Hello everyone. I've been a lurker here for a few months and since discovering MMM I've wanted to get involved with the community, as well as share my thoughts and plans for FI for my own situation. I would like you all to review what I'm about to submit and make comments, suggestions.
Background: You can skip this section if you wish, the meat of my plan will follow after this section. I'm 41 and my spouse is 42. We are currently living in central Texas. I've always had a problem with money. Not that it has been hard to earn, or that we have a problem with exorbitant spending, rather, I hate thinking I have to make X amount to feel successful. I have to admit, when I first started browsing the forums, I felt ashamed because it seems that many, if not most of the people that post here are already highly successful. Ie, making upwards of 100k per year or more. That is something that will never happen for my spouse and I. However, what has enabled me to participate in this community is the realization that I can still meet my FI goal, and more importantly, our situation may help to inspire others that don't make a high income to still be able to succeed to becoming FI.
Plan: At our age, we are pretty much at our peak earning years, therefore, the figures have been allocated to reflect current expenses. Any raises, bonus's, or promotions will simply be additional windfalls added to the pot over time.
Net annual earning after taxes: 65,000.00
My TSP annual contribution: 14,400. I receive a 5% match which is not included here. It is a bonus added to the amount contributed. Current TSP balance as of this posting: 5,000.00
Spouse 401K annual contribution:14,400. She receives a 3% match which is not included here. It is a bonus added to the amount contributed. Current 401K balance as of this posting: 32,000.00
Liquid assets (emergency savings): 18,000.00 and contributing 3,600.00 annually.
At this rate of savings I have computed the following forecast: Total combined saved annually: 28,800.00.
Total amount saved from earned income (excluding each company match): 403,200.00 @ 14 years.
I've added the investment component of compound interest at 5% and it comes out as:650,000.00 @ 14 years.
investment note: we both are investing 60/20/10 all index stocks split (large cap, mid cap, international) for the growth years. Once we hit our gross numbers in 14 years, we will re distribute the funds in more of a 80/20 split bonds/stocks for retirement. At this point we will withdraw the 4% SWR average @ 24,000.00 annually and contribute back 19,000.00 annually for future growth.
We currently live on the MMM guideline of half which, in our case, is less at 24,000.00 per year. We are debt free and only pay a mortgage. We are doubling down on payments which should allow us to pay it off within 10 years. This monthly expense is 1,600.00 which will, at the time of pay off, be contributed to our investments for the "catch up" increase after age 50. This will give us an additional +6 years of added income for a total of 115,000.00, bringing the grand total of net worth to about 765,000.00 in 14 years.
Future Plans: We bought our home for 137,000.00 and plan to sell it around the 14 year mark when we FIRE. We assume we would get at least 100,000 for it and plan on taking that cash and buying a property somewhere where we want to settle out for the remainder of our years. Since I work for the government, I will receive an average of 600.00 per month pension which will pay for either property tax or HOA fees depending on what type of property we purchase.
Final thoughs: This brings us to age 57/58 at the time of FI. Still well below the average retirement age of most people in the United States. Everything I have written, is all due to MMM and the community here, and what I have discovered therein. I have always been frugal, however, I have never had the financial advice I should have been given throughout my life. My parents never invested, they never went to college, they never earned more than 40,000.00 per year and they never coached me on what to do, or how to be financially responsible. I just wish I had someone to coach me when I was a teenager. It is depressing knowing I could have avoided all the financial hurdles of thinking about making a certain wage to be a successful person and just invested money early. I could have been FI in less than half the time I am doing it now. But the important thing is that I am now doing it and have a solid foundation to build upon. I wouldn't trade this knowledge for anything in the world.