Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Confessions of a ESR wannabe
Old 01-01-2011, 03:03 PM   #1
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
Confessions of a ESR wannabe

I joined ER.org about two years ago, after seeing some updates from other members, I realize that I haven't been moving much or at all towards my ESR goals.

My goal is/was to ESR at 55ish (12 more years), it has always been semi-retirement due to the fact that I anticipated needing HI coverage and I don't HATE my job, just dislike it immensely. I could theoretically have a schedule that would have me work 2 ten hour days every week to maintain PT status and still bring in a salary that is just over the median household income.

In addition to the time goal, my financial goals would be 100% debt free, have a $500k dividend stock portfolio throwing off $20k/yr in dividends @ 55y.o. We should be able to live off the PT work, dividends and continue to max out 401(k), shooting for a $1.5 to $2M Roth/IRA/401k balance when ever we hit it, not necessarily at 55.

I've read quite a few success stories of people who went from nothing or negative net worth to being able to retire in the above time frame, I figured I can do it too. Haven't had much success though, or don't feel like it. One problem is we have some cc debt. I am glad to say we don't have anything over 10% interest, but I am torn between focusing on getting the CC's paid off or saving or both?

We have all seen the charts that show a 20 y.o. putting $5k a year in the IRA for 10 years, not putting another dime in and having more $$ at 65 than the 40 y.o. putting in $10k year for the next 25 years. That is part of my fear, if I don't save some now, I will miss out on the compounding vs focusing on paying off all debt ASAP, then being able to save double or triple the dollar amount in a few years.

I keep getting tugged in hundreds of different directions. I do not want to have such a focus on the above that I am sacrificing the 'now'. I would like to have my basement finished so the family can have more room and entertainment activities. I feel now is the time to do it with building supplies/services having tanked.

I want to max out the 401k and IRA, I want to fund the dividend portfolio, I want to get my CC's paid off, I want to save for a replacement car, I want to have a larger emergency fund, the list goes on an on.

So I guess the whole point of this rambling is to get suggestions from people who have had similar experiences. Did you have some CC debt and focus solely on that, then save for retirement? Did you put some in retirement and debt repayment? Did you make a large purchase because you felt the time/price was right and later regret it or it worked out fine?

Happy New Year
__________________

__________________
I don't want to spend my entire life at work. I deserve more. - Want2retire aka W2R
Ronnieboy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-01-2011, 03:11 PM   #2
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,665
After you've set aside some emergency cash, pay off your credit cards! The interest you will save almost certainly dwarfs anything you can reliably make from investing.
__________________

__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 01-01-2011, 04:22 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,384
Quote:
Originally Posted by Ronnieboy View Post
One problem is we have some cc debt. I am glad to say we don't have anything over 10% interest, but I am torn between focusing on getting the CC's paid off or saving or both?
I wojld definitely put enough into 401k, etc, to get fulll match. Next pay off that CC debt, and lock your cards away somewhere.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 01-01-2011, 04:33 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,403
Indeed some people here posted about their crash savings to ER in a dozen years or something like that. And not all did it with stock options either. I really do not know how they did it, as I have been saving all my working life.

However, if you can find some part-time work to ESR, and if it fits your experience so that the pay is good, then it becomes much easier. The pressure is off. If you can work whenever you feel like it, then vacation time becomes unlimited. You almost go back to work to have a break from vacation. It's great!
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 01-01-2011, 05:53 PM   #5
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,142
Quote:
Originally Posted by haha View Post
I wojld definitely put enough into 401k, etc, to get fulll match. Next pay off that CC debt, and lock your cards away somewhere.

Ha
+1

I don't think you can go wrong by looking at all the potential uses for your money and picking the highest yielding one (adjusted for risk). As Ha notes, picking up a full 401k match is like earning 100% risk free on your money. Paying off your credit cards is like earning 10% or 9% or whatever your current rate is -- risk free. You'll never get that return in any risk free investment like a CD or a Treasury.

And the return from not adding to your current credit card balance is infinite. I'd suggest freezing them in a block of ice in your freezer (a 1/2 gal. milk carton would work). Then you'll have the time it takes to melt the ice to think about whether you really need to spend the money.
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 01-01-2011, 05:55 PM   #6
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,665
Quote:
Originally Posted by NW-Bound View Post
Indeed some people here posted about their crash savings to ER in a dozen years or something like that. And not all did it with stock options either. I really do not know how they did it, as I have been saving all my working life.
Not to get off topic, but to answer the question: I went from broke to FIREd in eight years. In years 1-4 I saved (incl. IRA/401k contribs) roughly 50% of my net income. I also w*rked a couple of temporary side j*bs. In years 5-6 I gradually doubled my salary by asking for raises and changing j*bs twice. In those years I saved roughly 60% of net income. In years 7-8 I smelled blood and saved roughly 75% of my net income. Vast majority went into domestic stock index funds. Never had any stock options or grants at w*rk, the bastards. I did not live a particulary full life during this sprint, as you can imagine. But that's the price I paid for starting late. I'm single and withdrew around $25k in my first year of ER.
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 01-01-2011, 05:59 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,403
Not off topic at all! You showed how it could be done. Although having no family made it easier, it still took much fortitude. Kudos to you!
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 01-01-2011, 08:07 PM   #8
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by Onward View Post
Not to get off topic, but to answer the question: I went from broke to FIREd in eight years. In years 1-4 I saved (incl. IRA/401k contribs) roughly 50% of my net income. I also w*rked a couple of temporary side j*bs. In years 5-6 I gradually doubled my salary by asking for raises and changing j*bs twice. In those years I saved roughly 60% of net income. In years 7-8 I smelled blood and saved roughly 75% of my net income. Vast majority went into domestic stock index funds. Never had any stock options or grants at w*rk, the bastards. I did not live a particulary full life during this sprint, as you can imagine. But that's the price I paid for starting late. I'm single and withdrew around $25k in my first year of ER.
Jacob Lund Fisker describes the acceleration process in detail at EarlyRetirementExtreme.org, and I ran a series of "how long does it take" numbers on the blog in a post that goes up 5 AM HST Monday 3 Jan.

Let's see if the HTML table displays correctly: Nope. Looks like "HTML code is Off". Maybe I can figure that out and post an excerpt, or you could subscribe to the blog, or just wait patiently until Monday.

Anyway a military member could do it in just over 20 years by saving 40% of their income, with a COLA'd pension and cheap health insurance to boot. An extremely motivated veteran could do it in five years with just their military skills and discipline as their only "veteran's benefits" to help them save 75% of their pay.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 01-01-2011, 09:01 PM   #9
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
Quote:
Originally Posted by Onward View Post
Not to get off topic, but to answer the question: I went from broke to FIREd in eight years. In years 1-4 I saved (incl. IRA/401k contribs) roughly 50% of my net income. I also w*rked a couple of temporary side j*bs. In years 5-6 I gradually doubled my salary by asking for raises and changing j*bs twice. In those years I saved roughly 60% of net income. In years 7-8 I smelled blood and saved roughly 75% of my net income. Vast majority went into domestic stock index funds. Never had any stock options or grants at w*rk, the bastards. I did not live a particulary full life during this sprint, as you can imagine. But that's the price I paid for starting late. I'm single and withdrew around $25k in my first year of ER.

These are the types of success stories I am talking about. I have read about yours and others on this board and am encouraged by it.
There is no way in heck though, I would be able to talk the wife into the college student lifestyle again

I am gathering from the tone of the replies though, I should focus on getting debt paid off, then through all of that into savings/retirement (after company match on 401k). I suppose the two or so years it might take is nothing in the whole compounding scheme of things?
__________________
I don't want to spend my entire life at work. I deserve more. - Want2retire aka W2R
Ronnieboy is offline   Reply With Quote
Old 01-01-2011, 11:17 PM   #10
Thinks s/he gets paid by the post
BigMoneyJim's Avatar
 
Join Date: Feb 2003
Location: DFW
Posts: 2,627
Quote:
Originally Posted by Ronnieboy View Post
I am gathering from the tone of the replies though, I should focus on getting debt paid off, then through all of that into savings/retirement (after company match on 401k). I suppose the two or so years it might take is nothing in the whole compounding scheme of things?
Yup. Fund 401(k) to company match point, then pay off consumer debt.

I've gone through similar thoughts. It can be discouraging here to read people younger than you with more money, but once you pay off debt and start building savings you can look back at your history and see progress.

Here are some posts of mine at this forum going through similar decisions and processes:

Paying off Debt vs. 401(k) Contributions
Light at the End of the (Debt) Tunnel
Debt Countdown Update
Woohoo! Woohoo! Yippee! Happy!

It was in 2000 at age 30 I started taking better control of my finances, but at the time I had $60k in a 401(k). I was tempted several times to use the 401(k) to pay off the debt, but due to taxes and penalties it would have wiped out the 401(k). I think aggressively paying it down instead of cashing out has helped me learn to trust my ability to control spending and perhaps taught me how in the first place.

Since the first payoff I got into debt again after being jobless a while and paid it off again. I also borrowed to buy a used car and paid it off. With less job security I got nervous about not having an emergency fund and fretted at times whether I should pay down debt first or build an emergency fund first. I ultimately paid down debt first, and I think that is the right decision.

Currently I have no debt, about $10k in PenFed CDs as emergency funds and am contributing to pretax and after-tax savings accounts invested roughly 60/40 stock funds / bond funds. It took a while to get here, but I met all my medium-term financial goals. It's worth the effort, time and patience to do it right. I kept wanting to fund more emergency savings or start an after-tax investment account before I had properly paid off debt and/or build up my initial emergency savings, but I managed to stay on track.

Edit: Reemphasizing: Don't get discouraged comparing yourself to others on this board. First, I think there is a bias for reporting success stories as people are hesitant to put out there "yeah, I screwed up some opportunities...." Make some financial goals and work towards them, but life happens, and sometimes that helps financial plans, and sometimes it wrecks them.
__________________
BigMoneyJim is offline   Reply With Quote
Old 01-02-2011, 02:55 PM   #11
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 354
If you aren't doing so already, tracking your expenses diligently may help you discover places in your budget where you are overspending and/or could cut back. I think if you really want to make progress toward your goal you need to look carefully at why you have accumulated credit card debt. Until you are able to live below your means, you will find reaching an ER goal (even an ESR goal) to be difficult.

lhamo
__________________
lhamo is offline   Reply With Quote
Old 01-03-2011, 05:53 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Yup, 401K contribution up until the match, if you have company employee stock purchase plan with a discount then fund that next. Next kill the credit card debt.
Then savings.


Remember a couple of Kimo's Hawaiian rule
two ways to be rich; earn more or desire less
the best things in life aren't things.
__________________
clifp is offline   Reply With Quote
Old 01-03-2011, 08:50 AM   #13
Full time employment: Posting here.
ronocnikral's Avatar
 
Join Date: Apr 2010
Posts: 852
Quote:
Originally Posted by Ronnieboy View Post
There is no way in heck though, I would be able to talk the wife into the college student lifestyle again
To me, this is the greatest obstacle for married couples. It's getting on the same page! DW is frugal and she gets that working because you have to stinks. I know family members who have one spouse on one track and the other going the other way. And both get upset. The point: your goals and your wife's goals need to be aligned. The rub is getting to that point. And maybe you don't go back to the college life, but perhaps you look at the budget and cut out some fat.

I track both budget and NW monthly (a little obsessive, but I'm an engineer and like to have data). It helps for me to look at the numbers regularly.
__________________
ronocnikral is offline   Reply With Quote
Old 01-03-2011, 09:28 AM   #14
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by Nords View Post
... and I ran a series of "how long does it take" numbers on the blog in a post that goes up 5 AM HST Monday 3 Jan.
Let's see if the HTML table displays correctly: Nope. Looks like "HTML code is Off". Maybe I can figure that out and post an excerpt, or you could subscribe to the blog, or just wait patiently until Monday.
Anyway a military member could do it in just over 20 years by saving 40% of their income, with a COLA'd pension and cheap health insurance to boot. An extremely motivated veteran could do it in five years with just their military skills and discipline as their only "veteran's benefits" to help them save 75% of their pay.
OK-- the military version of the "How long does it take to become financially independent?" post is up on the blog.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 01-04-2011, 05:10 AM   #15
Moderator
Ronstar's Avatar
 
Join Date: Aug 2007
Location: A little ways southwest of Chicago
Posts: 9,345
Sounds like you have a great plan.

Like others have said, We:
Maxed the 401k
cut the credit cards
saved an emergency fund
then paid off the mtge

I ESR'd at 55 - started with a 4 day work week and went down to 3, looking to go to 2. The key for me was getting expenses down below pt income levels while still funding 401k. (In ESR, its easier to cut expenses than it is to increase earnings.) Also bulked up the emergency fund to be able to cover all expenses till 59.5 in case I wanted to fully retire.

Once you get your 401k/savings up to a retirement sized nest egg, and get expenses down below anticipated part time earnings, and fund the capital intensive things you mention, you can ESR comfortably.
__________________
Ronstar is online now   Reply With Quote
Old 01-04-2011, 05:23 AM   #16
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Agree.

Quote:
Originally Posted by lhamo View Post
I think if you really want to make progress toward your goal you need to look carefully at why you have accumulated credit card debt.
lhamo
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 01-04-2011, 11:05 AM   #17
Full time employment: Posting here.
 
Join Date: Dec 2010
Location: Southern California
Posts: 916
Agreed, also I would look at discretionary spending not on credit card debt too. Cash out can impact ESR goal and/or savings. YMMV

Quote:
Originally Posted by lhamo View Post
If you aren't doing so already, tracking your expenses diligently may help you discover places in your budget where you are overspending and/or could cut back. I think if you really want to make progress toward your goal you need to look carefully at why you have accumulated credit card debt. Until you are able to live below your means, you will find reaching an ER goal (even an ESR goal) to be difficult.

lhamo
__________________
Aiming_4_55 is offline   Reply With Quote
Old 01-04-2011, 11:33 AM   #18
Full time employment: Posting here.
flyfishnevada's Avatar
 
Join Date: Jan 2010
Location: Smith
Posts: 743
From a more philosophical perspective, attack the problem from both sides. pay down that credit card debt and save but at the same time downsize and reduce your spending. A smaller home, used cars and such can save you a lot of money that can then be saved or used to pay down debt. As a bonus, once you get to retirement your expenses will be less and therefore you won't need as much money to live on.
__________________
Retired July 4th, 2010 at age 43
Trout Bum, Writer, Full-Time Dad and Husband


flyfishnevada is offline   Reply With Quote
Old 01-04-2011, 02:53 PM   #19
Dryer sheet aficionado
 
Join Date: Sep 2009
Location: Ottawa
Posts: 45
Quote:
Originally Posted by Nords View Post
OK-- the military version of the "How long does it take to become financially independent?" post is up on the blog.
Hi Nords, is it on the ERE blog? I can't seem to find it there.

Thanks.
__________________
oneils is offline   Reply With Quote
Old 01-04-2011, 02:57 PM   #20
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,142
Quote:
Originally Posted by oneils View Post
Hi Nords, is it on the ERE blog? I can't seem to find it there.

Thanks.
Here's the link

Military Retirement & Financial Independence | Financial independence & early retirement for veterans
__________________

__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
No Longer An RV'er Wannabe... NW-Bound Other topics 177 07-11-2010 04:33 PM
57yr old FIRE wannabe... Patsweb Hi, I am... 32 05-17-2009 10:04 AM
Confessions shoe Other topics 47 03-03-2009 03:58 PM
Young 'Wannabe' hova22 Hi, I am... 7 08-22-2007 04:03 PM

 

 
All times are GMT -6. The time now is 04:30 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.