Just a couple weeks ago, an actual person asked me for help with her finances. I’m sure you all remember. Yeah, I was shocked too. I’m not even a financial planning type of guy. Hell, I barely control my own finances, yet someone else actually wanted advice. I’m not sure what she did with that advice, actually. Don’t worry, I told her about all of your guys’ ideas too, even though they were clearly crappier than mine.
Anyhoo, we have another actual person who wants some help with his finances. Let’s do it up. He goes by the pen name Captain Awesome, and he’s totally wrote a guest post here before. He’s looking for a little help on his finances, just to make sure he’s on the right track. His first mistake was asking me for advice. I HOPE HE LIKES PENIS JOKES.
Here are the deets, removing some of the personal information Captain Awesome sent along, like his real name and that picture of his penis.
Status: Engaged (Although maybe not for long if she reads this post)
Net pay: $2525 bi monthly
GF’s pay: $833 monthly
Mortgage: $162,720 (3.75%, 30 year fixed) payment is $1145.04 per month
CC Debt: $19,701 (at 6%)
Liquid cash: $126
Retirement Savings: $12,685
Okay, well, it ain’t pretty. In his defense, the good Captain has amassed this debt for reasons that aren’t so horrible. He’s been paying the way for his own wedding and he bought a bunch of new furniture for the new house, since they’re going to need a new bed for all the KINKY NEWLYWED SEXIN’ THAT’LL BE HAPPENING. Yeah, financing furniture even at 6% is a bad idea. But it’s done, so let’s tell him how to fix the problem.
The good news is he’s got reasonable housing costs. His mortgage payment is less than 20% of the couple’s combined income. Sure, there’s property taxes and utilities and junk in there too, but he’s done a good job keeping his mortgage payment low.
The second thing he’s got going for him is no car payment. I hate car payments so much, This adds a few hundred bucks every month to his bottom line as well. Since there’s no obvious money pit, this will make ramping up his savings much easier.
Now onto the bad stuff. If he keeps financing furniture, I’m going to change his pseudonym from Captain Awesome to Captain :(. That’s bad. And there’s (scrolls back up) 19 grand of the stuff? Jeez, somebody needs to tell this guy that waterbeds peaked in the 80s. I have a feeling the lady friend was at least partially to blame for this, which is nothing a good backhand to the chops can’t cure. Or, you know, talking to each other about their financial goals. Step 1 is getting on the same page.
Step 2 is getting rid of that credit card debt. Our Captain gets a generous 6% rate because he is a current member of the U.S. Armed Forces, (We salute you, sir) which is a huge bonus compared to what us civilian folk usually end up paying. He needs to take advantage of that and PAY THAT CRAP OFF, YO.
Do whatever you can to get those credit cards paid off as quickly as possible. You’ll be married soon, so just stay in, drink delicious, delicious tap water and watch kitty Youtube videos. Everyone will assume you’re just doing it all the time. Or, you could go back into my archives and decide which of my jokes is the most hilarious. FINANCIAL UPROAR, BUILDING STRONG MARRIAGES SINCE 2010.
I don’t care what he does, he just needs to cut expenses so those credit cards get paid.
Secondly, his lady friend needs to bring in more than $200 per week. I don’t know what she does now, but I’m relatively sure she can ramp up her earnings from $200 per week. I mean, there’s basically only one direction to go here.
(Although, maybe she’s a full time student, working a part time job. If that’s the case, disregard the above tip. Getting her degree is important, obviously, because it will increase her income potential. Unless it’s a useless degree.)
He’s currently deducting 5% of each paycheque and putting it towards his retirement. I like that so much that I’m almost sexually aroused. Keep doing that, except when those pesky credit cards go away, increase that deduction to 10%. He’s young enough that putting away 10% should be able to fund his retirement. Besides, his lady should be doing the same thing once she starts working full time.
It’s pretty simple. All he needs to do is cut back, pay off those credit cards, ($1000 per month pays them off in less than 2 years) and life will be good. Then, once the couple is used to living on $1000 less a month, don’t succumb to lifestyle inflation. If they invest $1000 per month, for 35 years, and manage an 8% return, they’ll end up with 2.4 million dollars come retirement time, and that doesn’t even include his current retirement contributions.
It’s easy. All Captain Awesome needs to do is buckle down, get his crap paid down, and he’s good to go. He’s young, he’s gonna be married soon, and he’s got all sorts of time to correct the sins of the past. He obviously wants to, all he needs to do is execute.
One last thing. Wait to have kids until you’re doing better financially. Those damn rugrats cost a fortune.
Have any tips for Captain Awesome? Here’s your chance. Comment away.