Please help with my fear of money -- and retirement plan. [Long Post]

[QueerBlackMustachian]

I want to start off by saying that I would like folks to assist me without judgment. Of note, I have a fear of money. I have a fear of making money, a fear of spending money, a fear of letting go of money, and a fear of using money for anything other than basic necessities and to pay the bare minimum on anything (including lines of credit).

Me:

I’m 30 years old and I didn’t think I would live to make it to 30, but by 27 I realized that I will (more on that someday!). I’m just happy to be alive. I started saving when I got my first job out of grad school (at 27). To this end, I've been spending the last four months reading, listening to podcasts, and watching videos on everything I can on money, personal finance, retirement, and financial planning. I have had poor financial literacy growing up, and I have also been bad about educating myself on this topic until now. I learned about FIRE over the summer. And it’s strange because for the past couple of years, I have wanted to retire early (my desire is to retire at 45 years old) but never thought that that it’s an actual goal until I landed on a Reddit forum that introduced me to this community of amazing folks that follow a friendly cult and call themselves mustachians. 

Why I want to retire early:

1.   Adventure. After so many years of being in the academy (9 years total!), and thinking that my life would be capped at 30 years of age, I want to have some sense of adventure. I’ve been to three countries in the last two years, and would love to expand that. Thinking realistically, I have a career that doesn’t allow for that. I don’t hate it terribly though. I get vacation days, but I’m more apt to spend it on a stayaction or to not take the days at all.
2.   For some “lazy time.” This body has kept score of so many woes, but I’m thriving in it. Thank God. I would like some respite after so much of the emotional, psychological, and physical setbacks I have taken. Lazy time looks like gardening, learning a new language, reading, spending quality time with my mom, and visiting my mentors who will definitely be retired by the time I turn 45.
3.   To be present for my kids. My mom has worked the same job for the past 15 years, six days a week – raising her kids, and raising other people’s kids. She’s an amazing, kind, and generous person, but so much of my fear to money is attached to the poverty I grew up in. Her long hours (she would come home at 10PM on most evenings with a 90 minute commute each way) rarely made it possible for us to engage in the way we do now. I see her mainly on Sundays and stay at her place on some weekdays to hang with her. I don't want this life during parenthood. I want to be present with my children until they leave the nest – if that’s what they decide to do.
4.   To give my kids (some of) what I never had.  I have been supporting myself since I was 14 with summer gigs and jobs after school. Even after leaving home at 18, and while supporting myself through college, I would send money home. Poverty reminds you that one of two things happens with your money: You either give it to support your family, or it will be taken away from you (sometimes through guilt). I refuse to let that happen with my kids. I want to offer my children their own luxuries – letting them work for and keep their money, while allowing them to watch from up close how their dad navigates personal finance in a healthy way. I also want to be able to pay for their college.
5.   Giving of myself. I love giving of myself. This includes giving through time, skill, or making connections. I would love this to be a part-time thing for me during weekdays in early retirement; perhaps building homes, grant writing, supporting a campaign through a temp job, or serving as a volunteer staff person during the week at my church. 
6.   To give money. Part of my early retirement plan – the 4% withdrawal – is to make giving money a function of my annual withdrawal.

To tie this together…

I have lofty long-term financial and personal goals, and I would really appreciate it if folks can support me with ideas on how I can get to retirement by 45 and rid myself of this fear.

Long-term Financial/Personal Goals:

1.   Adopt two kids. I will do this through foster care by age 35; ideally, infants or toddlers.  I’ve been single my entire life, so I don’t expect to have a life partner – and it’s not something I’m actively pursuing. So, we should assume one income.
2.   Own a home. At 45 (or by 45), I would like to own a home. In my research, I’ve read that one should not buy a home more than 3 or 4x their income. So, my ideal mortgage would be $300k and I would like to put down 20% to avoid PMI.
3.   Get rid of student loan debt. I have a total of $120,000 in student loan debt which continues to accumulate interest. If I stay in the government sector, this will be forgiven at age 38 with PSLF. I will face a tax bill, no doubt.
4.   Invest in taxable accounts.
5.   Early retirement at 45 with $1,500,000. I spend about 41,000 a year on self – rent, utilities, entertainment, meals, giving, co-pays, etc. Using the 4% formula that would be $1,025,000 over my lifetime, but I would like that raised to 1.5 so I can give more to charities and afford quality healthcare and education for my kids. 
6.   FICO score to 800. My FICO score is at 600 currently for the dumbest reasons, which I will highlight later in the post.

Financial situation:

I currently make $100,000/year. I do not get overtime.

Monthly expenses:

Rent: $1150
Utilities: $75 (on average a month)
Cell: $91/month
NYT subscription: $8
Therapy: $130/month
Credit card 1: $25 (min. only)
Credit card 2: $25 (min. only)
Entertainment: $150 (movies, eating out, plays, concerts, Groupon activities)
Groceries: $130/month (until October of this year, I averaged $600 a month on eating out FOR THE PAST THREE YEARS and I cut this out by making my own meals)
Spotify: $9.99
Scribd: $9.99
Two life insurance policies: $46.96
No Netflix
No car (commuter city)


Debts:
•   Student loan debt: $120,000. I’m paying $400/month in interest only -- never paid principal.
•   $934 in credit card debt.

Savings:
•   Pension: $241.80 (6.28% annual; I’ll be vested by 37)
•   401k: $88.33 (2.5% annual; I have about $8,000 in three years at 2% annual return)
•   457:  $88.33 (2.5% annual; I have about $8,000 in three years at 2% annual return)
•   $42,000 cash savings (saved over three years)

Considerations:
•   Take home pay is about $53,000 (factoring in prescription rider, 401k, 457, commuter card, health plan, and taxes).
•   Mom will be retiring at 62 without any savings -- except social security. I’m fortunate because my siblings will also be supporting her. We figure about $800/month split between three of us will help her make ends meet until her full retirement age. My sister is building a home for her in her native homeland, so housing will be taken care of. The cost of living there is very cheap.
•   I donate about $2,500 - $3,000/year. I will actually like to raise this to about $5,300/year to reflect 10% annual donation post-taxes.
•   Support for family (mom, siblings) has been about $1,500 this year.
•   Based on the career trajectory of folks who have been in the same career I’m in, I can expect to make $150k - $170k by 40. But I would like to assume that it’ll be $130,000 by 40 because life throws curveballs.
•   I want to raise my credit score, the challenge is the fear of taking on more debt. I currently pay only interest in the credit cards. My score went down 61 points last month because I don’t pay in full and continue to use my credit card like it's some debit card. 

My questions:
1.   Since PSLF kicks in at 38, should I still attempt to aggressively tackle the debt before then?
2.   Do I invest more in 401k/457?
3.   Do I open ROTH accounts?
4.   What would taxable investing accounts look like? I’m deathly afraid of investment accounts. I’m trying to alleviate this fear of losing all of my money.
5.   I have a low deductible health account (and do need it), should I still get an HSA?
6.   Do I begin 529 accounts now?
7.   I spend $47/month on two life insurance policies (one for 10k another for 15k). Do I cancel?
8.   Is it “wise” to donate money given that I want to retire at 45?
9.   Is 45 a possible retirement age?
10.   Is $1.5 mil realistic?

[MDM]

QBM, welcome to the forum.

Regarding your questions,
1.   I defer to others more familiar with PSLF.
2&3&6.   See Investment Order.
4.   See Three-fund portfolio - Bogleheads for a variety of reasonable choices.
5.   You can't get an HSA unless you have a high deductible health plan (HDHP).
7.   Yes.  Until you have kids, for whom would you need to replace your earning power?
8.   Very much a personal choice.
9&10.   What do the simple Time to FI calculation in the case study spreadsheet and/or more sophisticated ones such as in Best and/or Recommended Retirement Calculator - Bogleheads.org tell you?

[mozar]

Hello,
I like your handle! I'm sorry you've been through so much. I grew up in a place where several of my friends were murdered so I know what it's like to be surprised to be alive!
The Book "The body keeps score" helped me so much to work through the trauma I had growing up.

There are a lot of discussion here about the benefits/costs of PSLF. So scroll through or do a google search of the forum.

Where do you want to live? You should be pretty sure you will not move for at least 5-7 years for it to be cost effective. You can also move to a place that has cheaper houses. You definitely don't need to spend 300k just because some article said so.

Pay off your credit cards first and don't start funding college until your kids are living with you. Also max your 401k (18k a year)
It might help you to learn about what the stock market is, how it works, and the history of it so you are less afraid of it.

[SwordGuy]

I want to start off by saying that I would like folks to assist me without judgment. Of note, I have a fear of money. I have a fear of making money, a fear of spending money, a fear of letting go of money, and a fear of using money for anything other than basic necessities and to pay the bare minimum on anything (including lines of credit).

Damn, but that must keep your mental space really busy!   

Keep learning and you'll find that most of those fears should either be tossed in the dustbin or be marked down as mere concerns, not fears. 

Personal finance isn't all that complicated.  Where people get messed up with it is when they bring mental baggage into the equation and do foolish things because of that.

As you learn, just do it.   After awhile it will become routine.

I’m 30 years old and I didn’t think I would live to make it to 30, but by 27 I realized that I will (more on that someday!).

Is this based on a known medical condition or just a debilitating feeling that would be the result.  I made friends with someone and discovered they had the latter issue.    After a year or so of dithering about the FI info I gave him, he just decided to give it a try.   3 years later he's happy, full of purpose, with attainable goals that are well beyond anything he ever dreamed of before, and happy.  Changing his actions changed his attitudes as he learned "this stuff works!"

1.   Adopt two kids. I will do this through foster care by age 35; ideally, infants or toddlers.  I’ve been single my entire life, so I don’t expect to have a life partner – and it’s not something I’m actively pursuing. So, we should assume one income.

God bless you for doing this.   If I became Emperor of my country the first thing I would do would be to make adoptions inexpensive and the typical adoption process fully resolved within 6 months.

As for not expecting to find a partner, prepare to be surprised.  Now that you're moving forward with actionable plans, you'll find that attitude infects other parts of your life, too.   You'll become more attractive as your self-confidence increases.  As your fears evaporate or drop down to mere concerns, you'll be more pleasant to be with.

I'll give you a piece of advice that worked for me.   I put some real thought into what kind of woman I wanted to marry.  And then, I asked myself, "What kind of person would I want to be that would also be attractive to that kind of woman?"  And then I set out to change myself to become more like that goal.   Worked like a champ, too.

2.   Own a home. At 45 (or by 45), I would like to own a home. In my research, I’ve read that one should not buy a home more than 3 or 4x their income. So, my ideal mortgage would be $300k and I would like to put down 20% to avoid PMI.

Wrong.  The ideal mortgage is a whole lot less than 3 or 4x your income.  That 3x ratio is a "Dear God!  Don't go over this!" guideline, not a "Spend this much, it's great!" guideline.

You'll find your finances are much more secure and your FIRE journey much faster if you can get your mortgage down to 2x your income or less.   

3.   Get rid of student loan debt. I have a total of $120,000 in student loan debt which continues to accumulate interest. If I stay in the government sector, this will be forgiven at age 38 with PSLF. I will face a tax bill, no doubt.

I've read quite a few horror stories about loan servicers screwing this up and people not getting the work credit they should have gotten.   Years worth of credit lost!   If I were in your shoes, I would verify your work credit totals in writing each and every single year.   That way, you can fix any problems while they are easier to fix.

6.   FICO score to 800. My FICO score is at 600 currently for the dumbest reasons, which I will highlight later in the post.

Yep, get that fixed!   

Rent: $1150  -- Can you cut that with a roommate? That would let you up your charitable giving without slowing down your path to FI.  Plus, you'll double (or more!) the number of people you know if you get to meet your roommate's friends.  Your new best friend or lifetime mate could be one of those people.

Cell: $91/month -- Yikes!  Cut that in half, at least.

Credit card 1: $25 (min. only)  -- Pay that shit off.

Credit card 2: $25 (min. only)  -- Pay that shit off.

Two life insurance policies: $46.96 -- You're single, have no kids.  If you have enough that your estate can pay for a funeral so your relatives don't have to, you don't need this.   Unless you have health reasons to believe you would have trouble getting it later in life when you have kids and need it...    Is this term life or whole life?  Get term life.

Overall, your debt and spending is pretty good.

•   401k AND 457: 2% Annual returns???!!  Dear God, what the hell do you have it invested in?   It sounds TERRIBLE.  HORRIBLE.   ROBBING YOU BLIND.   Give us an update with your investment choices in these, with what the funds are and their fees.
•   $42,000 cash savings (saved over three years).   Unless you're in an industry where lengthy unemployment is the norm, that's plenty.  Invest for growth with your new savings.


>1.   Since PSLF kicks in at 38, should I still attempt to aggressively tackle the debt before then?

Not if you know that you're actually getting work credit and you keep it on track.  Though as a taxpayer, I wouldn't mind it if you did. :)

2.   Do I invest more in 401k/457?

Max them if you can.

3.   Do I open ROTH accounts?

If you can get your marginal tax rate down to a pretty low one, I would.

4.   What would taxable investing accounts look like? I’m deathly afraid of investment accounts. I’m trying to alleviate this fear of losing all of my money.

Have you read JL Collins Stock Series?   (Google that phrase and it will pop right up.)  The antidote to fear in this case is knowledge.   Read it.  Then read it again.  Yes, I said "AGAIN".  Then re-read the sections about market crashes.  Your fear should go away.

As for what to invest in, I would suggest Vanguard's VTSMX or VTSAX (depending upon how much money you start out with, VTSMX becomes VTSAX when you've got enough invested).   For more international exposure, I would go with VGTSX or VTIAX (with the same deal on fees as the other two).

But read the Collins stock series first, then you'll know why I recommend it.

5.   I have a low deductible health account (and do need it), should I still get an HSA?

Sure, especially if you can decide where that money gets placed.

6.   Do I begin 529 accounts now?

Hell no.  Unless you've already maxed out all the other tax-sheltered approaches and are also setting aside a goodly amount in taxable accounts, too.

7.   I spend $47/month on two life insurance policies (one for 10k another for 15k). Do I cancel?

Yes.  Didn't realize they cover so little.

8.   Is it “wise” to donate money given that I want to retire at 45?

It's good for your soul.   I have no problem with it.   Good life advice is decide what kind of person you want to be and practice doing what that kind of person would do as early as possible.

9.   Is 45 a possible retirement age?

Hell, yes, for your situation.

10.   Is $1.5 mil realistic?

Yes, it's completely believable if you start as you are and adjust as needed as you go along.   Might do it a bit earlier, might take a couple years more. 


Good luck!

[alyx]

Hey boo,

I just wanna say I see you and you got this. I believe in you. From what I've read, I feel like you're a special person and you're gonna get the things you aspire for!

[bacchi]

Based on your income, projected income, expenses, and TTF (Time 'Till Fire), your plan is very achievable.

To emphasize what Swordguy wrote, in what is your 401k/457 invested? At 2%, I assume it's a bond fund.

You've GOT to invest more in the market (Total Market Index or S&P 500, as recommended). Write out an IPS (Investor's Policy Statement). The market will go down, and probably in a year or three, and you need to stick to this plan.

[Rob_bob]

Not about you but your mom.  Does she realize she will reduce her monthly social security income by about 25% by retiring at 62, and that reduction will be for the rest of her life?

[Tass]

You sound resilient and good-hearted. I wish you luck.

First, I got over my fear of the market primarily THROUGH the fact that the goal is to retire early. Like others have said, read the JL Collins stock series, and it will help you realize the market always goes up eventually. If the market crashes right as you're planning to retire and you have to work an extra 2 years to make up for it, you're still looking at 18 years earlier than standard. And that's the worst possible case. It's more likely that growth over time will push you toward your goal faster than you expected.

The other thing that helps me with that fear is that I'm in a Target Date Index fund instead of proper index funds. The latter are more efficient, but the Target Date funds make it impossible to screw up your allocation. Choose a target date for when you turn 65, not your actual target date - this will help you grow faster. You can absorb the risk because you will have the flexibility to work longer if necessary. Once you get close to FIRE you can switch to something more conservative.

Great work changing to cooking your own meals. I would put a higher priority on paying off your credit card debt, depending on their interest rates, which I don't think you mentioned. Are you still accumulating debt on these cards? If so, you need to cut them in half with scissors and switch to a proper debit card. If you have spending under control, you still need to be focused on paying more than the minimum each month. The only exception is if this is at a 0% or other very low interest rate.

Related to that, I have argued in favor of giving to charity on the way to a FIRE goal in the past. @Sailor Sam and @englishteacheralex have also discussed this in detail. Others make strong arguments against. HOWEVER. I do not believe you should be giving to charity while you are still in consumer debt. While you are in debt, all of your spending is at an interest rate. You shouldn't borrow money to give it away; you need to ensure your own stability first. I would focus on paying back your credit cards, never carry a balance again, and then assess your charitable contributions. I talked about my outlook on it here, if you're interested: https://forum.mrmoneymustache.com/journals/resolving-dissonances/msg2078384/#msg2078384

Finally, my family includes several children adopted from foster care as of this year. I think it's an important way to "give back," for lack of a better phrase. My siblings were adopted as kids, not infants, though. Anyway, I'm happy to discuss it if you're interested.

[Sailor Sam]

Related to that, I have argued in favor of giving to charity on the way to a FIRE goal in the past. @Sailor Sam and @englishteacheralex have also discussed this in detail. Others make strong arguments against. HOWEVER. I do not believe you should be giving to charity while you are still in consumer debt. While you are in debt, all of your spending is at an interest rate. You shouldn't borrow money to give it away; you need to ensure your own stability first. I would focus on paying back your credit cards, never carry a balance again, and then assess your charitable contributions. I talked about my outlook on it here, if you're interested: https://forum.mrmoneymustache.com/journals/resolving-dissonances/msg2078384/#msg2078384

Hi @QueerBlackMustachian, look how well the bat signal works! Charity is indeed one of my favourite topics, and I expect @englishteacheralex, will also check in.

Unlike @Tass, I chose to give to charity even while carrying consumer debt. I've been donating at least 10% of my net income for upwards of 14 years. The first 5 years I still had student loan debt, though I never had credit card debt. And I've only ramped up my giving since then. This year I'll be donating closer to 20%. My charitable ways will certainly delay my FIRE timeline, but giving of myself is an important part of my personal moral code.

You can see from the 180° between my answer and @Tass's answer, charity is one of those personal choices that even the MMM zeitgeist can't fully answer for you. If you want to read more into it, try pasting site:forum.mrmoneymustache.com charity into google.

I'm assuming the queer in your username is NOT an indication of just being a little peculiar? I'm also gay, which I shouldn't matter in this enlightened world, but still does. I'm not black, but I did serve active duty during DADT, and I know how to keep it tight when surrounded by a hostile mainstream. Welcome, brother. Love is deep as the road is long.

[FLBiker]

Just want to say -- anxiety around money is normal, and (for me, anyways) was actually "useful" in the sense that I've always lived well below my means.  That said, it feels lousy and it is absolutely possible (and much more enjoyable) to be frugal without the anxiety.

Also, 457s are awesome for early retirement.  If you can't max both it and the 401K, max the 457 first.

This is a great community and 100K is a tremendous salary.  You're doing great!

[SunnyDays]

There's a great book called "It's Your Money - Becoming a Woman of Independent Means" by Gail Vaz-Oxlade (Canadian) that talks about various Money personalities and how to manage your money with that in mind.  Based on your post, you're likely a Depriver, but might be an Avoider.  Check it out - lots of good info there.  It applies to guys too!

[BicycleB]

Hi @QueerBlackMustachian, I love the way you laid out your key asks and all your questions. I think you're likely to achieve everything you want, though with a few years' variance re timeline.

Re judgment - as a fearful person whose actions are more defined by fear than I want to admit, I feel you on the fear factor. If I had expertise on overcoming it, I would share. In other words, no judgement! That said, the actions you contemplate in your plans and questions are excellent. Unless you request otherwise, I will assume that you will overcome the fears and act wisely.

Gut responses:

How you got to 600 credit score is your story, but as one poster mentioned, resolving it something you can and should do. From experience (had an episode in 600s, now 780-810 depending on which agency you look at), you can do this. The main factors in resolving it are, in order as I understand them: 1) establish communication with all creditors 2) pay timely going forwards 3) get debts down to less than half of available credit. Therefore you don't need a lot of cards to improve it, but you do need to pay down the ones you have, at least to half or less of their credit line. I'd do this before increasing payments to retirement accounts. With your income and expenses, you should be able to do this.

Re health, not thinking you would make it to 30 raises questions in my mind. I don't want to pry, but so you know what one reader thinks of, I am unsure whether you thought you'd get shot in your neighborhood or die from AIDS or commit suicide or you have an ongoing unspecified issue or it was a fear without specific cause. If you have and would like to share about any particular health influence on your lifespan, all ears here in order to understand for planning purposes; otherwise, I will assume you are healthy and will achieve a normal lifespan, aka 70 to 90 years. If being your fan helps, I hope you will hit 90 or above!

Re charity, agree that some charity now is reasonable. Your choice - longer until FIRE, but so what? You'll be fine, there's no need to exclude your giving desires from current spending. Just learn from the FIRE calculators other posters recommended, and make a plan you feel is balanced. Like you're already doing... one or two more iterations of planning and you'll be set, I suspect. Good work!

Re PSLF - I have read very few people get repaid by this. Please check the program criteria in detail to determine whether you truly qualify. If you do not, then pay off debt as as possible within the suggested repayment order that the other poster linked to. (Just my suggestions - forgive me tone, it's just how I write).

Re helping family - I love your plans and your approach.
 

[englishteacheralex]

Hi! Yes, I strongly believe in charitable giving no matter what state one's finances are in. If you have anxiety surrounding money, one of the best counterweights to money fear is charitable giving. Habitual giving trains one's soul to stop thinking of money as a fortress against misfortune or an end in and of itself. We don't give because various charities need the money, we give because we need to get rid of money's hold on our soul.

As far as the PSLF program goes, my husband came into our marriage with $45k in student loan debt. He works for the VA and should be a shoo-in for the program. We did the math and we come out around $10k ahead if the program works out for us in 2020. He redoes all the paperwork every year, so everything should work out, but in case it doesn't we have the amount we would need to pay the debt in full earmarked in cash so that we can just pay them off should our gamble not work out. If that happens we will have lost some money in interest and it would have been better to have just paid them off as quickly as we could have.

We see it as a gamble.

As far as 529s go--get a Roth IRA. Serves the same purpose but much more versatile. 

[QueerBlackMustachian]

QBM, welcome to the forum.

Regarding your questions,
1.   I defer to others more familiar with PSLF.
2&3&6.   See Investment Order.
4.   See Three-fund portfolio - Bogleheads for a variety of reasonable choices.
5.   You can't get an HSA unless you have a high deductible health plan (HDHP).
7.   Yes.  Until you have kids, for whom would you need to replace your earning power?
8.   Very much a personal choice.
9&10.   What do the simple Time to FI calculation in the case study spreadsheet and/or more sophisticated ones such as in Best and/or Recommended Retirement Calculator - Bogleheads.org tell you?

Thank you for these great resources. I appreciate you! Definitely going to look into them.

[QueerBlackMustachian]

Hello,
I like your handle! I'm sorry you've been through so much. I grew up in a place where several of my friends were murdered so I know what it's like to be surprised to be alive!
The Book "The body keeps score" helped me so much to work through the trauma I had growing up.

There are a lot of discussion here about the benefits/costs of PSLF. So scroll through or do a google search of the forum.

Where do you want to live? You should be pretty sure you will not move for at least 5-7 years for it to be cost effective. You can also move to a place that has cheaper houses. You definitely don't need to spend 300k just because some article said so.

Pay off your credit cards first and don't start funding college until your kids are living with you. Also max your 401k (18k a year)
It might help you to learn about what the stock market is, how it works, and the history of it so you are less afraid of it.

Yes - I was actually referencing the body keeps score when I mentioned that line about my own body. It's so true!

I would love to live in the south -- right now, I'm in the east. The south would be away from family and my networks, but the COL would be so much better. I daydream about it often. I'll see where the Universe takes me.

As far as my credit cards, I'm going to make it a Christmas gift to myself to pay them off completely. My biggest issue is that though the information I'm reading on maintaining a good credit score is sufficient, I also don't know how else I'm going to have lines of credit. I don't have a car, personal loans, or home equity. One of my cards is a secured card; maybe I can continue with that route.

[BicycleB]

As far as my credit cards, I'm going to make it a Christmas gift to myself to pay them off completely. My biggest issue is that though the information I'm reading on maintaining a good credit score is sufficient, I also don't know how else I'm going to have lines of credit. I don't have a car, personal loans, or home equity. One of my cards is a secured card; maybe I can continue with that route.

My non-expert understanding is that as long as you retain a credit card, keeping the card helps your credit score even if you don't carry a balance. Normally you can pay off the existing debt, down to zero, and still keep the account open. That's better for your credit than charging it to the limit and paying the interest, and it's also cheaper - because you're not paying interest!  ;)

Are your existing cards secured, or are they regular revolving lines of credit? Have the card companies given you any reason to think they intend to close your accounts?

[QueerBlackMustachian]

I want to start off by saying that I would like folks to assist me without judgment. Of note, I have a fear of money. I have a fear of making money, a fear of spending money, a fear of letting go of money, and a fear of using money for anything other than basic necessities and to pay the bare minimum on anything (including lines of credit).

Damn, but that must keep your mental space really busy!   

Keep learning and you'll find that most of those fears should either be tossed in the dustbin or be marked down as mere concerns, not fears. 

Personal finance isn't all that complicated.  Where people get messed up with it is when they bring mental baggage into the equation and do foolish things because of that.

As you learn, just do it.   After awhile it will become routine.

I’m 30 years old and I didn’t think I would live to make it to 30, but by 27 I realized that I will (more on that someday!).

Is this based on a known medical condition or just a debilitating feeling that would be the result.  I made friends with someone and discovered they had the latter issue.    After a year or so of dithering about the FI info I gave him, he just decided to give it a try.   3 years later he's happy, full of purpose, with attainable goals that are well beyond anything he ever dreamed of before, and happy.  Changing his actions changed his attitudes as he learned "this stuff works!"

1.   Adopt two kids. I will do this through foster care by age 35; ideally, infants or toddlers.  I’ve been single my entire life, so I don’t expect to have a life partner – and it’s not something I’m actively pursuing. So, we should assume one income.

God bless you for doing this.   If I became Emperor of my country the first thing I would do would be to make adoptions inexpensive and the typical adoption process fully resolved within 6 months.

As for not expecting to find a partner, prepare to be surprised.  Now that you're moving forward with actionable plans, you'll find that attitude infects other parts of your life, too.   You'll become more attractive as your self-confidence increases.  As your fears evaporate or drop down to mere concerns, you'll be more pleasant to be with.

I'll give you a piece of advice that worked for me.   I put some real thought into what kind of woman I wanted to marry.  And then, I asked myself, "What kind of person would I want to be that would also be attractive to that kind of woman?"  And then I set out to change myself to become more like that goal.   Worked like a champ, too.

2.   Own a home. At 45 (or by 45), I would like to own a home. In my research, I’ve read that one should not buy a home more than 3 or 4x their income. So, my ideal mortgage would be $300k and I would like to put down 20% to avoid PMI.

Wrong.  The ideal mortgage is a whole lot less than 3 or 4x your income.  That 3x ratio is a "Dear God!  Don't go over this!" guideline, not a "Spend this much, it's great!" guideline.

You'll find your finances are much more secure and your FIRE journey much faster if you can get your mortgage down to 2x your income or less.   

3.   Get rid of student loan debt. I have a total of $120,000 in student loan debt which continues to accumulate interest. If I stay in the government sector, this will be forgiven at age 38 with PSLF. I will face a tax bill, no doubt.

I've read quite a few horror stories about loan servicers screwing this up and people not getting the work credit they should have gotten.   Years worth of credit lost!   If I were in your shoes, I would verify your work credit totals in writing each and every single year.   That way, you can fix any problems while they are easier to fix.

6.   FICO score to 800. My FICO score is at 600 currently for the dumbest reasons, which I will highlight later in the post.

Yep, get that fixed!   

Rent: $1150  -- Can you cut that with a roommate? That would let you up your charitable giving without slowing down your path to FI.  Plus, you'll double (or more!) the number of people you know if you get to meet your roommate's friends.  Your new best friend or lifetime mate could be one of those people.

Cell: $91/month -- Yikes!  Cut that in half, at least.

Credit card 1: $25 (min. only)  -- Pay that shit off.

Credit card 2: $25 (min. only)  -- Pay that shit off.

Two life insurance policies: $46.96 -- You're single, have no kids.  If you have enough that your estate can pay for a funeral so your relatives don't have to, you don't need this.   Unless you have health reasons to believe you would have trouble getting it later in life when you have kids and need it...    Is this term life or whole life?  Get term life.

Overall, your debt and spending is pretty good.

•   401k AND 457: 2% Annual returns???!!  Dear God, what the hell do you have it invested in?   It sounds TERRIBLE.  HORRIBLE.   ROBBING YOU BLIND.   Give us an update with your investment choices in these, with what the funds are and their fees.
•   $42,000 cash savings (saved over three years).   Unless you're in an industry where lengthy unemployment is the norm, that's plenty.  Invest for growth with your new savings.


>1.   Since PSLF kicks in at 38, should I still attempt to aggressively tackle the debt before then?

Not if you know that you're actually getting work credit and you keep it on track.  Though as a taxpayer, I wouldn't mind it if you did. :)

2.   Do I invest more in 401k/457?

Max them if you can.

3.   Do I open ROTH accounts?

If you can get your marginal tax rate down to a pretty low one, I would.

4.   What would taxable investing accounts look like? I’m deathly afraid of investment accounts. I’m trying to alleviate this fear of losing all of my money.

Have you read JL Collins Stock Series?   (Google that phrase and it will pop right up.)  The antidote to fear in this case is knowledge.   Read it.  Then read it again.  Yes, I said "AGAIN".  Then re-read the sections about market crashes.  Your fear should go away.

As for what to invest in, I would suggest Vanguard's VTSMX or VTSAX (depending upon how much money you start out with, VTSMX becomes VTSAX when you've got enough invested).   For more international exposure, I would go with VGTSX or VTIAX (with the same deal on fees as the other two).

But read the Collins stock series first, then you'll know why I recommend it.

5.   I have a low deductible health account (and do need it), should I still get an HSA?

Sure, especially if you can decide where that money gets placed.

6.   Do I begin 529 accounts now?

Hell no.  Unless you've already maxed out all the other tax-sheltered approaches and are also setting aside a goodly amount in taxable accounts, too.

7.   I spend $47/month on two life insurance policies (one for 10k another for 15k). Do I cancel?

Yes.  Didn't realize they cover so little.

8.   Is it “wise” to donate money given that I want to retire at 45?

It's good for your soul.   I have no problem with it.   Good life advice is decide what kind of person you want to be and practice doing what that kind of person would do as early as possible.

9.   Is 45 a possible retirement age?

Hell, yes, for your situation.

10.   Is $1.5 mil realistic?

Yes, it's completely believable if you start as you are and adjust as needed as you go along.   Might do it a bit earlier, might take a couple years more. 


Good luck!

First off, are you some kind of life coach? Every line I read, I kept getting more pumped. Thank you!

This hit me hard: "As for not expecting to find a partner, prepare to be surprised.  Now that you're moving forward with actionable plans, you'll find that attitude infects other parts of your life, too.   You'll become more attractive as your self-confidence increases.  As your fears evaporate or drop down to mere concerns, you'll be more pleasant to be with." I'm placing that quote in my quotes pad; particularly because, as much as I would like a partner, I feel my chances diminishes as I age. It doesn't make me sad (I do date), but the vision of a modern family does source through my head sometimes.

I'm going to heed your call on cutting the cell phone and cutting the life insurance policies (calling tomorrow). I've looked at MetroPCS and Republic Wireless.

Thanks for the book suggestions. I looked through Goodreads and the books look fantastic.

Based on your knowledge of the markets, how would you suggest I invest my 401k/457, and a ROTH? I'm on target funds -- 2050 -- because I was told that it's safe, but the returns are weak.

[QueerBlackMustachian]

Hey boo,

I just wanna say I see you and you got this. I believe in you. From what I've read, I feel like you're a special person and you're gonna get the things you aspire for!

That "boo" warmed my soul! Thank you for the kind words.

[QueerBlackMustachian]

Based on your income, projected income, expenses, and TTF (Time 'Till Fire), your plan is very achievable.

To emphasize what Swordguy wrote, in what is your 401k/457 invested? At 2%, I assume it's a bond fund.

You've GOT to invest more in the market (Total Market Index or S&P 500, as recommended). Write out an IPS (Investor's Policy Statement). The market will go down, and probably in a year or three, and you need to stick to this plan.

Do I do just shift the allocation of my portfolio? Is it guaranteed that I will get a better %? I often read about annual returns averaging 7% -- and I'm like, I'm way down with the safest choice.

[QueerBlackMustachian]

Not about you but your mom.  Does she realize she will reduce her monthly social security income by about 25% by retiring at 62, and that reduction will be for the rest of her life?

I don't know if we have any other choice. It hurts to think like that, but we'll supplement her income as much as we can.

[ElleFiji]

I got the queerio secret handshake batsignal.

Charity and supporting family are hot topics here. This is my first year hitting 10% on charity and it was kinda a mistake. But a happy one because now I can do it on purpose next year! Supporting family and starting a family I'm also 119% behind. And my mama couldn't work past her late fifties. It probably hurt her pension, but so did the drop in income that she took to have snotty nosed brats. I'm budgeting for her primary need to be my time and financial freedom to give her that time. You're budgeting money. It's all good.

I'd pay off the credit card and look at the rent vs Buy arguments now, before you're ready to buy.

I'd also stick to your new budget by asking yourself if x is more important than starting a family, or more important than building the life you want.

I'd also avoid befriending me because I'm an enabler. You've got this.

[BicycleB]

Not about you but your mom.  Does she realize she will reduce her monthly social security income by about 25% by retiring at 62, and that reduction will be for the rest of her life?

I don't know if we have any other choice. It hurts to think like that, but we'll supplement her income as much as we can.

Fwiw, actuarially the amount of income from early draw and late draw (age 62 vs age 70) are exactly the same, assuming that she lives to the average American age. In other words, her expected dollars received are the same, just spread out differently. If she dies early (racism/stress/medical disparities/luck/who knows), early draw is better anyway. "Worst" case financially is she outlives the actuarial calculation...but that's the best case because she gets extra years of life, including support from wonderful children. Do whatever you like, but IMHO don't feel bad about starting her Social Security draw ASAP. There are other things to worry about in life. Like letting her know she's loved, and that her son is prospering and making her proud. Which you surely are.

[Beach_Bound]

A lot of people have been covering the congratulations and motivational side of things. I'm going to have a more numbers-focused strategic approach that may feel harsher than most of the comments so far, but first I want to compliment you on having such clarity about your goals. You sound very giving, motivated, and self-aware, and I'm sure you'll make great progress towards anything you choose to focus on.

Now on to the facepunches… Pay off the credit cards! Now! Immediately! You don't need to carry a balance to improve your credit score. Having the card, using it for monthly purchase, and paying it in full every month counts as having a line of credit. A secured card is fine for now, though if you can get a card with a higher credit limit, your credit utilization will be lower and your credit score will increase. But first, get very comfortable with paying your card in full every month.

Also, your spending and savings picture looks incomplete. Your take home pay is $53k annually. Your list of monthly expenses totals $1851, or a little over $22k per year. In your first post, you say you spend about $41k per year. Part of the reason your two spending numbers ($22k vs $41) don't match up is that you're not including charity, payments to family, or student loan repayment in your monthly expenses. If we add those ($5300 charity, $1500 family, $4800 student loan interest) to the $22k from your monthly expenses, that's close to $34k per year... so still not matching your stated $41k. Your spending picture needs to get a lot clearer.

Now onto your goal of saving 1.5 million in 15 years: Try playing around with a simple savings calculator like this one https://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx. If I put in $58k as the initial amount ($42 cash savings, $8k 410k, $8k 457) and play around with the monthly contribution, you'd have to save $4500 per month to reach 1.5 million in 15 years, assuming 6.5% interest. You're currently saving $5k per year in your 401k and 457, and maybe $12-19k per year after tax.

Or looking at this another way, consider your saving rate. Here's an article linking your savings rate to your working years http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement. If your savings rate is 35% (( $5k pre-tax + $15k after tax ) / ($53 take home pay + $5k pre-tax savings)), you'll need to work 25 years to save enough to retire on the 4% rule. This still puts you way ahead of most people! But to retire by 45 when you're starting at 30, you'll need to save over half of your income.

I'm ignoring the pension because it's outside your stated goal of 1.5 million in savings. Depending on how much the pension will pay and when, your 1.5 million target could be adjusted lower, since you can use the pension to support part of your spending.

Most importantly, early retirement and the 4% rule rely on investing your money in the stock market, in broad market index funds. Like others have said, re-read the JL Collins stock series until the thought of having all your money in cash provokes more anxiety than the thought of having it in the stock market.

Finally, to answer your original questions:

1. No, interest only sounds like the logical thing to do, assuming you are very very sure that PSLF will apply in your case

2/3. Yes to 401k/457, no to Roth. Roth accounts allow you to contribute money after tax, and then withdraw it tax free. 401k's allow you to contribute money before tax, and then it's taxed on withdrawal. If you expect your tax bracket to be lower when you contribute than when you withdraw, Roths make sense. If you make $100k, you will most likely pay more tax now compared to when you withdraw, so 401k/457 make more sense.

4. Read the JL Collins stock series :)

5. No

6. No

7. Yes - life insurance is for replacing your income for your dependents. You don't have dependents yet.

8. Personal choice. Consider that supporting your family and adopting are also forms of charity, and you may feel comfortable reducing your donations to other causes such that your total contribution meets your goals.

9/10. On your current path, no. But you have plenty of ways to change that! Consider posting a case study if you want a lot of feedback on how to reduce spending.