Young Dreamer Reporting for Duty

[PennyThoughts]

Hello

Facts: 27 yo, single, no kids, 24K student loans, 6K medical/car debt, 300 in an vanguard 403(b) ?, and 200 in savings bonds.

I stumbled across the concept of retiring early several years ago, but have been trying to get degree and pay off bad debt choices (let's hear it for a 19 year old getting credit cards and buying a new car!)

My long term goal is to get degree in May '04 and find the highest paying job possible. I'll save up to the match in 401(k) and throw the rest at bills, travel and debts. Once the debts are paid off, that allocated money goes to investments. I plan to live way below my means without trying to deprive myself.

My immediate aim is to keep gathering information on RE and find the right investment vehicles for when I do have the money to sock away. That and start calculations so I tweak them every day and dream of when I can retire early.

So my question to everyone is how did you start investing or how to you think "youngin's" should do it?

All the research I've done so far is mixing together, so hearing how people are actually doing it will help.

[RedOscar]

Quote:

So my question to everyone is how did you start investing or how to you think "youngin's" should do it? All the research I've done so far is mixing together, so hearing how people are actually doing it will help.

I started saving for retirement (company stock purchase plan) when I was 26 years old; that was back in 1977. At that time, I was married and we had already purchased a starter home. We never rented.

When 401k's came along, started putting in maximum possible. Never had any credit card debt. Normally waited until I could pay cash. Had savings plans established for the kid's college education. They are graduating with no debt.

I was planning on retiring at age 55. Retired at age 48 when the company made me eligible to start receiving my pension. I took them up on it and have never looked back.

We don't support the entertainment industry. We don't support the pro-sports industry. We don't eat out 5 nights a week. We enjoy the simple things in life.

Good luck to you in your journey!

Red

[MRGALT2U]

Hello Red. Sounds like you did all of the right things.
I did almost everything wrong but still got here (ER).
Fortunately, my lack of preparation was offset by some
good luck. Now, we also enjoy the simple things that life has to offer. In fact, we prefer the free (or almost free) stuff.

[BigMoneyJim]

Hello PennyThoughts,

I am 33. I started saving for retirement at 21 because someone showed me some charts detailing how advantageous it was to do so. I was mostly not forward-thinking, but I knew I'd thank myself later. I didn't really learn how I should invest the savings until about age 27.

I'm unclear as to whether you're saying you have $500 in savings or $500,000 in savings, but I'll deduce that you have the lower amount. In that case you're quite a few years away from retirement, and your investment choices *may* be more aggressive (in stocks/stock funds) than the ERs who have recently retired or who are about to retire. If you actually have $500,000 then you can probably invest less aggresively and still retire in 5-10 years or maybe even sooner.

I'm not going to attempt to lay out a retirement timeline until a few months after I pay off my debts in May 2004, but I feel like retirement is roughly 15 years away. I'm fairly comfortable with the stock market swings, so most of my investments (97.9%--just checked) are in stock mutual funds. That's very aggressive, but I am currently diverting 20% of my new contributions to bond funds for a little balance. I may increase the bond contributions once I feel like the stock market is "recovered". (I'm buying on the down swing, if there is such a thing.) Come to think of it, I may start thinking about rebalancing my investments. I loaded up heavily on stock funds thinking retirement was 30 years away, but if I think I could retire in 15 years I should really cut back a little on the aggressiveness. My stock funds are largely invested in a collection Vanguard Index funds that more or less represent the entire US market.

You sound like you're on the right track for budgeting. I notice you threw traveling in there with bills and debts. The biggest challenge for me has been to balance debt payoff with fun (including travel). On one hand the debt should be gone ASAP, on the other hand I could die next week, so why not go on vacation this week? I suppose a good compromise might be to travel frugally.

[PennyThoughts]

Quote:

I'm unclear as to whether you're saying you have $500 in savings or $500,000 in savings, ..... I notice you threw traveling in there with bills and debts. The biggest challenge for me has been to balance debt payoff with fun (including travel). ...... I suppose a good compromise might be to travel frugally.

Those horridly low numbers ($500.00) are correct. I've worked many retail jobs (often two at a time) just trying to get by. Those jobs acted as a catalyst to my setting financial goals and getting out of debt.

I felt travelling needed its own category since it is the only expensive hobby that I have. Travelling on the cheap is the best way to go (only way right now ) I put aside a small amount each month for travel and plan fun yet in budget trips. I'd love to save up and do a round the world trip, but the better option might be to take an overseas job for a couple of years.

Thanks to everyone for sharing! I enjoy hearing how others did it and what they do now. It's great inspiration and advice.

[ChocoKitty]

I started seriously investing when I was 26 in my first job. I'm 33 now. I like keeping things simple, so what I did was max out my 401k, max out my IRA, started saving 10% of my paycheck into an index fund, and paid off as much as I could into my student loans. I had a roommate for a few years, which really helped.

These days, I save around 30-40% of my gross income and I split it between a total stock market index fund (75%) and a total bond market index fund (25%). I'm sure there are more sophisticated ways to invest, but I like to do other things with my time.

What got me started? I was SO miserable in my first job when I realized that the mantra "things will get better once you graduate" did not make me like the subject matter I studied any more. In fact, I felt worse and trapped. So in desperation one lunch hour I typed in "retire early" on Yahoo and stumbled across The Retire Early Home Page. It was eye-opening and made me realize that I could actually control my future!

The toughest parts along the way for me is learning to tune out what other people think I "should" buy. My latest mistake (sort of?) was a house. I'm not the house-type. So I plan to move back to a less-expensive condo in a few years. Because I work in a high-paying job, there were people all around me who were telling me that I should buy a nicer car, better clothes, fancier stuff because "I deserved it." You'd be amazed at how many people will have opinions on how to spend YOUR money. But the desire to stop working, or even downshift, is so strong in me that it's been pretty easy to ignore them.

Good luck!! And don't forget to enjoy life along the way!

[blazerjeremy]

Hi,
I am 23 and a network administrator for public Ed. I have the dream of retiring by 40. I will have 20 years in the state retirement system then. I have worked for the government since I was 16. I bought a house first of this year and will have it payed off in 4yrs and 3 mons. I am a very firm believer in lbym. I mostly only invest in my 401k and Roth Ira. No taxable investments other than my house. I am very excited to find this forum because most of you seem like you are in almost the same boat as me. It is nice to have company.

Blazer,

You certainly are on the right track as far as savings and investments. Keep it up and I'm sure you will be glad you did.

As far as wanting to retire at age 40. Just curious, what would you do if you were retired? In other words, don't hold off on anything that you want to do now.

I am 52 and am retired for over 2 years. I love Mondays!

Best,

[blazerjeremy]

Hi cut-throat,
I plan to travel around the world when I retire. I do travel extisively right now. But I only get 2 Months off each summer being on a 10 month contract. So I can't do an around the world trip justice with only 2 months. But each summer until I retire I will use my 2 months to travel to somewhere. I spent 2 months this year driving to Alaska and back. It was awesome. And your right if I was to put that off until I retire it would be missing out.

I am also lucky in that my wife shares my passion for exploring. How many wives do you know that would camp in a tent 57 nights and stay in a hotel for 3 nights in one summer to be able to afford the trip with out charging it to the credit card got to love her for that. We explored 11,536 miles of road this summer.

[dory36]

Quote:

I plan to travel around the world when I retire. *I do travel extisively right now. *But I only get 2 Months off each summer being on a 10 month contract. *So I can't do an around the world trip justice with only 2 months.

Before I retired we lived overseas (Saudi), and took vacations that averaged 5-6 weeks. We found that the poorly-publicized "round the world" fares were a bargain. Usually good for 6-12 months and effectively unlimited stops. The prices as of about 3 years ago were about $2500 economy, $3500 business, and $4500 first class.

A typical vacation would be a week somewhere in Asia (we did Bali, Hong Kong, and Bangkok, on different trips), 3 weeks or so in the US mostly with family, and then a week somewhere in Europe (Amsterdam, Bavaria, Vienna) before continuing on to our starting place.


2 months would make for a nice RTW trip!

Dory36

[MRGALT2U]

Maybe it's an age issue, but an ATW trip appeals to me
about as much as being boiled in my own juices.
No, that's not quite right. I would prefer being boiled in
my own juices to any sort of RTW trip. Honestly, I can
conjure up very little that would be worse.

[blazerjeremy]

The ATW trip I imagine will take all 6 months allowed. Usually they allow 6-12 stops on your trip around. So I would want to spend 2-4 weeks in each place and really get to know the people, culture, and geography.

Johngalt,
you say you would hate it but why would you hate it? Do you hate to fly? I think it would be really interesting to see how other people in the world live. Find out what motivates there day to day lives. And do some of the touristy stuff to.

Cut-Throat,
I wish I would have had a float plane to help me out. I drove over 2,000 miles of dirt road, hiked/Backpacked over 800 miles, Canoed 300 miles, and Sea kayaked 300 miles to get to alot of places that would have been very easy to get to with a float plane. Would have saved alot of blisters and flat tires.

[MRGALT2U]

I understand the appeal of world traveling. Although I
have enjoyed my travels since I retired, they were of
relatively short duration and cheap. I admit I enjoyed
a lot of the business travel back when I was working,
but that was on someone else's nickel .

To answer the question, I do not fly any more, under
any circumstances. Never liked it and finally just quit
altogether. There is nowhere on earth that I want
to go/see which requires flying to get there. I admit
it may be mostly an "age" thing, but my vision of a trip
around the world includes a long list of mostly
unpleasant experiences, bad food, slow service,
waiting on other people and operating on the schedules of others, not to mention the cost. Honestly, if someone would pay for my trip and pay me a salary just
to take it, I still would not go. Different strokes, right?