Where should one be at 30?

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Petrocelli
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Post by Petrocelli »

I don't think you should compare yourself to anyone but yourself.

I think at age 30 you should hopefully be relatively free from consumer debt, and starting to accumulate assets. If you are doing that, you should be OK.
Petrocelli (not the real Rico, but just a fan)
HornedToad
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Post by HornedToad »

steelerfan wrote:Remember the book, the Millionaire Next Door by Stanley and Danko?

Stanley and Danko argue that your total net worth alone does not tell a good enough picture of one's wealth, what matters is how much worth you can accumulate on your income considering your own age. Therefore, a 30 year old making $ 25,000 who has a net worth of $ 80,000 has more relative wealth than a 50 year old doctor making $ 200,000 a year who is only worth $500,000.

Here is a link to the wealth calculator:
http://www.banksite.com/calc/wealth
I like that calculator and idea but feels it vastly over-estimates the amount people under 35 or so should have saved. i.e. I'm an underaccumulator of wealth at age 27 but I've been only working ~2 years because of college and 2 yrs of grad school. Interestingly it said that between 110k and 430k would be average accumulator of wealth at my age and income and that just seems crazy.

Whereas if I was 40, with the exact same income then average accumulator of weath would be 160k to 640k... That sames reasonable to me at that age, maybe even slightly low.
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iceport
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Re: Where should one be at 30?

Post by iceport »

waitforit wrote:I am currently in the midst of a milestone year in my life (yeah, that means I'm 29) and have been thinking a lot lately about goal setting and planning. I'm at the point where I've been in the workforce for >5 years and have started executing my career plan. This year has brought both our first child and also the first serious move down the career path into a mid-level position.

Anyway, I'm curious what would be considered good progress on the financial front. I can find data that suggest the medium income of 30-somethings is X, or that the average 30-yr old has Y dollars in retirement accounts... but I am hardly interested in comparing to the 'average' american.

How much in retirement savings should the 'average' Boglehead have accumulated by 30?
waitforit,

This article by Charles J. Farrell, Personal Financial Ratios: An Elegant Road Map to Financial Health and Retirement, might be the sort of general, income-referenced measure you're looking for. Of course you'll want to consider the underlying assumptions and make appropriate adjustments for your specific circumstances, such as savings rate, assumed real return, desired retirement age, retirement income requirements, etc. (I have no idea how this relates to the "average Boglehead".)
Farrell wrote:Table 1 shows a sample set of personal financial ratios for an individual from age 30 to retirement at age 65. The primary objective of the ratios is to help the person reach age 65 with no debt, and savings worth 12 times their salary. Why 12 times salary versus, say, 10 or 15 times? This ratio would put the individual in a position to generate approximately 60 percent of his or her pre-retirement income from savings. For example, a 65-year-old with $100,000 of pre-retirement household income would ideally have $1.2 million in savings. At a hypothetical 5 percent distribution rate, that would produce approximately $60,000 of income. Add the person's Social Security benefit of approximately $20,000, and the individual has an income that is 80 percent of his or her pre-retirement income.
Image

I hope you find this useful.

--Pete
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market timer
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Post by market timer »

HornedToad wrote:
Here is a link to the wealth calculator:
http://www.banksite.com/calc/wealth
I like that calculator and idea but feels it vastly over-estimates the amount people under 35 or so should have saved.
Yeah, according to that site, I'm below my desired net worth by $750K :oops:

Sadly, this is probably how much wealthier I'd be if I hadn't gone for a PhD (turned down i-banking jobs) and didn't lose $250K sending out a MYR test launch.
biasion
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Post by biasion »

EmergDoc wrote: If many of us had $500K at 30, we'd be retired at 40, 2.5 decades earlier than most Americans.

==FV(8%,10,50000,500000)=$1.8 Million at age 40.
The problem I see with that is for someone to have 500k or more by age 30, you'd be mostly taxable. If you are making well into six figures through your 20's, but it's all taxable, it becomes harder to try and harness it efficiently, and your rate of return will suffer through:
1. investment choices you must make to stay tax efficient (munis generally pay less, are riskier, TSM very tax efficient, but volatile)
2. the extra risk you are forced into for tax efficiency, thereby perhaps having a higher than expected stock ratio whose gains become hard to rebalance because....
3. rebalancing costs you a lot in taxes.

The other key issue is that if you're making so much money in your 20's and 30's, you've hit upon a nice cash cow, the 99th percentile, the holy grail, the ne plus ultra etc. It would be foolish to all of a sudden give it up at 40, and impossible to be able to match its income producing capability unless you were able to sell a business for a huge bonus (IE, I knew someone who sold their multi-lot car dealership worth 40 million at the height of the market 4 years ago).

Let's say you make 400k, a number I chose becuase it is divisible by 4 and easily multiplied by 25, factoring the SWR. You would need 10 million of net worth to produce a SWR of 400k. OK, so a lot of it goes to taxes and savings rate, but let's say you want to get by on just 150 or 200k. That's a big change in income, and very anxiety provoking if you're still young and can expect to live long. Still, you're a boglehead, you earn 400, but you could get by on a spendable income of 200k or less. Well, if you retire when you're 40, you need a SWR probably lower than 4%: at that age, they usually pick 2%. So, 200k is 2% of 10 million, same number. So, at this income level, when all is said and done, it is very, very, very hard to ammass enough money to keep up the same level of income. You have a very high tax drag, and then you're just giving up the goose that lays the golden eggs... it's very hard to replace.

1.8m doesn't seem like a whole heck of a lot to retire on at 40. In your late 60's if combined with taking social security later... maybe, but in that situation, it just seems a little hasty and greatly limits your options in the long term.

I actually say this because I know someone who retired in his early 40's with a net worth of about 1m 10y ago. He avoided stocks almost completely (Except for a small IRA), and is basically living off rental properties, but pretty much living with his girlfriend who is a singer on a cruise ship. He has a lot of fun yes, but he is a little strapped for cash as of late, and with 20 credit cards fueling the leverage which helped him finance his real estate ventures.....

Retiring early with such a profitable enterprise in hand becomes foolish: you kill the goose that lays the golden egg. Anyone so fortunate and adept had better ply their trade well into later life, unless, again, you can sell the business for such a huge worth (impossible in these times) that it will make the whole SWR argument a moot point.
Last edited by biasion on Tue May 19, 2009 7:15 pm, edited 1 time in total.
DSInvestor
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Post by DSInvestor »

biasion wrote:The problem I see with that is for someone to have 500k or more by age 30, you'd be mostly taxable. If you are making well into six figures through your 20's, but it's all taxable, it becomes harder to try and harness it efficiently, and your rate of return will suffer through:
1. investment choices you must make to stay tax efficient (munis generally pay less, are riskier, TSM very tax efficient, but volatile)
2. the extra risk you are forced into for tax efficiency, thereby perhaps having a higher than expected stock ratio whose gains become hard to rebalance because....
3. rebalancing costs you a lot in taxes.
Self employed folks can contribute and deduct 49K in 2009 to self employed 401k plans or SEP-IRA. If someone is making > 130K salary in their own self employed S-Corp, it is possible to accumulate 500K in tax sheltered account in 10 yrs.

It's not likely that a 20 yr old can earn that kind of money, but it's not impossible either.
Shireman28
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Post by Shireman28 »

I'm 30...

I went to a state school and picked up some scholarships along the way.

I've got a good job at the family business and try to save as much as possible.

I'm getting married in September to a fellow cheapskate so that should help.

Unfortunately I went house-fever crazy in 2005 and built a $450,000 house. It appraises for $395,000 today on recent my re-finance. Live and learn. I've got about $100K in home equity, six months salary in tax exempt money market, and $53K in retirement accounts.

Personally, if a Boglehead has over 100K after a housing collapse and a flat stock market the last eight years I think they're doing well. If they had student loans, maybe 50K is great.
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market timer
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Post by market timer »

biasion wrote:You would need 10 million of net worth to produce a SWR of 400k. OK, so a lot of it goes to taxes and savings rate, but let's say you want to get by on just 150 or 200k. That's a big change in income, and very anxiety provoking if you're still young and can expect to live long.

1.8m doesn't seem like a whole heck of a lot to retire on at 40. In your late 60's if combined with taking social security later... maybe, but in that situation, it just seems a little hasty and greatly limits your options in the long term.
Yeah, with only $8-10M in the bank, I'd really be stressing out about my $250-300K after-tax passive income. Might have to fire the butler and wipers.
tim1999
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Post by tim1999 »

First off, the poster saying you should have 500k at 30 is silly. That's impossible for 99.9% of the population, unless you got a six-figure job at 22 but lived in a cardboard box, had a big inheiritance, or are some kind of day trading sensation.

I think that Millionaire Next Door calculator is a little silly too, especially for younger folk. I am in my late 20s. Two years ago I switched jobs to one that paid 35-40% more. By that calculator, on the last day of my old job, I was way ahead of the average, but the first day of my new job I was just an "average" accumulator of weath. Despite the fact that I'd bet that I have a higher net worth than at least 3/4 of the people my age. I really doubt that the average 27-28 year old is sitting on six figures net of debt at this point in time.
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White Coat Investor
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Post by White Coat Investor »

biasion wrote:
EmergDoc wrote: If many of us had $500K at 30, we'd be retired at 40, 2.5 decades earlier than most Americans.

==FV(8%,10,50000,500000)=$1.8 Million at age 40.
The problem I see with that is for someone to have 500k or more by age 30, you'd be mostly taxable. If you are making well into six figures through your 20's, but it's all taxable, it becomes harder to try and harness it efficiently, and your rate of return will suffer through:
1. investment choices you must make to stay tax efficient (munis generally pay less, are riskier, TSM very tax efficient, but volatile)
2. the extra risk you are forced into for tax efficiency, thereby perhaps having a higher than expected stock ratio whose gains become hard to rebalance because....
3. rebalancing costs you a lot in taxes.

The other key issue is that if you're making so much money in your 20's and 30's, you've hit upon a nice cash cow, the 99th percentile, the holy grail, the ne plus ultra etc. It would be foolish to all of a sudden give it up at 40, and impossible to be able to match its income producing capability unless you were able to sell a business for a huge bonus (IE, I knew someone who sold their multi-lot car dealership worth 40 million at the height of the market 4 years ago).

Let's say you make 400k, a number I chose becuase it is divisible by 4 and easily multiplied by 25, factoring the SWR. You would need 10 million of net worth to produce a SWR of 400k. OK, so a lot of it goes to taxes and savings rate, but let's say you want to get by on just 150 or 200k. That's a big change in income, and very anxiety provoking if you're still young and can expect to live long. Still, you're a boglehead, you earn 400, but you could get by on a spendable income of 200k or less. Well, if you retire when you're 40, you need a SWR probably lower than 4%: at that age, they usually pick 2%. So, 200k is 2% of 10 million, same number. So, at this income level, when all is said and done, it is very, very, very hard to ammass enough money to keep up the same level of income. You have a very high tax drag, and then you're just giving up the goose that lays the golden eggs... it's very hard to replace.

1.8m doesn't seem like a whole heck of a lot to retire on at 40. In your late 60's if combined with taking social security later... maybe, but in that situation, it just seems a little hasty and greatly limits your options in the long term.

I actually say this because I know someone who retired in his early 40's with a net worth of about 1m 10y ago. He avoided stocks almost completely (Except for a small IRA), and is basically living off rental properties, but pretty much living with his girlfriend who is a singer on a cruise ship. He has a lot of fun yes, but he is a little strapped for cash as of late, and with 20 credit cards fueling the leverage which helped him finance his real estate ventures.....

Retiring early with such a profitable enterprise in hand becomes foolish: you kill the goose that lays the golden egg. Anyone so fortunate and adept had better ply their trade well into later life, unless, again, you can sell the business for such a huge worth (impossible in these times) that it will make the whole SWR argument a moot point.
This concept that because you once made $400K in a year means you have to live on $400K or $200K a year is silly IMHO and a great inhibitor of people enjoying financial independence. Those who value an early retirement sacrifice the higher income that working more years would provide.

Once a person has "enough" who cares what he does with the golden goose if he doesn't want to spend time with it every day?

$1.8 Million*.04=$72K/year indexed to inflation, more than enough for many people.

But if not 40, then say 45 or 50, and my point remains the same.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Post by bluto »

EmergDoc wrote: This concept that because you once made $400K in a year means you have to live on $400K or $200K a year is silly IMHO and a great inhibitor of people enjoying financial independence.
For the prudent boglehead that is true. But Biason's example does showcase why it is foolish to compare net worth at age 30. With savings rates so low, the average American is consuming most of their salary. My lawyer friends drive REALLY nice new cars, live in the most expensive areas... and will have to work forever! Look at my clothes, car, stuff...I'm the poor friend in the bunch... unless they compare our portfolios :D
jmuc85
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Post by jmuc85 »

Well, I'm 23, and essentially have a 0 net worth. Just started my first job out of college, have ~2500 in roth ira, ~450 taxable, and ~750 in emergency fund. I'm also in the process of paying off around $4000 in debt accumulated from college and a post-college Europe backpacking trip (worth every penny). At least it's all at 0% for another 6 months. My 4% matching 401k will be starting soon and I'm able to put away around 500/month right now and feel good about that at this point. I'm hoping to have around 100k between my various accounts at age 30...time will tell. My priority though is to have fun while I'm young...
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Post by arthurdawg »

i'm 35, out of medical training for 2 years, have no debt except a mortgage and recently passed the 100k mark at vanguard. the future is bright (pending changes in healthcare spending :lol: ) but i was also lucky from standpoint of having scholarships through college AND medical school that covered most of my expenses. it's a tough time though, my older colleagues were pulling high 6 figures at this point in their careers, missed the real estate bubble (my house is ok but it isn't likely to appreciate at the rates of the past twenty years for this area), and my income will never approach theirs.
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wingnutty
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Post by wingnutty »

I'll bite, although I agree, comparisons are fairly worthless.

28 yo (almost 29) Married, 2 yo daughter another due next month :D . We are just finishing building a home which cost 215K and have ~45K equity in the home.

10K savings/emergency fund
25K Roths
20K in 401Ks

Save 15-20% of income

Dept: mortgage and 2 yrs @ $400/mo for a truck. After the vehicle is paid we will never again owe on any vehicles. Will try to pay the mortgage in 15 yrs.

MOST IMPORTANTLY: we are happy, healthy and have a loving family. We live in a great location, small, close-knit town. I can be fishing and hunting outside my front door. I LOVE my job, don't get paid a ton ~60K and will never earn more than 70K, but that is ok. I get to do conservation work and complete projects from start to finish and at the end of every day know that I've helped create better wildlife habitat, reduced erosion and helped people.

I have no regrets and I am truely happy and that is what is most important.
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greg24
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Post by greg24 »

Here is what I had accomplished at 30, and I think is a great goal for others who believe in such a rat trap of life:

- Had recently bought a house with 20% down for a 20 year mortgage
- Had two reasonable cars, only one of which still had some payments left
- Had no other debt
- Had 20 year level term life for both of us
- Had two good jobs
- Were soon expecting the first financial sinkhole addition to the family (our eldest daughter)

We had a small nest egg built up, but nothing to brag about. We had lived a little in our 20s, had relocated a couple times, but built a solid foundation. In the following 6 years (we are now 36), my wife soon dropped to working 2 days a week, and we welcomed the 2nd financial sinkhole to the family.

Since we had the solid foundation built, we generally just had to put it on cruise control to grow our nest egg. Getting paid every 2 weeks, depositing a decent chunk into a 401k, and paying the mortgage every month has resulted in sizable gains over what we had at 30. Our net worth is now fairly impressive, even though we don't make all that much money. But we do put 15% (me) and 25% (her) into our 401k, make small monthly 529 deposits for both our kids, and pay that darn mortgage. Our LTV went from 80% to 61%, and this is assuming our house is worth the same that we paid, which is definitely underestimating its value. A 15 or 20 year note, instead of 30, is a great thing.

If you have built your solid foundation, I wouldn't worry about your net worth number at this point. I think that your 30s are where it will really grow.
ausgenf
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Post by ausgenf »

At age 30, my wife and I had accumulated about $150K mostly in a 401K, an IRA and an emergency fund. We were lucky to graduate a few years earlier with zero debt which helped tremendously. Today, at age 35 we have passed the $500K mark (80% of it is in stocks/bonds/cash) and I am pretty happy with that given the performance of the stock market over the past 9 years.
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Goldfinger
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Post by Goldfinger »

This is a pretty funny thread. There are so many combinations and permutations of income / salaries: (dual income vs single w/stay at home parent, salaried worker vs. business owner taking small "start-up" salary, potential periods of unemployment for one or both in household, one or both going back to school part-time, full-time, etc.)

I keep a "silly" spreadsheet of fun statistics based on my investing history: One of my favorites from the 90's bull market was my "hurdle rate." (How fast the wife and I could "bang down" each 100K hurdle)

The first 5 went something like this:

1st 100K: 7 years
2nd 100K: 2.2 years
3rd 100K: 1 year
4th 100K: 10 months
5th 100K: 3 1/2 years

Obviously, holding our contribution rates fairly static, you could so easily get swept up in the attendant euphoria of the bull market. But the silly predictions we would make were almost embarrassing. :oops:

That's why I call it a "silly" spreadsheet - that's all it is.

Goldfinger
"At cocktail parties lovely ladies would corner me and ask my opinion of the market, but alas, when they learned I was a bond man, they would quietly drift away." -- Sidney Homer/Salomon Bros
TRC
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Post by TRC »

For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
Bigfoothunter
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Post by Bigfoothunter »

I do not recall my net worth at 30, but at the time I had IRA's, 401K and a brokerage account, and owned a home debt free. In short, I was on good financial footing. Best of luck to you, bigfoot
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speedbump101
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Post by speedbump101 »

IMHO at 20, 30, or 60 the most important thing is to 'know where your money is going'... The one thing I've noticed is that people who are not very good handling money, usually have no clue where it's going.

Once you have a handle on where it's going, if you can put 10% away every month, preferably in a low cost vehicle like a Vanguard fund, or a low cost EFT, you will find your future financial needs will pretty much look after themselves.

SB...
"Man is not a rational animal, he is a rationalizing animal" -Robert A. Heinlein
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waitforit
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Post by waitforit »

At age 30, my wife and I had accumulated about $150K mostly in a 401K, an IRA and an emergency fund. We were lucky to graduate a few years earlier with zero debt which helped tremendously. Today, at age 35 we have passed the $500K mark (80% of it is in stocks/bonds/cash) and I am pretty happy with that given the performance of the stock market over the past 9 years.
This is very inspiring to me. I suppose at times I forget about the compounding factor since I've invested entirely in a flat market overall my entire investing life. My retirement account has acted like a zero-interest checking account so far :)

About the silly spreadsheet idea - I should be 'worth' double what I am right now. The projections in 2006 were looking pretty good and I've come down from the clouds a bit since then. I can only conclude that the plan we're following is sound and that long-term it is the best idea I've got.

We contribute about 30% of gross earnings to retirement spread out among 403b, roth, and taxable accounts - all invested in a slice n dice portfolio of index funds and ETFs. Owe $120k on a house appraised at $200k. Student loans of about $47k @ 2.6% (LUCKY). Small 529 plan started for 6mo daughter - not to 5 figures yet. No car payments, CC debt, etc.

Thank you for the FPANET link - it explains in a very eloquent way what I've sensed for a long time.
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Post by Radiohead »

Well, I'm currently 28...extrapolating out to age 30 in 1.5 years I will be something like:

single, no kids (I suppose that may change..anybody know any single ladies who aren't frightened off by debt?)

Student loans: (260k)
Mortgage: (130k)

ROTH: 15k
Emerg: 10k

Total: (365k)

I will at that point still have another 2-3 years of a salary <50k so my student loans will still be growing quite a bit. Any equity in the house may as well be a rounding error. That said, my situation will be quite a bit different by the time I hit 40. As was stated earlier, it is really hard to compare people at age 30.
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Post by HomerJ »

TRC wrote:For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
How did you get in this position?
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HomerJ
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Post by HomerJ »

Radiohead wrote:Well, I'm currently 28...extrapolating out to age 30 in 1.5 years I will be something like:

single, no kids (I suppose that may change..anybody know any single ladies who aren't frightened off by debt?)

Student loans: (260k)
Mortgage: (130k)

ROTH: 15k
Emerg: 10k

Total: (365k)

I will at that point still have another 2-3 years of a salary <50k so my student loans will still be growing quite a bit. Any equity in the house may as well be a rounding error. That said, my situation will be quite a bit different by the time I hit 40. As was stated earlier, it is really hard to compare people at age 30.
Are you 130k in the hole in your mortgate? If your house is worth around 130k and you owe 130k on it then you consider yourself even...

See, now your net worth is only -235k!!

(How in the world did you get $260,000 in debt from student loans? Med school?)
Radiohead
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Post by Radiohead »

fair enough on the mortgage...I guess I CAN consider myself even on it, but in my mind I consider it debt.

Yes, it is from medical school. I borrowed about 5k during undergrad and around 210k during medical school (instate with only minimal scholarship). Unfortunately, interest keeps adding up and capitalizing. :x
"Trying is the first step towards failure" -Homer
TRC
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Post by TRC »

rrosenkoetter wrote:
TRC wrote:For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
How did you get in this position?
By working hard and performing well at what I do. I'm in IT Software Sales and it pays really very well if you perform. The last 3 years I've averaged about 350K per year and my wife is an RN making about 60K. We live WAY BELOW our means and have either invested or paid down debt every time we get a commission. Sadly, all of our net worth has come from our earnings - our house has lost value since we bought it and all of our investments have lost money. My hope is that will change in the next 10 years...
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MossySF
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Post by MossySF »

At 30, I had blown all my money on booze, women and partying. It's turned around since then.
Valuethinker
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Post by Valuethinker »

MossySF wrote:At 30, I had blown all my money on booze, women and partying. It's turned around since then.
Well... some of us are smarter than others ;-).
meaghansketch
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Post by meaghansketch »

Here's a calculator I like which, while not perfect, may be better than the Millionaire Next Door one for younger people.

http://www.freemoneyfinance.com/2006/10 ... pute_.html


Yes, it assumes you will retire at 72. Yes, it assumes you only need 20x annual spending (not 25x annual spending) when you do retire. But it assumes that at 25, your net worth is 0x your annual spending, and that if you've saved 1x annual spending at 30 you're on track.
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Post by Gekko »

IMO, minimum $500,000 net worth.
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Go Blue 99
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Post by Go Blue 99 »

I turned 30 1.5 years ago and will give my estimated situation at that time:

- was engaged at the time
- rented a 1 BR apt
- in 401k/IRA, had total balance of about $85,000 (since fallen to $61,000)
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HomerJ
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Post by HomerJ »

Gekko wrote:IMO, minimum $500,000 net worth.
hmm.. minimum???

Interesting how probably only 0.1% of the world's population could manage to meet the "minimum"
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Post by HornedToad »

I'm 27 right now, getting married this year, and I estimate that our combined networth at age 30 will be somewhere around ~150-200k. (Right now I'm at ~$65k and she has just finished grad school and has ~$0). She's 23, so by the time she gets to be 30 and I'm 34 I could see our combined networth around ~400k-450k. But that's vastly speculating.

It's just interesting that my initial reaction to having a 500k networth was incredulous but when my fiance' is 30 it might be possible because she'll have more years of working and being DINKs than I will when I hit 30.

I think anywhere around ~$100k at age 30 is good assuming you didn't go to med school/law school or PhD.
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HomerJ
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Post by HomerJ »

TRC wrote:
rrosenkoetter wrote:
TRC wrote:For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
How did you get in this position?
By working hard and performing well at what I do. I'm in IT Software Sales and it pays really very well if you perform. The last 3 years I've averaged about 350K per year and my wife is an RN making about 60K. We live WAY BELOW our means and have either invested or paid down debt every time we get a commission. Sadly, all of our net worth has come from our earnings - our house has lost value since we bought it and all of our investments have lost money. My hope is that will change in the next 10 years...
Nice... Guess I'm in the wrong job... I actually write the software and only get paid a third of what you get for selling it...

:(

Sales is a very good job because it's so easy to show how much money you made the company... Working harder actually gets you more money...

If I work harder or smarter, I get paid exactly the same... It's very difficult for management to quantify my contribution to the bottom line...
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Post by Gekko »

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Alistair
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Post by Alistair »

Perhaps time for a new avatar?
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HomerJ
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Post by HomerJ »

I think he needs to restate that one should have $500k minimum ($431k really) by 30, and also that everyone should turn 30 at the end of the greatest bull market in history.

If you don't turn 30 in 1999, then you're doing it wrong... :)
SamLJ
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Post by SamLJ »

baw703916 wrote: The expectation of having a $100K net worth at 30 is absurd for someone going into science or medicine.
I don't think it is absurd, but it is hard to do (I've done it :) ). Educated in the UK where my tuition was effectively zero and I finished my Ph.D. by 24. Then did low pay post-docs for the next three years (during this time we didn't save much) and landed a tenure-track position three years ago. Since starting the tenure-track job I've been taking a generous 8% match from my university (which will become 12% soon) and maxing out my 403b and Roths for my wife and myself, plus doing a little taxable investing too. Savings rates over the last couple of years have been 50%+ of gross income and we are not depriving ourselves (honestly!). It definitely helps living in a cheaper area of the country, but frugal habits are important too.
TRC
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Post by TRC »

rrosenkoetter wrote:
TRC wrote:
rrosenkoetter wrote:
TRC wrote:For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
How did you get in this position?
By working hard and performing well at what I do. I'm in IT Software Sales and it pays really very well if you perform. The last 3 years I've averaged about 350K per year and my wife is an RN making about 60K. We live WAY BELOW our means and have either invested or paid down debt every time we get a commission. Sadly, all of our net worth has come from our earnings - our house has lost value since we bought it and all of our investments have lost money. My hope is that will change in the next 10 years...
Nice... Guess I'm in the wrong job... I actually write the software and only get paid a third of what you get for selling it...

:(

Sales is a very good job because it's so easy to show how much money you made the company... Working harder actually gets you more money...

If I work harder or smarter, I get paid exactly the same... It's very difficult for management to quantify my contribution to the bottom line...
You're right, Software Sales is great job and pays very well if you perform. What I didn't mention is that if you are not performing in 6 months you get fired. I've seen over 60 reps get fired at my company for not performing in the past 5 years. High risk, high reward.
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louiegoods24
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Post by louiegoods24 »

Age: 25 yr old working abroad
Married with no kids, no house.

Net worth: 142k
50k in high yield savings (saving for house)
42k in diversified low cost ETF Portfolio
18k (9k apiece in ROTH IRA's)
35k in our 401k

Like a previous poster, My wife and I are very fortunate and lucky. I was able to get a high paying (80k) job(engineering) right out of college. For the past three years we've been able to live well below our means while being able to save most of our incomes.

As many people mentioned, it all depends on yourself. We're happy saving and not spending beyond our means. Nothing flashy. Whatever makes you happy.
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HomerJ
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Post by HomerJ »

TRC wrote:
rrosenkoetter wrote:
TRC wrote:
rrosenkoetter wrote:
TRC wrote:For comparison's sake, my wife and I are 31 with a Net Worth close to 550K. Pretty much broken up into thirds: 1/3 in combined 401k/403B, 1/3 in home equity (and this was all cash that we've paid down on the mortgage...our house has lost value since we bought it), 1/3 in taxable investments and non-deductable IRAs. Our only debt is our mortgage and we should have it paid off in 5 years. We are very fortunate to be in this position at such a young age.
How did you get in this position?
By working hard and performing well at what I do. I'm in IT Software Sales and it pays really very well if you perform. The last 3 years I've averaged about 350K per year and my wife is an RN making about 60K. We live WAY BELOW our means and have either invested or paid down debt every time we get a commission. Sadly, all of our net worth has come from our earnings - our house has lost value since we bought it and all of our investments have lost money. My hope is that will change in the next 10 years...
Nice... Guess I'm in the wrong job... I actually write the software and only get paid a third of what you get for selling it...

:(

Sales is a very good job because it's so easy to show how much money you made the company... Working harder actually gets you more money...

If I work harder or smarter, I get paid exactly the same... It's very difficult for management to quantify my contribution to the bottom line...
You're right, Software Sales is great job and pays very well if you perform. What I didn't mention is that if you are not performing in 6 months you get fired. I've seen over 60 reps get fired at my company for not performing in the past 5 years. High risk, high reward.
Ah good point... If I slack off, I also get paid exactly the same :)
dtrainer
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Post by dtrainer »

I must admit that reading this conversation is a little depressing. I am 35 and just finished my first year of medical school. This endeavor has effectively made my net worth zero. But, as my father always says, "Don, your going to be 40 some day no matter what, so you might as well be doing what you love to do." I know he is correct, but reading this just reminds me how much financial catch-up I have to do in the coming years.
saurabhec
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Post by saurabhec »

dtrainer wrote:I must admit that reading this conversation is a little depressing. I am 35 and just finished my first year of medical school. This endeavor has effectively made my net worth zero. But, as my father always says, "Don, your going to be 40 some day no matter what, so you might as well be doing what you love to do." I know he is correct, but reading this just reminds me how much financial catch-up I have to do in the coming years.
Your human capital as a physician is probably worth far more than the financial assets you might have accumulated through not going to medical school. Just because it is not visible doesn't mean it doesn't have a very real value attached to it. Not only that, given the high job security of physicians, that human capital is very low risk.

Theoretically, if we could securitize your lifetime employment earnings, I would be happy to pay you some money upfront for a royalty interest in them - that is how monetizable your human capital is. Think of yourself as a blue chip AAA corporate bond as you walk around Med School. Most of us are high risk equities by contrast, whose human potential is harder to value and comes attached with a lot of volatility, and could never be monetized in such fashion.

Theoretically, the high value and stability of your human capital means that you can take on more equity risk than the rest of us, which could potentially allow you to accumulate wealth at a faster rate than the rest of us.
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cowboyinasia
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Post by cowboyinasia »

In 1995 when I turned 30, my net worth was about US$101K. That was after working for nearly 8 years as an engineer. Now I have around 10 times that and am starting to not worry about retirement, although the recent markets problems leave some niggling doubt. My advise to you is to put away 10% to 20% of what you earn.
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market timer
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Post by market timer »

rrosenkoetter wrote:Nice... Guess I'm in the wrong job... I actually write the software and only get paid a third of what you get for selling it...

:(

Sales is a very good job because it's so easy to show how much money you made the company... Working harder actually gets you more money...
An epiphany I had a couple years ago was that we're all in sales, regardless of our job titles. If you see yourself as a programmer, instead of someone who sells his programming work, then you're probably not giving enough attention to the sales aspect of your job. In any case, $100K/year is nothing to sneeze at.
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giacolet
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Post by giacolet »

At 30 with a wife and kid and a job you and spouse are still learning and making mistakes. The maturity comes with the realization that slams you to a standstill and that lets you know you have a batch of long term obligations and responsibilities to meet. It is this maturation that propels you to action to address those long-term challenges.

No debt outside of a mortgage. A savings program. Two incomes? Live off one and save the other. Initiation of a Retirement Program. Adequate term life insurance. Communuity, civic involvement. I'd say you need $30,000.00 in savings and a $200,000.00 investment portfolio.
May your heart always be joyful. | May your song always be sung. | May you stay forever young. | ----Bob Dylan
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Post by avalpert »

On a beach in Thailand
quarterstock
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Post by quarterstock »

strcmp wrote:For a Boglehead, I'd say by age 30, you should have $500k net worth.
Hi, I'm new here.

Of the 70 or so people who've posted here, I count two individuals who have met that hurdle. I'm a third data point. That works out to about 4% of the boglehead population, which probably skews much higher than any broader measure of the world's or U.S. population.

Aside from the an external windfall, a 30 year old's net worth will largely be driven by only two factors: their earnings power and their consumption/lifestyle habits. Enough time hasn't elapsed for the power of compound interest or equity appreciation to drastically impact their asset base. Further, since many high paying jobs are usually the result of 2-6 years of post-undergrad education, a 30 year-old with substantial earnings power likely has only been earning for only 2-8 years. Reaching $500k is tough to do in that short amount of time, but not impossible.

Be careful not to measure your progress against others though. Averages, medians, and modes are measures of mediocrity, which isn't a good measure for anyone with ambition. Instead, set financial goals that are personally meaningful and measure your success by meeting those goals.

Finances are a means to an end, not a measuring stick or measure of self-worth.
Last edited by quarterstock on Fri Mar 25, 2011 10:50 am, edited 1 time in total.
StarBucks1203
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Post by StarBucks1203 »

I don't think it is truly appropriate to try and put a specific net worth dollar amount on where someone should be at age 30. Your net worth at 30 will be drastically affected by the career choice that you make. Someone that decides to be a school teacher is probably going to make much less than someone who decides to be an electrical engineer.

I think the real focus should be on the process and not the outcome. You do the best you can with what your earning power is and that is all you can do.

From the moment you make your first dollar (birthday money from Aunt Betsy as a 10 year old), you should be:

* saving/investing at least 25% of every dollar you make.
* stay out of debt. no fancy cars. no fancy lifestyle.
* build a large emergency fund.

If you save/invest 25% of every dollar you have ever made, and stay out of debt, you will be in great shape whatever age you are at.
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preserve
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Re: Where should one be at 30?

Post by preserve »

waitforit wrote: How much in retirement savings should the 'average' Boglehead have accumulated by 30?
Single or couple?

Hypothetically a boglehead went to graduate school and graduated at 24. Has maxed out 401k and IRA at 20k with additional bonus. So that would be 120k Probably subtract another 20k in market losses. So probably 100k per person.
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