Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Am I overdoing it?
Old 03-20-2012, 11:45 PM   #1
Dryer sheet wannabe
 
Join Date: Mar 2012
Posts: 17
Am I overdoing it?

Hi everyone,

Long time reader, first time poster. I'm about to hit what I consider to be a major milestone, hence the motivation to come out of the trenches and say hello.

I'm 32 years old and work in technology. I've been very fortunate to see my income rise significantly since getting out of college, and especially over the last 4 years or so. As a result, I've been relatively successful at keeping my expenses fixed as my income has risen. My income currently sits at right around $145k/year, with about $20k of that coming from a side business I run and the rest from my dayj*b. My expenses generally run a little under $3k/month including my mortgage. I max out my 401k and Roth IRA, and the rest goes into taxable investments.

By the end of next month I expect to cross the $500k mark in total savings (not including home equity, of which there isn't much). The breakdown works out roughly to:
- $61,000 Roth IRA + Roth 401k
- $150,000 Traditional 401ks
- $278,000 Taxable accounts

Now to get to the point: Since my spending runs under $3k/month and I'm already maxing out 401ks and IRAs, I find myself saving another ~40-50k/year in taxable accounts. Mind you, this level of saving is a somewhat recent development for me, but it appears to be something I'll be able to continue going forward. I expect another significant raise some time this year, which will only solidify my ability to keep this up. So the question is: Am I overdoing this? I don't intend to call it quits for quite a while, as I haven't even determined what I'd do with my time. Should I be balancing things out a little more and not focusing so much on keeping my spending the same as my income rises? It seems at this rate that I might become so accustomed to saving that I'll never be able to let myself retire, so I'm not sure what the point of doing all of this is.
1979dreamer is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-21-2012, 12:01 AM   #2
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 927
Maybe. It really depends on what you want in your future and how much you are willing to sacrifice to get it. There is a lot to be said for scrimping so that you can retire early and not have someone else controlling your life in your 50s. It is also nice to have had a nice life along the way.
__________________
CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 03-21-2012, 12:16 AM   #3
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 47,472
If you become financially independent ("FI") before you want to retire, that's a good thing, right? That means you will only be working because you want to work. If things turn bad at work, you won't have to worry about income while you look for another job, for example.

Once you have already become FI, you won't need to save more, unless you want to. From what you are saying it sounds like it won't be long until you are FI, so you will have many, many years to enjoy life while you are still able to travel or do whatever you want.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.

Happily retired since 2009, at age 61. Best years of my life by far!
W2R is offline   Reply With Quote
Old 03-21-2012, 02:59 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,202
IMO life should be balanced, even in the phase of wealth accumulation.
So everything is good if you enjoy your life of today.
However, if you deny yourself the little joys of life for the sake of your growing accounts, better explore ways to change.
chris2008 is offline   Reply With Quote
Old 03-21-2012, 04:10 AM   #5
Dryer sheet wannabe
 
Join Date: Mar 2012
Posts: 19
Quote:
Originally Posted by 1979dreamer View Post
Hi everyone,

Long time reader, first time poster. I'm about to hit what I consider to be a major milestone, hence the motivation to come out of the trenches and say hello.

I'm 32 years old and work in technology. I've been very fortunate to see my income rise significantly since getting out of college, and especially over the last 4 years or so. As a result, I've been relatively successful at keeping my expenses fixed as my income has risen. My income currently sits at right around $145k/year, with about $20k of that coming from a side business I run and the rest from my dayj*b. My expenses generally run a little under $3k/month including my mortgage. I max out my 401k and Roth IRA, and the rest goes into taxable investments.

By the end of next month I expect to cross the $500k mark in total savings (not including home equity, of which there isn't much). The breakdown works out roughly to:
- $61,000 Roth IRA + Roth 401k
- $150,000 Traditional 401ks
- $278,000 Taxable accounts

Now to get to the point: Since my spending runs under $3k/month and I'm already maxing out 401ks and IRAs, I find myself saving another ~40-50k/year in taxable accounts. Mind you, this level of saving is a somewhat recent development for me, but it appears to be something I'll be able to continue going forward. I expect another significant raise some time this year, which will only solidify my ability to keep this up. So the question is: Am I overdoing this? I don't intend to call it quits for quite a while, as I haven't even determined what I'd do with my time. Should I be balancing things out a little more and not focusing so much on keeping my spending the same as my income rises? It seems at this rate that I might become so accustomed to saving that I'll never be able to let myself retire, so I'm not sure what the point of doing all of this is.
Sounds pretty good.. There's just a few things I'd personally consider

- I'd look at the track history of the options you're currently exercising in your 401K. I'd look at the swings it's taken as a whole and look at it's activities down to the day.. If you're happy with the overall growth a good way to streamline your upside potential by not stepping too far out of the box is to open a personal trading account, pick the same options, and manually control your entry and exit points.. that way when you break down your charts you'll see that there's been times where your current options where on a slide (aka negative trend) and you were stuck because of how the 401K worked. This way you have more control of what you're losing and what's funny is you don't need to know too much about the stock market because you're just doing more of that you're already doing - just keeping a much stronger grasp on what you're losing and making. funny part is if you have one of those co-workers that are always checking company stock and you happened to miss taking the 3 minutes in the morning to check your tickers and the company's stock or the 401K options you chose take a turn (which they all respectfully do up and down) - they can start wigging out and you can walk over to your computer and in a couple minutes stop some of the bleeding. because of the 401K your still tied to the game just not 100% committed to any loss and if you learn something like MACD - you're financial power will take off by literally playing a video game a couple minutes before and after work.. - sorry I just had to try that.. =)

- something else you may want to consider is a tangible investment. I believe it was Buffet who said that there are only 2 types of investments - non-tangible ( stock, 401K, insurance etc - basically something that represented by paper) and tangible (ie- RE, Gold, private placements, etc).. Owning the 2 is true diversification. The cool thing is that you have a business so the tangible part is already there.. personally if I were you I'd get with my CPA, Attorney, and business mentor - which if done correctly with cause you to outpace anything your doing right now for growth. Under the umbrella would be anything and not limited to - tax free growth, corporate assets - which with what you have is a glory train a million times over any job if done correctly, and getting yourself into the position of looking at local tangible asset streams along with everything else you have is what's going to overwhelmingly show you the difference between retirement and independence. The cool thing is that positioning yourself as an investor doesn't cost anything to get into, and you don't have to buy anything carrying through until you have your wits about you.. positioning yourself so people bring deals to you on a daily basis will get you to learn extremely fast and give you the opportunity to do more about your future than nearly anything else.. And don't be afraid to hire a decent attorney, cpa and look for a good mentor. If you look at all the negative swings that take place in 401K programs is extremely easy to invest into yourself and get good people around you who have the job of protecting and growing you.. hope that helps.. =)
Big Game James is offline   Reply With Quote
Old 03-21-2012, 06:58 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,317
I wouldn't worry about over saving. It is quite possible life will toss you some challenges you will have to grow into. Are you still single? Kids in the future picture? If not you definitely have room to mix in a few fun things - maybe go skiing for a week?
__________________
Idleness is fatal only to the mediocre -- Albert Camus
donheff is offline   Reply With Quote
Old 03-21-2012, 07:07 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by chris2008 View Post
IMO life should be balanced, even in the phase of wealth accumulation.
So everything is good if you enjoy your life of today.
However, if you deny yourself the little joys of life for the sake of your growing accounts, better explore ways to change.
+1 It is hard to tell from your post if your are denying yourself too much at $36k a year of spending. If you would be happier by spending a bit more and splurging on something you enjoy on occasion, then go for it without guilt - you are working hard to earn it and deserve an occasional splurge.

It might be helpful for you to have a plan to be FI by age x, and derive how much you need to save annually to achieve that goal. While any excess "can" theoretically be spent, it doesn't "have' to be spent but if you feel you are denying yourself some of the joys of life that you have earned, but all means increase your spending some to make you happy.
pb4uski is offline   Reply With Quote
Old 03-21-2012, 08:49 AM   #8
Thinks s/he gets paid by the post
Finance Dave's Avatar
 
Join Date: Mar 2007
Posts: 1,854
Quote:
Originally Posted by W2R View Post
If you become financially independent ("FI") before you want to retire, that's a good thing, right? That means you will only be working because you want to work. If things turn bad at work, you won't have to worry about income while you look for another job, for example.

Once you have already become FI, you won't need to save more, unless you want to. From what you are saying it sounds like it won't be long until you are FI, so you will have many, many years to enjoy life while you are still able to travel or do whatever you want.
I agree that the powerful thing will be w*rking because you want to, not because you have to.

We live off our salaries, and then when we get bonuses (which has been every year, but it's not guaranteed), we allocate 80% of it to further savings or paying down mortgage, and the other 20% to "fun". We add in a vacation, or go to a football game, or eat at a fancy restaurant, etc. This gives us a feeling of splurging, while at the same time knowing we are advancing our path to FI by investing 80% of it.

It sounds like you're on an excellent path...but don't deny yourself some small simple pleasures or you'll get burned out over time.

Dave
__________________
"Live every day as if it were your last, and one day you'll be right" - unknown
Finance Dave is offline   Reply With Quote
Old 03-21-2012, 09:47 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,808
Quote:
Originally Posted by 1979dreamer View Post
... So the question is: Am I overdoing this?
Yes Perhaps you are.
Quote:
Should I be balancing things out a little more and not focusing so much on keeping my spending the same as my income rises? It seems at this rate that I might become so accustomed to saving that I'll never be able to let myself retire, so I'm not sure what the point of doing all of this is.
Are you happy now? After the financial goal is achieved would you be able to be happier in retirement? What would you do in retirement? Maybe the unbalanced (singular focus) situation you are in is not your happiest state even now?

Lots of questions for you to answer.
Lsbcal is online now   Reply With Quote
Old 03-21-2012, 09:58 AM   #10
Thinks s/he gets paid by the post
Bimmerbill's Avatar
 
Join Date: Jan 2006
Posts: 1,645
I say do it while you can. You may reach a point where you start a family or something happens to your job and you won't be able to save as much. Sock it away now while you can (as long as you are happy and not feeling deprived all the time).
Bimmerbill is offline   Reply With Quote
Old 03-21-2012, 10:19 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 12,880
My motto: If it's worth doing, it's worth overdoing.
__________________
Al
TromboneAl is offline   Reply With Quote
Old 03-21-2012, 10:24 AM   #12
Full time employment: Posting here.
 
Join Date: Nov 2010
Posts: 628
As for deprivation, only you can judge that. I've purposely cultivated interests that are free, or pay for themselves (mostly), so that I am low-maintenance to myself. Electronic gadgets are my weakness in that regard.
devans0 is offline   Reply With Quote
Old 03-21-2012, 10:49 AM   #13
Dryer sheet wannabe
 
Join Date: Mar 2012
Posts: 14
Congrats; it's so nice to have the finance part covered when you're so young.
I was on target and everything was fine when I was 30. I had a decent paying job, I was able to saved enough even after I fully funded my emergency and retirement accounts so I also set aside money to travel and to enjoy my 20's. Then life threw me a few "challenges" like disability, unemployment, early 2000's market crash plus 9-11. I had to restart again at 32 and now 12 years later, I believe my accounts had finally recovered and it appears I’m on track. I also recently started to think of my early retirement options again.
I was a planner but I could have never planned for so many things to go wrong or the extended hiring freezes cause by 9-11. Thank goodness my emergency fund was big enough to last over 1.5 years of unemployment in NYC until I was able to find a part-time job without benefits just so I could cover my expenses. Since everything that happened was not a result of anything I did or did not do, I am so grateful, even while I was saving diligently for a rainy day, I also prioritize my social life and travel. Looking back especially during those rough years, I have the fondest memories of time spent with friends and travel. As touch upon by other posters, is your accumulation of wealth at the expense of something else? IMO, to answer your “am I over doing it?” if you’re not foregoing "life" in pursuit of a very large bank account (material possession can easily be gone), then you’re not.
I wish you the best; you are off to a great start.
Vaca is offline   Reply With Quote
Old 03-21-2012, 10:57 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 21,202
FWIW
Quote:
Originally Posted by 1979dreamer View Post
  • My income currently sits at right around $145k/year, with about $20k of that coming from a side business I run and the rest from my dayj*b. That's outstanding, congratulations!
  • My expenses generally run a little under $3k/month including my mortgage. That's discipline, congratulations!
  • By the end of next month I expect to cross the $500k mark in total savings (not including home equity, of which there isn't much). Excellent!
  • Am I overdoing this? Not unless you feel deprived. Obviously you could loosen up where it's worth it to you, but spending just because you can is foolish, contrary to popular culture/opinion.
  • I don't intend to call it quits for quite a while, as I haven't even determined what I'd do with my time. I hope not. You shouldn't even think about quitting if you enjoy your work at all.
  • Should I be balancing things out a little more and not focusing so much on keeping my spending the same as my income rises? Again, not unless you feel deprived. There is no right balance, it's unique to each of us and will probably change over the course of your life. And you haven't mentioned an SO or family, do you expect your expenses to continue as is indefinitely?
  • It seems at this rate that I might become so accustomed to saving that I'll never be able to let myself retire, so I'm not sure what the point of doing all of this is. The point is to reach FI (financial independence). Once you achieve FI, the options expand greatly. You're about halfway to FI based on current spending. When you reach FI, you can spend more, retire, change jobs, start a business, take a sabbatical or whatever you want.
  • Money is security, having it is worth more than spending it more often than not. If you haven't read The Millionaire Next Door, I'd recommend it. You'll identify with the successful examples in the book, you're not alone but you're part of an inconspicuous minority.
  • Unless you feel deprived in some way, I'd continue with low spending and aggressive saving/investing until the world is your oyster...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 03-21-2012, 11:16 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 4,629
The classic question of "Should I eat hamburger today so I can eat steak after I retire?"
I'd say no.
Independent is offline   Reply With Quote
Old 03-21-2012, 11:22 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,746
It seems like you would be in a great position to semi retire or slow down if you wanted. Maybe not today but very very soon. That is, if you wanted to do that.

If you can keep clearing $20k/yr with your side hustle then you are making over half your annual expenses already. Only need another $16k/yr from your investments. And if your mortgage was paid off your expenses would drop even further.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (8, 13, and 15).
FUEGO is offline   Reply With Quote
Old 03-21-2012, 11:23 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,746
Quote:
Originally Posted by Independent View Post
The classic question of "Should I eat hamburger today so I can eat steak after I retire?"
I'd say no.
Some like hamburger more than steak (myself included!).
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (8, 13, and 15).
FUEGO is offline   Reply With Quote
Old 03-21-2012, 01:20 PM   #18
Recycles dryer sheets
 
Join Date: Jan 2007
Posts: 398
Quote:
Originally Posted by FUEGO View Post
Some like hamburger more than steak (myself included!).
Absolutely. I believe this is the best way to think about it.

To the OP, only you can decide if it's better to save or spend your money. You clearly have a lot of financial discipline so the choice you make will be the right one. Save it if you want. Spend it if you want.

But there is no need to buy a McMansion just because you can. If you want more luxuries in your life, great. Buy them. But there is no reason to change your lifestyle if you are happy with your present status. So no, I don't believe you are overdoing it just because you are saving a sizable percentage of your income.

Personally, I save over 95% of what I consider my "discretionary" income (meaning my income after taxes, mortgage, electric bill, base allotment for food, etc). Yes, I could spend more. And it's not like I don't spend money when necessary (e.g., $25K on veterinary bills for my cat 7 years ago). But in general, all my needs/wants are being met so there is no reason to spend.

I cannot speak for you but for me savings is about freedom and security. I am quite content knowing that I have no financial worries. New water heater, no problem. New car, no problem. Financially care for my mother as she gets older, no problem. This sort of freedom and security is, well, priceless.

So if you want to eat steak instead of hamburger, do it. If not, don't. But don't discount the emotional value of being financially independent and secure.
Shawn is offline   Reply With Quote
Old 03-21-2012, 05:07 PM   #19
Dryer sheet wannabe
 
Join Date: Feb 2012
Posts: 10
No, I do not think you are overdoing it, as long as you don't feel deprived.
nobodyknows is offline   Reply With Quote
Old 03-21-2012, 06:24 PM   #20
Full time employment: Posting here.
 
Join Date: Aug 2011
Location: Atlanta
Posts: 507
Quote:
Originally Posted by 1979dreamer View Post

.. So the question is: Am I overdoing this?
Not if you are happy with your life style. I'll will give you a lot more choices
and a lot less pressure down the road.
It is also better to save to much than to spend to much. Most people in my
age group (almost 60) wish they did what you are doing.
SJ1_ is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hi, I turn 55 tomorrow (21 March), and am retiring June... wander luster Hi, I am... 20 03-22-2012 02:50 PM
Hi I am Dan - SSA Benefits for Minor Children danhart Hi, I am... 40 03-20-2012 11:58 AM
Goldman Director resigns and lets it all hang out nun FIRE and Money 103 03-17-2012 01:40 AM
Wh... Wh.... Wh(eee!)... Party like it's 1929 W2R FIRE and Money 112 03-15-2012 07:10 PM

» Quick Links

 
All times are GMT -6. The time now is 09:41 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.