Hi all! I've piped up a few times before, and I thought I'd introduce myself. I think I'm quite a bit younger than most of you (33) and still working with three young children (all under 5). I have a typical desk job, and my wife stays at home. I dream of FI/RE, but, like the typical family, saving money was a lot easier when it was Double Income No Kids, rather than Single Income Three Kids. With the wife and kids sending our expenses up rapidly, the dream seems farther and farther away each year. This year was particularly bad, with a move to a higher-priced neighborhood, and an almost endless stream of large expenses that went with it. In the next two years I hope to get back to saving significantly (something that I used to do easily, but haven’t been able to manage for the last two years).
Another Young Dreamer
- Thread starter bongo2
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Mr._johngalt
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Yep, DINKS have it made, financially speaking. Alas,
almost none of them realize it before they become
non-DINKS. I married and started a family at age
20, so have never been a DINK. However, I feel your pain................................Maybe this will help. Of all I have done in my life ( a lot), everything is kind of insignificant compared to my kids.
almost none of them realize it before they become
non-DINKS. I married and started a family at age
20, so have never been a DINK. However, I feel your pain................................Maybe this will help. Of all I have done in my life ( a lot), everything is kind of insignificant compared to my kids.
John:
You kindred soul, you! Looks like everytime either of us says something, the other has done it or is doing it.
I also married at age 20 but we didn't have any kids for 4 years. That gave us the time to get through school, get jobs, and start putting down some roots before laying in a stock of house-apes.
I can sympathize with Bongo2. It IS hard to save when you have a growing family. My wife and I always tried to live on one of our incomes and save/invest the other. This made saving a lot easier, even though there were times when we simply could not save. Thankfully, those times were few and far between.
If asked by a youngster for financial advice, I would offer this:
1. Work hard to ensure your job when hard times arrive.
2. Save religiously... even if it's only $5 per pay period, always
save at least something.
3. Watch your expenses closely... only buy what you need and
try to get it on sale... avoid bars and restaurants except on
special occasions... and Friday isn't!
4. Start an investment program ASAP. Time is on your side
when you are young, so make the most of it.
5. Start a Roth IRA for yourself and a spousal Roth IRA for your
wife. These make great savings accounts for college AND
retirement expenses... and they are not taxed.
6. Take full advantage of any retirement savings plan offered by
your employer, especially if there is any kind of a match.
This is FREE money and all you have to do is accept it.
7. Minimize taxes whereever possible as this expense can eat
up more of your income than shelter, food, clothing, and
medical expenses combined.
8. Forget about having the latest and greatest goodies, fancy
clothes, or expensive cars. Go for good quality, take care
of it, and make it last for a long time.
9. See a lawyer and make up a will. Once you have created
significant wealth, create a trust.
10. Make sure that you are adequately insured. Use term life
insurance and have at least 5x your annual salary worth of
it. Shop around and get the best rate as rates vary widely.
OK, that's enough from me. Anyone else care to add their thoughts on this?
Ed_B
You kindred soul, you! Looks like everytime either of us says something, the other has done it or is doing it.
I also married at age 20 but we didn't have any kids for 4 years. That gave us the time to get through school, get jobs, and start putting down some roots before laying in a stock of house-apes.
I can sympathize with Bongo2. It IS hard to save when you have a growing family. My wife and I always tried to live on one of our incomes and save/invest the other. This made saving a lot easier, even though there were times when we simply could not save. Thankfully, those times were few and far between.
If asked by a youngster for financial advice, I would offer this:
1. Work hard to ensure your job when hard times arrive.
2. Save religiously... even if it's only $5 per pay period, always
save at least something.
3. Watch your expenses closely... only buy what you need and
try to get it on sale... avoid bars and restaurants except on
special occasions... and Friday isn't!
4. Start an investment program ASAP. Time is on your side
when you are young, so make the most of it.
5. Start a Roth IRA for yourself and a spousal Roth IRA for your
wife. These make great savings accounts for college AND
retirement expenses... and they are not taxed.
6. Take full advantage of any retirement savings plan offered by
your employer, especially if there is any kind of a match.
This is FREE money and all you have to do is accept it.
7. Minimize taxes whereever possible as this expense can eat
up more of your income than shelter, food, clothing, and
medical expenses combined.
8. Forget about having the latest and greatest goodies, fancy
clothes, or expensive cars. Go for good quality, take care
of it, and make it last for a long time.
9. See a lawyer and make up a will. Once you have created
significant wealth, create a trust.
10. Make sure that you are adequately insured. Use term life
insurance and have at least 5x your annual salary worth of
it. Shop around and get the best rate as rates vary widely.
OK, that's enough from me. Anyone else care to add their thoughts on this?
Ed_B
Mr._johngalt
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I don't mind adding my thoughts (surprise- surprise).
First of all, I think your advice is mostly excellent.
Alas, I did not follow this path. Here is what I did, item
by item in the same order as listed.
1. I did work very hard for many years, not because
I wanted to insure my job. Just the way I am.
2. I never had a structured savings program in my life.
3. I now am a careful shopper and buy almost 100%
at bargain prices. If it is not on sale or "cheap" I do
not buy. I've always been a good negotiator, but
used to buy big houses and Cadillacs. Plus, I would
drop huge sums in bars and restaurants on a regular basis.
4. I did not have a structured investment program until
after I retired.
5. I do not have and have never had ROTH IRAs.
6. Most of my employers did not have a very
generous retirement program, although I took advantage of what was available.
7. I always have tried hard to minimize taxes.
8. For many years, I bought the "latest and greatest"
very style conscious in cars, clothes, etc.
9. I always write my own will. Unless you have a big
estate or a complicated situation, you do not need a
lawyer.
10. I have no life insurance of any kind and have not since I retired. I have no debts. My heirs will split
my assets. That's it.
First of all, I think your advice is mostly excellent.
Alas, I did not follow this path. Here is what I did, item
by item in the same order as listed.
1. I did work very hard for many years, not because
I wanted to insure my job. Just the way I am.
2. I never had a structured savings program in my life.
3. I now am a careful shopper and buy almost 100%
at bargain prices. If it is not on sale or "cheap" I do
not buy. I've always been a good negotiator, but
used to buy big houses and Cadillacs. Plus, I would
drop huge sums in bars and restaurants on a regular basis.
4. I did not have a structured investment program until
after I retired.
5. I do not have and have never had ROTH IRAs.
6. Most of my employers did not have a very
generous retirement program, although I took advantage of what was available.
7. I always have tried hard to minimize taxes.
8. For many years, I bought the "latest and greatest"
very style conscious in cars, clothes, etc.
9. I always write my own will. Unless you have a big
estate or a complicated situation, you do not need a
lawyer.
10. I have no life insurance of any kind and have not since I retired. I have no debts. My heirs will split
my assets. That's it.
To each their own, John. I think that you will agree, however, that you probably SHOULD have operated in a different financial mode than you did. My advice is generic and mostly fits most people. Imagine what you could do now with a few hundred thou$and that you had saved and invested rather than spent. I know from your posts that you weren't a saver for most of your life and that you did not even start investing until you retired. My question is: HOW THE H*** DID YOU MANAGE TO ER?". Sounds to me as if you did not plan to ER but just sorta fell into it and somehow managed to make it work. This is a plan?
Ed_B
Ed_B
Sorry that this is a little off topic, but how could anyone (at least in the last 30 years) knowledgeable about cars buy a cadillac?
I'd say that is the poorest use of money imaginable!!
But I'm certain that now that you are a `careful shopper' John, those things are long in your past.
Funny how just last week Howard Stern (who, admittedly knows nothing about cars) expressed an interest in purchasing a cadillac. Fans and co-workers unanimously convinced him of what a foolish decision that would be. He now has an Audi A8 on order.
I'd say that is the poorest use of money imaginable!!
But I'm certain that now that you are a `careful shopper' John, those things are long in your past.
Funny how just last week Howard Stern (who, admittedly knows nothing about cars) expressed an interest in purchasing a cadillac. Fans and co-workers unanimously convinced him of what a foolish decision that would be. He now has an Audi A8 on order.
>Fans and co-workers unanimously convinced him of what a
>foolish decision that would be. He now has an Audi A8 on
>order.
Oh, that's MUCH better... and probably even more expensive than the Caddy.
Actually, if one wanted to drive a really nice car at least once in their lifetime, they could do worse than buy a 4 year old luxury sedan of some type. Personally, I favor the Jag XJR but then that's just me.
A good alternative is to buy a classic car and maintain it. Then you can have the pleasure of driving it for several years and selling it for more than you paid for it... unlike most car purchases. Just a thought.
Ed_B
>foolish decision that would be. He now has an Audi A8 on
>order.
Oh, that's MUCH better... and probably even more expensive than the Caddy.
Actually, if one wanted to drive a really nice car at least once in their lifetime, they could do worse than buy a 4 year old luxury sedan of some type. Personally, I favor the Jag XJR but then that's just me.
A good alternative is to buy a classic car and maintain it. Then you can have the pleasure of driving it for several years and selling it for more than you paid for it... unlike most car purchases. Just a thought.
Ed_B
You're right, Ed, the A8 is almost twice as much as even a `top-of-the-line' caddy.
But - to get us back more on topic - an important lesson that I learned a long time ago (and one that helped me retire very early) is that you get what you pay for.
If you desire a quality product (ie a car you want to last 10 years), sometimes you have to spring a little more up front for that quality (ie foreign, sometimes) product.
Again, JMHO, but it's worked like a charm for me!
But - to get us back more on topic - an important lesson that I learned a long time ago (and one that helped me retire very early) is that you get what you pay for.
If you desire a quality product (ie a car you want to last 10 years), sometimes you have to spring a little more up front for that quality (ie foreign, sometimes) product.
Again, JMHO, but it's worked like a charm for me!
Mr._johngalt
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Just breifly (and mostly for Ed). My history is not presented as a "plan" for anyone. I did about everything wrong (as to ER planning) for many years.
I still was able to do it as I was highly motivated
(once I made up my mind) and very creative. As to cars,
I now drive used and older, after I squeeze every nickel
out of the sellers. I owned 3 Cadillac Sevilles in my life.
Best cars I ever owned. No contest!
I still was able to do it as I was highly motivated
(once I made up my mind) and very creative. As to cars,
I now drive used and older, after I squeeze every nickel
out of the sellers. I owned 3 Cadillac Sevilles in my life.
Best cars I ever owned. No contest!
You don't have to spend $50,000 to get a quality vehicle. I'm driving a 13 year old Astro van with 160,000 miles on it, and it still runs and looks just fine. It won't win LeMans, but it will get me to where I need to go.
Expensive cars are NOT good value (unless it is a real classic). But they are good for the tax man and insurance company.
Red
Mr._johngalt
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Well, when I was working I was quite style conscious.
And..............even today I have my standards although
you wouldn't know it to look at me most days, when I
am fishing or loafing. During my career (30 years
from school to semiretired) I was the president/CEO of 4
corporations. There was a certain level of style and consumption which went with that territory. To be
honest, I enjoyed my big spender years. But, I got to a point
where what I had to do to maintain that lifestyle was no
longer appealing. So, I gave up the salary/perks/prestige for the freedom of ER. A slam dunk decision, even if I was ill prepared. Most of you have heard the phrase "golden handcuffs". That's the
way I felt before I cut the cord. Really, my story is quite
similar to Paul Terhorst's, except that he did it sooner
and scaled back much more drastically than I ever could.
And..............even today I have my standards although
you wouldn't know it to look at me most days, when I
am fishing or loafing. During my career (30 years
from school to semiretired) I was the president/CEO of 4
corporations. There was a certain level of style and consumption which went with that territory. To be
honest, I enjoyed my big spender years. But, I got to a point
where what I had to do to maintain that lifestyle was no
longer appealing. So, I gave up the salary/perks/prestige for the freedom of ER. A slam dunk decision, even if I was ill prepared. Most of you have heard the phrase "golden handcuffs". That's the
way I felt before I cut the cord. Really, my story is quite
similar to Paul Terhorst's, except that he did it sooner
and scaled back much more drastically than I ever could.
John:
While I never worked at your level, I DO understand the term "golden handcuffs". The salary that I now earn and the benefits package are effectively the same thing for me. I'm in that weird part of ones working life where I can afford to ER but am better able to prepare for a long and comfy R by working, earning, saving, and investing. Knowing when we have enough for a comfortable retirement is a tricky question. It invariably means that we must polish up the crystal ball, peek at the future, and plan for the things that are coming. Like most crystal balls, mine gets a little murky at times and it is difficult to see what's coming. As a cautious person, that makes me doubt the value of my current financial position and desire even more savings before cutting the financial lifeline between me and the company.
I keep hoping that I will get floated out of this decision by a wave of corporate down-sizing but no such luck so far. Oh, well... :-/
Ed_B
While I never worked at your level, I DO understand the term "golden handcuffs". The salary that I now earn and the benefits package are effectively the same thing for me. I'm in that weird part of ones working life where I can afford to ER but am better able to prepare for a long and comfy R by working, earning, saving, and investing. Knowing when we have enough for a comfortable retirement is a tricky question. It invariably means that we must polish up the crystal ball, peek at the future, and plan for the things that are coming. Like most crystal balls, mine gets a little murky at times and it is difficult to see what's coming. As a cautious person, that makes me doubt the value of my current financial position and desire even more savings before cutting the financial lifeline between me and the company.
I keep hoping that I will get floated out of this decision by a wave of corporate down-sizing but no such luck so far. Oh, well... :-/
Ed_B
Red:
I agree completely. My current set of wheels is a 1994 Ford Ranger mini-pickup that has 97,000 miles on it and is still going strong. I take good care of it with frequent oil and filter changes and don't mistreat it. I expect it to last for several more years and am planning to keep it as a 2nd car that I can use for various jobs around the house and yard.
I would like to have a nice car at some point. I've always had inexpensive cars and would like to try a nice one just once. Haven't decided what to get yet but am looking at various Lincolns, Caddys, and Jaguars. I'd prefer a US built model but will get whichever appeals to me at the time. I'll shop carefully, whatever the make and model, so will get a good deal on it.
Ed_B
I agree completely. My current set of wheels is a 1994 Ford Ranger mini-pickup that has 97,000 miles on it and is still going strong. I take good care of it with frequent oil and filter changes and don't mistreat it. I expect it to last for several more years and am planning to keep it as a 2nd car that I can use for various jobs around the house and yard.
I would like to have a nice car at some point. I've always had inexpensive cars and would like to try a nice one just once. Haven't decided what to get yet but am looking at various Lincolns, Caddys, and Jaguars. I'd prefer a US built model but will get whichever appeals to me at the time. I'll shop carefully, whatever the make and model, so will get a good deal on it.
Ed_B
John:
I also married at age 20 but we didn't have any kids for 4 years. That gave us the time to get through school, get jobs, and start putting down some roots before laying in a stock of house-apes.
I can sympathize with Bongo2. It IS hard to save when you have a growing family. My wife and I always tried to live on one of our incomes and save/invest the other. This made saving a lot easier, even though there were times when we simply could not save. Thankfully, those times were few and far between.
If asked by a youngster for financial advice, I would offer this:
............. (see original post)...................
OK, that's enough from me. Anyone else care to add their thoughts on this?
Ed_B
The best investment for anyone younger than about 30 is in prophylactics. Kids are wonderful (and necessary for humanity to survive and retirees to be supported) but can be financially and socially devastating when they arrive too soon.
Mr._johngalt
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Well, my kids were expensive but worth it. I suppose
if I knew the real financial drain of supporting 3
children and an acquisitive wife for 32 years I might
be depressed. Re. vehicles, we have a 1991 Jeep
with 185,000 miles, a 1997 Dodge pick up with
108,000 miles, and my "toy", a 2003 Suzuki Intruder
motorcycle. I figure the whole bunch is worth
$15,000 tops! In my former life I would have spent
$15,000 for a vehicle and not even blinked.
if I knew the real financial drain of supporting 3
children and an acquisitive wife for 32 years I might
be depressed. Re. vehicles, we have a 1991 Jeep
with 185,000 miles, a 1997 Dodge pick up with
108,000 miles, and my "toy", a 2003 Suzuki Intruder
motorcycle. I figure the whole bunch is worth
$15,000 tops! In my former life I would have spent
$15,000 for a vehicle and not even blinked.
Hi all ! I've piped up once before, but I usually stay in hiding. Bongo2, like you I am also 33 years old, but am unmarried with no kids. So, as was mentioned before, a hefty investment goes to the "raincoat" companies ! I'm still trying to get that nest egg up to "take this job and shove it" proportions as well. At least it's starting to grow lately !
johngalt: always good to see another biker out here ! You might get it from the screen name, I'm a Harley nut. I buy em', fix em' ride em' and sell em' ! Hard to believe something fun could actually make you money ! I won't even make any Japanese motorcycle comments, I promise.... Heh heh.
As for the car discussion, they are all pretty much throwaways in my book. Get a good deal on a used car with a good dependability rating (yeah, even Harley riders really like toyotas, unbeatable reliability for the price) maintain it well, and run it until the floors fall out of the bottom of it and your feet get wet when you go thru puddles.
OK, I'm done, back into stalking (uh,lurking) mode.
Panhead
johngalt: always good to see another biker out here ! You might get it from the screen name, I'm a Harley nut. I buy em', fix em' ride em' and sell em' ! Hard to believe something fun could actually make you money ! I won't even make any Japanese motorcycle comments, I promise.... Heh heh.
As for the car discussion, they are all pretty much throwaways in my book. Get a good deal on a used car with a good dependability rating (yeah, even Harley riders really like toyotas, unbeatable reliability for the price) maintain it well, and run it until the floors fall out of the bottom of it and your feet get wet when you go thru puddles.
OK, I'm done, back into stalking (uh,lurking) mode.
Panhead
Mr._johngalt
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Hi Panhead! I almost gave up riding this winter.
Sold my bike but when it got warm I got the fever
and bought a new Suzuki, identical to my old bike
except I added saddle bags. I always wanted a Harley
but expect this will be my last bike. I really like it even if it is a rice burner. I will admit that when a Harley
goes by I still feel a little twinge. I'll get over it..
BTW, there is a bar in town (2 miles) named
Panhead's. Very popular with the Harley crowd.
Sold my bike but when it got warm I got the fever
and bought a new Suzuki, identical to my old bike
except I added saddle bags. I always wanted a Harley
but expect this will be my last bike. I really like it even if it is a rice burner. I will admit that when a Harley
goes by I still feel a little twinge. I'll get over it..
BTW, there is a bar in town (2 miles) named
Panhead's. Very popular with the Harley crowd.
Nor mine either, Red, but then perhaps those of us who refuse to borrow money, unless it is an emergency situation, are pretty well out-numbered nationally by the spenders who are in debt up to their eye-balls. Fortunately, the group on this web site tends to be in the saver camp rather than in the spender camp. Even so, we still have to borrow occasionally... such as for a house. Other than that, I agree with you and do not borrow money to buy "things" for which I can't pay cash.
Ed_B
Agreed, John. I feel the same way. Our youngest just graduated last week and presented me with his final tuition bill. Glad to have this part of my financial life behind me. Not sure what I will be doing with the extra $15k per year that has been gobbled down by the local university for the past 5 years but I'm sure that I will think of something.
$15K per year? WOW - you got out of it CHEAP. Decent private schools are now easily twice that!
Likewise, I'm glad to have that part of my life behind me.
Oh, and for those of you with young kids, I heard recently that public schools will be around $100K and private ones will be around $200K by 2020.
Likewise, I'm glad to have that part of my life behind me.
Oh, and for those of you with young kids, I heard recently that public schools will be around $100K and private ones will be around $200K by 2020.
The good news is that people with young kids have a wider range of tax-advantaged accounts in which to build up assets to pay for college. The bad news is that, as more and more ways are created to help people finance college, the prices that colleges are able to charge (especially "selective" colleges that hire "renowned" faculty members) keep rising faster than overall inflation. Corporate officers aren't the only people in the U.S. who are arguably over-paid.
To the extent that the cost of "selective" colleges is justified (relative to much less expensive ones), the major difference tends to be in the intellectual level of the students themselves. Presumably, this provides a higher level of intellectual interaction in college, and better contacts thereafter. The level of knowledge among different faculties doesn't really vary all that much, and the most "brilliant" faculty members often can't relate to students and therefore can't teach worth a damn.
BigMoneyJim
Thinks s/he gets paid by the post
Young'uns!
Great! Now I'm not the only whipper-snapper around. I'm also 33, and I'm glad to see Bongo2 and Panhead here. I'm single, but I'd like to get married and have a family; I'm not quite sure how to work that into my ER plans.
I've been in lurk mode for a while, but the past few days I thought about asking Dory36 to make a Forum for those of us who want to retire early but are still a decade or more away from it. I haven't thought of a catchy name for it yet, but I was about to drop the idea because until today I hadn't noticed others in my position hanging around the site. (Also some members seem alergic to the "W"and "J" words.)
If you're like me, you're not quite ready to plan CD Ladders, SEPP's but are trying to build the foudnation to get there more easily. In my case that's paying off debt, lowering spending, increasing savings and managing the career.
Great! Now I'm not the only whipper-snapper around. I'm also 33, and I'm glad to see Bongo2 and Panhead here. I'm single, but I'd like to get married and have a family; I'm not quite sure how to work that into my ER plans.
I've been in lurk mode for a while, but the past few days I thought about asking Dory36 to make a Forum for those of us who want to retire early but are still a decade or more away from it. I haven't thought of a catchy name for it yet, but I was about to drop the idea because until today I hadn't noticed others in my position hanging around the site. (Also some members seem alergic to the "W"and "J" words.)
If you're like me, you're not quite ready to plan CD Ladders, SEPP's but are trying to build the foudnation to get there more easily. In my case that's paying off debt, lowering spending, increasing savings and managing the career.
YUP! This is a good thing we've got here, we've got younger RE wannabe's, young RE's and older RE's and older RE wannabe's ! Quite the wealth of knowledge here, for sure, and I think most of us have been bouncing around boards since the TMF days at least. Many of us are too cheap to pay the TMF fee, that's for sure !
I am definitely in the mode of building the foundation for RE/FI. I've never been a big spender, most of my hobbies are either cheap, or make me money. I am a big DYI'er, so I did buy my own house, extremely cheap foreclosure house. Due to sweat equity, it's about doubled in value now. Not for everyone, but living in the NE, rents have been skyrocketing along with house prices. I pay about 1/2 what rent would cost me, plus I really need a garage for my hobbies. Of course, other costs have gone up, but I ain't gonna get in the rent vs buy debate, to each his own !
I have no debt except for about 60K of mortgage debt. Life is pretty easy and the nest egg has been growing lately. Of course, if I was married or had a live in girlfriend, much of what I have done would not have been possible. The house I bought was pretty bad at first, and I ripped out the one bathroom and the kitchen right away ! Don't ask how I lived there, it wasn't easy !
I've learned tons by the people here and from the other boards, and plan to keep on learning and give back when I can. I am especially interested in Dory's way of life, and would very much like to hear more about the lifestyle, costs involved, etc.
Good luck to all,
Panhead
I am definitely in the mode of building the foundation for RE/FI. I've never been a big spender, most of my hobbies are either cheap, or make me money. I am a big DYI'er, so I did buy my own house, extremely cheap foreclosure house. Due to sweat equity, it's about doubled in value now. Not for everyone, but living in the NE, rents have been skyrocketing along with house prices. I pay about 1/2 what rent would cost me, plus I really need a garage for my hobbies. Of course, other costs have gone up, but I ain't gonna get in the rent vs buy debate, to each his own !
I have no debt except for about 60K of mortgage debt. Life is pretty easy and the nest egg has been growing lately. Of course, if I was married or had a live in girlfriend, much of what I have done would not have been possible. The house I bought was pretty bad at first, and I ripped out the one bathroom and the kitchen right away ! Don't ask how I lived there, it wasn't easy !
I've learned tons by the people here and from the other boards, and plan to keep on learning and give back when I can. I am especially interested in Dory's way of life, and would very much like to hear more about the lifestyle, costs involved, etc.
Good luck to all,
Panhead
