Early Retirement in Two Steps

From my calculations, I should be able to retire somewhere between the ages of 29-31. I’ve thought about this a lot, and been questioned about it a lot. To “retire” that young doesn’t sound realistic to a lot of people. Even my friends who are knee-deep in student loans are incredulous at how this could be possible.

In that sense, I do feel a little guilty, because I make what feels like a ton of money, especially for my age group. My friends who count themselves lucky are in the $50-60k group. Meanwhile I’m making almost triple that. I realize that this alone means that retirement is a lot closer for me than most, and for that I am grateful. But there are a few things I’d like to mention with that in mind.

 

Earning more

If my earning level sounds crazy to you, keep in mind that you may not have maxed out yours. There’s a lot of money to make out there in a capitalist economy, and I’ve had to fight like a dog for every raise I’ve received. I started out earning $80k (a lot more than many people, but I still negotiated hard), and now less than 3 years later I’m making over $140k. Take the time to familiarize yourself with what you’re worth, then shoot for a little extra. Learn how to negotiate. No one is going to just hand money to you, you need to demand it. Also learn how to recognize when you’re not being appreciated, and when it’s time to walk away. It’s also good to read inspirational material like Sheryl Sandberg’s Lean In.

There are definitely limits to how much you can earn in certain fields, but you can train yourself to recognize opportunity. This can come either in the form of taking on new projects, stepping into manager positions, or obtaining a certification in a different field with more earning potential. As Sheryl puts it, your career isn’t a ladder, it’s a jungle gym. You can move in all different directions, leading to more chances to earn more.

 

Saving more

The second factor in retiring early is increasing how much you save.  For the people I know making around $50k and even less, there are still ways to stop the cash bleeding.  Even if you don’t have a six-figure salary, you can stop shooting yourself in the financial foot by spending money you don’t yet have. Every time you take out a loan for something you want now, you are spending more of your after-tax dollars than what that item actually costs. If instead of paying that loan interest you waited until you had the full amount to purchase what you wanted, you’d still have your luxury item, and more cash to your name (by growing your money, and letting compound interest work for YOU instead of letting it work for the loan issuer). This is part of practicing delayed gratification; which even through its difficulty, humans are the best species at.

The other thing besides such blatant financial mistakes such as getting tangled in loans, car leases with terrible terms, and indulging in excessive luxury purchases (aka: lifestyle inflation), is that you need to figure out what your means are and live within them. Even better yet, live far below them, by practicing frugality. A lot of people shudder at that word, or feel nauseous when I tell that that I’m living in an expensive city on only $20k per year. But the truth is, it sounds way more extreme than it is. Many a financial blogger has touted this same line before, but I’m willing to say it again, since I’ve even surprised myself with how feasible it is. What it really comes down to, is prioritizing what matters to you.

For example, if you feel that living on less would really be that terrible, that your current lifestyle is fully satisfying, and that all your purchases are necessary to your happiness, by all means, continue doing exactly what you’re doing!  Conversely you are saying that financial independence doesn’t appeal all that much to you, and you’re fine working until social security kicks in, or even later.   And if that’s true, that’s totally fine.  You do you.  Who am I to tell you to stop living the life that makes you happy?

But assuming you’re reading this blog for a reason, all I’m doing here is imploring you to have an open mind.  Maybe there’s a different way than what you’re currently doing.  Maybe you’re not really all that happy.  Maybe your life is lacking something, and you want to find out what it is.  Let me tell you one last thing: having money in the bank is a great feeling.  And it’s more than just being miserly for those about to accuse me of that. It’s freedom.  And by not spending it, I hold onto that freedom.  If a time comes when I need to dip into the bank, I don’t have to stress that it’s my last dollar there.  I’m not sure what luxury exists that I’d be willing to sacrifice that for.  If you can think of one, then more power to you.  But like I said, this is all a game of prioritization.

~GMG

 

Are you earning enough? Saving enough? Let me know in the comments below.

My Progress Towards FIRE (mid-2017)

I’ve only been writing on this blog for a few months now, and I haven’t given many details on my own situation to date.

I had wanted to document my progress towards FIRE (aka: Financial Independence, Early Retirement) as well as provide information on basic personal finance for my readers. However I haven’t known where best to start on telling you all about who I am.

I’ve always done a lot of writing for myself, but this is my first time writing for an audience, and I do admit, it can be a bit awkward! How do I share things I’ve learned without sounding preachy? How do I talk about myself without being boring or seeming conceited? Am I choosing the right topics that people are anxious to hear about? I’m sure this will be a learning process for me, and as always, I welcome any feedback.

So here goes; a little bit more on how I got to this point in my life.

I graduated from engineering school with a Computer Science degree in hand in 2014. I already had some experience developing software at a few companies before finishing school, and had dedicated myself to making my resume look as impressive as possible, in order to land the best job. I had an entrepreneurial spirit, with a few projects I’d done at school that I hoped to turn into companies one day.  However, the path I was on led me to taking a job after graduation.  Within the month I started my first full time job making $80k a year.

And it was…..terrible. I couldn’t stand the company I was working for. The people were nice, but the management was oblivious. The software was not only garbage built on unrecognizable, outdated tech, it was in the health insurance space fraught with regulation and it was dull.

I figured I ended up there by mistake, and quickly switched over to another software company.

I still think that I made a good choice in leaving for the new job, but I ended up just as miserable at employer #2. I may have had too high expectations for this new job. I had just come from a really bad experience and hadn’t gotten over the shock yet. I was rather desperate to be shown that hating your job wasn’t “normal” and that other companies got it better.

The new job was at a small office that was part of a decent-sized startup.  It was very flexible there, but it meant that most of my co-workers never came into work.  As soon as I started, I spent most of my time almost completely alone, and I quickly became bored, lonely, and depressed. I was largely ignored by the companies leaders, and there wasn’t a path for advancement for me.  I had conflicts with certain teammates for which there were no resolutions, and I was positioned squarely at the bottom of the ladder so that others could climb above me. I became resentful.

I am leaving out a lot of details for obvious reasons, but I really tried to make job #2 work for a long time. Of course, there were both good and bad aspects to this job. I ended up learning a lot and added a successful startup to my resume.  Incidentally, it was working there that caused me to discover the FIRE community.

After realizing job #2 was not what I’d hoped, I became very dispirited.  I remember clearly on a bad day, after only having been there about a month, I realized I would have to work like this for years and years. Fresh out of college, I felt burnt-out.  I was already dreading every day for the rest of my life.  It was on that day, sitting alone in my office, that I typed into the google searchbar, “how to retire early.”

Thinking I’d see articles on gurus and geniuses, entrepreneurs selling their independent startups in their early twenties, I was surprised to find that the first result was Mr. Money Mustache.  I’d never heard of him, or FIRE before that day, but from that point on, I’ve been a devout mustachian ever since. This is my ticket out, I realized.

After a few years I ended up leaving that job when I was told plain as day that there were no possibilities for salary or career advancement in the near future. In a high-demand field like tech, it just came to the point where I was ready to take my talents elsewhere.

I hadn’t given up on finding a job I’d really enjoy; I generally liked the work itself, it was more the work environments that were giving me trouble. I moved onto job #3 openminded (albeit a bit burnt out after several years at job #2), but also full-into the path towards Financial Independence (and early retirement).

In the time between job #2 and job #3 I had,

  • paid off $30,000 in student loans within 15-months of graduating (something I would have dragged out over years had I not found Mr. Money Mustache)
  • moved apartments 3 times (due to the crazy housing market where I lived, which caused a bit of stress, but I ended up in a decent place where I’m comfortable and living within my means)
  • started tracking my finances with Mint and Personal Capital
  • focused on cutting down my spending as much as possible
  • setup 401k contributions with matching
  • opened a Vanguard personal investment account (and proceeded to put 80% of my liquid assets there)
  • opened an Ally savings account (because after doing some research their 1.05% rate was the best return I could get on any money I didn’t want in the market)
  • downloaded the Robinhood app and put a couple thousand dollars in there to play around and learn about the market (I don’t advise this as a path to financial freedom, but I do find it interesting. I’ve doubled my original $2000 after a year, but I believe that’s mostly due to the current bull market.  It’s fun finding and researching companies, then buying when you know the price is low, and selling when it’s high.  I’ve come a long way from financial illiteracy).
  • read about personal finance every day, and had read books on investing, salary negotiation, and navigating the workplace

To date, I went from starting out with a negative networth due to student loans, to over $200,000 to my name.  I’m on track to grow that over another $100,000 within the next year (also depending on how the market behaves).

Some days, I wish those first full-time job experiences had been better.  I wish I’d been better appreciated, or even just better treated.  Other days I’m almost thankful they’d been tough, because I may have never typed that desperate search into google.  I don’t know what my life would look like now. Would I only have $1000 in the bank like most Americans? Would I still be paying student loans? It’s possible.

“Every adversity, every failure and every heartache carries with it the seed of an equivalent or a greater benefit.” – Napoleon Hill

I hope to learn more about you as you learn about me 🙂 What’s your story? Please share in the comment section below.

Until next time,
~GMG

Your Furniture is a Commodity

(source: google definitions)

I want to start off by saying that there are places to look for money that not everyone thinks of.  In finance, you may hear people talk about “assets” which are items that hold value.  Assets can be any property you own, it can be art, it can even be money, or it can be something physical that not only holds its value, but has the potential to grow in value over time. Your assets are what define your net worth.

As I pursue Financial Independence, I’m always looking for ways to increase my net worth, no matter how small an amount it seems. What some don’t appreciate is that every little bit you can add to your net worth helps, especially due to compounding interest. (More to come on that topic later).

Living in a densely populated area, it’s not hard to see how little value a lot of people put in their furniture. Furniture is one of the easiest things to resell! Every Sunday night in my town (the day before trash day), I see curb after curb lined with furniture in perfectly good condition.

(Desk we got before trash day, brand new, not a scratch, totally free. Value on Ikea: $50)

What shocks me, is that rather than walk this furniture over to the donation center right down the street, so many people have no problem with throwing perfectly good things away! This is especially sad, since brand new things that someone else could have used will just sit in a landfill somewhere, which is a terrible waste of natural resources. There’s definitely a win-win option instead: resell the furniture and make $$$, or donate it to help people in need (which is a tax write-off btw).  So treat the planet a little better, make some cash, and don’t just toss furniture!

So naturally, when I see perfectly good things on the street, I snatch them up, take them home (they’re free!), and clean them down really good. Then I take my time taking a ton of pictures, and put up a really nice Craigslist ad with all the dimensions, a good description, and a flashy title. Before I set the price, I do some quick intel on Craigslist and see what the going rates are for similar items. Depending on how long I’m willing to store the item, I’ll set the price. If I just want to sell it quick and move on, I’ll price more competitively. If I don’t mind throwing it in the basement or using it for a while, I’ll price slightly higher.

Either way, Craigslist is awesome. It’s super easy to use, it’s 100% free for furniture postings, you meet cool people, and you make money in all cash. Not to mention that items that could easily be thrown away (to sit in that landfill) are being repurposed, which is great news for the planet! I’ve sold a bunch of stuff on Craigslist, and I’ve even bought some really nice stuff too for amazing prices. I got 5 really nice chairs that matched my dining table perfectly for $75. I’d never find a deal like that in a retail store; nor would I find chairs as unique.

Another good place to look for furniture is in thrift stores. I’ve got lucky and found beautiful furniture. I’ve been able to use the furniture for as long as I needed, and then sell it on Craigslist for double or triple of what I paid!

Some may think that this all sounds like a waste of time. Picking up furniture, creating the posting, and trying to sell it, all for a little bit of money when they make a lot more at their day jobs. But $100 here, $30 there, $50 there…..it really does start to add up. Another helpful thing that keeps me from turning my nose up at small amounts is this: think about what that money can buy.  100 dollars is just 100 dollars, so think: what is tangible for that 100 dollars? A week or two’s worth of groceries? A massage at the spa? A new tire for the car? A year’s membership to Amazon prime? Almost a year’s worth of Netflix? I’m not saying that you have to immediately turn around and spend that $100 on something, but it’s good to think of the things that you buy anyway, or the things you’d like to buy. What if you could get closer to those things for free?

Well you can! Because furniture can be a commodity. It’s a physical thing that has interchangeable value to someone else. And you can capitalize on that. Sell your unwanted furniture (don’t trash it!).  Give a second-chance to that chair or bookshelf your neighbor left out on the street. Here’s were you can start, and get to work on that networth: https://boston.craigslist.org/search/fuo?s=100

(Boston is specific to me obviously, but you can change it to your area)

Thanks for reading!
~GMG