Author Topic: Reader Case Study - Is early-ish retirement possible?  (Read 12967 times)

Nate T

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Reader Case Study - Is early-ish retirement possible?
« on: September 12, 2014, 01:29:03 PM »
I just recently started my first job out of graduate school as a professor, and am slowly getting my financial house in order after years of terrible decisions. I am still adjusting to the mustachian perspective on things, and could perhaps use some advice from more seasoned participants of this forum. At the moment I am trying to figure out whether early retirement is even an option for me! Even moving to positive net worth would be huge.

Thank you in advance for any advice you may have!

Age: 31, single

Income: Just received salary bump, and about to earn $76,475 before taxes/insurance → roughly $4,222.52 a month after taxes/insurance.

Current expenses:

Expenses have been wildly variable over the past year, but a rough estimate going forward is as follows:

Mortgage: $1,005.00
HOA dues: $305
Property tax: $225 (estimate)
Insurance (car and home): $86
Student Loan: $291
Internet: $54
Cell phone: $84
Gas and electric: $60 (average over the year higher in summer months lower in winter)
Groceries: $250
NYTimes: $15
Hulu: $7
Gym: $38
Restaurants: $70
Alcohol/bars: $70
Haircuts: $36
Miscellaneous expenditures: $200

Total: $2796

Income minus expenses: 4222.52 2796 = 1426.52

Assets:

2004 Prius: KBB says $4,800 but the car has terminal problems so more like $2k

Condo purchased in 2010: $210,000

Roth IRA: $23,423.67

Individual investment account: $10,504.02

Total: $245,927

Liabilities:

Mortgage: $207, 825 at 4%
Student Loans: $93,427 at a weighted average interest rate of 5.48% (note I qualify for loan forgiveness in 10 years time)

Total: $301,252

Specific Questions:

I would like to move to positive net worth as soon as possible, and figure out whether it is possible for me to retire within 20 years.

My questions are as follows:

What kinds of things should I be doing to reduce my expenses and move more quickly to positive net worth?

Starting this year, I am eligible for 403b contributions (employer contributes 7.75%), how much of my savings each month should I direct to this?

Is early retirement possible for me?

I greatly appreciate the information in this forum and any potential help anyone can offer!

Pigeon

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #1 on: September 12, 2014, 01:50:39 PM »
It's not a huge amount, but can you not use the gym at your college for free?

lizzigee

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #2 on: September 12, 2014, 01:58:11 PM »
Damn, just deleted a lengthy reply. Most important thing is to make a start improving your financial situation now, don't procrastinate. Low hanging fruit - haircuts, bars, eating out, NY times, gym. And what's in that misc category - identify your spending there and be ruthless. Also your car is in dire health. Do you actually need a car? If so, start an emergency fund asap with savings from cutting the above expenditure. I'm from NZ so I'll leave it to someone who's more familiar with the situation over there to discuss employer matches and loan forgiveness schemes.

cheapdad

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #3 on: September 12, 2014, 02:04:10 PM »
I buy my booze at SAMs club instead of drinking out at bars.  Spend 25 per month, save 45

Get rid of gym membership and run outside or use school gym

Call internet company at end of contract, threaten to cancel unless you get a better price.

Cancel cell phone, go with republic wireless.  25 bucks a month. Cell your curren phone on amazon.com

Go to walmart and buy hair clippers for 15 bucks and learn to cut you own hair.  Find a friend to make sure the back is straight.  It is actually very easy. I cut my own hair. With clippers, you can't mess up too bad.

Consider moving to somewhere that does not have an HOA.  That 305 per month could equate to years less of work or thousands of dollars worth of a home loan.  When we were shopping for a home, we found that we could afford a 220k home with an HOA OR A 270k dollar home without one. That means more money invested with leverage.  Property value increases by 5% an you end up making more money from a more expensive house rather than throwing money to the HOA. 

Cancel New York Times, they don't have anything you can't get online anyway.

Good luck!

sirdoug007

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #4 on: September 12, 2014, 02:26:31 PM »
Use one of these techniques and get around the NYTimes paywall...

http://betabeat.com/2013/02/5-ways-you-can-still-get-around-the-new-york-times-paywall/

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #5 on: September 12, 2014, 02:41:01 PM »
Ok! Thanks for the suggestions so far!

Gym - Will use the university gym from now on (I've been hesitant because I don't love the idea of working out with undergraduate, but this is just an excuse!).

Haircuts - Will definitely get the clippers. No sense in paying that much for haircuts, I agree.

Cell phone - Looked up the republic wireless option and will switch in Oct. when my contract expires. Thanks!

NYTimes I am hesitant to cancel because I use it for class, but perhaps I can get around the paywall as suggested by sirdoug007.

My booze expenditures are so high because I am currently dating... figuring out how to date in a mustachian way is hard!!

Any thoughts from anyone about saving via the 403b vs. sticking it in an individual investment account? I of course like the tax savings but worry I'll be paying a penalty if I retire early.

unseenstache

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #6 on: September 12, 2014, 02:47:06 PM »
There is multiple ways to avoid penalties if retiring early.   I asked this same question and learned tax advantaged is always better.  I am a noob, so not 100% sure on 403b vs 401k.  Relevant links..

http://www.madfientist.com/retire-even-earlier/
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

TomTX

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #7 on: September 12, 2014, 02:52:13 PM »
Yeah, my biggest WTF? was $36 a MONTH on haircuts. OMG.

Last year I bought some nice Wahl clippers off Amazon with a full set of guards, pro grade motor and a 5 year warranty (IIRC) for $20, delivered. They work GREAT. Not only for my hair, but 2 different friends.

Buy Wahl. No substitute. Amazing value.

I even looked it up for you. It's now $18 shipped (with Prime)

http://www.amazon.com/Wahl-79300-400-Color-Complete-Haircutting/dp/B000JNQSIQ/ref=sr_1_1?s=hpc&ie=UTF8&qid=1410555059&sr=1-1&keywords=wahl+clippers

bacchi

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #8 on: September 12, 2014, 02:56:57 PM »
You're paying $1500/month for housing. Is it a 2 bedroom? Can you get a roommate?

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #9 on: September 12, 2014, 03:00:14 PM »
There is multiple ways to avoid penalties if retiring early.   I asked this same question and learned tax advantaged is always better.  I am a noob, so not 100% sure on 403b vs 401k.  Relevant links..

http://www.madfientist.com/retire-even-earlier/
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

Holy crap! I just had my mind blown. The madfientist article in particular was really useful, thank you! I think maxing out the 403b is the way to go.

You're paying $1500/month for housing. Is it a 2 bedroom? Can you get a roommate?

Yes, a small(ish) two bedroom condo. Definitely I could get a roommate... but boy would that test my commitment to early retirement! You are right though, I really need to consider that as real possibility.

Yeah, my biggest WTF? was $36 a MONTH on haircuts. OMG.

Last year I bought some nice Wahl clippers off Amazon with a full set of guards, pro grade motor and a 5 year warranty (IIRC) for $20, delivered. They work GREAT. Not only for my hair, but 2 different friends.

Buy Wahl. No substitute. Amazing value.

I even looked it up for you. It's now $18 shipped (with Prime)

http://www.amazon.com/Wahl-79300-400-Color-Complete-Haircutting/dp/B000JNQSIQ/ref=sr_1_1?s=hpc&ie=UTF8&qid=1410555059&sr=1-1&keywords=wahl+clippers

Yeah, I'm not going to defend that one! Wahl clippers are on their way... Thanks for the link

dandarc

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #10 on: September 12, 2014, 03:09:00 PM »
There is multiple ways to avoid penalties if retiring early.   I asked this same question and learned tax advantaged is always better.  I am a noob, so not 100% sure on 403b vs 401k.  Relevant links..

http://www.madfientist.com/retire-even-earlier/
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

Holy crap! I just had my mind blown. The madfientist article in particular was really useful, thank you! I think maxing out the 403b is the way to go.

Yes - the realization that you can defer taxes now only to pay 0 (or very low) taxes later changes your whole mindset towards these accounts.  Wish I had had this particular AHA! moment, 5, 10, 15 years ago myself.

Roots&Wings

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #11 on: September 12, 2014, 03:49:51 PM »
Use one of these techniques and get around the NYTimes paywall...

http://betabeat.com/2013/02/5-ways-you-can-still-get-around-the-new-york-times-paywall/

Your public library might also provide free online access (mine does).

icky

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #12 on: September 12, 2014, 04:13:33 PM »
Yeah, you're in a very similar position as me. Hulu and NYTimes don't matter so much, it's the housing that's really preventing you from seeing FI as something that could be close by.

I'm stuck there too - condo, good job that I worked hard to get, cool city.

The two-bedroom was probably a mistake. Maybe you should cut your losses and sell and look for a studio? How cheap could you find that in your city? Otherwise, yeah find a roommate. Or really kick up that dating and find a partner to move in with you :)

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #13 on: September 12, 2014, 04:47:26 PM »
Yeah, you're in a very similar position as me. Hulu and NYTimes don't matter so much, it's the housing that's really preventing you from seeing FI as something that could be close by.

I'm stuck there too - condo, good job that I worked hard to get, cool city.

The two-bedroom was probably a mistake. Maybe you should cut your losses and sell and look for a studio? How cheap could you find that in your city? Otherwise, yeah find a roommate. Or really kick up that dating and find a partner to move in with you :)

Yeah, the COL here is kind of brutal. I'm not sure I could save all that much by moving to a one bedroom (considering the costs of moving, etc...) but a roommate is probably in order. Of course, a partner would be even better! When I originally made plans to buy the condo I was engaged. That, unfortunately, did not work out, so must adapt the plan!

icky

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #14 on: September 12, 2014, 05:07:54 PM »
Yeah, you're in a very similar position as me. Hulu and NYTimes don't matter so much, it's the housing that's really preventing you from seeing FI as something that could be close by.

I'm stuck there too - condo, good job that I worked hard to get, cool city.

The two-bedroom was probably a mistake. Maybe you should cut your losses and sell and look for a studio? How cheap could you find that in your city? Otherwise, yeah find a roommate. Or really kick up that dating and find a partner to move in with you :)

Yeah, the COL here is kind of brutal. I'm not sure I could save all that much by moving to a one bedroom (considering the costs of moving, etc...) but a roommate is probably in order. Of course, a partner would be even better! When I originally made plans to buy the condo I was engaged. That, unfortunately, did not work out, so must adapt the plan!

Lol, that is the exact same thing for me. For my city, my mortgage is lower than rent ($1200 for a one bedroom), but if I was serious about FI I should probably get rid of it and look for roommate situation. Either that or move to a city that's cheaper which would mean leaving a lucrative job I like. Big decisions! Not easy little ones. (although those do help to over the long haul)

I agree those links above are kind of insane, I have to look more into tax sheltered accounts. But....welll......see my other posts, haha.

ps don't spend dating money at bars, it's just as easy to get banged on tinder and okc

Terrestrial

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #15 on: September 12, 2014, 05:35:26 PM »
For the NYT...you work at a University, correct?  If you use it to teach ask your department head if they will subsidize it.  Otherwise,
I just finished an MBA a few years ago, I know that the business college at most universities have a subscription available for staff/faculty....ask over there.

I second the roomate suggestion.  You say it will test your resolve for FIRE and that is absolutely true...just depends what you value more, present living conditions or future FIRE.  I dont know where you live or what market rate is but 500-750 is a decent gauge for a room in most areas.  Having an extra 500-750 to throw at debt or investments would be huge to get positive NW.

Are you close enough to the university you can bike or take mass transit?  If not as a single person, I'd ask, why not?  If you are, ditch the car especially if you are in an urban area with close grocery shopping...it's not like you need it to haul kids around or anything.  Renting a car for a few hours once a month for large purchase items, or having an Uber pick you up at the store and take you home once or twice a month will probably work out fine.

Pigeon

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #16 on: September 12, 2014, 06:17:48 PM »
If your university library has Westlaw Campus or Lexix Nexis Academic, articles from the NYT should be available that way.

MDM

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #17 on: September 12, 2014, 07:33:53 PM »
I think maxing out the 403b is the way to go.
Yes.  Best way to start.

On the student loans: can you be "too successful" in your career, such that you stop qualifying for low Income Based Repayment terms?  If so, you may want to pay more now so the interest doesn't accumulate....

TomTX

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #18 on: September 12, 2014, 07:57:25 PM »
Did I miss the answer to the "use the University Gym" query?

mozar

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #19 on: September 12, 2014, 08:00:15 PM »
I second getting a roommate. I bought a 3 bedroom townhouse with my ex. 250 hoa. I will never ever live in someone else's group house again. Nope, can't do it. So I got a roommate. It took me a month and a half to find exactly the kind of person I was looking for. She is very quiet and respectful. Sometimes I forget she's here. And I think she started dating my neighbor, Bob. So things are good for her!

80Westy

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #20 on: September 12, 2014, 08:17:42 PM »
If your current cell phone does not need to be replaced, why not keep using it after your contract expires on an mvno?  If you are on Sprint, try Ting.  No need to buy a new device like with Republic!

Pigeon

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #21 on: September 12, 2014, 08:21:02 PM »
If you get to the gym before 10 a.m. or so you probably have little chance of bumping into undergrads.

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #22 on: September 13, 2014, 09:49:45 AM »
For the NYT...you work at a University, correct?  If you use it to teach ask your department head if they will subsidize it.  Otherwise,
I just finished an MBA a few years ago, I know that the business college at most universities have a subscription available for staff/faculty....ask over there.

Yes! I actually just sent an email off to the chair to see if the department will pay. I think there is a good chance they will!

Are you close enough to the university you can bike or take mass transit?  If not as a single person, I'd ask, why not?  If you are, ditch the car especially if you are in an urban area with close grocery shopping...it's not like you need it to haul kids around or anything.  Renting a car for a few hours once a month for large purchase items, or having an Uber pick you up at the store and take you home once or twice a month will probably work out fine.

I do live next to work and in a downtown area. I bike basically everywhere at the moment, and may just let the car die and not replace it. Not having a car at all is a scary thought, but I might try it out for a month before the car dies to see how well it goes.

If you get to the gym before 10 a.m. or so you probably have little chance of bumping into undergrads.

I think that is probably true. I will definitely be switching over to the University gym. Seeing a few undergrads once in a while is nothing compared to $38 a month.

If your current cell phone does not need to be replaced, why not keep using it after your contract expires on an mvno?  If you are on Sprint, try Ting.  No need to buy a new device like with Republic!

Had to google this! Thanks for the info - looking into switching to Tracfone now!

I second getting a roommate. I bought a 3 bedroom townhouse with my ex. 250 hoa. I will never ever live in someone else's group house again. Nope, can't do it. So I got a roommate. It took me a month and a half to find exactly the kind of person I was looking for. She is very quiet and respectful. Sometimes I forget she's here. And I think she started dating my neighbor, Bob. So things are good for her!

Yeah, roommate seems to be a consensus around here. I will put an ad in craigslist, and see who responds to feel out the situation. I can imagine it taking a while to find the right person!

I think maxing out the 403b is the way to go.
Yes.  Best way to start.

On the student loans: can you be "too successful" in your career, such that you stop qualifying for low Income Based Repayment terms?  If so, you may want to pay more now so the interest doesn't accumulate....

That is entirely possible, and may happen very soon. I hadn't considered the merits of paying extra because of the loan forgiveness, but I will have to draw up a spread sheet and find out what exactly the costs/benefits will be. Thank you for the suggestion.

waltworks

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #23 on: September 13, 2014, 02:25:06 PM »
I am curious - what do you find so distasteful about undergraduates? I mean, you probably shouldn't be pounding nNatural Ice with your students on Friday nights, but what's the issue with lifting weights or running on a treadmill in their presence?

-W

mxt0133

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #24 on: September 13, 2014, 03:05:08 PM »
Not much else to contribute here other than try to take advantage of all the free things in the city.  Libraries have so much more now than they did back in my day, ebooks, movies, and even free passes to museums, zoos, ect.  There are other free stuff like concerts, out door movies, meet-ups events.  You hardly even have to pay for entertainment in a big city.

I really love this community and only wish I had found it sooner!  You are off to a great start.  Once you get your plan in motion try and enjoy the journey to FI.  No sense in obsessing about it every minute of the day until you actually FIRE and be miserable until you get there.

stlbrah

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #25 on: September 13, 2014, 03:34:01 PM »
move the condo down under the section that says "liabilities"

prosaic

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #26 on: September 13, 2014, 04:30:59 PM »
I wouldn't advertise on Craigslist. You're in a great position to find a Visiting Professor as a roommate -- one who only wants/needs to be near campus Mon-Fri, but who goes home on weekends. Consider offering a roommate situation to someone who ONLY needs to be in town M-F, or ONLY during the school year, price their share of rent accordingly and then you maintain some privacy, too.

Suit

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #27 on: September 13, 2014, 04:54:37 PM »
I'm also doing the PILF and my employer has a 457b and whatever I contribute lowers my AGI and the loans payments on IBR are based on AGI. I believe you'll also save taxes on your paychecks so if you contribute to your 403b your paycheck will decrease less than the amount that you're contributing since your paying taxes on a lower amount which means you'll have more to contribute to a Roth or other investments. It really is awesome once you get it up and running!

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #28 on: September 13, 2014, 11:56:15 PM »
I am curious - what do you find so distasteful about undergraduates? I mean, you probably shouldn't be pounding nNatural Ice with your students on Friday nights, but what's the issue with lifting weights or running on a treadmill in their presence?

-W

I hope I didn't make it sound as if I can't stand them! I actually am very fond of my students. My hesitation had more to do with my efforts to negotiate boundaries as a young faculty member. Of course, folks here are right and it shouldn't be a problem to work out there.

Nate T

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #29 on: September 14, 2014, 12:00:07 AM »
I wouldn't advertise on Craigslist. You're in a great position to find a Visiting Professor as a roommate -- one who only wants/needs to be near campus Mon-Fri, but who goes home on weekends. Consider offering a roommate situation to someone who ONLY needs to be in town M-F, or ONLY during the school year, price their share of rent accordingly and then you maintain some privacy, too.

Yes, this would be really ideal. When I put the ad out, I will circulate around the university.

CU Tiger

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #30 on: September 14, 2014, 08:37:15 PM »
I grew up in a university town, and you should consider getting a roommate who is either a grad student or another young faculty member. No one but an undergrad should have to live another undergrad!

Why not go ahead and try the no car thing for a while? It would save you lots of $$$ to put towards your loans.

Dee18

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #31 on: September 14, 2014, 08:57:48 PM »
The faculty rate for online NY Times is half what you are paying.  (I think that is also the student rate, so you may have been overpaying. )For that I can read it on any computer and my ipad. (Note:  I thought I had to buy the more expensive "tablet" version, but you don't if you want the regular view, instead of the ipad view.  I much prefer the regular view, which looks more like the actual newspaper.)  I used to go around the firewall, but decided I would rather pay my 7.99/month.  Be sure you check out all the other benefits of being faculty--such as free or half price tickets to all kinds of music and dance performances, as well as sports.  You could also check when the gym on campus has no students--Friday evening, early Sat and Sunday are likely times.  Also check for disability insurance (free at my school) and visits to the health clinic for routine medical care for $15.  The HR department even has free one day passes to Costco. 

Debt Free in Alabama

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #32 on: September 15, 2014, 10:40:17 AM »
One of your questions was, "Can I retire early?"
Here's my math, based on running your savings through my financial calculator.
Assume:
$1750 saved per month, using what you already have available and adding money you save from cutting some expenses.
Save into Roth, individual retirement, wherever.
No taxes, ie, tax free growth.
10% growth per year, your starting age of 31 years old.
I show $1 million at age 48.  THrow in a few more years to account for market fluctuations (as we all know that folks who started investing at market peaks do not receive the same returns as those who start at market bottoms.  Are we at a peak now?  WHo knows, so get started.  KNow that throwing extra money in at market dips helps boost long term returns).
Positive Factors: student loan forgiveness, you steadily paying off the condo and building equity there and you'll look even better.
Negative factors: needed car replacement along the way, done by buying a reliable used car (perhaps a non-hybrid toyota/Honda?), or the even better- eliminate the car all together?
Positive: add raises, money saved from student debt forgiveness, roommate income to accelerate this.
I'd do the math to see if it makes sense to kill off the student loan fast, or pay minimums and wait for forgivness.

MacBury

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #33 on: September 15, 2014, 11:13:39 PM »
OK this a pretty desperate/urgent situation in my view. Negative net wealth at 31 you have missed a decade at least of compounded savings. No kids or marriage when real expenses start.

If you follow MMM strategy you will need pot of min650k (in today's money) and freehold house to retire.

You are going need to save hard 20k pa won't cut it unfortunately for retirement in 20 years. You need some pretty heroic investment return assumptions.

My advice is to marry well.



MDM

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #34 on: September 15, 2014, 11:45:29 PM »
One of your questions was, "Can I retire early?"
Here's my math, based on running your savings through my financial calculator.
Assume:
$1750 saved per month, using what you already have available and adding money you save from cutting some expenses.
Save into Roth, individual retirement, wherever.
No taxes, ie, tax free growth.
10% growth per year, your starting age of 31 years old.
I show $1 million at age 48.  THrow in a few more years to account for market fluctuations (as we all know that folks who started investing at market peaks do not receive the same returns as those who start at market bottoms.  Are we at a peak now?  WHo knows, so get started.  KNow that throwing extra money in at market dips helps boost long term returns).
Positive Factors: student loan forgiveness, you steadily paying off the condo and building equity there and you'll look even better.
Negative factors: needed car replacement along the way, done by buying a reliable used car (perhaps a non-hybrid toyota/Honda?), or the even better- eliminate the car all together?
Positive: add raises, money saved from student debt forgiveness, roommate income to accelerate this.
I'd do the math to see if it makes sense to kill off the student loan fast, or pay minimums and wait for forgivness.

OK this a pretty desperate/urgent situation in my view. Negative net wealth at 31 you have missed a decade at least of compounded savings. No kids or marriage when real expenses start.

If you follow MMM strategy you will need pot of min650k (in today's money) and freehold house to retire.

You are going need to save hard 20k pa won't cut it unfortunately for retirement in 20 years. You need some pretty heroic investment return assumptions.

My advice is to marry well.

And the best part is, each of the conflicting opinions above come with money back guarantees if incorrect.

For yet another opinion...with the same guarantee...I put the OP numbers into the Reader Case Study spreadsheet.  Some takeaways from that:
  - With modest assumptions (e.g., 5% real return; no change in income or expenses) you could make FI in ~18 years.
  - The above includes paying off all student loans in 10 years
  - Not only is the 403b a good idea for investment purposes, if you put in enough (say, $13K for the year) you can take the full $2500 student loan interest deduction on federal taxes.
As G. E. P. Box said, "all models are wrong, but some are useful."  Up to you to decide, despite the assumptions almost certainly being wrong, if the spreadsheet is correct enough to be useful.

MacBury

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #35 on: September 16, 2014, 12:05:25 AM »
One of your questions was, "Can I retire early?"
Here's my math, based on running your savings through my financial calculator.
Assume:
$1750 saved per month, using what you already have available and adding money you save from cutting some expenses.
Save into Roth, individual retirement, wherever.
No taxes, ie, tax free growth.
10% growth per year, your starting age of 31 years old.
I show $1 million at age 48.  THrow in a few more years to account for market fluctuations (as we all know that folks who started investing at market peaks do not receive the same returns as those who start at market bottoms.  Are we at a peak now?  WHo knows, so get started.  KNow that throwing extra money in at market dips helps boost long term returns).
Positive Factors: student loan forgiveness, you steadily paying off the condo and building equity there and you'll look even better.
Negative factors: needed car replacement along the way, done by buying a reliable used car (perhaps a non-hybrid toyota/Honda?), or the even better- eliminate the car all together?
Positive: add raises, money saved from student debt forgiveness, roommate income to accelerate this.
I'd do the math to see if it makes sense to kill off the student loan fast, or pay minimums and wait for forgivness.

OK this a pretty desperate/urgent situation in my view. Negative net wealth at 31 you have missed a decade at least of compounded savings. No kids or marriage when real expenses start.

If you follow MMM strategy you will need pot of min650k (in today's money) and freehold house to retire.

You are going need to save hard 20k pa won't cut it unfortunately for retirement in 20 years. You need some pretty heroic investment return assumptions.

My advice is to marry well.

And the best part is, each of the conflicting opinions above come with money back guarantees if incorrect.

For yet another opinion...with the same guarantee...I put the OP numbers into the Reader Case Study spreadsheet.  Some takeaways from that:
  - With modest assumptions (e.g., 5% real return; no change in income or expenses) you could make FI in ~18 years.
  - The above includes paying off all student loans in 10 years
  - Not only is the 403b a good idea for investment purposes, if you put in enough (say, $13K for the year) you can take the full $2500 student loan interest deduction on federal taxes.
As G. E. P. Box said, "all models are wrong, but some are useful."  Up to you to decide, despite the assumptions almost certainly being wrong, if the spreadsheet is correct enough to be useful.
http://m.calculatorsoup.com/calculators/financial/present-value-annuity-calculator.php

The value in today's money of saving 20k a year (plus additional 5% saving per year) growing the investment at 5% every year over 20 years is 380k.

380/25 = 15k per year to live on.

This is without freehold house.

MDM

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Re: Reader Case Study - Is early-ish retirement possible?
« Reply #36 on: September 16, 2014, 12:20:41 AM »
http://m.calculatorsoup.com/calculators/financial/present-value-annuity-calculator.php

The value in today's money of saving 20k a year (plus additional 5% saving per year) growing the investment at 5% every year over 20 years is 380k.

380/25 = 15k per year to live on.

This is without freehold house.

Yup.  And OP says his non-mortgage annual expenses are $18K/yr.  He can pay off all student loans and mortgage in ~18 years, and has $34K which can grow to ~$80K given 5% real return.  $380K (from above calc'n) plus $80K = $460K, which times 4% = $18,400 or a whole $400/yr more than he needs.

As noted, the answer is only as good as all the assumptions....