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Old 12-04-2009, 04:44 PM   #21
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(snip) Here's an additional thought/question. I had an opportunity a few months back to take a job that would pay 30%-40% higher than I currently earn now. I turned it down because of the commute and other non-tangible factors (legal specialty, type of work, etc...) Part of me wonders how much closer to FIRE my DW and I would be if I had taken the job and spent a couple of years at it. Then again, another part of me thinks I made the right choice, and that a few more years of doing something I don't really want to do, just for the money, isn't worth it.
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I'm sort of stuck in that same quandary right now. I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).

But when I factor in taxes and crunch the numbers in terms of "years to retirement", I'm facing roughly 10 more years in the current position vs. 7 more years in a high paying firm position. Hard to give up a relatively cush position just to knock 3 years off the FIRE clock, when the next 7 would likely involve much less free time and much more stress.
I'm looking at this question through the other end of the telescope. I made a lateral transfer to a different (non-supervisory) position with the same employer at significantly lower pay to reduce my stress level at work, and I still feel that is one of the smarter things I've done in my life. I hope I am never in the position of needing to make such a decision again, but I now know whether having more money or having less stress is a higher priority for me. It sounds as if you both also know which one is really more important to you.
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Old 12-04-2009, 04:50 PM   #22
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Ages and milestones for DW & I combined

  • Early 30's - 100K - (but 100K was worth a lot more 30 years ago), RE inflation mostly and some savings
  • Early 40's - 500K - (about 1/3) was inherited as we both became orphans, natural growth + savings
  • Early 50's - 1000K- natural growth + savings
  • Early 60's - X000K- (X has varied with markets and former mega-corp's stock price), Normal growth + mega-corp stock options awarded from about age 50
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Old 12-04-2009, 04:52 PM   #23
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After reading another thread, I was surprised how quickly people were able to jump from $100k to $250k. How long did it take you to hit certain NW milestones? Obviously the market plays a major role in this and there are a bunch of other factors but it'll be interesting to see if there's any sort of a trend.

I've also heard people say how the first $100k is the toughest. Was this the case for you and if so, why? Compound interest, paying off debt, becoming established in your career, buying a house?
Looking at this in terms of my retirement portfolio only, I hit six figures for the first time earlier this year, and I hope the first $100K is the hardest because if the second takes me as long as this one did I'll be working when I'm 90. I suspect that if others are in the same boat, it's often for the same reason I'm in it: it took me forever to get serious about saving for retirement. I'm 53 and this is only the second year I'll be making maximum contributions to my tax-deferred plan. Last year I also maxed my Roth contributions and am on track to do that again next year in addition to my 457. I didn't start really serious savings until I was 50
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Old 12-04-2009, 05:20 PM   #24
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The actual numbers are all relative so instead, I hit my 2010 goal in 2006 at age 52. Despite setbacks, I am halfway (about 33X projected expenses) to my next, ultimate $ goal which would put me at 50X projected retirement expenses or 2% SWR. At that point, I'll be completely out of excuses not to retire...
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Old 12-04-2009, 05:38 PM   #25
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I don't remember establishing any milestones till a few years ago. I started doing a yearly net worth calculation in the early 2000s and watched my progress from 300K to 450K to 650K to 900K. I was on track to hit $1m in 2005, when I had an inheritance that took me over the $2m mark. I peaked at over $2.5m in 2008 and since then it's been a roller coaster ride. But I am definitely on the upswing again.

The early years show the greatest percent increases because the contributions dwarf the earnings. Over time, the percent increases decline but the absolute increases hopefully go up. Or at least they do, in general.
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Old 12-04-2009, 06:17 PM   #26
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I would expect growth rates in net worth to be erratic and non-linear for most people. If I had to generalise:

1. after a few years in the work force, promotions/pay rises will allow for an increased level of savings (although other expenses like children will come along to offset this)

2. as your net worth grows, you start to get an increasing component of growth comes from return on investment rather than savings

3. with age comes experience - the ability to get better returns on your money

4. returns on investment will almost never be in line with the market average - get a few good years in a row and your net worth will take a big jump

5. when you buy your first property, you will have a mortgage. If the property appreciates your net worth will appreciate at a rate compounded by the leverage

In my own case, I can point to:

1998: promotion at work and stock markets recovering from the Asian crisis combining to give a significant boost to net worth

2000: major promotion - my income more than doubled and I saved most of the extra income

2004: buying HK property for investment using debt finance - significant appreciation in values in the years which followed

2009: change jobs - invest lump sum payouts and existing cash balances in emerging market equities and HK real estate - massive rise in net worth

In between there have been years when my investments have lost money and expenses (like our wedding) have been much higher than normal.
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Old 12-04-2009, 09:11 PM   #27
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I usually participate in this type of thread, but I am too lazy to do that this afternoon.
Spoken like a true retiree. You go girl.
I remember only the first $100K in my TSP 401(k), but I'll be darned if I can remember what year that happened.
And I am too lazy to go look it up.
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Old 12-04-2009, 10:46 PM   #28
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I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).
After 30 years in private law practice, I have to say that it sucks the life out of you. It is quite a siren song though. About midway through my years in practice I considered switching careers, actually went to school part time at night and became licensed in another more interesting, but low paid, field. I ended up not switching and decided to have more children (thereby wanting more income).

I contrast my work to that of DH. DH works for a megacorp in a job that on the surface pays much less than mine. But...he has wonderful benefits (it is his pension lump sum that will allow us to retire). And, he gets 7 weeks of time off every year. When he, say, gets sick, he takes the days off and when he goes back to work...well, he goes back to work. He doesn't have to make up the time. He might have a time sensitive project that he would have to put in extra time to get out but even that is rare.

On the other hand, in private practice, there is the constant pressure of billing enough hours. If I get sick, it is expected that I nonetheless bill the same amount as someone who wasn't sick. On paper I don't have a specific amount of vacation time that I can take during the year. I can take whatever I want. Some people here that and think that is wonderful. What they don't understand is that it really means that I don't get vacation...I just get to time shift. Whether I take 2 weeks of vacation or 0 weeks or 6 weeks -- I still have to bill the same amount.

DH and I figured out how many hours he is actually expected to work during the year. It works out to about 1500 hours. His employer is very happy with that level of work. If I billed 1500 hours that would be considered terrible.

I have considered asking to work less hours for less pay. However, we are so close to retirement that I probably won't. If I was going to continue working 3 or more years I probably would but I think we are closer to retirement than that.
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Old 12-05-2009, 12:06 AM   #29
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I second what Katsmeow says about private practice law. It can be a very stressful career - very long hours, no control over your schedule (including weekends and evenings/nights), etc etc etc. There are people who thrive in this sort of environment and I used to be one of them - once we had children I found I did not have the flexibility to do everything I wanted without sacrificing something that was important to me. Sure the money is good - very good in fact - and it will enable me and my wife to retire in my mid-40s - but sometimes I really wonder if it is worth it. Ask me again as I walk out the door for the last time on 31/12/2013 and I will probably say yes. Right now I'm not so sure.

Working reduced hours is usually a bad deal for the individual - you get a reduction in pay which is proportionally much greater than the reduction in hours and are still expected to be available whenever the clients want you. If you are going to do it, go full time and re-evaluate after a few years.
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Old 12-05-2009, 12:32 AM   #30
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I chart my nw on an excel spreadsheet, and since Ive only been doing it a few years, its very accurate, and goes all the way back to the paycheck to paycheck days.

Age 24: January 06-May06...Took me 5 months to go from 1k to 2k Random j*bs, unemployment, just trying to survive.

July of 07- Took 14 months to go from 2k to 10k. (Started LBYM somewhere in there)

April of 08- Took 9 months to go from 10k to 20k.

July of 09- Took 16 months to go from 20k to 50k.

December 09- current nw: 63k

I want to get that 100k by March of 2011.
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Old 12-05-2009, 02:36 AM   #31
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I started at zero in 1984 after my divorce. I saved $3K that year. 1985 my dad gave me 13K plus I saved 2K and bought a house. After closing cost and everything my net worth was maybe 15K. I paid down the mortgage over the next few years and saved 2K a year in a IRA. So after about 1990 I had a house and tiny mortgage and about 12K saved. I managed to keep saving $2K a year and put myself through two more years of college in cash. I rented out my house and bought a new one in 1992 and sold the old paid off house for 90K in 1994 so perhaps had a net worth of 100K after closing cost from selling and the cost of buying the new one.

So about 100K in 10 years.

From 1994 to 2000 I twice had a 401K to put 15% in put after I started jobs so only a few thousand total. Still putting 2K in IRA.

When the ROTH IRA came out I converted 67K in
IRA money and was putting into the 401K so my net worth was probably 150K by 2000.

I lost my job, had two really bad years and the stock market crashed. The house was still appreciating but still took maybe 5 years to go from 67K invested to 100K.

2003 this started looking up ROTH was increased to 5K and we got a new 401K that you could put in 14K so I was saving the max in both or about 20-22K a year from 2003-2007.

My equity in my house was about 300K so I refinanced to take out money to invest.

I put that in the markets and in 2007 hit a net worth of over 600K, 400K invested and 200K equity.

Then the house went down and the market went down. My investments lost 170K and the house about 100K so my net worth was about half of the high.

This year I went from that bottom to investments up about 102K and the house holding it's own so net worth is about 500K.

The first 10K is the hardest, since it requires living below your means for a long time. Most young people start of with a negative net worth so even getting to zero is hard.
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Old 12-05-2009, 05:29 AM   #32
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Certain types of "achievement levels" for us were set along the path over the past 30 years. For example: Goal of having most of mortgage paid off by the time we started a family and went to 1 income..rare but achieved. By the time 1st child in 1st grade have enough set aside in zero coupon bonds to pay for state univeristy 4 years....acheived. By the time we could get out from under large corp setting moving into small corp job with less benefits but more freedom...achieved. By the time we could jettison corp health benefits but still be healthy enough to be insured on our own apply and qualify for high deductible health plan with HSA to allow us to change location of residence and jobs at our will vs. being stuck in a job due to future health. Now...recent meltdown was a wake up call....make sure despite future inflation threats that not too much is in equities or in weaker bonds. Lost quite a bit in real estate fund sectors and with CIT group....zero bonds with gov't still look like great decision many years ago. Last tuition bill about to be paid....money in account left over. Cash is king....still north of pre retirement $$ levels but will stick with it a few more years to build a cushion on current nest egg. Don't need much in early retirement but recent market turmoil says build the number a bit higher before either job loss or health loss might hit. Anyway...setting goals and measurement used along the way....very active effort to save money and keep it locked away has allowed a feeling of being secure or at least partially secure. Now...how much is enough is the question never able to be answered?
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Old 12-05-2009, 06:33 AM   #33
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I started investing in, as Dickens might put it, the best of times, the worst of times, times much like our own, the ‘70s. I never expected my PF to amount to a hill of beans but kept at it anyway. I tried to focus my mind elsewhere and I’m ashamed to say this, when I was fully involved with and enjoying w*rk, I remember feeling glad I didn’t have time to think of the bottom line. During the ‘80s to mid-'90s my PF bounced around a forgotten but nice number, it seemed normal to make little progress but by 2007 I was surprised that there was more than 25 times expenses.
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Old 12-05-2009, 08:57 AM   #34
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I would expect growth rates in net worth to be erratic and non-linear for most people.
Agree, and in some cases there are special circumstances, which may have been compounded by the economy of the time. Some started their own business, and rarely does that take a straight or even normal curved growth.

In my case I joined a company that gave stock options, and did very well especially during the dot.com bubble. Stock options are volatile and I had almost all of my eggs in one basket.
I remember it took about a year for those options to hit 100K because that's what the number of shares * strike price was, and the stock doubled. Then I got more options and it kept more or less doubling for a few years so $1M and above didn't take too long. I also hit some landmarks in reverse when the bubble burst and I didn't diversify well enough.

I've thought about trying to figure out where I'd be without those options, since I did work hard at saving during the same time, but when I tried to think about how I'd do it, it didn't seem worth the effort. I figure my time is better spent focusing on where I'm at now, and the only reason to look at the past is to avoid making some mistakes.
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Old 12-05-2009, 09:05 AM   #35
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Mine would look like the story of the tortoise just slow and steady .I started as newly divorced single mother socking away $25 a paycheck than as I got raises I added some more . I never made more than $60,000 a year but I continued to save . My last years of full time work I was saving a $1,000 a paycheck and paying for college tuition . I never really had a set amount I thought I needed to retire to me it was more a mental rediness . When I finally decided enough was enough I had a net worth of two million . So in answer to how long it took me . It took me thirty years .
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Old 12-05-2009, 09:05 AM   #36
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I've found mint.com to be bad for net worth obsession.

Previously it was somewhat laborious to determine net worth so I'd very rarely do it, but now I can get a pretty close idea with the click of a mouse so I find myself checking it after big market moves to see if I've crossed over or back under threshholds.
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Old 12-05-2009, 09:19 AM   #37
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Contrary to the laws of compounding but consistent with the laws of the street, I put away almost nothing until I had my last educational loan paid off around age 40, then a few more years as we finally acquired some of the basic possessions which my friends had had for years.

Fortunately, if a little belatedly, we knew what faced us financially. We went on an accelerated savings plan (detoured by kids' 13 years of college). By the time I got my current job 7 years ago we were saving 25% of income, about half of which was qualified. The curve steepened and now at age 60 we are near our goal.

The deferred income stream, serious though appropriate debt associated with my chosen profession (especially in my nonsurgical specialty) can be ER killers. I feel very fortunate that we were able to salvage it in the nick of time.

When your portfolio earnings exceeds your max'd out annual contributions, it's a good feeling.
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Old 12-05-2009, 09:56 AM   #38
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I've also heard people say how the first $100k is the toughest. Was this the case for you and if so, why? Compound interest, paying off debt, becoming established in your career, buying a house?
I think for us, given the crappy returns in the market this past decade, the biggest influence has been the increase in the amount we could contribute to our 401ks. For years the amount for IRAsand 401k contributions wasn't indexed to inflation. Plus they added the catch up for age 50 and above.

Our goal is to pay for a house (done) and save enough for retirement in 21 years. We got a late start saving and I made some mistakes during the dot com bubble, so we aren't getting a lot of help via compounding.

LBOMs and having decent paying jobs is what will get us there. And yes, the first $100k was the hardest.
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Old 12-05-2009, 11:32 AM   #39
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Interesting... a quick glance through the posted numbers suggests that on average a lot of folks here doubled their NW every 4 years or so. (FIREdreamer is a notable exception planning to double it in next 2.)
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Old 12-05-2009, 11:44 AM   #40
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If we use the rule of 56 (years x interest to double an investment) then doubling NW in 4 years would approximate to a 14% annual increase. This should be achievable during accumulation years with aggressive contributions to the portfolio and a single digit positive return on investment.
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