Evaluate My Financial Plan Please

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20130312
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Re: Evaluate My Financial Plan Please

Postby 20130312 » Tue Nov 22, 2011 12:53 pm

Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 12:54 pm

InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?

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20130312
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Re: Evaluate My Financial Plan Please

Postby 20130312 » Tue Nov 22, 2011 12:55 pm

SpiteFence wrote:
InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?


Yes. Just wanted to point out to the others that those things shouldn't even really be discussed, since they're totally irrelevant.

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 12:56 pm

InGoodFaith wrote:
SpiteFence wrote:
InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?


Yes. Just wanted to point out to the others that those things shouldn't even really be discussed, since they're totally irrelevant.


Oh, right... thanks.

ToTransferOrNot
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Re: Evaluate My Financial Plan Please

Postby ToTransferOrNot » Tue Nov 22, 2011 12:58 pm

InGoodFaith wrote:
SpiteFence wrote:
InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?


Yes. Just wanted to point out to the others that those things shouldn't even really be discussed, since they're totally irrelevant.


No, they're not, because presumably his GF would be helping with the living expenses if she wasn't just saving for the wedding, so it impacts the budget (it shows up via higher living expenses, leaving less money leftover to pay loans).

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Re: Evaluate My Financial Plan Please

Postby c3pO4 » Tue Nov 22, 2011 1:01 pm

SpiteFence wrote:
InGoodFaith wrote:
SpiteFence wrote:
InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?


Yes. Just wanted to point out to the others that those things shouldn't even really be discussed, since they're totally irrelevant.


Oh, right... thanks.


If you are engaged but not married, there's no reason not to pool all your money. The wedding is a sunk cost just like blowing 50k in Vegas is a sunk cost.

Ideally, you and your girlfriend would devote almost all of your income past living expenses and savings/retirement contributions to loans. Then you would get married. I understand if you say its a personal preference and are willing to take the less financially efficient route, but saying "the decision has been made so it's a sunk cost" seems ridiculous. I think this discussion proves why you need to see a financial advisor. You are shooting from the hip with fairly large sums of money here.

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20130312
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Re: Evaluate My Financial Plan Please

Postby 20130312 » Tue Nov 22, 2011 1:01 pm

I think OP has made it clear that messing with the wedding plan was off the table...

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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 1:02 pm

ToTransferOrNot wrote:
InGoodFaith wrote:
SpiteFence wrote:
InGoodFaith wrote:Consider the wedding a "sunk cost". You aren't paying for it, so don't worry about it for the purposes of this budget. This means your GF's income is sunk as well. We shouldn't be discussing either of those things when forming the budget. It's not like your GF is going to help pay down your loan debt :lol:


Isnt this what I did?


Yes. Just wanted to point out to the others that those things shouldn't even really be discussed, since they're totally irrelevant.


No, they're not, because presumably his GF would be helping with the living expenses if she wasn't just saving for the wedding, so it impacts the budget (it shows up via higher living expenses, leaving less money leftover to pay loans).


Right, so I considered her expenses without her income. Yes, once a wedding is paid for, then she can contribute, but presumably that won't happen until 1 -2 years after I start making an income. In addition, she is exploring career changes, so I wanted to assume a situation where zero income on her part was a reality for a period of time, with the cost to that being a delayed wedding instead a reduction of SoL.

c3pO4
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Re: Evaluate My Financial Plan Please

Postby c3pO4 » Tue Nov 22, 2011 1:04 pm

InGoodFaith wrote:I think OP has made it clear that messing with the wedding plan was off the table...


Yes, RC success. But explain how a hundred dollars here or there have any impact when there is a year's worth of 4k/month loan payments being spent on a wedding. That wedding is costing 8% more because the loans aren't being paid off first. OP is clearly practicing a classic American debt-serviced lifestyle. In any objective evaluation of OP's financial plan, it's ludicrous not to bring this up.

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 1:11 pm

c3pO4 wrote:
InGoodFaith wrote:I think OP has made it clear that messing with the wedding plan was off the table...


Yes, RC success. But explain how a hundred dollars here or there have any impact when there is a year's worth of 4k/month loan payments being spent on a wedding. That wedding is costing 8% more because the loans aren't being paid off first. OP is clearly practicing a classic American debt-serviced lifestyle. In any objective evaluation of OP's financial plan, it's ludicrous not to bring this up.


Your kind of fighting the hypothetical. I see your point, and I don't entirely disagree. In all likelihood, we will have enough saved for a wedding in a year and then she can help with servicing our loans. But I have made the decision to not put life on hold like that. We don't have CC debt, and the difference between paying my loans off in 5 years vs. 10 years is about $40. Is that a lot, yes, but by the time 10 years rolls around is that $40 really that significant? probably not. I'm not trying to maximize my income, I'm trying to maximize my happiness (Yes, I know I should not be in Biglaw).

ToTransferOrNot
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Re: Evaluate My Financial Plan Please

Postby ToTransferOrNot » Tue Nov 22, 2011 1:12 pm

Anyway. Your clothing and grocery expenses are probably kind of low, particularly because the biglaw life does necessitate eating out more often than you'd otherwise want to. One thing to really think about is whether you actually need a car: In Chicago, it sucks to not have one for grocery shopping, but that's about it, and using Peapod costs you less than car ownership.

Re: Paying down loans vs. saving for a house downpayment vs. retirement investing - everyone has different opinions on that. If the housing market stays the way it currently is in Chicago for long enough to let you get a house downpayment together, buying is a better deal than renting (assuming you'll live there 4+ years) right now. That could change as mortgage rates start to go up again and the housing glut dies down (if it does). It's not a matter of the house being an "investment" though - you can't really count on appreciation for the foreseeable future - it's more of a straight-up "cost of renting vs. cost of buying" calculation, where you consider as a lost opportunity cost the student loan rate on the house downpayment. NYT has a calculator that is helpful for that.

And cp, you continue to ignore the significant tax benefits of marriage. They matter. And I also don't see where OP said anything about a $40k wedding.

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Re: Evaluate My Financial Plan Please

Postby Anonymous User » Tue Nov 22, 2011 1:14 pm

OP, you should repost in a few weeks but pretend that you are a single dude with a dog or something and that's why you don't want to get a roommate.

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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 1:14 pm

Plus the main point in me asking this, which I did not preciously disclose, was my housing budget. I'm trying to figure out if I am overshooting by getting a $1600 apartment + $200 parking is within my price range, basically because I would really love it if I can walk to work in the loop.

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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 1:15 pm

Anonymous User wrote:OP, you should repost in a few weeks but pretend that you are a single dude with a dog or something and that's why you don't want to get a roommate.


lol thanks, will do.

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Re: Evaluate My Financial Plan Please

Postby ToTransferOrNot » Tue Nov 22, 2011 1:16 pm

SpiteFence wrote:Plus the main point in me asking this, which I did not preciously disclose, was my housing budget. I'm trying to figure out if I am overshooting by getting a $1600 apartment + $200 parking is within my price range, basically because I would really love it if I can walk to work in the loop.


Please send me info about these mystical $1600 one-bedroom apartments in the loop that aren't horrible. Future-me thanks you in advance. (Not meant to be snarky. I would be thrilled to find a decent one-bedroom at $1800 or under that puts me within walking-ish distance of work next year.)

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 1:18 pm

ToTransferOrNot wrote:
SpiteFence wrote:Plus the main point in me asking this, which I did not preciously disclose, was my housing budget. I'm trying to figure out if I am overshooting by getting a $1600 apartment + $200 parking is within my price range, basically because I would really love it if I can walk to work in the loop.


Please send me info about these mystical $1600 one-bedroom apartments in the loop that aren't horrible. Future-me thanks you in advance.


--LinkRemoved--

Not in the loop, but definitely within walking distance.

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Re: Evaluate My Financial Plan Please

Postby c3pO4 » Tue Nov 22, 2011 1:24 pm

SpiteFence wrote:Plus the main point in me asking this, which I did not preciously disclose, was my housing budget. I'm trying to figure out if I am overshooting by getting a $1600 apartment + $200 parking is within my price range, basically because I would really love it if I can walk to work in the loop.


Sorry I didn't mean to rain on your parade. I stand by all my points though.

W/r/t housing--- you are fine. Your fellow associates in NYC and Bay Area are paying 2.5k+ on rent with the same salary and higher taxes. 1600 is dirt. cheap.

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 6:49 pm

I am wondering if there are any other Chicago junior associates paying 1800-2000 for rent+parking with similar debt burdens? Should I just look for something cheaper north of Fullerton and suck it up and get on the L?

Again, walking to work sounds sooooo nice.

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Re: Evaluate My Financial Plan Please

Postby sunynp » Tue Nov 22, 2011 6:55 pm

Shouldn't you both contribute to the wedding? Why is she the one paying for it? Why are you only going to marry her after she saves up enough? This sounds like a very bad way to start off married life. You should have a joint account where you both contribute to the wedding. Let her help pay for something else if you are so concerned about where her money is going.

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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 7:47 pm

sunynp wrote:Shouldn't you both contribute to the wedding? Why is she the one paying for it? Why are you only going to marry her after she saves up enough? This sounds like a very bad way to start off married life. You should have a joint account where you both contribute to the wedding. Let her help pay for something else if you are so concerned about where her money is going.


We would have joint accounts. All I am saying is that we would use her income as main variable in determining our wedding savings. Again, that way I can provide her some additional job flexibility without reducing our SoL. But ultimately all our income would be pooled in joint accounts. I would like to avoid my pre-wedding planning from high jacking this thread, so I would appreciate any responses to my previous question.

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Re: Evaluate My Financial Plan Please

Postby MrKappus » Tue Nov 22, 2011 8:07 pm

SpiteFence wrote:
sunynp wrote:Shouldn't you both contribute to the wedding? Why is she the one paying for it? Why are you only going to marry her after she saves up enough? This sounds like a very bad way to start off married life. You should have a joint account where you both contribute to the wedding. Let her help pay for something else if you are so concerned about where her money is going.


We would have joint accounts. All I am saying is that we would use her income as main variable in determining our wedding savings. Again, that way I can provide her some additional job flexibility without reducing our SoL. But ultimately all our income would be pooled in joint accounts. I would like to avoid my pre-wedding planning from high jacking this thread, so I would appreciate any responses to my previous question.


Seems like your question's been asked/answered. There's no way you're going to support 2 people in a 2300/month apt with a car in Chi on 50k a year.

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Re: Evaluate My Financial Plan Please

Postby sunynp » Tue Nov 22, 2011 8:12 pm

Ok.
So about your question: if you can find a good place to live with parking for less than $2000 and you can walk to work you should grab it. I'm from manhattan and that sounds like a great deal. Being able to walk to work is a huge advantage and well worth paying for. When you are working all night or on the weekend, convenience is paramount. I think you have lowballed alot of your costs like clothing, food etc. Clothing is very important because your appearance matters. Also you may want some money to go out with work colleagues and clients. Don't nickel and dime on stuff that helps you build contacts for your career. That is money well spent.

You didn't include expenses for random stuff like haircuts, glasses, dental, medicine, or any vacation/ travel expenses. Maybe you live close to your family, and if so, having a car might be worth it so you can visit. If not, you need to include travel expenses, and then you might want to do without a car. I know you didnt include your insurance cost-note it will not cover your girlfriend until your married so she needs insurance too. I think that insurance payment will be a few hundred a month. Make sure you have disability and life insurance too.

Also, what have you projected as your 8 month cash reserve total?

I personally think saving for retirement is smart- but only if you aren't going to end up losing most of it in the stock market. And who the he'll knows what is happening with that? Maybe you could pay down the loans while at least making a few grand toward retirement.

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 8:28 pm

sunynp wrote:Ok.
So about your question: if you can find a good place to live with parking for less than $2000 and you can walk to work you should grab it. I'm from manhattan and that sounds like a great deal. Being able to walk to work is a huge advantage and well worth paying for. When you are working all night or on the weekend, convenience is paramount. I think you have lowballed alot of your costs like clothing, food etc. Clothing is very important because your appearance matters. Also you may want some money to go out with work colleagues and clients. Don't nickel and dime on stuff that helps you build contacts for your career. That is money well spent.

You didn't include expenses for random stuff like haircuts, glasses, dental, medicine, or any vacation/ travel expenses. Maybe you live close to your family, and if so, having a car might be worth it so you can visit. If not, you need to include travel expenses, and then you might want to do without a car. I know you didnt include your insurance cost-note it will not cover your girlfriend until your married so she needs insurance too. I think that insurance payment will be a few hundred a month. Make sure you have disability and life insurance too.

Also, what have you projected as your 8 month cash reserve total?

I personally think saving for retirement is smart- but only if you aren't going to end up losing most of it in the stock market. And who the he'll knows what is happening with that? Maybe you could pay down the loans while at least making a few grand toward retirement.


I want my cash reserve to be in the area of $45,000 before I reallocate income to paying down debt. That should cover rent, minimum loan payments, car, and food for eight months, so realistically six months of living without starting to have to make major lifestyle changes.

So I guess the question then is, if I live where I want to live, again WITHOUT CONSIDERING MY GFs INCOME, where do I steal from to make the other budget categories work? Do I not save as much? Or do I pay down my loans quicker?

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MrKappus
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Re: Evaluate My Financial Plan Please

Postby MrKappus » Tue Nov 22, 2011 8:35 pm

SpiteFence wrote:I want my cash reserve to be in the area of $45,000 before I reallocate income to paying down debt. That should cover rent, minimum loan payments, car, and food for eight months, so realistically six months of living without starting to have to make major lifestyle changes.

So I guess the question then is, if I live where I want to live, again WITHOUT CONSIDERING MY GFs INCOME, where do I steal from to make the other budget categories work? Do I not save as much? Or do I pay down my loans quicker?


Once you have a cash reserve, with principal running at 6.8%, I don't think you should be saving anything to speak of. I'd still max out retirement accounts because compound interest is magical, but all other money should go to loans. For your situation, $3000-3500 a month sounds slightly uncomfortable but doable.

SpiteFence
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Re: Evaluate My Financial Plan Please

Postby SpiteFence » Tue Nov 22, 2011 8:42 pm

MrKappus wrote:
SpiteFence wrote:I want my cash reserve to be in the area of $45,000 before I reallocate income to paying down debt. That should cover rent, minimum loan payments, car, and food for eight months, so realistically six months of living without starting to have to make major lifestyle changes.

So I guess the question then is, if I live where I want to live, again WITHOUT CONSIDERING MY GFs INCOME, where do I steal from to make the other budget categories work? Do I not save as much? Or do I pay down my loans quicker?


Once you have a cash reserve, with principal running at 6.8%, I don't think you should be saving anything to speak of. I'd still max out retirement accounts because compound interest is magical, but all other money should go to loans. For your situation, $3000-3500 a month sounds slightly uncomfortable but doable.


So limit savings to the $5000 max contribution, and then reduce my loan payment in accordance with the whatever need remains? That probably extends my pay-off window a little more than I would like, but I suppose that's more realistic. Thanks.




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