Road to financial independence?

[surveyor]

Seven Years

That’s interesting! My wife and I did exactly those three things and we are pretty well off now. And it took exactly 7 years (we started our process in 2000). It was last year when the fruits of our labors started becoming evident.

[Anonymous]

I appreciate the advice so far. 🙂 Gonna pick up those books.

Submitted by La Jolla Renter on January 9, 2008 –

8:41am.Define financial independence/wealth for yourself? It is not the same for everyone.

How old are you? How far along are you already? How much do you make now? Do you have debt?

I like the classic The Millionaire Next Door.

Hi, La Jolla. Good questions. I guess I need to define financial independence for myself. I guess financial independence would be not having to work unless I wanted to OR perhaps, having enough to live on if I got sick and could no longer work. Also, having enough money where I can retire early if I want to. Lastly, having a real good retirement nest egg. I guess I’m thinking along the lines of all the above.

I’m 42, and pratically starting from scratch. I don’t have a 401k or anything like that. I have minimal debt. I was a stay-at-home mom until my kids reached school age, and I went back to school and recently received my masters. I don’t regret that as I don’t believe in the daycare for children. If I had to do it over, I’d do it again. I sacrificed. For all those years, I had to rely on my husband. He wasn’t a successful man.

All I really have right now is my earning potential due to my degrees, my intelligence and a desire to succeed.

I also want to add, I’m a pratical woman. I rarely buy things at full price. That’s clothes, appliances, furniture, whatever. Virtually everything goes on sell, there is almost never a reason to pay full price. ALthough I’m frugal, I like to look nice and womanly. My one big splurge is nails and pedicures. I have a 2005 vehicle that I bought brand new-modest and gets very, very good gas mileage. I have low payments and it’s almost paid off. I usually cook for me and my two boys, that saves us money. ALso, since I wasn’t born with a silver spoon in my mouth, I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

[Anonymous]

I appreciate the advice so far. 🙂 Gonna pick up those books.

Submitted by La Jolla Renter on January 9, 2008 –

8:41am.Define financial independence/wealth for yourself? It is not the same for everyone.

How old are you? How far along are you already? How much do you make now? Do you have debt?

I like the classic The Millionaire Next Door.

Hi, La Jolla. Good questions. I guess I need to define financial independence for myself. I guess financial independence would be not having to work unless I wanted to OR perhaps, having enough to live on if I got sick and could no longer work. Also, having enough money where I can retire early if I want to. Lastly, having a real good retirement nest egg. I guess I’m thinking along the lines of all the above.

I’m 42, and pratically starting from scratch. I don’t have a 401k or anything like that. I have minimal debt. I was a stay-at-home mom until my kids reached school age, and I went back to school and recently received my masters. I don’t regret that as I don’t believe in the daycare for children. If I had to do it over, I’d do it again. I sacrificed. For all those years, I had to rely on my husband. He wasn’t a successful man.

All I really have right now is my earning potential due to my degrees, my intelligence and a desire to succeed.

I also want to add, I’m a pratical woman. I rarely buy things at full price. That’s clothes, appliances, furniture, whatever. Virtually everything goes on sell, there is almost never a reason to pay full price. ALthough I’m frugal, I like to look nice and womanly. My one big splurge is nails and pedicures. I have a 2005 vehicle that I bought brand new-modest and gets very, very good gas mileage. I have low payments and it’s almost paid off. I usually cook for me and my two boys, that saves us money. ALso, since I wasn’t born with a silver spoon in my mouth, I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

[Anonymous]

I appreciate the advice so far. 🙂 Gonna pick up those books.

Submitted by La Jolla Renter on January 9, 2008 –

8:41am.Define financial independence/wealth for yourself? It is not the same for everyone.

How old are you? How far along are you already? How much do you make now? Do you have debt?

I like the classic The Millionaire Next Door.

Hi, La Jolla. Good questions. I guess I need to define financial independence for myself. I guess financial independence would be not having to work unless I wanted to OR perhaps, having enough to live on if I got sick and could no longer work. Also, having enough money where I can retire early if I want to. Lastly, having a real good retirement nest egg. I guess I’m thinking along the lines of all the above.

I’m 42, and pratically starting from scratch. I don’t have a 401k or anything like that. I have minimal debt. I was a stay-at-home mom until my kids reached school age, and I went back to school and recently received my masters. I don’t regret that as I don’t believe in the daycare for children. If I had to do it over, I’d do it again. I sacrificed. For all those years, I had to rely on my husband. He wasn’t a successful man.

All I really have right now is my earning potential due to my degrees, my intelligence and a desire to succeed.

I also want to add, I’m a pratical woman. I rarely buy things at full price. That’s clothes, appliances, furniture, whatever. Virtually everything goes on sell, there is almost never a reason to pay full price. ALthough I’m frugal, I like to look nice and womanly. My one big splurge is nails and pedicures. I have a 2005 vehicle that I bought brand new-modest and gets very, very good gas mileage. I have low payments and it’s almost paid off. I usually cook for me and my two boys, that saves us money. ALso, since I wasn’t born with a silver spoon in my mouth, I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

[Anonymous]

I appreciate the advice so far. 🙂 Gonna pick up those books.

Submitted by La Jolla Renter on January 9, 2008 –

8:41am.Define financial independence/wealth for yourself? It is not the same for everyone.

How old are you? How far along are you already? How much do you make now? Do you have debt?

I like the classic The Millionaire Next Door.

Hi, La Jolla. Good questions. I guess I need to define financial independence for myself. I guess financial independence would be not having to work unless I wanted to OR perhaps, having enough to live on if I got sick and could no longer work. Also, having enough money where I can retire early if I want to. Lastly, having a real good retirement nest egg. I guess I’m thinking along the lines of all the above.

I’m 42, and pratically starting from scratch. I don’t have a 401k or anything like that. I have minimal debt. I was a stay-at-home mom until my kids reached school age, and I went back to school and recently received my masters. I don’t regret that as I don’t believe in the daycare for children. If I had to do it over, I’d do it again. I sacrificed. For all those years, I had to rely on my husband. He wasn’t a successful man.

All I really have right now is my earning potential due to my degrees, my intelligence and a desire to succeed.

I also want to add, I’m a pratical woman. I rarely buy things at full price. That’s clothes, appliances, furniture, whatever. Virtually everything goes on sell, there is almost never a reason to pay full price. ALthough I’m frugal, I like to look nice and womanly. My one big splurge is nails and pedicures. I have a 2005 vehicle that I bought brand new-modest and gets very, very good gas mileage. I have low payments and it’s almost paid off. I usually cook for me and my two boys, that saves us money. ALso, since I wasn’t born with a silver spoon in my mouth, I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

[Anonymous]

I appreciate the advice so far. 🙂 Gonna pick up those books.

Submitted by La Jolla Renter on January 9, 2008 –

8:41am.Define financial independence/wealth for yourself? It is not the same for everyone.

How old are you? How far along are you already? How much do you make now? Do you have debt?

I like the classic The Millionaire Next Door.

Hi, La Jolla. Good questions. I guess I need to define financial independence for myself. I guess financial independence would be not having to work unless I wanted to OR perhaps, having enough to live on if I got sick and could no longer work. Also, having enough money where I can retire early if I want to. Lastly, having a real good retirement nest egg. I guess I’m thinking along the lines of all the above.

I’m 42, and pratically starting from scratch. I don’t have a 401k or anything like that. I have minimal debt. I was a stay-at-home mom until my kids reached school age, and I went back to school and recently received my masters. I don’t regret that as I don’t believe in the daycare for children. If I had to do it over, I’d do it again. I sacrificed. For all those years, I had to rely on my husband. He wasn’t a successful man.

All I really have right now is my earning potential due to my degrees, my intelligence and a desire to succeed.

I also want to add, I’m a pratical woman. I rarely buy things at full price. That’s clothes, appliances, furniture, whatever. Virtually everything goes on sell, there is almost never a reason to pay full price. ALthough I’m frugal, I like to look nice and womanly. My one big splurge is nails and pedicures. I have a 2005 vehicle that I bought brand new-modest and gets very, very good gas mileage. I have low payments and it’s almost paid off. I usually cook for me and my two boys, that saves us money. ALso, since I wasn’t born with a silver spoon in my mouth, I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

[(former)FormerSanDiegan]

I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

Depending on the type of loan and rate you may actually be better off simply making the standard payment. But, whatever you do do not fall into the consolidation loan trap.

Once upon a time I had a student loan whose interest rate dipped as low as 2% in the Early 2000’s. The reason: After making 48 consecutive monthly electronic payments, Sallie Mae gave be an additional 2% cut. Don’t know if that program still exists. But I kept that loan until year 9 when it was so small I could pay it off with a single paycheck.

Also, Student loan interest is deductible, so you may be better off putting money away in an emergency fund or investments before paying it off.

[(former)FormerSanDiegan]

I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

Depending on the type of loan and rate you may actually be better off simply making the standard payment. But, whatever you do do not fall into the consolidation loan trap.

Once upon a time I had a student loan whose interest rate dipped as low as 2% in the Early 2000’s. The reason: After making 48 consecutive monthly electronic payments, Sallie Mae gave be an additional 2% cut. Don’t know if that program still exists. But I kept that loan until year 9 when it was so small I could pay it off with a single paycheck.

Also, Student loan interest is deductible, so you may be better off putting money away in an emergency fund or investments before paying it off.

[(former)FormerSanDiegan]

I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

Depending on the type of loan and rate you may actually be better off simply making the standard payment. But, whatever you do do not fall into the consolidation loan trap.

Once upon a time I had a student loan whose interest rate dipped as low as 2% in the Early 2000’s. The reason: After making 48 consecutive monthly electronic payments, Sallie Mae gave be an additional 2% cut. Don’t know if that program still exists. But I kept that loan until year 9 when it was so small I could pay it off with a single paycheck.

Also, Student loan interest is deductible, so you may be better off putting money away in an emergency fund or investments before paying it off.

[(former)FormerSanDiegan]

I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

Depending on the type of loan and rate you may actually be better off simply making the standard payment. But, whatever you do do not fall into the consolidation loan trap.

Once upon a time I had a student loan whose interest rate dipped as low as 2% in the Early 2000’s. The reason: After making 48 consecutive monthly electronic payments, Sallie Mae gave be an additional 2% cut. Don’t know if that program still exists. But I kept that loan until year 9 when it was so small I could pay it off with a single paycheck.

Also, Student loan interest is deductible, so you may be better off putting money away in an emergency fund or investments before paying it off.

[(former)FormerSanDiegan]

I have a small student loan that I needed to take out for college and I want to get rid of that as soon as I can.

Depending on the type of loan and rate you may actually be better off simply making the standard payment. But, whatever you do do not fall into the consolidation loan trap.

Once upon a time I had a student loan whose interest rate dipped as low as 2% in the Early 2000’s. The reason: After making 48 consecutive monthly electronic payments, Sallie Mae gave be an additional 2% cut. Don’t know if that program still exists. But I kept that loan until year 9 when it was so small I could pay it off with a single paycheck.

Also, Student loan interest is deductible, so you may be better off putting money away in an emergency fund or investments before paying it off.

[davelj]

Let’s flash forward and assume you’re 65 today just to make things simple. You could retire and live pretty comfortably if you had $750K in savings, and your house and car are paid off. You could invest $400K in high-yield fixed income at 8% and get $32K/year pre-tax, plus you’d get about $18K/year in social security. (You’d invest the other $350K for growth to keep up with inflation, which your fixed income won’t do.) So, you should have about $50K/year pre-tax, or about $3K/month after tax and you’d be on Medicare. You should be able to lead a reasonably comfortable life on that and keep up with inflation until you keel over. (Yeah, the math is rough, but it’s not too far off.)

So, you’ve got 23 years to get there. Adjusting for inflation – assuming 3%/year – you’ll need about $1.5 million in 2031 dollars plus you’ll need to buy and pay off a house in the meantime. You’re starting with nothing. Forgetting about the house, and using raw division (this is imperfect analysis, I know), you’ll need to save/achieve-through-investing an average of $65K/year for the next 23 years. Again, that doesn’t include the house you’ll want paid off.

Given the taxes and cost of living here in CA, slogging it out at a $100K/year job and saving a little bit each year isn’t going to get you even close. No, you need a plan of action.

My suggestions: (a) Marry someone wealthy, (b) Marry and divorce someone REALLY wealthy (no pre nup), (c) Inherit money, (d) Win the lottery, or (e) Pray harder for one of a-d.

[davelj]

Let’s flash forward and assume you’re 65 today just to make things simple. You could retire and live pretty comfortably if you had $750K in savings, and your house and car are paid off. You could invest $400K in high-yield fixed income at 8% and get $32K/year pre-tax, plus you’d get about $18K/year in social security. (You’d invest the other $350K for growth to keep up with inflation, which your fixed income won’t do.) So, you should have about $50K/year pre-tax, or about $3K/month after tax and you’d be on Medicare. You should be able to lead a reasonably comfortable life on that and keep up with inflation until you keel over. (Yeah, the math is rough, but it’s not too far off.)

So, you’ve got 23 years to get there. Adjusting for inflation – assuming 3%/year – you’ll need about $1.5 million in 2031 dollars plus you’ll need to buy and pay off a house in the meantime. You’re starting with nothing. Forgetting about the house, and using raw division (this is imperfect analysis, I know), you’ll need to save/achieve-through-investing an average of $65K/year for the next 23 years. Again, that doesn’t include the house you’ll want paid off.

Given the taxes and cost of living here in CA, slogging it out at a $100K/year job and saving a little bit each year isn’t going to get you even close. No, you need a plan of action.

My suggestions: (a) Marry someone wealthy, (b) Marry and divorce someone REALLY wealthy (no pre nup), (c) Inherit money, (d) Win the lottery, or (e) Pray harder for one of a-d.

[davelj]

Let’s flash forward and assume you’re 65 today just to make things simple. You could retire and live pretty comfortably if you had $750K in savings, and your house and car are paid off. You could invest $400K in high-yield fixed income at 8% and get $32K/year pre-tax, plus you’d get about $18K/year in social security. (You’d invest the other $350K for growth to keep up with inflation, which your fixed income won’t do.) So, you should have about $50K/year pre-tax, or about $3K/month after tax and you’d be on Medicare. You should be able to lead a reasonably comfortable life on that and keep up with inflation until you keel over. (Yeah, the math is rough, but it’s not too far off.)

So, you’ve got 23 years to get there. Adjusting for inflation – assuming 3%/year – you’ll need about $1.5 million in 2031 dollars plus you’ll need to buy and pay off a house in the meantime. You’re starting with nothing. Forgetting about the house, and using raw division (this is imperfect analysis, I know), you’ll need to save/achieve-through-investing an average of $65K/year for the next 23 years. Again, that doesn’t include the house you’ll want paid off.

Given the taxes and cost of living here in CA, slogging it out at a $100K/year job and saving a little bit each year isn’t going to get you even close. No, you need a plan of action.

My suggestions: (a) Marry someone wealthy, (b) Marry and divorce someone REALLY wealthy (no pre nup), (c) Inherit money, (d) Win the lottery, or (e) Pray harder for one of a-d.

[davelj]

Let’s flash forward and assume you’re 65 today just to make things simple. You could retire and live pretty comfortably if you had $750K in savings, and your house and car are paid off. You could invest $400K in high-yield fixed income at 8% and get $32K/year pre-tax, plus you’d get about $18K/year in social security. (You’d invest the other $350K for growth to keep up with inflation, which your fixed income won’t do.) So, you should have about $50K/year pre-tax, or about $3K/month after tax and you’d be on Medicare. You should be able to lead a reasonably comfortable life on that and keep up with inflation until you keel over. (Yeah, the math is rough, but it’s not too far off.)

So, you’ve got 23 years to get there. Adjusting for inflation – assuming 3%/year – you’ll need about $1.5 million in 2031 dollars plus you’ll need to buy and pay off a house in the meantime. You’re starting with nothing. Forgetting about the house, and using raw division (this is imperfect analysis, I know), you’ll need to save/achieve-through-investing an average of $65K/year for the next 23 years. Again, that doesn’t include the house you’ll want paid off.

Given the taxes and cost of living here in CA, slogging it out at a $100K/year job and saving a little bit each year isn’t going to get you even close. No, you need a plan of action.

My suggestions: (a) Marry someone wealthy, (b) Marry and divorce someone REALLY wealthy (no pre nup), (c) Inherit money, (d) Win the lottery, or (e) Pray harder for one of a-d.

[Author]

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