28 Years Olds Journey to FIRE!!!

[Vagabond2020]

I figured it would be great for accountability, as well as motivating other young-in's in the process to keep a journal of sort and posting how well, or not so well things are going. So a little background on me, I started working full time toward the second half of 2010 in retail management. After leaving college sans degree I wasn't sure what I wanted to do with my life. Retail was a good fit for me at the time, the hours were extremely flexible as long as I hit 40 a week, the pay was decent for someone without a degree. As soon as I paid off some consumer debt and had a little money in the bank I quickly began researching investing and how I can start building a nest egg so that one day my money can make more than my job. I read about the magic of compounding, and started playing with different calculators. I began by maxing out a Roth IRA, in 2012 I started contributing 5% into my 401k to get the employer match, kicking myself in the ass for not doing it sooner. I slowly increased my contributions there until I hit 20%. I thought I was doing well until.......

.........in Jan 2014 came across this site, I realized I should be maxing out tax deferred accounts. I realized I have been gambling inside of my Roth instead of sticking to index funds. I rebalanced my portfolio, attempted to bump my savings rate. I started scouring the internet for personal finance and ER blogs. Budgetsaresexy.com, financialsamurai.com. mrmoneymustache.com, livingafi.com etc. all opened my eyes to the double effect of cutting spending and increasing income potential. I took a leap of faith back in October and applied for a new position, it would mean a slight initial pay cut but much more room for growth and the potential after the first year to make substantially more $$. After SIX interviews I got an offer. I started working there at the end of 2014.

I realized that while I originally planed to FIRE by age 50, I have the potential to cut that by nearly a decade. I started playing with Firecalc, its going to be a stretch but the new goal is FIRE by 40 with a $1mil nest egg.

Currently This is where I am at.
Mid to high 40’s salary plus some incentive compensation (variable)
20% 401k Contribution (Max allowed by company despite IRS Limit)
Maxing out Roth IRA $5500/yr
Maxing out HSA $3300/yr
Saving $250/month Cash
Effective Savings rate 52% of Net Income

Budget is $1650/month in HCOL area.

Currently at $88,000 Investable Assets
Currently at $0 Debt

With my current portfolio and current rate of contribution, SS estimates, spending goals. Firecalc gives me a whooping 14.6% success rate of FIRE at 40.

I look forward to updated this thread with progress!

 

[navydavey]

26 year old guy here. Looks like you've got a great foundation to build on and the right attitude. +1

 

[Amethyst]

Wow, zero debt, and maxxing out your retirement accounts. So many folks your age are struggling with big student loans. You are on a great path, and we'll enjoy hearing about your progress.

Amethyst

 

[cooch96]

Fire all gives you a 14% success rate with a cool million? What a jerk.

Are a spouse or home purchase included in your life goals? I guess I'm assuming they aren't current factors since you didn't mention them.

You have a right to be proud of yourself. You've done a lot of research and taken some risk to improve your career. Good luck!

 

[Greencheese]

25 here, sounds like you've got an awesome start! Honestly I wouldn't kick yourself at such a young age, I didn't even consider the possibility of ER until after a year of working and getting my student loans paid off. With society ingraining the idea of working until 65-67 it can take time to get that "spark" and realize that you don't have to do this whole working thing for the next 40-45 years.

Had I known how the markets would have done in 2013 I would have started out at the max for my 401k, funded 2012 and 2013 ROTH by Jan 2nd 2013, and maxed/invested my HSA the same way as well instead of hammering down my loans, oh well. You live and learn. Besides, we got time on our side and a plan, which is more than most people in their 20's can say. So congrats on getting started and hopefully we'll be posting in the "Class of 20XX" before you know it!

 

[Mill]

you don't need a million dollars to do nothing. Look at my cousin. Hes broke, don't do $hit.


But seriously, have you considered that you could ER several years earlier with 600k? Its something to look into. And networthiq.com is a nice resource to track progress.


Good luck and best wishes.

 

[Vagabond2020]

Investable assets are at $90,800 as of March 1st so (+$2,800) for February.

I somehow managed to trim $150 off the monthly budget down to $1500/month. Happy to say I now have just over 5 years of annual expenses saved up.

Rolled my old employers 401k into a Vanguard IRA and waiting for the paperwork to go through. Been out of the market on that $$ for almost 2 weeks now. Nervous about plopping $20k into equities in a lump sum.

 

[Dreaming of Freedom]

When I was 26, I was thinking I would retire at 55 when I was eligible for a pension. Then I stared dating someone much older than I would was going to retire and live off his assets at age 55, and at that point I realized that I should set a new goal to retire earlier and live off my own investments. At age 30ish, my new plan was to try and retire at age 46. As of today, I am hoping to retire, at least partially, in two years when I am 40. Sadly, I will finally pay off my student loans about the same time.

 

[bad_LNIP]

FYI if you are 26, you will not be getting SS in its current form anyway. I plan for nothing. Retiring early requires more assets in stocks. I don't think you can put it in fixed income and get to where you want to be. Inflation will eat you alive.

Sent from my XT1049 using Early Retirement Forum mobile app

 

[Vagabond2020]

Figured I am overdue for an update.

I finally started cranking out sales at work, income for 2015 with commission will be ~$90k.

Savings rate with commission is now ~65-70%

As of today investable assets are up to $104k.

The biggest update, when I started this thread 6 months ago, Firecalc spit out a 14.6% success rate of FIRE @ 40 with $40,000/yr spending.

As of today this is up to a 67.5% success rate!!!

 

[amyj05]

It sounds to me like you're definitely on the right track. You're better off than most people in our generation. (I'm 28). Like bad_LNIP said above, I wouldn't plan on social security if I were you. Other than that, good luck!!

 

[zesty]

FYI if you are 26, you will not be getting SS in its current form anyway.

Maybe not at the current levels, but almost certainly 75% of its current levels as a minimum.

 

[Donzo]

Great aggressive start! I started saving at about your age and really enjoyed the process and watching the #s grow. Whats nice also you will be buying in when we have our next correction/crash and with your horizon can buy in whole heartedly. The dips and crashes along the way can really boost your $ during accumulation (they did mine). When others are running out...you are running in. I ERed at 49 but looking back I could have jumped years sooner. I was so wrapped up in my career I never really thought of getting free before 55.

Save AND enjoy your youth

 

[Vagabond2020]

Thanks Donzo! I am certainly enjoying life very much along the way!

Managed to have a fantastic year at work, just cracking the six figure mark.

This allowed me to hit a 75% after tax savings rate for the year, which in turn bumped investable assets to ~$140k by the end of December.

Success of ER @ 40 with a $40k/yr spend is now up to 82% according to FIRECALC

 

[early_retirement_or_bust]

I'm 28 and I'm not doing anywhere near this. You are a huge inspiration!


Sent from my iPhone using Early Retirement Forum

 

[Vagabond2020]

Figured I would toss up an update.

Investable assets are up to $167k as of today. Income for 2015 ended up being $109k, got a small promotion in January so I should be in the $100-120k range for 2016 assuming I hit sales quota.

Looks like ~$210k in investable assets will be possible by the end of this year. At that point a 4% withdrawal rate will cover my rent/utilities/groceries.

 

[chris2008]

Well done. You are on track.
2 cents: It makes sense to invest a bit in your professional knowledge, to protect your market value in case of sudden job loss.
How about trying to get the college done? Your competitors have.
Do you have hobbies? Money management + job alone can cause burn out.

 

[Vagabond2020]

Well done. You are on track.
2 cents: It makes sense to invest a bit in your professional knowledge, to protect your market value in case of sudden job loss.
How about trying to get the college done? Your competitors have.
Do you have hobbies? Money management + job alone can cause burn out.

Howdy Chris, you bring up some important points.

At this point in my life/career I don't think further schooling is something I want to pursue. I now have ~10 years of professional experience and with a career in account management/sales it weighs more heavily than a degree. Not to say a BA in business would hurt, I just don't think at this point it time it makes sense. I will be hitting financial independence somewhere in 2022 it looks like, for now I will grind away at work and stack the $$$.

Hobbies? I have tons, avid weight lifter, mountain biker, and hiker. I did my first triathlon last August and got hooked, been doing a USMS Masters Swimming class since October and I have a few races on my calendar for this upcoming season. Besides that I spend a lot of time with my close friends/family doing BBQ's, potlucks, happy hours, and game nights. SO and I love to travel and camp, we use travel hacking to score free flights/hotels.

My SO has ramped up at her job and is finally pulling in some nice commission checks the past two months.

Our household income is on pace to be ~$150-170k gross for 2016. At 29/25 years old I think we are doing ok.

 

[Vagabond2020]

I thought it would be fun to post my budget.

Out of this Necessary - $1,538 Discretionary - $963

 

[DrRoy]

You're doing great, Birds. Way ahead of your peers. I was not so focused at your age but was saving ~20% and got to FI. I will RE at 57 next year. Hang in there. The LBYM program works.

 

[pug_ster]

In my 20's I still lived with my parents despite that I can afford to rent until I got married and brought my own place. Also I didn't max out my 401k until I saved enough for a down payment for my own place and my home.

 

[Vagabond2020]

Thanks for the feedback everyone. It's nice to know we are not alone out there (though at times it feels like in my circle of friends/family)

 

[eastnortheast]

That is awesome!! Congrats.

Don't want to be a Debby Downer, but check to see if a prize like this is taxable. I got hit with an unexpected tax bill when winning something similar (though nowhere near as expensive) from my company. At least for me, they valued the trip at rack rate pricing, which was much higher than I could find elsewhere. It may end up costing you $5K for a "free trip".

 

[Vagabond2020]

Found out that my company does pay taxes on our behalf for this incentive trip.

 

[Vagabond2020]

Figured I would toss up an update.

Investable assets are up to $167k as of today. Income for 2015 ended up being $109k, got a small promotion in January so I should be in the $100-120k range for 2016 assuming I hit sales quota.

Looks like ~$210k in investable assets will be possible by the end of this year. At that point a 4% withdrawal rate will cover my rent/utilities/groceries.

Broke through this goal last month!

Investable assets are now up to ~$220k, which at a 4% SWR means income of ~$730/month......covers my rent/utilities & a frugal monthly grocery budget.

Slowly but surely getting there!!