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Author: bingocards Three stars, 500 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: Young'un sets FIRE goals Date: 3/2/2007 7:33 PM
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Hideho everybody. I'm turning 25 next month and have been getting my financial affairs in order for my mental transition to "real life" (although I've somehow managed to be employed and solvent for the last 3 years). I was a major fan of FIRE when I heard the idea and thought I'd write my goals down here to see if I make them 1, 5, 15, and 25 years down the line.

Where I am currently: My first goal after graduation was to get out from under a small mountain of student loan debt. I accomplished that last December. I don't anticipate my no-debt situation changing in any significant way in the future, although I may have a bit of a dip this August (see below).

Employment: I'm an engineer making a modest salary at the moment (live abroad in Japan, incidentally) with some rather nice benefits attached (90% housing subsidy, etc). I also run a small business on the side which is worth a few hundred in profits per month and, more importantly, gives me US tax liability to allow me to have a Roth IRA. This August I will be switching jobs and my salary will be getting a substantial boost, although some of that will be eaten up by loss of my housing subsidy and perhaps some uncovered transportation costs (I bike to work currently).

Savings/e-fund: I'm working on getting savings up in preparation for my move in August. Owing to the extraordinarily stable nature of Japanese employment (and a frankly outrageous amount of insurance my employer insisted on taking out on my behalf -- $2 million in disability coverage, etc) I sort of skimped on my e-fund these last 3 years in favor of loan payments. After August I'll receive a bonus from my current employer for successful completion of my contract, and 50% of that (about 3 months living expenses) will go to my e-fund. I'll add anything from my savings that I'm dedicating for the move that I don't end up using (my prospective next employer will theoretically be funding relocation costs, but I prefer having plans B and C ready to go). I have slightly less need for an e-fund than some people due to a low personal burn rate and that small business (I'm rather unlikely to fire myself, and anything less than my total disability to the point I'm unable to type on a computer would not hurt the income).

Investments: I just pretend my student loans are still out there and use my monthly transfer home to fund investing rather than loan repayment. I'm roughly 75% invested in index funds (ETFs, actually) and 25% in stocks I picked myself. My targets are 50% US largecap, 25% US smallcap, and 25% international (about 60-40 Europe/Pacific at the moment).

Pension/Social Security: Difficult to calculate due to the nature of working abroad and the difficulty of estimating how long that will continue. I assume that I'm solely responsible for my retirement expenses. Gov't/company support would be an unexpected bonus.

Numbers:
Savings: $1,400 (needed by August: $4,000, will just make it at current rate)
Roth IRA: $900. Going to hit $1,250 (my 2006 cap) by April and planning on maxing out the $4,000 this year.
Taxable investments: $1,700

Monthly investments:
Savings: $250 (temporarily $600 due to need to be ready by August)
Taxable investments: $600
Roth: Whatever's left over, with the goal of always maximizing this.

Yearly notes:
* Christmas fund of $2,000 ($500 from September through December). Most of that is the plane ticket.
* My next job has two bonuses a year for approximately 3 months of salary each time. Everything not needed for taxes gets invested.

Where I'd like to be in a year.
Savings: $8,000. That is 4-6 months of my expenses (more if you use small business income to offset them) or enough to survive, e.g., a sudden need to return to the US temporarily for a funeral or something (if I lost my job concurrently that would make things difficult but not catastrophic).
Investments: $10,000
Roth IRA: $5,000

Where I'd like to be at 30:
Savings: One year's worth of expenses, adjusted appropriately for any wife/kids who might be in the picture.
Investments/IRA: $100,000
Wedding fund: $20,000 (not sure on timing or price of that but heck if I'm going to be paying interest on it).

Where I'd like to be at 40:
Net worth: $800,000 (I did the math... this is aggressive but doable with salary growth and increasing my small business profits, which mostly flow straight to my bottom line)

Where I'd like to be at 50:
Working to stave off boredom more than anything else.
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