Hello Mustachians :)
First post here and just wanted to leave an intro thread.
I have been a long time dreamer (seeker) as far as early retirement goes. Fortunately I was brought up in a household where money was never wasted on 'wants', and credit was a no-no. After leaving university I took that to the next level, as after leaving my first job, and starting my second at the best company to work for in my country, I realised that if this is the best then it's not that great.
Every morning that I wake up I smell the fresh air and think about how 9 out of 12 hours of this beautiful day I'm cramped up in an office. So I'm aiming for FI, ASAP.
I have converted these numbers into US$ since most users here I guess are from the US. If anything seems unrealistic, remember I'm in a different country where cost of living is different.
I left university with a post-grad and have been working for just over a year.
At my first job which I hated my monthly cost to company was about $1500. After 8 months I left because I hated it.
I started a new career path. My current cost to company is about $2100. Here is where the money goes:
- $315 goes into a pension. This is paid before tax and is the maximum I can put in. Any interest earned is tax free. It is a company set up thing, and the closest equivalent in the US would be a 501k I guess but the employer doesn't match it. I have no choice in the fund it goes into. It is earning around 7%. Inflation in my country is about 6%. I don't really know what other retirement fund options I have in this country but am slowly researching it
- $200 goes straight to the tax man
- $200 goes to my medical aid/medical insurance (not sure of the terminology in the US). Briefly put, this covers me for visits to the doctor, dentist and optometrist a couple times a year. Generally I haven't paid anything more medical related
- $200 goes to rent. I have a sweet deal, living in a small apartment owned by my godparents. The rent has never gone up and if I left, the lowest I would expect to pay is about $400. I've used several online calculators and as long as I invest (at 10%) what I'm saving by renting instead of mortgaging, the compound interest will outgrow whatever my net worth would have been by mortgaging. Very rare for this to be the case. Awesome situation!!
- $100 goes to gas for my car. I don't pay insurance on it yet as my dad is still paying it. That will change on my 25th birthday when insurance rates will drop due to my age
- $130 goes to groceries, and eating out with friends, lunch at work etc (I make my own lunch 3/5 times per week).I don't pay for dinners though because my dad cooks for both of us for the week on Sunday nights I really need to reduce the expenditure on eating out.
- 12$ goes to 2GB of internet data per month for my laptop and airtime for my mobile phone
- Around $900 is what is left which goes into personal unit trusts every month. This I is likely to earn me 10% and compound nicely. (Note: inflation is 6%). Its mostly in a high equity fund, but I'm planning on moving some to a fund that is mostly property trusts which should also get me around 10% to hedge my risk, since property stocks tend to hold or do ok when the rest of the stock market goes down and vice versa.
I will need about $600,000 for FI and live off the interest, using the 4% rule, and keep living the way I do. T I have about 20,000$ in the unit trust so far, and another 500$ locked into a fixed deposit for about another year. I tend to not take into account that pension fund because that I can only access when I am at least 55 years old.
I am 25 now and I will thus be able to gain FI between 35 and 40 by some simple calculations.
This is assuming I don't get an annual salary increase (but I think I can rely on 7% per annum).
This is also assuming I don't have much higher expenses in the future. I have taken into account the fact that I will soon need to pay car insurance, but my gas price will be lower as I will be trading in and getting a more fuel efficient car. My grocery prices may increase as I rely less on my dad, but I would expect that to only happen in a few years. I am out of the dating game as every girl I've dated since my ex hasn't been stacking up/working out, so that is also an unlikely expense. I cannot own pets in my current apartment so no expenses there.
That's the end of my MMM situation. Quite a long tale but anyway, feel free to comment.
(PS I'm from South Africa.)