Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
25yo, want freedom by 40
Old 02-14-2008, 10:44 PM   #1
Confused about dryer sheets
FreeBy2020's Avatar
 
Join Date: Feb 2008
Posts: 5
25yo, want freedom by 40

Hi everybody, FreeBy2020 here. I just turned 25 last week and I set myself an ambitious goal of being FI by 40 years old. Not necessarily retired at 40, but able to choose any job anywhere at any pay and not have to worry about my eventual retirement. My moniker is even more ambitious, because in 2020 I'll be only 37. But I'm aiming high and I'm the type of person who expects great things of myself.

I'm so happy I found this website/forum. Anytime I try to talk about financial stuff with my friends my age, they either start sleeping or look to change the subject as soon as possible. Talking about FIRE-type things with people my age just doesn't typically prove fruitful.

A little more about me. I'm an English teacher in Japan. Though pretty much topped out (foreigners here can't climb the ladder), I don't have to pay any taxes whatsoever. So, my $30K salary is not much but it's not taxed. I plan to return to the US in late 2009 and either continue teaching or attend law school. My fiance is a Japanese woman who shares most of my beliefs about life and money, so I'm not worried about her ruining my financial plans in the future. I paid for 3/4 of my college by working in a salaried position for the university itself, so I managed to graduate with zero debt and two degrees (both with honors).

After 3 years of working full time and going to school full time and not having done anything fun in an eternity, I quit my job and cashed out my retirement account and maxed out a $7000 credit card. I used the money to take a couple vacations and just do anything I wanted for about a year. In retrospect, that year was the best mistake I ever made. I didn't work, I didn't spend all that much, really (about 10K in a year, with two trips to Japan). I got to spend time with family I hadn't seen much for about 5 years. Financially, it was a waste. But the overall experience taught me a lot about what I want from life.

WHAT I WANT IN LIFE:
-First and foremost, day-to-day freedom do decide how I spend my time.
-A companion to experience life with.

WHAT I'M DOING TO GET THOSE THINGS:
-Staying debt free. 6 months after moving to Japan, I had eliminated all debt.
-Trying to educate myself financially. I was never taught about money growing up. I started with "Rich Dad Poor Dad," and though I thought he said some good things I felt uncomfortable with his presentation (sort felt like I was reading an info-mercial, you know?). I moved onto "Millionaire Next Door," "The Wealthy Barber," "The Richest Man in Babylon," and a number of others. I read financial news as much as possible to familiarize myself with terminology and strategies.
-LBYM, or L(W)BYM (well). I tend to create an environment of relative scarcity. Every month when I get my paycheck, I send a giant chunk of it to my bank accounts back in the US. This way I know I have only 'X' dollars/yen to last the month.
-I leave myself an allowance to play with. Realizing from my experience of working in college and not having fun that I sort of "cracked" after 3 years of relative deprivation, I am taking measures to make sure I have enough fun so that I'm not tempted to "crack" ever again.

WHERE I AM FINANCIALLY:
-In 18 months I went from -$7000 to about $9000. Considering the interest on the credit card was significant, we're talking about about $1000 a month being added to my overall net worth. Not bad, right! That's about 40% of my salary.
-Of my $9000, I have about $2000 in CD's, $6000 in stocks/ETF's and $1000 left in a money market account.
-So, overall, I realize that I don't have much. But I'm confident I'm on the right track.

One of the things that really makes me happy nowadays is that my fiance is a natural born saver. Working together, I'm certain we can reach the goal of FI by age 40. On her own, and making about 20% less money, she has managed to save over $15,000 in just over a year of working. She's a force to be reckoned with, I tell you!

One of the side benefits of getting out of debt and building a (small) portfolio is that my father has become much more interested in making sure his retirement is being planned for. He's paying more attention to his future because he saw me doing it. And now my mom is, too. So, I guess what I mean to say is that having my actions mimicked by my parents tells me that I must be doing something right. And that inspires me more. So, I sort of feel that it doesn't take much for a snowball effect to start.

I don't have a lot of questions right now, but I'm always listening up for advice and little bits of information. I realize my post is long and maybe a little bit of a "tooting my own horn" sort of thing. All I can say is that I am an upbeat and enthusiastic person who is really happy to have found an (online) community of people who appear to think along the same lines as I do.

Nice to meet you all.
FreeBy2020
__________________

__________________
"In the realm of ideas everything depends on enthusiasm. In the real world all rests on perseverance."
Johann Wolfgang von Goethe
FreeBy2020 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-15-2008, 03:48 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Welcome.

You decided on that kind of goal much earlier than I did. I was 35 before I decided I wanted to ER at 55. Good for you.

Stick with it and you might just get there. However, 15 years is a fairly short period of time to accumulate enough money to support yourself for another 50 years. Of course, it depends a bit on your income sources (and investments) to accumulate wealth and how much income you will need when you ER.
__________________

__________________
chinaco is offline   Reply With Quote
Old 02-15-2008, 09:14 AM   #3
Thinks s/he gets paid by the post
Coach's Avatar
 
Join Date: Nov 2005
Location: Colorado, USA
Posts: 1,127
Welcome, FreeBy2020!

You've made a great start and it sounds like you and your future wife are on the same page -- that's critical. Your strong commitment to FI should give you lots of choices as you get older.

Coach
__________________
Coach is offline   Reply With Quote
Old 02-15-2008, 09:19 AM   #4
Recycles dryer sheets
 
Join Date: Oct 2007
Posts: 463
FreeBy2020,

Book recommendations: Your Money Or Your Life, and anything by Armstrong, Bernstein, Bogle, Brennan, and Swedroe. Look in the library for the latter five before you buy anything.

Also The Automatic Millionaire by Bach, although that may be too basic for you.

Good luck!
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future

"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
TickTock is offline   Reply With Quote
Old 02-15-2008, 09:25 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,874
Welcome FreeBy2020,

You have the right attitude and a really good start. I think you will succeed in your goal.
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 02-16-2008, 03:06 PM   #6
Confused about dryer sheets
 
Join Date: Feb 2008
Posts: 9
One thing that bears repeating here is that you have 15 years in front of you to FIRE....a lot can happen between now and then....and not all of it under your control. Having a spending/saving plan that adds a G every month is good, but be prepared to constantly revisit it, year on year, until you near 40. Having said that, by the time you reach 40, you may find that you want to work until 45-50, and that the advanced planning on your part pays off with that cushion of years. I'm sort of in the same boat, having taking sabbatical years at the expense of earning years, but it made sense to do so at the time. Good luck with your plans!
__________________
Raul is offline   Reply With Quote
Old 02-16-2008, 11:40 PM   #7
Confused about dryer sheets
FreeBy2020's Avatar
 
Join Date: Feb 2008
Posts: 5
Thanks for the kind words, book recommendations, encouragement and advice. Your Money or Your Life is next up on my list to read. I'm presently focused on my copy of Personal Finance for Dummies.

Thanks again!
__________________
"In the realm of ideas everything depends on enthusiasm. In the real world all rests on perseverance."
Johann Wolfgang von Goethe
FreeBy2020 is offline   Reply With Quote
Old 02-17-2008, 01:38 AM   #8
Recycles dryer sheets
 
Join Date: Oct 2007
Posts: 463
Oh, I forgot to mention earlier - completely ignore YMOYL's investing strategy and advice regarding personal inflation.
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future

"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
TickTock is offline   Reply With Quote
Old 02-17-2008, 09:20 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,616
To get freedom by 40, I had to live well below my means and save+invest at least half my gross income. That is, one-half of my income was used to pay taxes and living expenses. Are you committed to doing that?
__________________
LOL! is offline   Reply With Quote
Old 02-17-2008, 09:22 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Quote:
Originally Posted by LOL! View Post
To get freedom by 40, I had to live well below my means and save+invest at least half my gross income. That is, one-half of my income was used to pay taxes and living expenses. Are you committed to doing that?
Electricity is overrated. So is water - meditate on the power of the composting toilet.

Do or do not - don't read no stinking books! ok ok so Yoda didn't say that in 'The Empire Strikes Back.'

Buy the Vanguard Total Stock Market as early and as often as possible because succesful investing is a matter of faith and time in the market - not thinking and timing.

'God Looks After Drunkards, Fools, And The United States of America.'

When you get old or ready to ER then - pssst Wellesley.

heh heh heh - investing for retirement is stone simple which many absolutely refuse to believe.
__________________
unclemick is offline   Reply With Quote
Old 02-19-2008, 09:19 AM   #11
Confused about dryer sheets
FreeBy2020's Avatar
 
Join Date: Feb 2008
Posts: 5
Quote:
Originally Posted by LOL! View Post
To get freedom by 40, I had to live well below my means and save+invest at least half my gross income. That is, one-half of my income was used to pay taxes and living expenses. Are you committed to doing that?
Thanks for the advice. When did you start saving/when did you set your mind to the task of FIRE?

If I can save half and not be suicidal, yes. If I can save 75%, I'll do it. I recognize the difference between "wants" and "needs," yet I realize that sometimes I need some of my wants. A lot of people, perhaps most people, tend to lack the ability to resist their urge to spend money on "wants" and, in an effort to convince themselves that they should buy the thing on the shelf in front of them, they determine that this product is actually a need. I don't have that problem. I'm not into big TV's, I don't own and don't want a car (I'll likely have to get one someday, but so far so good), and while I think the iPhone is as cool as the next guy thinks it is, I'm not shelling out that ridiculous price for a fancy phone.

After going through my little financially immature episode a few years back, I've really been able to keep a clear head about what I want and what I need. What I really need is to have a partner and, more importantly, to have hope that I can free myself from the trap called W*RK that nearly everyone in the world finds themselves in. Financial Independence is my overarching goal, I'm committed to it 100%. I'll continue saving as much as possible while living well below my means.

Bravo on reaching FIRE by 40, by the way. That is an enormous accomplishment.
__________________
"In the realm of ideas everything depends on enthusiasm. In the real world all rests on perseverance."
Johann Wolfgang von Goethe
FreeBy2020 is offline   Reply With Quote
Old 02-19-2008, 12:10 PM   #12
Dryer sheet aficionado
 
Join Date: Nov 2007
Posts: 29
Saving in Japan? I salute you sir, after paying $3 for an apple I don't know what could be worse.

Granted I was probably shopping in the wrong place.
__________________
Neongreen is offline   Reply With Quote
Old 02-19-2008, 03:12 PM   #13
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Have you done any calculations with respect to what amount you'll have to save, at any rate of return in order to produce X amount of income? Or, do you just plan on quitting saving after 15 years and lettin' it ride until you fully retire.

I wish you luck. You'll probably do fine judging by your attitude.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 02-19-2008, 08:07 PM   #14
Confused about dryer sheets
FreeBy2020's Avatar
 
Join Date: Feb 2008
Posts: 5
Quote:
Originally Posted by CCdaCE View Post
Have you done any calculations with respect to what amount you'll have to save, at any rate of return in order to produce X amount of income? Or, do you just plan on quitting saving after 15 years and lettin' it ride until you fully retire.

I wish you luck. You'll probably do fine judging by your attitude.

-CC
Up to this point, no. I have haven't done any calculations because the variables seem so undefined for me right now. I really don't know what career path I'm on. All I really know is that I am going to save as much as I can without jeopardizing my relationships with those close to me.

I do know that in order to make FI by 40 a reality, the stock market is my vehicle. In regards to whether or not I'm going to quit savings and let it ride, I suppose it really depends on what degree of financial independence I have at 40 years old. If I have enough to live in the lifestyle that I desire (a home of my own, some international travel), I may just stop saving. But it really depends. The biggest thing for me is to be able to leave the w*rking world as soon as possible. I mean, I've been w*rking full time for 5 of the past 6 years, and for most of that time I have felt like I could be doing something more useful with my time if I didn't have to show up to a j*b every day. I want OUT of this rat race/hamster cage called the w*rking world, so when the right time to leave the vicious cycle approaches, I'll be ready.

Thanks for the encouragement.
__________________
"In the realm of ideas everything depends on enthusiasm. In the real world all rests on perseverance."
Johann Wolfgang von Goethe
FreeBy2020 is offline   Reply With Quote
Old 02-19-2008, 10:25 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Check out the Gen X Retirement Calculator over at the retire early home page

Millennium Edition Generation-X Retirement Calculator.

As a high level tool, it might help lay out what it's going to take for you to get to your goal.
__________________
Marquette is offline   Reply With Quote
Old 02-20-2008, 03:23 AM   #16
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,401
FreeBy2020,

I applaud your ambition.

From playing around with my spreadsheet and watching what affects it, I have figured out a few things that may help you:

1. After a certain point (which in my case is about 20%), saving more of your income doesn't really move the FIRE date appreciably closer. Basically, you need to have a certain amount of time for compounding to do its magic.

2. What really matters at that point is spending levels. For every dollar you want to spend, you need to have $25 in savings. What I have discovered is that it is easier for me to not spend that $1 than to save 25 of them. Obviously you want to enjoy life, but a laser-like and continual focus on expenses will serve you very well in achieving your goal.

Good luck,

2Cor521
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
3 days to freedom jambo101 Hi, I am... 20 12-19-2007 08:01 AM
Less than 3 weeks to freedom ARB57 Hi, I am... 7 12-12-2007 10:58 AM
The (emotional) freedom of FIRE tangomonster Life after FIRE 13 09-19-2007 09:06 AM
joining during my countdown to freedom lhamo Hi, I am... 3 04-19-2007 09:47 AM
Fidelity Freedom Funds Da Nag FIRE and Money 4 10-23-2006 02:21 PM

 

 
All times are GMT -6. The time now is 03:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.