, I lived in Naples for a year. Your description of your coffee shop sounds so authentic too. Just a suggestion for your consideration: Instead of cutting down your visits, maybe just a coffee one time, a pastry the next time? Maybe cut the cost in half each time, rather than cut the visits in half? It seems like part of why you go is the experience, so you might enjoy it just as much.
If you find a good Indian recipe for Tikka Masala that's easy, let me know, that is my one weakness, I can't cook Indian... or Pad Thai...
We bought a used bread maker for $10, and you can make pizza dough in it and freeze the dough. Adding the ingredients takes all of 5 minutes, rolling it out when it's done takes another 5 minutes, and you get two pretty good sized crusts when you're done. Buy mozzarella in bulk, freeze it, we use spaghetti sauce in a jar, not perfect but not bad, aaaand... easy yummy homemade pizza on command any night you choose.