Hello to all and how did you do it

[scrabbler1]

All the math and advice to LBYM is great. I did some of this myself. But why do you want to retire early? Do you hate work? It would be a shame if you spent the next decade hating your job and living frugally just to reach the NUMBER. Find something you like to do and hopefully pays well. Make sensible economic choices. Spend some now and save some. I worked at a job I loved and payed reasonably well. I am retiring at 55 but this whole retirement thing just snuck up on me recently. I feel grateful that I had a satisfying work life and that now I can enjoy ER.

For me, I wanted to retire early because I hated the commute. I mean HATED. The whole process of getting up, scrambling around, racing for a train, being nauseous and tired and depressed, even only 2 or 3 days a week (I worked P/T in my last 7 years), was too much for me.

Also, I had recaptured my personal life with stuff I was doing when I was working P/T, and working was becoming a nuisance to trying to schedule my midweek, midday activities.

Once I saw that I could cash in my company stock and find a way to live off its dividends while keeping my ER expenses under control, I planned to retire once those things converged - and they did in late 2008.

 

[Todd-O]

+1 Don't think you will make it being miserable/bored/unhappy with your job & life for 10 years or possibly more. It is not a race to the finish line, but how well you run it as well....

I think your NW is quite impressive at your age, but no matter how hard one tries, the future is hard to predict and even more than one can begin to guess. Setting goals is good but try not to let it get in the way of your present happiness either.

My personal NW at your age was probably only about 20K, if that, far less than your own position. But Like MartyP - I did enjoy my work and kept open minded about opportunities, following my heart. I could never have planned or guessed the eventual outcomes of the path I followed, but somehow by accident on purpose, it provided more than enough $$ to retire on.

Again, like I said that is not my net worth. The point of thread was to see how others accumulated such massive wealth is their 20's and 30's. I agree with you about work/life/happiness, but sometimes you are in a situation that is hard to get out of.

 

[Todd-O]

I guess my point is that whether you are working or not working/retired (I think) you should focus on leading a fulling life. If you can't do that in the working world then it puts in doubt that you will be able to do it when you retire. Isn't there some saying like - "Do what you love . . . the money will follow"?

Yeah, I've heard it and its a BROAD saying-all things to all people, is just doesn't work. There are things in this world that I would love to do, but unfortunately making a living off of them is the biggest issue.

 

[simple girl]

We crossed $100K in the year 2000 - when I was 32 and DH was 36. This was all due to DH investing in his 401K from the time he got out of college. We also started investing in Roth's in 2000.

We continued that strategy and aggessively paid off our student loans over the next 4 years (not prudent financially but emotionally we just wanted them GONE). By 2004 our networth had grown to just under $300K.

In 2005 we downsized from a big house to a townhouse. Realized between no student loans and a smaller mortgage that we had a bunch of extra cash...so we opened our taxable account in 2006 (continuing Roth's and 401K).

We completely invest my salary, much of DH's, and live off what we need from DH's salary. Savings have continued to grow over the years (and wane with the market losses, but that's part of the game.)

So keys are investing from an early age, using Roth's and taxable accounts in addition to 401K's, and most importantly, live WAY below your means. You need a lot less than you think. Plus, it's fun to be a bit unconventional compared to your peers.

 

[FreqFlyer]

All the math and advice to LBYM is great. I did some of this myself. But why do you want to retire early? Do you hate work? It would be a shame if you spent the next decade hating your job and living frugally just to reach the NUMBER. Find something you like to do and hopefully pays well. Make sensible economic choices. Spend some now and save some. I worked at a job I loved and payed reasonably well. I am retiring at 55 but this whole retirement thing just snuck up on me recently. I feel grateful that I had a satisfying work life and that now I can enjoy ER.

I'm 38 YO and hope to be FI in my early 40's. I'm not sure if I want to RE. Who can predict how they will feel 5 years in the future?

My motivations are CHOICE and SECURITY.

CHOICE

I'd like the ability to pursue a different line of work or industry. This might mean accepting a big drop in compensation. Part time in any case would be a very nice balance between work/play.

SECURITY

I don't want to be reliant on Mega Corp. I've seen too many people laid off. The high pay is nice but the j*b security stinks these days.

 

[FUEGO]

Again, like I said that is not my net worth. The point of thread was to see how others accumulated such massive wealth is their 20's and 30's. I agree with you about work/life/happiness, but sometimes you are in a situation that is hard to get out of.

Looks like your net worth is up there above a half million?? Assets that you have stated are around $650,000, so unless you have a ton of debt, that means that you have accumulated a good bit of wealth somehow.

My story is pretty simple I think. I'm 30 now, DW may be a little older (she's 29 again). DW and I bought a modest house at 23 while we were still in school. Had a couple kids since then. We save roughly 60% of our incomes. We pay almost nothing in income taxes. We live below our means pretty well (our basic expenses for our family are in the 20-24k range, maybe another 5-10k for vacations, luxuries, car replacement, etc).

We are very value conscious consumers, which has led to our savings rate being high. I scrimp and save in areas that we don't really care that much about. The focus has always been on growing the net worth and making decisions that would lead to net worth growth over the long term.

Our net worth is somewhere in the half million dollar area.

 

[Todd-O]

Looks like your net worth is up there above a half million?? Assets that you have stated are around $650,000, so unless you have a ton of debt, that means that you have accumulated a good bit of wealth somehow.

ARGHH
Guys like I said (3rd time now) that IS NOT MY NW. That was an example from another poster, NOT ME.

 

[Todd-O]

I'm 38 YO and hope to be FI in my early 40's. I'm not sure if I want to RE. Who can predict how they will feel 5 years in the future?

My motivations are CHOICE and SECURITY.

CHOICE

I'd like the ability to pursue a different line of work or industry. This might mean accepting a big drop in compensation. Part time in any case would be a very nice balance between work/play.

SECURITY

I don't want to be reliant on Mega Corp. I've seen too many people laid off. The high pay is nice but the j*b security stinks these days.

I Agree 100%
Well put FreqFlyer

 

[FUEGO]

ARGHH
Guys like I said (3rd time now) that IS NOT MY NW. That was an example from another poster, NOT ME.

Oh, ok, I got it now! I thought when you were saying you had not posted your NW, you were just saying you had not posted your liabilities, but that the other facts you had laid out did pertain to your own situation.

You said "My question was how this happened:" in post #13. You were just quoting someone else's post and not recounting your own financial status. That makes sense now. I was curious why you would need explanation of how one can acquire 200-300k NW by their 30's if you had done it yourself.

Just for clarity's sake, you may want to put quoted text in quotes, or italicize it, or use the [ quote ] blah blah blah [ / quote ] tags to make it clear you are quoting someone.

 

[FIREd]

ARGHH
Guys like I said (3rd time now) that IS NOT MY NW. That was an example from another poster, NOT ME.

Perhaps one of the mods can correct the post?

 

[Todd-O]

Oh, ok, I got it now!

You said "My question was how this happened:" in post #13. You were just quoting someone else's post and not recounting your own financial status. That makes sense now. I was curious why you would need explanation of how one can acquire 200-300k NW by their 30's if you had done it yourself.

Just for clarity's sake, you may want to put quoted text in quotes, or italicize it, or use the [ quote ] blah blah blah [ / quote ] tags to make it clear you are quoting someone.

Right =)
No problem man
I said before the post "this is from another poster". Since it was from another thread I didn't know if quoting it would tranfer to this thread, so I just used the old trusty crtl-c, crtl-v

 

[FUEGO]

Right =)
No problem man
I said before the post "this is from another poster". Since it was from another thread I didn't know if quoting it would tranfer to this thread, so I just used the old trusty crtl-c, crtl-v

I guess I was skimming and didn't pick up on those phrases or any other visual queue which led to the misunderstanding.

But anyway, to answer your question, many hundreds of thousands can be accumulated by the time someone is 30. But there has to be a plan and the plan must be followed. It doesn't happen overnight. It happens every two weeks when a part of someone's paycheck gets saved and invested. And it happens every day when someone decides they don't need to buy all the stuff that is out there.

 

[Rambler]

We got married while I was still in school. First job out of school in 1985 paid maybe 15k, same for DW. First kid came 3 years later, second kid 4 years after that. At 31 our NW was about 100k. Most of that was tied up in real estate (our home and a couple of rentals). At 37, we were up to about 220k, still mostly real estate. Several promotions later, and in an expat assignment, at nearly 49, we are in the multiple seven figures. The promotions came with lots more travel, lots more stress, lots of time away from home, but also with significant stock options (not all of which have ever been worth anything), a stock appreciation rights plan, a bigger salary, and most years really nice bonuses. The bigger income led to bigger tastes for certain luxuries, but we have always lived way below our means, which my DW hated at the beginning but is grateful for now. We are now FI but I continue working for a number of reasons, the biggest of which are an agreement to provide a smooth transition and other succession planning issues. We passed what would be considered by most (and what we used to consider FI) several years ago, but as I said, our tastes expanded a bit with the additional income. My goal had always been, from the time I was in college, to "be able" to retire by age 45. We achieved that, but now the target is to pull the plug by age 51, a tad over 2 years from now.

The moral of the story is to work and save hard, enjoy life along the way, but also realize that some sacrifices need to be made if you really intend to eject in your 40's. There are trade-offs...it all depends on which tradeoffs you are willing to make.

R

 

[Nords]

Todd, I would suggest you stick with ETFs and the like except for a small portion of your portfolio. If you clearly outperform for a few years, then expand what you manage in individual securities. But its not an easy job and you are competing with a lot of talented, hard-boiled investment professionals plus your own demons.

Let me endorse Brewer's suggestion. I've spent most of the last decade working through the popular investing techniques (and a few not-so-popular ones). While it is possible to beat the market, and while it is possible to pick market-beating stocks, it's a job. It's a chore. It's not how I want to spend my time.

Todd, I hope you're picking up on all the subtle hints that the vast majority of ERs got that way by aggressive saving, not by brilliant investing. In fact many of us got here in spite of our brilliant investing.

If you must get in touch with your [-]testosterone poisoning[/-] inner investor, I'd suggest sticking to 10% of your total portfolio for a length of five years or the next bear market... whichever blows you up sooner.

 

[Beryl]

In my early 30s I had about 200K in savings after paying off student loans for a few advanced degrees. Having a substantial nest-egg was largely due to living frugally, getting a substantial award for saving my employer millions, and investing in real estate. Frugal living meant only 3 cars in 30 adult years, few vacations, and not a lot of impulse spending. I made mistakes (like lending money to relatives and friends) but I quickly learned from them. I invested in mutual funds and company stock which split a couple of times.

 

[accountingsucks]

I'm 35 and around 650K NW including house. Well for myself I lived home until 26. This allowed me to make a nice downpayment on a house and that house has increased in value from 185 to about 385 as the economy where I live has been and continues to be strong during that time (Alberta Canada). My #1 priority when I bought the house was to pay it off ASAP and I sacrificed abit to do that in 6 years.

I've only owned one car in the last 10 years and I paid cash for it and it was a couple years old when I got it. I know a friend who recently spend 5k on rims for his truck - I just don't understand this mentality.

Overall I live pretty frugally and now with the house paid off I have lots of available funds to invest. The only expense I see increasing significantly for me is travel and home repairs as I've let maintenance slide abit on my house.

As for career I'm in a pretty stable profession. First year out of school made 24K but it quickly progressed to where I'm making a pretty good income but the main thing is I've kept my expenses low.

-----

Edit - Haha I notice now that the example OP used is actually me. I read it and thought, man that person has the same info as me as I forgot that I made that post a month or so ago.

 

[TomG]

Consider a 30-year-old who has been in the workforce for 10 years earning only $25 000 on average per year. Many of them without credit card debt or student loans left to repay. Even if their net worth is zero, it means their spending has been pretty close to exactly what they earned -- right around $250 000. Which means if at 25, they somehow stumbled into a position that paid them $50 000 per year, it should actually be very easy to reach that savings of $200 to $300k by 35 or so

I understand tax brackets mess up the equation somewhat, but that's how I see things and it stuns me that so few people in that age range don't have assets around those numbers

 

[kombat]

Consider a 30-year-old who has been in the workforce for 10 years earning only $25 000 on average per year. Many of them without credit card debt or student loans left to repay. Even if their net worth is zero, it means their spending has been pretty close to exactly what they earned -- right around $250 000. Which means if at 25, they somehow stumbled into a position that paid them $50 000 per year, it should actually be very easy to reach that savings of $200 to $300k by 35 or so

I understand tax brackets mess up the equation somewhat, but that's how I see things and it stuns me that so few people in that age range don't have assets around those numbers

I don't find it that surprising. The scenario you describe is very unrealistic. People don't earn exactly $25,000 for several years in a row, and then suddenly double their income. It rises gradually, and with it, their lifestyle rises too.

You're also ignoring a number of very expensive milestones in your hypothetical worker's life that typically occur during the window in question, such as getting married, going on a honeymoon, buying several vehicles, buying a home, having children, etc. Even without the burden of credit card or student loan debt, those items very rapidly consume any incidental increases in income. It takes a deliberate, conscious effort to set aside money for the future, it doesn't just happen by virtue of one's income rising. Very few 35 year olds are content to continue living the lifestyle they did when they were 20 (sleeping on a second-hand futon, eating ramen noodles in a bachelor apartment, taking the bus everywhere).

 

[TomG]

kombat,
Whether earnings increase suddenly or gradually is completely immaterial

Those life events are immaterial, too. Have to believe there are people in their 30s who are married, have children, drive cars and earn less than $30 000. At that point, it is possible to live ok by picking up a new mattress and a few pots and pans over a 15-year period. If buying a used car and driving it for 10 years is the most extreme hardship, that seems like an acceptable enough lifestyle to me

And that means if your income ever reaches $50 000, it only takes 10 years to accumulate a $200 000 net worth. Earn a little more than that and cut back a little more and it's $300 000

Of course it takes a deliberate and conscious effort. Once again, though, that is completely immaterial. If people truly value the freedom from working less and the security from sufficient savings and investments they will make that deliberate and conscious effort. And a part of me is surprised that so few people value those things. As you said, they instead value the costliest cars, houses, honeymoons and restaurants

 

[JohnDoe]

Again, like I said that is not my net worth. The point of thread was to see how others accumulated such massive wealth is their 20's and 30's. I agree with you about work/life/happiness, but sometimes you are in a situation that is hard to get out of.

I didn't really know what I was doing in my early 20's. But looking back at it now some things made a difference...

Saving 20% in 401k at age 17 (no college for me)
Buying a cheap house at 22 (equity builder)
Getting married at 23 (dual incomes)
Keeping cars for 8+ years

It wasn't until my 30's that I found this forum and started getting serious about ER.

I think you are ahead of 90% of the peeps at your age!

 

[heyyou]

Within a year of getting my first mortgage at age 28, I was layed off for six weeks. From then on, I wanted to have both substantial savings and reduced debt.

In my early thirties, I decided that I liked my lifestyle with its LBMM expense level. From there forward, I saved and invested all of my raises and 90% of my bonuses. Drove the same reliable vehicle to work for twenty years. When a work transfer ended the mortgage, I spent the equity on the next house and pushed the former house payment amount into savings. My disposable income stayed the same.

I had to work many extra years to make up for my investing mistakes, all due to my greed. In retrospect, I'm now glad that I learned those hard lessons back then. The last ten years of market turmoil have not been enjoyable but that is just how the market can be. There is always risk there but not always reward.