Need help gaining some perspective ...

[BigBangWeary]

Hi everyone. Long time lurker, first time poster here. I am hoping that you might be able to help me gain some much needed perspective on our financial situation. I am 32 and my wife is 29. We left North America almost 9 years ago with some of the typical five-figure student debt that has
come to define our generation. We felt that our options were quite limited and we hoped to find somewhere overseas where we would be able to get a bit of a leg-up on our situation.

Over this time we have been able to pay off our debt, and accumulate a net worth of $325,500 (investments, pension, savings account). Our after tax income is $11,000 per month and we have a pension that gives us just under $10,000 (after tax) per year. We are currently saving half of
what we make, and we are able to travel quite a lot.

I am not trying to brag here as I realize there are many people in our age range who are doing far better, and many who are not. The problem is that I am really not happy with my current career, nor the place we are living, yet we do not feel we have enough perspective outside of our little bubble to make an informed decision about what to do. I do not want to give too many details over a public forum, but trust me when I say that we would not be able to replicate our income anywhere else with our current qualifications. Our package is particular to where we work, and we have spent a lot of time working our way up the ‘chain’.

We have always dreamed of becoming financially independent and not having to ‘worry’ about finances so much. I grew up in a poor family, and we were always teetering on the brink. I know this has skewed my view to an extent.


At our current rate it will take us at least another 8 years to reach the coveted one million dollar mark, and that is if we do not have another major crash. I know that many people would suggest we leave this place, and start fresh at something new, but a part of me feels both guilty
and irresponsible for thinking of doing this. We know that many people in Generation Y are struggling to find steady, reliable jobs, let alone worrying about early retirement, and sometimes I feel that we should just suck it up and stay here and save. On the other hand, I don’t want to end up being the richest man in the graveyard.

I guess we are looking for some input into how well we really are doing at this age. Should we be holding on to this opportunity and avoid letting it slip away at all costs, or should we be throwing caution to the wind and starting over completely in an effort to be happier. I know that some of
this is very subjective, but we really do live in a bubble as expats and everyone around us is in a similar situation. It is very hard to get ‘real-world’ advice or make comparisons in our environment.

Anyways, any constructive feedback would be much appreciated. Thank you in advance!

[obgyn65]

To answer your question, I think you are doing well. Welcome to the forum.

[lhamo]

Welcome from another long-term expat who doesn't fit well in the typical bubble! DH and are older than you, but similar in that we work in very niche fields that would be hard to find work in back in the US. That is one of the main things keeping us in China -- the other is family (DH is originally from here). It has become harder and harder to justify the choice to stay as our net worth goes up (the Beijing property market has been very good to us so far -- knock wood!) and our quality of life goes down (assume everyone has seen the news about our horrible air quality issues. Now we are also contemplating paying a huge chunk of change to get our kids a higher quality education. If it weren't for the family factor I would probably be able to talk DH into selling our apartment and experimenting with FIRE or Semi-retirement. For now it doesn't seem like that is on the table.

We don't talk about these issues with many people in real life, because as you note the expat world doesnt seem to be on the same wavelength (have thought about blogging for the small subgroup that might --- are there many of us out there?). Silly, really, as a lucrative expat package (which we don't have) can be a fast track ticket to FIRE. I see so much wasteful spending among certain parts of the community it is RIDICULOUS! We live a VERY nice lifestyle that I don't think requires many compromises for about what it would cost us to live in the US. That includes at least two trips a year to visit each side of the family (2 transpacific trips * 4 people + 2-3 domestic trips a year = significant hunk of change). Plus a hefty mortgage, plus a helper to clean/cook dinner/help watch the kids. We don't have a car but that isn't really a huge sacrifice here -- can't drive one day out of the week anyway, and taxis are plentiful. We have cut way back on eating out but I enjoy cooking so that isn't a big deal. Anyway, as you know you can have a very good lifestyle and save a ton as an expat.

If you haven't read Your MOney or Your Life, I would suggest you give it a try. Although it is a bit dated now (especially the investment advice to put everything in long-term USG bonds), the stuff about tracking spending and aligning spending with values is classic, and really useful. You mentioned you travel a lot -- that would be the first place I would look at cutting back. there are ways to travel cheaply and still have a great time. Or if you really value FIREing then you may find that taking just a trip or two a year is all you need if it gives you just as much pleasure/satisfaction to see your FIRE stash growing.

Sorry this is longwinded. I get a bit excited to find people in a similar position to us! Welcome and look forward to hearing more from you.

lhamo

[donheff]

You are doing very well and face a tough choice. I would probably try to hang in for 8 more years and then move. Even if new jobs back here (or wherever) don't allow you to save as much $1M has a tendency to grow if left alone for another 10-15 years. And hanging on for 8-10 years will probably not seem like such a big deal looking back at the period. But one big question wasn't addressed, what about kids? And, if they are in the picture, how does that fit with your current location?

[Sarah in SC]

I think that your feelings, if not your exact circumstances, are shared by many of us.
Perspective from more than a few years ahead of you are to stick it out as long as you can, and stretching your BS tolerance with vacations, hobbies, and as much lifestyle enjoyment as you can get while still saving lots of money.

I think that you can probably compare yourself more easily to other FIRE wannabees like us than others of your age cohort. There are a lot of different lifestyle choices among Gen Y and Millennials, so although I think in general you are doing much better than the ones of them profiled on the news, it doesn't really matter much in your situation.

You'll never be sorry you stockpiled investments early on, so do it as long as you can stand, then make a change, knowing full well you are changing for very good reasons when the time comes. You want to reduce the sensation of regret, and I think right now if you bailed, you'd feel a lot of regret for what you left on the table.

[Texas Proud]

Some perspective...

With the limited info you gave... you spend $5500 per month... That would require $1,650,000 as a general rule (the talked about 4%)...

But, you mention a pension... is it safe? Are you getting it now? (it would seem strange you getting a pension at such a young age)...


You also did not mention kids... any plans? What is something unexpected happened and one came anyhow? Kids cost money...

So, reality check is that you are stuck where you are or will have to take that much lower income wherever you move...

The good news is that you ARE saving 50% of your income which would get you to where you need to be pretty fast compared to most...

[Midpack]

You are doing very well as you know. And wondering if the career (indeed life) 'grass is greener on the other side' is more common than not. All of us could do better, and all of us could do worse, and there's usually no way to know for sure except in hindsight.

For anyone who is able to land a career in a good paying position, I would not give it up easily. And I certainly wouldn't give it up without having something better (not necessarily higher pay) to go to, I doubt you would, but you didn't say. Only you can decide when it's time to move on...

I've read stories about a lot of people who have major career changes. Ideally the first career would be for the money, at something reasonably enjoyable. And the second career would be for the satisfaction first and foremost, with pay a secondary consideration. Taking a sabbatical between careers is appealing to many who want to travel or engage in activities than may not be possible later in life. I may be in the midst of my sabbatical before an encore career myself, but I probably won't ever have to go back to work thanks to my first career. I am glad I didn't give up on the first career earlier (despite a bonehead boss or two along the way), but that's a decision that's unique for each of us.

Relocation is an interesting topic. Early in my career I was literally willing to relocate anywhere for a promotion/career development, and it was very beneficial. But the older I got, the more important where I lived became to us. I don't know how universal that is, I had traveled all my life even as a child so relocating was 'normal' to me.

And Texas Proud noted above, based on your post I'd say the "coveted million dollar mark" is but a (significant) milestone for you - not likely anywhere near FI.

[daylatedollarshort]

A bird in the hand (your current job) is pretty good in this economy. If it were me, I would probably not give it up without a sure thing to go to.

The only thing I could suggest is that if you haven't read it yet, read The Millionaire Next Door. Then find something you love to do as a hobby / side business, and when that job reaches the point where you are making more than your current income, quit your current job. It has to be something you enjoy and can make money, otherwise you will be working two jobs for many years. But if your side business is something you love, it won't seem like work.

[BigBangWeary]

Thank you all so much for your thoughtful and detailed answers. I have a lot to chew on here, and I really do appreciate being able to see things from other viewpoints. It is a little daunting putting yourself out there like this, but let me see if I can fill in a few more details ...

We receive what is called an ‘indemnity’ which is paid out yearly in our case. We can invest it or spend it as we please (we save it). I was trying to keep things simple when I referred to it as a pension.

The likelihood of us having children is limited, but yes, this would have an effect on our ability to reach financial independence.

lhamo, I haven’t read Your Money or Your Life. I will have to pick that one up. Feel free to send me a PM if you want to trade Expat war stories.

It is true that even a million is not what it once was, and we are aware that this will not be enough to allow us to fully retire. Our plan has always been to save aggressively and then pull back a bit once we reach the million dollar mark and try our hand at something else. We have toyed with the idea of starting our own business, but even just something a little more in line to our wants/desires/beliefs would be fine as long as we could save.

As expats we also may have a very different view of FI. We have many mentors and colleagues who have retired to places like Thailand, Ecuador, Panama, the Philipines, etc. and are living on far, far less than they were here (or in the West). We have been investigating this a lot, and I really don’t see us making our permanent home anywhere back home. We would love to be able to visit family throughout the year (this makes Central/South America quite tempting), but we are not set on returning home.

I realize we are spending $5500 per month. 66% of that amount goes towards housing, bills, food etc. We are living in an expensive country, and we are some of the most fugal expats in our circle. The other 34% is spent on a medical issue that is not covered by our insurance (but that will one day go away), and for travel. As Sarah in SC pointed out, the travel is important to us because it keeps us from going insane. We are hoping to do the majority of our touring while we are young enough to enjoy it. Still, I agree that there is room for restraint.

I know there are several threads debating about just how much one needs in retirement compared to working years. We are in the camp of those who believe they will be living on less. We are quite happy to live in a modest home, to use public transport, and to eventually reduce travel to once a year at most. Still this is probably a debate for another thread.

I have read The Millionaire Next Door, and do try to keep myself busy with hobbies/interests. Still trying to find something that is a viable ‘business’ though. I would love to follow my heart and passions, but I am still trying to figure out a way of translating these into a viable business or career. I started out doing what I love actually, and realized early on that it was not going to pay off the debt or the eventual bills.

We really don’t feel like we are getting ahead, or are doing that well, simply because we are surrounded by others in a similar situation and we have lost touch of what is the reality outside of our bubble. Your feedback has been very helpful in this regard.

[Texas Proud]

Quote:

Originally Posted by BigBangWeary We really don’t feel like we are getting ahead, or are doing that well, simply because we are surrounded by others in a similar situation and we have lost touch of what is the reality outside of our bubble. Your feedback has been very helpful in this regard.

Really There are people around you that save more than 50%?

Or are you trying to compare portfolio size with others who might be older than you?

As an example, I had a friend who was at work when they got their 401(k) stmts... this was when he was about 30... a guy who was 55 was bragging on how much more he had than my friend... my friend's response? "Well, I sure hope so because you got 25 years on me"....

If you are comparing with similar ages and similar pay and you still come up short... well, that is rare indeed...


You are well on your way to where you need to go... much better than more than 99% of the people out there (and much more if you include other countries)....

[meekie]

Quote:

Originally Posted by BigBangWeary We have always dreamed of becoming financially independent and not having to ‘worry’ about finances so much.

For me, there's a big difference between the two. Neither of us are at the FI point, but with $325k saved, you really don't need to "worry" about finances too much. Even a single minimum wage job and your savings would probably be enough to have a barebones living.

Overall, I think you're doing quite well, and it does sound like you have a pretty good situation right now. I'd keep at it for a few years longer to see what happens, and to give you some time to research some other future job options. It may take you a few years to figure out what you really want to do with your life and where you want to go, and by then you'll have more saved up, and maybe it'll be enough. That 1 million dollar mark is a good goal, but it may be more or less than you need. You won't know until you decide where you want to be.

[BigBangWeary]

I wouldn’t say there are many people saving a lot more than 50% in our circles, but yes, saving half of what you make is fairly common where we are. Keep in mind that many expats have chosen to come here solely for the money. They usually come in, stay for a few years, sock it away, and then move on. We are in the minority who continue to stay on with the hopes of FI at some stage.

I suppose I may be getting a very biased view of how we are doing through the kind of websites I frequent. We do tend to spend our time on forums like this one where everyone is very focused on saving, and where some of the personal finance super stars tend to hang out.

I was assuming that ‘Young Dreamers’ meant 20s, 30s, early 40s, etc. but after looking through some threads on this topic, I do think we may be on the younger end on here. So if those of you who have been kind enough to respond think we are in good shape and that we should keep on keeping on, then I think we must be heading in the right direction. Cheers.

[panhead]

Welcome BBW (anyone get the pun?)! Anyway, I think you are doing great. My net worth was right about where yours is at your age (I'm about 10 years older) and if I felt comfortable drawing 4%, I 'd have plenty more than enough to retire today. So if you can stand it, keep on keepin' on. If you can't, since you don't have children you have the flexibility to make a change if both of you are on board with it. Just be very sure about not having a kid while you are making that change!

Cheers!

[Texas Proud]

Quote:

Originally Posted by BigBangWeary I wouldn’t say there are many people saving a lot more than 50% in our circles, but yes, saving half of what you make is fairly common where we are. Keep in mind that many expats have chosen to come here solely for the money. They usually come in, stay for a few years, sock it away, and then move on. We are in the minority who continue to stay on with the hopes of FI at some stage. I suppose I may be getting a very biased view of how we are doing through the kind of websites I frequent. We do tend to spend our time on forums like this one where everyone is very focused on saving, and where some of the personal finance super stars tend to hang out. I was assuming that ‘Young Dreamers’ meant 20s, 30s, early 40s, etc. but after looking through some threads on this topic, I do think we may be on the younger end on here. So if those of you who have been kind enough to respond think we are in good shape and that we should keep on keeping on, then I think we must be heading in the right direction. Cheers.

Where are you at and what are you doing Maybe I will jump in for a few years and be done

[JoshTrent]

Quote:

Originally Posted by Texas Proud Where are you at and what are you doing Maybe I will jump in for a few years and be done

+1

[Milton]

Having paid off substantial student debt and amassed $325,000 in capital in nine years, I would say that you are doing very well.

Quote:

Originally Posted by BigBangWeary I know that many people would suggest we leave this place, and start fresh at something new ...

Really? Who are those people? What reasons have they provided for their suggestion?

While you ask whether you should "throw caution to the winds and start over completely in an effort to be happier", I don't see in your post any information that your current jobs are horrible. There may be some minor problems, and perhaps you feel somewhat less than fulfilled; but unfortunately that is true of most people's work. Unless there are real difficulties that you haven't expressed, there is no apparent reason to bail on your current situation.

Quote:

Originally Posted by BigBangWeary ... but a part of me feels both guilty and irresponsible for thinking of doing this. We know that many people in Generation Y are struggling to find steady, reliable jobs, let alone worrying about early retirement, and sometimes I feel that we should just suck it up and stay here and save.

If you and your wife decide to make a change, I don't see any reason to feel guilty or irresponsible. You risk hurting your own financial situation, but as you have no dependents that doesn't impact any vulnerable third parties. You will also be ineligible for unemployment insurance, so there is not even any 'social cost' to such a decision.

[Milton]

Quote:

Originally Posted by BigBangWeary It is true that even a million is not what it once was, and we are aware that this will not be enough to allow us to fully retire. Our plan has always been to save aggressively and then pull back a bit once we reach the million dollar mark and try our hand at something else. We have toyed with the idea of starting our own business, but even just something a little more in line to our wants/desires/beliefs would be fine as long as we could save.

There is nothing at all wrong with such a plan. On the contrary!

Quote:

Originally Posted by BigBangWeary We really don’t feel like we are getting ahead, or are doing that well, simply because we are surrounded by others in a similar situation and we have lost touch of what is the reality outside of our bubble.

Point No. 1: I wouldn't be so sure that your peers are similarly situated. While they may make approximately the same income as you, and have access to the same expat perks, it should not be assumed that they are diligently paying off debt and saving/investing.

Point No. 2: Regardless of how you may be doing relative to immediate peers, there is simply no basis for your concern that you are "not getting ahead", at least financially. Compare your current net worth to what it was nine years ago, and surely it is obvious that you have achieved impressive results.

[Ronnieboy]

Quote:

Originally Posted by Texas Proud As an example, I had a friend who was at work when they got their 401(k) stmts... this was when he was about 30... a guy who was 55 was bragging on how much more he had than my friend... my friend's response? "Well, I sure hope so because you got 25 years on me"....

This is funny, I had a similar experience. A friend/mentor from a competitor pulled up his 401(k) account on the computer once when I was touring his place of employment and commented, "this is what you get to have by putting your money in a 401(k)" His balance? $110k

I was actually excited because I had at least 15 years less years on the job and my balance was at $90k. Then I figured I had better increase it

[BigBangWeary]

We work in the Middle East in education, so there is a lot that comes with that. We are very grateful for the experiences and benefits that coming here at a young age has given us, but there are obvious complications and stressors that we would not be dealing with if we were living a more traditional lifestyle.

To be honest, our early years were spent reacting to situations as opposed to truly thinking things through in the longer term (aaah youth). I ended up in the field I am in more out of necessity than design. As I mentioned before, I did start out trying to follow my passions, but this left us with significant debt, and fairly useless qualifications that were not going to pay the bills. The decision to move, and to start down this path was more of a need-too than a want-too move.