Author Topic: What would you do?  (Read 2575 times)

zada0002

  • 5 O'Clock Shadow
  • *
  • Posts: 4
What would you do?
« on: July 03, 2015, 07:58:10 AM »
I am 28 and want to be FI by age 40. I have a job that pays $100,000 a year (still have student loans to pay off and want to buy a house).

I currently have a Vanguard target retirement fund (2050) that I am contributing $500 a month to.

I plan on saving $3,000 a month and contributing it into the Vanguard Total Stock Market Index Fund for the next 12 years. I have thought about betterment but it sounds like it the tax harvesting wouldn't benefit me because I am retiring early and make a high salary. Those two funds are all I plan on investing in.

I have never invested before, but the insight i've gleaned from MMM and other posts have me leaning in this direction. Thoughts?

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1394
  • Age: 46
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: What would you do?
« Reply #1 on: July 03, 2015, 09:04:27 AM »
Gratz!

I started my FI journey at 28 and finished at 40.  There were no student loans but I bought a house in that period.  I started out with a much lower salary than you and lost a couple years of work to caring for a terminally ill family member.  I think you can *easily* get there by 40 at 3k/mo savings rate.  Much depends on how much house you are going to buy though.  I'm in a low COL area and got a 4 bedroom for 97k. 

Some suggestions:
1) when you get annual raises, commit to saving at least half the after tax delta.
2) take full advantage of employer match on tax advantaged accounts.
3) don't fall the 'new car trap.'  All my (still working) friends drive new BMW, Mercedes, etc.  My '02 Chevy Paid For serves just fine.
4) don't get married to a spendy-pants.

Your target date plus Total Market Fund sound perfectly reasonable for accumulation phase.

Gogogogogogogo!

sirdoug007

  • Pencil Stache
  • ****
  • Posts: 587
  • Age: 38
  • Location: Houston, TX
Re: What would you do?
« Reply #2 on: July 03, 2015, 09:04:45 AM »
Is that 2050 retirement fund in a 401(k)?  If so you should max out your tax deferred savings to optimize taxes since you will pay less when you are retired.

What is the interest rate on the student loans?


Sent from my iPhone using Tapatalk

Wads

  • 5 O'Clock Shadow
  • *
  • Posts: 37
  • Age: 32
  • Location: PNW
Re: What would you do?
« Reply #3 on: July 03, 2015, 10:48:05 AM »
Zada your doing fine. If you have never invested before I highly recommend reading Jim collins stock series.

http://jlcollinsnh.com/stock-series/

I started at 25 and would like to FIRE sometime around 35. I have a job that pays 80K-120K depending on how much overtime I work, best part is I only have a HS diploma and was able to avoid student loan debt.

I do the following:
1) Max out company 401K(18,000)
2) Max out Roth Ira every January(5,500)
3) Invest/trade the remaining amount.


zada0002

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: What would you do?
« Reply #4 on: July 03, 2015, 05:17:15 PM »
Thanks for the replies!

The interest rates on my loans are 6.8%.

The 2050 TRF is post-tax...My job currently doesn't offer a match on the 401K.

I'm so happy I found this site. I think a lot of the ideals (non-materialistic, making time to spend with family, independence) were already part of me, but it's nice to find a site that offers concrete steps to help achieve that.

Interest Compound

  • Pencil Stache
  • ****
  • Posts: 658
Re: What would you do?
« Reply #5 on: July 04, 2015, 09:17:39 AM »
Thanks for the replies!

The interest rates on my loans are 6.8%.

The 2050 TRF is post-tax...My job currently doesn't offer a match on the 401K.

I'm so happy I found this site. I think a lot of the ideals (non-materialistic, making time to spend with family, independence) were already part of me, but it's nice to find a site that offers concrete steps to help achieve that.

The biggest benefit a 401k provides, is the tax savings, not the match. Always fill out tax-advantaged space before taxable, even if you plan on retiring early.

For what it's worth, I'd pay down those loan before investing anywhere, though you could make the argument for filling out your 401k first, then attacking the loan.

johnny847

  • Magnum Stache
  • ******
  • Posts: 3196
    • My Blog
Re: What would you do?
« Reply #6 on: July 04, 2015, 09:24:24 AM »
Thanks for the replies!

The interest rates on my loans are 6.8%.

The 2050 TRF is post-tax...My job currently doesn't offer a match on the 401K.

I'm so happy I found this site. I think a lot of the ideals (non-materialistic, making time to spend with family, independence) were already part of me, but it's nice to find a site that offers concrete steps to help achieve that.

The biggest benefit a 401k provides, is the tax savings, not the match. Always fill out tax-advantaged space before taxable, even if you plan on retiring early.

For what it's worth, I'd pay down those loan before investing anywhere, though you could make the argument for filling out your 401k first, then attacking the loan.

And zada, in case you think your 401k money is locked up until 59.5, it's not.
http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

surething22

  • 5 O'Clock Shadow
  • *
  • Posts: 34
  • Age: 29
  • Location: Orange County, CA
Re: What would you do?
« Reply #7 on: July 04, 2015, 10:12:25 AM »
Thanks for the replies!

The interest rates on my loans are 6.8%.

The 2050 TRF is post-tax...My job currently doesn't offer a match on the 401K.

I'm so happy I found this site. I think a lot of the ideals (non-materialistic, making time to spend with family, independence) were already part of me, but it's nice to find a site that offers concrete steps to help achieve that.

The biggest benefit a 401k provides, is the tax savings, not the match. Always fill out tax-advantaged space before taxable, even if you plan on retiring early.

For what it's worth, I'd pay down those loan before investing anywhere, though you could make the argument for filling out your 401k first, then attacking the loan.

And zada, in case you think your 401k money is locked up until 59.5, it's not.
http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

Thanks for this link. I'd intended to read jcollinsnh and MadFI's thoughts on rollovers and missed out earlier.