howaldryan
Dryer sheet wannabe
So I plan on providing a yearly update to document my progress towards financial independence. You are more then welcome to look back on my last two post but my first post was title 20yrs old first house.
Anyways back to my update:
As stated in previous posts, I was anticipating that the contract our company had would expire and we would be hired on with the company who contracted us out. That was expected to happen august of 2012. It ended up happening February and I was lucky enough to get hired on for my same position.
In December of 2011, I received a promotion which came with a raise. When I got hired on with my current company in February I received anouther raise.
INCOME:
My Income is currently sitting around a base of $33,500 up from 27K. I have access to unlimited OT which I expect to increase my pay closer to 40 a year.
House:
I originally started on this forum looking for some advice for purchasing my first house. I have now been in the house for over a year, and I am in the process of refinancing. Looking at the real estate market in my neighboorhood, I figured my house value has gone up enough to get me out of PMI. House appraised in 2011 for $103,000 and just appraised last month for $127,000. Bye bye PMI. I dont plan on being in the house for more then 5 years so I ended up with a 7/1 ARM at 4%, which is substantially better then my 5.25 fixed rate. All in all my payment drops over $100 a month and no more PMI.
School:
Working on finishing up Bachelors. School has taken alittle longer then expected due to the amount of work hours required by my job. I took one class last semester and Im taking two next. If all goes well I will be back at school Full Time beginning 2013. Once I finish my Bachelors, Im jumping right into my MBA. I have the professional experiance the school wants, as well as the GPA so far. I just need to start studying for the GMATs. I have yet to take out student loans for school and intend to not take anything out until my masters. I plan to fund about 50% of my masters with student loans. Approx 25-30 thousand.
Girlfirend:
We will be together 4 years in August. Not rushing into anything more at the moment. I want to get through school. She is finishing up her Associates in 2 months and is starting her Bachelors next semester. She has just quit her job to work with her dads business which is far more flexible and will allow her to complete her BA in less then two years. From there she will be working on graduate school as well. My expectation is she will not have any student loans until her grad program as I will be paying for her school.
Debit:
I have taken on a car payment, which is 400 a month. My girlfriend primarily drives this vehicle. The gas savings alone saves us close to $200 a month from her previous car. We bought a 2011 Jetta TDI. No credit card debt, no student loans, just House and car. The car payment will drop alittle when I refinance next month to a better rate.
Retirement:
My new company overs 401K match. 30 cents on the dollar up to 15%. I am currently contributing 15%. I have about 1500 in 401K right now and it should be over $7000 by the end of the year.
Goals:
I want to retire by 45. This is flexible depending on retirement account amounts ect. I plan on keeping a one income household budget and using any future significant other/spouse income as retirement savings.
Questions:
I have played around with FireCalc alittle and have found that retiring at 45 with a 3% withdrawl rate gives you a close to a 100% success, assuming the income needs to last 45 years. Everything that I have read through these forums sayings that retiring that young should have a rate around 2%. Any clarification on this?
How does taking out a loan against your 401k work? I read a few things about it and it says you can take out up to 50% or 100K which ever is less. The interest you pay goes back into your acccount. Thinking about using that as potential financing options for my MBA and not have to take student loans.
Next question, how does withdrawing from 401k, Roth and retirement specific accounts work when retiring early? Do you still have to pay the penalty?
If there is a penalty would it be smart in not touch 401k until 59.5 and invest future spouse income in taxable accounts? Using taxable accounts for retirement until 59.5?
With my goal of not taking on student debt it has been difficult to create a serious emergency fund. I have access to about 10k in credit line through credits cards but after paying for tuition its difficult to have more then 2 months of expenses covered in cash. Any imput on this?
I would love to hear opinions and comments about my situation. I know investing young is hugely beneficial for the future but want to make sure I have my head on straight and im being realistic. I think I am in a good position with the company to get into a management role. Entry level starts at $45k Salary, which I hope for in the next two years.
Also maybe some additional information about paying for school. Due to paying for school out of pocket my girlfriend and I qualify for about 5k in credits. Our refunds from tax time almost pay for one semester a year for both of us.
Anyways back to my update:
As stated in previous posts, I was anticipating that the contract our company had would expire and we would be hired on with the company who contracted us out. That was expected to happen august of 2012. It ended up happening February and I was lucky enough to get hired on for my same position.
In December of 2011, I received a promotion which came with a raise. When I got hired on with my current company in February I received anouther raise.
INCOME:
My Income is currently sitting around a base of $33,500 up from 27K. I have access to unlimited OT which I expect to increase my pay closer to 40 a year.
House:
I originally started on this forum looking for some advice for purchasing my first house. I have now been in the house for over a year, and I am in the process of refinancing. Looking at the real estate market in my neighboorhood, I figured my house value has gone up enough to get me out of PMI. House appraised in 2011 for $103,000 and just appraised last month for $127,000. Bye bye PMI. I dont plan on being in the house for more then 5 years so I ended up with a 7/1 ARM at 4%, which is substantially better then my 5.25 fixed rate. All in all my payment drops over $100 a month and no more PMI.
School:
Working on finishing up Bachelors. School has taken alittle longer then expected due to the amount of work hours required by my job. I took one class last semester and Im taking two next. If all goes well I will be back at school Full Time beginning 2013. Once I finish my Bachelors, Im jumping right into my MBA. I have the professional experiance the school wants, as well as the GPA so far. I just need to start studying for the GMATs. I have yet to take out student loans for school and intend to not take anything out until my masters. I plan to fund about 50% of my masters with student loans. Approx 25-30 thousand.
Girlfirend:
We will be together 4 years in August. Not rushing into anything more at the moment. I want to get through school. She is finishing up her Associates in 2 months and is starting her Bachelors next semester. She has just quit her job to work with her dads business which is far more flexible and will allow her to complete her BA in less then two years. From there she will be working on graduate school as well. My expectation is she will not have any student loans until her grad program as I will be paying for her school.
Debit:
I have taken on a car payment, which is 400 a month. My girlfriend primarily drives this vehicle. The gas savings alone saves us close to $200 a month from her previous car. We bought a 2011 Jetta TDI. No credit card debt, no student loans, just House and car. The car payment will drop alittle when I refinance next month to a better rate.
Retirement:
My new company overs 401K match. 30 cents on the dollar up to 15%. I am currently contributing 15%. I have about 1500 in 401K right now and it should be over $7000 by the end of the year.
Goals:
I want to retire by 45. This is flexible depending on retirement account amounts ect. I plan on keeping a one income household budget and using any future significant other/spouse income as retirement savings.
Questions:
I have played around with FireCalc alittle and have found that retiring at 45 with a 3% withdrawl rate gives you a close to a 100% success, assuming the income needs to last 45 years. Everything that I have read through these forums sayings that retiring that young should have a rate around 2%. Any clarification on this?
How does taking out a loan against your 401k work? I read a few things about it and it says you can take out up to 50% or 100K which ever is less. The interest you pay goes back into your acccount. Thinking about using that as potential financing options for my MBA and not have to take student loans.
Next question, how does withdrawing from 401k, Roth and retirement specific accounts work when retiring early? Do you still have to pay the penalty?
If there is a penalty would it be smart in not touch 401k until 59.5 and invest future spouse income in taxable accounts? Using taxable accounts for retirement until 59.5?
With my goal of not taking on student debt it has been difficult to create a serious emergency fund. I have access to about 10k in credit line through credits cards but after paying for tuition its difficult to have more then 2 months of expenses covered in cash. Any imput on this?
I would love to hear opinions and comments about my situation. I know investing young is hugely beneficial for the future but want to make sure I have my head on straight and im being realistic. I think I am in a good position with the company to get into a management role. Entry level starts at $45k Salary, which I hope for in the next two years.
Also maybe some additional information about paying for school. Due to paying for school out of pocket my girlfriend and I qualify for about 5k in credits. Our refunds from tax time almost pay for one semester a year for both of us.
