Author Topic: Break me down, build me back up...please!  (Read 4236 times)

plainguy

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Break me down, build me back up...please!
« on: May 28, 2012, 09:00:13 AM »
First of all, this blog is the holy grail I sought out to discover and MMM is a fucking living legend. Now that I got that of my chest, can a thick, well maintained mustache out there please direct me towards some helpful grooming advice?  I want to retire from "the man" in less than 10 years from now. 

Here is my situation:

-I am a single 27 year old, almost 6 year vested Fed Gov employee waging 94,000 (gross) so after taxes/deductions it's comes to about 4k per month.

-I'm maxing out my Thrift Savings Plan (TSP) this year which currently carries a balance of 45k.  I have 70% in C and 15/15 in the S and I funds.  After reading several posts here I still don't know if I'm socking away too much into TSP. (I also read the article that MMM wrote on how much 401k is too much) 

-I have no debt whatsoever but I do not own a house either. I currently rent for $650/month with utilities included

-I just received a credit card in the mail and have an available credit line of 3k (I had been listening to Dave Ramsey too much and now have to "re-activate" my credit as it was inactive for years, boo!)

-I have a savings of 40k which I just slid into Vanguard 500 Index Admiral Shares (VFIAX).

-I have $1000 emergency fund (kind of pointless!)

-I own a truck (paid 23k cash) KBB value of around 10-13k (sure wish i could hit the rewind button on that one)

I will be throwing a minimum of 65% of my paycheck in the VFIAX every month.   

I am content with retiring at 20k a year.  I know that I have the intensity to save and live a mustachian lifestyle, but I guess I don't know how to crunch numbers! I am bad at piecing the total picture together.  Is there something I can be doing more efficiently to help maximize my early retirement? (i.e. invest less in TSP and more in VFIAX? buy a rental house? keep doing what I'm doing?)  I swear to you that any advice and time you give is MUCH appreciated.  Oh, I almost forgot to add, and I'm sure you guys/girls can relate but my co-workers think I've lost my god-damned mind, haha.







kolorado

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Re: Break me down, build me back up...please!
« Reply #1 on: May 28, 2012, 09:49:00 AM »
I don't have any advice for you because I think you are doing an awesome job! Really really impressed. ;)

plainguy

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Re: Break me down, build me back up...please!
« Reply #2 on: May 28, 2012, 10:05:32 AM »
I appreciate that, it's refreshing to get a compliment like that instead of getting poked fun at by my peers.

arebelspy

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Re: Break me down, build me back up...please!
« Reply #3 on: May 28, 2012, 10:23:09 AM »
You aren't too many years off.  I'd estimate definitely less than 10.

Clarify some numbers for me..

Current investible assets: You have 45k in the TSP, 40K in after tax VFIAX, correct?

Of 4k/mo net, you will save 65% (2600) and spend 1400? (I.e. yearly spending of 16800)

Of your gross, about 1/2 of it is gone (94 gross, 48 net), so how much of that is being invested and how much is tax?
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Mr Mark

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Re: Break me down, build me back up...please!
« Reply #4 on: May 28, 2012, 11:23:20 AM »
You may want to settle on asset allocation strategy and use your savings to add in line with your %'s, but as well as pure stocks [VFIAX] you could add some bonds via a balanced fund like VWELX

Keeping your portfolio simple, low fee, annually balanced is all you need do, and focus more on savings rate and mustashian life style!

velocistar237

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Re: Break me down, build me back up...please!
« Reply #5 on: May 28, 2012, 12:16:55 PM »
I recommend diversifying into a few different asset classes.

I don't know the early withdrawal rules on a TSP. Do you? It would make a difference how much to put in them if you could access them early.

plainguy

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Re: Break me down, build me back up...please!
« Reply #6 on: May 28, 2012, 01:40:50 PM »
Sorry for the late response but here is currently what is being deducted from my paycheck (I'm paid bi-weekly):

Retirement (I think this is for the FERS pension): $44.29
TSP: $859
Social Security: $161
Fed Tax: $500
State Tax: $162
Health Care: $56
Dental: $10
Charitible Contributions: $10
union dues: $28
medicare: $55ntil I figure out whats going on with it.

I'm trying to catch up to my TSP max which is 17k.  My monthly deduction will be lower next year as I got a late jump on it this go around. I will keep it maxed out until I pull the plug. I do have 45k currently in the TSP.

My savings, which was an additional 40k was just put into the VFIAX account last week so It hasn't been reported on my taxes yet.

I really have next to nothing in checkings or savings after reading all the posts here. 

Based on all the help this site has to offer I think I will easly spend less than 16800/year so hopefully I will be able to tighten my savings even further. 

Should I just continue to dump all my savings in VFIAX? I love the idea of simplicity. 

Thanks again for your input!

Oh, I just read that last response and as far as the TSP rule goes, I read that there is some kind of loophole through an annuity withdraw.  If I can get the money out early, do I use it for my total nest egg to live off for good of or do I put it into another retirement account and not touch that until the second half of my retirement? Just wondering what you folks would do if you were in my whiskers...thanks. 






MudHut

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Re: Break me down, build me back up...please!
« Reply #7 on: May 29, 2012, 01:18:13 PM »
I'm a fed employee as well. Would recommend looking at taking a retirement seminar as there are a lot of fed complicated/specific program info that you need to know...TSP is one aspect of this...you may also want to know repercussions of retiring early on your pension and other fed benefits, such as health insurance.  For instance there is a rule that you need to have an annuity to pay the insurance premiums and need to have health insurance the last X years before you retire to keep it into retirement.

When looking for a good seminar, keep in mind that many give a free or low cost half-day seminar as a teaser to get you to buy their retirement planning services. Find a good one that lasts a couple of days that gives you all the info and get it paid for by the agency you work for.  You can even organize a seminar for your coworkers and help them out if there is enough interest in your office.  You may want to find a good financial planner with expertise in federal benefits as well, before you take the step to retire so you are certain your assumptions are correct.  It is very unusual for fed employees to retire with less than 30 years (seems like many here are in the 30-40 range) and the seminars are often suited towards people who are going to retire in a couple years (and are still clueless as to what their benefits will be after working 25-35 years!).  Anyway, a seminar is a good place to start.

TSP is a great place to put your money, it has very low fees on the funds and no cost to trade or reballance your account.  Not a bad idea to have a separate Vangaurd account though--especially as a fund to live off while money is locked up in the TSP before your 59.5  (I believe there are some ways around this that I need to read up on).  When you retire, you can decide to remove all your funds from TSP into another retirement account, get an annuity, or keep it there until you are 59.5 (i think) when you have to start receiving fixed payments.

As others have said, you are putting all your money into stocks (C, S, I, VFAIX). Would read up on asset allocation and consider adding some bonds (F, or other Vanguard Funds) to your portfolios.

You are doing great...wish I was in such a good situation at such a young age.