27 Years Old, Starting to Lay Groundwork.......

[Vagabond2020]

........looking to soak up a much info, expertise, and partake in some good discussion.

I have been lurking on these boards for a few months and more seriously the past month or so, I am truly inspired by many successful stories of other reaching FI and ER at a much earlier age than many people think possible. I just began working full time a little over 3 years ago and I am slowly making sure my ducks are in order so I don't have to play catch up later on in life. Feel free to critique my plan and let me know if I am missing anything. A pleasure to meet you guys and look forward to contributing as much as I can.

27 years Old
2014 will be my 4th year working full time.
2104 will be my 4th year maxing out my Roth IRA
I started doing 10% of my Salary into 401k at the end of 2012, bumped that to 15% this past January(Attempting to bump by 3-5% annually till I reach the max allowable)
Have 6 months living expenses in Cash
0 Debt
No Kids
Renting with my significant Other, not married yet.
Salary is ~50k/yr, She finishes School in May and entry level in her field will be ~$30k/yr
Looking to semi retire by 2037

I know this isn't too much information, If I left anything out. Feel free to ask.

 

[Keim]

ON my computer the thread title abbreviated to this:
27 Years Old, Starting to Lay...

My dirty mind forced me to open the thread. So many possibilities!

Imagine my disappointment.

OTOH, the OP has the start of a good plan. Avoid debt and bump up that savings rate as able, OP! And, look into low cost indexing, and asset allocation. Wish I'd done that at your age.

 

[Walt34]

You are off to a great start and are well ahead of most people.

I gather you're planning to get married. How's your beloved's finances? Any school loans? Those are a biggie to attack right away since they never go away and compound to frightening levels if not paid on schedule. Any other debt she's carrying?

 

[Palimpsest]

Youre really on the right track. I would echo the sentiment of avoiding debt. It sounds like youve done that well so far, but there are times ahead for you where people sometimes shoot the budget (marriage, house, child). Saving 15-20% forces you to live below your means. Well done so far.

 

[Aiming_4_55]

Good job so far, keep up the good work.

Is the SO in the same shape with debt? same page on saving?

Just food for thought.

 

[SJ1_]

The only thing u have the most control over time is your expenses.
I would live the same as your are now, bank what u are then bank her salary once she starts working.
A lot of people I know said they were going to do this but few ever do. New Cars, bigger house , etc. They turn 40, 50 and realize they are trapped.

good luck ur off to a great start

 

[38Chevy454]

Keep up the good start. Continue to max out your 401k, try to save even more if you can. Avoid debt for unnecessary things; housing is OK. The old rule LBYM holds true. The more you save and less you spend results in ability to ER sooner.

Just the fact you are already started in 401k and are thinking about this makes you ahead of most your age. A plan to get to your goal is also more than most have, and will contribute to your success in meeting that goal.

 

[Vagabond2020]

ON my computer the thread title abbreviated to this:
27 Years Old, Starting to Lay...

My dirty mind forced me to open the thread. So many possibilities!

Imagine my disappointment.

OTOH, the OP has the start of a good plan. Avoid debt and bump up that savings rate as able, OP! And, look into low cost indexing, and asset allocation. Wish I'd done that at your age.

Hey Keim, I am using Vanguard low cost funds for my Roth and My workplace 401k is through Fidelity so my options there are pretty limited.

You are off to a great start and are well ahead of most people.

I gather you're planning to get married. How's your beloved's finances? Any school loans? Those are a biggie to attack right away since they never go away and compound to frightening levels if not paid on schedule. Any other debt she's carrying?

She has about $25k in loans and no other debt, marriage is definitely in the future but in no rush for now.

Youre really on the right track. I would echo the sentiment of avoiding debt. It sounds like youve done that well so far, but there are times ahead for you where people sometimes shoot the budget (marriage, house, child). Saving 15-20% forces you to live below your means. Well done so far.

Thank you Pal, I have avoided debt my whole life. Purchased my first 2 vehicles as well as my current car/motorcycle for cash and let some other ****er take the first 3-4 years of depreciation for me. I save ~15% pretax income and 20% post tax income for now while I can.

Good job so far, keep up the good work.

Is the SO in the same shape with debt? same page on saving?

Just food for thought.

Well, she has school loans, totaling ~$25k so that should be paid off within the first few years of her full time employment. Aside from that she is decent with her money and I just got her to open up a Roth IRA despite still being in her last semester of undergrad.

The only thing u have the most control over time is your expenses.
I would live the same as your are now, bank what u are then bank her salary once she starts working.
A lot of people I know said they were going to do this but few ever do. New Cars, bigger house , etc. They turn 40, 50 and realize they are trapped.

good luck ur off to a great start

I mean, as of right now we are living like broke college students haha. I have always been very frugal with my money and saving always came fairly easy. I would like to buy a house within the next few years but aside from that I plan on increasing my contributions to tax deferred accounts with the ultimate goal being able to max out both my Roth and my 401k with the maximums. If we could BOTH do that, I think we would be off to a great start, don't know many 20 something year old's putting away $46k/yr to retirement.

Keep up the good start. Continue to max out your 401k, try to save even more if you can. Avoid debt for unnecessary things; housing is OK. The old rule LBYM holds true. The more you save and less you spend results in ability to ER sooner.

Just the fact you are already started in 401k and are thinking about this makes you ahead of most your age. A plan to get to your goal is also more than most have, and will contribute to your success in meeting that goal.

I have 0 faith in social security and I think we live in an extremely uncertain world when it comes to employment. Gone are the days where it is common to work for 1-2 companies your entire working career. I think now more than ever people are not only moving about within an industry but often times changing industries all together.

Right now I work in Retail Management, and do consulting on the side. I am doing everything I can this year to expand my consulting income and hopefully phase that into my main source of income.

For now we just chip away slowly and let compounding work its magic.

 

[seraphim]

Sounds like you're on track. Now to keep the faith and avoid temptation lol. It will help for you and SO to find common ground low cost entertainment.

 

[readytofire]

You're off to a good start. I have a similar goal and schedule but am 3 years older than you and aiming for 2034. Don't forget to come back and update us on your progress from time to time.

 

[FIREontheMountain]

I'm a few years older than you and I'd say focus on your incomes and increasing your savings rate. Those two things will have the biggest impact on your future. Always be looking around in your field, network like crazy and don't burn any bridges, ever. Don't hesitate to leave a good job for a potentially great job especially if it comes with a higher salary. The compounding and long term effects of 10%/yr+ increases in salary are worth the effort.

I like to split my raises with my future self and contribute half of each bump in salary to savings. Don't forget to start thinking about starting a down payment savings as well, a lot of people really get the itch to buy a place when they are in their late 20s/early 30s.

You are on the right path, good luck to you!

 

[Vagabond2020]

Well, I made this post a little over half a year ago......and for the most part things are going great!

Tightened the budget a bit, increased 401K contributions to 25%, also in the works a side business to generate extra income. The misses has finished school and is currently working 2 part time Jobs while she hunts for something in her field.

The only rough patch has been the markets over the past 2 months. I am sure anyone here with a portfolio heavy in equities can feel as well.

 

[Bigdawg]

Hey two birds, go check out wherewebe.com. They ER'd on a 15 year plan. I think you can ER well before 2037. Don't forget about taxable accounts. You will need plenty of $ to bridge the gap between ER (at 40-45) and 59.5 (401K money).

 

[eytonxav]

You are way ahead of many your age who have even thought about planning for their retirement. Stay the course, keep increasing savings and spend prudently.

 

[Bryan Barnfellow]

"If we could BOTH do that, I think we would be off to a great start, don't know many 20 something year old's putting away $46k/yr to retirement."

Precious few I'd say! Save, save, save is the mantra for a successful FIRE.

One thing my wife and I did early on is calculate what the nominal value of a foregone capuccino (for instance) would be 30 years hence, when we would be retired, if we instead invested the cost. For example, in very simple terms, if we don't spend $3.50*2=$7.00 for two capuccinos today and invest it with a 4% annual rate of return, then in 30 years, forgoing the coffee drink on that one day gives us about $23.00 (nominally). It was a nice game to play...Capuccino now or $22 later? We sometimes still went for the coffee; but often thought better of it. These individual decisions added up. For this to work, one just has to be sure to put the money aside and actually invest it.

Or, even better, forgoing going out to dinner when you really don't feel like it but "it's Friday evening and we should". Then, for example, we'd say, dinner out tonight or $130 dollars when we retire (at $40 saved)? Visualization exercises like this kept us on plan for the last 22 years and we are retiring early next July!

We started out by creating "the plan" for early retirement and have had monthly "business meetings" every month since 1992 when we started our plan. She would report on the budget and where things stood. I would report on the investments and projections. As "head of investments" I would push hard for the monthly allocation to be fully available. As "head of budgeting" she would work hard to remind us when we were in danger of running into the ditch.

Sometimes when one of us wanted to buy something not budgeted for, the other would say, "But it's not in the plan". If we still decided to go ahead, we had to agree then and there where the funds would come from in the budget, including from the savings line. The plan became core to our lives (in a very positive way) and provided great comfort when things were difficult at work. It now is a source of joy---one of the products of our 29 year marriage that we can point to with pride. When we reached $1M in invested assets in the early 2000's you can imagine the joy and celebration.

All the best to you as you move forward to your FIRE objective!

-BB

 

[Vagabond2020]

I appreciate the insight guys and gals!! Since my last post I have discovered MMM. Reached a 50% Savings rate. Interviewed for a new career (should hear back next week) if I get the position it Will be a 50% increase from current pay within 1 year. New FIRE Date is 2027 instead of 2037.

 

[brewer12345]

I appreciate the insight guys and gals!! Since my last post I have discovered MMM. Reached a 50% Savings rate. Interviewed for a new career (should hear back next week) if I get the position it Will be a 50% increase from current pay within 1 year. New FIRE Date is 2027 instead of 2037.

Ah, MMM: land of bullcrap, political correctness and incompetent moderation. Have fun there in limited doses.

A small bit of advice from someone who started saving a year or so ahead of you and is now a semi-retired (read: I don't give a flying reproductive act about my contract job) 41 YO: gather some rosebuds (or some bud/Bud) while ye may. There are lots of things I thought would be lots of fun 15 years ago and I would get to once I made my bank. 15 years later, they are neither no longer fun, or I am too conservative/risk averse to chance enjoying them. Some things are best enjoyed young. Make sure you do so. Oh, and have a couple kids. Best thing I ever did besides marrying DW.

 

[Sea Kayaker]

What's wrong with MMM? Or as I like to call it, the Land of Unicorns and Rainbows.

Pretty sure I've seen you post over there Brewer. Good thing too, they could use a dose of your, uh, "unique perspective" over there.

 

[CoolChange]

....
A small bit of advice from someone who started saving a year or so ahead of you and is now a semi-retired (read: I don't give a flying reproductive act about my contract job) 41 YO: gather some rosebuds (or some bud/Bud) while ye may. There are lots of things I thought would be lots of fun 15 years ago and I would get to once I made my bank. 15 years later, they are neither no longer fun, or I am too conservative/risk averse to chance enjoying them. Some things are best enjoyed young. Make sure you do so. Oh, and have a couple kids. Best thing I ever did besides marrying DW.

I am a bit older than Brewer and not quite RE (even though all of the calculators and my own spreadsheets say I am FI); but, I do echo most of his sage advice above: Specifically, take some time to enjoy life while you are young; your body and outlook will almost certainly change as you age.

Kids aren't for everyone. If you and/or your SO desire them, the rewards can definitely be worth it; but, don't let social pressures persuade you that you need kids. You'll find several happy DINK's here.

Speaking of happy, assuming you have found your soul mate, do everything you can to keep her happy and maintain the relationship which can be worth so much more than money. Conversely, divorce is both expensive and emotionally draining.

 

[Vagabond2020]

Appreciate that insight very much Brewer and Coolchange.

We are definitely living up life and enjoying a balance. We are outdoors people and do a lot of hiking, camping, motorcycling, spend lots of time with family and friends.

I have been interviewing over the past 4 weeks for a big career change and finally got the offer yesterday. After one year I will see a ~70% pay increase on top of what I make currently. Should make that work/life balance easier as well as push that FIRE Date even closer.

 

[Vagabond2020]

Just an update,

Started a new career December 2014.

Our combined income is now up to $125k/yr
We have $125k in investable assets
Savings rate is ~50% of Net income
FIRE is looking like its 11-12 years away.

 

[Katiek]

Great job, thanks for the update!