Hello to all and how did you do it

[kombat]

See this is what I'm talking about. How long have you been working/saving/investing?

We both graduated university in 1999, me as a computer programmer, her as an industrial engineer. We started saving 15% of our paychecks immediately (as per the Wealthy Barber). We've made several major money mistakes since then (buying a brand-new car, joining an "investing club"), but as a result, I've become much more involved and knowledgeable about personal finance and investing.

 

[aaronc879]

I guess I'm just starting out here. It just floors me to see someone with a NW around 200-300k in their 30's. I mean I know some 30 yo with almost nothing-living pay check to paycheck. The range is just so dramatic.

The main thing is keeping your expenses low. I make less than you(<$50K/yr) but my total expenses are probably less than what you pay in rent alone. I take home $2400 month(after 8% in 401k). That's enough to cover my expenses for that month plus 2 more months. I only spend $800/mo or less now that I paid off my condo. I just turned 31 and i'm under your range but should reach it before I turn 33 despite my income still being under $50K/yr. For some people $200K may only be 3-4 years of expenses for me it's 20X current expenses and at least 10X expected expenses in retirement. You should shoot for 25X expenses before retiring. If your expenses are $20K/yr that's only $500K. If expenses are $50K/yr then you need $1,250,000 to retire. Keep your expenses low and don't increase them when you get a raise/promotion. Save the difference instead.

 

[FreqFlyer]

Well in all fairness I haven't mentioned my NW, investments, liablities, etc. My question was how this happened:

I've run over my numbers a million times while at work and I think retiring before 45 is realistic. I would like feedback from you guys as to whether it is or not.

-Home paid for. Very possible that I'll downsize to a condo and pocket 50Kish
Home value about 375K conservatively but this is irrelevant as not interested in living in apartment
-Save 70K a year which includes dividends but not market return. I assume another 4% return from the market over time with my investments.
-I assume my salary will grow by 2% a year. Basically just inflationary increases if any as I don't have any interest in promotions, increased stress.
-Have 275K saved - 25% bonds and cash (mainly cash waiting to be invested) and 75% equity. Will be fully invested by end of year hopefully
-Base expenses 20 - 23K per year
-Another 10K a year for vacations, home repair and car replacement assumed
-Not married, no kids. Might get married but very likely not to have kids

So, can I do it at 45? I feel I am doing alot better than others at saving so I think this is realistic. I am aiming for around 1M to 1.5M in assets. Really not sure how much I need. Ideally I would feel safe with a SWR UNDER 3.

Maybe I should have asked directly but the question is open to whomever it applies.

Are you saying you're 32 and already have a $375K house paid for plus $275K in investments ($650K net worth assuming you have no liabilities)?

I'm confused because if you are doing this well at 32 maybe you should be giving us advice on how YOU achieved it.

 

[Bestwifeever]

The money I made at grad school went to pay bills. I save around 50%. 25% IRA/401k the other in cash. I guess I'm just starting out here. It just floors me to see someone with a NW around 200-300k in their 30's. I mean I know some 30 yo with almost nothing-living pay check to paycheck. The range is just so dramatic.

Why does it floor you, since that's your net worth as you mention in post #13 above? If you could do it, why not others?

I think a lot of people in your age group have similar net worths, actually. Maybe the ones who seem to be living paycheck to paycheck are the young millionaires next door.

But congratulations on your own accomplishment!

 

[mf15]

I would like to add one more item to my above post. When we got married in 1974 both made about 10K a year,came into the marriage with both cars paid for,and at the time no student loan debt. Back then in our first two years living in an apartment,we were able to save about 10K a year,by 1976 were able to afford first new house for 40K and it was brand new,by 1977 I was making 15K a year. Between 1976 and 79 had 3 kids wife did not go back to work until about 1984. Bought next new house in 1979 for 69K and still in it,don't get me wrong going for that second house at 69K was a stretch on one income,but my salary went up. Oh yea also bought a house one block from the beach in 1988,with part of my ESOP money, still own the house,generate good summer rent. It was much easier to save back then with no kids and two incomes,also have to remember my car only cost 2800 new. I judge inflation by pizza price, back in 1966 when I worked in a pizza shop just out of high school for a buck an hour a pizza cost $1.60, now a large plain in a non chain about 12 bucks,steak sandwich about .65 now about 6 bucks. Tv was free, had no internet or cable to pay for,phone cheap,gasoline was about .31/gal in 1972.
Good Luck: I really worry how the grandkids will do as well as I did,and I am just an average person.
Old Mike

 

[ronocnikral]

In a nutshell: got a degree in a well-paid field (computer science / engineering), always maxed out 401k, other retirement accounts, and saved extra in taxable accounts. No kids. Live a low-key lifestyle. Invested 80-100% in equity index funds. Bought no real estate.

+1. This is my formula. And we're for all intents and purposes, living on one income. I'm 27 and just crossed the $200k NW mark (excluding house). We don't count our house as an investment. We max out our 401k and IRA's plus save in taxable accounts. Graduated as an engineer and save well over 50% of my gross salary. Also paid down $42k in student loans. I ride a bike everywhere (my "hobby"), we eat out maybe 2-3 times a month (I enjoy cooking and baking), we have no cable/satellite TV and check out books from the library. Keeps things simple and straight forward. But, we do plan to add some kiddos to the mix, if they delay our retirement, so be it.

read up as REW mentioned. enjoy life. and welcome.

 

[Onward]

We started saving 15% of our paychecks immediately (as per the Wealthy Barber).

You were very lucky/wise to have read Wealthy Barber early on. If I had read it in my 20s, I probably would have spent my 40s sipping margaritas, instead of wrestling the corporate demon.

 

[Todd-O]

Are you saying you're 32 and already have a $375K house paid for plus $275K in investments ($650K net worth assuming you have no liabilities)?

I'm confused because if you are doing this well at 32 maybe you should be giving us advice on how YOU achieved it.

Sorry guys, that wasn't my post. Another member posted that in another thread (accountingsucks is his handle). That's the post that really floored me in that someone that young could have that much. Here is the title of that thread:Realistic to retire before 45 given my info

Again sorry for the confusion.

 

[Calgary_Girl]

DH and I are 40 and 38 and our net worth is $1.4 million. Get a good paying job, LBYM and pay yourself first. I am currently on my one year Maternity Leave with 3 months to go before I have to return to work (still not sure if I'm going too however but it's nice to have the option to stay home with the kids).

I don't think having two kids (ages 4 and 9 months) has delayed retirement at all. Before the kids, we traveled and ate out at fancy restaurants. The amount of money we're saving every month by eating at home more often and by taking vacations within an 8 hour drive of our home pays for the kids .

 

[LOL!]

If someone gets married to a worker with a good job and they have a good job themselves, then it is possible to live as cheaply as one and invest the entire salary of one of the workers. If you invest $50K for 10 years, you have half a million if there are no gains and no losses. Kids don't cost that much in the first 10 years, so they are not a real factor in getting to $500K, but you can stop birth control after you get to $500K and still have kids.

 

[brewer12345]

Todd, I would suggest you stick with ETFs and the like except for a small portion of your portfolio. If you clearly outperform for a few years, then expand what you manage in individual securities. But its not an easy job and you are competing with a lot of talented, hard-boiled investment professionals plus your own demons.

 

[Bestwifeever]

Sorry guys, that wasn't my post. Another member posted that in another thread (accountingsucks is his handle). That's the post that really floored me in that someone that young could have that much. Here is the title of that thread:Realistic to retire before 45 given my info

Again sorry for the confusion.

Ah, that clears it up. You can put tags before and after any material you want to appear highlighted as a quote (delete the extra space after/before the brackets).

[ quote ] to begin the highlighting
[ /quote ] to end it.

 

[scrabbler1]

1. No kids.
2. No debts.
3. LBYM.
4. Cashed in valuable company stock worth $300k.
5. Found and bought into a high-yield (not junk) bond fund when its NAV was underpriced and its yield has been very good.

 

[Meadbh]

I never payed more than $700 a month rent living in Chicago, maxed out my Roth, contributed to match for 401k even when money was tight, and max it out when I can. I have never had to buy a car - I rent one if I need, ride public transportation and cabs, and spend a lot of time walking/riding a bus or train. I've never paid for cable (but I pay for high-speed internet). I eat very well at home (and spend a lot on good ingredients, and shop for good wine under ~$10 when bought as a case - use the internet and magazines) and have become a fairly good cook (makes for great dates too, especially after a long day out sailing). I probably only eat dinner out once or twice a month, and don't buy my lunch more than once or twice a week. I bought a lightly used treadmill and weight set for my place, but still belong to a martial arts school that I suspend in the summer when I'm too busy. When dating, I found that women who liked to do things were more interesting than those who wanted to buy things anyway, and it's not a bad filter to start with. Plus, because I'm sailing, doing martial arts, etc, with my time, I have tended to only meet the active ones - partial self selection for fit and active people. There is more, but a lot of it is just structure of your life. I'm lazy, so I set my life up so that I'm not in the position of having to always resist temptation, or work against people around me. I set it up so that just following through with things I enjoy pushes me to where I want to go when I step back and plan for it.

If I were 25 years younger.....

 

[Todd-O]

Ah, that clears it up. You can put tags before and after any material you want to appear highlighted as a quote (delete the extra space after/before the brackets).

[ quote ] to begin the highlighting
[ /quote ] to end it.

Yeah I get that now. i just copied and pasted the link. I didn't know the hyperlink would follow.

Thanks again to everyone for their input.

 

[obgyn65]

I agree with Seabourne's point #3 below. Living frugally has made it possible for me to save $100k+/year in (very) good years.

3. living well below my means (~50% gross or less)

 

[WanderALot]

We aren't FI yet, but I don't think that having a kid necessarily endangers FIRE. By the time we had our son, we had already saved a decent amount and had a lot of equity built up in our home. I started saving with my first 'real' job @ age 20. Our savings rate increased at age 28 when I got married and we had our kid when I turned 33, so that is 13 years of savings.

Now, we save only marginally less than before we had our son. Food is only a small added expense. Day care is expensive, about $800/month for us, but that should be a temporary expensive once he's only enough for [public] school. True we will be spending more on activities and on travel as he gets older, but we won't have daycare expense either. As with everything, there are more frugal ways to do things that don't break the bank. We didn't go crazy buying the $1000 stroller for him. So far the biggest expense was the loss in pay when DW stayed home, but even that was somewhat mitigated by the huge amount of sick days she saved up for maternity leave.

By the time he's close to college, we expect to have more than enough to fund that huge expense (with appropriate safeguards so he doesn't blow it!) We are going to start trying for our 2nd kid.

 

[martyp]

All the math and advice to LBYM is great. I did some of this myself. But why do you want to retire early? Do you hate work? It would be a shame if you spent the next decade hating your job and living frugally just to reach the NUMBER. Find something you like to do and hopefully pays well. Make sensible economic choices. Spend some now and save some. I worked at a job I loved and payed reasonably well. I am retiring at 55 but this whole retirement thing just snuck up on me recently. I feel grateful that I had a satisfying work life and that now I can enjoy ER.

 

[Meadbh]

I didn't even start to calculate NW till I was over 40. I estimate I was between 200 and 300 K in my late 30s. It helped being a physician and starting my career free of debt. I come from what was then a less materialistic country than the US. I had many years of postgraduate training, ending at age 37. During all that time I was not earning a lot and didn't have the time or inclination to spend the excess. By the time I started earning the big(ger) bucks, I was a diehard LBYMer.

 

[Moemg]

At 33 I was a single Mom with two kids to raise . That is when I realized I had better get my act togther . I started having money going right from my paycheck to savings so I never realy missed it and with each raise I upped the amount . I made $60,000 in my highest earning years but the saving combined with living way below my means paid off . It also helped that my second husband was also a saver .My advice would be start saving early and avoid divorce.

 

[Chelhxi]

We're both 33 and just reached the $200,000 mark a few months back.

Same story as others. We save about 50% of take-home, have very few wants, decent paying jobs. Husband as a truck driver. He made most of his money before we were married (2 years ago), doing full-time long-haul. High pay, minimal expenses then.
I made most of my money prior to marriage by buying and selling two houses at the right times. I didn't have that much cash in the bank, but we switched to renting when we married so that equity translated to savings.

We were always both frugal.
After marriage, the combined income and only slightly higher expenses = financial win. We're also DINKs.

We are actually putting FIRE on hold for now since we've both returned to school full time for complete career changes. Money in the bank sure makes that easier.

 

[Todd-O]

But why do you want to retire early? Do you hate work?

Honestly yes. I'd say its part apathy part boredom. I know I don't want kids. I live with my girlfriend that has a 4 yo from another guy and her behavior has confirmed my theory that 1.humans are bascially...well lets just say difficult to deal with (no offense to anyone here and since I'm new I'll bite my tongue) and 2.we don't need anymore things that consume other things on this planet. To me its too much waste.

 

[REWahoo]

Honestly yes. I'd say its part apathy part boredom. I know I don't want kids. I live with my girlfriend that has a 4 yo from another guy and her behavior has confirmed my theory that 1.humans are bascially...well lets just say difficult to deal with (no offense to anyone here and since I'm new I'll bite my tongue) and 2.we don't need anymore things that consume other things on this planet. To me its too much waste.

Oh boy. Another shot fired in the kids/no kids war. Skirmish to follow...

 

[martyp]

Honestly yes. I'd say its part apathy part boredom. I know I don't want kids. I live with my girlfriend that has a 4 yo from another guy and her behavior has confirmed my theory that 1.humans are bascially...well lets just say difficult to deal with (no offense to anyone here and since I'm new I'll bite my tongue) and 2.we don't need anymore things that consume other things on this planet. To me its too much waste.

I guess my point is that whether you are working or not working/retired (I think) you should focus on leading a fulling life. If you can't do that in the working world then it puts in doubt that you will be able to do it when you retire. Isn't there some saying like - "Do what you love . . . the money will follow"?

 

[NW Landlady]

+1 Don't think you will make it being miserable/bored/unhappy with your job & life for 10 years or possibly more. It is not a race to the finish line, but how well you run it as well....

I think your NW is quite impressive at your age, but no matter how hard one tries, the future is hard to predict and even more than one can begin to guess. Setting goals is good but try not to let it get in the way of your present happiness either.

My personal NW at your age was probably only about 20K, if that, far less than your own position. But Like MartyP - I did enjoy my work and kept open minded about opportunities, following my heart. I could never have planned or guessed the eventual outcomes of the path I followed, but somehow by accident on purpose, it provided more than enough $$ to retire on.