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Hello-from young married girl with big financial independence dreams
Old 09-10-2007, 05:05 PM   #1
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Hello-from young married girl with big financial independence dreams

Hello! I've just discovered this site and thought that these are my type of people! I'm looking forward to financial independence and early retirement and have been for some years now. I'm 24, DH is almost 28. Combined we make $200k a year. We currently have a combined networth of -$1500 or so due to a car loan, student loans (very favorable interest rate) and a brand new mortgage. We have a combined $16,700 in retirement with about 15% in bonds, the rest in diversified stocks. We don't contribute enough yet as we're just getting over our new mortgage payments, but the amounts will go up very soon.

We would like to retire early (45-50) and I think it's doable. At that time, DH would like to go back to school and we would like to travel.

Any suggestions for making this dream come true?
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Old 09-10-2007, 06:16 PM   #2
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Welcome, Miss Lala. Glad to have you on the board!

Rule number one, control expenses -- what we call LBYM around here. Live below your means.

I'd like to recommend you read The Millionaire Next Door -- I'd have gotten to financial independence sooner if I had read it sooner.

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Old 09-10-2007, 07:11 PM   #3
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  1. Set up a reasonable budget you can stick to and LBYM
  2. Do the following and you'll be cool. Good luck.
Everybody's free (to wear sunscreen)
Baz Luhrman

Ladies and Gentlemen of the class of ’99
If I could offer you only one tip for the future, sunscreen would be
it. The long-term benefits of sunscreen have been proved by
scientists whereas the rest of my advice has no basis more reliable than my own meandering experience…I will dispense this advice now.

Enjoy the power and beauty of your youth; oh never mind; you will not understand the power and beauty of your youth until they have faded.
But trust me, in 20 years you’ll look back at photos of yourself and recall in a way you can’t grasp now how much possibility lay before you and how fabulous you really looked…. You’re not as fat as you imagine.

Don’t worry about the future; or worry, but know that worrying is as effective as trying to solve an algebra equation by chewing
bubblegum. The real troubles in your life are apt to be things that never crossed your worried mind; the kind that blindside you at
4 pm on some idle Tuesday.

Do one thing everyday that scares you

Sing

Don’t be reckless with other people’s hearts, don’t put up with
people who are reckless with yours.

Floss

Don’t waste your time on jealousy; sometimes you’re ahead, sometimes
you’re behind…the race is long, and in the end, it’s only with
yourself.

Remember the compliments you receive, forget the insults; if you
succeed in doing this, tell me how.

Keep your old love letters; throw away your old bank statements.

Stretch

Don’t feel guilty if you don’t know what you want to do with your
life…the most interesting people I know didn’t know at 22 what they wanted to do with their lives, some of the most interesting 40 year olds I know still don’t.

Get plenty of calcium.

Be kind to your knees, you’ll miss them when they’re gone.

Maybe you’ll marry, maybe you won’t, maybe you’ll have children, maybe you won’t, maybe you’ll divorce at 40, maybe you’ll dance the funky chicken on your 75th wedding anniversary…

What ever you do, don’t congratulate yourself too much or berate yourself either – your choices are half chance, so are everybody else’s.


Enjoy your body,
use it every way you can…don’t be afraid of it, or what other people think of it, it’s the greatest instrument you’ll ever own..

Dance…even if you have nowhere to do it but in your own living room.

Read the directions, even if you don’t follow them.
Do NOT read beauty magazines, they will only make you feel ugly.



Get to know your parents; you never know when they’ll be gone for good.

Be nice to your siblings; they are the best link to your past and the people most likely to stick with you in the future.

Understand that friends come and go, but for the precious few you
should hold on. Work hard to bridge the gaps in geography and
lifestyle because the older you get, the more you need the people you knew when you were young.

Live in New York City once, but leave before it makes you hard; live in Northern California once, but leave before it makes you soft.

Travel.

Accept certain inalienable truths, prices will rise, politicians will
philander, you too will get old, and when you do you’ll fantasize
that when you were young prices were reasonable, politicians were noble and children respected their elders.

Respect your elders.

Don’t expect anyone else to support you. Maybe you have a trust fund, maybe you have a wealthy spouse; but you never know when either one might run out.

Don’t mess too much with your hair, or by the time you're 40, it will look 85.


Be careful whose advice you buy, but, be patient with those who
supply it. Advice is a form of nostalgia, dispensing it is a way of
fishing the past from the disposal, wiping it off, painting over the
ugly parts and recycling it for more than
it’s worth.

But trust me on the sunscreen…
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A todos los amantes del mundo. No importa el color de su piel, la pasion es universal.
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La tavola e il letto non hanno restrizioni.
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Any day your on this side of the grass is a good day.
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Old 09-10-2007, 07:27 PM   #4
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That was an excellent graduation speech. Although, I think the part about sunscreen probably would be lost on 22 year olds.
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Old 09-10-2007, 07:43 PM   #5
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Thanks for the advice so far. I have already read the Millionaire Next Door, actually I read it aboutt 5 years ago, and have since read the Millionaire Mind. I'm obsessed with finance articles and blogs, so I guess I'm looking for inspiration and tips to tweak what I've got going.
As for LBYM, we're saving about 3k a month, so I think we've got that down. I just need to know where to put it.
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Old 09-10-2007, 08:15 PM   #6
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Miss Lala, you are already half way there just by becoming aware of the possibility of FI and putting yourself on a plan to achieve it. Most people don't get serious about this until they are in their 40's or later and by then it is too late.

There will be bumps in the road, but having investments can really cushion the pain.
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Old 09-10-2007, 08:26 PM   #7
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Welcome to the boards

If you are obsessed about finance, there are people here who would be happy to discuss it with you. I would recommend you start out in the FIRE and money forum but check everything out.
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Old 09-10-2007, 08:38 PM   #8
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Welcome - and I'm so envious of your early start. Congratulations. For investing advice I'd recommend: Diehards.org. Good set of resources, recommended reading list and informative postings. Motley Fool also has some good material if you can ignore the thinly veiled marketing...

DD
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Old 09-12-2007, 08:31 AM   #9
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Hello!

I'm a Young Dreamer myself, but congratulations on starting this early!!

Only suggestion - if you want to travel and study, it may be cheaper to study & live abroad!
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Old 09-12-2007, 08:40 AM   #10
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Welcome!
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Old 09-14-2007, 12:14 PM   #11
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Miss Lala,

Welcome to the boards. Are you the same person over on SLN? I am there as well.

My suggestions:

1. Don't get divorced. Setting aside the emotional damage, basically the financial negatives to divorce will result in about a 35% reduction in your standard of living. Short term you get lawyer bills, court fees, and startup expenses of a second household; long term your taxes go up, your expenses nearly double, and your income may suffer. If you can nurture your marriage and it requires some money, whatever it costs is probably cheap compared to a divorce.

2. I think 15% in bonds at your age isn't necessary unless you are very risk averse. But then I am a decade older than your husband and am 100% stocks.

3. The reason LBYM is so powerful is that the dollar you don't spend represents two things at the same time: (1) The dollar can be saved and invested to provide income later on, and (2) The dollar you don't spend is $25 in retirement savings you don't have to save.

2Cor521
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Old 09-14-2007, 12:26 PM   #12
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Quote:
Originally Posted by Miss_Lala View Post
Thanks for the advice so far. I have already read the Millionaire Next Door, actually I read it aboutt 5 years ago, and have since read the Millionaire Mind. I'm obsessed with finance articles and blogs, so I guess I'm looking for inspiration and tips to tweak what I've got going.
As for LBYM, we're saving about 3k a month, so I think we've got that down. I just need to know where to put it.
Welcome Miss Lala. 200g's per year? Yikes. That is awesome.

Is your 3k figure outside of retirement savings, or including retirement savings?
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Old 09-14-2007, 12:44 PM   #13
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To answer the last two:
What is SLN? I guess that question just answered your question SCore521!
~Thanks for the advice on the bonds, I was following what all the calculators have told me, although I put more in stocks than they even said. I will probably be reducing the bond amount

As for the 200g per year, DH is a lawyer in a private firm in DC, so you can tell where the bulk of it is coming from! COL is super high here and we have a brand new mortgage to take care of, and that whittles away at the high income
Savings of $3000 per month does include retirement (which should be higher than what we contribute and will be shortly) at about $650 a month. My employer doesn't match for a 401(k), so I contribute a bit to my IRA. DH's employer start contributing in January, so that's when retirement will start getting big. We're also prepaying $800 a month on the mortgage as the interest rate is high. Living in the DC metro area, the houses are super pricey and our choice was a jumbo mortgage or to continue shelling out almost $2500 a month for a townhome with a terrible landlord.

We'll be opening a fund with Vanguard when bonus time rolls around, and saving even more then.

If you want to know more, just ask.

FYI~ here's my essential breakdown of our pathetic networth
http://www.networthiq.com/people/Miss_Lala
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Old 09-14-2007, 01:38 PM   #14
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Miss Lala,

SLN = simple living network = Simple Living Discussion Forums - Active Topics

I thought I recognized your username from over there, but maybe I just read one of your other posts here.

2Cor521
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Old 09-14-2007, 01:45 PM   #15
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Lala,

That's an awfully expensive house you have, even with your large income. Is that really the lowest priced home you could find? 600K+ for your income is still high.

What kind of lawyer is your husband? Is there something keeping you in the DC area? Here in Chicago he can still make a similar amount I'm sure, and there are plenty of nice homes in the 300k+ range. Cutting your housing in half could make a pretty big difference in your finances I'm sure.

Also, any plans for kids? That could make an impact on your living expenses as well.
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Old 09-14-2007, 02:22 PM   #16
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Lala,

That's an awfully expensive house you have, even with your large income. Is that really the lowest priced home you could find? 600K+ for your income is still high.

What kind of lawyer is your husband? Is there something keeping you in the DC area? Here in Chicago he can still make a similar amount I'm sure, and there are plenty of nice homes in the 300k+ range. Cutting your housing in half could make a pretty big difference in your finances I'm sure.

Also, any plans for kids? That could make an impact on your living expenses as well.

It is not the lowest priced home that we found, but the others weren't much lower, and needed a lot of work done, thereby defeating the thought of a lower cost. We had criteria to meet as well. We live just out of DC, and need to be within walking distance to a metro station to lower commute time for DH, as well as costly DC parking which can run $10 a day, not to mention the gas wasted for time spent in traffic. Our house is extremely modest, a 1917 bungalow, under 1900 sq. ft. including the basement. We didn't over purchase, although the price is definitely staggering. I'm from Cleveland and my parent's house is est. at $210,000. Here it would go for over $1M, easy. It's crazy here.

As for his type of law, it actually is important for him to be here. He works on appelate cases, and therefore the Supreme Court cases. This is one of the only places where you can get steady work like that.

Plans for kids...yes, but not for 5-10 years. We're enjoying being newlyweds for now!
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Old 09-14-2007, 04:44 PM   #17
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Great to have you on board! - the fact that you are focused on "the means to an end" -this early in the game really sets you up for success! Just make sure you enjoy your youth and have a alot of fun on the journey to FIRE -- it makes the time to freedom go faster as well!!

Donzo
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Old 09-14-2007, 05:50 PM   #18
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Welcome.

If the two of you make $200k per year, you probably have the ability to retire sooner than you think if you LBYM and get disciplined about saving and investing.
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Old 09-14-2007, 09:50 PM   #19
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Welcome to the board Miss Lala,

First I would recommend reading a book called "Work Less, Live More" by Bob Clyatt. It provided me with inspiration and motivation. I think it's a good book for those of us who contemplate early retirement.
Second, live way below your means. You should try to save 30-50% of your gross income if you can (especially now when you are still young with no kids and 2 incomes). It shouldn't be too hard when you earn 200K a year, even in DC. Then you can let the magic of compounding do its thing. We save more than 4K per month on an income significantly lower than yours and are always looking for ways to increase that amount.
Third, keep your expenses as constant as you can year over year. We have been doing this for 3 years now, and everytime our income increases, it gets added directly to our savings. It has made a HUGE difference on our balance sheet.
Finally keep in mind that becoming financially independent at a young age (30s, 40s or 50s) requires discipline, sacrifices and a very real long term commitment. You might get discouraged along the way (i am sure we all did at some point), but remember why you're doing it and get right back on track!

Good luck to you!
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Few Simple Advice Tid Bits
Old 09-18-2007, 03:04 PM   #20
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Few Simple Advice Tid Bits

Looks Can Be Deceiving
You don't have to look rich to be rich.

Set Priorities
Pay Yourself First

Sweat the Small Stuff
"A latte a day keeps retirement away" Most of us don't think about how we spend our money. If we do, we focus solely on the big-ticket items. Even worse, we don't realize how much wealth we might have if, instead of dribbling our income away, we invested just a little of it.
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