Hey tjt
Wow ! I am happy for you and your family. Your numbers are very impressive but I am most happy for your happiness! Keep it up. My progress is soon to be similar.
tjt's Journal
Nice work!
But I think you should include the 401k/IRA funds in your calculations because you have penalty free access to your 401k through the 72(t) rule, starting at any age, including 33.
Provided you can handle a bit of math and planning ahead, and you have some money in taxable accounts to supplement if your math is a bit off, you can start accessing your 401k money without penalty even in your 30s. You're seriously like the perfect candidate for the 72(t) rule.
But I think you should include the 401k/IRA funds in your calculations because you have penalty free access to your 401k through the 72(t) rule, starting at any age, including 33.
Provided you can handle a bit of math and planning ahead, and you have some money in taxable accounts to supplement if your math is a bit off, you can start accessing your 401k money without penalty even in your 30s. You're seriously like the perfect candidate for the 72(t) rule.
I'm glad you liked the 72(t) rule! I've been singing the praises of that thing forever, but usually my advice seems to fall on deaf ears.
So many people give up the tax-advantage of retirement accounts in order to have access to their money... when they already do have all the access they should need to it!
So many people give up the tax-advantage of retirement accounts in order to have access to their money... when they already do have all the access they should need to it!
July has been a roller coaster ride in many ways, especially with my ERE goals. As the month wrapped up, however, it was by far the most successful month I’ve ever had (despite losing a bunch of capital in the stock market).
In June I made a ton of life changes, including changing jobs, moving to a new state, and selling my car. It wasn’t until July that I started seeing those massive changes paying off.
As I said, it was a roller coaster ride. In July, my 18-month old daughter had a second bout of seizures. This is a life threatening problem, and it’s extremely stressful. It puts my ERE goals into question, to say the least. Besides the obvious costs associated with several days in the ICU, it also calls into question my life’s priorities. It’s been an emotionally draining experience, so I’ve decided to continue to march forward with ERE plans for now, and reconsider everything as I become more rational with my thoughts.
OK, here are July’s numbers:
<b>Expenses: $2849</b>
Mortgage: $871
Auto Sevice and Parts: $41
Fuel: $89
Auto Insurance: $53
Auto Registration: $21
Groceries: $337
Restauraunts: $81
General Shopping: $230
Utilities: $513 ($280 was old house)
Student Loan: $143 (paid off!)
Cash: $100
Medical: $127
Entertainment: $12
Home Improvement: $231
My original ERE stretch goal was to get expenses under $3000, which I accomplished. But it’s so much better than that. I set that goal with the assumption that I paid off my house in cash, which I chose not to do because of the low interest rates. I expect the number to now go even lower because I paid off my wifes student loan ($143/month), I’m done paying old utility bills from my old house ($280 last month), and last months home improvement fees were mostly due to buying a new house (~$150). Subtracting those fees, I now realize that $2500 is reasonable, and $2300/month is my new stretch goal. If I paid off my house, I could be looking at closer to $1600/month for my family of 4 – and yet still not feel like I’m making big sacrifices.
I’m most satisfied about our improvement with food costs. We dropped from $800 last month to $420 this month. This was my primary goal for the month, and it was extremely successful. My strategy was to do all the shopping myself, and not let my wife in the store.
My secondary goal was to get the general shopping down. I did not succeed in this, although my wife and I have agreed to start analyzing it more. Next month, I hope to either bring that number down or break it out so we understand where it’s going.
<b>Income: $7293</b>
Salary: $6934
Adsense: $3.68
Dividends: $348
Lending Club: $0 (future monthly estimate is $45)
Amazon: $6.96
Dividends were a bit low, but July is just not a big payout month for me. Neither is August, but September should be very good. Average payout should be $1295/month, which equates to nearly half my expenses. I expect my dividend income to rise quite a bit over the next few months as I continue to reallocate my portfolio.
<b>Assets: $938,619</b>
Cash: $113K
Taxable stocks: $464K
401K/IRA: $348K
Lending Club: $5K
Investment House: $7K
I lost quite a bit this past month in the stock market. I’m not panicking, in fact I’m glad I didn’t invest more last month and instead I’m still holding on to quite a bit of cash. I plan to invest another $50K this month into dividend paying stocks and bonds. Because of the recent market drop, I will be getting more for my money.
Savings rate: 61%
Months to retirement at current expenses (3% SWR): 45
Months to retirement at current expenses (4% SWR): 5
Overall I’m happy to see that a 3% safe withdrawal rate results in just 4 years to retirement at current expenses. This number is pessimistic because it assume my July’s monthly income, which was low for dividends and slightly low for salary. I also think a 3% SWR is conservative considering some of my investments are significantly higher returning over the long run (with higher short term risk).
BTW - Over the past few months, I've re-purposed my blog into an outlet for my ERE goals. I am also including my monthly updates and other writings there if you'd like to visit.
In June I made a ton of life changes, including changing jobs, moving to a new state, and selling my car. It wasn’t until July that I started seeing those massive changes paying off.
As I said, it was a roller coaster ride. In July, my 18-month old daughter had a second bout of seizures. This is a life threatening problem, and it’s extremely stressful. It puts my ERE goals into question, to say the least. Besides the obvious costs associated with several days in the ICU, it also calls into question my life’s priorities. It’s been an emotionally draining experience, so I’ve decided to continue to march forward with ERE plans for now, and reconsider everything as I become more rational with my thoughts.
OK, here are July’s numbers:
<b>Expenses: $2849</b>
Mortgage: $871
Auto Sevice and Parts: $41
Fuel: $89
Auto Insurance: $53
Auto Registration: $21
Groceries: $337
Restauraunts: $81
General Shopping: $230
Utilities: $513 ($280 was old house)
Student Loan: $143 (paid off!)
Cash: $100
Medical: $127
Entertainment: $12
Home Improvement: $231
My original ERE stretch goal was to get expenses under $3000, which I accomplished. But it’s so much better than that. I set that goal with the assumption that I paid off my house in cash, which I chose not to do because of the low interest rates. I expect the number to now go even lower because I paid off my wifes student loan ($143/month), I’m done paying old utility bills from my old house ($280 last month), and last months home improvement fees were mostly due to buying a new house (~$150). Subtracting those fees, I now realize that $2500 is reasonable, and $2300/month is my new stretch goal. If I paid off my house, I could be looking at closer to $1600/month for my family of 4 – and yet still not feel like I’m making big sacrifices.
I’m most satisfied about our improvement with food costs. We dropped from $800 last month to $420 this month. This was my primary goal for the month, and it was extremely successful. My strategy was to do all the shopping myself, and not let my wife in the store.
My secondary goal was to get the general shopping down. I did not succeed in this, although my wife and I have agreed to start analyzing it more. Next month, I hope to either bring that number down or break it out so we understand where it’s going.
<b>Income: $7293</b>
Salary: $6934
Adsense: $3.68
Dividends: $348
Lending Club: $0 (future monthly estimate is $45)
Amazon: $6.96
Dividends were a bit low, but July is just not a big payout month for me. Neither is August, but September should be very good. Average payout should be $1295/month, which equates to nearly half my expenses. I expect my dividend income to rise quite a bit over the next few months as I continue to reallocate my portfolio.
<b>Assets: $938,619</b>
Cash: $113K
Taxable stocks: $464K
401K/IRA: $348K
Lending Club: $5K
Investment House: $7K
I lost quite a bit this past month in the stock market. I’m not panicking, in fact I’m glad I didn’t invest more last month and instead I’m still holding on to quite a bit of cash. I plan to invest another $50K this month into dividend paying stocks and bonds. Because of the recent market drop, I will be getting more for my money.
Savings rate: 61%
Months to retirement at current expenses (3% SWR): 45
Months to retirement at current expenses (4% SWR): 5
Overall I’m happy to see that a 3% safe withdrawal rate results in just 4 years to retirement at current expenses. This number is pessimistic because it assume my July’s monthly income, which was low for dividends and slightly low for salary. I also think a 3% SWR is conservative considering some of my investments are significantly higher returning over the long run (with higher short term risk).
BTW - Over the past few months, I've re-purposed my blog into an outlet for my ERE goals. I am also including my monthly updates and other writings there if you'd like to visit.
I hope all is well with your family. I think of all the people on the forum, your change is most impressive... and you've got so much saved up, ERE is probably only a 2-3 years away for you, even at 3%.
I considered putting ERE info on my own blog, but decided against it. I wouldn't want anyone I work with to find it. Maybe after I'm FI.
I considered putting ERE info on my own blog, but decided against it. I wouldn't want anyone I work with to find it. Maybe after I'm FI.
August was another successful month on my road to extremely early retirement. We have once again achieved our goal of keeping our family expenses below $3000 (well, pretty much). This, despite several large purchases. In fact, although I was a few dollars over, I’m encouraged because it included nearly $600 of one-time expenses that we could have done without. I’m not happy about those expenses, but it was a compromise with my wife who has been very open to our drastic life changes. I’m continuing to stick with my stretch goal of $2500/month as my next target. To do that, we need to step up on getting our grocery expenses down.
Here are August’s numbers:
Expenses: $3011
Mortgage: $871
Auto Sevice and Parts: $21
Fuel: $80
Auto Insurance: $0
Auto Registration: $0
Groceries: $479
Restauraunts: $88
General Shopping: $0
Haircut: $16
School Supplies: $38
Utilities: $321
Student Loan: $0
Cash: $143
Medical: $144
Entertainment: $54
Books: $18
Bike Stuff: $40
Diapers: $89
Home Improvement: $609
The highs:
My wife’s student loan is paid off, saving $140 per month.
I finally broke out the general “Shopping” category which was mostly unknown payments to Amazon and Walmart. Turns out it’s a combination of groceries, diapers, and bike gear this month.
The lows:
My in-laws came to town and spent a bunch of our money painting and doing other home improvements that I considered unnecessary. We also bought a new bed, which was slightly more necessary. This all resulted in $609 of home improvement. I’d like to keep this under $100/month. Remove this expense and we hit our stretch goal of $2500/month
I continued to take too much out at the ATM.
Grocery expenses began creeping back up. There were a few good reasons for this, but I want to get it back under $400. Originally I wanted to hit $300, but I’m easing off that. $300 is a better goal when I actually retire and can spend the time preparing less expensive food. Targeting $300 now puts too much burden on my wife.
Income: $12235
Salary: $10402
Dividends: $1382
Online Store: $362
Amazon Affiliates: $1.48
Commission Junction: $25
Lending Club: $57.1
Adsense: $5.55
Admob: $0
My salary was nice this month because I got three paychecks instead of the typical 2. For dividends, I’ve decided to start reporting the annualized expected payout divided by 12, rather than see some months extremely high and others extremely low. I’m trying to reduce the volatility in the tracking of my progress.
For my online store, I had not previously been paying myself any income. Now, I’ve decided to pay out 10% of sales. Profit margin is close to 50%, so that still allows us to reinvest quite a bit. Reinvesting all goes into buying more inventory, although I’m also thinking about hiring out some designers to improve the look of the store. I did it all myself, and while I’m proud of the work, it’s not up to par with the high-end competitors we have, who spent thousands on their design. I often wonder how much that hurts sales.
I was happy to see a sale on Commission Junction. It’s actually from this blog, when someone signed up for Lending Club. I don’t write on this blog to make money, but if I make a few bucks while also helping someone else get involved in a product I believe in, all the better.
You’ll also notice that I set up a placeholder for Admob. This is an advertising platform for mobile devices. I’ve recently started re-learning java and plan to try writing some Android apps. For now I’m writing custom games for my kids. I figure if they like them, then other kids will too. It might be an utter failure, or it could be another fun way to get some income diversification. I’m enjoying the challenge, so even if it fails financially I’ve had some fun.
One of my other outlets for investing is real estate. I don’t do any work, I just fund a partner who does all the work and take in 50% of profits. This week, we found a renter for our first house together, so we’ll start to see mild cash flow from that. It was rented out as “rent-to-own”, and once she qualifies for the purchase I should see about a $10,000 payout. That should happen in 1-2 years. Not bad on the $7000 investment. We are also looking at doing a flip together which will cost me about $109,000 for 3-4 months time, with an expectation of about $11,000 payout. That would be a 30% annualized return. I’m still analyzing that purchase, however.
Investable Assets: $948,000 – does not include house equity
I re-positioned my investments quite a bit this past month. After the volatility we experienced in the stock market, I’ve decided to re-allocate to a more conservative (smarter) portfolio. Predictability is key when approaching an extremely early retirement. The allocation is similar to Harry Browne’s Permanent Portfolio, and I’ll be writing about it in my next post – so stay tuned!
Other Stats
Savings rate: 75%
Months to retirement at current expenses (3% SWR): 28
Months to retirement at current expenses (4% SWR): 7
This is the first month where my “Months to retirement” at a 3% safe withdrawal rate will actually get me to my goal of retiring at 35. In 28 months I will be exactly one month shy of my 36th birthday – still 35! That’s cutting it a little close, but I will build some buffer as I continue to drive expenses lower.
Picture of progress (click to expand):
Here are August’s numbers:
Expenses: $3011
Mortgage: $871
Auto Sevice and Parts: $21
Fuel: $80
Auto Insurance: $0
Auto Registration: $0
Groceries: $479
Restauraunts: $88
General Shopping: $0
Haircut: $16
School Supplies: $38
Utilities: $321
Student Loan: $0
Cash: $143
Medical: $144
Entertainment: $54
Books: $18
Bike Stuff: $40
Diapers: $89
Home Improvement: $609
The highs:
My wife’s student loan is paid off, saving $140 per month.
I finally broke out the general “Shopping” category which was mostly unknown payments to Amazon and Walmart. Turns out it’s a combination of groceries, diapers, and bike gear this month.
The lows:
My in-laws came to town and spent a bunch of our money painting and doing other home improvements that I considered unnecessary. We also bought a new bed, which was slightly more necessary. This all resulted in $609 of home improvement. I’d like to keep this under $100/month. Remove this expense and we hit our stretch goal of $2500/month
I continued to take too much out at the ATM.
Grocery expenses began creeping back up. There were a few good reasons for this, but I want to get it back under $400. Originally I wanted to hit $300, but I’m easing off that. $300 is a better goal when I actually retire and can spend the time preparing less expensive food. Targeting $300 now puts too much burden on my wife.
Income: $12235
Salary: $10402
Dividends: $1382
Online Store: $362
Amazon Affiliates: $1.48
Commission Junction: $25
Lending Club: $57.1
Adsense: $5.55
Admob: $0
My salary was nice this month because I got three paychecks instead of the typical 2. For dividends, I’ve decided to start reporting the annualized expected payout divided by 12, rather than see some months extremely high and others extremely low. I’m trying to reduce the volatility in the tracking of my progress.
For my online store, I had not previously been paying myself any income. Now, I’ve decided to pay out 10% of sales. Profit margin is close to 50%, so that still allows us to reinvest quite a bit. Reinvesting all goes into buying more inventory, although I’m also thinking about hiring out some designers to improve the look of the store. I did it all myself, and while I’m proud of the work, it’s not up to par with the high-end competitors we have, who spent thousands on their design. I often wonder how much that hurts sales.
I was happy to see a sale on Commission Junction. It’s actually from this blog, when someone signed up for Lending Club. I don’t write on this blog to make money, but if I make a few bucks while also helping someone else get involved in a product I believe in, all the better.
You’ll also notice that I set up a placeholder for Admob. This is an advertising platform for mobile devices. I’ve recently started re-learning java and plan to try writing some Android apps. For now I’m writing custom games for my kids. I figure if they like them, then other kids will too. It might be an utter failure, or it could be another fun way to get some income diversification. I’m enjoying the challenge, so even if it fails financially I’ve had some fun.
One of my other outlets for investing is real estate. I don’t do any work, I just fund a partner who does all the work and take in 50% of profits. This week, we found a renter for our first house together, so we’ll start to see mild cash flow from that. It was rented out as “rent-to-own”, and once she qualifies for the purchase I should see about a $10,000 payout. That should happen in 1-2 years. Not bad on the $7000 investment. We are also looking at doing a flip together which will cost me about $109,000 for 3-4 months time, with an expectation of about $11,000 payout. That would be a 30% annualized return. I’m still analyzing that purchase, however.
Investable Assets: $948,000 – does not include house equity
I re-positioned my investments quite a bit this past month. After the volatility we experienced in the stock market, I’ve decided to re-allocate to a more conservative (smarter) portfolio. Predictability is key when approaching an extremely early retirement. The allocation is similar to Harry Browne’s Permanent Portfolio, and I’ll be writing about it in my next post – so stay tuned!
Other Stats
Savings rate: 75%
Months to retirement at current expenses (3% SWR): 28
Months to retirement at current expenses (4% SWR): 7
This is the first month where my “Months to retirement” at a 3% safe withdrawal rate will actually get me to my goal of retiring at 35. In 28 months I will be exactly one month shy of my 36th birthday – still 35! That’s cutting it a little close, but I will build some buffer as I continue to drive expenses lower.
Picture of progress (click to expand):
@Sree - Thanks. I'm an electrical engineer and you are right, I did start saving early. Heck, I still have my paperboy money from when I was 12. 
I can't say I recommend Lending Club yet, only because it is too new to me. I think I need at least a full year of personal experience before I can say that I officially recommend it. I did do a post about it on my blog, providing my strategy by incorporating some data mining. I definitely recommend LendStats.
@m741 - It very well might be too good to be true. If you google around, you'll find some people that report good earnings while others had poor results. The only negative returns I saw were people that invested very little, like $100, and had a default.
@sshawnn - Transportation is going well. I've started researching some warm winter gear for my motorcycle. I don't think I'll buy any of the heated gear, mostly because it's a hassle and can break. My drive is only 3.5 miles, so as long as I can block the wind and have several layers I think I'll be OK. I'm probably going to buy some nice thinsulate gloves, just haven't decided which ones yet. The ones I'm wearing now were good in Texas "cold" but they won't cut it in sub-freezing temperatures.
Most days I ride my bicycle. It's been interesting as I've had to learn to fix and replace my chain, true my wheels, and some other basic repair/maintenance. Luckily my neighbor works at SRAM and is a bike geek, so when in doubt I can check in with him.
I can't say I recommend Lending Club yet, only because it is too new to me. I think I need at least a full year of personal experience before I can say that I officially recommend it. I did do a post about it on my blog, providing my strategy by incorporating some data mining. I definitely recommend LendStats.
@m741 - It very well might be too good to be true. If you google around, you'll find some people that report good earnings while others had poor results. The only negative returns I saw were people that invested very little, like $100, and had a default.
@sshawnn - Transportation is going well. I've started researching some warm winter gear for my motorcycle. I don't think I'll buy any of the heated gear, mostly because it's a hassle and can break. My drive is only 3.5 miles, so as long as I can block the wind and have several layers I think I'll be OK. I'm probably going to buy some nice thinsulate gloves, just haven't decided which ones yet. The ones I'm wearing now were good in Texas "cold" but they won't cut it in sub-freezing temperatures.
Most days I ride my bicycle. It's been interesting as I've had to learn to fix and replace my chain, true my wheels, and some other basic repair/maintenance. Luckily my neighbor works at SRAM and is a bike geek, so when in doubt I can check in with him.
I have been experimenting first with Prosper and now Lending Club since 2007. My first forays were not so great, yielding close to zero return, but I have a method down now that I am happy with. My net returns are average by LC standards, around 9.6%, but my default rate is only about 1%. I currently have about $40K invested in nearly 800 loans. I have a regular deposit that goes in every month because they give you a 1.5% bonus if you do it that way.
I'd have to think about that. I had been considering setting up some kind of investment fund to do this on a leveraged basis if my results continue to be consistent. I will say that I think the most important criteria is having zero inquiries in the last six months. That kind of surprised me, but it was true on Prosper too.