Author Topic: 18yo Looking For Advice  (Read 681 times)

Keen12321

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18yo Looking For Advice
« on: November 08, 2018, 01:31:26 AM »
My name is Austin, I've been following the MMM idea for a few years now and I've just finally been able to actually commit to it. My dream is to retire before 45. I'm fortunate enough to make a starting salary over $50,000. I have no debt and have virtually no expenses living with my parents. Should I max out my 401k and RothIRA before I put money into a taxable account or would it be my best interest to just use a taxable account and skip the penalty. I'm new to this and I know there is a way to withdraw without taking a penalty but I from what I understood you would have to initially have the money to hold you over for 5 years. If there's any other advice you can give me it would sincerely be appreciated.
« Last Edit: November 08, 2018, 01:34:58 AM by Keen12321 »

Classical_Liberal

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Re: 18yo Looking For Advice
« Reply #1 on: November 08, 2018, 01:39:38 AM »
Check this out as a starting point.

PS you could easily retire by 30 at original MMM spending levels, 25-30K for two people (12-15K for one).  This forum has morphed into a high income/slightly less ridiculous spend place.  If you haven't picked up the bad habits yet, you don't need to.  It's all priorities.   

Trifele

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Re: 18yo Looking For Advice
« Reply #2 on: November 08, 2018, 04:35:23 AM »
Hi Austin

Congrats for getting off to a great start!  Read the investment order link that Classical Liberal sent.  At your age you should be following that order; don't worry about 401k withdrawal penalties.  There are ways around them. 

And X2 on KEEP YOUR EXPENSES LOW.  If you can avoid lifestyle creep and tempting toys/cars/trucks-- you will be set.  You're at a sweet spot right now -- save like your life depends on it.

:) 

Classical_Liberal

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Re: 18yo Looking For Advice
« Reply #3 on: November 08, 2018, 06:36:30 PM »
Deleted the post, I was being too preachy.
« Last Edit: November 08, 2018, 06:48:55 PM by Classical_Liberal »

kei te pai

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Re: 18yo Looking For Advice
« Reply #4 on: November 08, 2018, 07:28:36 PM »
Welcome. I have no idea about tax matters etc in US, but I think the best progress can be made by not associating your ego with your material possessions.
A healthy body and a healthy bank balance, along with good relationships, will bring you freedom and choices. Dont worry at this stage about FIRE numbers or dates,  just lock in the good habits for the future.

Duke03

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Re: 18yo Looking For Advice
« Reply #5 on: November 08, 2018, 09:35:16 PM »
Best advice I'd give to an 18 year old that wants to retire early is learn about birth control and use it every time!

Keen12321

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Re: 18yo Looking For Advice
« Reply #6 on: November 09, 2018, 12:18:12 AM »
Thank you guys for all of the help. The article linked is a great template for planning and all the other life advice is very helpful get my bearings straight

Loren Ver

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Re: 18yo Looking For Advice
« Reply #7 on: November 09, 2018, 04:47:00 AM »
This is wonderful.  Good for you looking ahead!

A few other things to think about since others have covered the investment questions.

- Avoid debt, especially consumer debt.  This can be done with good planning.   I know people that buy new cars on debt because they are afraid of repair bills.  A sad state indeed.  So get yourself an emergency fund. 

- Watch your career.  50k is great!  Especially at 18, but make sure you are in a job that will keep paying you more and you can keep learning new skills.  If they are still paying you ~50K a few years from now, that isn't so good. 

LV

MaaS

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Re: 18yo Looking For Advice
« Reply #8 on: November 10, 2018, 11:57:41 AM »
At your age and income, you'll likely be set in a decade if you keep it simple and stay consistent. Follow the investment order recommendation. Spend reasonably, invest often, and enjoy your life.

TomTX

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Re: 18yo Looking For Advice
« Reply #9 on: November 10, 2018, 01:32:19 PM »
Good on you!

Remember, Roth contributions (not growth) can be withdrawn with no penalty. That means they are available during ER for expenditure.

Roadrunner53

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Re: 18yo Looking For Advice
« Reply #10 on: November 11, 2018, 05:28:19 AM »
Get a credit card with rewards. I have the Costco Visa card and I try to pay for everything with it every month. There are some bills I cannot pay with a credit card but I keep trying to add any purchase with it. Last year I was rewarded with about $550 in cash back. You have to go to Costco and redeem the cash back check once a year or you can spend it on Costco purchases. But I will NOT spend the cash on that! I will purchase things with my card to get more rewards!

Just remember, the plastic gets paid off each month. Put money aside each week to go towards your purchases. I know one woman who will spend money at a store using her card then immediately pay that off thru on line banking. I rack up between $3,500-$6,000 a month. Have had unusual medical expenses this year that has upset the apple cart a bit.

I wish I had gotten into these reward cards years ago. I have had mine for about4 years. I used to have airline reward points on American Airlines but have not flown in a long time.

There are probably better reward cards than the Costco one so investigate what is good for you!

TomTX

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Re: 18yo Looking For Advice
« Reply #11 on: November 11, 2018, 06:33:07 AM »
Yep, we have had several threads on getting the ideal credit cards. Typically the signup bonus is the biggest reward you can reasonably get per $ spent.

Younger people often have trouble getting the "first" credit card. If you can get someone like a parent (who is 100% responsible with credit!) to add you as an authorized user, that gives you a leg up starting a credit history. Choose a Visa or MC, and you actually inherit their account age as well. That credit card will show up on your credit report. If the card has always been paid on time, it's a big starter benefit - especially if it's several years old. If the person has NOT been responsible with credit, it will be BAD for your credit history.

Easy-ish cards to start off with are Discover or the Chase Freedom, both of which can give you a small signup bonus. Freedom usually has the bigger bonus ($100-$150) and if you have one card with a good history on your credit report, Chase will very likely issue it to you.

If you don't have a parent to give you a leg up, you can often get a starter credit card while in college (some companies ignore your lack of credit history if you are in college and target getting you your first card) - otherwise, you may have to look for a "Secured" credit card. 

Penn42

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Re: 18yo Looking For Advice
« Reply #12 on: November 11, 2018, 11:22:56 AM »
I was lucky enough to see the light fairly young at 26, but boy oh boy where'd I' be if I'd started at your age!  You're doing great.  Dig through these forums and read a few books and you're going to be set in no time! Keep up the good work and interest.