32 and finally working towards early retirement

[OutdoorX]

It is encouraging to see there are people who are not only dreaming but close to realizing their goals of early retirement!

Not too long ago I was truly was right in the thick of the rat race. I was making a middle class income yet I had the not so fun kind of debt (15K credit cards + 35K student loans) with no emergency savings. I said the heck with that! Quickly curbing spending on things that were outright wasteful and wasn't truly contributing to any happiness I was recently able to become debt free. A trip to the Bahamas couldn't come close to giving you the peace of mind you get when knowing you don't owe anybody anything!

Now that my "Dear Diary" phase is over I can work towards what this forum is about. Early retirement!

Now please try to keep your seat as I divulge my massive current financial standing.

Currently:
Savings - 15K emergency fund
Roth IRA - 12K
Vehicle Paid For
Zero Debt

I also said the heck to my past employer who really, really sucked! Enough said. My new job has me on a 76K salary with another 30K in tax free per diem. My goal for the next calendar year is to live off the per diem and save 100 percent of my after tax salary. Doing so should allow me to max out a Roth IRA and 401K, as well as put another 25K in a brokerage account.

That's my story and I am sticking to it. Any feedback on my plan would be much appreciated. Looking forward to building some wealth!

 

[Tykimeister]

What do you do for work now?

Being 32 you still plenty young to rack up some cash in the IRA. I started mine when I was 26. You have a nice salary and can save a lot of money if you stick to your low standard of living. Dedication will be key.

 

[UnrealizedPotential]

Good for you for thinking of your future. If you can accumulate enough non retirement assets to support an early retirement you can do anything you want and let the other accounts grow. Good luck!

 

[DrRoy]

I think your plan is great and you are already doing well. You are in complete control of your spending, and your assets are going to grow well. It does work. I will FIRE in 8 months at 57.

 

[aaronc879]

I see nothing wrong with the OPs plan going forward. However, most people would say that buying a modest house is better financially in the long term than renting so maybe he should consider saving for a house.

 

[ivinsfan]

30K in tax free per diem how does that work,do you travel a lot?

 

[Katiek]

Congrats on paying off your debt and focusing on your goals. You're young enough that the changes you're making now will have lots of time to pay off. You're also young enough that you may well have a lot of changes in your life (medical challenges, family changes, job changes when/if you tire of traveling for work) that could impact your plans. But being on solid financial footing will let you handle those changes when they come.

You're also young enough that you're likely to want some fun in your budget and some travel. That's also fine as long as you're also saving for your future and not incurring debt for the "fun".

Congrats and welcome!

 

[OutdoorX]

What do you do for work now?

Being 32 you still plenty young to rack up some cash in the IRA. I started mine when I was 26. You have a nice salary and can save a lot of money if you stick to your low standard of living. Dedication will be key.

30K in tax free per diem how does that work,do you travel a lot?

On site construction supervision that can be anywhere in the country. Projects vary from 9 months to 3 years. They pay a living allowance based on the cost of living of an area. 2,500/month is about average and it is tax free. It is set up so you can still own property and keep a family in your hometown while you pay for a second residence where the project is located as well as cover meals. I just live where the project is, and when it is done I get to pack up and move wherever work takes me after that. Some people have families and they travel with them full time, others keep them at home. It's super easy for myself as a single person.

 

[OutdoorX]

I see nothing wrong with the OPs plan going forward. However, most people would say that buying a modest house is better financially in the long term than renting so maybe he should consider saving for a house.

Right now owning a home does not work well with a traveling job as a single person. Though, having some money saved up through a stock brokerage account could be utilized as a down payment for a future home.

 

[Walt34]

Right now owning a home does not work well with a traveling job as a single person. Though, having some money saved up through a stock brokerage account could be utilized as a down payment for a future home.

I'd have to agree with this too. Traveling a lot and being single, owning a house might be an anchor that you later want to shed, perhaps at a loss. And whether home values will go up is a crap shoot.

 

[YVRRocketSurgery]

Had a similar situation where for a couple years in my late 20's, I was doing consulting work overseas for my company and provided a per diem. I also was able to save 100% of my salary and even some of my per diem. Needless to say, that really jump started my nest egg and I suspect it will for you too!

 

[highlow65]

Sounds ambitious to do this, but you got to have goals, good luck and welcome to the site. If you can keep that up for a few years you will be well on your way.

 

[Exit 2024]

Op, you have excellent opportunity to jump start savings, if you stick to your plan it will work.

 

[enginerd]

My megacorp has a similar per diem policy for the construction guys. Quite a few of them live full time out of campers and stash the rest. However, if you are in one place for over a year, the per diem becomes taxable. I think this might be an IRS policy, but I'm not the expert. In this case, our megacorp increases the perdiem to cover the tax liability. Just something you should look into if you get a long project.

 

[ponyboy]

Sounds like you have a solid plan. Just remember to enjoy life. Its not all about retiring early. Find a balance...take some vacations, buy some things you want...do not deprive yourself. As far as we know you're only young once...make the most of it.

Im 33 and my wife and I take a couple nice trips every year. We like to spend money on life experiences rather than material things....though we love to hit up thrift stores and goodwill!

 

[OutdoorX]

Following up 2 years later... When I first posted this, I was excited to start working towards Financial Independence not knowing if I would follow up with it. I lived very frugal year 1, then decided in year 2 that I could afford to spend some hard earned money on fun while still saving a substantial amount. I still have a long way to go with some catching up to do but man what a difference that first 100K makes. Going from a couple months of living expenses saved up to a couple years is substantial to peace of mine, and don't ever want to experience the former again. Without further adieu the following update on financial standings:


Roughly 2 Years Ago:
Savings - 15K emergency fund
Roth IRA - 12K
Vehicle Paid For
Zero Debt
Total Net Worth = 27K


Now:

Savings: 10K
Cryptocurrency: 9K (don't judge me)
401K: 25K (maxing)
Roth IRA: 25K (maxing)
529 Savings Account: 2K
Vanguard Investment Accounts: 50K
Total Net Worth = 121K


Slow and steady wins the race! Hopefully as my accounts grow I can make some money on the next economic cycle.

 

[NgineER]

Nice progress - See if you can contribute to an after-tax 401k beyond the $18.5k limit at wor, this can be converted into a Roth IRA in most cases, allowing you to go beyond the $5.5k limit for Roth accounts.

 

[Oakster]

It is encouraging to see there are people who are not only dreaming but close to realizing their goals of early retirement!

Not too long ago I was truly was right in the thick of the rat race. I was making a middle class income yet I had the not so fun kind of debt (15K credit cards + 35K student loans) with no emergency savings. I said the heck with that! Quickly curbing spending on things that were outright wasteful and wasn't truly contributing to any happiness I was recently able to become debt free. A trip to the Bahamas couldn't come close to giving you the peace of mind you get when knowing you don't owe anybody anything!

Now that my "Dear Diary" phase is over I can work towards what this forum is about. Early retirement!

Now please try to keep your seat as I divulge my massive current financial standing.

Currently:
Savings - 15K emergency fund
Roth IRA - 12K
Vehicle Paid For
Zero Debt

I also said the heck to my past employer who really, really sucked! Enough said. My new job has me on a 76K salary with another 30K in tax free per diem. My goal for the next calendar year is to live off the per diem and save 100 percent of my after tax salary. Doing so should allow me to max out a Roth IRA and 401K, as well as put another 25K in a brokerage account.

That's my story and I am sticking to it. Any feedback on my plan would be much appreciated. Looking forward to building some wealth!

And you will be caught up, and not behind at all in about 3 or 4 years. Looks like you are screaming to an early finish.

 

[exnavynuke]

Great progress!

 

[FreeBear]

Nice! Even if you can't sustain this savings rate forever, just the growth, will eventually have huge impact. Youn single and well paid won't last forever. Rake it in & save! You are invested mainly in broad market, low cost stock index funds, right?? Don't enrich an advisor robo or otherwise.

 

[EvrClrx311]

Way to go!

The way to FIRE is slow and steady (consistency). You've laid a great groundwork there. I had one of those "don't judge me" segments in my portfolio about 10 years ago (I'm 36 now). I remember people telling me it was foolish, and I remember not listening. It went up (way way up) and it went down (way way down). At one point early on (where you are now) it was only 5% of my net worth, and then it grow to 25% of my net worth on it's own (wooooah!), and soon after it dropped back down to 2% of my net worth, which was kind of sad. Actually it was heart wrenching, even though I ended up with basically what I put in to start. It's still so painful to see 95% (or a 24% in total portion of my net worth) vanish overnight. Money that I had assigned, in my mind, as part of my net worth. In retrospect I viewed that "investment" as a lesson in how much more important the rest of my net worth was. The emotional ride of trying to make a lot off of a smaller subset can distract from the real path...

What I'm getting at is this... you may want to normalize your mind to this now, because you will get highs and lows otherwise... and your psyche towards your investment path is really what's important. WAY more so than your actual net worth (trust me)... so you want to protect your ability to stay the course. Taking risk, where warranted is great. The older you get, the the larger your net worth grows the LESS you'll care to deviate from the thing that actually gets you to FIRE. It won't be cryptocurrency. It'll be the rest.

For now, might I suggest removing the $9K and viewing your Net Worth as $112K... if the crypto goes way up, and you cash out some, then move that into what you consider part of your net worth.

There is a very specific reason for this. It has everything to do with what I said above. It's dangerous to presume that a portion of your net worth is in something that can literally go up and down overnight. So instead, I'd require your brain to think of that as fun, hope, a gamble even? Then when it either goes up or down you'll handle it better

Back to the original point. Great job! Keep it up