Hit a financial milestone at an age milestone
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Hit a financial milestone at an age milestone
This post might seem like a bit of a milestone brag but please don't hold it against me, I'm bursting at the seams to share it with someone! A few of my close friends know about this, but they aren't Bogleheads! I've followed the Bogleheads forum since it was at Morningstar, but mostly just lurked and learned.
I'm about to turn 40 soon (DW is 38) and our net worth just crossed just over $1.5M in both taxable and retirement assets and close to $2.2M including home equity. I'm just so thankful to be in this position and feel so blessed especially when I hear about the hard times that people are going through. We hope to pay off the house in about 4 years! Our current position, no doubt helped by the great market the last few years, was not someplace I ever dreamed of being.
Saving comes pretty easy to me since I'm inherently cheap! DW, on the other hand, was a bit more cavalier when we first got married 15 years back. I'm only half joking when I say that it brings a tear when I see how careful she has become. We've both gravitated towards the center; I'm a lot less cheaper and she's a lot more careful when it comes to household finances.
The two things that I'm most proud of are:
1. We did this without any inheritance / stock options. We do make a very nice combined salary of $200K however.
2. I don't feel like we sacrificed our lifestyle for this. We have 2 young kids and still travel internationally at least once per year.
I still have quiet a bit of cleanup with regard to simplifying our investments, but I wanted to thank all of the Bogleheads for not just the great well-thought-out advice, but also the inspiration. There are just so many smart people here that constantly keep me humble, especially with the breadth of topics that are covered here (nose hair trimmers anyone?!)
Thanks for listening.
I'm about to turn 40 soon (DW is 38) and our net worth just crossed just over $1.5M in both taxable and retirement assets and close to $2.2M including home equity. I'm just so thankful to be in this position and feel so blessed especially when I hear about the hard times that people are going through. We hope to pay off the house in about 4 years! Our current position, no doubt helped by the great market the last few years, was not someplace I ever dreamed of being.
Saving comes pretty easy to me since I'm inherently cheap! DW, on the other hand, was a bit more cavalier when we first got married 15 years back. I'm only half joking when I say that it brings a tear when I see how careful she has become. We've both gravitated towards the center; I'm a lot less cheaper and she's a lot more careful when it comes to household finances.
The two things that I'm most proud of are:
1. We did this without any inheritance / stock options. We do make a very nice combined salary of $200K however.
2. I don't feel like we sacrificed our lifestyle for this. We have 2 young kids and still travel internationally at least once per year.
I still have quiet a bit of cleanup with regard to simplifying our investments, but I wanted to thank all of the Bogleheads for not just the great well-thought-out advice, but also the inspiration. There are just so many smart people here that constantly keep me humble, especially with the breadth of topics that are covered here (nose hair trimmers anyone?!)
Thanks for listening.
Re: Hit a financial milestone at an age milestone
Congratulations! I hope to be you someday
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Re: Hit a financial milestone at an age milestone
Congratulations! Sounds like you and DW have achieved a nice balance. Nice work!
I paid off the mortgage before I turned 40 so I understand the age/financial milestone thing. Good luck and keep on trucking!
I paid off the mortgage before I turned 40 so I understand the age/financial milestone thing. Good luck and keep on trucking!
Re: Hit a financial milestone at an age milestone
Congrats!!! Have you used any of the tips in the family taxes thread to reduce your taxes? It seems like you fit the demographic there.
http://www.bogleheads.org/forum/viewtopic.php?t=79510
http://www.bogleheads.org/forum/viewtopic.php?t=79510
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Re: Hit a financial milestone at an age milestone
Congratulations
John
John
Re: Hit a financial milestone at an age milestone
Congrats, good job.
Re: Hit a financial milestone at an age milestone
Very nice, congrats!
Three-fund portfolio |
"Simplicity is the master key to financial success." John C. Bogle
Re: Hit a financial milestone at an age milestone
Congrats. I hope to be in your position in 14 years (I'm 26 now!).
Don't only practice your art, but force your way into its secrets. For it and knowledge can raise men to the divine. |
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Re: Hit a financial milestone at an age milestone
Great Job
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Hit a financial milestone at an age milestone
Awesome! Nothing like setting a long term goal and nailing it.
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Re: Hit a financial milestone at an age milestone
Nice work!
I am curious, was the second million easier than the first? Why?
Here is an interesting thread about net worth progression: http://www.bogleheads.org/forum/viewtop ... 2&t=139157
I am curious, was the second million easier than the first? Why?
Here is an interesting thread about net worth progression: http://www.bogleheads.org/forum/viewtop ... 2&t=139157
25% stock, 25% bonds, 25% cash, 25% stuff
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Re: Hit a financial milestone at an age milestone
Nice Job.
Given our similar age and incomes, I'm assuming you made some money either off of real estate or investments that generated outsize returns over typical index funds? Or you don't have kids, that's a big boost to savings.
Given our similar age and incomes, I'm assuming you made some money either off of real estate or investments that generated outsize returns over typical index funds? Or you don't have kids, that's a big boost to savings.
- MikeWillRetire
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Re: Hit a financial milestone at an age milestone
2.2 million by age 40, with two kids, and international vacations?
Head spinning...
Head spinning...
Re: Hit a financial milestone at an age milestone
Good for you. FWIW, the second figure you give is your net worth.
I had a goal of $1MM in net worth by age 40, but missed it by a few years.
It is good to establish goals and work toward them.
And good on you to take some nice vacations with your family. Money is to be enjoyed, I think a lot of BH's miss that point.
I had a goal of $1MM in net worth by age 40, but missed it by a few years.
It is good to establish goals and work toward them.
And good on you to take some nice vacations with your family. Money is to be enjoyed, I think a lot of BH's miss that point.
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Re: Hit a financial milestone at an age milestone
200K in annual income is a substantial number....the average income is $56K, they are 3.5x that figure. A great accomplishment on their part but you have to view this in proper context. The amount you accumulate will be a function of time, savings rate, spending rate and maybe some luck. Why savings rate? If person A is making $56K per year gross, there is no way they can bank/invest $56K net. However, person B who makes $200K could likely bank it through a combination of tax deferred/taxable investments. The more you invest, the longer it has to compound the likelier you too will come out with large dollar balances in net worth. Why spending rate? If you don't spend it, you have the resources to save/invest, however if you practice consumerism like most of your neighbors, you won't be able to accumulate nearly as much. Living Beneath Your Means will get you to your financial goals much faster than those who subscribe to "i'll spend first and what ever is left over will be saved, usually nothing is left over so no savings".MikeWillRetire wrote:2.2 million by age 40, with two kids, and international vacations?
Head spinning...
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Hit a financial milestone at an age milestone
My wife and I are coming from very similar figures, both salary and age. We've been aggressively saving and investing since early 20s and also have two kids.Grt2bOutdoors wrote:200K in annual income is a substantial number....the average income is $56K, they are 3.5x that figure. A great accomplishment on their part but you have to view this in proper context. The amount you accumulate will be a function of time, savings rate, spending rate and maybe some luck. Why savings rate? If person A is making $56K per year gross, there is no way they can bank/invest $56K net. However, person B who makes $200K could likely bank it through a combination of tax deferred/taxable investments. The more you invest, the longer it has to compound the likelier you too will come out with large dollar balances in net worth. Why spending rate? If you don't spend it, you have the resources to save/invest, however if you practice consumerism like most of your neighbors, you won't be able to accumulate nearly as much. Living Beneath Your Means will get you to your financial goals much faster than those who subscribe to "i'll spend first and what ever is left over will be saved, usually nothing is left over so no savings".MikeWillRetire wrote:2.2 million by age 40, with two kids, and international vacations?
Head spinning...
Our total investment portfolio is right in line with the OP, around $1.5 million. It's the 700K in home equity, driving his Net to over 2 million, that I had trouble reconcilling. Per my earlier post, I have to assume there was either significant gains on the real estate front or some one off (or maybe a couple) of investments that paid off very well that are outside the realm of index funds that were then used to put into a house and home equity.
Re: Hit a financial milestone at an age milestone
OP, nicely-written post. Congrats.
For perspective to other BHs, it is expensive to live in NorCal and our home equity portion of total worth does become skewed.
I second the importance of taking international vacations, particularly with kids; money is to be enjoyed and life is about experiences, not about accumulating things. A lot of self-proclaimed "Cheapskates" miss that point.
For perspective to other BHs, it is expensive to live in NorCal and our home equity portion of total worth does become skewed.
I second the importance of taking international vacations, particularly with kids; money is to be enjoyed and life is about experiences, not about accumulating things. A lot of self-proclaimed "Cheapskates" miss that point.
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Re: Hit a financial milestone at an age milestone
Congratulations NorCalHiker - always nice to here about someone doing well!
While my wife and I are earning about the same, we're dealing with a massive amount of student loan debt that's really dragging our net worth down and unfortunately, that will be on the books for another eight years until it's due to be forgiven.
It has been somewhat of a struggle to get my wife to understand the benefits of aggressive debt repayment and investment, but thankfully she's not much of a spender, so it could definitely be worse. We're maxing out her 403b and we're close to maxing out mine...hopefully sometime in the next couple years.
We just paid one of our cars off last week AND also repaid her one and only private student loan in full, so we're making slow and steady progress, but patience is definitely not my virtue.
I'd be thrilled to be in your position in eight years when we're the same age.
Best of luck to you and thanks for sharing.
While my wife and I are earning about the same, we're dealing with a massive amount of student loan debt that's really dragging our net worth down and unfortunately, that will be on the books for another eight years until it's due to be forgiven.
It has been somewhat of a struggle to get my wife to understand the benefits of aggressive debt repayment and investment, but thankfully she's not much of a spender, so it could definitely be worse. We're maxing out her 403b and we're close to maxing out mine...hopefully sometime in the next couple years.
We just paid one of our cars off last week AND also repaid her one and only private student loan in full, so we're making slow and steady progress, but patience is definitely not my virtue.
I'd be thrilled to be in your position in eight years when we're the same age.
Best of luck to you and thanks for sharing.
Re: Hit a financial milestone at an age milestone
The trick is $200k income with a $100k lifestyle in a LCOL area (low cost of living).MikeWillRetire wrote:2.2 million by age 40, with two kids, and international vacations?
Head spinning...
$100k is a very nice lifestyle if you're not living in New York or San Francisco, leaving a ton of money to be saved each year, without hardly any sacrifice.
This is how my wife and I did it... We hit $200k combined income about 8 years ago, managed to keep our jobs during the recession and all that extra money we were saving got invested at much lower prices than today (in 2009, nearly 3x lower).
Congrats OP!
Last edited by HomerJ on Wed Aug 27, 2014 12:56 pm, edited 1 time in total.
Re: Hit a financial milestone at an age milestone
Oh wow, I just realized the OP is from Northern California... NOT a LCOL area....
I'm surprised you managed to save so much living there... I mean really surprised... You sure you don't make more than $200k combined? How long have you two been making that much money?
I'm surprised you managed to save so much living there... I mean really surprised... You sure you don't make more than $200k combined? How long have you two been making that much money?
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Re: Hit a financial milestone at an age milestone
Glad to confirm I'm not completely nuts for being surprised as well!HomerJ wrote:Oh wow, I just realized the OP is from Northern California... NOT a LCOL area....
I'm surprised you managed to save so much living there... I mean really surprised... You sure you don't make more than $200k combined? How long have you two been making that much money?
In any case, he and his wife are doing quite well so...
[edit]
I found one of the OP's earlier posts (like from 2011) and confirmed my guesswork...he says he bought a California home at a "fortuitous time" and had roommates that covered costs. Plus, he broke 100K in his 20s.
Yes, I can see that even though he and his wife and I and my wife are at the same age and total salary, it's very likely he's out in front of me by many hundreds of thousands given his higher income early on. If he was saving and investing as hard as I was at that age he has to be given the math. Just another data point on why outsized EARLY saving and investing will win in the end.
So well done!
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Re: Hit a financial milestone at an age milestone
I was wondering why we did not have that much money saved, then I realized that we just put my elder son through an Ivy League school ($75,000 per year after tax).
- MikeWillRetire
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Re: Hit a financial milestone at an age milestone
Maybe he is bragging. Driving over the border into Canada for a camping weekend could be viewed as "international travel", and his "two kids" may actually be billygoats.
Re: Hit a financial milestone at an age milestone
Heh, you should have just invested that $300,000 for him... By 62 (assuming 10% historical return), he'd have $13.5 million without ever saving another cent...flyingaway wrote:I was wondering why we did not have that much money saved, then I realized that we just put my elder son through an Ivy League school ($75,000 per year after tax).
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Re: Hit a financial milestone at an age milestone
That was EXACTLY what I told my wife two months ago.HomerJ wrote:Heh, you should have just invested that $300,000 for him... By 62 (assuming 10% historical return), he'd have $13.5 million without ever saving another cent...flyingaway wrote:I was wondering why we did not have that much money saved, then I realized that we just put my elder son through an Ivy League school ($75,000 per year after tax).
Re: Hit a financial milestone at an age milestone
Didn't he imply that he is a Boglehead? Bogleheads don't brag, do they?MikeWillRetire wrote:Maybe he is bragging. Driving over the border into Canada for a camping weekend could be viewed as "international travel", and his "two kids" may actually be billygoats.
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Re: Hit a financial milestone at an age milestone
it's not bragging if it's a fact. It seems you did everything right. Others with your income level don't have the discipline to save like you have. would have, should have, could have for us. congrats.
Re: Hit a financial milestone at an age milestone
Awesome job! And just imagine where you'll be in another 10 years!!
"An investment in knowledge pays the best interest." - Benjamin Franklin
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Re: Hit a financial milestone at an age milestone
Wow! Thanks for all the replies!
a. Old cars; we tend to spend money on experiences (travel/food) vs things (cars/boats/oversized houses).
b. Health insurance is included in my job and my wife's job. And we have been fortunate to have good health to not have many out of pocket expenses
c. We save, have saved for the last 15 years, between 40%-50% of our income every year. I personally saved that percentage before marriage; DW didn't
d. DW is able to max out her 403b and 457 (35K tax deferred this year) every year for the last 10. Great way to reduce taxable income! We don't separate taxable accounts, but if you look at our retirement accounts, you'd see how much faster hers has grown. From 0 to >500K in about 15 years!
e. No periods of unemployment. Being laid off once in 2008, found a job quickly.
f. "Stay the course" investing. No matter what.
g. No student loans, and DW just had some minimal credit card debt that we took care of quickly. Our parents paid for our education (mine cheap state school, hers more expensive private)
In 10 years, I hope to be semi-retired. I'm way too risk averse to fully retire at 50, plus DW wants to work parttime anyways till at least 50.Awesome job! And just imagine where you'll be in another 10 years!!
Haha, I guess you'll never know for sure because I could be a 14 yr. girl from Missoula right? We take our kids on international travel quite a bit (France, Israel, Japan etc). About the only rule we have is, "no third world" till the kids are both 7-8. My older son is quite inquisitive and loves the simulation of new places. Our younger one could care less where he is since he is so young, but I hope to instill the love of travel in him as well. Travel is one of the best education one can give their children.Maybe he is bragging. Driving over the border into Canada for a camping weekend could be viewed as "international travel", and his "two kids" may actually be billygoats.
Very nice! I had forgotten about that post. Yeah, I [before marriage] bought our house in the late 90s and lucked out, so that's helped us with the equity. I think the biggest reasons we were able to save so much and end up are:I found one of the OP's earlier posts (like from 2011) and confirmed my guesswork...he says he bought a California home at a "fortuitous time" and had roommates that covered costs. Plus, he broke 100K in his 20s.
Yes, I can see that even though he and his wife and I and my wife are at the same age and total salary, it's very likely he's out in front of me by many hundreds of thousands given his higher income early on. If he was saving and investing as hard as I was at that age he has to be given the math. Just another data point on why outsized EARLY saving and investing will win in the end.
a. Old cars; we tend to spend money on experiences (travel/food) vs things (cars/boats/oversized houses).
b. Health insurance is included in my job and my wife's job. And we have been fortunate to have good health to not have many out of pocket expenses
c. We save, have saved for the last 15 years, between 40%-50% of our income every year. I personally saved that percentage before marriage; DW didn't
d. DW is able to max out her 403b and 457 (35K tax deferred this year) every year for the last 10. Great way to reduce taxable income! We don't separate taxable accounts, but if you look at our retirement accounts, you'd see how much faster hers has grown. From 0 to >500K in about 15 years!
e. No periods of unemployment. Being laid off once in 2008, found a job quickly.
f. "Stay the course" investing. No matter what.
g. No student loans, and DW just had some minimal credit card debt that we took care of quickly. Our parents paid for our education (mine cheap state school, hers more expensive private)
DW has made between 45K-75K. I crossed the 100K mark around 2003 and have gradually gotten and average of 4-5% raises most of the year, except for 3 years when raises were frozen due to the downturn. I'm making the most I've ever made now, but DW has been working parttime for the last few years.I'm surprised you managed to save so much living there... I mean really surprised... You sure you don't make more than $200k combined? How long have you two been making that much money?
Amen sister! I'm a cheapstake and I love seeing the balances creep up, but man, what's the point if that's all there is?! I've had at least 2 friends who past away in the last decade and they were both younger than me. Twenty years from now, I won't remember my Aug 2014 account balance, but I will remember how excited my son was going up for the first time in a funicular. Plus, time with kids is precious, even if they do drive me up the wall at times!I second the importance of taking international vacations, particularly with kids; money is to be enjoyed and life is about experiences, not about accumulating things. A lot of self-proclaimed "Cheapskates" miss that point.
Bought the house in late 90s for approx 250K. It's a small house but we have since remodeled it to accommodate our growing family. It's now worth approx 750K-800K. I *wish* I had significant home run investments but I don't. Before giving up and indexing, I had bought SBUX and that is by far my best individual investment. I can't bear to sell it and pay the capital gains and it has a gain of .... wait for it .... 20K (cost basis is about 2-3K). I've had several friends who hit it *big* with stock options. And I continuously kicked myself for doing that. Everything else is indexed: 65/35 with approx 40% international. Small value tilt.It's the 700K in home equity, driving his Net to over 2 million, that I had trouble reconcilling. Per my earlier post, I have to assume there was either significant gains on the real estate front or some one off (or maybe a couple) of investments that paid off very well that are outside the realm of index funds that were then used to put into a house and home equity.
Well, I haven't made by second million yet (1.5M in investments, 2.2ish M in net worth as another poster pointed out), but it does seem like it's going faster. The first 100K in my 20s was definitely the hardest.I am curious, was the second million easier than the first? Why?
Livesoft, thanks, yes. We do mostly of those things mentioned in that thread. Still hemming and hawing about 529s for the kids.Congrats!!! Have you used any of the tips in the family taxes thread to reduce your taxes? It seems like you fit the demographic there.
- MikeWillRetire
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Re: Hit a financial milestone at an age milestone
You save 50 percent of gross? You have 200k income. After income tax, ss, etc, your take home is around 150k? You save 100k? Your property tax on a 750k home has to be 10k in CA. That leaves 40k for a family of four in California, and you can still afford international vacations?
Re: Hit a financial milestone at an age milestone
@MikeWillRetire, did you read the thread I linked? Families like this do not pay the taxes that you think. Much of their income is income-tax-free.
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Re: Hit a financial milestone at an age milestone
Let's do some back of the envelope calculations here, with reasonable assumptions. OP can correct the figures if he feels up to it.MikeWillRetire wrote:You save 50 percent of gross? You have 200k income. After income tax, ss, etc, your take home is around 150k? You save 100k? Your property tax on a 750k home has to be 10k in CA. That leaves 40k for a family of four in California, and you can still afford international vacations?
Based on the evidence, assume he makes 140K and she makes 60K. Let's ignore investment income and taxes on that.
200,000 gross
- 35,000 [wife's 403(b)/457(b)]
- 17,500 [his 401(k)]
- 15,600 [4 exemptions]
- 16,000 [itemized deduction estimate - includes property tax of 10K and approximately 6K CA tax liability. No mortgage interest to deduct.]
- 6,450 [full HSA contribution]
- 3,000 [pretax medical premiums]
-----------------------------------------------------
= 106,450 taxable income
2013 joint federal income tax: 18,500
2013 joint state income tax: 5,000
2013 his payroll tax (113,700 @ 7.65%): 8,700
2013 her payroll tax (50,000 @ 7.65%): 3,800 [assumes cafeteria plan - HSA deduction and medical premiums from her payroll]
Total tax: 36,000 [At this AGI, a partial TIRA deduction may also be possible, which may reduce this by about 1000-1,500]
Given the above, net after all payroll deductions and taxes should be around 70,000. They have already saved 59,000 in pretax retirement accounts. To get to 50% gross saving rate, they need to save an additional 41,000 in IRA/taxable. That would leave about 30,000 to spend, which seems tight for a family of four even with low housing costs. At 40% savings rate, they would need to save an additional 21,000 in IRA/taxable. That would give them about 50,000 to spend, which gives some more breathing room. We would be spending around that much for a family of four, if we weren't paying for daycare.
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Re: Hit a financial milestone at an age milestone
These threads always generate a predominance of congratulatory responses and a few skeptics. It just goes to show you that it's not how much you make, it's how much you spend: if you make $200k per year and spend $75k you'll simply be much further ahead than if you make $200k and spend $125k.
Congrats OP
Congrats OP
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Re: Hit a financial milestone at an age milestone
Congrats. I'm only 37 but have a similar estimate milestone as OP.
For the 200k income for my family, roughly
66k taxes
66k spent
66k saved
For the 200k income for my family, roughly
66k taxes
66k spent
66k saved
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Re: Hit a financial milestone at an age milestone
I was scratching my head at first, but after the OP's long clarifying post, it all adds up just fine for me.
I guessed there was a real estate factor and he confirmed that. By his own admission he got lucky on that one and has realized the potential of significant gains...but to really capture that he'd have to sell and buy a place for much less, which means leaving the area or downsizing.
But if we put the crazy house gains aside, I can absolute confirm his $1.5 million portfolio is entirely reasonable. The house aside, he and his wife are pretty much walking the same financial path as us in terms of income, age, and current value of portfolio. It's partly how I guessed the missing real estate piece.
No need for me to check his numbers, I can vouch based on personal experience.
I guessed there was a real estate factor and he confirmed that. By his own admission he got lucky on that one and has realized the potential of significant gains...but to really capture that he'd have to sell and buy a place for much less, which means leaving the area or downsizing.
But if we put the crazy house gains aside, I can absolute confirm his $1.5 million portfolio is entirely reasonable. The house aside, he and his wife are pretty much walking the same financial path as us in terms of income, age, and current value of portfolio. It's partly how I guessed the missing real estate piece.
No need for me to check his numbers, I can vouch based on personal experience.
Re: Hit a financial milestone at an age milestone
Congratulations, now get back to work.NorCalHiker wrote:We have 2 young kids...
This should be one of your next milestones:
http://www.bogleheads.org/forum/viewtopic.php?t=15835
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Re: Hit a financial milestone at an age milestone
My secret sauce was not California real estate but market timing. Buying lots and lots of stocks in 2009 and late 2008, to be specific. In other words there are lots of roads to Dublin; why does success seem to cause so many people to raise an eyebrow? The OP even tried to preempt some of the skepticism by posting "no inheritance, no stock options" but that was apparently insufficient for the inveterate head scratchers out there.investingdad wrote:I was scratching my head at first, but after the OP's long clarifying post, it all adds up just fine for me.
I guessed there was a real estate factor and he confirmed that. By his own admission he got lucky on that one and has realized the potential of significant gains...but to really capture that he'd have to sell and buy a place for much less, which means leaving the area or downsizing.
But if we put the crazy house gains aside, I can absolute confirm his $1.5 million portfolio is entirely reasonable. The house aside, he and his wife are pretty much walking the same financial path as us in terms of income, age, and current value of portfolio. It's partly how I guessed the missing real estate piece.
No need for me to check his numbers, I can vouch based on personal experience.
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Re: Hit a financial milestone at an age milestone
Removed personal info
Last edited by Pizzasteve510 on Fri Sep 19, 2014 9:50 am, edited 3 times in total.
Re: Hit a financial milestone at an age milestone
Yeah, but I'm still having a hard time seeing how he lives in Northern California on $75k AND takes international trips each year with the kids...letsgobobby wrote:These threads always generate a predominance of congratulatory responses and a few skeptics. It just goes to show you that it's not how much you make, it's how much you spend: if you make $200k per year and spend $75k you'll simply be much further ahead than if you make $200k and spend $125k.
Congrats OP
Color me impressed... but he's got to be sacrificing somewhere... Or maybe not... Hiking is mostly free, right?
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Re: Hit a financial milestone at an age milestone
I must say I hadn't quite expected the last batch of replies which include a bit of skepticism. Feel free to believe or not believe any of it.
17.5K 401k
35K 403b/457 (no match)
24K taxable investment (2K/month)
11K Roth IRAs
AGI: 150K
Taxable income (line 43): 110K
Federal Tax: 18K
Effective Tax: 12%
State Tax: 7K
CA Property Tax: 4K (Thanks to Prop 13).
Mortgage balance approx 100K
As far as the travel goes, we churn credit cards for bonus miles and hotel points. Combine free air travel and affordable lodging from airbnb or staying in local hotels (*not* Marriott/Hyatt unless they have points etc) and international travel is not nearly as expensive it's made out to be even for a family of 4.
17.5K 401k
35K 403b/457 (no match)
24K taxable investment (2K/month)
11K Roth IRAs
AGI: 150K
Taxable income (line 43): 110K
Federal Tax: 18K
Effective Tax: 12%
State Tax: 7K
CA Property Tax: 4K (Thanks to Prop 13).
Mortgage balance approx 100K
As far as the travel goes, we churn credit cards for bonus miles and hotel points. Combine free air travel and affordable lodging from airbnb or staying in local hotels (*not* Marriott/Hyatt unless they have points etc) and international travel is not nearly as expensive it's made out to be even for a family of 4.
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- Posts: 12073
- Joined: Fri Sep 18, 2009 1:10 am
Re: Hit a financial milestone at an age milestone
The most expensive part of living in NorCal is housing and their house cost $250k. So their cost of living is not actually that high.
Re: Hit a financial milestone at an age milestone
+1. Earning is a big factor, then how much you can save. Options are limited for low-income earners. Congrats OP!letsgobobby wrote:These threads always generate a predominance of congratulatory responses and a few skeptics. It just goes to show you that it's not how much you make, it's how much you spend: if you make $200k per year and spend $75k you'll simply be much further ahead than if you make $200k and spend $125k.
Congrats OP
Re: Hit a financial milestone at an age milestone
Thanks for showing rough numbers for the taxes.
Since the salary deferral is so much, there is the possibility of the child tax credit (my kids are too old, so I don't know the income limits anymore*). Also with taxable investments mostly in international funds, one could get a substantal foreign tax credit. The two credits could reduce federal income taxes by another $2500.
Qualified dividends from taxable investments raise one's AGI, but are not taxed at one's marginal rate.
So a family can have more income than the OP and pay lower taxes.
*OP is beyond the income limits, so no child tax credit.
Since the salary deferral is so much, there is the possibility of the child tax credit (my kids are too old, so I don't know the income limits anymore*). Also with taxable investments mostly in international funds, one could get a substantal foreign tax credit. The two credits could reduce federal income taxes by another $2500.
Qualified dividends from taxable investments raise one's AGI, but are not taxed at one's marginal rate.
So a family can have more income than the OP and pay lower taxes.
*OP is beyond the income limits, so no child tax credit.
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- Posts: 2126
- Joined: Fri Mar 15, 2013 10:41 pm
Re: Hit a financial milestone at an age milestone
Keep in mind that while everyone here is working hard to practice the Boglehead philosophy, far fewer actually employed this philosophy in their 20s or coming right out of college. So when those of us that did post up the results (like you did), it's naturally going to catch some attention. It's one thing to understand the math, it's another to see the results when somebody has actually done it exactly the way everyone says you should...because far fewer have.NorCalHiker wrote:I must say I hadn't quite expected the last batch of replies which include a bit of skepticism. Feel free to believe or not believe any of it.
Being a Boglehead before you know what a Boglehead is AND making Boglehead moves right out of college is uncommon (I think) even among Bogleheads. So take the skepticism in stride. Even I had to reconcile your numbers and we did the same thing!
Congrats again and enjoy the rapid increases that come from two decades of patient investing.
Re: Hit a financial milestone at an age milestone
There isn't anything that I could add except CONGRATS. You made no mistakes and even your one individual stock was a gem. Perfect family, both working steadily and controlling spending, house in California, thinking and LIVING frugally, and socking it away. I have learned in this long life, that its always what we do, not what the market does or does not do.
It is very gratifying to see young people get it right. Crystal Mendez, a teacher colleague, has managed to save $160,000 as a single female on a teachers salary at age 33, because she started at 22. She is on her way to getting to a million by 40. She was featured in the PBS Frontline broadcast "The Retirement Gamble." She was the most successful investor in the broadcast.
Congrats for not just achieving your milestone at a young age, but apparently learning from the mistakes and experiences of others (the usual mistakes of buying new cars every three years and all the latest trendy things and/or getting crushed by one or both of the last two stock market crashes because of lack of diversification). Its quite an achievement itself in our culture to focus on experiences rather than things.
It is very gratifying to see young people get it right. Crystal Mendez, a teacher colleague, has managed to save $160,000 as a single female on a teachers salary at age 33, because she started at 22. She is on her way to getting to a million by 40. She was featured in the PBS Frontline broadcast "The Retirement Gamble." She was the most successful investor in the broadcast.
Congrats for not just achieving your milestone at a young age, but apparently learning from the mistakes and experiences of others (the usual mistakes of buying new cars every three years and all the latest trendy things and/or getting crushed by one or both of the last two stock market crashes because of lack of diversification). Its quite an achievement itself in our culture to focus on experiences rather than things.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
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- Joined: Thu Apr 05, 2007 8:20 pm
- Location: New York
Re: Hit a financial milestone at an age milestone
That's a bit of a stretch don't you think? Going from $160K to $1,000K in just 7 years, even if you contributed $35K a year, I don't see it happening. But then again, my crystal ball is as cloudy as yours is.sschullo wrote:There isn't anything that I could add except CONGRATS. You made no mistakes and even your one individual stock was a gem. Perfect family, both working steadily and controlling spending, house in California, thinking and LIVING frugally, and socking it away. I have learned in this long life, that its always what we do, not what the market does or does not do.
It is very gratifying to see young people get it right. Crystal Mendez, a teacher colleague, has managed to save $160,000 as a single female on a teachers salary at age 33, because she started at 22. She is on her way to getting to a million by 40. She was featured in the PBS Frontline broadcast "The Retirement Gamble." She was the most successful investor in the broadcast.
Congrats for not just achieving your milestone at a young age, but apparently learning from the mistakes and experiences of others (the usual mistakes of buying new cars every three years and all the latest trendy things and/or getting crushed by one or both of the last two stock market crashes because of lack of diversification). Its quite an achievement itself in our culture to focus on experiences rather than things.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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- Posts: 25617
- Joined: Thu Apr 05, 2007 8:20 pm
- Location: New York
Re: Hit a financial milestone at an age milestone
That low effective tax rate of 12% is just incredible, come east where property and state taxes alone can eat you alive. Saving gets harder when you get taxed to death. The other thing you mentioned about having health insurance provided by your employer - is it provided free to you or are you paying premiums for it? I ask because a friend of mine was working for a tech company that gave his family free health insurance - that is a substantial savings that he then used to take his "international" trips too. Not saying you haven't accomplished something substantial, you have, it just seems a little suspect to only be paying federal taxes of 18K on 150K of taxable income.NorCalHiker wrote:I must say I hadn't quite expected the last batch of replies which include a bit of skepticism. Feel free to believe or not believe any of it.
17.5K 401k
35K 403b/457 (no match)
24K taxable investment (2K/month)
11K Roth IRAs
AGI: 150K
Taxable income (line 43): 110K
Federal Tax: 18K
Effective Tax: 12%
State Tax: 7K
CA Property Tax: 4K (Thanks to Prop 13).
Mortgage balance approx 100K
As far as the travel goes, we churn credit cards for bonus miles and hotel points. Combine free air travel and affordable lodging from airbnb or staying in local hotels (*not* Marriott/Hyatt unless they have points etc) and international travel is not nearly as expensive it's made out to be even for a family of 4.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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- Posts: 3908
- Joined: Fri Jan 17, 2014 9:19 am
Re: Hit a financial milestone at an age milestone
I must say that if they consistently made above $200,000 and saved like they posted in the past 16 years, they should be able to achieve what they reported. Although we do not save that much, I could see from my experience that is doable. (We did not max 403b and 457b, and had to put a kid through private college). So I certainly congratulate them for their remarkable milestone.
Re: Hit a financial milestone at an age milestone
After reading the OP here, when people don't make any mistakes, use the Boglehead way and with a little luck with individual stocks, anything can happen. Personally, I cannot imagine not making some mistakes, just part of learning, but some people dont! Most of us never got it all together, the way the OP reports. Young people are learning from the mistakes of others and that is a huge deal. Yea, I agree about going from 160,000 to million in 7 years is a stretch. I just got caught up in the excitement. Here is a little more information on Crystal, she just got married to a guy who is doing the same thing. Together they will reach a million for sure by 40ish. They are very similar to the OP (only Crystal and hubby make less income than OP), living in LA, live frugal, etc. and they have no kids, yet. She is very public about her retirement plan and wants her colleagues to save too. She has been on the front page of the LA Times and on Retirement Gamble. I am trying to get the Los Angeles Unified board of education to recognize her as a model retirement plan saver for their National Save for Retirement Week proclamation, held in October. Just like the OP, Crystal and her new hubby are an inspiration for all of us!Grt2bOutdoors wrote:That's a bit of a stretch don't you think? Going from $160K to $1,000K in just 7 years, even if you contributed $35K a year, I don't see it happening. But then again, my crystal ball is as cloudy as yours is.sschullo wrote:There isn't anything that I could add except CONGRATS. You made no mistakes and even your one individual stock was a gem. Perfect family, both working steadily and controlling spending, house in California, thinking and LIVING frugally, and socking it away. I have learned in this long life, that its always what we do, not what the market does or does not do.
It is very gratifying to see young people get it right. Crystal Mendez, a teacher colleague, has managed to save $160,000 as a single female on a teachers salary at age 33, because she started at 22. She is on her way to getting to a million by 40. She was featured in the PBS Frontline broadcast "The Retirement Gamble." She was the most successful investor in the broadcast.
Congrats for not just achieving your milestone at a young age, but apparently learning from the mistakes and experiences of others (the usual mistakes of buying new cars every three years and all the latest trendy things and/or getting crushed by one or both of the last two stock market crashes because of lack of diversification). Its quite an achievement itself in our culture to focus on experiences rather than things.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
Re: Hit a financial milestone at an age milestone
.
Congratulations.
A good demonstation of saving a signficiant share of what you earn, start early, avoid mistakes - and let the power of compounding work for you. The earlier you start the higher the multiple effects of compounding can work for you - really important IMO, and really powerful.
I also subsrcibe to not spending much for day-to-day living, but also not skimping on vacations. And international travel helps put things in perspective.
Congratulations.
A good demonstation of saving a signficiant share of what you earn, start early, avoid mistakes - and let the power of compounding work for you. The earlier you start the higher the multiple effects of compounding can work for you - really important IMO, and really powerful.
I also subsrcibe to not spending much for day-to-day living, but also not skimping on vacations. And international travel helps put things in perspective.