Female 26 working in finance and moving to NYC

[Delphi305]

Hi! This is my first post in the MMM forum but I have been practicing frugality and following Mr Money Moustache for over 18 months now. I would like to have some feedback from other people who have already reached FIRE at a young age. Every time I make my numbers I calculate that I will be able to retire in 8-12 years depending on market conditions. This means that I will be as young as 34-35 ish or as old as 38-39ish. One of the main reasons that I would like to FIRE is because I would love to travel way more (at least 3 to 4 months of travel every year or a sabbatical year), be able to see my friends and family that live abroad more often, have more flexibility with my time and have some financial security to start a small business (nothing too time consuming, just enough to keep my mind busy) and possibly start a family.
So my current economic situations and future plans are the following:

General Background

Age: 26
Sex: Female
Marital status: Married
Health history: me and my husband are healthy and never had serious illnesses
Occupation: Business Analyst in large private bank. Looking to grow in this field since it’s in high demand. Possible promotion every 2 -3 years. Possibility to be a Manager when I am 30. After that I would like to transition to something more flexible since I love traveling and also my family lives abroad.
Years of experience: 2
Educational background: I have bachelors and Masters in Business achieved one after the other. They are from relatively small universities and fully paid.
City: Miami but moving to Jersey City or NYC in the summer 2019 (my husband is graduating from his bachelors in computer science and has a 10-week internship in NYC with 99% chance of a full time offer by the end of his internship period)
Dependents: None. But planning to adopt a dog very soon. Also my mother in law will probably require some financial help in the next 5 years, she came to the US at an advanced age and has no retirement savings whatsoever.

Financials

Salary 61,000 including annual bonus
(3400 per month After taxes and 401k contributions and medical insurance )
I also teach online or sell stuff once in a while but the income I generate here is kind of pointless so I won’t count it.
I automatically withdraw $2300 every month for all expenses, the rest goes to my investment ($1100 per month).

This covers:
Rent $800
Utilities $45
Phone $60
Subscriptions $30
Insurance: $100 (this is very expensive in Miami)
Gasoline: $30 (I drive my car less than 10 miles every day)
Food: $300-$350 (We shop mostly at Aldi)
Travel: $200 (I said I love traveling)
Fun: $200
Total $1815 to $2000
Whatever is left stays in the joint checking as a little cushion.

Net Worth

Assets—————————
Taxable accounts $ 22,472 (all invested in SPYD)
401k $ 7,695 (invested in S&P500 index)
HYSA $ 805
Savings $ 3,369
Checking $4,535
Car valuation $12,875
Liabilities————————
$0 (no student debt ,car fully paid yay!)
Net Worth ———————-
$ 51,751

Future Plans

When I move to NYC or jersey city my husband and I will probably be making around 100k each one including bonuses. (That’s around 5.8k per month after taxes each)

We are planning to rent in a place that costs no more than 2000 per month (so $1000 each one) and keep one of the cars if we stay at Jersey. We also plan to keep the rest of our costs pretty similar (food, travel etc.), since this time my husband is going to be working it’s going to be much easier to save, even in NYC so I calculate that every month each one of us is going to put 2k -2.5k toward expenses and the rest is going to go towards investments.  (5,800 - 2,500 = 3,300 aprox each month to invest)

I plan to retire with around $750,000. I am not counting my husband’s money in this because we like to separate our finances when it comes to investing. (I calculated a 6-15% return in my portfolio and also calculated paying around 20% every year on capital gains and a average savings rate of 56-65% after tax)
Not planning to live in NYC forever but a couple years and then move to a LCOL , buy a house, and get a job that pays 100k+ per year or a remote NY job that pays the same.
Not entirely sure if I am going to be able to househack since we have to separate a part of the house for my mother in law.
Also not planning to max out 401k (but taking advantage of the free match) I value the flexibility of taxable accounts since I am planning to do some fun stuff with my money later on (I plan to buy and sell options, my father retired early thanks to that knowledge and now I plan to leverage that knowledge to get better long term results from my portfolio than just the regular couch potato strategy, that’s why I believe I can get up to 15% return)

Am I being too optimistic? Any feedback or improvements I can make to my strategy are welcomed!

[JLee]

At a ~100k salary with federal + state income tax, you're losing out on significant tax advantage by not maxing your 401k. 

For what it's worth, I'm around 110k base (in NJ) and after maxing my 401k and HSA and withholding single/0, my take-home is about ~2300 biweekly (~$5k/mo average if you factor in the two 3-check months). With health insurance/etc deductions, that will vary slightly but hopefully it gives you a rough estimate of what to expect.

Have you priced transit costs, both from living in NJ or living in NYC (presumably Brooklyn or Queens at $2k/mo budget)?

[ysette9]

Absolutely max out your 401k and a backdoor Roth IRA before starting on taxable investing. I doubt you’ll find many fans of options trading around these parts, but if you want to play and can stand to lose the money without impacting your long-term goals, go for it. I would personally advise no lore than 10% of your invested money going towards such alternative/risky strategies.

I think you are off to a great start. You have good discipline and are establishing a plan. My own life evolved quite a bit from my early career in ways that I wouldn’t have been able of predict. I am immensely grateful now that I began maxing out my 401k as quickly as possible, and that I had an emergency fund as well. The early start to savings and investing have put us in such an awesome position now in our late 30s.

I would recommend you read about a personal investment policy statement. https://www.bogleheads.org/wiki/Investment_policy_statement
This is your investment roadmap that you plan out in advance. It is designed to provide you guideposts to keep you from doing irrational things when the market looks like it is going crazy. Decide on a reasonable plan and then stick with it through thick and thin, and you’ll be successful.

[Montecarlo]

Just on the options bit...

A vanilla index fund that returns 5% appreciation and 2% dividends will wind up being taxed federally each year 15% of the 2% dividends.  That’s 0.3%.  At distribution you’ll pay whatever the capital gains tax is for your income bracket, which could wind up being 0%.

If you go with options, you’ll pay ordinary income, which will likely be 24% at your income.

Someone correct me if I’m wrong here.

Even if you can beat the market, how do you plan on beating the IRS?

[BostonBrit]

My advice for what it's worth. Big picture It sounds as if you've got a great plan, are making a fantastic start. At the same time however, you have an awful lot of unknown costs and outgoings coming up over the next few months with the move, which inevitably will result in higher costs that you expect. Equally, further out, and if I keep this high level, you've got an awful lot of unknown costs (and earnings opportunities) so I suggest you keep your goals, work towards keeping costs down, don't get a dog and then revisit this all in a year once you better understand the realities in NYC/NJ.

Dependents: None. But planning to adopt a dog very soon. Also my mother in law will probably require some financial help in the next 5 years, she came to the US at an advanced age and has no retirement savings whatsoever.

Don't do anything on the dog front until you're settled in NYC. You have no idea what the day-to-day practicalities of living in NYC will be like (commute, hours etc.). You're also 26 and moving to a new City... this is an amazing time in your life to enjoy being free, feeling wealthy and grasp every new opportunity that comes your way both personally and professionally. There's plenty of time in the rest of your life for having dependents. In NYC this is also a big financial commitment.

Net Worth ———————-
$ 51,751

Well done..

We are planning to rent in a place that costs no more than 2000 per month (so $1000 each one) and keep one of the cars if we stay at Jersey. We also plan to keep the rest of our costs pretty similar (food, travel etc.), since this time my husband is going to be working it’s going to be much easier to save, even in NYC so I calculate that every month each one of us is going to put 2k -2.5k toward expenses and the rest is going to go towards investments.  (5,800 - 2,500 = 3,300 aprox each month to invest)

These costs are aggressive. Manageable but there'll be a trade off somewhere.. probably in commuting time/cost. This has value and I'd again point out that there could be a trade off with having a once in a life time opportunity of being in your mid-late 20s, with no commitments in New York. I'm not saying blow all your cash on lifestyle... but don't have regrets over a couple of $$$ when you're 40, with potentially more commitments/dependents.

I would argue that $100k is not that aggressive a comp package in NYC. There's an argument for being more aggressive whilst you have this opportunity. If you're that confident in being able to trade options for instance and get a 15% return there are a heap of hedge funds that will pay you $$$+ for that skill, or research houses/IBs where you could monetize that and rapidly speed up your FIRE plans. I can only imagine the amount of time it would take outside of work/along with a day job to be effective at that... time where you could either get properly paid to leverage other people's assets or enjoying life.

Good luck with it all!

[marty998]

Hi! This is my first post in the MMM forum but I have been practicing frugality and following Mr Money Moustache for over 18 months now. I would like to have some feedback from other people who have already reached FIRE at a young age. Every time I make my numbers I calculate that I will be able to retire in 8-12 years depending on market conditions. This means that I will be as young as 34-35 ish or as old as 38-39ish. One of the main reasons that I would like to FIRE is because I would love to travel way more (at least 3 to 4 months of travel every year or a sabbatical year), be able to see my friends and family that live abroad more often, have more flexibility with my time and have some financial security to start a small business (nothing too time consuming, just enough to keep my mind busy) and possibly start a family.

You sound like the women I've had the misfortune of dating the last few months :D
In all of that I would ask them..... any time for me in there?

I'd park the idea of options trading and knuckle down on the career. Your best investment for the next couple of years will be building your personal brand within your company and industry.