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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 03:12 PM   #41
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Re: NET WORTH FOR ONE'S AGE

(I told this joke fairly recently; I may have even put it on this board; if so, then I apologize for the duplicate.)

Then there's the three accountants who went deer hunting. When they finally had the deer in sight and lined up, the first accountant fired and missed a yard to the left. The next fired and missed a yard to the right. The third threw down his rifle, jumped in the air and screamed "WE GOT HIM!"
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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 03:45 PM   #42
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Re: NET WORTH FOR ONE'S AGE

Quote:
The third threw down his rifle, jumped in the air and screamed "WE GOT HIM!"
LOL! Thanks!

Mikey
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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 04:19 PM   #43
 
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Re: NET WORTH FOR ONE'S AGE

Accounting is NOT an exact science. Trust me.

JG
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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 05:54 PM   #44
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Re: NET WORTH FOR ONE'S AGE

Quote:

And C-Girl....how'd you guys reach your net worth so quickly? *Any tips you can pass on?
I guess you could say we reached it by being in the right place at the right time. Both of us are educated and work in an industry where the pay and bonuses are quite lucrative (energy). We are able to pay our bills with my salary alone and completely invest my husband's salary which is over 6 figures.

We also made some "strategic" moves that enabled us to increase our net worth such as moving back to Canada from the U.S. when the CAD dollar was quite low. By taking advantage of the great exchange rate, we were able to purchase our house outright.

Hubby and I are also quite frugal when it comes to everyday living. The one weakness we have is that we like to travel quite a bit. Other than that, we brown bag our lunches, take the bus to work rather than drive and waste money on gas and parking, etc. Even before I met my husband however, I was always conscious of financial planning and started saving for retirement when I was 20.
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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 09:06 PM   #45
 
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Re: NET WORTH FOR ONE'S AGE

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I was always conscious of financial planning and started saving for retirement when I was 20.
Wow, that is terrific. I guess the key is to start early. Have you factored children into the financial plan? With the rate you guys are going, you will be ER'd by 40! Then you can travel all you want.
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Re: NET WORTH FOR ONE'S AGE
Old 01-27-2005, 09:13 PM   #46
 
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Re: NET WORTH FOR ONE'S AGE

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I was always conscious of financial planning and started saving for retirement when I was 20.
Did anyone teach you this when you were growing up? How did you learn all this so young? How were you raised? Did this have anything to do with it? I'm sure alot of people would like to know even though it might be too late for a lot of us. But we can always teach the younger generation coming up.
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 02:04 AM   #47
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Re: NET WORTH FOR ONE'S AGE

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Did anyone teach you this when you were growing up? *How did you learn all this so young? *How were you raised? *Did this have anything to do with it? *I'm sure alot of people would like to know even though it might be too late for a lot of us. *But we can always teach the younger generation coming up.
I don't know about calgary_girl, but in my case I also started saving in earnest for retirement at age 22, right after graduating for college. Also convinced my wife to do the same (i.e. maxing 401k contributions, getting out of cc debt etc). SHe fought me on it at the time, but now being er/fi at young ages she is thankful...

Anyway, I need to thank my parents for putting me on the road to fi/er at a very early age. They could not have done a better job in inspiring me to set my goals high...


Watching them grow older, with barely a penny to rub together, blowing every investment opportunity that ever came along, failing to ever save a single penny for their golden years and whenever a little extra money came in one would find something to blow it own so the other couldn't spend it first...they couldn't have been better examples of everything you shouldn't do (All this despite making very decent money at times)

So yes, my parents taught me...but probably not the way they intended.....
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 06:57 AM   #48
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Re: NET WORTH FOR ONE'S AGE

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I guess the key is to start early. * *Have you factored children into the financial plan? *With the rate you guys are going, you will be ER'd by 40! *Then you can travel all you want.
We are currently in the process of trying to start a family...in other words, the fun part From what I hear, children can be quite expensive so we're not sure how long that will delay our retirement. Whatever the case, I think kids are well worth it.
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 07:12 AM   #49
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Re: NET WORTH FOR ONE'S AGE

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Did anyone teach you this when you were growing up? *How did you learn all this so young? *How were you raised? *Did this have anything to do with it? *I'm sure alot of people would like to know even though it might be too late for a lot of us. *But we can always teach the younger generation coming up.
To tell you the truth, I've always been interested in finances (used to collect all of my change when I was little, roll it up and take it to the bank). I definitely did not learn about finances from my parents. They are first generation immigrants and English is their second language. They worked two jobs to put me and my sister through school so I owe them a lot.

I started to get REALLY interested in financial planning when I took an elective course in high school called "Personal Living Skills". It taught us about budgeting, saving for retirement, etc. That was the first time I had ever heard of an RRSP (Registered Retirement Savings Plan), which is similar to an IRA I guess for you guys. I immediately went home and told my parents about it and made them open one up with their bank a week later.

At 20, I realized that the one thing I had on my side was time and a lovely thing called compounding. Although I like the interaction I get with other people through work, I dislike work itself and my goal was to always get out of the rat race ASAP.
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 08:31 AM   #50
 
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Re: NET WORTH FOR ONE'S AGE

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I took an elective course in high school called "Personal Living Skills". *It taught us about budgeting, saving for retirement, etc. *

my goal was to always get out of the rat race ASAP.
That elective course in high school should be mandatory for everyone, don't you think?

Also, what is your goal to get out of the rat race?
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 09:55 AM   #51
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Re: NET WORTH FOR ONE'S AGE

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It is required in my school district along with Economics. *Having taught both for the last 16 years, I think it is about as effective as teaching abstinence in health class to 14 yr olds. *:-/
Sometimes it's not WHAT is being taught, but HOW it's being taught. As a student I hated courses that taught theory without showing any practical application.

I've taken it upon myself to teach my child about personal finances. I've opened an account for him and when then interest gets posted we go through the math to figure out how it's calculated. Then we calculate the future value of his deposits, etc. I'm sure if I just talked to him about formulas I would lose him after the first 30 seconds, but making it apply to real life makes a world of difference.

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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 11:40 AM   #52
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Re: NET WORTH FOR ONE'S AGE

Quote:
It is required in my school district along with Economics. *Having taught both for the last 16 years, I think it is about as effective as teaching abstinence in health class to 14 yr olds.
What an apt analogy. *Both require a certain amount of screwing around before their adherents become proficient, experienced, and (somewhat) safe... and some practitioners never achieve those goals!

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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 05:30 PM   #53
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Re: NET WORTH FOR ONE'S AGE

Quote:
I don't know about calgary_girl, but in my case I also started saving in earnest for retirement at age 22, right after graduating for college.
This is my action plan as well - definitely the way to go. Can't say I learned much about investing from my parents but they did encourage my early interest in business and finance. If you really want to see my NW you can check out the blog.
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Re: NET WORTH FOR ONE'S AGE
Old 01-28-2005, 06:53 PM   #54
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Re: NET WORTH FOR ONE'S AGE

Quote:

That elective course in high school should be mandatory for everyone, don't you think?

Also, what is your goal to get out of the rat race?
I agree.

We're not sure yet what our exact dollar figure is to get out of the rat race. I would definitely love to travel and I know that can be quite expensive. Ideally, I would like to spend the winters in the U.S. in a warm climate (Phoenix is a fairly short flight for us from here...see my thread on I Wanna Be A Snowbird) and spend the rest of the year here.

I think we could retire on $3K-$4K/month net if we paired down our spending and didn't live extravagently. Ideally though, I think we would need $5K-$6K/month net. Of course, I'm talking in today's dollars. Twenty years from now, we would need almost $10K/month.
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Re: NET WORTH FOR ONE'S AGE
Old 01-29-2005, 04:23 AM   #55
 
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Re: NET WORTH FOR ONE'S AGE

I have posted most of this before, but will attempt
to cleverly alter my verbage so as to disguise
obvious repetition

Although I had two (2) business mentors, I had no
investment/ER mentors. My parents were very thrifty
but knew (know) little or nothing about finances/
investing. So, left to my own devices former spouse
and I just earned and spent for 30 years (actually
I did most of the earning and she did most of the
spending) . So, I am almost entirely self-taught
regarding these issues. Maybe for the best?

Re. snowbirding, now that I've got that arrangement whipped into shape, I am looking at the day (6 years out)
when we will be living on two (2) SS checks plus my
mostly fixed income investments. In today's $, the
maximum gross income I can see is about 34K
per year. Compared to what we are living on today
this looks like plenty. Of course, inflation is the bent rail on the ER track, as has been so often pointed out.

JG
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Re: NET WORTH FOR ONE'S AGE
Old 01-29-2005, 05:05 AM   #56
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Re: NET WORTH FOR ONE'S AGE

Quote:
Actually, he went from $60K to $910K in NINE (9) years. Even more amazing! How'd you guys do it?

And C-Girl....how'd you guys reach your net worth so quickly? Any tips you can pass on?
There are two ways you can do it:
A) Become a Suit and make >200K per year. Earn so much money you can't help but accumulate a lot. You could play the startup lottery and achieve similar results.
We didn't have the smarts or desire for that so plan B is:
B) Keep your expenses flat while you grow your income and save the balance
- Start living on a fixed amount, say 30K per year
- Save as much as you can in year 1, say 10K per year
- Work harder and get more done than any of your coworkers at a company that is profitable.
- Each year your income goes up save all the extra income. Keep your expenses as flat as possible. Lots of people on this board can help you with that

I suspect many if not most on this board took something similar to road B.

Luck of course plays a role too - we caught the latter 1/2 of the 90s bull market and were only silly enough to leave 75% of our money on the table during the bubble. We don't have children but we do have aging parents who will soon be financially dependent. So, the moral of the story is save as aggressively as you can before you have children or aging parents to support.
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Re: NET WORTH FOR ONE'S AGE
Old 01-29-2005, 10:15 AM   #57
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Re: NET WORTH FOR ONE'S AGE

The secret for my strong start has been two-fold:

1) Talk to your boss about having your company pay for as many expenses as possible (cell phone, car/car allowance, car maintenance, gas, car insurance, health insurance, etc.). While it's not the easiest thing to do at large corporations, I work for a small family-run business (and when your family is the one that owns it, it's far easier ). But even at places where nepotism is non-existant, it is still possible to have your employer work out a deal better for both parties.

As long as you point out that every dollar of expenses that your employer pays not only saves the employee money (Federal/State/Local income tax plus 9.1% of Medicare/SS taxes), but also saves the employer the 9.1% of Medicare/SS taxes that they would owe, it's a win-win situation. Plus it helps employee morale.

2) I know many people have a 'problem' with it, but if your parents are semi-retired, have two homes and spend a good deal of time away, it's not too bothersome to stay at home for a few years out of college. It saves a bunch in utilities, rent/mortgage, and other costs, all for the inconvenience of having to be around them for 1-2 hours a day for 3-4 months a year. Sure, it may not be possible if your job isn't in the same city...but if you are the unlucky son that has to pick them up/take them to the airport each time they fly, has to pick up their mail every day, check the pool, look after their place, etc., it's far easier if you're living there at the same time.

While it may not sound like the above two would have a big impact, and you can make the argument that the longer you wait to buy a house, the more home values could rise and cost you more in the long-run, it provides a greater positive cash flow in the early years of your life, when every dollar saved has a much greater compounding effect. That, combined with a sensible frugal lifestyle (brown-bag lunches, not dining out too often to eat higher quality/healthier food at home) all add up to make the most of early compounding.


My parents were fairly frugal earlier, but their early 60s in semi-retirement have seen them loosen up quite a bit. They never really talked about money around my siblings and I. My frugality/awareness of money was purely one of those genetic things (out of 4 children, I was the only one that always thought about long-term savings, carrying cost of consumer debt, etc.), rather than an orchestrated effort by my parents to teach the benefits of sensible money management to their kids. Out of my 3 siblings, one sister turned out to be fairly sensible after she got married; the other sister is a financial disaster, and the brother is a cross between the two (likes to live it up with only very moderate savings, without thinking about the future).

As for my results? Well, they are as follows:
Age: 28
Net Liquid Assets (no home equity at the moment, excludes personal effects), less all estimated income taxes for retirement plans/savings bonds: $418k

"Disclaimer" (approximately 80k inheiritance in 2001, and parents paid for college...)

I invest very little in mutual funds (I opt for a few closed-end funds), as I have waaaay too much fun tinkering around with my portfolio. I might wakeup and see the light someday...However, I am the very conservative type that prefers less volatility/more certainty, with the following investment breakdowns:
23% Muni Closed-end funds
17% Bond funds/I-Bonds/CDs/Treasuries (Oh, why didn't I buy more of the 2000 10-year 4 1/4% inflation-indexed T-bond? )
2.5% REITS
23% Preferred Stock
6.5% Various individual junk bonds
18% common stock with some covered calls/puts
4% 529 plan
6% cash awaiting redeployment in the next 2 weeks

All-told, my entire net worth has an average fixed yield of 6.32% pre-tax / 4.99% after-tax, plus any capital gains growth I can squeeze out of my 18% common stock/options positions.
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Re: NET WORTH FOR ONE'S AGE
Old 01-29-2005, 10:25 AM   #58
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Re: NET WORTH FOR ONE'S AGE

Quote:
As long as you point out that every dollar of expenses that your employer pays not only saves the employee money (Federal/State/Local income tax plus 9.1% of Medicare/SS taxes), but also saves the employer the 9.1% of Medicare/SS taxes that they would owe, it's a win-win situation.
I thought the Medicare/SS tax was 7.65% for each the employee and the employer. Where do you get each at 9.1%?
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Re: NET WORTH FOR ONE'S AGE
Old 01-29-2005, 11:33 AM   #59
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Re: NET WORTH FOR ONE'S AGE

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I thought the Medicare/SS tax was 7.65% for each the employee and the employer. Where do you get each at 9.1%?
You get 9.1% when you start thinking too early about numbers on a Saturday morning...combined with a Sprite spiked with pineapple rum...and the result is double-counting the 1.45% Medicare tax to arive at the erroneous 9.1% figure.

Yes, it should be 7.65% total, as retire@40 correctly points out. Thanks for the note.
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Re: NET WORTH FOR ONE'S AGE
Old 01-30-2005, 08:36 AM   #60
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Re: NET WORTH FOR ONE'S AGE

[quote=mikey
I would rather have a $1.5 Million house in Pacific Palisades and $1million in invested assets, than $1.2 million in invested assets and a $100,000 home in Jackson, MS.

Why? Because I could sell the house, move to Jackson or someplace similarly cheap and even after costs still be well ahead on the deal.

Of course the culture shock might kill me.

Mikey

[/quote]

No one is moving to Jackson these days. Today's paper informed us that there were a record number of homicides there in 04.
No one, that is, except drug dealers and pimps.
Maybe somewhere else in MS where the enjoyment of life is much greater/real estate and taxes are cheaper.
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