Hey everyone, I stumbled across these forums a few days ago and have been poking around various posts. I've always wanted a place to talk about early retirement, and this seemed as good of a place as any to start.
I know I could break this up and post elsewhere, but thought I might give a long post, explaining everything.
1) My username. Yeah, it's silly. I came up with it ~13 years ago and it's almost always available wherever I register, so that's nice.
My Background and Goals
I've been married for nearly 4 years and have a 16-month old daughter. I grew up in Iowa and graduated from the University of Iowa with a Bachelor's and Master's and also owned a condo while I was in Iowa City. I now have half of a duplex in the Seattle area and have a relatively well paying and stable job. My wife stays home with our daughter, but would like to return to work someday. Probably 5-10 years from now.
About 5 years ago, I set 3 career goals for myself:
1) Get a job I enjoy (check)
2) Get a job where I manage something (people, project, or otherwise) (check)
3) Retire at 45
Why retire at 45? Well, even though I have a great job, I hate working. I'm sure many of you can relate. I like reading about football, playing basketball, doing little projects that seem fun. All that kind of stuff. Work gets in the way
My Current Financial Situation
After our mortgage, taxes, and insurance, we currently have ~$3500 to spend on groceries, bills, and miscellaneous expenses. In general we're able to save $1300-2000/month, depending on the circumstances.
We use Mint to set budgets and goals and categorize all of our spending and look critically at categories we are over-spending on. At the beginning of each month I put all of our account information (fixed assets, long-term liabilities, etc) into a spreadsheet and use that to track how we're doing month-to-month. Ever since starting this exercise, we've been able to prioritize our spending and goals and have increased our net worth from $38,000 to $54,000.
As far as our goals and plans, here's where we're at:
My Thoughts on the Future
- We are putting $125/month into the Utah UESP 529 plan for our daughter. This will get her approximately $25,000 for college; compared to what my wife and I got, we think this is plenty.
- We are saving $150/month for a cruise we're going on next year.
- We're saving $230/month to replace half the windows in our home (we already did half of them, can't wait to do the rest).
- We are planning to pay off the rest of our car 2.5 years early in September. It will be ~$13,000 to pay off the remaining balance.
- Depending on what my bonus is (and we estimated pretty conservatively), we will pay off our remaining student loans by December or January. They will total about $5000.
- Paying off those things will free up an extra $600/month.
- We have 4+ months of emergency expenses sitting in savings. We are thinking about moving this to a different savings account. Our current account yields 0.4%, and Mint shows me several accounts that would net us 1.2% yearly. Not bad (I think) with how low the current rates are.
- We have $20,000+ scattered around in my 401(k), Sharebuilder, Vanguard, and stock bonuses from my company.
- Besides our mortgage, once we pay off the loans I talked about above, we have no other debt.
I'd love to be able to (semi) retire at 45, move to Denver, and build our final home. I'd consider seeing if I can't get a job for the Denver Broncos doing about anything, just because I might like working in sports, and I'd get some free gear. However, anything I get at this point is just icing on top
I know that my 401(k) can't set me free, especially with only 20 years of savings in it. I do think that if I roll it over into an IRA upon retirement, then start with SEPP, I can pull about $8-10K/month from it, but that's probably 20% or less of what I'll need.
So, I need to find a way to invest/save a lot more, and maybe find a way to generate passive income.
This is why I came to you guys. Based on where I am and what I'm doing, what can I do? How should I save better? What can I re-prioritize?