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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.

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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No. of Recommendations: 1
Hi bingo,

Your situation and goal sounds very similar to my own (I even bike to work too!) I'm also an engineer (software), also got Foolish at around age 25, and paid off my student loans then out of an aversion to debt. I can share a bit of the view from a few years down the road.

I had my e-fund of $10,000 for about 6 months expenses within half a year of deciding to do it, plus funding the Roth IRA which was $3000 at the time. It'll depend on your salary, but you should be able to do that in your year too. Unfortunately, then my company downsized me and I went through that e-fund in the six months before I landed another job. (Happy ending: that company rehired me two years later at 50% more salary.)

At age 29 this month, I've got over $100,000 in investments too. I keep $8K in an easily accessible bond fund as an emergency fund (about 4 months expenses), and don't really differentiate between any of the rest. About a third is in the 401k (which I'm presently maxing for the fourth year), a quarter in the Roth, and the rest is taxable. I just have 100% Vanguard mutual funds; I don't have the time or interest to chase individual stocks -- although your points about Microsoft are tempting and I work in a business sector that's entirely beholden to them too. :)

I have about the same timeline for future goals - hoping to be a millionaire by age 40 and "work optional" a few years after that. I have some ideas for work I'd like to do when income is no longer a factor.

So as long as you keep your salary up and your expenses down, I'm sure your goals are entirely reachable. Just hope the value of the dollar doesn't crash too much that you can't meet your expenses in yen.

- Erik
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My salary is yen-denominated but my small business and the bulk of my investments are dollar-demoninated. I'm like a one man currency hedge fund. (Which has a seemingly limitless ability to cause 3% upticks in the dollar every time I wire money home, so if the dollar does crash just tell the Fed to give me a few million and I'll get to work on the economic stimulus package.)
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Sounds like you definately belong on the FIRE wannabee board. I don't have anything to add to your basic strategy. It is very typical of a logically oriented person and I'm not surprised you are an engineer. Over on the RECF board where I inhabit most of the time, many of us are engineers, software developers or involved in the finance industry and started out early just as you have.

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

I felt just like you did when I was 25. However, after 20+ years as a software developer (I'm 45), I now look forward to ER (early retirement) in roughly 8 years. Each passing year, I think about all the other things I would rather be doing instead of working.

Just one example:
Yesterday, I was working out at a local HS track that is adjacent to a golf course. The course is at a rural location so not very busy. After my workout, I stopped to lay down on the grass to stretch out and observe the golfers meander up and down the fairways without being pressured, talking amongst each other etc.. How much I would love to be playing golf during the week when green fees are lower and uncrowded.


Anyway, congratulations on your prudent planning and God Speed that you reach you FIRE goals.

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You'd be crazy to spend 20K of your own money on your wedding. Personally, I'd try to keep your expenses under 5K (today's dollars). Now, if you can sucker the bride's parents into paying for it, then the sky's the limit!

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You have a good plan and certainly are on the right track. The biggies would be: unemployment, being sued by someone, not a large enough in crease in salary to meet goals and/or increased expenses that you can;t cut back on (which perhaps could involve getting married) and of course unexpected illness (you or someone close to you)

Im 26 as well, our housing is paid for my husbands job, no student loans, we got married last year, have a baby on the way, and have side income from a small business as well so I can see where your coming from.

4 years to go from 15k to 100k is doable but it would mostly be contributions unless very lucky on your stick picks - which is where having your ducks in line for the other "threats" become important.

Depending on your type of business you of course need to carry liability insurance, but try to realistically asertain the sue factor of your business - and that is even more true if it is similar business to the contract work you do now and you have a non-compete in place.

Head injuries of a car crash could happen to anyone (my brother in law lives in Europe and bikes to work yet was hit by a car) so just because your not doing manual labor does not mean you might be disabiled to the point you can't work.

Talk to business people, accountants, lawyers to keep a heads up so you can take the most value from your business. Keep your network wide open.

Having a house subsidy is huge- so be careful in your location choice when you do come back - as that could quickly eat up an increase in salary. (very very quickly btw)

If you are holding seperate index funds perhaps try a target retirement fund that matches your goals to keep expenses down.

As far as weddings go, it is up to you and your future spouse, but 20k is a lot of money in my opinion for a wedding - even though I see many around here spend more. It is one day - so have priorties - a great outfit, or honeymoon, or pictures - but don't go crazy. You'll be married weather you have punch at a friends house after or a lavish weekend wedding party. And of course lavish spending doesn't gurantee a marriage that will last. Espically for someone on an aggressive FIRE plan youll need a spouse whos ideals are somewhat inline with a LBYM lifestyle in order to accomplish these goals. Cause after weddings, then come kids - which will be even more expensive.

Just my thoughts anyways Good Luck and Good Job

ps if you could stay working in japan would you?

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good luck with your work in japan. i really enjoyed working there. i am sure you have considered the implications of a major economy let-down. i worked in 2000, just after a major downturn, and it wasn't pretty.

also, i have a question about your roth investment. i also live overseas and understand that i am not allowed to invest in a roth as my income is tax-emempt. is your second job based state-side and taxed, hence your ability to participate? is it a job in japan that allows such investments? i am in a bit of a quandry as to how/if i should allocate my money differently because of my exempt status. any advice?

$20,000 for a wedding is a safe estimate, depending heavily on many factors, especially location and how much your mother-in-law gets involved!!! (can you tell i am in the wedding-planning process right now? it has its moments, my friend...)

buenos suerte,

jon p

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Long OT post ahead, FIRE folks can disregard:

Self-employment income is not subject to the Foreign Earned Income Exemption, and since I had a few thousand dollars worth of it in 2006 and duly paid my few hundred worth of self employment taxes I can contribute up to my self-employment income in a Roth (its less than the $4k cap). I also wrote with my tax return that I consider my self employment income to be US sourced (as I sell a product and the customers are in America, and product sales are sourced where the transfer of property takes place), so I think I'm covered there, too. Since I didn't repatriate any of the income and am a non-permanent resident the local tax authorities here don't give a fig about it.

My advice for Americans living abroad is that tax free investment growth is a nice perk if you can get it and it might be worth a little work to do so. Sell something on eBay, see if you can get freelance translation to qualify as US-sourced (difficult, under my layman's understanding of US tax policy), whatever: its effectively receiving a direct subsidy from the government equal to 20% or so of what you make. (I assume that my US tax burden at retirement will be approximately 33% or higher, and my marginal tax rate on that SE income is only the 13% or so SE tax since I can FEIE away all other income, so the extra 20% compounding for 40 years is Uncle Sam's gift to me for helping to save Social Security by paying SE taxes without drawing benefits.)
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This is very do-able - I hit the $800k at 40, with 2 children in tow as well as a spouse. You may actually be able to do better (I'm now 52).

I am currently working on a MBA so I can part-time teach in my 'retirement' just to keep active. Be sure to plan something in your retirement - boredom is not good or fun!

I'm still working full-time, mostly because I like what I do, but I am a contractor, and can jump out at any time.

My youngest starts college in the fall, and has some very nice scholarships that should pay for 50-75% of her education, rest will be out of my pocket so she can graduate free and clear. My parents saved only for the older ones in my family, so I had to struggle - something I don't want her to have to deal with too much. Grad school will be on her dime, undergrad on mine.

Good luck - sounds like you have a good sense of fiscal responsibility.
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It's good to have goals, have a plan, and stay out of the fast lane if that's what you want. BUT...don't live the next 30 years around retiring early. That's too much focus on what you *don't* want to do (work) vs. what you want to do with your life.

I'm not replying to any specific part of your post that seems ill-informed...just throwing out a comment from someone who's been around.
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