Author Topic: Trying to accelerate the path to FI...  (Read 17459 times)

ardrum

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Trying to accelerate the path to FI...
« on: September 26, 2015, 07:45:26 PM »
I made my first post awhile back, and so this is kind of an update/question about how much I can accelerate my journey to FI (original estimate had me being 49 years old at FI).

I finished an academic program this past May, and I have a decent amount of student loans.  My annual salary is $68,000, but it seems after taxes I am getting barely over $50,000/year based on what my steady biweekly check is x26. 

Below is how I came to estimate my average monthly expenses:

- Rent             $789.00 
I don't like how high this is at all but I'm stuck until next summer.

- Grocery + Misc. Household   $175.00 
I'm trying to cut this down a bit... I don't know how people do the $25-30/week budget, but I will keep optimizing this expense over time to get it lower.

- Utilities   $138.00   
I don't like this amount because the apartment complex has some "public" charges and other fees and whatnot that I can't reduce easily through private behavior.  Over half of this is essentially "hidden rent" imo.

- Gas/Transportation   $125.00   
Thank you, long commute.  This can be addressed by moving close to my workplace when my lease is up next year.

- Health Insurance (ALL)   $121.36
I chose the high deductible options from my employer's available options. 
   
- Car Maintenance   $50.00   
Just an vague estimate.  I drive a 1999 Honda Accord Lx with 152,000 miles on it.

- Internet   $44.00
This includes taxes/BS fees and whatnot all included.  This is the basic cable option from Time Warner.

- Car Insurance    $33.00
I have Geico and recently cut some unnecessary "fat" from my coverage to save $10/month (I pay two 6-month bills/year). 
   
- Clothing/Shoes   $20.00
Ideally this is close to $0. I just put it in there in the emergency that I would need something :P

- Phone   $33.00   
I use T-Mobile's no contract $30/mo. plan (before taxes) that has 100 min talk and unlimited data/texting.

- Phone/Laptop/TV (hardware)   $25.00 
This is a very rough estimate of the rare occasions I would need to replace a laptop or phone.  If anything, I might update my phone in the next year, but I don't want to get anything pricy if it comes to that.  I definitely don't plan on updating a TV or laptop for years though.

- Games   $20.00   
I'll admit my guilty pleasure is gaming, though I haven't played much at all for months and may very well be able to scrap this entirely.  I can't believe I would have said that a year ago.  I think I just put this value in here in the event I backslide a bit, haha! 

- Out of Pocket Medical   $15.00
I exercise regularly and am in good health.  I figured I'd budget something in though in case something came up requiring a medical appointment.

- CEUs   $10.00   
Continuing education courses.  My employer will pay to some extent for this, but I will likely have to pay for a bit of it myself too.  I'll shop around of course.

When I originally posted, I believe I said I was living on something like $24,000, but I have since made significant cuts to my spending estimates thanks to developing my frugality muscles further.  I am now sitting at $19,180 for my estimate annual spending (saving $30,902).  I would like to eventually knock the spending down to about $15,000-$16,000, but I unfortunately signed a lease that started in July and those savings will be best achieved by moving to a cheaper living situation within walking/biking distance to work so that I can go without using my car to commute (my current commute is awful...over 30 minutes one way, not Mustachian).  That would unleash MAJOR savings and more free time with less commuting!  Talk about painless reduction of living expenses!

If I could get my spending down to $16,000, that would give me $34,000+ to save.  Currently the first thing I do is use the first $1,000 of my paycheck to pay down my highest interest rate student loans ($26,000 for 26 annual paychecks).  I then flex the frugality muscles to get the additional $4000-$5000 estimate annual savings. 

Here are my debts.  All of these are student loans.

Loan 1 $12,500 (6.21%)
Loan 2 - $4,000 (5.41%)
Loan 3 - $12,000 (5.41%)
Loan 4 - $1,108.09 (6.8%)  --- This just happens to be the one I'm attacking.  Almost dead!!
Loan 5 - $10,131.82 (6.8%)
Loan 6 - $6,833 (6.8%)

I have jokingly thought about giving these loans various nefarious names to personify them to further the "killing" metaphor... Not sure if I'll go through with that tactic though. :P  Before the end of the year, my net worth will finally be positive again.

I have about $44,000-45,000 in a Roth IRA right now (has lost value since my first post), with $28,800 of that being contributions (I rolled over an old 401k from my previous career).  As I understand it, I could theoretically withdraw up that amount tax/penalty free if a major emergency arose or something.  I'm assuming I should leave that invested though rather than withdraw it to pay the 6.8% student loan though right?  My Roth IRA (Vanguard) has averaged 8.9% historical return since around 2005-06.

I have pretty good job security and don't like the idea of holding a lot of cash in an emergency fund.  I keep between $1000-2000 in that format, and even that feels wasteful to me, haha!  Considering how high my savings rate is, I feel like I could cover any true emergency cost pretty easily within that month's income (and I have that Roth as well).  I see emergencies as very rare though.

Since I am a career changer, I'm a little older than I wish I was at this point financially, being 32.  My "dream" would be to have a LOT of flexibility by the time I'm 40-42 to be able to work VERY part time to cover living expenses while my main Stash grows undisturbed.  I am single and don't plan on having kids or owning any kind of property in the near future (I want to be open to moving if opportunities arise).  I have never desired owning property to be honest.  I feel like living on under $20,000 would be extremely easy if not using a car much and not picking the stupidly expensive apartment I ended up choosing...forgive me, I hadn't yet found MMM!  :) 

I didn't mention it before, but I am a physical therapist.  Salaries nationally average about $80,000, so it's possible I could increase my earnings over the next 5-10 years by anywhere from $5,000-15,000+ depending on where I go and what practice area I choose (nursing facilities pay physical therapists the most, but it isn't really my cup of tea...though I could maybe do it for a short time for something different).  I work in the outpatient setting though, and that's my preferred setting.  My pay is actually relatively quite good for being right out of school and working outpatient, especially for Ohio.

In today's dollars, it seems like it would take a minimum Stash of $400,000 to even begin to entertain the idea of being FI given my spending level ($16,000/yr at 4% SWR).  While I like what I do, I think I would like it a lot better if I knew I didn't depend on the job to "get by."  If I amassed $400,000 (again, in today's dollars) at some point in the future, I would likely just stick to my plan of working part-time and probably still maintaining a savings rate at a more traditional level than the 65-70% I aspire to save next year (at around 60% now). 

I guess I'm just a little bit dejected at how many calculations seem to suggest it will take me roughly 12-13 years.  Perhaps it's just the envy of hearing about people reaching FI in 5-6 years thanks to higher salaries and no starting student loans.  I am motivated to get there eventually, and even if I was 45 when I reached FI that would give me multiple decades of earlier than typical retirement. 

Do you think it is realistic for me to expect FI to come for me around age 43-45 but no earlier?

Should I keep attacking the 6.2%/5.4% student loans after I finish the 6.8% loans with 100% of my savings so that I obliterate all debt, or would those lower rates suggest I maybe mix it up more?  Should I be weary of putting further money into my Roth IRA because the investment returns will be inaccessible until I'm 59.5 unless I take the penalty?  Is it still advisable for me to put money in a traditional 401k for the tax advantages/to the extent of employer matching benefits?  I'm concerned about putting too much into traditional retirement accounts considering I'm not one of those people making over $100k/year who can easily max retirement accounts while sizably increasing a taxable account too.

Any help would be greatly appreciated.  This community is incredible!  Sorry for being long-winded!



robartsd

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Re: Trying to accelerate the path to FI...
« Reply #1 on: September 28, 2015, 01:08:22 PM »
It looks like you're doing great! Keep working on optimising your grocery spending. You may want to study Daley's frugal telecommuncations superguide to reduce your internet and/or cell phone service costs (potential savings $20-35/month). Celebrate the day you reduce your rent/commute costs next year (this will be your big win)!

I'd stick with paying off student loans before any taxable investements. Your Roth contributions are your emergency fund - no need to keep more than about one extra month's spending in a bank account. I wouldn't withdraw from the Roth to pay down the student loans though.

As far as 401k and IRA savings go, don't forget that rollovers are withdrawable the same as contributions after a 5 year waiting period. If your Roth contributions and taxable investments can carry you through the first five years, you can use a rollover ladder to access your tax deferred accounts for years 6 to normal retirement age. Also, if you do decide to buy a house, you can use retirement accounts funds there too - if nothing else this helps pay housing costs out of your retirement accounts when you retire early. More detailed analysis required to determine how to split money between tax advantaged savings and student loans, but I certainly would not overlook the potential savings of these accounts.

zolotiyeruki

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Re: Trying to accelerate the path to FI...
« Reply #2 on: September 28, 2015, 01:40:28 PM »
I'd like to second everything robartsd said.  The interest rates on your student loans are high enough that I'd attack them first.  I like the idea of giving each one a name!  You're already on the right track, and it's awesome to see how aggressively you're paying them down.  At your current rate, you'll probably have them all paid off within 2 years.

As far as your spending is concerned, I don't see anything worthy of a facepunch.  There *might* be a couple hundred bucks total you could save, but overall, you're doing well.

The only adjustment I *might* make would be to reduce your taxable income via pre-tax retirement accounts--401k and/or traditional IRA.  Assuming you're single, you'd defer the 25% tax you're currently paying until you're likely to pay only 10% (or less!).  That's effectively an instant 15% return.  However, the guaranteed 5-7% return you're getting now by aggressively paying down your student loans is pretty hard to pass up.

If it were me, I'd pay off the student loans and take the tax hit for the next two years.  Then max out 401k and tIRA contributions to minimize taxable income and maximize retirement savings.

robartsd

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Re: Trying to accelerate the path to FI...
« Reply #3 on: September 28, 2015, 03:09:54 PM »
The only adjustment I *might* make would be to reduce your taxable income via pre-tax retirement accounts--401k and/or traditional IRA.  Assuming you're single, you'd defer the 25% tax you're currently paying until you're likely to pay only 10% (or less!).  That's effectively an instant 15% return.  However, the guaranteed 5-7% return you're getting now by aggressively paying down your student loans is pretty hard to pass up.

Remember that that 15% effective return is one time, not annual; but you'd also get your investment returns on your retirement accounts, so it certainly is worth considering. I would not forgo an employer match to accelerate student loan payoff in your situation; but I'm not certain how I'd balance saving in tax deferred accounts vs. paying off the student loans if I were in your tax bracket.

I have a 15% marginal federal tax rate and have been only contributing enough to IRAs to maximize the federal Saver's Credit. I hadn't really considered the tax deferral benefits much until this year, but think that may actually have been the more beneficial options. I'm pretty sure that the emotional impact of paying off all debt at more than 3% by year's end is more of the reason I'm staying on my current course than rational lifetime optimization.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #4 on: September 28, 2015, 10:00:59 PM »
Thanks to you both!  My employer's 401k matching is something like 20% of your first 2-3% or something like that, and in addition they have a "vesting" setup where you're only entitled to their matching amounts over a period of 5 years of continued employment (after one year, you keep 20% of what they matched, then 40% after two years, etc. up to 100% after 5 years).  You are fully vested in your own contributions though. 

Because I started work halfway through this year, my taxable income will only be about half of the $68,000 annual salary I have.  I figured that would make it more obvious to go after the student loans first. 

I think the most rewarding process from all of this planning and frugal living is in actually appreciating all the amazing privileges I still have available to me in my life despite living on much less than most of my classmates (some are buying new cars, new fancy triathlon bikes, and other items costing thousands of dollars when I know they have student loans to pay).  By cutting out lots of extraneous things, it keeps me more mindful of my possessions and their true value.  More often than not, I'm shocked by how much waste I can continuously find over time and eliminate with continued mindful living. 

Thanks for the feedback again!  I'll have to check that "super guide" next, robartsd!

LAGuy

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Re: Trying to accelerate the path to FI...
« Reply #5 on: September 28, 2015, 10:06:14 PM »
Can't you consolidate those student loans into one? I dunno, you used to back in the day and usually got a pretty low rate on it when you did. Think I got mine down to like 4% plus another .25% off for automatic payments. I put myself on the 20 year repayment plan since I could also take some of that interest off my taxes. I paid it off once my income got too high to claim that reduction.

robartsd

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Re: Trying to accelerate the path to FI...
« Reply #6 on: September 29, 2015, 11:45:34 AM »
Yes, since all your student loans are at a fairly high rate, you might see if they can be consolidated to a lower rate. MMM recommended SoFi student loan refinancing a while back. If they are federal student loans, you may lose some ability to qualify to change payment plans when you consolidate.

Bucksandreds

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Re: Trying to accelerate the path to FI...
« Reply #7 on: September 29, 2015, 01:05:11 PM »
I basically have the same problem as OP and the real problem holding back millenials is student loans.  I make more and have more in student loans.  Spending 50% of my after tax income paying them will take 5-6 years to pay them.  At the 6.8% interest rate that the federal government demands, it makes it financially savvy to pay them off ASAP.  Sofi may get you to 4.5-5% on a 10 year term but you lose the opportunity to defer them in the event of unemployment or sickness and your family would have to pay them if you die. That puts a person in a position where with full time work the smart thing to do (besides putting enough in 401k for company match) is saving virtually nothing for greater than a half decade.  That is after delaying entering the workforce for years while in school.  How is putting millions of people into a situation where they have no hope to begin to get ahead for a decade or longer the best option for our society as a whole?

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #8 on: September 30, 2015, 09:01:27 PM »
I could consolidate the loans, and I went to SoFi yesterday actually after looking at MMM's post about it, but the rates offered to me were actually surprisingly above my lowest loans for the fixed rate.  All of my loans are federal, and while I don't anticipate unemployment anytime soon, few people plan on becoming unemployed.  It is still a tempting idea in theory to consolidate at a lower overall rate, but I'm not yet sold on it since it seems like the deferment option could theoretically be helpful in a pinch.  Perhaps I'm being overly conservative here...

I think I'll just keep this "ARRHGHGH I'M COVERED IN FIRE ANTS AND ACTUAL FIRE!!!!" mindset toward the loans and pay them off ASAP to minimize the impact of the interest rates. 

Bucksandreds

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Re: Trying to accelerate the path to FI...
« Reply #9 on: October 01, 2015, 05:38:08 AM »
I could consolidate the loans, and I went to SoFi yesterday actually after looking at MMM's post about it, but the rates offered to me were actually surprisingly above my lowest loans for the fixed rate.  All of my loans are federal, and while I don't anticipate unemployment anytime soon, few people plan on becoming unemployed.  It is still a tempting idea in theory to consolidate at a lower overall rate, but I'm not yet sold on it since it seems like the deferment option could theoretically be helpful in a pinch.  Perhaps I'm being overly conservative here...

I think I'll just keep this "ARRHGHGH I'M COVERED IN FIRE ANTS AND ACTUAL FIRE!!!!" mindset toward the loans and pay them off ASAP to minimize the impact of the interest rates.

Same cost/benefit analysis I did with same result.  I have a child and a pregnant wife and if something happened I wouldn't want to burden the my family.  I don't qualify for the tax deduction, also.  When you looks at the statistics that millenials are buying less houses and spending less in general it is all because of the dead weight of student loans.  The thousands$ that I am spending every month for years, could be invested into productive outlets but instead are being used by the federal government for profit (they are profiting billions$ off of these loans.)  At the rate that things are going it will eventually become not financially profitable to go to college.  Then you look at the 8 years of delayed gratification that I spent while taking on more debt and living in a cockroach infested off campus apartment and I begin to wonder if maybe that point is closer than the 'experts' even believe. 

robartsd

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Re: Trying to accelerate the path to FI...
« Reply #10 on: November 06, 2015, 11:50:33 AM »
My wife and I graduated with Bachelor's degrees in March 2010 and Dec 2009. We had about $24k in subsidized Stafford loans. About $6k of that was in my earliest loans at rates below 3%, the rest was at rates from 5.75%-6.80%. As the economy was really poor when we graduated, the flexibility of the Federal loan program was very useful for the first couple of years. Last month we paid off the last of the high rate student loans (we're paying the low rate loans as slowly as possible). When I talk to young people about college, I encourage them to avoid student loans unless they've fully researched how their planed education will help them make enough money to justify them.

Freedomin5

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Re: Trying to accelerate the path to FI...
« Reply #11 on: November 11, 2015, 05:23:06 AM »
It sounds like you're doing great, and 50k take home pay is pretty decent. I only have one possible suggestion - if you're not liking the high rent, is it possible to take on a roommate? That could potentially save you a few thousand a year.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #12 on: January 24, 2016, 07:22:51 PM »
UPDATE:  I'm starting the new year strong, and I'm pleased to say I have a positive net worth now!  I have been fighting to pay off highest interest loans every month, shooting for ~$2600/month or around a 61% savings rate.  I have scouted out potential places to move that are within a few miles of my workplace, and there are a lot of options!  Rent should be cheaper too since I'm currently in a fairly pricy area.  I just filed my taxes today, and will get a refund of $2322, 100% of which will go toward paying off debt even more.   

My student loan interest rates slightly went down after I entered the official repayment period, interestingly.

Loan 1 $12,928 (5.96%)
Loan 2 - $4,173 (5.16%)
Loan 3 - $12,768 (5.16%)
Loan 4 - DESTROYED (6.8%)
Loan 5 - $11,482 (6.55%)
Loan 6 - $783 (6.55%)  ---- Almost destroyed!!!

Total value of Vanguard/bank accounts: $44,563
Total Debt: $42,175


arebelspy

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Re: Trying to accelerate the path to FI...
« Reply #13 on: January 25, 2016, 01:05:02 AM »
Seems like you're on a great path.

I would definitely look for other jobs in your field after a bit--changing companies can be one of the best ways to bump salary (going up straight from raises is a lot tougher, typically).

Don't worry about what others are doing, focus on your path, and enjoying your journey.  FI will come all too quickly, believe it or not. If you point yourself in the right direction, time will inevitably pass.

Good luck!
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FrugalFan

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Re: Trying to accelerate the path to FI...
« Reply #14 on: January 25, 2016, 08:20:20 AM »
Congrats, you are making AMAZING progress! You will have those loans destroyed in no time!

robartsd

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Re: Trying to accelerate the path to FI...
« Reply #15 on: January 25, 2016, 08:55:13 AM »
My student loan interest rates slightly went down after I entered the official repayment period, interestingly.
A lot of Student Loan lenders offer a discount for putting your loans on auto pay with them. Usually their auto pay will automatically draw the minimum payment from your bank account on the due date (or a date a few days earlier that you choose). My loans are serviced by Nelnet and I get the discounted rate even though their auto pay never pulls money from my account - I have payments sent using my bank's bill pay which ensure that on there is no payment due for autopay to collect.

AZDude

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Re: Trying to accelerate the path to FI...
« Reply #16 on: January 25, 2016, 09:06:01 AM »
Here you go. I tried not to get too obscure.

Loan 1 $12,928 (5.96%) :                                   Lanfear ( Forsaken from WoT series)
Loan 2 - $4,173 (5.16%) :                                      Smaug (Dragon from The Hobbit)
Loan 3 - $12,768 (5.16%) :                                    Verminaard (Dragon highlord from Dragons of Autumn Twilight - Dragonlance)
Loan 5 - $11,482 (6.55%) :                                    Warlock Lord (Sword of Shannara) 
Loan 6 - $783 (6.55%)  ---- Almost destroyed!!! : Voldemort (Harry Potter)

MsSindy

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Re: Trying to accelerate the path to FI...
« Reply #17 on: January 25, 2016, 10:33:53 AM »
So, I was just thinking, if you have a normal 40 hour work week, single, looking to crush your SL debt, is it possible to take on a side hustle?  Nothing that you have to commit too much time to, but could bring in some extra bucks each week to make things move faster.  Ideas:
 - working PT with a moving company
 - bartending/waitstaff at a more upscale restaurant (make better tips)
 - landscaping / day laborer (I pay my guys $15/hour tax free and that includes a nice lunch!)
 - ???

Anyways, just a thought!   Just wanted to stop by and say you're doing great!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #18 on: January 25, 2016, 05:18:03 PM »
Today I was actually thinking about the possibility of looking for an "as needed" (prn) side physical therapy job.  I wouldn't have to worry about benefits since I have those through my Mon-Fri job, and I'd get a nice hourly rate most likely being a prn employee. 

I will consider this along with planning my potential new apartment locations close to work (ideally walking distance).  I'd love to hit the 70% savings rate!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #19 on: April 21, 2016, 09:11:22 AM »
UPDATE:  I signed up for a new apartment that is 0.8 miles from work, so I can walk or bike.  The rent/utilities are cheaper as well, but it is still a nice place (brand new).  This move, in June, will eliminate 240+ miles of commuting to work in my car!  I will also have about an hour extra per week day of free time!  I am continuing to vigorously fight my student loans, and my goal is to kill Loan 5 by my June 19 33rd birthday (then on to Loan 1).  Here is how the loans look today:

Loan 1 $12,676 (5.96%)
Loan 2 - $4,088 (5.16%)
Loan 3 - $12,508 (5.16%)
Loan 4 - DESTROYED (6.8%)
Loan 5 - $4,522 (6.55%)
Loan 6- DESTROYED (6.55%)  ---- Almost destroyed!!!

Total value of Vanguard/bank accounts: $49,002
Total Debt: $33,811

Net Worth: over $15,000

My goal is to hit $300,000 net worth by age 40, but this feels oh so far away haha!

2Birds1Stone

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Re: Trying to accelerate the path to FI...
« Reply #20 on: April 21, 2016, 01:16:43 PM »
You are killing it!!

b_girl

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Re: Trying to accelerate the path to FI...
« Reply #21 on: April 21, 2016, 01:29:57 PM »
Awesome Job! Every time you kill a loan has to be empowering!

I love the updates every few months. Looking back it shows how much progress you have made.

Lucky Girl

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Re: Trying to accelerate the path to FI...
« Reply #22 on: April 22, 2016, 11:18:09 AM »
Very inspiring read, great job!  I'm sure it feels like getting to that final goal is a long way off, but you've put yourself in a great position.  Small emergencies are not going to knock you down.  If you read the article from that guy in The Atlantic about "middle class shame" (its in the Anti-mustachian wall of shame section), you must feel great about where you have put yourself.  Not that I recommend comparing one's self to others, but you have taken control of your own life.  Great work!

Check2400

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Re: Trying to accelerate the path to FI...
« Reply #23 on: April 22, 2016, 11:40:47 AM »
Good Job! 

As a recently extinguished Student Loanee, I can tell you that you're doing it all right, and that you're already set up to win.

Some people say consolidate, but I think that killing them individually is mentally, emotionally, and practicably better, especially at your rates.  People on these boards tend to be goal oriented, and I see nothing wrong with having shorter term goals of sniping loans one by one.  That way they're closer and more attainable. 

My two cents:  Don't actually pay down the loans each month, but set aside the pay down on the loans each month.  That way, when you get 4,000 in your savings account, you can either pull the trigger to smite Smaug, or bulldoze down and attack Lanfear.  I mixed it up, depending on bonus/tax refunds, but always looked at the loan pay off as a monthly pay raise.  Pay off a $100 a month obligation?  Well, that is essentially a $1500 a year gross pay raise. 

The other bit of advice is that when these debts are gone immediately max the 401K.  If you're paying $700 in loans, and putting an additional $800 towards them a month, then maxing the 401K changes nothing in your excess take home--once again, paying 1500 pretax in 401k is essentially like losing 1200 in net pay.  The fruits of this are two fold.  You put yourself on autopilot above 90% of savers out there, and it makes every pay raise you receive from here on forward a direct raise to you--no other obligations to tend to but to deposit into your Vanguard!

The good news is that these opinions are just different opinions on the great path you're going to.  The goal after no debt, and maxing retirement isn't FI (I'm in the 12 year boat too and its a constant numbers running obsession), but to get FU.  The feeling of comfort and security of knowing that you can take months off, take a pay cut, or tackle what would be an emergency for others but a mere speedbump for you is a great feeling. 

Keep it up!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #24 on: April 26, 2016, 11:08:58 AM »
Very inspiring read, great job!  I'm sure it feels like getting to that final goal is a long way off, but you've put yourself in a great position.  Small emergencies are not going to knock you down.  If you read the article from that guy in The Atlantic about "middle class shame" (its in the Anti-mustachian wall of shame section), you must feel great about where you have put yourself.  Not that I recommend comparing one's self to others, but you have taken control of your own life.  Great work!

Thanks for that article suggestion.  I am baffled at the concept of a negative savings rate.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #25 on: April 26, 2016, 11:09:51 AM »
Awesome Job! Every time you kill a loan has to be empowering!

I love the updates every few months. Looking back it shows how much progress you have made.

I will plan to do another update on or around my June birthday.  Tune in to see if I reach my goal, haha!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #26 on: April 26, 2016, 11:11:31 AM »
Good Job! 

As a recently extinguished Student Loanee, I can tell you that you're doing it all right, and that you're already set up to win.

Some people say consolidate, but I think that killing them individually is mentally, emotionally, and practicably better, especially at your rates.  People on these boards tend to be goal oriented, and I see nothing wrong with having shorter term goals of sniping loans one by one.  That way they're closer and more attainable. 

My two cents:  Don't actually pay down the loans each month, but set aside the pay down on the loans each month.  That way, when you get 4,000 in your savings account, you can either pull the trigger to smite Smaug, or bulldoze down and attack Lanfear.  I mixed it up, depending on bonus/tax refunds, but always looked at the loan pay off as a monthly pay raise.  Pay off a $100 a month obligation?  Well, that is essentially a $1500 a year gross pay raise. 

The other bit of advice is that when these debts are gone immediately max the 401K.  If you're paying $700 in loans, and putting an additional $800 towards them a month, then maxing the 401K changes nothing in your excess take home--once again, paying 1500 pretax in 401k is essentially like losing 1200 in net pay.  The fruits of this are two fold.  You put yourself on autopilot above 90% of savers out there, and it makes every pay raise you receive from here on forward a direct raise to you--no other obligations to tend to but to deposit into your Vanguard!

The good news is that these opinions are just different opinions on the great path you're going to.  The goal after no debt, and maxing retirement isn't FI (I'm in the 12 year boat too and its a constant numbers running obsession), but to get FU.  The feeling of comfort and security of knowing that you can take months off, take a pay cut, or tackle what would be an emergency for others but a mere speedbump for you is a great feeling. 

Keep it up!

Thanks for the input!  I may be exposing my naivete, but what is FU?  I can only think of one vulgar possibility but the context doesn't fit LOL! 

Financially...?

FrogStash

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Re: Trying to accelerate the path to FI...
« Reply #27 on: April 26, 2016, 12:16:00 PM »
It is what you think it is.  Having enough money to tell the full time job you hate that you don't have to do it any more.  Having enough money to quit unexpectedly and be ok while you look for another job or explore your options.

Gin1984

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Re: Trying to accelerate the path to FI...
« Reply #28 on: April 26, 2016, 12:25:06 PM »
Are you maxing out your HSA for those times you need OOP medical?

Cannot Wait!

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Re: Trying to accelerate the path to FI...
« Reply #29 on: April 26, 2016, 08:50:33 PM »
http://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/

Great job!  With a second job and biking for transportation,  you're head will start to spin at how fast you'll reach your goals.

Is your new place big enough for a roommate?   IMO, if you get the right person, that can be real easy money.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #30 on: June 16, 2016, 07:48:54 AM »
Update:  I have reassessed the prioritization of my investments and am currently putting money into my company 401k and traditional IRA ahead of loans.  I want to max these out to lower my taxable income, allowing me to use the tax benefit for interest paid on student loans (I should get the max).  I am also given mild pause by the fact that many jobs in my field offer a student loan assistance where the employer will help pay them down. 

In any case, I am focused on improving net worth and multitasking my 401k/IRA investing + attacking loans with whatever else I can spare.  I have gone from a net worth around $2k at the start of the year to near $21k today.  I am also hoping by the end of the year to have a net worth of 2x my annual living expenses.

Cannot Wait!

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Re: Trying to accelerate the path to FI...
« Reply #31 on: June 16, 2016, 08:29:26 AM »
Happy Birthday!
Fantastic update!

arebelspy

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Re: Trying to accelerate the path to FI...
« Reply #32 on: June 28, 2016, 11:14:50 PM »
I am also hoping by the end of the year to have a net worth of 2x my annual living expenses.

To go from approximately zero to 2x your living expenses in a year is awesome!  FIRE is only a decade away or so at that rate!
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.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #33 on: June 29, 2016, 04:33:33 AM »
Yup, that is the plan!  FI by Dec 31, 2025!

nottoolatetostart

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Re: Trying to accelerate the path to FI...
« Reply #34 on: June 29, 2016, 04:39:24 AM »
Congrats, you are doing great!

Getting rid of SLs is such a huge relief. I had 89k at one point (job earned me much more than that, thankfully), but they were gone about 3.25 years after graduating. Your momentum is going to go faster and faster as you get closer to the finish line. Great job on the 2x too.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #35 on: September 22, 2016, 06:36:52 AM »
It has been awhile since I last updated my progress, so I figured I would give a succinct update.  I am doing a mixture of investment between 401k/IRA/paying student loans at this point (seems best for my situation at present), and so far this year has involved some major progress.

1) I moved, cutting my direct housing expenses by around $150/month.
2) The move eliminated a 48-mile round trip drive.  I now walk to work almost every day, barring extreme weather or other unusual circumstances.
3) I jumped through some hoops at work for a new health incentive program to knock off $50/month in my health insurance premiums starting next year.
4) I earned a 3% raise, which is a relatively high number at my employer, raising my overall (pre-tax) salary to >$70k.
5) Flirting right around 70% personal savings rate now!  Whenever I hit a nice round number like that, it is further motivation to cling on to it!

Net worth progress on the first of the month (remember, I started the year around $2000):
June- $19,879
July- $23,001
August- $28,667
September- $33,134

After tomorrow's paycheck: Around $35k

My reach goal is to hit $45k by the end of the year, but I should safely be beyond $40k by January 1.  I will have maxed out my 401k/IRA contributions for 2016 as well as cut down on my student loan debt. 

I love what MMM has done to my life!  My current long-term plan is to shift to part-time work eventually (maybe in ~7-8 years), which itself should more than cover my happily frugal lifestyle while allowing the Freedom Fund (The "Stache") to grow untouched.  The way I live now, I could only work two days/week (vs. 5) and easily cover my life expenses with money to spare!
« Last Edit: September 22, 2016, 06:39:03 AM by ardrum »

zolotiyeruki

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Re: Trying to accelerate the path to FI...
« Reply #36 on: September 22, 2016, 07:23:50 AM »
Wow, that's fantastic progress!

FrugalFan

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Re: Trying to accelerate the path to FI...
« Reply #37 on: September 22, 2016, 08:14:29 AM »
I agree, amazing progress! Thanks for the update!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #38 on: December 26, 2017, 03:28:59 PM »
Update:  Approaching the end of 2017, I am at about $91k net worth with my annual cost of living being about $19k currently.  I received a 4% raise this year, but I'm feeling any further significant progress (aside from staying the course as I'm at now) would require getting a new job or somehow getting a profitable side gig.  I'm not convinced I want to cut expenses much more, so I'm at a point where increasing income is the more realistic way to speed up the trip to FI.  Either way, I am looking forward to hitting my first $100k in net worth (investable assets have already been above that, but I only identify with net worth) before the end of winter.


zolotiyeruki

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Re: Trying to accelerate the path to FI...
« Reply #39 on: December 26, 2017, 07:31:06 PM »
Update:  Approaching the end of 2017, I am at about $91k net worth with my annual cost of living being about $19k currently.  I received a 4% raise this year, but I'm feeling any further significant progress (aside from staying the course as I'm at now) would require getting a new job or somehow getting a profitable side gig.  I'm not convinced I want to cut expenses much more, so I'm at a point where increasing income is the more realistic way to speed up the trip to FI.  Either way, I am looking forward to hitting my first $100k in net worth (investable assets have already been above that, but I only identify with net worth) before the end of winter.
Congratulations!  If you're comfortable with the place you're in, and you're just ticking off the years until FI, that makes you a SWAMI.  It's a good place to be in :)

zeli2033

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Re: Trying to accelerate the path to FI...
« Reply #40 on: December 28, 2017, 10:35:23 PM »
Replying for a couple reasons:

1) It's awesome to see the progress you've made! There are some similarities in our situations (granted you're further along) and it inspires me to keep on truckin'. I can't wait to get updates on where you're at!

2)...I've seen the SWAMI acronym before but Google is failing me and I can't for the life of me figure out what it means in this context...hoping zolotiyeruki or someone else can enlighten me!

Wayward

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Re: Trying to accelerate the path to FI...
« Reply #41 on: December 29, 2017, 11:34:28 AM »
Posting to follow your progress; it has been super inspiring to read your journey to FI!  You are much further along than me, but Im realizing Ive been too focused on killing the student loans and not adding enough to my net worth.  I will need to make a post myself for motivation and to keep track of my progress.  Please keep updating!

Happy New Year!   

zolotiyeruki

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Re: Trying to accelerate the path to FI...
« Reply #42 on: December 29, 2017, 03:25:13 PM »
Replying for a couple reasons:

1) It's awesome to see the progress you've made! There are some similarities in our situations (granted you're further along) and it inspires me to keep on truckin'. I can't wait to get updates on where you're at!

2)...I've seen the SWAMI acronym before but Google is failing me and I can't for the life of me figure out what it means in this context...hoping zolotiyeruki or someone else can enlighten me!
SWAMI = Satisfied Working Advanced Mustachian Individual.  Someone who has their finances under control, knows what they're spending, knows why they're spending it, and knows it's worth it.  Someone who is not FIRED yet, but is in a good place and biding their time until they reach FI.

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #43 on: December 30, 2017, 07:09:47 AM »
I don't know how I missed the SWAMI reference since when I first discovered MMM I read them from start to finish.  I think I periodically would daydream mid-blog post though about the possibilities with FI, so perhaps I was brain farting at that time. :D

I was thinking that with $60k net worth gain in 2017 (I'm still stunned thinking about that), using the 4% rule, I basically gave myself the gift of a lifetime of free food.  It's an interesting and motivating mental exercise to periodically "itemize" progress along the way to FI to really imagine how far you've come.

zeli2033

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Re: Trying to accelerate the path to FI...
« Reply #44 on: December 30, 2017, 08:47:45 PM »
Replying for a couple reasons:

1) It's awesome to see the progress you've made! There are some similarities in our situations (granted you're further along) and it inspires me to keep on truckin'. I can't wait to get updates on where you're at!

2)...I've seen the SWAMI acronym before but Google is failing me and I can't for the life of me figure out what it means in this context...hoping zolotiyeruki or someone else can enlighten me!
SWAMI = Satisfied Working Advanced Mustachian Individual.  Someone who has their finances under control, knows what they're spending, knows why they're spending it, and knows it's worth it.  Someone who is not FIRED yet, but is in a good place and biding their time until they reach FI.

Thank you for shedding light on this!

ardrum

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Re: Trying to accelerate the path to FI...
« Reply #45 on: January 19, 2018, 05:11:17 PM »
New milestone achieved today!

Apple_Tango

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Re: Trying to accelerate the path to FI...
« Reply #46 on: January 19, 2018, 07:04:50 PM »
This new milestone is amazing!! I am in a VERY similar career to you, although I am transitioning out after only 3 years because I actually dont like it due to all the healthcare hoops and unethical employers. I think outpatient is one of the best options, but I spent most of my time in SNF ( would not recommend)  and now Im just doing part time Home Health (actually not bad at all) as well as tutoring as a side hustle until I get my new non-healthcare job started in a few months. I love your net worth progress!!! I want to be a SWAMI like you :)

Check2400

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Re: Trying to accelerate the path to FI...
« Reply #47 on: January 22, 2018, 09:22:49 AM »
Loan 1 $12,676 (5.96%)
Loan 2 - $4,088 (5.16%)
Loan 3 - $12,508 (5.16%)
Loan 4 - DESTROYED (6.8%)
Loan 5 - $4,522 (6.55%)
Loan 6- DESTROYED (6.55%)  ---- Almost destroyed!!!

Total value of Vanguard/bank accounts: $49,002
Total Debt: $33,811

Net Worth: over $15,000

My goal is to hit $300,000 net worth by age 40, but this feels oh so far away haha!


My reach goal is to hit $45k by the end of the year, but I should safely be beyond $40k by January 1.

New milestone achieved today! [$100,000K]

Isn't it fun having your past posts to look back at and see where you were and where you are?   

Now that you've hit six digits, come over and join the rest of us for more fun and accountability. 
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-from-100-to-250k/1500/

Where are you on your student loans?  I've got to believe that they are in the final stages.  Give us an update so your audience knows!  Are you still spending 20K a year?   Are your 'multiples of final living expenses' still based on 30K a year? 

Does 40 still seem so far away?  More importantly, does $300,000 still feel so far away?  I'll bet not, since you've gotten 1/3 of the way there in 2 years time--and the beginning is always the hardest!

My two cents--if you're anything like me, and it sounds like your path is--you're now safely in the groove, which can easily turn into a rut.  You've figured out how to live life frugally, you've got fat trimmed in most places, and now you've just got to wait.  Part of you wants discounted stocks, and part of you knows that seeing that number go down now will hurt hurt hurt--even if it doesn't matter for 5-6 more years.   

Stick to the plan and, as arebelspy will tell you, find out what you enjoy in life and start living it now--the good life doesn't have to wait until work is out of the way.

Congratulations!


Ryland

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Re: Trying to accelerate the path to FI...
« Reply #48 on: January 22, 2018, 02:20:47 PM »
First off, definitely name those loans! haha Love that.

And I think you should try using a new psychological framework to accelerate your path to FI...

So FI right now is when you hit your number (25-30x your spending, passive income covering lifestyle cost...)

But what FI really is (and what it sounds like you really want) is the ability to live that freedom-based/flexible lifestyle/self-fulfilling work as soon as possible. You can live that life much sooner then you reach the 25-30x spending numbers.

I had the same mindset -- get to 25X my spending -- and then "I'm free!" but what I've learned is that once you have 'enough' in your net worth you got to start building your FI life before you hit those FI numbers.

I did this after quitting my job out in Silicon Valley last year (at 26 with ~$180k), and it was the best thing I've ever done. And with the Mustaschian mindset, spending patterns and yearning to always be learning and contributing to society/other people... it's worked out great.

If you want to chat more about your situation, feel free to PM me. Happy to learn more about where you're at and wanting to go.

Igelfreundin

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Re: Trying to accelerate the path to FI...
« Reply #49 on: January 22, 2018, 04:18:00 PM »
Chiming in to say that your updates are great. I hope you are still loving your commute- having a mainly non-car commute had made a big difference in my quality of life.

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