Hi! <insert generic rest of subject here>


Dryer sheet wannabe
Jun 23, 2004
Hello All,
Kind of like several others I have been lurking for quite awhile now. I have visited the message boards probably once a week for six plus months now and finally decided I should get on the bandwagon and contribute something since I've gained tons of great information from the posts.

Here is my situation:
-I am 28 Years old.
-I want to make work completely optional by the time I'm 45. I don't know whether or not I will stop working at that age but I would like to prepared to do it if I choose.
-I have plenty of hobbies and other things to keep me occupied. My days are pretty filled at home and having more time would be nice.
-I like my job and enjoy working. My company is good to me and my 401k matches 100% up to 10% of my income so it is pretty good even though we don't have any other retirement/medical/etc. plan after you retire. I don't have any urgent need to run from the company.
-I would prefer to retire somewhere where english is a commonly spoken language. I have a coworker retiring to thailand at the end of the summer and although I've read some great things on the message boards about retiring places like that I would prefer to stay in the US or someplace similiar unless it is not an option. Then I just need to convince my friends to move with me :^).

Here are my Assets/Current Investments:
-I have a 401k with about 100k in it. I'm continuing to invest about 20k/year into it with about 5k of that total being post-tax (this year I might get a kick-back at the end of the year I will need to reinvest in something else since I might max out my legal 401k contribution). I was thinking about perhaps using 72t to my benefit when I was 45 to perhaps turn it into a supplemental retirement income rather than a single source, kind of like my ex-military coworkers use their military retirements for. I haven't read all the regulations on this yet so I don't know my limitations.
-I have about 30k in equity in my home at this minute and am adding about 5k/year at this point. I pay an extra 150-200 each month on my mortgage.

Other than that I have very little savings (4k +/-) but I maintain no revolving debt. I have a car loan and a mortgage. The car will be paid off in about three years and is only six months old so I'm planning on keeping it for ten years (that was the plan when I bought it).

Right now I put enough money into my 401k (20+% of my income between pre and post tax) that I'm starting to crimp my lifestyle with my bills taken into account. I could probably save another 300/month if I really tried. When the car is paid off I can save another 400/month on top of that.

I have ran the numbers on at least five different retirement calculators and figured out that if I want to retire with 35k/year in cash (basically what I live on now without inflation taken into account) I need to either contribute more to my savings or raise my income. Right now I have some business ideas in the works but I don't know if any of them will take off so I'm not counting on them. Plus, I don't have any desire to work more than I already do :^). I've also considered real estate but that is yet more work that I don't really want to do but will if necessary.

When calculating yearly withdrawl rates I have been using 3% as my "safe" number.

So I guess y'all can comment if you want. Otherwise I'll post messages in other proper forums with any specific questions on reading material/tools/etc..

Get a life! At 28 the first thing you need to do is set some priorities. Get married, raise a fine family, invest in your kid's future education, buy a house, drive a decent set of wheels, take some nice vacations(Canada's nice ;)), do some volunteer work for the betterment of your community, stay physically and mentally sharp for a lifetime, save 10% of pre-tax income for retirement..............and work for another 25 years.
Hey, c'mon, Zipper, cut some slack.


Keep socking it away in the 401(k). 10% match is the highest I've ever heard of.

Keep paying down the mortgage if it makes you feel good & sleep better-- there's a strong emotional component to this decision and it shouldn't be based solely on the finances. Another option, instead of putting your cash flow into an illiquid asset, would be to open an IRA (a Roth if you qualify) and get more tax-deferred compounding.

Do any of those hobbies/interests have the potential to generate income? Rental real estate sounds attractive only if it's a fascinating hobby. Otherwise it's work and you might not have the motivation to stick with it.

Keep refining that expenses budget and keep plugging the numbers into FIREcalc. I don't have any problem with most of Zipper's advice, but I can't agree with the "work for another 25 years" part...
Hey, we need someone to keep putting money into social security, and someone to keep making all the stuff and performing all the services we consume!
Relating to the 401k:
Our companies primary competitors are union shops. Due to this our company is always on its toes improving benefits, reevaluating wages, etc. to try to keep the union lure out of the workforce and to keep our best employees with our company. That is probably a major reason why our 401k matching is so high. I realized it was a good thing several years back when I started to compare it to friend's options and they were all at like 0-3% matching.

The key to my 401k investing was increasing my contribution with every significant raise. I still let my take-home income go up a bit but I still do a number on my income. Right now it is 8% post-tax and 12% pre-tax. Starting within the next year I might be limited to only increasing post-tax investing due to 401k law. The advantage of the post-tax money is I can still centrally manage my investments, I can get to it if I really need it and it is taken out of my paychecks before I can spend it but it doesn't come with several of the advantages that my pre-tax dollars do. Right now about 12k of the 100k is post-tax money.

On Family:
I have made a decision not to have kids. I have a live-in girlfriend but I am not going to do the family thing. Rather than have kids of my own I'm starting to do volunteer things in the community to give back. Hopefully make someone else's kids lives better.

On Hobbies:
Yes, my hobbies have potential to generate cash. I've written a couple of articles for magazines, I do some consulting on the side and I'm a techno-weenie with skills in fairly high demand so I can find stuff to do to generate cash. The two business ideas I've been plotting recently are both doable and require little maintenance after being setup but the one with real business potential would require venture capital to really get off the ground so that is currently in holding pattern. I've also written a high level outline for a book that I want to write at some point.

On Volunteer Work:
I switched to a new job about a year ago and just now I've started to do volunteer work. For the first time in many years (since I have been in corporate america, about 9 years) I have the time/weekends/nights to obligate myself to help others. In my perfect-world ER scenario I would give up my job to seek satisfaction helping others without the money component being an issue.

On Investing:
Although I have very little savings considering that I had about 4k in CC debt six months ago and now I'm 4k ahead I'm shooting to bank 10k or so in the next year then start investing all additional above that things are going well. I want to have a six month safety net in the bank before I start investing so that I can deal with any emergencies without having to go back into debt for more than a month or two. After I have a safety net I am looking at investing in a Roth IRA.

Thanks for the feedback so far!
Hi random

I think you are doing well. Your goal of developing a six-month emergency fund is a good one. Life is much less stressful when you know you are not absolutely dependent on your next paycheck. Knowing that work is optional for six months starting any time you please isn't full fledged financial independence, but it's a great start.

If you become a principal in a business, bear in mind that your bankers and suppliers will require you to provide unlimited personal guarantees on everything. In no time at all there will be a million dollars floating around town with your name on it. This will weigh most heavily on your mind.

When I was young I also had a live-in girlfriend. She was my future ex-wife. We had talked about many things before we were married, but one of the things we foolishly did not do was establish that we had truly compatible attitudes about money and plans for children.
Hello Platy and all.......

A couple of observations. Almost any sort of closely held business (start up or otherwise) requires the
owners to personally guarantee the bank debt.
There are ways to get around this but too much to
cover here. Anyway, the last company I bought
was leveraged 100% (I put in no personal money).
Thus, everything I had in the world was on the line.
My gin consumption jumped dramatically :)

My current wife and I have had our families, all
grown now, and we recognized that our views on
money and finances were poles apart. Even so,
the lack of a common view on the finances can spell
trouble (in marriage or with business partners). That
was the main thing that killed my first marriage.

John Galt
Hey Random,

I'm also 28 and want the freedom to choose whether or not I want to work, either for a living or any other reason.  

I don't have the techy skills, but I have the money mgmt skills.  Sounds to me like you're on the right/fast track for FI.  I say keep on keeping on.
My girlfriend and I are currently doing a "goal matching" exercise. Several months ago I started to go through a personal realization period where i realized I didn't want to work until I was 65 so we have been discussing our long term goals and dreams quite a bit.

With that being the case we are currently working on our independant sets of goals and then will bring them together to see how well they line up and if we can make everything work.

So I'm currently working on the "is the girlfriend on board" concept. We'll see how it all works out.

Hi random

When I was young I also had a live-in girlfriend. She was my future ex-wife. We had talked about many things before we were married, but one of the things we foolishly did not do was establish that we had truly compatible attitudes about money and plans for children.
I'll think more about the business concept. I have been doing consulting on the side and writing to add to my income (2-7k/year) for several years now. Maybe rather than start a business I will focus on writing/general consulting more, which I also find more rewarding as a whole but won't churn out reliable money without me putting in effort to sustain it every month. One of my long term goals was to find ways to create steady money inflow without significant effort (real estate rental income, etc.).

I have a brainstorming partner on the techie-businesses that has worked for VC/startup companies so I'll discuss these points with her and see what her experience has been.

The feedback is much appreciated.

Hello Platy and all.......

A couple of observations. Almost any sort of closely held business (start up or otherwise) requires the
owners to personally guarantee the bank debt.
There are ways to get around this but too much to
cover here. Anyway, the last company I bought
was leveraged 100% (I put in no personal money).
Thus, everything I had in the world was on the line.
My gin consumption jumped dramatically :)

John Galt
Random, a question and a recommendation...

First, what do you write-- reports or articles or something associated with your consulting? I easily churn out a couple pages a day and I can only imagine the hobby-stock results if I focused my output on my local editors. If writing comes easily and is entertaining then that might produce the most results with the least additional efforts. (I've always suspected that a lot of articles are refreshed & recycled every 18 months or so.)

Second, I can appreciate that from the outside it seems fairly straightforward "to create steady money inflow without significant effort (real estate rental income, etc.)" but before you take the plunge you should read (1) Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and (2) Landlording by Leigh Robinson (7th edition or later). Hopefully they won't blow the lenses out of your rose-colored glasses.
I love real estate, but "real estate rental income without
significant effort" is positively oxymoronic. Look, if I was
forced back to work, I would go with real estate
(not selling). However, to suggest it is easy is silly.
I would choose it because I have a lot of experience
and I enjoy it. Those without the prerequisites
should enter the field very carefully.

John Galt
On Writing:
Previously I've only written articles for magazines. Stories and product reviews so far. I was thinking about writing more articles (I have been contacted several times to write more but have pushed back since I switched jobs in the last year and needed to focus on getting that stable) but the stuff I write articles on tends to take lots of time and when I did the math on time vs. payout especially for product reviews I would be better off finding more consulting work if I was doing it for the money. Maybe I'm just ultra-anal about my writing so I spend to much time on it :^).

On Real Estate:
The notes on real estate without effort being a bad comparison are taken.

I guess to me Real Estate may not be easy money but at least it can be turned into a steady flow of money. Consulting, writing, etc. require direct time expendature to create money. To me the difference seems to be that one of them has the potential to be passive income (especially with a management company in the loop) whereas the other one has a direct 1 to 1 money to time cost.

Thanks for the book suggestions and feedback. It is nice to hear from people with real experience. I'll read some reviews and see about reading one of them to see if real estate is something I want to consider. It has definitely tempted me in the past even though I don't really have a passion for it.
At 28, and male you are perfectly within your rights to say you don't want kids. Be very sure that your significant other won't change her mind when she is 35. If she does......and you don't, then you are obligated to give her up for "someone with balls". I just spent a day with my grandchildren. Just them and me. We do it often.................priceless!!

Do the Real Estate.

Your house is a $500,000 tax free sales profit every two years if you are married.

Rental house... Tenants consider it theirs and don't want to call landlord unless they have to. Would prefer to never see him. Same with duplex.

Four unit... not big enough for manager, lots of "landlord should take care of this."

Multiple units... big enough for near free manager to take care of most problems. Move up to this.

Rents rise with inflation to protect you when you are retired. No fixed income for you.

Plus, building can be depreciated (on paper only) for tax savings windfall.

Plus, the building (in real life) goes up in value, and your mortage costs can be refinanced lower and lower if you are lucky (like now as the government gives us very low cost loans adding the real cost to the overall government debt which the nation at large is on the hook for not you.)

Very, very difficult to beat this as an investment. Especially when you can buy the properties for 20% to 30% cash down payments. Just pencil out the returns...

30% down on $500,000 small apartment. It goes up, say, $75,000 in two years (six months in California) what's the return you have to get on Stocks to match that? Not going to happen for most stock investors.

good luck,

And if you look long and hard, you will find a seller
who will practically give the property to you and
take your old beat up RV as down payment. Then you
are no cash out of pocket so the ROI is infinity. This
is not fantasy folks. I've done it. It's work though, not like buying CDs at the bank.

JOhn Galt
John Galt wrote...

"And if you look long and hard, you will find a seller
who will practically give the property to you and
take your old beat up RV as down payment. Then you
are no cash out of pocket so the ROI is infinity. "

Who said anything about that? I didn't. Please re-read what I wrote and don't make things up.

I said 20 to 30 percent down on a $500,000 property. I said huge tax free returns on your personal residence every two years. I said use depreciation as a no-cost tax savings. And I asked anyone to come up with better returns or a safer investment.

If you dispute this then offer some contrary facts.


I addressed this situation with John Galt earlier in the day. He does this consistently, and if you are going to be a regualar poster on this board, you have got to ignore a lot of his rambelings.
I have been a member of this board for about 6 months, and have kept my comments to myself, as really didn't want to get involved with a counter-productive back and forth with him. Stick around, and you will find that
most of the posters of this board will listen to you.
Regards, Jarhead
Yep, I plead guilty. I have my own thoughts/agenda
on every topic and that trumps whatever we started with. This is the wonderful part of tending toward the
egomaniacal. It doesn't matter where you start.
What matters is where I finish.

John Galt
Location, location, location AND the ability to keep your job and stay in one place should the real estate cycle turn against you.

I remember the Denver post - Jan 1970 - reading the federal govt paid section - page after page listing every house number on both sides of street in greater Seattle - wanting retiree's to step in and start making payments. I remember thinking if I'd still had a job in Seattle - I could make a killing on rentals. A few did. Those were the days when Kobe, Japan was sending care packages to Seattle and the area churches were feeding 78,000 people a week.

Had a duplex for 15 years in New Orlean's - did ok but never scaled up - liked the depreciation until I got my well layed for sale by owner plans hosed by an unexpected messy divorce - they didn't get much - but I got a big cap gain as I had derpreciated to zero.

In short real estate is work - it's doable. I have however retired.
During the late 80's our housing economy crashed here in Alaska.. My mother had started a house cleaning/general contacting business a couple years before it happened. She was VERY busy for a couple of years due to all the repos/etc. and did quite well for herself during that time. It was very interesting seeing so many people do so poorly but we were buying a house, a new car, etc. etc..

Anyway, that is my memory of the last housing crash here.
You've gotten some great advice as usual. Just a couple more points.

On the kids, congrats on making the decision not to have any. You should not have them just because it is "expected" (at least it was by our parents). This was a decision that we made early on and have never regretted it. We love to see good parents with lots of good children, but it just wasn't for us.

As far as rental property goes, IMHO, it can be your best investment out there, but it does require some hard work (consider a management company if the numbers support it). But, by all means, read the books that were recommended and any others you can get your hands on. The more knowledge the better. We were able to retire at 36, mostly because of our real estate investments.

As far as the principal residence, you do get a great tax break for gains if you live their two years and actually have a gain (this benefit has been somewhat diminished by the cut in capital gains taxes). In my opinion, though, you should NEVER purchase more principal residence than you need to be comfortable. Use the extra money for investments such as rental real estate.

And lastely, avoid the nice car while you are young if you can, it's a terrible investment and just sits outside sucking up your money while you work and sleep. After almost going bankrupt with a sports car early in my career, I purchased a Toyota Camry and drove it for 12 years. I did regress, though, two years before I retired and drove a new corvette for a couple of years. That was a blast and set me back about $20,000.00 :-[

Good luck to you.
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