Author Topic: Should I care about FI/RE in my twenties?  (Read 6467 times)

Rimu05

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Should I care about FI/RE in my twenties?
« on: January 25, 2017, 09:45:14 AM »
Hi all,

24 year old here. While not a spend thrift, I feel like I've been solely focused on saving, paying off debt and there are a lot of adventurous things I want to do but keep thinking about money.

For instance, in may, I want to go to Kenya for two weeks but the trip would cost about $2500 for everything and I've put it on the back of my mind because all I keep thinking is save and I need to pay off my student loans and car loan as soon as possible, but is this necessary? I pay my student loans and car loan monthly and contribute 6% to 401k and since I'm in the middle of building my emergency fund, I put about 35% of my income into savings after all bills.

I keep feeling though, If I go on this trip, it will be a setback towards future financial freedom and now it feels like I'm completely wasting my life while thinking about money.

Should I be worried about FI now? Can't I just go travel, have fun in my twenties and then worry about this later? This doesn't mean absolutely no contributions to retirement. I'll still contribute to 401K and savings (until I build emergency fund and then throw most of my money to student loans) but I want to look into the option of teaching abroad (hopefully south America or France) but then I feel that would set me back career wise and also money wise which is not good for FI.

Yet it also feels like I'm trading away what should be the "best time of my life" for future freedom.

mozar

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Re: Should I care about FI/RE in my twenties?
« Reply #1 on: January 25, 2017, 10:03:27 AM »
If it helps you can calculate how much of an impact the 2500 will have on your FIRE date. It probably won't be that much, like a few days.
I don't agree with the whole have fun in your twenties and not worry about anything. You don't become incapacitated when you turn 30. You do slow down though and a 30 hour flight and 10 hour time change is easier in your twenties. But that doesn't mean you can't travel after 30 you just have to give yourself more time. I did a lot of travel in my 20's and I'm glad I did. Not because I suddenly keeled over when I turned 30, but because it was hard! I don't enjoy staying in crappy hostels anymore, or overnight buses.

Would teaching in another country set back your career here? Probably, but you can be smart about it and use the experience to get you into grad school and then start your career.

marielle

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Re: Should I care about FI/RE in my twenties?
« Reply #2 on: January 25, 2017, 10:04:13 AM »
I'm no expert since I'm only 23, but for me it would depend on the interest rates and how much your emergency fund is. If you have low interest rates (under 4% or so) and don't plan to pay that debt off fast, then it's not the worst idea ever to spend that much on travel. If you have high interest rates then...well...

http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Another option is travel hacking/churning. See if you can get a credit card to pay for that trip. I'm still paying off student loans, but will be going to Canada easily thanks to $2100 in travel credit from a Chase card (after $450 annual fee).

There's also plenty of free/cheap ways to have fun and enjoy your life than to travel to another country, especially if you're debt. Personally I'd rather spend a year or so hunkering down and destroying all debt before going on any extravagant trips.

prognastat

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Re: Should I care about FI/RE in my twenties?
« Reply #3 on: January 25, 2017, 10:10:40 AM »
I would say if you want to FIRE at some point you should care about it as soon as possible. I wish I had found out about FIRE sooner and could have made effective changes that with minimal sacrifice to my standard of living would have brought it closer sooner.

If you don't have a decent emergency fund and/or you have debts over 5% I would seriously recommend against spending any money beyond necessary on anything other than building those first since not addressing that is not only pausing any progress to FIRE but is actually effectively moving you away from it.

If you have an emergency fund fully funded and no debt over 5% and this would simply be reducing the amount saved this year then it would simply be pausing your progress towards FIRE slightly which at that point I would just say weigh what the trip is worth to you against the delay it would bring to your goals for FIRE.

Also as Marielle mentioned it is worthwhile looking at ways to dramatically reduce the cost of your trip too.

Finally the longer you wait to work towards FIRE the harder it gets. If you don't have it as a goal lifestyle inflation likely will happen and it is harder to reduce your lifestyle than it would have been to maintain the same level of contention without increasing lifestyle. Also later in life things like getting married and kids often happen which can delay FIRE if they happen early in your journey to FIRE.

For example if you focused on FIRE and managed to maintain a savings rate of 60% or more you would be FIRE by 33. At this point a lot of people have kids, however being FIRE gives you opportunities such as one or both parents staying home to take care of the kids drastically reducing some of the biggest costs of having kids and you can have a kid without it having a large effect on you being FIRE. However if you are still in your accumulation stage when you have a kid to continue accumulating you will have to keep working and thus spend far more on raising your kids than you would if you were FIRE. This means you will have to spend more time in your accumulation phase. Also the earlier you put money in to the market the more time it sits in there and has time to increase through compound interest which needs time to work meaning less work for you in the long run too.
« Last Edit: January 25, 2017, 10:17:11 AM by prognastat »

Laura33

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Re: Should I care about FI/RE in my twenties?
« Reply #4 on: January 25, 2017, 10:48:55 AM »
Hi all,

24 year old here. While not a spend thrift, I feel like I've been solely focused on saving, paying off debt and there are a lot of adventurous things I want to do but keep thinking about money.

For instance, in may, I want to go to Kenya for two weeks but the trip would cost about $2500 for everything and I've put it on the back of my mind because all I keep thinking is save and I need to pay off my student loans and car loan as soon as possible, but is this necessary? I pay my student loans and car loan monthly and contribute 6% to 401k and since I'm in the middle of building my emergency fund, I put about 35% of my income into savings after all bills.

I keep feeling though, If I go on this trip, it will be a setback towards future financial freedom and now it feels like I'm completely wasting my life while thinking about money.

Should I be worried about FI now? Can't I just go travel, have fun in my twenties and then worry about this later? This doesn't mean absolutely no contributions to retirement. I'll still contribute to 401K and savings (until I build emergency fund and then throw most of my money to student loans) but I want to look into the option of teaching abroad (hopefully south America or France) but then I feel that would set me back career wise and also money wise which is not good for FI.

Yet it also feels like I'm trading away what should be the "best time of my life" for future freedom.

1.  Is this trip a one-shot deal?  Or is it this year's representative of "fun things I want to spend money on because my lifestyle is too monk-like and I feel like I'm missing out on things"? 

2.  If it is a once-in-a-lifetime, one-shot opportunity, then no, it's not going to derail you from FI.  You can put the $2500 into a calculator to tell you how much cash Future You is giving up.  You can do the math to figure out how many extra hours of work you need to put in now to make that up.  Simple math.

3.  If you actually think you are in #2 above, go read all you can about hedonic adaptation, then call bullshit on yourself.  Proceed to 4.

4.  If this is the desire-du-jour because your lifestyle is too cramped, you are walking right into the world of lifestyle inflation, and now you need to do the math on what your life will be like if you pay off debt/invest $2500 [or some other amount] every year on fun stuff.  You want a good illustration of the time value of money, do one of those "if I start at 25" vs. "if I start at 35" calculators.

5.  The human race has a strong proclivity to value Current You over Future You.  Be aware of that bias when you evaluate these choices.

6.  There is no right or wrong answer to this question.  You can't spend $2500 each year on travel and also use that same $2500 to pay down bills or invest, and choosing one necessarily delays your ability to enjoy the other.  If freedom and independence is your primary driver, then keep your lifestyle minimal and use the money to pay down loans/invest.  If travel is something that is important to keep you happy, then divert some money to that (assuming we're talking student loans, not CC debt), recognizing that the tradeoff is that Future You needs to work longer.  Or find somewhere in-between, e.g., "once I max out my 401(k) and pay off the car loan and have an emergency fund saved, I will devote $X from my monthly budget to fun international travel."

itchyfeet

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Re: Should I care about FI/RE in my twenties?
« Reply #5 on: January 25, 2017, 11:44:18 AM »
Yes you should care about your money, and yes why not travel too if it makes you happy.

I am now in my mid 40s, and have travelled the world in my adult life. I have so many amazing memories from the 55 or so countries I have explored. I have walked many of the great hikes of the world, attended some of the most amazing festivals the world has to offer and just generally seen some really cool stuff.

I would estimate that I might have spent $200K or more on travel over 20 years, and have probably spent 2-3 years travelling all up. So, I can't even claim that I was particularly efficient in my spending.

Yes, this is a big sum. However, I have always lived within my means and will FIRE in 2 years aged 46. My DW wii be 41.

I have absolutely no regrets spending all of that money on travel and these days can accumulate $200k in a year or so through returns on my stache plus savings.

1 year of extra work for 20 years of amazing holidays is a small price to my reckoning!!

When we were young we prob saved 20% of our income. We now save more than 50% off far higher salaries. Travel has not stood in the way of achieving our financial goals and Our FIRE stache will be sufficient to finance another 20+ years of world travel.

As you can see, I definitely believe life should be lived and not put on hold for 10 or 20 years.

If you want to take the trip and it looks like it will stop you achieving your financial goals  can you pay for it with a side hustle? Or by cutting other costs?

Guesl982374

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Re: Should I care about FI/RE in my twenties?
« Reply #6 on: January 25, 2017, 11:49:43 AM »
Looking at your past posts, it seems you have ~$30K in student loans, another $15K for a car loan and are originally from Kenya but living in the US (please correct me if I have it wrong). If the trip is to go visit family and you haven't seen them in a number of years, I say go for it. If it's to go on safari / get drunk / general travel /whatever else then no, you shouldn't go. As others have said, you have a hair on fire emergency.

Things you should consider doing:
-Getting a higher paid job
-Working a second or third job
-Posting a detailed case study here so people can help you reduce your expenses
-Selling your fancy car and buying something <$5K, or better yet, ride a bike

IMO, you should be focused on growing your income in your 20's. Reducing expenses is great but there are two sides to the equation: Savings Rate = Income - Expenses.

When we were young we prob saved 20% of our income. We now save more than 50% off far higher salaries. Travel has not stood in the way of achieving our financial goals and Our FIRE stache will be sufficient to finance another 20+ years of world travel.

+1 - Notice the bold section.

arebelspy

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Re: Should I care about FI/RE in my twenties?
« Reply #7 on: January 26, 2017, 03:36:14 AM »
The savings habits you set now are pretty crucial.

That being said, wasting your twenties just thinking about money is a shame.

Figure out how to do things frugally.  That trip can be done for WAY less than that.  Probably < $1,000 if you travel hack the flights.

Live your life, and enjoy it, but do it in an optimized way, so you can have the same amount of fun and still save a ton.

For example, the wife and I love travel, and did a bunch.  From this post:
We also enjoy travel, so we've done plenty of that along the way, including such lavish trips as (all of the below are separate trips):
- Over 2 months backpacking through Europe
- A week in Barbados
- A week in Loreto Bay, Mexico
- Many trips to Southern California to see my in-laws (at least 4x per year, approximately 20-25 trips) and Seattle to see my family (at least once or twice per year, approximately 8-10 trips)
- A week cruise out of Miami to St. Lucia, St. Kitts, and St. Maarten
- A week in Athens, Greece (separate from Europe backpacking trip)
- A week in NYC/CT
- 3-4 days in Boston
- Trip to WA peninsula to go to the beach/rain forest
- I also individually (without the wife) did quite a bit of traveling for a hobby (Texas several times, New Jersey, Philly, Chicago a few times, Indianapolis, etc. - probably another 11 individual weekend trips to cities in the U.S. for just myself)

Most (all?) of those were done quite frugally, with deals, special promotions, whatever. 

We also have taken advantage of being locals in Vegas, seeing various "entertainment" things such as:
- Cirque du Soleil's Beatles' Love
- Penn and Teller
- 2-3 other magic shows
- Wayne Brady
- 2-3 other comedian shows
- Phantom of the Opera
- Shark Reef
- Madam Tussauds' Wax Museum

Again, most (all?) of those were done quite frugally, with deals, special promotions, whatever.  In fact, almost every single one of those were free (and the ones we paid for were usually at least half off or more).

That's not an exhaustive list of entertainment stuff, those are just the items people would generally think of as expensive. We've done other cheap/free entertainment stuff like camping at Mt. Charleston multiple times, camping trips to the Grand Canyon and Death Valley, hiking at Red Rock, etc. etc.

(These experiences were added because I figured I might as well type them up now, to counter the "but you're living like misers at that spending level!" arguments - not that I'll see it from you guys, but when I use these crib notes to write a more thorough history of our stache it'll be helpful at that point.)

We FIRE'd approximately two years after that post, and did a bunch of trips in those two years as well that aren't listed (quite a few, as that's when we really got into travel hacking).

Yet we still FIRE'd at a very young age, because we figured out how to make our main lifestyle very low cost, and how to do that travel cheaply, so our savings rate was 70%+.

The point of Mustachianism isn't to deprive yourself.  It's not not blow money on things you don't value, and to spend it optimally on the things you do value.

If travel is one, great!  Travel!  I'm a big advocate of travel (the wife and I have been traveling the world nonstop since FIRE 1.5 years ago).  But do it in a smart, economic way.

And cut expenses elsewhere, on the stuff you don't care about.

It's about living a fulfilling life.  I fully think anyone can push towards FIRE while having a fulfilling life.  Worked for us, at least, and I think you can do the same!  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

ShoulderThingThatGoesUp

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Re: Should I care about FI/RE in my twenties?
« Reply #8 on: January 26, 2017, 03:53:37 AM »
Our twenties are a substantial part of our adult lives. That doesn't mean don't go to Kenya, but yes there ought to be a plan.

arebelspy

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Re: Should I care about FI/RE in my twenties?
« Reply #9 on: January 26, 2017, 03:58:03 AM »
Our twenties are a substantial part of our adult lives. That doesn't mean don't go to Kenya, but yes there ought to be a plan.

Your comment reminds me of this TED Talk:
Meg Jay: Why 30 is not the new 20

I actually disagree with most of it, funny enough, but a lot of people seem to really like it, and it's directly relevant to the OP.

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

boarder42

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Re: Should I care about FI/RE in my twenties?
« Reply #10 on: January 26, 2017, 04:02:26 AM »
Travel hacked and that trip can be greatly reduced. I'm guessing your flight is 1500 or so. Easily eliminated by one credit card

MoonLiteNite

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Re: Should I care about FI/RE in my twenties?
« Reply #11 on: January 26, 2017, 06:36:44 AM »
I always wanted to "Retire early"
I never did the math.

Had i done the math at age 22, i would almost be retired at this point, at age 30, instead i have another 7-10 years to go.
I spent money on computers, 2 cars, and a house (a house can be a good thing, but not always), too many vacations and road trips. Had i done the math back then, i would known to cut back a tad bit.


So start NOW!Even if you want to be FI by 30, or 45 or 65. Doing the math NOW, you can start properly saving and be on the right track.

westtoeast

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Re: Should I care about FI/RE in my twenties?
« Reply #12 on: January 26, 2017, 06:56:55 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

arebelspy

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Re: Should I care about FI/RE in my twenties?
« Reply #13 on: January 26, 2017, 07:04:08 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

boarder42

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Re: Should I care about FI/RE in my twenties?
« Reply #14 on: January 26, 2017, 07:23:38 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)

agreed so easy to do this.  i'm running out of cards to signup for now that i keep them open to add AUs though.  funny how banks dont like to give you piles of revolving credit.

Mgmny

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Re: Should I care about FI/RE in my twenties?
« Reply #15 on: January 26, 2017, 07:30:45 AM »
Your comment reminds me of this TED Talk:
Meg Jay: Why 30 is not the new 20

I actually disagree with most of it, funny enough, but a lot of people seem to really like it, and it's directly relevant to the OP.

:)

Really? I liked that TED Talk. But, I'm 26, and most of my friends are making between 8-12 $/hour and it bothers me that they are "missing out" on this crucial career/wealth building stage.

Also, I am 95% certain you showed up on my Google Cards a couple of days. Sorta cool/weird!

arebelspy

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Re: Should I care about FI/RE in my twenties?
« Reply #16 on: January 26, 2017, 07:37:29 AM »
Your comment reminds me of this TED Talk:
Meg Jay: Why 30 is not the new 20

I actually disagree with most of it, funny enough, but a lot of people seem to really like it, and it's directly relevant to the OP.

:)

Really? I liked that TED Talk.

I know, I know.  Everyone around here seems to love it.  So know you're in the majority, and I'm in a tiny minority (as with most things, for me).  Make of that what you will.  :)

I think her mindset is all wrong, thus her conclusions are flawed.

Quote
Also, I am 95% certain you showed up on my Google Cards a couple of days. Sorta cool/weird!

Hah, yeah, that was me.  Very weird.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Filliteracy

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Re: Should I care about FI/RE in my twenties?
« Reply #17 on: January 26, 2017, 09:43:40 AM »
Hi all,

24 year old here. While not a spend thrift, I feel like I've been solely focused on saving, paying off debt and there are a lot of adventurous things I want to do but keep thinking about money.

For instance, in may, I want to go to Kenya for two weeks but the trip would cost about $2500 for everything and I've put it on the back of my mind because all I keep thinking is save and I need to pay off my student loans and car loan as soon as possible, but is this necessary? I pay my student loans and car loan monthly and contribute 6% to 401k and since I'm in the middle of building my emergency fund, I put about 35% of my income into savings after all bills.

I keep feeling though, If I go on this trip, it will be a setback towards future financial freedom and now it feels like I'm completely wasting my life while thinking about money.

Should I be worried about FI now? Can't I just go travel, have fun in my twenties and then worry about this later? This doesn't mean absolutely no contributions to retirement. I'll still contribute to 401K and savings (until I build emergency fund and then throw most of my money to student loans) but I want to look into the option of teaching abroad (hopefully south America or France) but then I feel that would set me back career wise and also money wise which is not good for FI.

Yet it also feels like I'm trading away what should be the "best time of my life" for future freedom.

1.  Is this trip a one-shot deal?  Or is it this year's representative of "fun things I want to spend money on because my lifestyle is too monk-like and I feel like I'm missing out on things"? 

2.  If it is a once-in-a-lifetime, one-shot opportunity, then no, it's not going to derail you from FI.  You can put the $2500 into a calculator to tell you how much cash Future You is giving up.  You can do the math to figure out how many extra hours of work you need to put in now to make that up.  Simple math.

3.  If you actually think you are in #2 above, go read all you can about hedonic adaptation, then call bullshit on yourself.  Proceed to 4.

4.  If this is the desire-du-jour because your lifestyle is too cramped, you are walking right into the world of lifestyle inflation, and now you need to do the math on what your life will be like if you pay off debt/invest $2500 [or some other amount] every year on fun stuff.  You want a good illustration of the time value of money, do one of those "if I start at 25" vs. "if I start at 35" calculators.

5.  The human race has a strong proclivity to value Current You over Future You.  Be aware of that bias when you evaluate these choices.

6.  There is no right or wrong answer to this question.  You can't spend $2500 each year on travel and also use that same $2500 to pay down bills or invest, and choosing one necessarily delays your ability to enjoy the other.  If freedom and independence is your primary driver, then keep your lifestyle minimal and use the money to pay down loans/invest.  If travel is something that is important to keep you happy, then divert some money to that (assuming we're talking student loans, not CC debt), recognizing that the tradeoff is that Future You needs to work longer.  Or find somewhere in-between, e.g., "once I max out my 401(k) and pay off the car loan and have an emergency fund saved, I will devote $X from my monthly budget to fun international travel."

+1 on Laura's advice.

Honestly though (and coming from a 26 year old) think of it this way: that 2500$ trip isn't costing you 2500$. Since you are currently servicing debt, whatever the interest on the debt is (let's say 10% just to make numbers easy), means that your trip is costing you 2500$, plus 250$ for EVERY YEAR that you still have the debt after your trip. So let's say it takes you another 4 years to pay off your student loans, car loan, etc. That trip actually cost you 3500$ (2500$ + 4X250$). Going further, convert that 1000$ premium into work required to save it. If you make 50K a year, and save 10K a year, then it takes you about 5 weeks of work to save 1K. If to you, the thought of working an additional 5 weeks so that you can go on your trip earlier is a good trade off (depends on how you value each in terms of happiness), then do it. Remember, Mustachianism isn't actually about money, but about happiness. It's about how most of society is on "auto-pilot" and oblivious that they continuously making choices that don't maximize their happiness. If travel NOW for you is more important than the freedom gained of not having to work for five weeks to pay for that decision while still in debt, then you do you.   

ysette9

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Re: Should I care about FI/RE in my twenties?
« Reply #18 on: January 26, 2017, 09:50:39 AM »
I did a fair amount of (cheap!) international travel when I was young and I am so glad I did. However, I also saved a fair amount at the same time. I didn't discover MMM and the idea of FIRE until I was about 30; if I had discovered it in my 20s I would be done by now. All the same, I am SO grateful to my past self (and my husband's even more frugal past self) that I saved in my 20s in a way that sets us up to be done before we hit 40. That is such a spectacular gift to yourself and an amazing feeling.

Case

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Re: Should I care about FI/RE in my twenties?
« Reply #19 on: January 26, 2017, 10:02:13 AM »
If it helps you can calculate how much of an impact the 2500 will have on your FIRE date. It probably won't be that much, like a few days.
I don't agree with the whole have fun in your twenties and not worry about anything. You don't become incapacitated when you turn 30. You do slow down though and a 30 hour flight and 10 hour time change is easier in your twenties. But that doesn't mean you can't travel after 30 you just have to give yourself more time. I did a lot of travel in my 20's and I'm glad I did. Not because I suddenly keeled over when I turned 30, but because it was hard! I don't enjoy staying in crappy hostels anymore, or overnight buses.

Would teaching in another country set back your career here? Probably, but you can be smart about it and use the experience to get you into grad school and then start your career.

Very much doubt the impact will be a few days. More like a month at least, given he is young and at th beginning of the investing stage where compound interest has the highest impact.

The bigger question is whether or not he'll regret not going on this trip while he was younger.  The MMM group tends to be of the mentality that you should travel while young despite the costs, but MMM followers are often (but now always) wealthy computer programmers.  Depending on the OP's income level, the impact on potential FIRE could be larger than you might expect.

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Re: Should I care about FI/RE in my twenties?
« Reply #20 on: January 26, 2017, 10:23:10 AM »
Don't go anywhere until you have completely padded your emergency fund. As unlikely as it is, emergencies can happen while on vacation too.

I think it is important to reward yourself when you reach certain milestones. The extravagance of the reward (a $2,500 trip) or the goal you achieve is totally up to you and based on your own goals and value systems.

Here are some goals I think are worthy of a reward/celebration*
- Establishing emergency fund
- Refinancing a loan for a lower interest rate
- Eliminating or reducing a monthly expense
- Zero debt (non-negative net worth)
- The first time you get $100, $500, or $1000 in dividends in a distribution cycle
- When your stash gets an extra digit. ### to #,### or ##,###
- When starting out, every 5k added to the stash is a nice milestone, then $10k, $25k, etc.

I'd suggest to finish saving for your emergency fund, then save up for the trip via a side hustle or selling some stuff as a reward for your efforts. Travel hacking strategies will definitely help you cut costs and get abroad sooner.

Best of luck!

*This could be going out to a nice dinner or drinks, a road trip, treating yourself to coffee, ice cream, a six pack of your favorite brew, bubble bath, etc. It doesn't have to be a big ticket item/adventure.

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Re: Should I care about FI/RE in my twenties?
« Reply #21 on: January 26, 2017, 11:01:14 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)

Can you point me in the direction of a good place to start for researching travel hacking?  I am pretty good about using credit cards to get rewards.  I mostly use my BofA cash rewards card which gives 3% on gas and 2% on groceries.  I redeem about once every other month for an extra $30-$40.  I feel intimidated when it comes to learning about travel rewards and I need some kind of super simple guide.  My only "travel" credit card is my BofA travel rewards card which I got because it is free and has no foreign transaction fees.  Normally when I fly, I take the cheaper option and it could be a different airline each time because I go to all kinds of different places.  My next flight I have to buy is Puerto Rico.

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Re: Should I care about FI/RE in my twenties?
« Reply #22 on: January 26, 2017, 11:19:31 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)

Can you point me in the direction of a good place to start for researching travel hacking?  I am pretty good about using credit cards to get rewards.  I mostly use my BofA cash rewards card which gives 3% on gas and 2% on groceries.  I redeem about once every other month for an extra $30-$40.  I feel intimidated when it comes to learning about travel rewards and I need some kind of super simple guide.  My only "travel" credit card is my BofA travel rewards card which I got because it is free and has no foreign transaction fees.  Normally when I fly, I take the cheaper option and it could be a different airline each time because I go to all kinds of different places.  My next flight I have to buy is Puerto Rico.

its about the sign up bonuses not the ongoing cash back.  travelmiles101 has a course on it.  I have a link to an Amex delta card as well that is expiring jan 31.  it gets you 70k delta points the usually offer is only 30k. PM me if you want that .. you have to spend 3k in 3 months there is a 200 dollar fee but if you buy a 50 dollar delta GC at delta you get a 100 dollar statement credit.

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Re: Should I care about FI/RE in my twenties?
« Reply #23 on: January 26, 2017, 11:24:52 AM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)

I donīt want to hijack the thread, but I think this question would be relevant to the OP. Has anyone noticed a credit score impact from travel hacking? I have opened a few cards in the past year or so, and I did see a decrease in my score of about 30 points. I have a very good ratio of debt to open credit and a 9.5 year credit history, and I have made no late payments on anything, so I canīt think of how else to explain this decrease. For this reason I am trying to space out how often I apply for cards. Thoughts? Thanks!

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Re: Should I care about FI/RE in my twenties?
« Reply #24 on: January 26, 2017, 12:15:33 PM »
Hello! I am having a similar problem... should I meet my travel goals now before I have other responsibilities, or should I take advantage of compounding interest now and save travel for my older years? I have decided to knock a few locations off my list in the next few years and then I will save the rest for later. My travel rules for myself are:
1) I will travel hack a card each year.
2) I will ONLY use money I have earned on top of my primary income (If I side hustle, I get to travel. If I do not hustle, no travel. This also makes me really see the connection between the hours I spend working and the value I get out of my travel).

I'd push 1 & 2 together: Travel must be solely funded by travel hacking--a combination of points for planes, points for hotels, and cash for paying for food while traveling, entrance fees to things, etc.

And don't limit to 1 card (in #1).

Travel hacking doesn't just give you points, it can pay you straight cash, too.  So aim to fund travel solely though that, and then you can use other side hustle money for faster FI.  :)

I donīt want to hijack the thread, but I think this question would be relevant to the OP. Has anyone noticed a credit score impact from travel hacking? I have opened a few cards in the past year or so, and I did see a decrease in my score of about 30 points. I have a very good ratio of debt to open credit and a 9.5 year credit history, and I have made no late payments on anything, so I canīt think of how else to explain this decrease. For this reason I am trying to space out how often I apply for cards. Thoughts? Thanks!

are you buying a house soon.  if yes then back off a bit but if not who cares your credit will hardly be impacted of any value.

i started churning hard core in 2014 winter (read 20-30 cards a year)

in 2016 winter i bought a new house and got the prime rate. - i paused hacking for 3 months b/c we had a 90 day close window

in summer 2016 i REFId at the bottom of the market got 3.25% on a 30 year thats the lowest rates have ever been in my area.  i didnt even pause my churning applied for 4 new cards between rate lock and closing date.

who cares about 30 points at the end of the day.

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Re: Should I care about FI/RE in my twenties?
« Reply #25 on: January 26, 2017, 12:51:34 PM »
I don't know why you can't save up for things and have fun at the same time. I certainly have spent plenty of money on travel and fun things. But there's a lot of ways to save money. I saved money by eating out rarely (not even once a month) and cooking at home, packing my lunch for work every day, having an extremely cheap cell phone plan, never buying a brand new car, pretty much never being in debt (which costs you in interest and fees), not having cable TV, etc. But I still went to concerts and conventions, bought video games, and did other non-mandatory-but-fun things.

I reached financial independence in my late 20's. I early retired at the age of 32. And honestly - I'm enjoying life MORE than I did in my 20's, because I don't have work or mandatory schedules in my way. I am free to pursue my hobbies and interests. I have less stress because I can visit stores, doctor's offices, travel sights, etc when they're not super busy.

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Re: Should I care about FI/RE in my twenties?
« Reply #26 on: January 26, 2017, 02:11:27 PM »
I donīt want to hijack the thread, but I think this question would be relevant to the OP. Has anyone noticed a credit score impact from travel hacking? I have opened a few cards in the past year or so, and I did see a decrease in my score of about 30 points. I have a very good ratio of debt to open credit and a 9.5 year credit history, and I have made no late payments on anything, so I canīt think of how else to explain this decrease. For this reason I am trying to space out how often I apply for cards. Thoughts? Thanks!

I opened up 4 cards within a week, going from 2 to 6. And my credit score went from 814 to 811.

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Re: Should I care about FI/RE in my twenties?
« Reply #27 on: January 26, 2017, 03:12:55 PM »
In the short term, travel hacking lowers your score a bit... after a few months, it tends to raise it.

(On average; exceptions exist given your credit profile.)

Either way, you're getting paid thousands of dollars for a temporary fluctuation.
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Re: Should I care about FI/RE in my twenties?
« Reply #28 on: January 26, 2017, 08:06:18 PM »
If it were me, I'd knock out any debt before spending a pile of cash on a fancy vacation. After that, why not plan for regular travel? Figure out a budget that allows to you do the things you want and retire at the age you want.

For what it's worth, we started out saving for FIRE at the about same age - 25 and 23. We travel very frequently - in 2016 we went to Singapore, Malaysia, Taiwan, Ireland, Northern Ireland, and Vegas/Grand Canyon, in addition to local weekend getaways to go camping and visit relatives. We also shoot to save at least 60% of our income (and actually hit 70% for 2016), and should be set to retire in our mid-30s. And that's on pretty average salaries for a receptionist and an administrative assistant.

So the answer is, do everything.

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Re: Should I care about FI/RE in my twenties?
« Reply #29 on: January 26, 2017, 09:34:55 PM »
So the answer is, do everything.

Yup.

We should get together sometime, Zikoris.
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Re: Should I care about FI/RE in my twenties?
« Reply #30 on: January 26, 2017, 10:06:13 PM »
If it were me, I'd knock out any debt before spending a pile of cash on a fancy vacation. After that, why not plan for regular travel? Figure out a budget that allows to you do the things you want and retire at the age you want.

For what it's worth, we started out saving for FIRE at the about same age - 25 and 23. We travel very frequently - in 2016 we went to Singapore, Malaysia, Taiwan, Ireland, Northern Ireland, and Vegas/Grand Canyon, in addition to local weekend getaways to go camping and visit relatives. We also shoot to save at least 60% of our income (and actually hit 70% for 2016), and should be set to retire in our mid-30s. And that's on pretty average salaries for a receptionist and an administrative assistant.

So the answer is, do everything.

Love this. We've also taken the do everything approach, in our case by travel hacking ~90% of our flights and by staying cheap (we're still cool with chill hostels in our mid-30s). We've traveled all over, usually at least three times internationally per year, and while the thrill of quick trips is maybe starting to fade, now we're really looking forward to slow travel in FIRE.

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Re: Should I care about FI/RE in my twenties?
« Reply #31 on: January 27, 2017, 10:17:51 AM »
Thank you for all the advise.

I should mention here that, my itch to travel by no means equates to I'll suddenly start spending money without any regard for savings or retirement. I've just never been a spend thrift. I've definitely made about three dumb purchases in my life that I can safely say were very anti-mustachian, but for the most part, my expenses are super low and I'm such a minimalist that selling stuff isn't even an option.

To answer some questions, yeah definitely not going to see my family, a good portion of my family lives in the U.S (Although in other states). Other than one of my aunt's, two cousins and great granny (I saw them all in September though), definitely not doing this for fam. The trip though is a pre-panned trip that would cost way more if I did it myself. It involves a lot of the great parks and also going to some destinations, I have never gone to in Kenya (admittedly, some I have visited but a very long time ago as a kid).

I'd be lying if I said I wasn't tempted to go on this trip because yes, I can't change my life is too short stance but at the moment the thread has made me 40% go 60% No.

Also, I decided this year was the year to get my finances on track with a hefty emergency fund ($10K, large by standards here but I've had emergencies and the 3k fund I built up has been sucked in mere weeks and I've found myself in CC debt that takes a good three months to pay off), rid myself off any debt that is not car or student loan and officially start hurling money at student loan and Roth IRA.

I shall revive this thread on the decision I make because May is far off and hope I can fight the temptation, but ugh, Maasai Mara, Amboseli, elephant park, snorkeling in Mombasa, feeding giraffes (I haven't done that since I was in third grade and curious as an adult who's life has completely changed, what that will feel like).

PS. Apologies, just found out the trip is in July. Ugh, the temptation, this is peak Mara season. Right after the monsoon and all is green and lush. Also a cooler season.
« Last Edit: January 27, 2017, 10:21:44 AM by Rimu05 »

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Re: Should I care about FI/RE in my twenties?
« Reply #32 on: January 27, 2017, 01:57:44 PM »
Why wouldn't you care about FIRE in your 20's? Your entire life is filled with opportunity and excitement, it doesn't get worse as you age, it gets better. The trick is to balance fun now with fun later. The only constant is there's never enough time to do it all.

The weird thing about compound interest is that it balances out low earnings/low savings with high earnings/high savings later on. Every dollar I saved at 25 is worth $2 at 35, so now I need to save twice as much. At 45 you need to save 4 times as much to get the same NW as $1 at 25. Time is your friend with compounding savings, early starts make it easier. If saving $5000 is tough now will saving $10,000 be easier later on? or $20,000? It depends on your earnings later in life of course. 

The "Rule of 72" is a quick math formula which basically says that with the miracle of compound growth money will double according to formula 72/growth rate. A 7.2% annual return means money doubles every 10 years. I find it helpful in thinking about the present cost of something with respect to what my future self could have.

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Re: Should I care about FI/RE in my twenties?
« Reply #33 on: January 27, 2017, 11:35:31 PM »
So the answer is, do everything.

Yup.

We should get together sometime, Zikoris.

Give me a shout if you end up in Vancouver! We have a cool little Mustachian club going here. We go hiking, have dinner parties/potlucks, and discuss money and interesting projects we're working on.

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Re: Should I care about FI/RE in my twenties?
« Reply #34 on: January 27, 2017, 11:55:45 PM »
Give me a shout if you end up in Vancouver! We have a cool little Mustachian club going here. We go hiking, have dinner parties/potlucks, and discuss money and interesting projects we're working on.

That sounds awesome!  We'll be in Vancouver a lot, since we're getting an RV to go across Canada, and my parents live just north of Seattle, so that's the most convenient entry/exit point to the US for us.  :)

I'd love to have a little Mustachian group in whatever city we eventually settle in.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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