quote:

---

Two 25-year-old living off of $40k is not even remotely feasible.

Rent: $1200 bare minimum.
Util/Cable/Internet: $225 minimum
2 cell phones: $150
Monthly Gas: $350
Monthly Groceries: $250
Lunch @ $7/day each: $420/month
Car Ins for 2: $180 assuming clean record

That's $33,300 in BARE MIMIMUM expenses.

Hopefully you own both cars free & clear, don't play golf, buy clothes, go on vacations, buy christmas/birthday gifts, like to go out to dinner, go on dates, go to concerts, go to sporting events, meet friends at happy hour, etc.

---

I'd say you're pretty accurate with the exception of the rent and lunch expenses. Our rent in a brand new 1 bed + office apartment was 850 + utilities when we got married.

We spend about 475/month on groceries + lunches dining out per month. I track expenses in Quicken, so everything we buy at wal-mart (dog food, brooms, OTC drugs, shaving supplies, toothpaste, etc.) gets thrown into the same category. I imagine we could cut it down a lot if we had to.

Using 900/month for rent and 475 for food + grocers in place of your numbers knocks 6k off of that budget.

That's 27k for mandatory expenses (again, assuming no car note) and 6k left over for incidental expenses like clothes and travel. Probably even leaves a bit more for a used car as well.

Not saying that it would be easy, but that's probably what people that would be classified as "over savers" by 30 would have done to get there, unless they are DInCs making above average (70k/year) salaries in their late 20s. I don't know many 28 year olds making 70-80 grand solo, but I could be way off.

quote:

---

If you're two 25-year-olds stuck on $40k/year, it's time to cut back the expenses big time. I'd even drop cable for awhile.

---

Well, in this case they aren't stuck on $40K, but $90k. It would be feasible to live on that salary alone, but saving 100% of the other salary seems to be a bit much given those values. I think there is a fine line between saving and being responsible vs. saving at unrealistic rates to meet some ridiculous metric that says you are "average" or where you are suppose to be when you turn 30. We can all cut back on things, but why if you can afford it and still meet your savings goals? Being 25 and able to stash away 20k/year would be exceptional if you ask me while still being able to enjoy life a little bit.

How would the case study change if say for instance one spouse made $60k and the other $30k? That would appear to be more reasonable.

quote:

---

quote:

---

If you're two 25-year-olds stuck on $40k/year, it's time to cut back the expenses big time. I'd even drop cable for awhile.

---

Well, in this case they aren't stuck on $40K, but $90k. It would be feasible to live on that salary alone, but saving 100% of the other salary seems to be a bit much given those values. I think there is a fine line between saving and being responsible vs. saving at unrealistic rates to meet some ridiculous metric that says you are "average" or where you are suppose to be when you turn 30. We can all cut back on things, but why if you can afford it and still meet your savings goals? Being 25 and able to stash away 20k/year would be exceptional if you ask me while still being able to enjoy life a little bit.

How would the case study change if say for instance one spouse made $60k and the other $30k? That would appear to be more reasonable.

---

The first post I quoted was referring to two 25-year-olds living on $40k TOTAL, hence my thoughts.

If they're living on $80k/year, sure you can spend money more freely. But why not try to save as much as possible? Retirement is no longer guaranteed and everything is getting more and more expensive. I'd rather have that $10k-$20k in the bank than a brand new car in my driveway.

Everybody is different. Some want to live NOW and have everything NOW. Some people refuse to spend money on anything. I'm somewhere in the middle, but leaning more towards the savings. I don't want to work forever and I don't want to own a bunch of crap that was on at one time "nice" and is now just taking up space in my house and money out of my savings account.

[This message has been edited by AgDrumma07 (edited 4/10/2012 1:28p).]

I bet the "average" is a lot lower than we think. Im 32, and far too many people my age live off consumer credit and bank loans. Most people dont save enough, and most people spend too much. You couple that with all the people who don't have college educations, a tough economy etc and its no wonder our country has some of the issues it does. I know people my age who have good jobs and their net worth still is in the toilet because they bought huge homes that lost value, are house poor, and make payments on 2 semi-new vehicles. All their money is tied up in debt.

Perhaps its just me, but I feel like the number of people who actually live within their means,a and are financially prudent is an ever declining number.

^^ was taking 7 years to graduate prudent?

quote:

---

Everybody is different. Some want to live NOW and have everything NOW. Some people refuse to spend money on anything. I'm somewhere in the middle, but leaning more towards the savings. I don't want to work forever and I don't want to own a bunch of crap that was on at one time "nice" and is now just taking up space in my house and money out of my savings account.

---

I agree. I tend to lean more towards living "now", but I still save a considerable amount of money, including college/future expenses money for my kids I realize that my situation is not the same as everyone else, so I won't even try to compare and say what I would and wouldn't do, but we have been able to meet our goals and for us as a family, that is what matters.

Net worth (especially at or around 30) really must be looked at on a case by case basis, much like the house price to income ratio, but I don't think it really tells you much. I would think it is more important in the later stages of one's career.



"First in Sight, Ready to Fight"

IMO, this whole thread is pretty pointless. Who cares what you're worth at age 30? All that matters is the day when you can say "you know what, I don't need to work anymore. I'd rather not be tied to a job." If you hit that point at age 30 or 60, then you've done well.

quote:

---

Two 25-year-old living off of $40k is not even remotely feasible.

Rent: $1200 bare minimum.
Util/Cable/Internet: $225 minimum
2 cell phones: $150
Monthly Gas: $350
Monthly Groceries: $250
Lunch @ $7/day each: $420/month
Car Ins for 2: $180 assuming clean record

---

It is feasible. My wife and I are 27-ish in Plano and spend just about $42k/yr on all of these things:
Mortgage = $1880 (15-yr)
Utils/Cable/Internet/Cells = $415
Gas/Groceries/Dining Out = $650
Full Coverage Insurance on 2 cars = $104 (although I save up and pay annually)
Everything else = $450

This doesn't include the life insurance, maxed out IRA contributions, tithing, other donations and additional savings. I should also note that we are completely debt-free except for the home (includes paid-off student loans and both cars).

I would be a millionare if not for alcohol, tobacco, and ..... Some of yall need to pick up some bad habits/hobbies.

ag92's advice:

1 - drive a car for 10 years... when your payments end at year 5, continue paying into a fund to buy your next car in 5 years... buy all new cars with cash from there forward... never have an auto loan again (better to be able to buy a ferrari w/cash than drive a porsche on credit)

2 - use quicken to track net worth and set goals... you'll save a lot more when you have a net worth goal that you are shooting for... i do mine at every 5 years interval (ps - only account for 75% of retirement plans...taxes!)

3 - if u don't do the ramsey plan of no credit cards, then have your cc's automatically debit from your checking acct on the day they are due... it forces you to be responsible for what's on the card

4 - get that house below 2.0 ratio... i'm not a big fan of refi-ing UNLESS you can reduce the overall cost of the house in your total net worth pic... most people look at how much it will save them over a few years and not at the big picture... if you get a decent rate cut, then cut the # of years so the overall financial impact is minimal... what people don't calculate is how much has already been spent... get that house paid off asap!

5 - start a random savings fund (non retirement) at an early age... maybe plop in $50 or $100/month... use vanguard imo... buy index or something similar... it forces you to save for something that is non-retirement or not a depreciating asset... and start enjoying dividend income later in life

i got more.... but that's enough for now

If you seriously think saving >60% of your income is typical (the two salary example) then you are crazy. Try to live a little. You can't take it with you.

quote:

---

If you seriously think saving > 60% of your income is typical (the two salary example) then you are crazy. Try to live a little. You can't take it with you.

---

No kidding!

Every situation is so different this is a silly topic. Someone that goes from high school straight to working could easily have more net worth at 30 than an educated person that put themselves through school and will make way more over their lifetime. Many at 30 still have student loans, are just having kids and have a newish mortgage. I'd think 40 is a much better place to examine as those with all the loans are making more, paying those off and passing the others.

I know w/o my wife's student loans from vet school I'd be sitting pretty good, but we owe a lot on those and the 4 years of vet school and three years of minimal earning internships put us behind.

Saving = not relying on the 2nd.

Take for example the ability for a spouse to stay home with kids. If you live off 2 incomes for 5-7 years, I'm guessing the challenge to live off one is not only difficult but usually insurmountable.

What if a spouse gets laid off?

There is no right answer, but the accrual of net worth isn't the only advantage of living off one salary.

Touché aggiepaintrain!

edwards I'd like to know your net worth and age if willing to divulge that information

I'd bet he is about 30-31

These threads are always hilarious. The idea that you can try to place everyone in a box is stupid.

I do ok... actually I do pretty good. I just turned 31 and fit pretty squarely between the #2 - #3 estimates that were thrown out before.

I'm sure I could be well beyond the #3 estimate if I had lived a meager existence for the first 10 years of my life. Instead, I'm the member of a rather nice golf club and I spend time on my photography hobby when my job allows. I also drive a nice car with a habit of turning them over faster than would be optimal for my bank account.

It really came down to this. I can live a meager existence for 15 - 25 years and retire early (if I'm lucky and the market doesn't go to crap), or I can save a pretty good amount (what i can sock away tax free plus maybe some more), acquire assets prudently with debt (home, maybe a vacation home, other investments, etc) and retire at around 60 or 65.

I don't understand the notion that you are stupid if you don't live a meager existence and sprint towards retirement as fast as possible.

Plus... being single with no wife or kids factors into it. My financial goals and position would be much different if I was married with kids.

[This message has been edited by AeroAg2003 (edited 4/10/2012 5:31p).]

30. Unfortunately my username is very obvious to who I am and many many Ags on here know me personally.

Net worth is private and very dependent on career and lifestyle. However, I'm not blowing smoke and have done on some form/fashion much of what I've stated.

I deeply value independence.

I golf, we travel, and I plan on retiring when I am about 65. I'm very much like the poster above me (except I'm married and have a child)



[This message has been edited by edwardsk2003 (edited 4/11/2012 7:26a).]

Good for you Edward. I understand and I would never tell anyone either as I know several people on this board too. I just asked for curiosity.

Sound like we have a similar situation (I am a year younger and married with a kid and an avid golfer).

quote:

---

I don't understand the notion that you are stupid if you don't live a meager existence and sprint towards retirement as fast as possible.

---

Totally agree. I am all for saving and planning for a comfortable retirement, but there is a hell of a lot of life to live in between. Not to mention there is no guarantee that you will reach 65 or whenever you plan to retire. Sadly, as I get older I know more and more people that worked their asses off only to die prematurely.

quote:

---

For those without student loans:
quote:
Age * Pre-tax income / 10
For those with student loans:
quote:
(Age - 27) * Pre-tax income /10

---

Wow, I'd be nowhere close.

Say for someone who is 28 making 65k that would either be $182,000 without student loads or $6,500 with student loans.

If you at 25 with 455k NW, a 50% LTV on the house note, with no car debt and no student debt, what would you recommend? Ive been doing DRIP on alot of blue chip dividend growers like PG, MO, and some preferreds and etfs, but Ive never been financially savy and am more a benefactor of dumb luck vs. any investing skill.

TIA!

I couldn't imagine doing some of what you all do: making $90 and living on $40.

How do you buy clothes?

Delayed gratification is nice, but there is no guarantee of tomorrow.

I propose to you all that a net worth of greater than $100K at age 30 is a reasonable goal for most people. Under $50K and you have some catching up to do, and more than $200K you are well on your way to success. The real savings/wealth accumulation years are ages 30-45, so I would worry less about what you did up until 30 and more of what you are going to do in your peak earning years.

quote:

---

I couldn't imagine doing some of what you all do: making $90 and living on $40.

How do you buy clothes?

Delayed gratification is nice, but there is no guarantee of tomorrow.

I propose to you all that a net worth of greater than $100K at age 30 is a reasonable goal for most people. Under $50K and you have some catching up to do, and more than $200K you are well on your way to success. The real savings/wealth accumulation years are ages 30-45, so I would worry less about what you did up until 30 and more of what you are going to do in your peak earning years.

---

I live wonderfully. I don't make close to $90k but I'm well north of $40k, which is about what I live on. I sleep easy knowing I could be fired tomorrow and be fine for months. I also sleep easy because I didn't spend a bunch of money on contractors and do a lot of my home repairs myself. I've done a ton of cool stuff that seems to impress people though it bores me.

I'm derailing, so I'll just say life is what you make of it. If you need to spend $90k/year on stuff, then that works for you. It wouldn't work for me unless I was making over $200k/year. Also, I'm a guy and we don't buy clothes.

Im 28 and make 6-figures. I went to a good business school and have 6-figure loan debt. I'm also a DINK, and wifes salary is quickly catching mine (she's 26). We live on ~75k in LA all expenses (rent, 2 cars financed, retirement, h&b, travel) and the rest goes to Ed debt. It'll likely be around age 31 when my needle moves into positive territory.

On the other hand, I hate my job. I used to teach 7th grade math and loved it. I'm beginning to think that not chasing a beach house in Malibu and waking up happy to go to work and retire later than most is better than what I'm doing now.

I'm only 24 and am at ~9k, but I calculated that if my salary stayed the same, my 401k contributions stayed the same %, and I paid off my loans by 30, I'd be $46000 higher before saving a penny outside of my 401k. I bet I do have to buy another car before then though.

quote:

---

It really came down to this. I can live a meager existence for 15 - 25 years and retire early (if I'm lucky and the market doesn't go to crap), or I can save a pretty good amount (what i can sock away tax free plus maybe some more), acquire assets prudently with debt (home, maybe a vacation home, other investments, etc) and retire at around 60 or 65.

---

this statement rubs me the wrong way... i'm not quite sure that spending butt loads of money isn't directly proportional to living a 'meager essistence'...

but to each their own i guess...

my thoughts are that there is a lot more to life than the almighty dollar... as several aforementioned books have pointed out, sometimes the savers are typically the ones that have the most 'happiness' in life... they put greater importance on other things in life that can't be bought...

[This message has been edited by Ag92NGranbury (edited 4/11/2012 3:16p).]

[This message has been edited by Ag92NGranbury (edited 4/11/2012 3:16p).]

quote:

---

I propose to you all that a net worth of greater than $100K at age 30 is a reasonable goal for most people.

---

That explains why so few people manage to do it.

The average A&M grad is probably making $50k at age 25 and $96k at age 37.

http://www.smartmoney.com/borrow/student-loans/colleges-that-pay-off/

So, let's say that you're averaging $50k/year to age 30. That's eight years. To have $100k in net worth, you'd need an effective savings rate of roughly 25%.

If you really can save 25% of your income straight out of school (in the years when you are most likely to be not earning much, paying down student loans, getting married, buying a house), you're a better man than most.

There's nothing average about that kind of discipline. It's highly commendable. Particularly given the way that both the employment market and the equity markets have been kicking young people in the junk for the last 5 years.



[This message has been edited by Vestal_Flame (edited 4/11/2012 4:00p).]

Any budget without season tickets to Aggie Football is not a budget.

This thread also makes me think of a thread I have seen, "100 places to see before you die". Just curious how the super savers place on that list. 100k of net worth at 30 is pretty damn good IMO.

I was selling plasma my last summer at A&M and very happy. Started a good paying job and ended up staying at zero net worth for many, many, many years. Rent, insurance, car, business attire, lunches, dry cleaning, happy hours, dating and vacations suck that money right up. I have a lot of great memories, but will not be retiring anytime soon.

I think an important point on saving needs to be made here. Automatic savings is the best method. A major reason why a lot of people don't have much or any savings at all is because they prioritize it towards the bottom of their monthly financial decisions after all the bills are paid. If you automatically put money each month, you're already ahead of most people.

If you aren't doing this now, I suggest you start today. You won't notice the change in your checking account after the first month.

Thoughts on buying raw land for those under 30? Im thinking about liquidating 1/2 my stock holdings and purchasing a hunting/fishing/raw land getaway.

What is the best way to invest capital for people without tons of connections?

quote:

---

Total Assets (Conservative home value, conservative car value, retirement account, savings, checking, any other investment account balances)

-

Total Liabilities (Mortgage, car loans, credit card balances, student loans, any other loans)

=

Net Worth

---

Single 30 y/o- 170K (50K cash and the rest in investment RE equity)

I agree this doesn't say a whole lot at this age but it is a good fork in the road to analyze and keep on track or get back on track. I agree with some above posters that many people my age spend way too much on houses/cars/partying telling themselves (justifying) that they prefer to "live" rather than pinch pennies. I think there is a medium in there but I would assume many of these "splurgers" will settle down and leave a different lifestyle the next 20 years.

Assuming you are in the 60K-100K salary, seems plausible to save 1K (single) and 2K (couple)/mo.

[This message has been edited by roycoy (edited 4/11/2012 10:52p).]

I'm 26 and have all of my finances extrapolated out to 2020, I predict hitting Millionaire next door goal right at age 30.

dp

[This message has been edited by motherlover (edited 4/11/2012 10:57p).]