Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Need some guidance
Old 09-21-2007, 03:45 PM   #1
Dryer sheet wannabe
 
Join Date: Sep 2007
Posts: 16
Need some guidance

Hi,

I have been reading these forums from 1 week and now i am really tensed about our retirement and other financial aspects.

DW and myself have saved about 150k in taxable and around 70k in various tax defered accounts. I am self employed and hence 401k is less and taxable income is more.

I am 28 yrs and DW is 25 yrs old.

We have a mortgage on our house which we bought last year in the 500k range. Nowdays that is the norm. I am not sure when we will have a positive networth bcs its going to be a long time to have one with the current market.

How did other ppl manage to get a positive networth before 33 if someone graduates in the 25 yrs range . I cant seem to understand that and that is keeping me awake big time.

thanks
honkydonk
__________________

__________________
honydonk 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 09-21-2007, 03:59 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Unless your house is worth zero or you have some kind of massive non-mortgage debt you arent telling us about, it sounds like you already have positive net worth (and have done very well). The mortgage amount is offset by what the house is worth in the calculation of net worth.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 09-21-2007, 04:08 PM   #3
Dryer sheet wannabe
 
Join Date: Sep 2007
Posts: 16
Hi,

Thanks for replying. The issue i am having is that the house was bought in the last 2 years and as we now know the house prices are decreasing rather than increasing so there is no equity built except for the 25% that has been put down. I am not sure how i have a positive nw unless i am missing something.
__________________
honydonk is offline   Reply With Quote
Old 09-21-2007, 04:45 PM   #4
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,402
honydonk,

If we assume your house was worth $500K when you bought it and is still worth $500K and you put down 25%, your net worth would look like this:

Assets

House -- $500K
Taxable savings -- $150K
Tax-deferred savings -- $70K

Total Assets --- $720K

Liabilities

Mortgage -- $375K

Total liabilities -- $375K

Net worth ---- $345K

which is actually a fabulous position to be in at your age.

2Cor521
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
thanks for explaining
Old 09-21-2007, 07:20 PM   #5
Dryer sheet wannabe
 
Join Date: Sep 2007
Posts: 16
thanks for explaining

Hi,

Thanks for explaining this. I didnt know how to compute networth and since right now if I sell the house i wouldnt make a dime i didnt consider it part of my networth.

Atleast now i can concentrate on getting to a better position faster.

thanks
amit

*** lets get to dublin faster than others
__________________
honydonk is offline   Reply With Quote
Old 09-21-2007, 09:23 PM   #6
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Quote:
Originally Posted by honydonk View Post
How did other ppl manage to get a positive networth before 33 if someone graduates in the 25 yrs range . I cant seem to understand that and that is keeping me awake big time.
Your housing situation is regrettable...your other savings are quite good...My impression is that many here dont consider home equity of much value in net worth calculations (and many have argued that point due to the situation that you are now in) and the value comes more from having it paid off....

On the issue of age, there are a lot of engineers, computer science, etc. folks on these boards...I am an engineer and certainly graduated with a degree before age 25....I am also in the midwest where housing is considerable cheaper and 150-200k gets a pretty decent place...
__________________
maddythebeagle is offline   Reply With Quote
Old 09-22-2007, 12:36 PM   #7
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Your doing fine. Keep doing whatever you have been to save what you have so far and the 25% downpayment and you will be in great shape at age 33 or beyond.

DD
__________________
DblDoc is offline   Reply With Quote
Old 09-22-2007, 12:51 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by honydonk View Post
Hi,

I am self employed and hence 401k is less and taxable income is more.

honkydonk
Are you eligible to use a Solo 401K? That can allow you to stash a way quite a bit money before taxes, but you have to have no other employees (except for a spouse).
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 09-22-2007, 01:19 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,178
It is tough to get ahead in the first few years but as has been pointed out, you are doing well. Hopefully the house will bounce back and you'll have some positive equity in that soon.

Also keep in mind that presumably your income will increase through the years, usually faster than your expenses go up especially with a fixed rate mortgage assuming you don't keep upgrading homes and mortgages. Any time you make more money (salary increase for us who are not self-employed), put a lot of that towards your investments. Finished paying off a car? Put the car payment amount away in savings, so when you replace that car you can put a considerable amount of cash down on it and eventually don't even need to take out car loans. And of course keep credit card debt away.

If you keep add it, in another 5-10 years you will find yourself in a lot better shape, as you have less debt, are saving more, and your home and investments appreciate. Right now you want to position yourself for this.
__________________
RunningBum is offline   Reply With Quote
Old 09-22-2007, 03:46 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,881
If you have over $200K already saved, you are way ahead of your peers.

My advice is to live below your means for the next few decades and continue to increase your savings in both taxable and nontaxable accounts as you see fit and you and DW will be in fine shape and ready for ER in a timely manner.
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is online now   Reply With Quote
Old 09-22-2007, 03:54 PM   #11
Full time employment: Posting here.
 
Join Date: Sep 2002
Posts: 538
Quote:
Originally Posted by mickeyd View Post
If you have over $200K already saved, you are way ahead of your peers.

My advice is to live below your means for the next few decades and continue to increase your savings in both taxable and nontaxable accounts as you see fit and you and DW will be in fine shape and ready for ER in a timely manner.
I agree. Seems like you are doing fine. Just remember the 8th wonder of the world. "Compounding"

It will sneak up on you.

Tomcat98
__________________
JDARNELL is offline   Reply With Quote
thanks for encouragement
Old 09-22-2007, 07:32 PM   #12
Dryer sheet wannabe
 
Join Date: Sep 2007
Posts: 16
thanks for encouragement

Hi,

Wanted to thank everybody here for the support and kind words. I jumped into the housing market at the wrong time but i am sure everything will work out in time. Lot of commercial buildings coming near by so when the market recovers i am expecting a lot but lets c.

I am aiming to save a lot more and we LBYM , DW doesnt like it but if we need enjoy later we need to struggle now.

I am looking to reach the 200k mark by year end and that is definitely doable I hope.

We dont have any other debt .

thanks
honydonk
__________________
honydonk is offline   Reply With Quote
Old 09-23-2007, 05:59 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,643
Heck, if you are even thinking about this stuff at 28 you are ahead of your peers.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 09-24-2007, 09:38 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by donheff View Post
Heck, if you are even thinking about this stuff at 28 you are ahead of your peers.
Amen to that........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-24-2007, 10:40 AM   #15
Dryer sheet aficionado
 
Join Date: Sep 2007
Posts: 44
Very true. Kids in their twenties are a generation of spenders with no looking into the future. I wonder what their retirements will look like?
__________________
Fred333 is offline   Reply With Quote
kind words
Old 09-24-2007, 10:20 PM   #16
Dryer sheet wannabe
 
Join Date: Sep 2007
Posts: 16
kind words

Hi,

Wanted to thank for the kind words and encouragement. Can someone show me a calculator that based on a retirement figure and a return of 7% how much of principal do we need to putting into the market . That would give a very good figure to aim for and based on the market condition we may need to increase the principal.

thanks
__________________
honydonk is offline   Reply With Quote
Old 09-24-2007, 11:20 PM   #17
Dryer sheet aficionado
 
Join Date: Mar 2007
Posts: 26
I love playing with this calc: Retirement savings calculator -- How much money can I save in my 401(k) plan?

Congrats on the savings so far, you have time on your side, you may be surprised to see the numbers that the above calculator will toss out. It makes LBYM all that more enjoyable!
__________________
Breitling is offline   Reply With Quote
Old 09-25-2007, 08:34 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,879
Quote:
Originally Posted by honydonk View Post
Hi,
..... Can someone show me a calculator that based on a retirement figure and a return of 7% how much of principal do we need to putting into the market . ....
I like the Fidelity free calculators, but they are one of many (search Google "retirement calculator ")
__________________

__________________
Yes, I have achieved work / life balance.
travelover is online now   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
Seeking guidance on 401k rollover to Vanguard, please! Achiever51 FIRE and Money 7 03-15-2007 10:30 AM
New Here - Looking for Guidance arthurb999 Hi, I am... 11 07-25-2006 08:13 AM
Hello - Guidance Needed Hope2Retire Hi, I am... 4 07-23-2006 08:25 AM
Need Guidance From The Pros trailblazer Young Dreamers 5 09-16-2004 01:57 PM

 

 
All times are GMT -6. The time now is 02:44 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.