My FIRE Journey so Far (Any suggestions?)

[MrFire22]

All:

I'd like advice on my Fire Journey. Here's my info:

BIO
1. 35 year old lawyer in NYC. Debt free (paid off $150K in student loans 2 years ago). Graduated law school in 2008.
2. Income: $158K + $20-$40K bonus
3. Assets: $125K stocks (VTI, VYM, Facebook and Apple)
4. 401K: $25K from previous employer. My current job does NOT have a 401K, but they may set one up next year.
5. Rent: $1,200
6. Spending: Approx $1000 to $1,200 per month on food, groceries, entertainment, utilities, personal travel. I know I could probably cut this down.

After tax, I get about $8K per month. $5K of that goes to an ETF like VTI. I know I could probably get better on eating out less and cutting down my expenses. I make too much for a ROTH IRA, but my job may begin offering a 401k going forward. Its a small law firm that just started out and growing rapidly. I'm tracking my spending with Nerdwallet.

Anything else that I should be doing? I hear after the first $100K saving becomes easier due to compounding / dividends reinvesting themselves. My goal is to become FI by age 40 maybe age 42. I expect salary to increase and cost of living to maintain the same / slightly more due to inflation over the next few years.

When I do become FI, I plan on living abroad. Top contenders: (Brazil, Mexico, and Philippines). Living abroad for most of the year and maybe coming back to NYC in the summers. I know NYC is expensive, but I was born and raised here. Family and friends here.

Thoughts?

[mspym]

There is not a lot of detail to work with so if you want better advice you might need to add more info. Rough thoughts:

- Are there other ways to lower your taxes? Fund an HSA or another retirement account?
- Have you analysed your past spending and worked out if you are getting value for each dollar spent. How accurate are your expense estimates because if you take home 8k and spent 2-2.2k on rent +expenses, where is the other $800 going?

[FIREball567]

You might make too much for a Roth IRA, but it doesn’t mean you can’t contribute. You can do a backdoor Roth. Put the $6k to a traditional IRA (non-deductible) and convert it to a Roth IRA.

Also, do you do any self-employment work on the side? If so, you can open up a solo 401k.

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[gannowar]

I don’t have any advice, but welcome to the forum! Congratulations on what you have achieved so far. Paying off that much student debt is impressive! Good luck on your journey.

[mistymoney]

All:

I'd like advice on my Fire Journey. Here's my info:

BIO
1. 35 year old lawyer in NYC. Debt free (paid off $150K in student loans 2 years ago). Graduated law school in 2008.
2. Income: $158K + $20-$40K bonus
3. Assets: $125K stocks (VTI, VYM, Facebook and Apple)
4. 401K: $25K from previous employer. My current job does NOT have a 401K, but they may set one up next year.
5. Rent: $1,200
6. Spending: Approx $1000 to $1,200 per month on food, groceries, entertainment, utilities, personal travel. I know I could probably cut this down.

After tax, I get about $8K per month. $5K of that goes to an ETF like VTI. I know I could probably get better on eating out less and cutting down my expenses. I make too much for a ROTH IRA, but my job may begin offering a 401k going forward. Its a small law firm that just started out and growing rapidly. I'm tracking my spending with Nerdwallet.

Anything else that I should be doing? I hear after the first $100K saving becomes easier due to compounding / dividends reinvesting themselves. My goal is to become FI by age 40 maybe age 42. I expect salary to increase and cost of living to maintain the same / slightly more due to inflation over the next few years.

When I do become FI, I plan on living abroad. Top contenders: (Brazil, Mexico, and Philippines). Living abroad for most of the year and maybe coming back to NYC in the summers. I know NYC is expensive, but I was born and raised here. Family and friends here.

Thoughts?

Interesting plan! Where would you stay for summer in NYC? accommodations would be very expensive, would you stay with friends? Might be a kind of a lot to ask to stay over for a month or two?

According to above investments = 5k/month, you'd be at about 650k at 40, close to a mil by 42....

seems a bit lean to be spending any appreciable time in NYC on the regular.

[MrFire22]

Its possible. Right now my expenses per month in NYC are $2-3K (including rent). Abroad, my expenses would be a lot lower too. If I apply the 4% rule to 1M that's $40K spending per year.  You can easily get an AIRBNB in the outer boroughs for relativity cheap. Or I can stay with family. Worst case scenario, I take a temporary attorney job while I visit NYC.

[Kayad]

1. Welcome! And congratulations on killing off the debt, that is a big accomplishment.
2.  If you want a full analysis on your spending, try a detailed post in the case studies section.  This requires very detailed spending tracking for yourself for a while, which is a beneficial exercise. You will likely find you have more annual expenses than you realized.  Based on your top level summary, seems like you are doing pretty well on frugal living for nyc, but squeezing out an extra few thousand in savings each year adds up over time.
3.  The lack of a 401K is brutal given your tax burden.  Can you do anything to grease the wheels?  Research low cost to the firm options for the managing partner?
4. Your FIRE plan is . . .  perhaps optimistic.  $150k in the bank.  5 more years of saving 5k/month is an additional $300k.  7 years is $420k.  Absent meteoric growth in your wages and the stock market I don’t know how you get to a mil by 40.  But goals are good.  I would say work to optimize your money situation, work on your personal happiness during the journey (my current focus as a fellow lawyer), and be excited that the more you sock away, the more options you open for yourself.

[MrFire22]

A fellow FIRE lawyer! We have to connect. I know my plan is optimistic. I'm at a point where I am starting to get my own clients which allows me to share in profit, which I hope boosts my savings.

I am trying to focus on enjoying the journey too.  I've been doing my best to enjoy everything NYC offers recently. Especially things for cheap/free. A lot of people don't realize that the NYC gov offers so many free events throughout the year and there are lotteries to catch Broadway shows and concerts for cheap.

[Luap595]

Sounds like you're off to a great start. One quickish, easy thing you can do to get spending down is check on current expenses and see if you can get better deals, per MMM https://www.mrmoneymustache.com/2019/08/22/1000-per-hour/

I did this and shaved off quite a bit with 2 hours of work.

[MrFire22]

1. Welcome! And congratulations on killing off the debt, that is a big accomplishment.
2.  If you want a full analysis on your spending, try a detailed post in the case studies section.  This requires very detailed spending tracking for yourself for a while, which is a beneficial exercise. You will likely find you have more annual expenses than you realized.  Based on your top level summary, seems like you are doing pretty well on frugal living for nyc, but squeezing out an extra few thousand in savings each year adds up over time.
3.  The lack of a 401K is brutal given your tax burden.  Can you do anything to grease the wheels?  Research low cost to the firm options for the managing partner?
4. Your FIRE plan is . . .  perhaps optimistic.  $150k in the bank.  5 more years of saving 5k/month is an additional $300k.  7 years is $420k.  Absent meteoric growth in your wages and the stock market I don’t know how you get to a mil by 40.  But goals are good.  I would say work to optimize your money situation, work on your personal happiness during the journey (my current focus as a fellow lawyer), and be excited that the more you sock away, the more options you open for yourself.

Just want to let you know that I just turned 39 and my NW is $950K. Salary is now $350K per year. I'm on track to more than $1M by age 40!