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Not so young, but I do have night terrors
Old 01-26-2009, 07:54 PM   #1
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Not so young, but I do have night terrors

Hi, been lurking awhile and thought I'd jump into the waters (they look fine).

I'm 41, my wife is 39, and even after reading most of the posts in the Young Dreamers and FIRE and Money forums I can't for the life of me understand how you are all achieving this RE thing. I'm currently reading a few of the books recommended in the reading list ("A Random Walk Down Wall Street," "Live More, Work Less," and "The Bogleheads Guide to Investing") so I'm sure I still have much to learn. The good news is, rather than purchase the books as I would have several months ago, I checked them out from the local library ... so I'm well on my way I hope

I'm wondering though ... how many of you ever experienced/are currently experiencing this same sort of feeling, namely, the feeling that 'maybe all of these other people are just making a bunch more money than I am, because my numbers never seem to add up to FI.'?

Looking forward to participating more in this community. The group as a whole is quite impressive.
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Old 01-26-2009, 08:04 PM   #2
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I can't speak for anyone else on the board, but we did not make a bunch of money. Wife and 2 kids, for the first 20 years of marriage we never made more than $50 K a year. It was not until the last 10 years of a 40 year marriage that we hit the $100k + range. For us it was not how much we made, but what benefits each job contributed to retirement. (also wife only worked about 14 of those years) In our case a military career gave us the foundation. We also lived well within our means. While we paid for our kids education, it was state school not private schools.

Anyway, it is possible. It is however, where YOU put your priorities. Learn finance! Learn where you money goes! Avoid credit! Keep your cars for at least 10 years! Learn weather you should rent or buy a home! Learn finance, oh did I say that. You can still have a good time, neither DW or I feel like we sacrificed anything to get to where we are. Above all enjoy life!

Had to add this. I was in Thailand and on a tour with a group of other military guys. One of the guys, an airman, looked around and said 'I thought we were poor, but you look out over here and these people are really poor, but everyone of them is smiling' It's not the money that makes them happy.
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Old 01-26-2009, 08:20 PM   #3
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It's not how much you make, it's what you do with it. Many people here save a very large percentage of their income, most probably around 20-50%. Most also ruthlessly cut their expenses, with many living (happily it seems) on $20,000 a year or less.

It's not easy. I am pretty sure that people on this board are/were pretty driven to achieve FIRE. Some would probably consider us obsessive if not extreme in our march to financial freedom. But that's what it takes. If it were easy, everybody would do it. But I think that there are quite a few people on this site who achieved FI on a middle class income.
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Old 01-26-2009, 08:53 PM   #4
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Like Rustic23, we counted on a government pension to be the foundation of our income stream in retirement. But, we also saved approx 20% of our pay every month. My wife never earned more than $1000/yr, she stayed home. And, we spent a lot less money than many of my peers. I'm not truly RE'd, as I still work part time so we can afford some of the "extras" and meet possible college expenses for our daughter, but I feel like I'm off the treadmill. How much you earn is not nearly as important as how much you save, how you invest it, and being amenable to a basic standard of living that exchanges luxuries for financial security.

Most folks here also benefitted from some very strong stock market returns over the last 25 years. While things seem dark now, betting against stocks over the long term has generally not been a good idea. So, don't overlook the potential that your own savings may experience 25%+ growth in some years if they are in the market. And, there will be times when they'll go down, too.

Welcome aboard.
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Old 01-26-2009, 09:04 PM   #5
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I'm wondering though ... how many of you ever experienced/are currently experiencing this same sort of feeling, namely, the feeling that 'maybe all of these other people are just making a bunch more money than I am, because my numbers never seem to add up to FI.'?
A lot of people here DO make a lot of money, and a lot have big fat pensions. Not everyone, though.

Just take it one step at a time. Cut back on your expenses and save every cent you can. Rethink what you can and can't afford, given your ambitions to retire early. Make a plan.
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Old 01-26-2009, 09:28 PM   #6
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Very well said all, and thank you for treating a newcomer with kid gloves.

You see, here's the thing. We've both been contributing to our 401Ks since 2000. First several years we only contributed between 6-10% each, but have been contributing over 20% total the past few years. We've also been paying down the mortgage on our starter home we purchased in 1999. Not to get into too much detail, but we currently have about 100K in equities, 20K in cash, and expect to have the home paid off in about five years.

All in all, I feel pretty good about all of that ... until I began reading this board. Most who post here seem to be in much better shape, and though I'm still trying to figure out the ins and outs of FIREcalc, I just can't see how we're going to get to that mystical place where we can withdraw 4% each year and live comfortably (if modestly) until we're both happily old and decrepit.

On the more optimistic side, I'd like to think it will happen. I guess what I'm looking for is some reassurance and some company in my misery

Those of you who have done it; did you ever feel like I do now? Those who are in the accumulation phase; are you as concerned as I am?

Or, alternatively, will a little more reading and learning make all the fears (and the associated night terrors) go away?
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Old 01-26-2009, 09:37 PM   #7
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Finance = Time Value of Money

Say $120,000 now, put $20,000 year in retire in 15 years, at 10% you have $1,137,719
and a paid off house. Can you retire on $45,700? Ok, I left out inflation, but I also didn't put in greater savings as things like house paid off, and increased salaries.
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Old 01-26-2009, 10:01 PM   #8
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Those of you who have done it; did you ever feel like I do now?
We didn't know beans about 4% SWR, finance calculators, AA, or the stock market when we finally started to make decent money. We knew we didn't want to depend on both of our salaries, so most of the money I made was put toward the mortgage and the rest was saved from my paycheck. This 401k thing came along and we thought, wow that looks like a good deal.

We knew we shouldn't put all of our eggs in one basket, so we spread our money around. We thought we should stay with our job because they would pay a pension and provide medical benefits after a certain number of years.

We didn't worry about funds in our old age because we were ignorant of exactly how much it would take to live after retirement.

Fortunately, our financial situation is very strong. If we were not diligent in saving money and staying out of debt that would not be the case.

There is so much financial info out there now. It can be confusing and frightening. But, you are fortunate that you have the ability now at a young age to understand what it will take for you to retire. I think we all should understand our financial position now, than to retire, start to learn more and think..."I'm in trouble." It may be too late then.

Enjoy your life; look forward to your future and sleep well.
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Old 01-26-2009, 10:39 PM   #9
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You are comparing yourself to a select group of people. You are way ahead of most in your age group. You have time on your side and if you can comfortably do the LBYM thing you should be OK if you develop a plan and stick to it. As Rustic pointed out in 5 years all that mortgage money can be saved, as can any future raises.

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Old 01-26-2009, 10:56 PM   #10
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Those who are in the accumulation phase; are you as concerned as I am?

Or, alternatively, will a little more reading and learning make all the fears (and the associated night terrors) go away?
It is grueling, especially at the beginning. In the first few years of savings (which were not that long ago for us), it felt like it was mission impossible. It took what seemed like ages for our savings to reach $100K and then $200K. We had made it (painstakingly) all the way to about $500K when the market crashed. Yet, despite this recent set back, I do sense that it's getting easier and easier every time we reach a new milestone. Over the years we have also increased considerably the amount of money we save on an annual basis. At the very beginning, we contributed only small amounts of money to our 401Ks, far less than the maximum allowed. But, as our income increased, we were able to increase our contributions little by little and it has made a very big impact on our savings and our ability to reach FI. But we are still pretty far from the goal line.

Are we afraid or concerned we won't make it? Sometimes. But I think that it comes with the territory when you undertake a task as monumental as reaching financial independence. Whenever in doubt though, I go back to "the plan", a conservative roadmap to FI that we designed 7 years ago. A plan, I believe, is essential to keep us from going astray. It's a compass that shows you the way to the goal line and it allows us to measure our progress and successes along the way.

Reading and educating yourself about finances will ease your mind. Many factors will determine your ability to reach FI. How much do you save, how fast do your investments grow, how much risk do you take, how much do you pay in fees and taxes, etc... If you want to feel in control, you have to focus on the things that can TRULY control. You can't control the stock market (i.e. your return on investments), but you can decide how much to save each year. You can decide how much risk to take with your money. You can decide to use cheap investment vehicles. And you can decide to structure your portfolio as to pay as little taxes as possible. You can learn how to do all these things here, on these boards, but also by reading books.
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Old 01-26-2009, 10:58 PM   #11
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Lawrence: Well, what about you now? what would you do if you had a million dollars?
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Peter Gibbons: Nothing.
Lawrence: Nothing, huh?
Peter Gibbons: I would relax... I would sit on my ass all day... I would do nothing.
Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do ****.
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Old 01-26-2009, 11:12 PM   #12
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Quote:
Originally Posted by intent
I'm wondering though ... how many of you ever experienced/are currently experiencing this same sort of feeling, namely, the feeling that 'maybe all of these other people are just making a bunch more money than I am, because my numbers never seem to add up to FI.'?
I wondered about that at first but after being a member awhile realized there are some on here who will FIRE with a lot more than I & some with quite a bit less. It's a real mix.



From what I've seen there are basically three kinds on this forum:
  • Those earning really good incomes & planning on ER on a couple mil or more investments
  • Those earning so-so incomes with modest investments & planning on a simple-life type retirement on much, much less in investments
  • Those having a secure COLA'd pension w/health benefits and adding modest investments to that (usually started young with the same company/govt - like me) and planning on a comfortable, but somewhat modest, ER
(or some combination of the above) There are many paths.....

What I think you will find is some common characteristics such as LBYM, no debt other than mortgage, no car payments, etc
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Old 01-27-2009, 07:03 AM   #13
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You see, here's the thing. We've both been contributing to our 401Ks since 2000. First several years we only contributed between 6-10% each, but have been contributing over 20% total the past few years. We've also been paying down the mortgage on our starter home we purchased in 1999. Not to get into too much detail, but we currently have about 100K in equities, 20K in cash, and expect to have the home paid off in about five years.
That's great! You are in SO much better shape than the majority of Americans your age.

Quote:
Originally Posted by intent View Post
All in all, I feel pretty good about all of that ... until I began reading this board. Most who post here seem to be in much better shape, and though I'm still trying to figure out the ins and outs of FIREcalc, I just can't see how we're going to get to that mystical place where we can withdraw 4% each year and live comfortably (if modestly) until we're both happily old and decrepit.
First - - it's not a competition. But you knew that, didn't you. Second, when you are retired your expenses are going to be much lower. No mortgage, for example. If you have a few years that are mortgage free before you retire, all that extra money that you have been putting towards the house will pile up pretty quickly.

Quote:
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On the more optimistic side, I'd like to think it will happen. I guess what I'm looking for is some reassurance and some company in my misery

Those of you who have done it; did you ever feel like I do now? Those who are in the accumulation phase; are you as concerned as I am?

Or, alternatively, will a little more reading and learning make all the fears (and the associated night terrors) go away?
It's only natural to feel like you do. Combat it with knowledge and math. (Expenses<income) means happiness and successful ER.
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Old 01-27-2009, 07:36 AM   #14
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I have been really paranoid lately too, mostly about losing my job because I don't think I'd have an easy time getting work otherwise. Even if I'm willing to downshift into a second career, I'm afraid my salary history and level of education would be problematic unless we moved back to the big city, which we really don't want to do.

When we moved out here, we factored in what could happen in an economic recession but we really didn't plan for one this severe.
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Old 01-27-2009, 07:44 AM   #15
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Old 01-27-2009, 07:58 AM   #16
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Intent: Welcome to the board (I see this is your second post, I must have missed the first one).

Learn where your money goes down to the $1. Cut expenses, all you can:

Brown Bag it (even my SIL, who is a surgeon, does it).
Cut Magazine subscriptions (unless you can get them free).
Eat at home as much as possible (drink water).
Watch energy use (yes turn the lights off as you leave the room).
Cut Transportation costs (group your trips so you are getting more than one thing done).

Save, Save, Save.

It is a slow and steady process but many in America can do it if they really try.
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Old 01-27-2009, 08:19 AM   #17
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I feel the same way. Lots of $100K plus earners here (or there seems to be). I am not one of them!
By the time I subtract property taxes, mortgage payment, health insurance, day care expenses, other insurance (life, umbrella, car, etc), gas, utilities, and food, there ain't much left!
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Old 01-27-2009, 08:21 AM   #18
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There are many paths to FI . Some inherit , some have high paying jobs and some just live way below their means . I started investing at 30 and I always lived below my means while still enjoying travel ,dining out and having fun. Just keep investing but enjoy life .Also just do not get into the lusting after what other people have . They are probably broke .
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Old 01-27-2009, 08:34 AM   #19
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intent-

In the hopes of providing some encouragement,
I really don't think having 3-6 yrs+ of living expenses
in the bank and a house that's nearly paid off justifies
night terrors.

I've got co-workers with 3-6 years worth of negative
equity in their house.

Keep up the good work,
LB
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Old 01-27-2009, 11:36 AM   #20
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You're in good shape, intent. There are many very successful people on these boards who did have high incomes or successful businesses. There are also older folks who worked for companies with pensions. So yes, this is a very selective group of successful people and you are bound to feel like a little guy when you're first starting out with your FIRE plans.

But your house is nearly paid off, which is a great thing. That's most people's largest expense. You'll be able to significantly increase your savings once you no longer have to pay a mortgage.

In other words, just keep up the good work and take it one step at a time.
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