3 Years Later

[iwannaretire]

I originally posted back in 2007 (http://www.early-retirement.org/forums/f26/iwannaretire-too-25586.html) and wanted to give update on our financial status.

During the past 3 years, we have worked hard to reduce our debt. We sold our overpriced condo and one of our cars; the other car we paid off. Our annual salaries have increased to a combined $124,207 (not including ~$8,000 in annual bonuses) and my wife’s company provides a car, cell phone, internet service, etc. We contributed $19,437 to our retirement accounts last year and hope to break $20,000 in contributions this year. We still don’t have much in savings but plan to increase it to ~$20,000 by the end of 2010.

I am 35 and my wife is 26 (no kids). I feel like we’re still behind for someone my age, but somewhat ahead of the game for someone my wife’s age. Here’s at look at our current net worth breakdown:

Assets
$57,281.42 - retirement accounts (401K, Roth IRAs, & traditional IRA)
$4,327.37 - savings
$388.43 - brokerage
$14,815.64 - value of car

Liabilities
$3,988.09 - student loan balance

Net worth
$72,824.78

Thank you for the feedback on my original post. We listened and it has helped.

Thanks!
iwannaretire

 

[Eladio]

Congratulations and I think you are off to a good start. Keep saving as much as you can, keep your expenses low, and don't lose sight of your end goal.

Eladio

 

[Fireup2020]

Welcome back! I think you are well ahead for your age! (and for many people older!) Congratulations on your accomplishments!

 

[ikonomore]

Is your savings your emergency fund?
If it is, it's way to low. You might want to get that up another 10k before maxing your retirement funds.

 

[Helen]

You are way ahead of where I was at your age, it sounds like you are doing well. I would ditto the suggestion to up your emergency fund. It is a great security blanket to know you can live for six months to a year off a savings account or other liquid asset.

 

[iwannaretire]

Thank you for the replies. We had our savings (emergency fund) balance up to $15,000, but decided to pay off our 6.5% auto loan with most of it. We have a plan to deposit $1,500/month back into it for 2010.

iwannaretire

 

[jIMOh]

I originally posted back in 2007 (http://www.early-retirement.org/forums/f26/iwannaretire-too-25586.html) and wanted to give update on our financial status.

During the past 3 years, we have worked hard to reduce our debt. We sold our overpriced condo and one of our cars; the other car we paid off. Our annual salaries have increased to a combined $124,207 (not including ~$8,000 in annual bonuses) and my wife’s company provides a car, cell phone, internet service, etc. We contributed $19,437 to our retirement accounts last year and hope to break $20,000 in contributions this year. We still don’t have much in savings but plan to increase it to ~$20,000 by the end of 2010.

I am 35 and my wife is 26 (no kids). I feel like we’re still behind for someone my age, but somewhat ahead of the game for someone my wife’s age. Here’s at look at our current net worth breakdown:

Assets
$57,281.42 - retirement accounts (401K, Roth IRAs, & traditional IRA)
$4,327.37 - savings
$388.43 - brokerage
$14,815.64 - value of car

Liabilities
$3,988.09 - student loan balance

Net worth
$72,824.78

Thank you for the feedback on my original post. We listened and it has helped.

Thanks!
iwannaretire

Those of us 10-20 years away think we are "behind". I might have had 40k in my accounts when I was your wife's age...

I agree with advice of keeping expenses low
I agree setting aside 20k is a decent goal
I agree needing a higher amount in emergency fund is a decent goal.

Keep up good work.

 

[MasterBlaster]

If you haven't seen this nifty little calculator, then check it out

Choose to Save®

it will let you know (roughly) where you stand.


here's another rough guide. If I recall, The calculator (linked above) and the table below use the (oft-maligned) 80 percent of post-retirement income replacement rate target. In spite of that shortcoming I believe that either one can be useful as a guide.

 

[Sea Kayaker]

If you haven't seen this nifty little calculator, then check it out

Choose to Save®

it will let you know (roughly) where you stand.


here's another rough guide. If I recall, The calculator (linked above) and the table below use the (oft-maligned) 80 percent of post-retirement income replacement rate target. In spite of that shortcoming I believe that either one can be useful as a guide.

Thanks for posting those!

According to the calculator I'm looking really good to acheive 50k of retirement income at 45... just seven years from now.

The table shows that at my current age of 38, I'm am supposedly ahead of where a 50 year old should be in terms of retirement savings. It's hard not to look ahead and imagine what my life could look like - I will be able to participate in the "Life after Retirement" forum... in particular the "What did you do today?" thread... I go there daily for a dose of envy.

 

[Bestwifeever]

It's thoughtful of you to report your progress--thanks. And wow, what progress!

It looks like you have no mortgage but you don't have a home's value in your net worth--did you buy another place with the equity from the condo or are you renting? If you're renting I agree your emergency fund could use some more.

I think you'll be amazed at how quickly your retirement funds will grow as you add to them.

Report back sooner than 2013

 

[lhamo]

Looks like you have made significant progress, but I'm going to challenge you a bit -- where is your money going? There is an awfully big gap between what you listed as your expenses back then (around 5k a month, which included the high payments on the condo and the cars), what you say you are currently bringing in, and what you have in savings/investments. I realize you paid off some of the debt, but apparently not all of it. We are a family of four with a gross income close to yours, but we have two kids, a substantial mortgage, large travel budget (two trips to visit family in the US a year), but our expenses are close to what yours are and we still manage to put the max into retirement accounts, contribute to the kids college funds, and still have money extra to save. Granted our tax situation is probably different than yours, because we have little if any US tax liability, but still -- as DINKs you guys should be able to save much more than you are currently. So where is it going? Are you willing to shine a bright light on that question? If you really wannaretire, it might be smart to do so earlier rather than later.

lhamo

 

[iwannaretire]

MasterBlaster - Great calculator, thanks!
Bestwifeever- We sold our condo at a loss and are currently renting.
lhamo- Short answer - we spend more than we should, but we're working on it. Below are our expenses for January:

Auto: Fuel - Car 2

78.61 ​

Clothing: Wife's

108.75​

Dinning

200.04 ​

Entertainment: Movie rental

2.18 ​

Giving: Church

825.00 ​

Giving: Family/friends gifts

50.00 ​

Groceries

523.39 ​

Gym

119.00 ​

Household Items

390.08 ​

Housing: Rent

1,550.00 ​

Insurance: Husband's 10 Year Term Life

123.00 ​

Insurance: Wife's 10 Year Term Life

110.50 ​

Medical: Husband's Doctor Visit

20.00 ​

Medical: Prescription

58.91 ​

Medical: Wife's Doctor Visit

61.56​

Misc: Husband's Fun Money

250.00 ​

Misc: Other

52.92 ​

Misc: Wife's Fun Money

250.00 ​

Student Loan

100.00 ​

Utilities: Gas & Electric

84.78 ​

Utilities: Internet/cable

104.10 ​

Utilities: Phone

273.75 ​

Vacation

455.48 ​

Total Expenses

5,792.05 ​

*10 year term insurance bills cover 6 months

 

[lhamo]

You're tracking -- that's great, and half the battle. Knowledge is definitely power if you are trying to bring down your spending and increase the money you have in emergency savings and other types of long-term savings. A few observations, which may or may not be things you want to look at more closely:

Overall amount going to food is over $700/month, which seems high to me for two people.

What are the "household goods"? Close to $400 in this category seems high, but not sure what it includes.

Phone bill/internet/cable bills seem high -- didn't you say your wife has cell phone and internet covered by work? Phone seems particularly high. We live overseas and we don't spend that much on phone calls in a year -- skype is wonderful if you do a lot of long-distance calling.

Your "fun money" allowances seem high to me for people who don't have a solid emergency fund. Maybe cut back on this a bit -- even cutting back $25/week each would give you $200/month more to put toward savings or debt payoff.

Do you have annual figures for your 2009 spending? That would help us see things from a longer-term perspective. It isn't clear from the monthly totals what all the regular versus irregular expenses are (though the point about life insurance is noted).

It does look like you brought expenses down considerably by selling the condo and the second car, though -- but it isn't obvious that those savings have not been at least somewhat diverted toward additional spending in other categories. If you haven't read it already, I highly recommend the book "Your Money or Your Life" as a starting point for thinking how to figure out what "enough" is for you in different areas and rechannel your money to the places where it is most aligned with your values and long-term dreams.

lhamo

 

[iwannaretire]

lhamo - Thank you for the feedback. I do have figures for our 2009 expenses, but I'm not sure how to post such a large amount of information at once. Our "household goods" includes things like toiletries, office supplies, appliances, etc. "Your Money or Your Life" is a great book, thanks.

 

[ikonomore]

I know this going to sound bad but I must comment on the $850 to church per month. Is that every month or just a beginning of the year thing?
It seems awfully high compared to your income

It's only second behind your mortgage. You could lower the contribution and when you can afford it,up it.

 

[iwannaretire]

ikonomore- We hope to deposit ~$1,500/month into our savings account this year, so we should be able to get it built back up without reducing our tithe.