[Ciara]

I’m looking for general reactions and advice on my current situation. What would you do differently? Notes of inspiration from folks who have been in similar situations.

The background: I turned 40 last year and overpaid my credit card by more than I’d like to admit. It made me realize I actually had money and maybe the concept of retirement plans and savings wasn’t out of reach.

I started to look at the possibility of a financial advisor (b/c I thought that was what you were supposed to do) and fortunately, Reddit steered me clear.

I read I Will Teach You to be Rich, and that gave me some grounding/starting points. But really, I only understood like 5% of it.

So this is where I’m at:
-Income: make a little less than 100k/year. This has been gradually increasing over my 12 years of employment.

While it might continue to increase a little, I doubt by much.

-Expenses & Savings: I started using YNAB to track expenses. I have about 6 months in savings, which I keep in an HYSA in Ally, which I just opened about 6 months ago, prior to that it was all in a Credit Union. I don’t spend a lot and honestly the biggest chunk of my expenses are on Wants and not Needs and I could easily cut back like 300-500/month.

-Checkings: I keep a couple thousand buffer in a checking account and this is where my income and expenses draw from.

-401K: prior to last year, I was putting very little into this, but maxed it out last year and am on track to continue to do so. Currently around 91K.

These are held in things called TimeFrame 2045 and TimeFrame 2040 b/c I think I just clicked on some random things on the website and I’m afraid to undo anything.

-Roth IRA: same story, prior to last year, I was putting very little, but maxed it out last year and am track to do it again.

This is in Victory Capital b/c that is what USAA rolled me into. Some in USCAX (Small cap stock fund) and some in Target Retirement 2060.

Total is currently around 57k.

-Brokerage: After doing all that, I’ve been sitting on an additional 20k in the Ally account. Just the other day, I opened up Fidelity and moved 10k over.

ChatGPT told me to do this, so I did it…..Or I think I did it right, I’m not 100%. But there is still 500 just sitting there.

I plan to maybe move the other 10k over but I need to do things in baby steps to build my confidence….unless there is somewhere else that should go?

FXAIX (Fidelity 500 Index Fund) → $5,000
FSKAX (Fidelity Total Market Index Fund) → $2,000
FSPSX (Fidelity International Index Fund) → $1,500
FSSNX (Fidelity Small Cap Index Fund) → $1,000
-Net Worth: According to YNAB, my net worth is around $199K

I don’t really have a goal or plan. Originally, it started as having money when I retire, but then I started wondering if I could stop working sooner rather than later. So I guess that’s my goal.

I want to do nothing. No side hustles, no landlording.

[Nancy]

Do you listen to the Choosefi podcast? If not, I suggest it to dive in, learn more and gain mental momentum

Somewhere is info on good starting points there.

Early episodes (100-110?) it goes over the “basics” It will help

[Rick]

I have bad news and great news for you.
Bad news first. You cannot maintain your current trajectory and hope for amazing results.

Mostly good with a few bad decisions is just not good enough.

I was there. Most of us were there. It. Wasn’t. Good. Enough.

Great news next. You are on the cusp of a seismic change in your future. This is exactly where the rocket fuel induced Financial Freedom takes off.

Sorry to our “I started in debt$300k” people. But that was the slogfest to get here. Here is where the magic happens.

I would strongly suggest driving your savings rate higher and higher and higher. This is the moment savings rate matters. Immensely.

This is the 2-3-5 years where you make it as a fire enthusiast. It may seem daunting and at times wacky/insane.

If you feel that way….good! It should feel that way. This is the inflection point.

This is the point in time 55 year old you looks back….with a big huge smile….and says yeah when it really mattered…. when I could have given in and caved and given up….

I did it…and look at me now.
Do not let up. Petal to the metal.

[Bruce]

Congrats on starting to max out 401k and Roth IRA. Another option is an HSA (if you have a HDHP). Read “The Simple Path to Wealth” by J. L.

Collins. If early retirement is a goal, learn to live on less and invest the excess income.

Pay off debt is another option.

[Jay]

Congrats on where you are starting at.
Next step. Max out 401k, ROTH (every year) and put the rest in a taxable brokerage account. The higher the savings rate the sooner you can retire.

If you are ok working longer even a 25% net savings rate will do fine.

Most people I think reach for 40-60% savings rate as that is a faster financial independence.

Read “The shockingly simple math too early retirement” article by Mr money mustache. Very quick read.

[Lisah]

Congrats to you on maxing out 401k and IRA. You can make up some ground but I think you need to be definitive on your goals. This will make you more purposeful.

If you plan to spend 100k per year in retirement, your target number is 2.5m. Use a retirement calculator or chat gpt to tell you how much you need to invest each month to get there by 65.

It will take more than maxing out its and 401k.

I would encourage you to understand the Money Guy’s order of operations.

You probably need to find something for extra investing money. But you are off to a great start and can have success.

[Bill]

Welcome aboard! If you commit to maxing out both of those and do that for 20 years, you would have $1.2 million. Based on your other numbers, I would guesstimate you are spending 50-60k.

Assuming Socialy security exists, that would easily bridge the gap to when you can collect and let you retire at that point.

Maybe sooner if the market does well. If you want to move that timeline up, it’s really just a math equation.

Spend less,/earn more, save more, and invest the difference.

[Berk]

You have to do something about growing your passive income urgently. This becomes critical the older you get.

You must be prepared for the odds of redundancy.

[Author]

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