Other than that, great!

- Been a programmer for 6 years. Switched my career to contracting, after discovering that A) I’m highly employable and can pick up new work easily, B) contracting pays much better.
- After tax I’m making $1800-2000 (AUD) p/week on average.
- Lowest I can keep my expenses is $400 p/week.
- Putting about $1500 p/week into savings.
- Maintaining a social life by only having friends who are as frugal as me.
- Staying single to avoid relationship/marriage expenses. Don’t really need kids; the relatives are popping out babies, so I can enjoy being “uncle” without the responsibilities of parenthood :)
- Planning on doing some contracting in the UK and US, which will probably pay even better rates for my skills, and still allow me to travel.
- Doing a Masters degree, all paid for by the government out of tax deductions (work-related education expenses).
- I have a LOT of business/startup ideas, which could generate modest profit. I’m thinking of taking 3 months off work just to try them all out.

All said and done, I’m not sure I’ll ever be a millionaire, but I still prefer saving and living frugally because:

- Work is a big part of my self-fulfillment in life.
- I like being financially stable enough to pick and choose my jobs and not depend on my employer.
- A genuine relationship should be based on personal values and love, not on money, so I don’t see any point getting a girlfriend if doing so costs money.

As far as the “doom and gloom” (financial markets collapsing, global warming, etc), that doesn’t change anything for me.

I’d be pretty upset if I lost all my savings, but not devastated, because I’ve gained a lot of non-monetary benefits from working – i.e. having skills that are always be in demand, meeting lots of cool people, increasing my intelligence and problem solving abilities.

So money is important to me, but not everything. But living responsibly and thinking long-term IS important.

If he has no debts, he could even do more than 20%.
If he follows your tips on budgeting and works towards increasing his income while keeping his expenses in check, then he should be able to retire quite young.
Also, if he gets into business and finds alternative sources of income with more potential the process could go even quicker.

Cheers,
Guy

Investing in real estate won’t be feasible until my child goes to school, so I can only try to earn more, save more, and find good investments.

No retiring at 41 for me!

How did that plan work out for all the 20 year olds who started buying the NASDAQ in 1999-2000 at a high of 5000?

Or what about everyone in Japan from 1989 through today? They are down from a high of 38,000 to about 9,000.

There are a ton of 20 year time periods where the stock market WAY underperformed the mythical 12% annual return. Factor in inflation, and its even worse.

The best bet is your own automated business along the lines of the 4HWW “muse” concept. Muses are hard to make–don’t let anyone tell you that you can create passive income easily–but so is saving 20% of your income for 20 years and averaging a 12% annual return in the stock market.

Saving is great, get me wrong. Just saying that these phony annual return numbers from the stock-market snake oil salesmen create unrealistic expectations.

Run the numbers with a more realistic long term target such as a real (after-inflation) return of 5%. Hate for you to turn 41 with your big investment warchest in 2000; or Japan 1989, trying to live off of your interest.

I think it is the slightly older and wiser of us who are responding with potential pitfalls in the provided scenario. I have now been in the job market close on to 8 years (having graduated in the unfortunate 2001) and over these few years, I had seen ideal investment plans congeal, be put in action, and blown apart under the force of circumstances and shifting life values.

I saved like insane in the first five years of my career and, making close to a six-figure salary, I was able to invest some, pay off college loans, put a healthy % down on a nice apartment, and continue living as usual during a recent two-year unemployment spell. So, saving and investing is super-important, yes. But putting one’s life on hold until retirement?

You, in your early 20s, if you think you will be able to sustain such a lifestyle, put your thoughts down on paper now. You’ll get a good laugh out of them in about ten years. Delaying children until you are 50? Picking out the cheaper, frost-bitten apples at a local grocer’s? Getting the ever creaky furniture at Ikea for the next thirty years? Wearing the same suit till the collar starts getting shiny and threadbare?

Please… No amount of future gain is going to justify not getting invited to friends’ birthdays because you always tip no more than 5%. With age, come shifting priorities. So, save heavily while you are very young, but don’t hope that one can continue at the same frantic saving pace in one’s thirties and forties. Please, add a dash of reality to that advice!

How is that 12% return looking to everybody? HAHAHA!!

How is that awesome high paying job working out for you?

Might as well laugh about it. What else can we do?

Oh.. And BTW, the VAST MAJORITY of the richest people are all MARRIED.

I was once a young college graduate with similar plans. Then I met my girlfriend and all bets were off. Trying to live frugally is one thing when living alone – trying to do it as part of a couple is something else. It can be done but it is more difficult.

That said it is essential to set up your savings plan so that it is automatic and take directly from your bank account before you have a chance to realize that it is gone.

That guy has the right attitude – start as you mean to go on.

Good luck to him

Use other tax shelter means such as custom pension plans, C corps, real estate depreciation etc instead. If you have a matching company contribution that is great, but otherwise it might be better to pay taxes now, while your income is lower, and not have to wait till your 60 something to get your own money without penalties. It kind of defeats the purpose to have all these savings if you can’t reap your rewards until you are in your 60s.

I made a spreadsheet showing my progress on such a plan and compare savings, investment income and total net income to make sure I will make my early retirement. It is possible, just most people don’t see it as a priority. Perhaps some people are more tolerant of the grind them I am. :)

SIDENOTE: Also whoever was dogging on six figure incomes, is just venting. The fact it is possible for most people, but not always worth the risk or sacrifice for everyone. Six figures is not a lot of money in todays world, especially if you have two income earners. I know a 60+ year old lady who makes six figures selling things on ebay, and another dozen of people who do other side businesses that net way more then six figures. Perhaps the only limiting factor is your negative attitude and motivation. The sky is the limit, so go for it!

otherwise, prepared to live life with all the due expenses!

You’re in a league all your own. Most people aren’t fortunate to be in a situation where they can sock away so much money.

What about:

–student loans
–car payments
–rent/mortgage

Can you tell me the secret to finding a six figure income directly out of college? I don’t know anyone under 30 who makes that much.

Are you planning on ever getting married or having kids?

I think that it’s very difficult to plan life, because life just happens. It’s great to plan for retirement (I’m 25, and I’ve been planning for a few years already!), but you have to be realistic.

In our economy — you can’t be entirely sure that you’ll keep the same job, especially when you’re so young. Things change, just be prepared and realize that you may not be where you want to be in 20 years.

Good luck.