4 years as a Boglehead

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pasadena
Posts: 333
Joined: Sat Jul 02, 2016 1:23 am
Location: Washington State

4 years as a Boglehead

Post by pasadena » Thu Mar 28, 2019 10:02 pm

WARNING: SUPER LONG POST.

tl;dr: I was poor and clueless, now I'm not poor anymore (not rich yet though) and I know things :)

As I am finishing a big review and overhaul of my financial landscape (due to a big change of employment and relocation at the end of last year), I found myself looking back at my past data and notes. I realized I have come a very, very long way, and thought I would make this post, both to thank the Bogleheads community, and to encourage newcomers.

4 years ago, in January 2015, I posted for the first time on this forum. I was still learning what to do with my finances. As a foreigner having arrived in the US 3 years earlier, I had very little knowledge on the subtleties of US money management, investing and retirement. So I wanted to start on that path, as well as save for a downpayment.

I had about $53k in my name - $41k in my 401k, and $12k in my savings account, and that was the extent of my Net Worth.

My first question was whether or not I should open a Roth IRA, given my specific set of circumstances. The answer was a resounding yes, and I will always be grateful to those Bogleheads who took the time to answer all my questions, and explain how it worked in great details.

So I did that, and "backdoored" $5,500 for FY2014. Then I took the time to really think about my goals, to come up with a reasonable plan, and an appropriate asset allocation. I ended up investing this money in VASIX, which sounded pretty good while I waited to have enough to set up a true 3-funds portfolio. My 401(k) was in some target retirement fund (and has been all this time).

When my relocation loans ended and freed up $700 a month, I increased my 401(k) contribution to the max I was allowed - 13%. It wouldn't be enough to max it out that year, but I was limited by HCE rules.

Then I got my bonus, and sent it to the Roth for FY2015. Since then, I have maxed it out every year in January.

After that, I spent a year or so building up my EF, then saving more until I had enough to buy VTSMX. I opened my first-ever brokerage account in July 2016 (In my notes I wrote "I'm a big girl, now!"). Sold my VASIX, bought some more VTSMX and some VBTLX, and I had my first 2-funds portfolio.

I added VGTSX (International Index) in August 2017, again after saving up the money for the minimum. So it took 2.5 years to build a full 3-fund portfolio.

I have tried to save as much as I could. Every raise went into my investments. Most of my bonuses, and any overtime pay too. I had a couple of pretty "good" years in terms of OT. I also had a huge bonus payout last year when I left my job, of which I invested 100%, and took my pension as lump sum (rolled it over in my 401(k)). So that helped a lot (the after-tax bonus plus the pension amounted to ~100k)

I haven't been perfect. Sometimes it's very hard for me to fight against shinytis, and I have bought way more high-end electronics and workout gear than I care to admit. I'm not frugal by any means, but I'm also not attracted to big cars and big homes, I hate debt, and I (almost) never stopped saving money. Many thanks to the Gods of Automated Direct Deposits.

So where am I now, 4 years later?

My Net Worth as of the end of last month was $420k. Again, all of it is savings and investments. I'm still a renter.

I'm still "behind" compared to what this forum would say a person "should" be at my age (almost 45). But when I look at the path behind me, and the path in front of me, I know I can "win the game" if I keep it up as long as I have a job. My new job has great benefits, the best of them being the ability to front-load the 401(k) and the match, and full Mega Backdoor Roth IRA. So I'm planning on maxing that out every year for as long as I have access to it. My budget got a fair bit of a raise after relocation, due to a much better housing situation, but I will be saving most of the income boost I got from the new job and new state tax situation. I expect to save about 45% of my gross income this year.

I don't know what I would have done if I hadn't found this forum, and its wiki. So please accept my most heartfelt thanks. Not only have you all allowed me to save more money than I EVER thought I would ever have, and made my retirement prospects pretty good, but I have learned so much in the process.

To all the new members starting with next to nothing or less, I know it feels like an insurmountable task, but trust me, every little bit adds up, and there is nothing more effective than patience and perseverance. It *will* get to a point where it feels like your goals are within reach.

Thank you :sharebeer

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Stinky
Posts: 2491
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Location: Sweet Home Alabama

Re: 4 years as a Boglehead

Post by Stinky » Thu Mar 28, 2019 10:12 pm

Congratulations to you!

Sounds like the last four years have been a very positive learning experience for you. With the knowledge that you’ve acquired, I trust that the next four years, and the next four years after that, will be much better.

You started later in life than some, but earlier than many. And you’re well on your way.

The financial future for you is incredibly bright. Again, congratulations.
It's a GREAT day to be alive - Travis Tritt

ladycat
Posts: 231
Joined: Fri Sep 28, 2018 5:02 pm

Re: 4 years as a Boglehead

Post by ladycat » Thu Mar 28, 2019 11:45 pm

That's impressive progress in a very short time. I hope your hard work and good habits continue to pay off.

zeal
Posts: 195
Joined: Tue Dec 11, 2018 4:28 pm

Re: 4 years as a Boglehead

Post by zeal » Fri Mar 29, 2019 7:09 am

Thanks for posting this! Well done and I'm sure that being "behind at [your] age" won't last much longer... You are already ahead of the game knowledge-wise. You effectively multiplied your net worth by 8 in 4 years since your first post... Wow!

If we can do that, my wife & I will have the option of retirement/stress-free job change before we're 40 if we want to. Thanks for helping us dream today.
:sharebeer

Topic Author
pasadena
Posts: 333
Joined: Sat Jul 02, 2016 1:23 am
Location: Washington State

Re: 4 years as a Boglehead

Post by pasadena » Fri Mar 29, 2019 4:31 pm

Thank you! I'm pretty proud of myself :)
zeal wrote:
Fri Mar 29, 2019 7:09 am
Thanks for posting this! Well done and I'm sure that being "behind at [your] age" won't last much longer... You are already ahead of the game knowledge-wise. You effectively multiplied your net worth by 8 in 4 years since your first post... Wow!

If we can do that, my wife & I will have the option of retirement/stress-free job change before we're 40 if we want to. Thanks for helping us dream today.
:sharebeer
This is exactly why I posted this. Until I came to the US, and had to learn how to manage my money in a foreign country, I never saved anything. Saving to buy a home, for example, seemed so out-of-reach, and SLOW, especially on a European salary, that I gave up before I even started. Anytime I would manage to save a few thousand Euros, I ended up spending it. I have nothing left to show for those years of spending, by the way. Thankfully I never got into debt.

So I wised up, and while it did seem unattainable at the time, it slowly added up. It's worth it. Had I started at 30 years old, I would be very close to early retirement now.

You can do it :)

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