28 looking for advice... late start

[Andre1969]

If it makes you feel any better, you're doing a lot better than I was at your age. I'm 43 now. Got married at 25, divorced at 26, and ran up about $28,000 in debt as a result. I did get the debt paid off by the time I was about 28 1/2, thanks to working a second job delivering pizzas. I didn't even start putting into a 401k until I was almost 28, and I couldn't afford to put in much at the time. At the end of 1998, I think I had about $10-11K saved up, between the 401k and after-tax investing. As of yesterday's close, I'm up to around $826K.

You're making a lot more than I was at 28. In fact, I don't make much more than that now, at 43! Plus, you have a wife who's helping out, rather than draining you like mine did. I think you'll do fine.

[kikechico]

Quote:

Originally Posted by mountaintosea Hey you can do it! In my early 40s I had around 80k. It occurred to me I might want to save for retirement even though I would receive a pension. By the time I was 55 I retired with 1m. So it took about 15 years. I tracked my expenses. Co-workers teased me because they thought I was miserly. But hey I retired at 55 quite suddenly because I was tired of the politics at work. I walked out never to look back. You can do it!

Thanks. I understand completely what you are saying. People tease me at work all the time because I bring lunch to work instead of going out for lunch everyday like my coworkers.

Quote:

Originally Posted by intent This is from a kidless person, so take it with a grain of salt, but if you reconsider having children you could probably significantly increase your chances of making it out by 45. That's obviously a very personal decision and I'm not suggesting you don't have kids, just throwing it out there as food for thought.

I don't think that is going to happen.

Quote:

Originally Posted by Milton Luck is very important; but making the decision to become FIRE and accepting the necessary trade offs of LBYM is equally significant. Ultimately we all make choices (see Intent's post immediately above).

Thanks

Quote:

Originally Posted by nash031 This is a mistake, IMO. Your first goal should be to build a rainy day fund in the event of a job loss, major medical expense, etc. The second goal should be to max your 401Ks. Then if you want to get debt free, that's an honorable goal. Doing steps two and three in reverse is going to cost you money, and the peace of mind isn't worth it in your late 20's. You can't double your savings rate into the tax-deferred account to make up for it and you won't ever get the compounding effect back. All that said, I wouldn't say you're off to a late start. The bulk of people ten years younger than me don't have the first clue about retirement savings, and many don't own a home. You have more than you think! If you lay out a plan to retire by 45, I bet you can accomplish it!

Thank you, we accomplished goal one. I just need two focus in goal two more than in goal three. I understand the benefit of the compound interest and what I am going to miss out if I focus in paying off the house. Is just that the feeling of having no debt must be awesome.... there has to be a feeling of freedom and peace haha

Quote:

Originally Posted by chasesfish I forgot to add that I think it's entirely possibles you can retire in 15 years. The biggest choice you'll make then is what your spending levels will be relative to the cost of working an additional year, You've received a lot of advice, but you're already most of the way there - you're living on 30-40% less than you make. Congratulations

Yes we try to live below our means. We still go out and have a nice dinner and buy things that we like from time to time but we don't go crazy and spend the complete paycheck on things that we don't need.

Quote:

Originally Posted by Andre1969 If it makes you feel any better, you're doing a lot better than I was at your age. I'm 43 now. Got married at 25, divorced at 26, and ran up about $28,000 in debt as a result. I did get the debt paid off by the time I was about 28 1/2, thanks to working a second job delivering pizzas. I didn't even start putting into a 401k until I was almost 28, and I couldn't afford to put in much at the time. At the end of 1998, I think I had about $10-11K saved up, between the 401k and after-tax investing. As of yesterday's close, I'm up to around $826K. You're making a lot more than I was at 28. In fact, I don't make much more than that now, at 43! Plus, you have a wife who's helping out, rather than draining you like mine did. I think you'll do fine.

Thank you! We will keep working hard to achieve our goal and hopefully we will have jobs until we are ready to retire. Even if I have to work until 50-55 I don't think that will be a huge deal.

[kikechico]

Quote:

Originally Posted by kikechico Hello everyone. I been feeling old lately and I been thinking about retirement . I haven't made good choices with my money before and is time to start thinking about my future. I am looking for any input and advice from members of this wonderful site. My goal is to retire at the age of 45. We are shooting for $30,000 per year during retirement; in our area we can live well with that money. Currently 28 and will be 29 in January. I am married and have two cats. We are planning on having kids within two years... no more than two . Currently we have the following assets: 14k cash 1K my 401K 1K her 401K 100-120K home equity Debt 80k mortgage No car payments or student loans. Our current income is of about 116K. I currently make 67k and the wife 49k. We are sending about 3k extra to the mortgage and we are going to start sending 4k on top of the mortgage payment in about 3 months. We are trying to pay off the house as soon as possible and it should be paid of by December of 2014. My 401k contribution is 4% and my company matches 50% up to 6%. My wife's contribution is 4% and her company matches 50% up to 4%. I also have 1000 shares of a stock option that could be valued at around 25k if the company goes public. Any advice? Thanks

Here is my one year update

Currently we have the following assets:
9.5k cash
14.2K my 401K
10.5K her 401K
150-170K home equity

Debt
24.5k mortgage

So me and my wife decided to max out our 401k for the first time. We been aggressively paying the mortgage and we will be done in December before I turn 30. Our income has increased to 121.5k.

We been tracking our expenses and it seems that we are spending 19k + the mortgage. I still think 30k a year will be plenty and I if everything keeps going the way it is I might be able to retire before turning 40k.

Thanks for everyone's help

[NgineER]

Nice work!

With your focus, you should be able to do it.
I echo everyone else on the mortgage. I have a 30 year at 35%, two years in and I don't plan to retire that loan until maybe the last couple of years. Itemized deductions on it combined with maxed out 401(k) gives me a nice tax reduction.

Consider the Roth IRA for the two of you as well. Tax free money in retirement will be awesome.

[NgineER]

Forgot to mention that I had a late start as well...

Started roths in grad school, at age 27, started working at 32 and started maxing out my 401(k). It has grown nicely over the last seven years, not only due to contributions but also the stellar market after 2009.

[chris66]

You're doing great. I see you are still focused on paying of the mortgage. I have to restate what was said a year ago -- maxing out your 401K and other investments is probably the better way to go. But, I understand having no debt can be liberating, and if that's your goal, then that's what you gotta do. It may mean a little longer to your goal. Kids may also change your plans.

I got serious about saving around 28 myself, and retired 20 years later. But, I didn't have kids, and I got uber serious about investing in the past decade during my marriage -- so I was dumping money in during the recession and continuing during the growth. The timing was lucky (the behavior, tho, was because I had learned about investing). DH and I also both had high incomes.

Also, like you did with your spouse, choose your friends wisely, too. It's easier to live simply when you're younger. Your peers aren't raking in the bucks necessarily, and they're still dealing with things like student debt, so even if they aren't LBYM, they still have some constraints on their spending. The pressure to consume to show your status grows as you get older, especially if you hang out with folks sometimes referred to as "aspirationals".

You're definitely on your way! Keep the updates coming. I'm pulling for you

[MooreBonds]

Quote:

Originally Posted by molof I echo everyone else on the mortgage. I have a 30 year at 35%, two years in and I don't plan to retire that loan until maybe the last couple of years.

Because I'm such a nice friend, I'd be willing to refinance your mortgage into a private loan by myself for the ultra low rate of 17%. It'd cut your mortgage payments in HALF!

[ExFlyBoy5]

I know this goes against the tide here, but I support you wanting to pay off the mortgage. The math does show that you would make more money by continuing to float the mortgage, but the mental clarity you gain from not having a mortgage is HUGE.

I did this very thing and when the original mortgage deed was mailed to me with the stamp 'canceled', I did a happy dance that can not be replicated. I have it framed and in my office.

Sent from my mobile device so please excuse grammatical errors.

[kikechico]

Quote:

Originally Posted by molof Nice work! With your focus, you should be able to do it. I echo everyone else on the mortgage. I have a 30 year at 35%, two years in and I don't plan to retire that loan until maybe the last couple of years. Itemized deductions on it combined with maxed out 401(k) gives me a nice tax reduction. Consider the Roth IRA for the two of you as well. Tax free money in retirement will be awesome.

Thanks. I think we qualify for the traditional IRA and we are planning on maxing them out at the end of this year. We are also planning on maxing out my wife's HSA next year to add to our stash.

Quote:

Originally Posted by chris66 You're doing great. I see you are still focused on paying of the mortgage. I have to restate what was said a year ago -- maxing out your 401K and other investments is probably the better way to go. But, I understand having no debt can be liberating, and if that's your goal, then that's what you gotta do. It may mean a little longer to your goal. Kids may also change your plans. I got serious about saving around 28 myself, and retired 20 years later. But, I didn't have kids, and I got uber serious about investing in the past decade during my marriage -- so I was dumping money in during the recession and continuing during the growth. The timing was lucky (the behavior, tho, was because I had learned about investing). DH and I also both had high incomes. Also, like you did with your spouse, choose your friends wisely, too. It's easier to live simply when you're younger. Your peers aren't raking in the bucks necessarily, and they're still dealing with things like student debt, so even if they aren't LBYM, they still have some constraints on their spending. The pressure to consume to show your status grows as you get older, especially if you hang out with folks sometimes referred to as "aspirationals". You're definitely on your way! Keep the updates coming. I'm pulling for you

thank you. Yeah we are still focusing on paying the mortgage, I just think that even if I end up with less money in the end the peace of mind that paying the mortgage brings is priceless.

Is hard to find people like us; most of my friends spend money left and right. Sometimes it bothers me but I know better. I haven't talk to any of them about my early retirement plans, I think it would make things awkward. We get most of our support from my parents who are frugal.

Sometimes I feel the need to consume... specially fast cars. I always had a fast car and I just recently sold mine (700hp). I feel an empty space and find myself browsing the internet looking at cars all the time. I actually feel that the car made me feel a little happier.... I really enjoyed driving it after work but it was a money pit. I might end up buying a car next year, I will probably buy something used that has all ready deprecated and spend the least money I can. Also I am planning on keeping that same car until I get to FIRE...

Quote:

Originally Posted by FlyBoy5 I know this goes against the tide here, but I support you wanting to pay off the mortgage. The math does show that you would make more money by continuing to float the mortgage, but the mental clarity you gain from not having a mortgage is HUGE. I did this very thing and when the original mortgage deed was mailed to me with the stamp 'canceled', I did a happy dance that can not be replicated. I have it framed and in my office. Sent from my mobile device so please excuse grammatical errors.

haha that's great. Yeah I am after that mental clarity.

Hopefully I can keep working where I am right now and retire before turning 40.

I am glad I found this community it has provided me with a lot of insight on how to achieve FIRE.

sorry for the grammatical errors on post 23... I cannot edit it for some reason.

thanks

[kikechico]

Quote:

Originally Posted by kikechico Here is my one year update Currently we have the following assets: 9.5k cash 14.2K my 401K 10.5K her 401K 150-170K home equity Debt 24.5k mortgage So me and my wife decided to max out our 401k for the first time. We been aggressively paying the mortgage and we will be done in December before I turn 30. Our income has increased to 121.5k. We been tracking our expenses and it seems that we are spending 19k + the mortgage. I still think 30k a year will be plenty and I if everything keeps going the way it is I might be able to retire before turning 40k. Thanks for everyone's help

Here is a quick end of the year update:

We finally paid off the house .... I send my last payment yesterday . It feels so good, liberating and I was able to do it before I turn 30 later this January.

Investments
Total Investments $48,245.......$24,640 in my 401K

It is crazy that when I started this thread we only have $2k in total investments.

Total Net Worth: $250k

We are still shooting for $700k-1M in investments to retire.

Thanks

[Legally_dead]

Great work! We paid off our house too a few years ago (currently 30). As Dave Ramsey says, the grass feels different when you own it.


Sent from my iPhone using Early Retirement Forum

[kikechico]

Quote:

Originally Posted by kikechico Here is a quick end of the year update: We finally paid off the house .... I send my last payment yesterday . It feels so good, liberating and I was able to do it before I turn 30 later this January. Investments Total Investments $48,245.......$24,640 in my 401K It is crazy that when I started this thread we only have $2k in total investments. Total Net Worth: $250k We are still shooting for $700k-1M in investments to retire. Thanks

Update.............

We finally broke 100k in investments and we now have a 3 month girl

Investments

Total Investments $101,189

Debt

Total Debt $16,500

Total Net Worth

$322,925

And we have about $4,500 in cash.

I been tracking all our expenses and even with all the baby related expenses (hospital, doctors, a lot of things etc etc) our expenses for the year should be around $31,000-33,000.

[Greencheese]

Congrats! Glad to see such progress

[amyj05]

Congratulations!!! You're certainly making progress! Keep up the good work!

[kikechico]

Quote:

Originally Posted by kikechico Here is a quick end of the year update 2014: We finally paid off the house .... I send my last payment yesterday . It feels so good, liberating and I was able to do it before I turn 30 later this January. Investments Total Investments $48,245.......$24,640 in my 401K It is crazy that when I started this thread we only have $2k in total investments. Total Net Worth: $250k We are still shooting for $700k-1M in investments to retire. Thanks

Here is the end of the year update for 2015

Investments

Total Investments: $114,322. This includes 401K's and IRA's

Debt

Total Debt $15,770

Total Net Worth: $341,91

and I always forget to include the cash which is around $8,000

Expenses for the year were $35k but these includes medical expenses and other expenses for our first child. After subtraction all of those expenses our yearly spending is around $25k.

We are considering retiring to Colombia which is where I am originally from and to live there we only need around $16,000 usd to live large thanks to a strong dollar.

Thanks

[kikechico]

Here is the end of the year update for 2016

Investments

Total Investments: $199,831. This includes 401K's and IRA's

Debt

Total Debt $15,984

Total Net Worth: $441,450

Cash around $15,000

Expenses for the year were $41k but this number includes the purchase of as solar system that cost $14,000.

I also purchased a rental property on 12/30 that needs to be fixed up and I have is not included on this end of the year update.

Hopefully 3 more years to go

[exnavynuke]

Making good progress! Keep it up!

[aaronc879]

What is this ~$15K of debt you have had for over a year? You clearly have the cashflow to pay it off. Is it zero interest? Other than that it looks like you are doing very well.

[MDC86]

Rental property, alright! Almost no one mentions on these forums rental properties. Everyone is all about money in the market. I personally prefer assets I can touch and see. I'm the same age as you, have made several foolish decisions. You and your wife have been doing great staying on track. I had my first house payed off at 28 back in 2015. I was mortgage free for only 7 month before I sold it (it was worth 335k) to buy a $650k house because it had the 4 car garage I wanted and was closer to the highway.

Keep up the great work my friend!

[ugeauxgirl]

I thought I was the only one excited about crunching my end of the year numbers- I love seeing your progress- you are doing great!