+1 especially on FIREing before 50. Do either of you have any words of wisdom to the 3- and 40 somethings lurking on this forum? How did you do it?
1) Avoid debt like the plague. Neither of us had school loans, we've never taken a loan for a car, and I have only paid consumer interest twice in my life -- once on credit card bills I incurred right at the end of my BA period (before my graduate scholarships started) to attend my best friend's wedding out of state, and once when I forgot to set up automatic payment on a credit card. We have had mortgages but the leverage we got in rapidly appreciating markets (NYC and Beijing) made those "good" debt. (see more details in point 4 below)
2) Live below your means. DH and I met in grad school and didn't start our professional careers/salaries until 1999. We tried not to let lifestyle creep affect us too much, especially in the early years of working FT. Bought less house than we could "afford" (essentially kept our mortgage levels to what we could pay on one salary), aligned spending with values (ala Your Money or Your Life), and made strategic use of retirement and college savings options. We have made roughly 100-150k between us over the past 15 years. Used to save 30-50% of that, on average. Savings rate dropped dramatically a couple of years ago when we bit the bullet and put the kids in proper, expensive international schools (to the tune of $60k+ out of pocket/year). But we were able to make that choice because we had a huge asset base built up already, and our long term investments have continued to grow nicely so even though we aren't saving as much anymore I think we are set for the long term.
3) Invest regularly, and as much as you can. Actually we weren't as good about this as we could have been. There were a few periods when we kept an extremely large cash stash because we were waiting to purchase property and/or didn't know what would be happening income wise (I left a job about 8 years ago without something else lined up, and we cut way back on retirement savings during that period).
4) Get lucky with real estate. This has been a huge factor for us. We bought a lovely co-op in Queens in 2000 for 120k that we sold for $280k in 2003. We kept the proceeds in liquid form, because we eventually wanted to buy a house in China, from 2003-2009 -- but at least during most of that period we were getting 4-5% interest on it in high yield savings accounts. Then in 2009 we managed to purchase a condo in Beijing at the absolute bottom of the market. We paid mostly cash, taking out a mortgage for around $290k. In US$. Smart move, as our payment has stayed steady in dollar terms at around $1880/month, while the dollar has depreciated and the apartment has skyrocketed in value (worth more than 3 times what we paid currently, and that is after a drop in the past year). DH gets a housing allowance that covers about 1/3 of the monthly payment. We get another $150 or so a month from renting out our two parking spaces. At this point what we pay out of pocket is all going to principal. True FIRE awaits the sale of the apartment, which will set us up for life. But even if it dropped in value by 50%, we would still be FIREable.
5) Buy, don't sell during any economic downturn. This was really key for us. When things started to tank in late 2008, I started tracking our net worth daily and made a promise to myself that we would only buy, not sell, while things were looking bad. That proved to be very, very smart. Not only were we able to use our significant cash stash to snap up our apartment at a bargain basement price, I was able to strategically throw a good bit of the remaining cash into retirement and kids college funds in 2008-10. As the market recovered, those investments appreciated nicely.
I do recognize that we have been very, very lucky. But we have also made some good/smart choices. That is really what it is all about. Learning to wait for the marshmallow. I'm sure glad I did. I've got decades of freedom awaiting me as a result.
