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Author: fredinseoul Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: I've begun Date: 1/13/2007 10:54 PM
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Actually, I've been a wannabee for some time. Through a series of poor decisions, bad luck and poor health, I had little "free" cash for investing.

Well, now let the FIRE begin. I've opened up an Index Fund and have $500 a month going to it.

Background for those who may want it. I conquered my cc debt in 2001. The following year, I spent saving for an efund and planned to start investing in 2002. Instead, I moved and bought a house. This was the first poor decision, I think, I paid off the house in three years. So, I wiped out my savings and put 83% of my income towards my house. I was lucky in that I had no major problems during that time, still, we had to borrow from my MIL once or twice. (I feel it was a bad decision because if I'd chosen a more traditional mortgage, I could have been investing for the last three years.)

Three years later, I just paid off the house and I was hospitalized with a serious blood clot condition. It was over $14,000 for the hospital bill. I have insurance, but had to pay then file. This wiped out what was left of my cash. I spent the whole year of 2006 saving for various things, including geting my efund up to snuff.

The efund is now 3 months of income, which isn't enough in my case, I live overseas. A true emergency involves moving to the states and being out of work. I still contribute a good amount of money to the efund each payday. So, I hope to have it up to a sizable amount in about 11 months.

Then I bought a new car. (Another poor decision) I should have fought it harder, but the truth was I wanted a new car. My DW and I put down about 1/2 and now I have a car note. This is my only debt, so I felt comfortable enough. I've prepaid it so much that I don't have to pay until September, but I should have it paid off completely within 18 months.

I have my budget set up to accomodate my car, the index fund and most expected expenses (insurance, maintenance, gifts and such) and the efund. Even before I started the index fund, I'd had a line for retirement in my budget. So, instead of saving the money each month, now I will be investing the money each month.

I've also been doing my 401K. I started the 401K in 1993 and have 10% going there. I did do 6% for a couple of years on when I paid for the house, but am back to 10%. The company matches 3%.

So, I have no house payment, one car note, no debts and a good, working budget. With some luck I should make 50 as my early retire date. I have to squeeze a bit more out of my income to make that happen but I think it is possilbe.

Thanks for reading, if you've made it this far. Keep the faith.

fredinseoul
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Author: TMFDj Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4005 of 5068
Subject: Re: I've begun Date: 1/14/2007 9:10 AM
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So, I have no house payment, one car note, no debts and a good, working budget. With some luck I should make 50 as my early retire date. I have to squeeze a bit more out of my income to make that happen but I think it is possilbe.

Hi, Fred. It's nice to see you post over here.

In your post, you mentioned twice your perceived poor decisions. STOP BEATING YOURSELF UP!

First, your decisions probably made good sense with the information you had at the time. It's only in retrospect that you think they were poor. Add those decisions and their consequences to your book of lessons learned, and move on.

Second, there are many informed people who would make the same decisions you made. In other words, your decisions were not terrible. If you want to read examples of terrible decisions, just look through some of the posts on the Living Below Your Means or My Dumbest Investments discussion boards.

Third, from what I've seen from your posts on TMF's discussion boards, you're an intelligent and thoughtful person, and not given over to wonton frivolity. Cut yourself a little slack. Some frivolity is what makes life worth living; otherwise we'd all live in cardboard boxes under overpasses and have seven-figure checking accounts.

I know you know this stuff, but for other readers, start with a financial plan. Then pick an asset allocation strategy to support your plan. Next implement your asset allocation strategy. Finally rebalance your portfolio to comply with your asset allocation strategy every other or every third year.

David Jacobs
TMFDj

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