You're just getting started in life and you have a positive net worth! That's fantastic! So many people your age have student loan debt giving them a negative net worth. I was one of them, so I speak from experience.
Yes, I was lucky to get a nice easy start without too many pitfalls in my way. But that's just my point. People dig themselves out of these enormous holes and have a huge positive on the other side of it, and yet I'm just barely moving up! I don't get how they are able to move their graphs so much greater than mine.
Your salary will increase over time. You are young. Resist the temptation to inflate your lifestyle each time you get a raise and your savings rate (and net worth) will grow over time.
Unfortunately, no, it won't. I don't work in the corporate world where you get raises. I worked on a tipped wage and those tips are pretty consistent. The only time I'll ever see a raise is when minimum (tipped) wage goes up. I have to account for this lack of growth in my future plan.
I do have one question, are you maxing out (or as close as you are able) your tax advantaged retirement accounts? The tax benefit from those accounts will help accelerate the growth of your net worth. But the main thing will be compound interest as matchewed said-- and that takes time to work its magic. But magic it is, you will be amazed when it starts to happen.
Yes. I maxed out my ROTH last year and this one too already. I plan to continue maxing it out until retirement. It accounts for the money I'll need in the 'early period' of retirement. I also am maxing out my 401k at work with as much as they will allow me to contribute: 15%. Unfortunately, I'll never hit the Government Max, but I'm putting in as much as I can.
The point of saving 50% isn't so you can have a million dollars.
It's so you can have financial independence.
Keep this in mind.
I know this. That's the end goal. I like $1,000,000 because at a 4% SWR, it gives me $40k/year which is what I would like to have in retirement.
OP, have you read MMM's article http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/? If not, this will probably completely change how you view saving for retirement. I think $2,500 a month in savings is a great amount, and if that means a 50+% savings rate as you stated, you'll be retired before 40, assuming no pay raises. If you bank your raises and avoid lifestyle inflation, it will be even sooner. Mustachianism is a marathon, not a sprint. I totally get where you're coming from, but you're doing just fine.
Only read it about twenty times or so. ;) Sadly, no bonuses or raises for me though. As stated, I'm a tipped employee, not a corporate one.
Also note that since you will most likely have a paid off house, your expenses are actually going to be a lot lower than the ~$30K/year you are currently talking about (especially with a 15 year mortgage). Not sure if you are tracking your home equity in your net worth.
Plus, trust what people are saying here. You will be surprised how your net worth increases more and more each year with compound interest. It is not overblown how insane this is. According to my graph I am increasing my net worth ~$60K/year at the beginning of my investing while it will be increasing by ~$125K/year near the end with no change to the amount I am saving.
Yes, my home equity is included in that graph and about $500 of that $2500 in increases number. I'd like for that compounding to happen sooner, but I guess I just have to wait it out for now.
