30s and behind

[FIFoodie]

Hello everyone,
First off, I have enjoyed and gained great insights from reading various posts. Thank you for the inspiration!
Now, a little about me and my financial journey. I am 31 and I'm behind the 8 ball. I have no debt, but I also have no liquid savings. I make 34,000 a year working at a University in a "tech" job (database administration) that doesn't pay a "tech" salary. However, this is much better (11,000) than what I was making 5 years ago. I graduated from the University of Virginia with a BS in Psychology, but didn't want to do anything counseling/psychology related. My GPA wasn't all that great so I'm having difficulty being accepted to a Grad program.
I am proud to be debt free because I had a long journey of getting out of debt. At the height of it, I had roughly 14,000 in debt. I currently have a net worth of roughly 11,000 (retirement and non-retirement investments).
My monthly expenses are low, I spend roughly 500/month on bills, the rest gets eaten (restaurants) and some saved. Also, I'm single with no kids.
I am currently trying to find a way to kick my Financial Independence journey into overdrive and make it a real possibility. I have identified the steps I need to take as:
1. Earn more money - new job and side business
2. Lower wasteful spending (Eat out less)
3. Learn to invest better

My question to everyone is... Do you think it is possible for me to retire in about 15 years? Do you think the steps I have outlined are the correct steps for me to follow? What would you do if you were me to start striving for financial independence?
Thank you for reading!

 

[LauAnn]

1. Max out any employer matches to retirement accounts.
2. Max out tax-deferred savings obtained via IRA's.
3. Learn more about the LBYM life-style.
4. But don't forget to 'live' as well.

I don't think 15 years is realistic, but certainly FIRE can be in your future.

 

[Keim]

Correct steps so far.


Can you retire in fifteen years? Only you can answer that. How frugal are you? Planning on spouse and kids?


Determine how much income you need. That will tell you how much money you need to save-up based on a three or four percent withdrawal rate.


My guess is you would need to substantially increase your income to accomplish a fifteen year horizon. I suggest you play with firecalc.

 

[hnzw_rui]

1. Earn more money - new job and side business
2. Lower wasteful spending (Eat out less)
3. Learn to invest better

My question to everyone is... Do you think it is possible for me to retire in about 15 years? Do you think the steps I have outlined are the correct steps for me to follow? What would you do if you were me to start striving for financial independence?

1 & 2 will help you a lot. If you can keep the same level of spending or even lower it while increasing your income, you'll be able to save quite a lot.

3. I'm an indexer. Pretty much the only thing I did was schedule automatic deposits to the Vanguard Target Retirement Fund 2040 (0.18% ER). That's it. When I have enough investable assets for Admiral shares on component funds at my target asset allocation, I'll break it out.

As for retiring in 15 years, depends on your consumption. I'm also 30 years old and personally, I like my tech and creature comforts too much to retire at 45 unless I hit the lottery (something highly improbably given I don't buy lottery tickets in the first place ).

 

[purplesky]

Hello everyone,
First off, I have enjoyed and gained great insights from reading various posts. Thank you for the inspiration!
Now, a little about me and my financial journey. I am 31 and I'm behind the 8 ball. I have no debt, but I also have no liquid savings. I make 34,000 a year working at a University in a "tech" job (database administration) that doesn't pay a "tech" salary. However, this is much better (11,000) than what I was making 5 years ago. I graduated from the University of Virginia with a BS in Psychology, but didn't want to do anything counseling/psychology related. My GPA wasn't all that great so I'm having difficulty being accepted to a Grad program.
I am proud to be debt free because I had a long journey of getting out of debt. At the height of it, I had roughly 14,000 in debt. I currently have a net worth of roughly 11,000 (retirement and non-retirement investments).
My monthly expenses are low, I spend roughly 500/month on bills, the rest gets eaten (restaurants) and some saved. Also, I'm single with no kids.
I am currently trying to find a way to kick my Financial Independence journey into overdrive and make it a real possibility. I have identified the steps I need to take as:
1. Earn more money - new job and side business
2. Lower wasteful spending (Eat out less)
3. Learn to invest better

My question to everyone is... Do you think it is possible for me to retire in about 15 years? Do you think the steps I have outlined are the correct steps for me to follow? What would you do if you were me to start striving for financial independence?
Thank you for reading!

You have a great attitude and the fact that you are so focused at age 31 helps big time.

1. Pay yourself first until it hurts.
2. Stay out of restaurants!
3. NO credit card debt.
4. NO big car payments. Drive your car for 10 to 15 years.

Being debt free is great but don't lose focus on paying yourself first.

The math to retire in 15 years at your current income level will not work. But don't worry about it.

Just pay yourself first and invest in something like a Vanguard target retirement fund that only requires a 1k initial investment and will allow you to make small investment amounts any time as you go along.

 

[nash031]

1. Pay yourself first until it hurts.
2. Stay out of restaurants!
3. NO credit card debt.
4. NO big car payments. Drive your car for 10 to 15 years.

Let's not go crazy here... the handle is FIFoodie, so I wouldn't espouse any retirement plan that said "stay out of restaurants!" That'd be like telling me not to ride my bike or run. If that's what brings them enjoyment, you only live once... FI is a journey that should be enjoyed.

 

[RetireAge50]

It is pretty much a math problem along with self control. You can work out the math (and timetable) now and then it will be up to you whether it happens or not. Enjoy life along the way!

 

[Katiek]

I think others in this thread (including you) have already identified the right steps. Is 15 years realistic? It depends on a lot of factors including some unexpected things you may encounter along the way. I think it seems a bit too aggressive, and you have to ask if you're really willing to sacrifice everything now for a chance you may be able to RE in 15 years.

But I also want to say I don't think you're really "behind the ball" at your age. Certainly starting in your 20's is good, but you just hit your 30's and you still have time for the actions you're taking to have a big impact. Getting debt free and focusing on savings/budgeting is wonderful and in many ways, you're ahead of the game.

Welcome and good luck!

 

[FIFoodie]

Thanks for the encouragement everyone! I will be looking in to the suggestions mentioned here, especially FireCalc. I am trying to enjoy life as I go, and find a financial balance that will help with that enjoyment.

 

[jimnjana]

Can you take classes at the university you work at for free? Do you have pension benefits.?

 

[Gumby]

But I also want to say I don't think you're really "behind the ball" at your age. Certainly starting in your 20's is good, but you just hit your 30's and you still have time for the actions you're taking to have a big impact. Getting debt free and focusing on savings/budgeting is wonderful and in many ways, you're ahead of the game.

100% agree with Katiek. You're doing great for your age. You have a goal and are making a plan to achieve it. Just stick with it.

 

[purplesky]

Let's not go crazy here... the handle is FIFoodie, so I wouldn't espouse any retirement plan that said "stay out of restaurants!" That'd be like telling me not to ride my bike or run. If that's what brings them enjoyment, you only live once... FI is a journey that should be enjoyed.

At his income level he needs to find enjoyment from things that won't eat up all his disposable income.

 

[Terryjm51]

Great start and your making a PLAN
That's big, some people just meander along.
I would agree with the prior post stay debt free no car loans anything with wheels deprecates.
Pay yourself first, stay on course, life does happen and we have to refocus.
I would also tell you increase your income by extra jobs or changing fields.


Sent from my iPhone using Early Retirement Forum

 

[hnzw_rui]

Just a thought, at your current income level contribute to a Roth IRA as much as possible (after maxing out your 401k match, if any). I know that's one thing I wished I'd done in my 20s - maxed out my Roth. Unfortunately, went through a period of hyperconsumption instead.

 

[bclover]

Lol
When I was in my 30's there was no such thing as IRA's.
Op can I as why 45 is your target date? I think you are doing rather well.

Sent from my SPH-L710 using Early Retirement Forum mobile app

 

[FIFoodie]

Just a thought, at your current income level contribute to a Roth IRA as much as possible (after maxing out your 401k match, if any). I know that's one thing I wished I'd done in my 20s - maxed out my Roth. Unfortunately, went through a period of hyperconsumption instead.

I work for a University, so I have a 457/401a plan, I currently contribute enough to get the match, but the match is pretty small ($40/month). I don't know if its worth it to contribute more to this plan over retirement plans like the Roth or Traditional IRA. However, they also offer a Defined Benefit Pension plan which is automatically contributed to before I receive my paychecks. I didn't count the pension in my net worth, but its currently about $7000. I am fully vested, so whenever I leave this job, I could take the entire amount or leave it there and receive pension payments when I retire.

I opened a traditional IRA to help me with my taxes. If I open the Roth IRA, would you suggest contributing to both the ROTH and the traditional IRA at the same time, or prioritizing the ROTH?

 

[FIFoodie]

Lol
When I was in my 30's there was no such thing as IRA's.
Op can I as why 45 is your target date? I think you are doing rather well.

Sent from my SPH-L710 using Early Retirement Forum mobile app

I mostly just want Financial Freedom rather than official retirement at 45. I want to be able to choose what I want to do with my time rather than feel forced to work at an institution all day.

 

[FIFoodie]

Can you take classes at the university you work at for free? Do you have pension benefits.?

I can take classes, and I currently am taking classes, but they're on the undergraduate level because I have not been accepted to grad school. I do have pension benefits (they are currently around $7000), and I am fully vested.

 

[nash031]

At his income level he needs to find enjoyment from things that won't eat up all his disposable income.

^^^ He'll be here all week. ^^^

I agree, to a point. No way should there be $100 dinners every week, nor every month. But a blanket "stay out of restaurants" seems drastic to me if that's something he really enjoys. DW and I looooove some food, but we find ways to get it done less expensively now as we accelerate our savings. I've found I really love to cook good stuff at home, and that meal with wine that costs $30+time to make at home would be $200+ out. That's one way to scratch the foodie itch.

 

[hnzw_rui]

I work for a University, so I have a 457/401a plan, I currently contribute enough to get the match, but the match is pretty small ($40/month). I don't know if its worth it to contribute more to this plan over retirement plans like the Roth or Traditional IRA. However, they also offer a Defined Benefit Pension plan which is automatically contributed to before I receive my paychecks. I didn't count the pension in my net worth, but its currently about $7000. I am fully vested, so whenever I leave this job, I could take the entire amount or leave it there and receive pension payments when I retire.

I opened a traditional IRA to help me with my taxes. If I open the Roth IRA, would you suggest contributing to both the ROTH and the traditional IRA at the same time, or prioritizing the ROTH?

I'd prioritize the Roth first and a taxable account next. At $34K a year, you're easily in the 15% tax bracket for single. For 2015, you can actually earn up to $47,750 ($37,450 + $6,300 standard deduction + $4,000 personal exemption) and still be in the 15% bracket. That's not even including pension and 457b contributions both of which are not included in your W2. Suppose you have $2,000 in pension and $2,000 in 457 contributions. Income reported on your W2 is only $30K ($34K - $2K - $2K). Subtract your standard deduction and personal exemptions of $10,300 and your taxable income is just $19,700. $9,225 of that is taxed at 10% and the rest at 15%. I really wouldn't bother with lowering taxes even more until you're earning enough to bump you up to the 25% bracket. Really, take advantage of your low tax rate now and contribute to Roth and taxable accounts as much as possible. Wish I had done that in my 20s because now, I'm already in the 25% bracket for federal and 9.3% for state.

Also, do you pay state income tax and does your state allow deductions for your traditional IRA contribution? In California, we can't deduct tIRA contributions so putting the funds in a 457 is better (contributions are not taxed by both federal and state since income is deferred).

As for investing and asset location, put US stocks in the taxable account and keep bonds and international stocks in the 457 or Roth.

 

[Hermit]

I can take classes, and I currently am taking classes, but they're on the undergraduate level because I have not been accepted to grad school. I do have pension benefits (they are currently around $7000), and I am fully vested.

An undergraduate degree in a technical or mathematics field will probably do more for you financially than a graduate degree in many fields. Do some research into a specific field or area of interest to see what would be likely to bump your salary. I didn't graduate until I was 35 and didn't even start thinking about saving money until I was 40.

Good Luck

 

[purplesky]

^^^ He'll be here all week. ^^^

I agree, to a point. No way should there be $100 dinners every week, nor every month. But a blanket "stay out of restaurants" seems drastic to me if that's something he really enjoys. DW and I looooove some food, but we find ways to get it done less expensively now as we accelerate our savings. I've found I really love to cook good stuff at home, and that meal with wine that costs $30+time to make at home would be $200+ out. That's one way to scratch the foodie itch.

Eating out is a luxury. And many people have no business in restaurants because they simply cannot afford it. Yet.

Its no different than super expensive vacations on a credit card or people I see driving BMWs with a mortgage size car payment.

Its about the sacrifice and money choices he makes now at age 31 that will help him to build some wealth for 20 to 30 years down the road.

"Stay out of restaurants" is just a state of mind. To help him be frugal and watch his food spending. He can eat out but just stay within budget.

 

[konadog]

Retiring early

I am near your age and have similar goals. DW and I have about 320k in retirement investments.

 

[MRG]

Hello everyone,
First off, I have enjoyed and gained great insights from reading various posts. Thank you for the inspiration!
Now, a little about me and my financial journey. I am 31 and I'm behind the 8 ball. I have no debt, but I also have no liquid savings. I make 34,000 a year working at a University in a "tech" job (database administration) that doesn't pay a "tech" salary. However, this is much better (11,000) than what I was making 5 years ago.

..snip.....
1. Earn more money - new job and side business
2. Lower wasteful spending (Eat out less)
3. Learn to invest better

Welcome and I like your plan.

I have to ask what are you doing as a DBA?

SQLSERVER, Oracle, DB/2, other?

Do you do installs?
Data restores etc?
Application query tuning?
Data modeling?

I was a DBA manager for a few years, most of my staff were making 6 figures. Entry level was close to $60K. Now the 6 figure folks were experienced DBA's that w*rked multiple platforms. I thought some ate raw meat for breakfast. Keep in mind I'm in a low COL area, without a huge technology industry.

I realize academia doesn't generally pay well for IT. But it sounds like you could do much better elsewhere(not sure if you would be eligible for a decent pension, that might change my opinion)

So my best advice is; if you like DBA work. Look around what skills are you lacking to triple your salary. I believe Oracle had free certification exams. The certifications and any added skills will add bucks to your paycheck. Best wishes.

Edit to add, you want to become the person everyone goes to when their stuck.

 

[sailor]

+1 to what MRG said.
Glassdoor lists national salaries for DBAs from 53k to 101k.
DBA folks @ megacorp I work for make about 85k.