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Do I see the light or is it a train?
Old 01-24-2008, 11:11 AM   #1
Confused about dryer sheets
 
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Do I see the light or is it a train?

I just wanted to introduce myself and say hello to everyone. I'm writing a little about myself so everyone can see my situation. I could sure use some advise. I'm married with 1 child who is moved out and on his own. I'll be 45 years old. All critics welcome.

About 5 years ago something struck a nerve. I was 40 years old. We had no savings to speak of and no retirement plan. We had just bought a house two years prior and I realized I would be almost 70 years old when the mortgage was over. Then I thought about how much the taxes would be. How would we ever afford that when we were retired? I could harldy save any money as it was.
So, I decided to get out the only way I knew how. Reduce the time. I asked myself the question. "Whatif" we sold the house and bought something more affordable. So we did. The house we sold had a 30 year note and the taxes were about 5k a year. The one we bought was 3 times cheaper, taxes were 500.00 a year and we got a 10 year note! (I gained 1500 square ft too.) I figure we saved at least 250k on that move.
We have 5 years left to pay on the house. We have 2 years left on a vehicle payment. That's it! We should be totally out of debt in about 3 years. I didn't get involved in my 401k until we made the house swap. I only put in 5% as that was what I thought I could afford. To date, I have about 35k in there. 95% in stock. House in a small quiet town is worth about 40k. We probably have 20k in equity. My wife and I make close to 100k between us. If I liquidated toys we would probably have about 6-8,000 there. Savings is still very small. I'm sure we can dump more into 401k when things are paid for.
I want to enjoy life while I still can. I want to retire when I'm 50-55. Am I crazy? This may be very small potatoes to some of you but it's the world I currently live in. We spend way more than we should on fun. I need advise. Thanks for reading all of this.

Sincerely,

"Whatif" :confused:
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Old 01-24-2008, 11:18 AM   #2
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Hi Whatif...

A GREAT start.... but you do not have to dump 'toys' IMO if you like and use them.... you already have incurred most of the 'loss'... now, if they are only sitting around to impress someone else.... sell...

Start to get more money in the 401(k).... max out if you can (and your tax bracket is still high)...

Start to put some away in taxable accounts...

You still have a way to go, but as I said... a great start from where you were heading...
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Old 01-24-2008, 11:25 AM   #3
Confused about dryer sheets
 
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Thanks a bunch! Toys get used as often as possible. Hence the reason for getting out early. :-) Taxable accounts as in Roth/IRA?
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Old 01-24-2008, 12:21 PM   #4
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Originally Posted by Whatif View Post
This may be very small potatoes to some of you but it's the world I currently live in. We spend way more than we should on fun. I need advise. Thanks for reading all of this.
Your potatoes are every bit as big as mine were when preparing for ER. Most of our nest egg is is from interest and dividends earned on what DH and I invested by saving half our take home pay for 10+ years.
If you know how much you're saving (and spending), you read up on investing, and you and your spouse share the goal of ER, you're on your way.
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Old 01-24-2008, 12:37 PM   #5
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Thanks a bunch! Toys get used as often as possible. Hence the reason for getting out early. :-) Taxable accounts as in Roth/IRA?
Then keep the toys... just save away..

Read on investing... you do not want to put to much in tax sheltered accounts where you have nothing 'saved' outside of them... and do not want to put money in them if you are only in the 15% marginal tax bracket (at least I would not)... so taxable account is just that, an account that you are taxed on any income or gains you receive.
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Old 01-24-2008, 12:40 PM   #6
Confused about dryer sheets
 
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Originally Posted by toofrugalformycat View Post
Your potatoes are every bit as big as mine were when preparing for ER. Most of our nest egg is is from interest and dividends earned on what DH and I invested by saving half our take home pay for 10+ years.
If you know how much you're saving (and spending), you read up on investing, and you and your spouse share the goal of ER, you're on your way.
Thank You! I think we have 2000.00 a month extra after winter time expenses. We are very social so that doesn't last long. It would be hard to save half our income. However, in three years, it should be easy as everything will be paid for.
I don't want to live like hermits for a long time saving money but I don't want to work the rest of my life either. There has to be a happy medium somewhere. I'm not spoiled by any means. My parents raised six of us in a mobile home. I guess that's part of why I enjoy spending so much. We never had much. Thanks again.
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Old 01-24-2008, 11:52 PM   #7
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Hi! It's doable. Just depends on you. At the age of 41 I had about 80,000. Now at the age of 55 I have a little over 1 mil.(depending on the market). I just saved a lot. Only about 30% in equities.(Again depending on the market)
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Old 01-25-2008, 04:08 AM   #8
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Hi! This forum is great to support ER ideas.
What I find very helpful to increase savings:
I track all expenses in writing and add up by category monthly. When I started this exercise my monthly expenses dropped by 10%.
Whenever I receive a bonus, salary increase or other windfall I save at least 50% of it.
Regarding toys: If I deduct work-related expenses from salary, add work-related unpaid time like commuting to the x hours per week I get paid for I can calculate my real income p.day. When I see a nice toy I calculate how many days I have to throw in to buy it - is it producing enough fun to pay for x days of my lifetime or would I rather retire x days sooner? This exercise helps to find the toys that really are worth investing in.
Another one dedicated to saving for ER with small budget is at www.slnet.com. Several users here are there, too.
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Old 01-25-2008, 07:27 AM   #9
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... I track all expenses in writing and add up by category monthly. When I started this exercise my monthly expenses dropped by 10%...
I while ago, I finally realized the advantage of using some personal finance software like Quicken. I've been using one called MoneyDance. The software can connect to your bank and credit card accounts, download your recent transactions, where you can assign them categories like grocery, phone bill, restaurants, etc. It's really simple to keep up with, especially if most of your expenses are paid by check or credit card. Do this for a while, and it becomes very clear where all your money is going.

I'm sure this is old news for most people here, but for those like me, who only recently took an interest in their finances, you really should check this out. MoneyDance, Quicken, MS Money, Wesabe, Mint, and a bunch of others.
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