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29 year old female - looking for support and info
Old 01-19-2010, 08:45 PM   #1
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29 year old female - looking for support and info

Hello,

I have been lurking for a few months now, and finally decided it was time to indroduce myself.

I am a 29yo female that would love to retire early! I currently max out my 401K and Roth IRA, and have started contributing to a taxable account (STAR fund with vanguard) I have about 80K in various retirement accounts and am trying to contribute approx 40% of my income each year. My boyfriend and I bought a house a year ago at a lovely 4.6% interest rate and plan to stay for the long haul.

Being a financial savoy woman, I have a lot of trouble relating to my friends who are in major debt. Recently this is where I find myself lurking when I need to feel I am not the only one obsessed with retiring early.

Also, as I approach my 30th B-day I am struggling with what the future holds and how it will affect my goal of ER. I am still on the fence as to whether I want kids some day, but I ain't getting any younger either.

I plan to post specific questions as they come up and contribute when I can.
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Old 01-19-2010, 08:53 PM   #2
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Been there done that. Its great that you have an SO who is on board. Major find. Other than that, keep it up but do not feel bad if one day in the future you need to back off on the savings to pursue a worthwhile goal (pursuing a dream, kids, getting a grad degree, etc.).
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Old 01-19-2010, 09:06 PM   #3
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Nice solid foundation to your future, Lilly (I love the name by the way). Welcome to the boards and I hope to read your contributions to our threads.
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Old 01-19-2010, 10:21 PM   #4
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Quote:
Originally Posted by lilly View Post
Recently this is where I find myself lurking when I need to feel I am not the only one obsessed with retiring early.
Perhaps not that so much, but that you have the maturity and wisdom to know that the "far distant future" that so many people put off thinking about has a rather disconcerting habit of becoming the present.

Don't ask how I know that....
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Old 01-19-2010, 11:56 PM   #5
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OP:

If you want to retire early, Read all you can. Then try and think "outside the box".

Invest in a Rental House. (Since you already bought one, you know how).
Location, Location, Location.

Don't be Greedy. When in invest in the market, go for "base hits", Don't gamble on the "home run".

Be leary of the "experts". They are usually wrong.

Talk to "older people", who are financially secure. Listen to their advice.
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Old 01-20-2010, 07:02 AM   #6
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Absolutely nothing wrong with early retirement, just try not to let it cost too much today.

Welcome and enjoy, there's no hurry.

May your dreams come true.
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Old 01-20-2010, 07:48 AM   #7
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Congratulations on being financially responsible and having goals. I, too, find comfort in seeing that there are like minded people on this board (versus all the debt junkies in the everyday world).

One thing you might consider is that STAR is not very tax efficient. I inherited $80K when my dad died last year and put it in STAR - thought was I wanted to keep those funds separate to fund some "trips of a lifetime" so that I could say my inheritance allowed us to do some very nice vacations we would not do on our own. So far it has funded a climb of Kilimanjaro and a rafting trip on the Colorado River through the Grand Canyon and is up to $100K, so I am pretty pleased!

Just yesterday I looked at the tax efficiency tab of Vanguard's portfolio analyzer and they flagged STAR in a taxable account as not a good thing.

You may want to consider this if you are in a high tax bracket. I am leaning towards selling the STAR and buying it back in my IRA.
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Old 01-20-2010, 08:36 AM   #8
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Welcome to the forum. I worked for years with people who thought I was odd and didn't seem to spend according to my income. They were the same ones that were amazed when I left at age 54.

STAR includes bonds. It is more tax efficient to hold bonds in a tax deferred (IRA or 401(k)) account. You can trade it for the Total Stock Market fund and buy bonds within your tax deferred accounts.
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Old 01-20-2010, 09:58 PM   #9
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Thanks for some great words of wisdom and advise.

I initially started in the STAR fund since I only need 1K vs 3K to get started, so it is very small right now. I have been trying to better understand the tax implications, but I am still pretty green. I also have some invested in the Total Stock Market fund as suggested above, but it has done very poor over the last 6 years or so. (But I imagine that is true for most of the market the last decade)

Please don't give me the evil eye, but all of my IRA and 401K funds are in set it and forget it Target funds. I do understand this gives me less flexability with self allocation, but I am just not comfortable yet to do it myself. Seems like I better figure it out soon so I can get my taxable accounts and tax defered to work better for me.
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Old 01-20-2010, 10:59 PM   #10
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Quote:
Originally Posted by lilly View Post

I initially started in the STAR fund since I only need 1K vs 3K to get started, so it is very small right now. I have been trying to better understand the tax implications, but I am still pretty green. I also have some invested in the Total Stock Market fund as suggested above, but it has done very poor over the last 6 years or so. (But I imagine that is true for most of the market the last decade)

.
Vanguard has a tax-efficient balanced fund that may be more appropriate for your taxable account than STAR if you are in the appropriate tax bracket.

I haven't looked at its holdings but my guess is that it is something along the lines of 60% Total Market Fund/40% Intermediate Term Tax Exempt Bond Fund.

The common wisdom (if you decide that you want fixed income in a taxable account) based on typical yields (this isn't necessarily a typical time) of taxable and tax-exempt bonds is that fixed income in taxable accounts should be in tax-exempt bonds if you are in the 25% bracket or higher.

CA tax free funds are also tax exempt from the 9.3% CA state tax. Vanguard has intermediate and long funds although many people are concerned about CA bonds because of the financial situation in the state. You'll have to make your own decision about that.

MB
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Old 01-21-2010, 12:03 AM   #11
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Welcome, Lilly! We're just a few years ahead of you and were in a similar situation until the arrival of kids.

I can say that your diligence and planning now may make for a much easier transition if you do decide to have kids. We had aggressively worked to pay our mortgage off early (personal choice, not universally recommended by the board here) and the result was that when our eldest was born, we were able to refinance and ended up with a much easier payment, which made my staying home much more comfortable.

The point is: Sometimes one goal (early retirement) makes other, as-yet-unknown-goals (staying home with the munchkins) much more possible.

Have fun!
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Old 01-22-2010, 09:14 PM   #12
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Welcome! DH and I are in San Diego as well, and also plan on staying (at least that's our plan for now).

Nothing wrong with Target funds, many here use them for at least part of their portfolios. Individual funds just give you more flexibility (and endless opportunities for discussion and debate ). Many people (myself included) started out with expensive managed funds, annuities, whole life policies - all kinds of money-draining products. I think you're off to a great start!
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Old 01-23-2010, 01:36 AM   #13
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Hello! 31-year-old female here, also on the fence about whether to have children. In any case, like an earlier poster said, have a solid financial foundation will greatly widen your options and reduce stress if you decide to take that step. You're way ahead of where I was 2 years ago.

We generally just go with some of the common VG index funds because we are a little nervous about emerging markets, especially China. From what I read, there is a lot of accounting problems and inflated estimates. But that's not unique to China, of course.

Welcome to the forum!
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