Author Topic: 23 Years old, looking for a long-term plan  (Read 4034 times)

Vitai Slade

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23 Years old, looking for a long-term plan
« on: October 19, 2012, 03:47:28 AM »
Hey there Mustachians!

Just but a week or so ago I found the MMM blog and community and have been absolutely hooked on his stuff ever since. Little did I know that I was already practicing some of his techniques and ideas on my own which only made it easier to glide right into this new lifestyle mindset. Though I've had a bit of a rough start to life, it's recently gotten much better and is heading in the right direction now. I'm still young and just seven months ago landed my dream job as a poker dealer in a local cardroom 15-20 minutes drive away from where I currently live. It fits the bill perfectly for a MMM career to the nose. Low stress, decent wage, little fear of losing the job, and lots of autonomy. That's of course not to mention that I grew up on cards and love being around it. I'm currently trying to figure out how to retire as early as possible with constant money streams to keep me going until the day I die.

My current retirement goals include a lot of traveling (I try to do a lot now as well), and I know that can get quite pricey, but I really would like to go places, visit countries, learn about different cultures, and experience all there is to see and do - lots of vacation. I don't desire super-fancy cars or a lot of material things, but I would like a nice 3br/2br home to call my own, a DECENT car to get me from place to place when needed (the one I have now is a bit run down and I will have to replace it within the next few years... it's also a gas guzzling Ford Explorer), I would like to splurge on the MMM lifestyle and have a nice motorcycle as I absolutely LOVE to ride (I have a decent one now, paid-off), and I have a couple other miscellaneous desires and hobbies that require some money like paintball and such.

My income right now is approximately $50,000-$60,000/year. I give a range because I do work hourly and rely on tips from players. That being said, there is virtually zero chance of me getting any sort of raise no matter how long I work at my job. I average about $3,500-$3,600/month in take home pay right now.

My expenses divided per month are as follows:

Rent: Approximately $480-$500 including overages (electric, cable, internet, water are included)
Phone: $49
Car insurance: $84
Motorcycle Insurance: $0 (In Florida it is legal to not have insurance on a motorcycle provided helmets are worn)
Car/Motorcycle Registration: $12.50
Xbox Live Membership: $4.17
Lifetime gym membership: $4.17
_______________________________________
~$654/mo. + any food, entertainment, gas, misc.

I have zero credit card debt as I like to buy everything in cash. My assets include (nothing on credit/loan): my car (Approx. Value: $1,000), my motorcycle (Approx. Value: $3,000, a 3D HGTV (Approx. Value: $1,000), and a couple other things little things like a PS3, Xbox 360, iPad 3, an old laptop, and a fair amount of paintball gear (gear adding up to about $1200 or so in value) among the basic necessities like clothes and such.

I do have a ROTH IRA retirement account which I just put the full amount of $5,000 this year in. It's current value went down, sadly to about $4800, but it's in relatively strong long-term stocks. I plan to contribute the full amount every year to this account. I am not currently eligible for my employers 401k as I do not have 1 year under my belt yet, but I plan to max that out every year (or rather, what they allow me to put in percentage-wise of my income) as soon as that option becomes available to me. I try to save a thousand or two every month in regular savings to contribute to these retirement accounts and possible investment options. Right now though I only have $1,000 in savings as I pulled a big chunk just this month to max out my ROTH. I also have a vacation account that I contribute $500/mo. to. This money I set aside strictly for vacation and only for vacation. I cannot use this money for bills or anything other than enjoyment for my trips.

My ultimate goal would be to replace my current income ($50,000-$60,000/year) with other income sources that take little to no effort at all on my part. I'm quite sure that I can take all the trips I want (within reason) to wherever and live nicely for the rest of my life on that income (or the equivalent of that income as inflation rises).

I'd kill for MMM's personal advice on my plan, but I'm more than happy to accept advice from those thoroughly trained in his ways as well. Thanks in advance!
« Last Edit: October 19, 2012, 03:57:30 AM by Vitai Slade »

thrifted

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Re: 23 Years old, looking for a long-term plan
« Reply #1 on: October 19, 2012, 11:04:52 PM »
I have good news for you. MMM does actually reply to emails. So feel free to shoot him one that lays out income, all (you need to include food, entertainment,etc.) expenses and savings -total and monthly - and a specific question like should I put my savings in a vanguard index or an ing savings account?


TomTX

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Re: 23 Years old, looking for a long-term plan
« Reply #2 on: October 20, 2012, 05:55:01 AM »
Sounds like you're doing pretty well. I can understand replacing a $1,000 car with a newer used car at some point.

The real key when you get your first "real" job or a raise is to keep from letting your lifestyle expand to meet your new salary.

If you want to travel a lot - I suggest not buying that house until you're mostly done traveling for awhile. You may well find another place you would rather live. Transaction costs on a house is stupidly high (think 10% of the selling price going *poof*!)


arebelspy

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Re: 23 Years old, looking for a long-term plan
« Reply #3 on: October 20, 2012, 08:17:36 AM »

My expenses divided per month are as follows:
...
~$654/mo. + any food, entertainment, gas, misc.

So, any idea what your total expenses are, not just fixed?

Fixed expenses is a (more or less) useless number except for making a floor in emergency (but not even then, because it doesn't count food and does count ones that could be cut in case of job loss or whatever).  Total expenditures is what is relevant 99% of the time, IMO.

If not, start tracking ASAP.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

frugalcalan

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Re: 23 Years old, looking for a long-term plan
« Reply #4 on: October 20, 2012, 11:20:27 AM »
It's great that you found a job you love!

Have you thought about being a dealer in a cruise ship? Then you will get paid to travel.

Catbert

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Re: 23 Years old, looking for a long-term plan
« Reply #5 on: October 20, 2012, 12:46:44 PM »
I'd move closer to work to stretch out the life of your car.  If possible ride a bike to work (I realize you likely work nights so that might not work) or your motorcycle to save on gas.  Not sure I'd skip motorcycle insurance.

Vitai Slade

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Re: 23 Years old, looking for a long-term plan
« Reply #6 on: October 21, 2012, 04:14:39 PM »
I have good news for you. MMM does actually reply to emails. So feel free to shoot him one that lays out income, all (you need to include food, entertainment,etc.) expenses and savings -total and monthly - and a specific question like should I put my savings in a vanguard index or an ing savings account?

Thanks for the info on this!

Sounds like you're doing pretty well. I can understand replacing a $1,000 car with a newer used car at some point.

The real key when you get your first "real" job or a raise is to keep from letting your lifestyle expand to meet your new salary.

If you want to travel a lot - I suggest not buying that house until you're mostly done traveling for awhile. You may well find another place you would rather live. Transaction costs on a house is stupidly high (think 10% of the selling price going *poof*!)

Since when is 50k-60k/year not a real job? I don't know about where you live, but here in FL it's stupid hard to find something that even pays that high without at least a masters degree.

I did learn to not let my lifestyle increase (too much) in regards to the increased income though. That's how I've been saving so much of my income each month. I'm forcing myself to live pretty much on the pay I was making before I landed this new job.

The house idea is a good one. I don't think I'll ever change jobs and therefore will never move out of this city (at least for a really long time), but buying a house would be a very bad investment for me at this point - Interest alone would be more than my current rent. I might try to save up and just buy the house outright when I can afford it. Thanks for the advice!


My expenses divided per month are as follows:
...
~$654/mo. + any food, entertainment, gas, misc.

So, any idea what your total expenses are, not just fixed?

Fixed expenses is a (more or less) useless number except for making a floor in emergency (but not even then, because it doesn't count food and does count ones that could be cut in case of job loss or whatever).  Total expenditures is what is relevant 99% of the time, IMO.

If not, start tracking ASAP.

I figure food, entertainment, and gas to pile up to something like $500? Maybe $120 or so on gas, $300 on food, and $80 on entertainment a month? I've made a few random big purchases lately that could have gone to savings, but I don't count those as part of a regular budget. I can always cut those out if necessary. They are usually things that involve a new hobby (Paintball, Gym membership, etc.).

It's great that you found a job you love!

Have you thought about being a dealer in a cruise ship? Then you will get paid to travel.

I have actually and though it sounds appealing, it's in general a very terrible idea. You "travel" to the same places every week and they don't have to follow a lot of the U.S. laws regarding overtime pay, 40hrs./week, etc. Not really a good gig to get into.

I'd move closer to work to stretch out the life of your car.  If possible ride a bike to work (I realize you likely work nights so that might not work) or your motorcycle to save on gas.  Not sure I'd skip motorcycle insurance.

I am actually already doing this as much as possible. It's great advice. During the spring/fall/summer I will be riding mostly my motorcycle to work (just too cold in winter). Trying to keep good care of the truck for as long as it will run. The only problem with buying motorcycle insurance is that it costs so much (me being 23). After a year of having it, I would have paid off my entire bike value and been able to purchase another one. It's really less of a gamble financially to not have it.

arebelspy

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Re: 23 Years old, looking for a long-term plan
« Reply #7 on: October 21, 2012, 04:47:35 PM »

My expenses divided per month are as follows:
...
~$654/mo. + any food, entertainment, gas, misc.

So, any idea what your total expenses are, not just fixed?

Fixed expenses is a (more or less) useless number except for making a floor in emergency (but not even then, because it doesn't count food and does count ones that could be cut in case of job loss or whatever).  Total expenditures is what is relevant 99% of the time, IMO.

If not, start tracking ASAP.

I figure food, entertainment, and gas to pile up to something like $500? Maybe $120 or so on gas, $300 on food, and $80 on entertainment a month? I've made a few random big purchases lately that could have gone to savings, but I don't count those as part of a regular budget. I can always cut those out if necessary. They are usually things that involve a new hobby (Paintball, Gym membership, etc.).

It's easy to say you could cut out expenses, it's another to do it, especially because doing so could affect quality of life, so you wouldn't want to and shouldn't.

On top of that irregular expenses come up. But they should still be accounted for.

Track what you actually spend. It is literally the most important number for early retirement.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.