27 year old pipe welder on the fast track to FI!.. hopefully

[Huntnful]

Hello everyone!! Sorry for the long post, but I’m excited to be here and at this stage in my life! My name is Steve, and I’ve been a pipe welder for one of the major utility companies in California for 8 years. Roughly 1 1/2 years ago I couldn’t get the thought out of mind “why do I need to work here for 30 more years?”. I had to take some action. I initially considered work I could do for myself to have more freedom, then started reading books, starting with “Your Money or Your Life” followed by “The Simple Path to Wealth”. Early retirement wasn’t even a thought in my mind until I read these books, and now it’s my main focus! What is more free than just retiring and doing what you want, with your own defined purpose?! Here’s my current financial status and current workings toward retirement.

-27 years old, single, no children

-Average annual income of $160-210k based on overtime (for the past 7 years). My base salary is $110k.

-Currently maxing out 401k with a 6% company match .70 cents on the dollar. Great match in my opinion. Account at $200k currently. All in an index fund.

-Investing an addition $750 per week (started at $350) in my taxed account through Vanguard. All into VTSAX (us stock index fund). Account at $80k currently. Started this account in July 2017 with full savings of $50k.

-I own a house with +-$350k in equity that I bought 4 years ago also.

-I have very little cash in the bank due my investments actually exceeding my income if I don’t work overtime, and any time I build up a lump some I invest it as an additional to my taxed account.

I was very reckless with money not long ago and made many mistakes like a 401k loan and excessive spending before I found this new path. I try not to dwell on the past and my mistakes, but damn I was young and dumb haha (still am). If I had this mentality when I was 19 I’d probably be retired. But I didn’t and I’m not, but the time is now!! I believe I can achieve retirement in 8 years with discipline and the sale of my house and leaving California. It also makes it not so scary since I will be so young and with still the full ability to work and make money at will if needed. I actually plan on continuing to work (as a hobby) and added play money since I am very active. I would love some added guidance for my path or any questions about my past or present! I appreaciate any and all help as well as critiques. I’m very open minded and am welcoming to any other visions and opinions!

 

[VanWinkle]

Welcome Steve,

It seems you are on a great path to FIRE with a great income and good saving habits. I would work to increase my taxable account savings as it will be needed to bridge an early retirement until you can access your 401K without the penalty. I would aim for a 50/50 mix of taxable to tax deferred for maximum flexibility when withdrawing for living expenses

You are young and life may change in ways you have not thought about. A wife and children could change your outlook in early retirement. However, financial independence is a goal that will be unshaken by life's changes.

Best of luck to you,

VW

 

[Huntnful]

Welcome Steve,

It seems you are on a great path to FIRE with a great income and good saving habits. I would work to increase my taxable account savings as it will be needed to bridge an early retirement until you can access your 401K without the penalty. I would aim for a 50/50 mix of taxable to tax deferred for maximum flexibility when withdrawing for living expenses

You are young and life may change in ways you have not thought about. A wife and children could change your outlook in early retirement. However, financial independence is a goal that will be unshaken by life's changes.

Best of luck to you,

VW

Yes sir, I completely agree about having a sizeable taxed account to draw from since I’ll be drawing from it for a long period of time before being able to access my 401k. I only just learned this strategy 2 days through another book I’m reading. I’m strongly considering part time work to get me through that long period also. The $750 per week is my mandatory addition to make sure I stay on a steady track, but I did just put another $5k in that accumulated while I was working excessive OT, and I plan to continue to add lump sums like that along the way. The $750 per week is $1500 a month more than I can afford without OT with my currently bills. So that’s the max I feel comfortable with as a recurring payment, but I completely agree about piling as much as possible when I can into my taxed account!! Thank you very much for your insight!!

 

[Huntnful]

Welcome Steve,

It seems you are on a great path to FIRE with a great income and good saving habits. I would work to increase my taxable account savings as it will be needed to bridge an early retirement until you can access your 401K without the penalty. I would aim for a 50/50 mix of taxable to tax deferred for maximum flexibility when withdrawing for living expenses

You are young and life may change in ways you have not thought about. A wife and children could change your outlook in early retirement. However, financial independence is a goal that will be unshaken by life's changes.

Best of luck to you,

VW

And the wife and kids could clearly change plans, but wouldn’t de rail them. Like you stated, just change and adjust and maintain the mindset. I’d also be looking for someone frugal with a similar mind set. I also won’t get married without a prenup. As bad as that sounds haha, I learn from others mistakes as often as possible.

 

[Scrapr]

You are young and life may change in ways you have not thought about. A wife and children could change your outlook in early retirement. However, financial independence is a goal that will be unshaken by life's changes.

Best of luck to you,

VW

I was playing with a retirement calculator that had income sliders for myself & Mrs Scrapr. I came up with one scenario and showed it to her. "The good news is I can retire at 55. The bad news is you're working to 75"

I almost slept on the couch that night

 

[Bigdawg]

I was playing with a retirement calculator that had income sliders for myself & Mrs Scrapr. I came up with one scenario and showed it to her. "The good news is I can retire at 55. The bad news is you're working to 75"

I almost slept on the couch that night

Had a good belly laugh with this one. Thanks for that. Early in our marriage DW would get mad at me and put my pillow on the couch. I never figured it out. I would just pick up my pillow (never thought about how it got there) and head to the bedroom.

 

[Bigdawg]

Welcome Steve. Since you are single and own a house have you thought about renting out some of the rooms? Good luck and welcome.

 

[Joylush]

Hello everyone!! Sorry for the long post, but I’m excited to be here and at this stage in my life! My name is Steve, and I’ve been a pipe welder for one of the major utility companies in California for 8 years. Roughly 1 1/2 years ago I couldn’t get the thought out of mind “why do I need to work here for 30 more years?”. I had to take some action. I initially considered work I could do for myself to have more freedom, then started reading books, starting with “Your Money or Your Life” followed by “The Simple Path to Wealth”. Early retirement wasn’t even a thought in my mind until I read these books, and now it’s my main focus! What is more free than just retiring and doing what you want, with your own defined purpose?! Here’s my current financial status and current workings toward retirement.

-27 years old, single, no children

-Average annual income of $160-210k based on overtime (for the past 7 years). My base salary is $110k.

-Currently maxing out 401k with a 6% company match .70 cents on the dollar. Great match in my opinion. Account at $200k currently. All in an index fund.

-Investing an addition $750 per week (started at $350) in my taxed account through Vanguard. All into VTSAX (us stock index fund). Account at $80k currently. Started this account in July 2017 with full savings of $50k.

-I own a house with +-$350k in equity that I bought 4 years ago also.

-I have very little cash in the bank due my investments actually exceeding my income if I don’t work overtime, and any time I build up a lump some I invest it as an additional to my taxed account.

I was very reckless with money not long ago and made many mistakes like a 401k loan and excessive spending before I found this new path. I try not to dwell on the past and my mistakes, but damn I was young and dumb haha (still am). If I had this mentality when I was 19 I’d probably be retired. But I didn’t and I’m not, but the time is now!! I believe I can achieve retirement in 8 years with discipline and the sale of my house and leaving California. It also makes it not so scary since I will be so young and with still the full ability to work and make money at will if needed. I actually plan on continuing to work (as a hobby) and added play money since I am very active. I would love some added guidance for my path or any questions about my past or present! I appreaciate any and all help as well as critiques. I’m very open minded and am welcoming to any other visions and opinions!

So glad to hear there are young folks out there with your mindset. I suspect you will do well.

 

[Senator]

I would start a welding side gig. Make trailers, do some side work to make a bit of spending cash.

 

[Surewhitey]

I was playing with a retirement calculator that had income sliders for myself & Mrs Scrapr. I came up with one scenario and showed it to her. "The good news is I can retire at 55. The bad news is you're working to 75"

I almost slept on the couch that night

We're married to the same woman... Mine just accepted a new j*b, so I'm thinking my date just moved out 5 years

Just going to build up the extra padding...until 52. See you then.

Seriously, we did take a 3 year break and it did wonders for the experiences / friendships bank. Gave me the super-bug of not wanting to go back to the cog / machine of "life"...

 

[Music Lover]

I would start a welding side gig. Make trailers, do some side work to make a bit of spending cash.

I agree on this 100%, Whether trailers or something else...find a side gig. Most of my friends in trades have side gigs that not only provide additional income, but they get to pick and choose only the jobs that they want.

Also, don't let early retirement consume your focus so much that you forget to have fun. You say that you're 27 and may be able to retire in 8 years. If you skipped overtime every now and then and enjoyed a minor splurge every now and then you might push retirement another year. So what? I once worked overtime for 3 evenings and a Saturday one week. That paid for a 7 day all-in trip to Jamaica the next week. When I looked at it that way, it was a fair trade off.

 

[Huntnful]

Thank you for that view point! I actually work quite a bit less than I used to for that exact reason. I’m an avid hunter and plan on doing more traveling hunting trips to get a double experience. And I’m actually leaving for Jamaica this Friday for a 7 days cruise with my family! I’ve been thinking more and more about a side welding gig, but I do work a lot to begin with but bridging some the weekend gaps with a little extra money would be an added to either invest or spend on experiences.

 

[Huntnful]

Welcome Steve. Since you are single and own a house have you thought about renting out some of the rooms? Good luck and welcome.

I’ve had roommates in the past during college and was honestly not a fan at all. I’m not much of a people person which is also why I haven’t gotten involved in rentals and real estate.

 

[NgineER]

Welcome-you are doing awesome. See if you can contribute to an after tax 401k account, this can be rolled over to a roth and contributions can be withdrawn at any time tax and penalty free. The after tax 401k contribution is above and beyond your $18,500 401k contribution limit. Its a nice way to add some taxfree savings to balance out taxable, taxfree and tax deferred.

 

[rocketjockey]

I also won’t get married without a prenup. As bad as that sounds haha, I learn from others mistakes as often as possible.

While a great idea, good luck with implementation! Most women (unless they have sizeable assets of their own), seem to view this as a "lack of conviction to the forthcoming marriage". Or at least any that I have ever been associated with. And before all you women jump me, the ones on this board are the exceptions to the rule.

 

[38Chevy454]

Welcome to the forum. I think your OT extra money is a great way to add up the savings. Live (below your means of course!) off your base salary, and pocket the extra OT into savings. You will do fine. Congrats on a a good start so far, even if you think there was a little stumble out of the blocks at the beginning. None of us are perfect, the idea is to make a lot more good decisions and fewer bad decisions.

I assume you work for the same utility that I did some co-op work in college for. I probably would have went to work for them once graduated, but there was a hiring freeze at the time 1987. Also paid enough money to the utility when I lived in San Francisco bay area. One thing for sure, the utility seems to have enough customers and work. Although a side gig may be a nice change, I doubt that you would make as much as you get in OT. My suggestion is while you are young and have the ambition, take the OT when you can. Saving as much as you can as early as you can is a sure path to success. Just make sure to have some fun now and while you have the freedom.

 

[Huntnful]

Welcome-you are doing awesome. See if you can contribute to an after tax 401k account, this can be rolled over to a roth and contributions can be withdrawn at any time tax and penalty free. The after tax 401k contribution is above and beyond your $18,500 401k contribution limit. Its a nice way to add some taxfree savings to balance out taxable, taxfree and tax deferred.

I will look into this! Thank you!

 

[Huntnful]

While a great idea, good luck with implementation! Most women (unless they have sizeable assets of their own), seem to view this as a "lack of conviction to the forthcoming marriage". Or at least any that I have ever been associated with. And before all you women jump me, the ones on this board are the exceptions to the rule.

I agree somewhat. But I’m a realist and expect my partner to be also. No one gets married with an expectation of divorce. But there a 60%+ divorce rate that can’t be ignored. It’s also to protect assets I obtained prior to the engagement. Anything grown and built together should be split to a certain extent. It may sound harsh, but I won’t be throwing away my hard work for anyone lol. But I’d be happy to share it with an understanding women!

 

[Huntnful]

Welcome to the forum. I think your OT extra money is a great way to add up the savings. Live (below your means of course!) off your base salary, and pocket the extra OT into savings. You will do fine. Congrats on a a good start so far, even if you think there was a little stumble out of the blocks at the beginning. None of us are perfect, the idea is to make a lot more good decisions and fewer bad decisions.

I assume you work for the same utility that I did some co-op work in college for. I probably would have went to work for them once graduated, but there was a hiring freeze at the time 1987. Also paid enough money to the utility when I lived in San Francisco bay area. One thing for sure, the utility seems to have enough customers and work. Although a side gig may be a nice change, I doubt that you would make as much as you get in OT. My suggestion is while you are young and have the ambition, take the OT when you can. Saving as much as you can as early as you can is a sure path to success. Just make sure to have some fun now and while you have the freedom.

I completely agree about the OT making more than a side gig. That’s my view point as well. A side gig welding would probably cost me around 3-5k to start up. But the benefits would be working from home for extra money and on my own schedule. I’m still weighing the benefits of the initial investment costs.

 

[Walt34]

Huntnful, you are doing great where you are. At 27 I had a decent-paying stable job, but I was spending every spare nickel on owning and maintaining an airplane. Now, I have some great memories from that time, but I'm not sure I would do the same thing knowing what I do now.

 

[Jasonjam83]

Nice work Steve! I’m not sure if this was covered already, but you may want to set up an emergency fund (3-6 months expenses) to avoid tapping into your investments if something unexpected happens.

 

[pjigar]

No-one has mentioned this but I want to make sure you are aware of back-door Roth IRA contributions. I like to distribute my egg in after-tax, pre-tax (401K) and no-tax (Roth) buckets if I can and not to mention HSA (if you qualify) that is never spent but rather invested.

 

[Maenad]

Welcome! Sounds like you're doing great! You've gotten great advice so far, but I wanted to add something that's been appearing in various discussion fora more the last couple of weeks: be prepared for the bear markets, and talk to other FIRE folks before you panic and sell. Those of us old-timers who made it through the dot-com bubble and the great recession can tell you how awful it is to watch your portfolio crash, and can help you with your first time through it.

If you haven't, you can also checkout the forum on Mr. Money Mustache, Early Retirement Extreme, the FI subreddit, and the Bogleheads forum. There's a different vibe at each, and it's fun to see where you fit best.

 

[HighOnLife]

And the wife and kids could clearly change plans, but wouldn’t de rail them. Like you stated, just change and adjust and maintain the mindset. I’d also be looking for someone frugal with a similar mind set. I also won’t get married without a prenup. As bad as that sounds haha, I learn from others mistakes as often as possible.

Hey Steve! Congratulations man, sounds like you are set up in a good position. My own story is pretty similar to yours at 27. You can really get ahead if you keep doing what you're doing. Although I will be a dissenting voice and say don't get married. That is the quickest way to lose half or more of what you make. It's not your father's dating scene out there anymore; modern marriage is a high-risk proposal for a man like you who has resources and is making his own way. Don't just take my word for it, do some internet research on this, there is plenty.

Just keep doing what you're doing, don't do anything stupid, and we'll soon be asking you how you managed to retire so quickly!

 

[ndnguy822000]

Wow amazing !!!! Buy an investment property when you have a good down payment , the cash flow will get you to where you want to be much faster. I’m 35 and have 3 homes and will have them all paid off before I am 40. I’ve put about the same as you in my 401k . Put it in line before you get married or have kids because I just had my first baby and MAN all the tales of “ kids are expensive “ are true. You’ve don’t fantastic man, what a great foundation you’ve set forth for yourself , I wish there were more people like you around here