Hi everyone, I'm eager to hear any advice you have for me!
Health is very important so I'm willing to splurge on groceries (plus I'm a large very active person). These numbers reflect my data and best guesstimates. Once I compile several months of expense data from Mint I can update them.
Single 22M recently graduated from University. Wants to pursue FI as quickly and enjoyably as possible. Possible mini retirement to travel in next 3-5 years (cheap domestic traveling, let investments compound). Would like to be FI when having kids (6-8 years). Perhaps work part time to not draw down investments in lieu of early retirement.
Income biweekly
: $2,400
After Fed, State, and FICA taken out
:$2,270
After 401k ($771) HSA ($144) Roth IRA ($230)
:$1,125
Income per month -> $2,250
+ Yearly bonus -> $2-4k assumed
+ 4% 401k Match -> $2,500
+ May look into side hustles, flipped things from CL before
+ Can work up to ~ 10 hours of extra time/week (want work life balance though)
Expenses:
• Rent- $767.50
• Utilities (Internet, Electricity, Trash) - $50
• Groceries (Incl household supplies) - $400??
• Gas - $75
• Car insurance - $133 (keeping comprehensive since value of car is substantial compared to net worth)
• Restaurants - $100 (variable and often less)
• Phone bill - $40 (covered by family plan currently)
• Gym membership - $23 (May be subsidized through work)
• Netflix - $10 (covered by family sharing)
• Vacation/Fun money/Dates - $100
• Clothes/Shoes (thrift store) - $20
• Car maintenance fund - low mileage, take from savings/cash flow it if repairs needed?
• Health insurance - $40 (Subsidized through employer)
• Dental insurance - $0 (Subsidized through employer)
• Life insurance - Could purchase for $X, was
thinking of getting when married
~~~$1,800/month -> $450/mo savings -> $5,400/yr
Assets:
• Savings - $2,500 (parents/grandparents can provide temporary loans)
• Taxable brokerage - $51,200
- $42,100 of which is in ETFs and individual holdings, $5700 in VTSMX.
-$3,400 in Cryptocurrency
• Roth IRA - $15250
-Invested in individual securities, will put future contributions towards international stock market index fund.
• 401k
-Will be invested 100% in S&P 500 fund, 0.04 ER
• HSA
-Will be invested 100% in S&P 500 fund, 0.04 ER
Liabilities:
None. Paid off car (Newish car~45k miles, purchased for half the KBB value), renting living space.
Total:
Networth of liquid assets: $68,950
Invested assets needed to maintain $24k/yr expenses ($200/mo buffer) = $600k
Saving $27,450 per year (401k, HSA, Roth) -> 44% SR
+ $4500 from 401k match & bonus -> $31,950 - 51% SR
+ $5,400 general savings -> $37,350 - 59.8% SR
SR of 55% implies FI in 14.5 years (from 0)
SR of 70% implies FI in 8.5 years (from 0)
(
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
Further, plugging the numbers into a compound interest calculator gives 9 years until $600k is reached at a current principal of $66500, annual addition of $37350, and interest rate of 7%.
Note the model assumes:
- I have zero increases in my income (highly unlikely given that it is a starting salary)
- Zero increases in my expenses (I intend to not let lifestyle inflation creep in but there may be a slight rise here over time)
The model does not include:
• A significant other and their respective expenses.
• Kids (grocery, clothes, sports, activities, healthcare)
+ Have insurance when pregnant**
• Saving for kids college
• Home (mortgage, maintenance, property tax)
• Charity
• Dog (healthcare, food)
• Gifts
• Post retirement - healthcare
Questions:
+ Should I do a traditional IRA instead of a Roth to decrease taxes further? (Next year)
+ I may be able to do after tax contribution to my 401k (mad fientist mega backdoor Roth), thoughts?
+ Just graduated this year and I'll have a taxable income of ~$15k ($36k base less 401k and HSA), anything you'd recommend doing now while in a lower tax bracket (consolidate individual holdings?)
+ Any other life hacks you can recommend?
+ Anything I am missing to speed up my FI journey?