How to strike a balance?

[Anima Mundi]

Nooblet to the FIRE thing, and also my first post.

I'm currently working at a low-paying job and my job recently began offering a Roth IRA and a 457 plan (I enrolled in both.) I am still struggling to find better-paying work to help pay off my student loans and CC debt, and also help out my parents with their mortgage and want to set aside funds for them so they can retire.

Lately I've been thinking about how soon I'd be able to retire (I'm barely under 30 at this point.) TBH, I'm miserable working and earning a living, and fantasize about not having to work anymore so I can spend my time on activities I care about. At the same time, I'm a thing-oriented person and I'd still like to have some money for at least good food and wine, travel overseas, quality clothing and shoes, some jewelry, and a nice car (at the very least, I already have this one!) I'm not asking for a yacht, a private jet, multiple residences and a different colored Birkin for each day of the week.

Is there anyone who's managed to find a balance between satisfying their needs and at least some of their wants and also be FI? Or do I have to live like a spartan just to be able to afford to not work?

 

[plex]

There are all different types of people who reached (or are reaching) FI in their own way. The vast majority of members here, are living on an amount that they are very comfortable with, but are also putting aside enough to meet (most) of their goals. You can learn a lot here. Incomes and spending vary drastically depending on the poster, some are living on $200K+ a year, others are comfortably living near the poverty line. Spending is very individual. The one thing all posters have in common, is they live below their means. Most of them live well below their means. They save a lot, usually 20-60% of their incomes.

As you seem to know, having stuff and savings for early retirement is a balancing act. You can either spend everything you earn now, and not retire until you are no longer healthy, you can spend a little less and retire a little early, or you can spend a lot less and retire very early. You will have to decide what you like more, stuff, or less work. No matter what your income is, this is always a choice you must make.

As for helping your parents, this is something you should leave for later to think about, when you have some breathing room of your own (unless you owe them money). Most young people are not in a position to be giving money to their parents to help them reach early retirement. I am near your age and I certainly am not. You need to tackle your debt first, if nothing else. One thing I do though, is help my parents with their investment decisions, after I studied the subject for about five years, had done some of my own investing, and felt confident enough to be giving advice to others. The advice I gave them a few months ago when they were re-balancing netted them about $50k more than they otherwise would have gotten, reduced the complexity of their portfolio, and also reduced their equity exposure, the way they wanted.

It is a lot to think about, but try and find ways to comfortably reduce your expenses and also find a better job. As you improve your situation, it will all be down hill from there.

 

[freebird5825]

Except for the mortgage and 1 partial car loan in 1992, my rules have always been as follows...
1. First, I set up automatic payroll deduction for my 401(k) AND auto-investment of my retirement portfolio DCA funds. Then I allocated enough to pay COL expenses.
2. Second, if I didn't have enough money left over in the bank for a fun purchase, I don't buy it. Maybe next month...

Edited...Oops...Welcome to the board

 

[Bestwifeever]

Welcome to the boards!

Nooblet to the FIRE thing, and also my first post.

I'm currently working at a low-paying job and my job recently began offering a Roth IRA and a 457 plan (I enrolled in both.)

Excellent.

I am still struggling to find better-paying work to help pay off my student loans and CC debt, and also help out my parents with their mortgage and want to set aside funds for them so they can retire.

Do not feel you are responsible for your parents' mortage or retirement funds. If you are living at home, you should pay a fair rent imho, but focus on your own financial situation.

Lately I've been thinking about how soon I'd be able to retire (I'm barely under 30 at this point.) TBH, I'm miserable working and earning a living, and fantasize about not having to work anymore so I can spend my time on activities I care about, At the same time, I'm a thing-oriented person and I'd still like to have some money for at least good food and wine, travel overseas, quality clothing and shoes, some jewelry, and a nice car (at the very least, I already have this one!) I'm not asking for a yacht, a private jet, multiple residences and a different colored Birkin for each day of the week.

Is there anyone who's managed to find a balance between satisfying their needs and at least some of their wants and also be FI? Or do I have to live like a spartan just to be able to afford to not work?

At your age, why not think about how you can combine the activities you care about with a job? And "nice things" become "stuff" after you get them, so imho put your money into experiences and not things.

 

[FIREd]

Nooblet to the FIRE thing, and also my first post.

I'm currently working at a low-paying job and my job recently began offering a Roth IRA and a 457 plan (I enrolled in both.) I am still struggling to find better-paying work to help pay off my student loans and CC debt, and also help out my parents with their mortgage and want to set aside funds for them so they can retire.

Lately I've been thinking about how soon I'd be able to retire (I'm barely under 30 at this point.) TBH, I'm miserable working and earning a living, and fantasize about not having to work anymore so I can spend my time on activities I care about. At the same time, I'm a thing-oriented person and I'd still like to have some money for at least good food and wine, travel overseas, quality clothing and shoes, some jewelry, and a nice car (at the very least, I already have this one!) I'm not asking for a yacht, a private jet, multiple residences and a different colored Birkin for each day of the week.

Is there anyone who's managed to find a balance between satisfying their needs and at least some of their wants and also be FI? Or do I have to live like a spartan just to be able to afford to not work?

I am sorry to say that unless you make quite a bit of $$$, it is very hard to reach FI at a fairly young age and have the kind of lifestyle you want to have and help people financially along the way.

 

[HsiaoChu]

The one thing all posters have in common, is they live below their means. Most of them live will below their means. They save a lot, usually 20-60% of their incomes.

I can't imagine saving 60% of my income. When I was making $14K a year and had a child and was paying a car loan and college loans and saving for a house, there is now way that I could have done that on $6K a YEAR.

I'm pretty sure that those who are saving 60% of income are making a lot of income, and don't have any children. Having children really makes a dent in income.

Just MO.

Z

 

[JBmadera]

Is there anyone who's managed to find a balance between satisfying their needs and at least some of their wants and also be FI? Or do I have to live like a spartan just to be able to afford to not work? [/QUOTE]


welcome, I new too, love the site.

this is what we did: starting at about your age we set a baseline of spending which fit with our income. we didn't live on rice and sleep in a tent but we had a nice, simple life. over time, as our incomes rose, we DID NOT increase our spending, we didn't buy a new house, we didn't go on fancy vacations or drive expensive cars. instead we just start saving more and more. we paid off our home, all debt actually, fully funded my daughter's college fund and set money aside for the grand-kids. now at 50 and 52 we're basically done (not by choice for me..), our investments can provide the income we need for our enjoyable/basic lifestyle (at least i think so, i'm still new here).

best of luck on your quest!

 

[ESRwannabe]

I can only speak for myself. I make an average salary, actually it is probably on the low end for my education and work history. I am very LBYM but am not deprived. I don't think early retirement is possible for me without increasing my income a lot. What I do believe I can achieve however is early semi-retirement, i.e. switching to part-time or consulting work for the rest of my life. My goal is to have that as an option by the time I turn 45 or so.

I think retiring early is a very difficult goal and it takes a lot of hard work... or luck.

 

[Anima Mundi]

Thank you all for the responses! I know that what I'm seeking is like asking for the sun, the moon and the stars, but I was wondering if there was anyone on the board who has managed to achieve something along these lines.

@plex - True, I should try to get a better handle on my own finances first. It's so frustrating to be working now, subtracting time from my lifespan. On the other hand, having money is my reason for working in the first place. It's sad how most people have to trade time for money instead of having both in abundance.

@bestwifeever - TBH, no one is going to pay me to do what I love. And I'm personally of the mindset that work is called work for a reason (i.e. it's not supposed to be enjoyable or fulfilling,) and hence I would like to opt out ASAP. I'm segueing into a different field from the one I'm currently in because it's relatively high paying, and I'm hoping to combine this with other work I'm planning to get started in. And I know it sounds shallow and materialistic, but there's more things I want to possess than experience, but at the same time I don't want to clutter my house with "stuff," and I don't buy for the sake of buying or to keep up with the Joneses. There are just some things I'd like to own that happen to be high-end/expensive.

@FIREdreamer - Indeed this is my dilemma. It's a Morton's fork.

 

[aaronc879]

I make an average salary, actually it is probably on the low end for my education and work history. I am very LBYM but am not deprived. I don't think early retirement is possible for me without increasing my income a lot.

I don't see why you can't retire early. You make more than I do and you have more saved than I do(i'm 3 years younger) yet I expect to retire before 50 so you should be able to as well. It all depends on your expenses. You say you are "very LBYM" but spend nearly double what I do and I could cut back if necessary so you should be able to as well.

 

[aaronc879]

I'm pretty sure that those who are saving 60% of income are making a lot of income, and don't have any children. Having children really makes a dent in income.

Just MO.

Z

I'm very close to saving 60% and I don't make a high salary. My highest income ever was $49K before taxes because of overtime(2008). I agree I couldn't do it if I had children on my income though. I also live in a lower than average COL area but I do have a mortgage.

 

[lightspeed]

Live below your means. Accept you can't have everything you want, be happy with what you can have. Be good to others, and be generous (if not financially, in other ways). But don't live on peanuts, and do enjoy life, because I've seen enough people w*rk their arshes off for an anticipated payoff "someday" only to die of some terrible cancer they did not deserve or expect.

 

[Eladio]

Definitely max out your 457 plan, because it helps an early retiree avoid the 10% penalty on withdrawls before 59.5 yoa. That's one benefit of working for the government, even if the BS is a bit much at times.

Eladio

 

[ESRwannabe]

I don't see why you can't retire early. You make more than I do and you have more saved than I do(i'm 3 years younger) yet I expect to retire before 50 so you should be able to as well. It all depends on your expenses. You say you are "very LBYM" but spend nearly double what I do and I could cut back if necessary so you should be able to as well.

Maybe so. My pessimism probably comes from not getting any appreciation on my investments so far. I just recently got back to a zero percent return over the past five years, which is about how long I have been saving money.... I screwed up by being very bond heavy until pretty much 2007... right before the crash when I went about 80/20.

I have heard that some people actually make a profit off of their investments. Now that I have been through a proper initiation test I would like to try that out sometime and see what it is like.

 

[Moscyn]

You are still young - when I was your age, I was earning much less than what I am earning today. I still managed to do things I like but my holidays then were fewer and less luxurious than now. The clothes I bought than were not necessarily less expensive than the clothes I buy now - but I certainly bought less. My focus then was to pay off all debts first (mainly the home mortgage) and groom my career to get higher remuneration. Throughout the cycle, exercise moderation when it comes to spending - live below your means but this does not mean you can't enjoy quality - just buy less. I used to spend 80% of my salary on necessities and wants but once the home mortgage is paid, I can live on 30% of my salary and even less if I want to. On your parents, it is very admirable what you wish to do. I was fortunate that my parents had their mortgage paid but I have always given them money to subsidise their living expenses. Taking care of your own debts and your parents mortgage simultaneously seems rather challenging.

 

[Anima Mundi]

You are still young - when I was your age, I was earning much less than what I am earning today. I still managed to do things I like but my holidays then were fewer and less luxurious than now. The clothes I bought than were not necessarily less expensive than the clothes I buy now - but I certainly bought less. My focus then was to pay off all debts first (mainly the home mortgage) and groom my career to get higher remuneration. Throughout the cycle, exercise moderation when it comes to spending - live below your means but this does not mean you can't enjoy quality - just buy less. I used to spend 80% of my salary on necessities and wants but once the home mortgage is paid, I can live on 30% of my salary and even less if I want to. On your parents, it is very admirable what you wish to do. I was fortunate that my parents had their mortgage paid but I have always given them money to subsidise their living expenses. Taking care of your own debts and your parents mortgage simultaneously seems rather challenging.

What I bolded in your response hits the nail on the head! This makes sense. I don't want to relinquish luxury entirely in order to be FI, but to have some nice things is better than none at all. For instance I already have my dream car, albeit used and without the GPS navi I wanted, but it was cheaper than a new Honda, and that was sufficient.

I'm in the process of getting into a better-paying field than the one I'm currently in, and I also want to do freelance work on the side and seek ways of developing passive income streams. I know I'm really in no position to help out my parents right now when I need to take care of my own finances, but I try to help them out whenever I can.

It's funny how so many mentioned that I'm so young. I guess it's because I've been working since I was 16 that I don't feel young at all. In fact I feel burned out and wish I could just stop working. But your response has given me hope and I'll try to weather this storm as best I can.

 

[W2R]

Except for the mortgage and 1 partial car loan in 1992, my rules have always been as follows...
1. First, I set up automatic payroll deduction for my 401(k) AND auto-investment of my retirement portfolio DCA funds. Then I allocated enough to pay COL expenses.
2. Second, if I didn't have enough money left over in the bank for a fun purchase, I don't buy it. Maybe next month...

Edited...Oops...Welcome to the board

+1 This is great advice, in my opinion. Also plan what you need to contribute to pay off your debts, and what you need to be saving in order to make future big purchases, and consider all of these as part of your COL expenses too.

 

[Celany]

some thoughts:

- Like other have said, worry about your parents later. Unless they are in a dire financial situation, you need to worry about you first. And if you do decide to help them (or anyone else), it may be worth asking yourself if they are helping *themselves* enough. There are some people in my life that I love, and I feel bad when they are sad that they cannot afford the things that they think will make them happy. But when I notice how many things they "just can't not buy/do/grab" (a quick $5 latte at Starbucks as a pick-me-up, a new sweater, new jewelery, etc), and then I see how many things I walk away from, so that I have money for my goals, I feel a lot less inclined to help them. Not that they are bad people. I just don't want to help someone that is sacrificing significantly less than I am, to make my dreams come true.

- Think out of the box. How many bedrooms are in your place? Can you rent any of them out? Can you move back in with your family & pay less rent than you do now? Could you get some friends together and rent a multi-bedroom place (often a lot cheaper per person than renting a 1 bedroom). How do you feel about dumpster diving? Can you swap skills so you pay less for certain things? Can you sell things on ebay? Can you freelance/consult/work part-time as a bartender/server? Do you have any skills that you could use to make a part-time business (computer fixing, dog walking, baby-sitting)?

One note about all of that stuff above: There are different levels of pay-off for each. You could probably benefit from experimenting with a bunch of them, and seeing which ones work best for your personality. Even if something brings in a bit less extra income, if it makes you happy to do, or doesn't bother you, it's probably better than something that brings in a bit more income, but is really outside of your comfort zone.

- What do you want to do *exactly*? Do you know? What do you know that you want and why? Do you have any role models on how to get there?

I don't know exactly what I want to do. For me, it's more a process of elimination. I know that I don't want to be employed full-time my whole life. Because full-time seems to always end up being "nearly all my time except for when I'm sleeping or commuting". I want to try to do my own thing again some day - my own business, that I wouldn't mind working on so much, because it would (hopefully) be something that is a joy & not a burden, & thus enriching.

I follow several blogs that help me to think out of the box, and look at very different ways to live my life: Nerdy Nomad, WiseBread, The Art of Non-Conformity, Moneyless World & Frugan Living. Right now, these are the sites that help me figure out where I want to go, give me ideas on how to get there, and give me role models so I know that it *is* possible.

I hope that helps!

 

[Bimmerbill]

I can't approach a 60% savings rate either. My take home is barely 50% of my gross (FSA and day care FSA, insurance, 15% into 401K, tax, etc).

If I had a spouse making a similar wage, we could both probably save 50% of our combined salary. But that isn't the case.

So I do the best I can. I've been lucky working for companies with pensions. That reduces the $ I need to save right now. I hope.

 

[Anima Mundi]

some thoughts:

- Like other have said, worry about your parents later. Unless they are in a dire financial situation, you need to worry about you first. And if you do decide to help them (or anyone else), it may be worth asking yourself if they are helping *themselves* enough. There are some people in my life that I love, and I feel bad when they are sad that they cannot afford the things that they think will make them happy. But when I notice how many things they "just can't not buy/do/grab" (a quick $5 latte at Starbucks as a pick-me-up, a new sweater, new jewelery, etc), and then I see how many things I walk away from, so that I have money for my goals, I feel a lot less inclined to help them. Not that they are bad people. I just don't want to help someone that is sacrificing significantly less than I am, to make my dreams come true.

- Think out of the box. How many bedrooms are in your place? Can you rent any of them out? Can you move back in with your family & pay less rent than you do now? Could you get some friends together and rent a multi-bedroom place (often a lot cheaper per person than renting a 1 bedroom). How do you feel about dumpster diving? Can you swap skills so you pay less for certain things? Can you sell things on ebay? Can you freelance/consult/work part-time as a bartender/server? Do you have any skills that you could use to make a part-time business (computer fixing, dog walking, baby-sitting)?

One note about all of that stuff above: There are different levels of pay-off for each. You could probably benefit from experimenting with a bunch of them, and seeing which ones work best for your personality. Even if something brings in a bit less extra income, if it makes you happy to do, or doesn't bother you, it's probably better than something that brings in a bit more income, but is really outside of your comfort zone.

- What do you want to do *exactly*? Do you know? What do you know that you want and why? Do you have any role models on how to get there?

I don't know exactly what I want to do. For me, it's more a process of elimination. I know that I don't want to be employed full-time my whole life. Because full-time seems to always end up being "nearly all my time except for when I'm sleeping or commuting". I want to try to do my own thing again some day - my own business, that I wouldn't mind working on so much, because it would (hopefully) be something that is a joy & not a burden, & thus enriching.

I follow several blogs that help me to think out of the box, and look at very different ways to live my life: Nerdy Nomad, WiseBread, The Art of Non-Conformity, Moneyless World & Frugan Living. Right now, these are the sites that help me figure out where I want to go, give me ideas on how to get there, and give me role models so I know that it *is* possible.

I hope that helps!

Thanks for the suggestions! Yes, I will definitely focus on myself first, then my parents. I want to get into UI design, which can pay well once you break into it. Alas, I don't have any role models, and I don't have any inherited wealth coming my way in any case, so I can't have wealth without work to some degree. If anything, I know I don't want to be employed for longer than necessary. I feel like I'm blazing my own trail.

 

[stoutboy]

50% of gross is pretty darn good, considering most Americans have a negative savings rate. My employer has a pension too, and it should be fairly secure, but I'm trying to save as though I don't have one. I just try to keep my eye on the goal.

I can't approach a 60% savings rate either. My take home is barely 50% of my gross (FSA and day care FSA, insurance, 15% into 401K, tax, etc).

If I had a spouse making a similar wage, we could both probably save 50% of our combined salary. But that isn't the case.

So I do the best I can. I've been lucky working for companies with pensions. That reduces the $ I need to save right now. I hope.

 

[ESRwannabe]

I can't approach a 60% savings rate either. My take home is barely 50% of my gross (FSA and day care FSA, insurance, 15% into 401K, tax, etc).

If I had a spouse making a similar wage, we could both probably save 50% of our combined salary. But that isn't the case.

So I do the best I can. I've been lucky working for companies with pensions. That reduces the $ I need to save right now. I hope.

My numbers are similar. I am saving about 44% of w2 gross income. There is a good bit of fat I could cut from my budget and maybe get it to 50%.

 

[Bimmerbill]

Haha! I wish I were saving 50% of gross. I'm only taking home 50% of my gross, after all deductions (15% to 401K included).

 

[aaronc879]

I save 33% of gross in my 401K. Then, after taxes, I only have about $1650 every 4 weeks in take-home pay. I save a minimum of 20% of that(most of which ends up in my ROTH). I don't know how other people are figuring that out with a mix of pre and post-tax savings but i'm definetly over 50% savings.