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How Did You Get There and When Did You Start
Old 12-29-2011, 06:41 AM   #1
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How Did You Get There and When Did You Start

While I'm sure most stories have similarities such as pay off bad debt, LBYM, budget, max out 401k contributions, I want to know what else you all did to get to your FIRE goal. I'm still forming my plan and want to see what others have done.

Am I too late at (almost) 30 to seriously consider retirement in my 40's? When did you start?
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Old 12-29-2011, 07:10 AM   #2
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For me it was a continuous process starting sometime in my mid thirties. Yup, max. 401K contributions, lived within my means and carried little to no debit, and have only ever carried one credit card and have never paid a penny in credit card interest. I was fortunate to have a decent job and worked with older folks that liked to talk investing and retirement. Index investing and discipline in staying the course also was a factor. Also made some money on three houses I have bought, lived in and sold over the past thirty years.

I need to mention that when I was a young man I remember my grandfather telling me that a man should only ever go into debt on two things, a house and a car. And he said if you can avoid it, don't go into debt on a car. He grew up during the depression and was very conservative and wise with his money. Maybe some of his influence rubbed off on me.

Last but not least and may be the most important factor is being with and married to the same woman for almost forty years and her having the same mindset when it comes to money management.
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Old 12-29-2011, 07:29 AM   #3
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Last but not least and may the most important factor is being with and married to the same woman for almost forty years and her having the same mindset when it comes to money management.
+1 (42 years, thus far )...
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Old 12-29-2011, 07:43 AM   #4
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+1 (42 years, thus far )...
+2. We also did well in real estate with buying properties, renting them out for a while, selling them on land contracts and/or selling them outright. If you have the fortitude to manage and maintain them yourself, you can do well. Now would be an excellent time to consider getting into that business. My MO was to stick to houses and never condo where you cannot control the cost and they are harder to sell. My opinion.
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Old 12-29-2011, 07:53 AM   #5
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I selected Federal service partially because I liked the concept of an inflation protected pension in my mid 50s. I also married a very successful woman who has similar ideas about work, life balance. She pushed us to save 25% of our income and reigned in my impulse spending (to a degree). Luckily our interests in travel, cycling and entertainment match so we make a good ER couple. Some people thrive living parallel, largely separate lives. I don't.
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Old 12-29-2011, 08:04 AM   #6
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Looking back I think the key things were:
1. Lucked out with parents who taught values of hard work, self discipline and difference between needs and wants.
2. As a youth didn't hate the rich guy in town: wanted to be him.
3. In college discovered the means to achieve goal: the magic of compound interest.
4. Married a spouse who works, too. It's easier with 2 incomes.
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Old 12-29-2011, 08:10 AM   #7
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Three things came together in 2002:

1. I went broke. It sucked.

2. I tasted the misery of unemployement in an oversaturated labor maket. It really sucked. I resolved to escape the labor maket completely.

3. I quit screwing around and committed myself 100% to passive indexing.

Retired last year and haven't missed that ol' labor market.
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Old 12-29-2011, 11:57 AM   #8
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Was fortunate to advance late in my career with higher salaries that factored into my pension equation. My biggest financial error was not following through on financial advice from my first boss almost 30 years ago. That being he said.... "Remember 2 can live together cheaper than one, but 3 cant live cheaper than 2". Proceeded to 3 almost immediately, then divorced a few years later. Oh well, it all worked out in the end. But a successful marriage with working spouse who has same money goals, achieves a tremendous benefit and financial advantage over doing it as a single person.
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Old 12-29-2011, 11:58 AM   #9
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Looking back I think the key things were:
1. Lucked out with parents who taught values of hard work, self discipline and difference between needs and wants.
2. As a youth didn't hate the rich guy in town: wanted to be him.
3. In college discovered the means to achieve goal: the magic of compound interest.
4. Married a spouse who works, too. It's easier with 2 incomes.
Similar for me except #2. Got the message on compounding from my dad and so I started an IRA pretty close to my first paycheck. We were a two-paycheck couple - we generally lived on one income and invested the other. I decided to stay in the workforce after having kids and this also really made a difference to reach FI. Although DH retired at 54 and I pulled the trigger at 53, now that we have a year under our belts I think we could have moved that up a little bit (although health insurance would have been a lot pricier due to the retiree benefits we have). 40s would have been tough.
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Old 12-29-2011, 12:12 PM   #10
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Other than learNing from my frugal parents, my first active step to FIRE was choosing a well paying career. As it turned out, the track I have followed is not pensionable. When I started my first real job (after 10 years of postgraduate training) my professional association provided guidance and got me started on investing. 15 years later, I had an inheritance which almost doubled my net worth. That opened up new possibilities including FIRE. Then I joined this forum........
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Old 12-29-2011, 12:28 PM   #11
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+1 (42 years, thus far )...
+3

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4. Married a spouse who works, too. It's easier with 2 incomes.
+1

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"Remember 2 can live together cheaper than one, but 3 cant live cheaper than 2".
Priceless
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Old 12-29-2011, 12:35 PM   #12
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I got lucky with stock options with a startup company. Not much help there.

However, it is fairly simple to use a spreadsheet to see how soon saving x% of your income will allow you to retire. I use 15% from graduation until you turn 50 as my baseline recomendation for DS's. Starting later and ending earlier will obviously require a larger percent. The nice thing with saving more is that your budget will be smaller and the portfolio value required to support that income will be smaller as well. The bad thing is that it might be too small for you.
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Old 12-29-2011, 12:51 PM   #13
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Originally Posted by cscott711 View Post
Am I too late at (almost) 30 to seriously consider retirement in my 40's? When did you start?
As a rule of thumb, if you can accumulate an nest egg of 25x of spending by the time you turn 40's then it is not too late.
Let's make the following assumptions:
Current value: $200,000
Annual contribution: $50,000
Expenses: 40,000
Estimated Nest Egg Required: 25 x 40000 = 1,000,000.
Annual return: 7%

Using Ecel: =NPER(7%, -50000, -200000, 1000000)
9.3 years.

This is a really rough estimation and 25x may not be enough to fund 50 years of retirement.

BTW: We started in our late 30s.
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Old 12-29-2011, 01:26 PM   #14
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LBYM, debt-free by age 35, no kids, worked for a company which went for-profit and whose ESOP grew by 3,000% in the 12 years it was there when I was working there.

I realized I could ER a few years after I became debt-free and the whole plan really took hold in 2007, a year before I ERed i 2008.
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Old 12-29-2011, 02:18 PM   #15
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When I was 25 years old I made a conscious decision that I wanted to retire early. I don't know where/why the idea came from. No one in my family had done such a thing. I think the desire mainly stemmed from a general dissatisfaction of getting up in the morning. The job itself wasn't bad, nor the commute, nor the coworkers, environment, etc. In fact, it's been a great place to work. Still, I found myself wanting to win the lottery so I could sleep in and do things when I wanted and not just a paltry two days of the week.

At age 25 the goal was to retire at 50. It was pretty much an age picked out of the air, but nevertheless one I thought I could achieve and it was a goal to work towards. I didn't make the 50 goal (building a home through a wrench into things, plus the market downturn) but I am 16 months away from retiring at 55.

My parents were never big spenders, always making us wear hand-me-downs, teaching us to keep the things we did get nice, etc. We did take a family vacation each year, always driving, never flying; plus occassionally got a nice toy -- for example the Honda mini-bike all 4 kids and my parents shared. My parents always had a vegetable garden, froze/canned fruits and vegetables, etc. They also travelled before they got too old to enjoy it and paid off their mortgage early and always paid cash for their cars. So....I guess I learned a lot from Mom and Dad -- learning to live and save at the same time.

I also lived with my parents until I was 27. I could have moved out early but the rent I paid them was a bargain so it allowed me to work and build a solid financial foundation, always LBYM, while enjoying the journey as well.

I started investing at age 25 and taking part in the company's matching retirement plan, plus IRA's.

I made mistakes, or more accurately sometimes used poor judgment along the way -- purchasing things I thought I wanted, but could have done without. I often wish I could go back and rethink those decisions. But even so, I will FIRE in April 2013.
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Old 12-29-2011, 03:05 PM   #16
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Got first real job at age 28.
Worked 22 years saving around half of gross income in retirement plans and regular ol' taxable accounts. Got the benefit of the 1982 to 2000 bull market as well.

So anybody who saves half their gross income can do it. This is mostly because in order to save half your gross income, you had better live well below your means. Also note this is gross income, not net income.

This works whether you are married or not, works whether you have kids or not, and works whether you buy a home or rent.
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Old 12-29-2011, 03:32 PM   #17
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How I started? Pretty much LBYM, budget, max out 401k and IRA contributions.
Discovered the beauty of passive index investing. I started when in the late 20's.

Also, stayed healthy, so when the time was right, qualifying for individual health insurance (HSA) was the final piece of my FIRE puzzle.
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Old 12-29-2011, 04:21 PM   #18
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Quote:
Originally Posted by cscott711
While I'm sure most stories have similarities such as pay off bad debt, LBYM, budget, max out 401k contributions, I want to know what else you all did to get to your FIRE goal. I'm still forming my plan and want to see what others have done.
I used all of the techniques you mention, and they are some of the most important.


Others were:
  1. not remarrying (didn't want to anyway),
  2. leaving my job to take a relatively lower paying job with the federal government because of the benefits,
  3. buying an inexpensive home,
  4. paying it off quickly, and then saving even more to taxable accounts since less was going into the house.
  5. self knowledge through introspection, learning what I really want in life and prioritizing accordingly. Seeking out free things that I enjoy doing.
There are many different paths towards ER, and most of them work pretty well. Mine worked nicely in getting me to FI.
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Old 12-29-2011, 04:31 PM   #19
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How I started? Pretty much LBYM, budget, max out 401k and IRA contributions.
Discovered the beauty of passive index investing. I started when in the late 20's.

Also, stayed healthy, so when the time was right, qualifying for individual health insurance (HSA) was the final piece of my FIRE puzzle.
Can you expound on why you like passive index investing?
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Old 12-29-2011, 04:37 PM   #20
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Can you expound on why you like passive index investing?
Quote:
Historically over time, an indexing investment strategy has performed favorably
in relation to actively managed investment strategies, as a result of indexing’s
low costs, broad diversification, minimal cash drag, and, for taxable investors,
the potential for tax efficiency. Combined, these factors represent a significant
hurdle that an active manager must overcome just to break even with a low-cost
index strategy over time, in any market.
https://advisors.vanguard.com/iwe/pdf/ICRPI.pdf
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