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DH and I were at McD's having a pop and reading the newspaper/book. We were also discussing the net worth statement I had just done. I have been doing this every two months for the past year.

When we got married in July 2000, our goal was to have $250k in net worth in 5 years. As of today, we're at $260k. We were discussing how much we would be able to save this year now that we are no longer paying for anything big - I finished my master's in August and we have no debt except our mortgage. He said that $300k would be a good goal to have and that we'd meet it if the stock market keeps doing well. I think we can do better:

DH 401k contribution - $13000 + 50% match = $19500
Ameritrade taxable account contributions of $2000/mo = $24000
Vanguard automatic deductions of $600/mo = $7200
529 plan contributions $150/mo x 2 = $3600

These figures alone add up to $54,300! This year we grossed approx. $115k and next year we'll probably be at about 120k. That's a savings rate of almost 50%!

I also have a portion of my paycheck contributed to my pension and am buying 5 years of service ($225/paycheck). The net worth we just did includes our Roth IRA contributions (the money is in our checking account.) We have a 10 year mortgage, so much of our payment goes to principle. I wonder if we could get the savings rate up to 60%?

FIRE here we come!

Monica
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When we got married in July 2000, our goal was to have $250k in net worth in 5 years. As of today, we're at $260k. We were discussing how much we would be able to save this year now that we are no longer paying for anything big - I finished my master's in August and we have no debt except our mortgage. He said that $300k would be a good goal to have and that we'd meet it if the stock market keeps doing well. I think we can do better:

DH 401k contribution - $13000 + 50% match = $19500
Ameritrade taxable account contributions of $2000/mo = $24000
Vanguard automatic deductions of $600/mo = $7200
529 plan contributions $150/mo x 2 = $3600

These figures alone add up to $54,300! This year we grossed approx. $115k and next year we'll probably be at about 120k. That's a savings rate of almost 50%!


This is mighty impressive especially since you were paying for a Master's throughout. Good for you!

I suspect I am not the only person on this board who is incredibly envious of your DH's 50% match!!

The good thing about have such a short term mortgage is that although paying principal isn't exactly saving, it definitely makes a positive contribution to your net worth.

Shouldn't be long until you're FIRE'd at all.
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For the first two years that my husband was with his current company, they matched 100% of contributions! Maybe if business picks up, they'll go back to that!

Monica
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principle. I wonder if we could get the savings rate up to 60%?


Congratulations on your awesome savings rate and ability to stay ahead of the baseline.

Monthly expenses at 50% of 115K = (115000 * 0.5)/12 ~ 4792 (50% savings)
Monthly expenses at 40% of 115K = (115000 * 0.4)/12 ~ 3833 (60% savings)

Extra savings required = 4792-3833 = $959(appx.)

Those expenses include fixed costs like taxes and mortgage, thus the savings need to come completely from the variable component. In Texas, one can have a lifestyle where a 3-person family manages an active lifestyle at about 2000 dollars. Net worth can rise faster or slower than these calculations which do not take investments and employer contributions in consederation.

Couple of suggestions -
- You can set an expense target instead of a savings target. That way, when your income continues to grow, your savings will grow even faster.
- You could change the 10-yr mortgage to a 30-yr mortgage and make payments equal to the 10-yr mortgage. That way, you will pay down the principal faster and with less risk.

These are mere observations. Feel free to ignore them. In reality, you have done a terrific job of financial planning and deserve a kudos.

- TD
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Those expenses include fixed costs like taxes and mortgage, thus the savings need to come completely from the variable component. In Texas, one can have a lifestyle where a 3-person family manages an active lifestyle at about 2000 dollars. Net worth can rise faster or slower than these calculations which do not take investments and employer contributions in consederation.


After posting, I went back and looked at my number of 2000 dollars. It is a *post-tax* number. We can reasonably assume that you owed at least 2792 dollars in taxes which puts you in the right ballpark of 4792 for savings making my statement incorrect for you.

- TD
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<<So this year, one of my resolutions is to be more disciplined with tracking expenses with the goal of analyzing where I could save more and hopefully actually saving more.

flipstress
>>


Caongratulations on your financial accomplishments. You are about at the point where your net worth starts taking on a life of its own, only partially related to new savings on your part.

Since early retirement is your goal, you probably need to begin some serious planning on what you will do with that time. Will you be ready and satisfied to give up paid employment when you are able to do so? You might want to begin to make lists of things you want to accomplish while you are employed, so you wont have any regrets or missed opportunities when you can retire.

I quit regular employment at age 49 in 1999, but I'm continueing my furnace repair business because I can enjoy doing some work, and I have a good deal of control over how much I do. But I find that I'm accumulating more in the way of assets than I need. With better planning, I might have given up my regular job two or three years earlier, and "coasted" to hitting financial independence with the aid of income from my furnace repaior business, instead of pointlessly accumulating more than I need.

I point out my own mistakes in the hope that you will be able to look ahead to avoid similar kinds of pitfalls. You have obviously solved many financial problems to get to the position you are in today. But the kinds of problems you face in the future may be different. I wish you good luck in identifying and solving the problems of the future.



Seattle Pioneer
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When we got married in July 2000, our goal was to have $250k in net worth in 5 years. As of today, we're at $260k. -Monica

Congratulations! Now you already know this but I'd like to reiterate it for those just starting out on the road to FIRE: If you keep your discipline, it works! When you first start off, you have all these fancy spreadsheets/napkins whatever and "know" what you need to do -it can be hard to "feel" that it is working when you just start and you are in debt or have a very low net worth. Keep with it and you will see that seed sprout! -Even with mistakes! And it works for all income levels. Don't think, "oh, well I only make $XX, I could never save that much!" It doesn't matter so long as you save. Absolute dollar values do not matter... proportions do. The quest is simply to get your personal cost of living under a certain percentage of your net worth. -The math is the same whether you make $20K/yr or $20M/yr (at $20M/yr I'd be FIREed in January!)

I love these posts for thier inspirational quality. Thanks, Monica!

Now to add my two bits: I started down the road to FIRE back when I was a freshman in college. At the time, I didn't call it "FIRE" but knew I wanted to be "A millionaire" -not that I cared about the money but, without doing any research, I knew that I could live off of $1M indefinitely (I now know that I could do it on less than $1M). It was several years later that I found the REHP and the other resources our community has identified and created. I've been out of school for 6 years and have seen my net worth skyrocket (graphed it is a beautiful exponential curve!). Two factors have helped; I got lucky with my employment and have had fairly regular raises over the course of my career and I kept my discipline and saved voraciously. I can see that I'm well on the path to FIRE and am now at a point where my net worth is "substantial" and while not allowing freedom yet, I can smell it simmering on the back burner! What a wonderful aroma! My success so far is in spite of the occasional slip-up and/or calculated "mistake" such as buying a house and a new truck last year. My most recent milestone (noticed this weekend) is that my financial net worth is within $1K of my outstanding mortgage debt (my only debt). I do not count my house or its mortgage on my balance sheet but it is a neat feeling to know that in theory, I could own my house outright and only have to work for food, medical, and taxes/insurance!

I hope my successes to date further stoke the fire under your quests for FIRE!

FoolNBlue (FIRE Just do it)
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Monthly expenses at 50% of 115K = (115000 * 0.5)/12 ~ 4792 (50% savings)
Monthly expenses at 40% of 115K = (115000 * 0.4)/12 ~ 3833 (60% savings)

Extra savings required = 4792-3833 = $959(appx.)
Couple of suggestions -
- You can set an expense target instead of a savings target. That way, when your income continues to grow, your savings will grow even faster. - TD


I really like this idea of an expense target - track expenses and make sure that they're under x dollars each month. This seems like a good challenge! As always, the fixed expenses are easy to document. It's the discretionary expenses that will take some work to track.

Thanks!

Monica
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Monica,

Now that's impressive!

I am humbled at thy due diligence and perseverance!

decath
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