Please help - 30 year old single male - Life Advice & FIRE Tips needed

[Nicholas88]

Life Situation: Single male, high school graduate, turning 30 this month and live in in Europe (Expat), Geek that loves to travel

Additional relevant information:
- I am intentionally not giving specific information on the country I live in as some of my work colleagues read this blog and I would like to remain anonymous for obvious reasons.
- My equivalent to the US 401k is fixed (i.e. I can not contribute more or less, nore do I have any control over how the money is invested)

Gross Salary/Wages: USD 8’120.00 per month

Individual amounts of each Pre-tax deductions:
- My contribution to 401k equivalent: USD 395 per month
- Mandatory insurances (unemployment, SS, etc.): USD 505.45 per month

Other Ordinary Income: None
Qualified Dividends & Long Term Capital Gains: +/- None / very little
Rental Income, Actual Expenses, and Depreciation: None

Adjusted Gross Income: USD 7’219.55 per month

Taxes: USD 1’289.34 per month (will be approximately 1’100.00 per month for 2019 and beyond assuming my current salary)

Current expenses:

Important Note:
-   Please note that I live in a very high cost of living country. Rent payments are crazy high. The only way to significantly reduce them would be to downsize to one room (which would still cost me USD 1’000.00 or so a month. This is not an option for me). Furthermore, local tax rates vary significantly and my rent costs are partially offset by low tax rates. I actually chose the area primarily to optimize for costs. Food is another category that is crazy high and my current costs may be considered very low compared to almost anyone in my country. My primary hobbies including traveling and reading.
-   I transfer some money to a “Reserves” account for all non-monthly recurring costs. E.g. Unlike in the United States, we pay our taxes annually from our savings. From what I heard on this blog, this system would not work in the United States considering many people can’t save.

All figures represent average monthly expenses:
(apologies for the weird format, I had it prepared really nice in word, but I can't get it to look properly on this editor. It keeps inserting code ... The cursive items sum up to the "Reserves")

-   Rent (2.5 room flat)          USD 1’485.00
-   Reserves                        USD 2’200.00
o       Taxes                                  USD 1289.34
o   Insurances                USD 25.00
o   Transport (cheapest, public)            USD 250.00
o   Electricity                        USD 35.00
o   Gifts                           USD 25.00
o   Holiday                        USD 550.00
o   Unexpected Costs             USD 25.50
-   Health Care (max deductible)       USD 262.70
-   Food                           USD 379.55
-   Phone, TV & Internet            USD 135.00
-   Household Items            USD 50.00
-   Appearances (Suits, etc.)         USD 150.00
-   Discretionary               USD 550.00

Total Income after deductions & Tax per month:    USD 5’930.21
Total Expenses per month (after tax):       USD 3’922.91
Savings (rounded):                       USD 2’000.00

Special note: My current employer is extraordinarily generous and contributes USD 1’185 per month to my 401k equivalent.
Another note: My “discretionary” spending includes items such as clothes, games, books, etc. It is probably somewhat higher than it ought to be as since I set up this budget a few months ago, I noticed that some cash was accumulating (very slowly) in my current account. Approximately USD 1’500.00 (not counted for) and I will use this as my emergency fund and hopefully it will grow.
Savings Rate: 47.76%
(Savings/Take-home-pay)

Expected ER expenses: USD 3’000 per month (living) + USD 500 per month (traveling)
--> USD 3’500 per month

Assets:
401K: USD 28’440.00
Other retirement assets: USD 6’768.20
Rent Deposit: USD 4’140.00
Cash: USD 12’884.56
After Tax Investments: USD 50’205.00
Liabilities: None

Special Note: I also currently have approximately USD 15’000.00 in my “Reserve” account. But I don’t consider that money as belonging to me as that money is spoken for (e.g. tax bill 2018 will be coming soon & renewal of my public transport ticket)

Net Worth: USD 102’437.76

Specific Question(s):

1.   I’ve had various corporate jobs (in different countries) and I seem to belong to that group of people that can’t be happy working
at a 9-5 job. I would like to retire as soon as possible. Any suggestions are much appreciated.
2.   I am faced with the dilemma of leaving my current employer and starting something new (… again) and (probably) not ending up any happier than I am now, or staying with my current employer as long as possible. The retirement contributions of my current employer are way, way, way higher than any other company would pay and I would lose all of that if I switched employer/ job now. On the other hand, I really can’t imagine working another 10-20 years doing what I am doing now. I’m in a real dilemma. Very depressing. Any insights are much appreciated.
3.   When could I realistically retire? – According to a post from MMM I would have to work another 15 – 20 years. That’s so depressing. Am I overlooking something? Note: As I am an Expat, I have all my investments in the United States. I like the VTI fund.
4.   Until I found MMM, I assumed that I was very, very well off financially. In fact, because most of my friends were either in debt or had very little money saved, I felt very good about my savings. Well, I don’t anymore. Any further advice would be much appreciated. While compliments are appreciated, critic is what’s going to help me. Please be brutally honest with me. I can take it. :)

Note: All of the above assumes of course that I remain single. If I do end up married, hopefully to someone who is financially on the same page as me. Apologies for the direct manner of my writing and potential spelling errors. English is not my mother tongue.

And last but not least, to anyone still reading, thank you so much for your valuable time. Any advice really would be much appreciated. I feel like I am stuck, even though I’m not in debt. I hope this makes sense.

[foobaz]

If you want to keep your current quality of life, retiring in 20 years is a bit tight (https://www.lifetimepotential.com/worksheet/8tec95c57ql3rzckyb3m2b87p). Luckily you have a good income (and low tax!) and it looks like you can cut a lot of expenses so you could push your retirement date earlier and adjust your expenses some time in the next decade (move somewhere with cheaper rent or cut more discretionary spending).

[Chrissy]

If you're in a 2-bedroom, can you get a roommate?

At your age, your best bet is growing your income.  Don't move jobs for happiness, move for MONEY.

[Nicholas88]

Thank you so much for your responses. Please note that I meant 2.5 room flat. I amended it in the original post. So a room mate is not an option unfortunately (1 bedroom only).

[mrmoonymartian]

Just cut everything that you don't need to survive, and minimise the rest. Problem solved.

[auntie_betty]

Firstly, have you worked out a rough budget (based on today's cost of living) for when you retire? As it stands at present, where do you see that being? If a LCOL country you may not need to accumulate so much. Once you have a rough annual budget, and multiply it by 20 to set the size of your 'stash, you know now what you need to achieve. Assuming you maintain your current standard of living in your current job, and let's assume 'stash standard growth, how long will that take? 

I assume the answer is not acceptable, but at least it's more accurate than '15-20 years'. Now the quest is on to reduce that timescale and see what you are willing to trade:
- Retirement standard of living - what have you included you could realistically exclude?
- Job. You are well paid but don't like it - are you prepared to stick at it for X years to retire at Y date? If not, are you prepared to work longer? Or if not, can you really knuckle down and get promoted or move to another better paid (but similar) job to reduce the years you have to do it?
- Accommodation. If you were to rent a room for USD 1000 a month that would be 6,000 in your stash every year which would bring your FIRE date forward by how much? So, privacy and a bit of space against FIRE - what wins?
- Travel. Am making a rough guess at where you are living. Even if I'm wrong, anywhere in Europe is well placed to explore fairly cheaply with low cost airlines and rail or bus. Am guessing this is where your holiday budget goes.  Again, travel now vs FIRE - what wins? Space for a compromise maybe?
- Appearance and Discretionary. Overall, there is a lot of money available in here. I note you've said you're not spending it all. So cut the budget and allocate the funds elsewhere at the start of the month - emergency fund first then longer term savings.

I know all of the above is obvious and you'll have been through a similar process, as I did when planning to FIRE. However, I found redoing it with a specific date in mind and seeing the collective impact of my decisions made a difference and I was happier to cut things because a on its own didn't make a difference, but coupled with b, c and d it knocked years off. Basically it's a case of wanting it all. And you can have it all, just not necessarily when you want it!

[Freedomin5]

Based on your projected spending of $3500/month in retirement, you will need a stash of $1,050,000, using a 4% safe withdrawal rate. Multiply your annual expenses by 25, not 20, to get an estimate of the stash you need.

In order to retire ASAP, you have a few options:
1. Increase income
2. Decrease current expenses and increase savings
3. Decrease FIRE budget

Ideally, you do all three for the fastest way to FIRE.

Ways to increase current income include job hopping, asking for a raise, or getting a side hustle. I have no idea how to decrease your FIRE budget since you didn’t post any specifics. To decrease current expenses:

1. Consider getting a roommate. Would it cost a lot more to move to a two bedroom and then get a roommate? For example, you’re currently paying 1485 for a one bedroom, but if a two bedroom is less than $2970, then it might make sense to rent a two bedroom and split the rent with a roommate.
2. Another option is if you travel a lot, consider putting your place on AirBnB for the dates when you’re not home.
3. What is this holiday business that costs you $550/month? Where are you going each year? Staying at the Ritz Carlton in Bali? We are an expat family of three and travel at least three times per year, and We spend about that much for the three of us. You can choose to spend on travel experiences now, or you can choose to FIRE. Using the Financial Freedom Calculator on https://engaging-data.com/freedom-calculator-periods/ developed by one of the members on this site, one day of freedom will cost you $2877. That means every $2877 that you save will fund one day of freedom per year in perpetuity. So your $6600 vacation each year is costing you 2.29 days of FIRE freedom.
4. You can use the same calculation above to figure out how many days of freedom your current non-essential expenses are costing you. For example, take a closer look at discretionary spending, gifts, and appearance
5. Is biking to work an option to lower transportation spending?

If you can lower your post-FIRE budget, then one day of freedom will cost less for you, which means you can get to FIRE faster.

Use firecalc https://www.firecalc.com and play around with the variables to figure out specifically when you can retire. The early retirement calculator here: https://engaging-data.com/fire-calculator/ is also interesting.

[Hirondelle]

Fellow European here. Looking at your budget I can only imagine 2 countries with such a cost of living. There's a few things that stand out to me though.

- Travel: USD500/month is A LOT. What kind of travel do you do and will you be able to cut back on this? $6k is year is just ridiculous. For reference; I spent about €2300 on travel this year and that included 2 week-long trips within Europe and one intercontinental trip. Now I travel low budget, but I have a hard time imagining how you'd get to 2.5x that amount as a single person. Especially if you still have American accounts and can do some travel hacking on long haul flights.

- Phone, TV and internet sounds expensive. Cut cable if you can. For mobile phone it might be an option to look at phone plans abroad and keep only a prepaid sim in the country that you're in. E.g. my Dutch plan is only €2.50 and you can get one with a ton of data for €10/month that can be used all over Europe (including non-EU HCOL countries like Switzerland and Norway). Use the foreign data and use the local sim for text/calls.

- Household items and appearance also sounds high, but depends on what's included in it. Same for the discretionary category.

- Public transit sounds high, what kind of pass do you have and how much do you use it? Is it possible to bike to work?

- Also keep shopping around for cheaper apartments. Even a $100/month saving will add up real quick. 

You currently save about 47% of your income and have about 2.5x FIRE expenses saved up, so that's approx a 15-year timeline. Dropping your expenses by $500-600 a month (which seams feasible to me) could reduce this by 2-3 years. After that it will probably get harder to cut expenses, so there you'd have to get more creative or give us more details to see if we can offer some 'hack' ideas.

[Nicholas88]

Thank you so much for all the helpful replies so far.

@Hirondelle & Freedomin 5: I travel to the United States perhaps twice a year and then within Europe maybe 2-3 trips. I agree, my travel budget is kind of high. I will definitely need to optimize it a bit next year.

@ Hirondell: Thank you on the phone advice. That never even occured to me. Are there any specific plans you could recommend?

I need to buy nice suits and other work clothing and that probably costs me about USD 100.00 - USD 125.00 per month. I don't see any way around that. It's part of the deal I have ... Also, clothing is ridiculously expensive where I live.

@Freedomin 5: Thank you for the advice on the appartment. I will need to think about this for a while and do some number crunching.

@aunti_betty: Promotions aren't very likely. I don't have the right education for one thing. I am a high school graduate and earn a nice living considering  ...

@aunti_betty: As I don't know where I will be retiring (probably not where I currently live, possibly North America, England or Southern Europe somewhere, it's difficult for me to make an accurate budget. I've been playing around with numbeo a bit, and USD 2'000.00 per month seems to be on the low end (e.g. Portugal or Thailand). Rural USA may run me around USD 3'000.00 - 3'500.00. Therefore it's really difficult to make a budget.

Thank you all who have helped me. Your advice is much appreciated and thanks for all the links. Any further advice would also be much appreciated. You've definitely given me a lot to think about so far. :)

[LifeHappens]

If clothing is expensive where you live, could you purchase it when you travel? I live in Florida and have noticed many Europeans do their clothes shopping when they visit.

[Hirondelle]

Thank you so much for all the helpful replies so far.

@Hirondelle & Freedomin 5: I travel to the United States perhaps twice a year and then within Europe maybe 2-3 trips. I agree, my travel budget is kind of high. I will definitely need to optimize it a bit next year.

@ Hirondell: Thank you on the phone advice. That never even occured to me. Are there any specific plans you could recommend?

I need to buy nice suits and other work clothing and that probably costs me about USD 100.00 - USD 125.00 per month. I don't see any way around that. It's part of the deal I have ... Also, clothing is ridiculously expensive where I live.

Regarding phone plans; my current provider is Simpel. You can check their website and see if they have any plans that fit your needs. There's tons of other companies and I could imagine some other European countries having even cheaper plans but I haven't looked into that. A friend of mine once said France has some pretty good deals with EU-wide coverage too, but that was when EU-wide coverage wasn't a default thing yet.. It will also depend on whether your country is within the EU or not.

And as we've started talking about abroad shopping; would it be an option to do that with (part of) the clothing too? Not sure how much you could shave off there, but if you travel abroad up to 5(!) times a year that seems like it can't be too hard to pick up some quality clothes whenever you need them.

For the travel; do you actually travel when you're in the USA or do you just visit family/friends? The latter option doesn't have to be expensive. You could consider reducing frequency slightly, let's say 3x in 2 years rather than twice a year? For travel within Europe I'd say less, but slightly longer trips in 1-2 places is more efficient than hopping all over the place for a weekend continuously. I have to admit that my trips are usually extremely cheap as I crash at friends' all over the place, but maybe that's an option for you too. If you've lived in many places you might have many contacts as well - don't be afraid to reach out!

[Nicholas88]

Thank you for the advice on shopping abroad. I've actually started doing just that this year. Usually in the United States. Thanks also on the input on phone plans. I will look into this in detail. Planning holidays further in advance and staying longer (few trips) is a good idea as well.

Thank you so much for all the advice. I'd really like to get my savings rate to approximately 60% if I can.

[flaskandpen]

Just want to say that your retirement cost per month seems extraordinarily high. I lived easily on $2K a month in Las Vegas and have friends who say they lived like kings in Thailand for $500 a month (one in particular was in Chiang Mai; he was making $1500 a month). I strongly suggest adjusting your numbers here.

When in Vegas, I loved to buy nice clothes, but a couple years of spending like you set me up for about a decade. Unless you’re in a place where extreme climate or some kind of physical duress wears out your suits, it seems possible that you could at least hit “pause” for a year or two, and invest that money instead.

However, I am a mess financially. You’re in a much better place! So regardless, best wishes, and thanks for taking us along on your journey.

[former player]

One thing you might look at is changing your paradigm of "work full time in a well paid job then live off my stash and never earn again".


Here's how it might go:

1.  As others have suggested, take a good look at your retirement expenses.

2.  Calculate how many years it would take for your current stash to compound over time and meet those expenses.  At the moment that will be so many years that you will probably be dead first.

3.  Keep recalculating that number of years for each extra year of accumulating your stash at the current rate to meet your retirement expenses, taking account of both further contributions and compounding of existing investments.

4.  At some point the calculations will show that you will have sufficiently leveraged your current high-paying job that your retirement stash will support you from some reasonable point in the future but which is still further ahead than the 15 or so years for a fully-funded immediate retirement.  When you reach that funding point, you can leave your current job and do whatever you need to do to get by financially until you can pull down your retirement stash without risking it running out.

[Nicholas88]

Thank you for your response flaskandpen. I think my retirement expenses may be a little on the high end.

@ormer player: Amazing! I never thought this through entirely. So naturally I had to do the math immediately and assuming a 7% return (average return after inflation of US equities for the past like 80 years or so) and my current liquid assets (no retirement assets included), I could continue saving at my current rate for only 3 more years and be a (inflation adjusted) millionaire by age 60 (assuming I never touched the money during that time of course). That's a very powerful thought. I'm having some fun with this notion. Thank you. :)

[flaskandpen]

Thank you for your response flaskandpen. I think my retirement expenses may be a little on the high end.

@ormer player: Amazing! I never thought this through entirely. So naturally I had to do the math immediately and assuming a 7% return (average return after inflation of US equities for the past like 80 years or so) and my current liquid assets (no retirement assets included), I could continue saving at my current rate for only 3 more years and be a (inflation adjusted) millionaire by age 60 (assuming I never touched the money during that time of course). That's a very powerful thought. I'm having some fun with this notion. Thank you. :)

(I’m Flask and Pen; made a money-focused profile & changed my name to Frugal Fuyanger based on where I live.) You’re welcome, and WOW!! That’s amazing re: the three years.