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4 hours ago, ramssuperbowl99 said:

So, Johnny makes $95k/year, with a $5k 401k match and pays $15k in taxes, plus spends $50k/year. Johnny's SR is:
SR = ($95k+$5k - $15k - $50k)/($95k+$5k - $15k) = $35k/$85k = 41%. Johnny is crushing it.

Alright Johnny pump the brakes if my effective tax rate was 15% I'd be crushing it too...

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55 minutes ago, HorizontoZenith said:

Done.  With five years to spare.  No kids.

deal_eith_it.gif

This is important unless you're fortunate to have people that are significantly helping you out. I didn't have my first child until I was 35, and now I'm so glad I waited. Trying to save while also paying for children is a very difficult task even at my age currently; I couldn't have imagined doing it when  I was 19-25, working entry level jobs and the like as some of my friends did, and what I do now, I do without having to pay for day care like so many people (day care is ridiculous here - we debated it before his birth, and full time daycare would have cost as much as our mortgage) . I was very fortunate that while I was on paternity leave (fun fact: I got longer paid paternity leave, 12 weeks, than my gf did for maternity leave after having the baby lol) that my job converted to remote working, so the baby is home with me all day while I work. We have just recently decided to put him in the at home daycare of a friend for a nominal amount 2 days a week so that we can work on his communication, socializing and the like, but very affordable. 

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Posted (edited)
1 hour ago, mission27 said:

Alright Johnny pump the brakes if my effective tax rate was 15% I'd be crushing it too...

In 2017, a single taxpayer making $95,000 would pay $16,900 roughly if they took the standard deduction. That’s not that far off 15%. 

 

Edit: Just saw that 5k of that 95k was going to a 401k. Now you’re talking about a tax bill more like $15,700. That 15,000 was pretty dead on. 

Edited by winitall

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56 minutes ago, winitall said:

In 2017, a single taxpayer making $95,000 would pay $16,900 roughly if they took the standard deduction. That’s not that far off 15%. 

 

Edit: Just saw that 5k of that 95k was going to a 401k. Now you’re talking about a tax bill more like $15,700. That 15,000 was pretty dead on. 

Like just federal or what? 

Way back when when I was making $100K a year, my withholding was at least 30-35% but maybe the tax law was better than I thought.

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As far as the 2x salary thing... somewhat depends on where you live yeah? 

If you live in NYC or SF you could easily save MUCH less than that and retire in say Montana.  Or Ecuador or something. 

Rule of thumb only works if you want to maintain your current spending levels aka lifestyle at current location.

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3 hours ago, HorizontoZenith said:

Done.  With five years to spare.  No kids.

deal_eith_it.gif

Done with five years to spare.  2 kids.

Gif me.

 

EDIT: nice job btw

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I did.... until I build my house and shop. Not 35 but it is easily obtainable when you enter your life with no debt exiting college.

i really think this is harder to accomplish depending on where you live and the situation you are put in. I mean some jobs people go for make life hard if you have to save that much plus pay off previous debts like student loans and such. 

Some people enjoy nicer things also. 

 

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12 hours ago, ramssuperbowl99 said:

It's savings earmarked for retirement. So if your savings account is more an emergency fund, or perhaps a car fund, that wouldn't count. Your 401k would, unless you were planning on using that money as a downpayment for a house or something (don't do that).

1x salary at 31 is a very nice start.

Ok, so I don't feel nearly as bad now. Was thinking savings in terms of liquid assets - savings accounts, etc. Factoring in things such as retirement funds, I'm much closer to the 2x figure now. (Not there, but closer).

I wonder - does this study compensate for increases in your salary over the life of your career? I had a significant jump in salary from job 1 to job 2 when I was 31, then another significant jump at 34 - I made adjustments to a few things, but also had a few things come up as well (bought a house, had a few kids, etc). 

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9 hours ago, mission27 said:
10 hours ago, winitall said:

In 2017, a single taxpayer making $95,000 would pay $16,900 roughly if they took the standard deduction. That’s not that far off 15%. 

 

Edit: Just saw that 5k of that 95k was going to a 401k. Now you’re talking about a tax bill more like $15,700. That 15,000 was pretty dead on. 

Like just federal or what? 

Way back when when I was making $100K a year, my withholding was at least 30-35% but maybe the tax law was better than I thought.

The $5k was a 401k match, not his complete 401k. He's got $50k in expenses, but could easily be saving $35k as:

401k - $18.5k personal contribution + $5k employer match
tIRA - $5.5k
HSA - $3.5k

All of which are deductible from his gross income. That takes him down from $100k gross to $68k, and the standard deduction is another $12k, so he's at $56k.

He'd be paying way less than $15k on a MAGI of $56k. But these numbers were completely made up so I don't know why I'm even posting this.

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34 minutes ago, EliteTexan80 said:

Ok, so I don't feel nearly as bad now. Was thinking savings in terms of liquid assets - savings accounts, etc. Factoring in things such as retirement funds, I'm much closer to the 2x figure now. (Not there, but closer).

I wonder - does this study compensate for increases in your salary over the life of your career? I had a significant jump in salary from job 1 to job 2 when I was 31, then another significant jump at 34 - I made adjustments to a few things, but also had a few things come up as well (bought a house, had a few kids, etc). 

No it doesn't, which is why this is stupid measurement tool. If you have $95k saved at 34, and make $50k/year, would you really not take a $75k/year job because you wouldn't be on track for 2x at 35 any more? Obviously not.

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In all honesty, stuff like this gets me excited, which means that I've officially become an adult, who talks about things like finances, mortgages, retirement, investing, and all of that stuff I used to find mundane. I wish that I was ahead of the game, as I really didn't comprehend most of this stuff until the last 3-5 years. Special shout out/thanks to @ramssuperbowl99 for helping me think through these things, setting financial goals, understanding what these rates mean in layman terms, etc. I'm just thankful that I understood basic finances, which boiled down to basically this:

1. Debt is bad. Pay it off ASAP. (Student loans, credit card which thankfully I never had, etc.)

2. If you're able to, finance/refinance to a 15 year mortgage. If you can't, at least pay 20% down to avoid PMI. PMI is a black hole of money you'll never get back. If you can't, then refinance as soon as you're able to hit that 20% threshold so that you're not wasting money.

3. Don't spend too much money...especially more than you earn/can afford. Eating out occasionally isn't going to break you. You know what will? Impulse buying expensive things.

4. Have some type of basic retirement set up. If your company matches to a certain amount, always pay the maximum that they'll match, or you're leaving money on the table.

5. Save up 6-12 months in emergency savings "just in case". Water heaters break. Cars break down. People get laid off.

6. This is the one that I am/was VERY CLUELESS on. Investing. I did this one last. I suppose that if I were to have started this 10 years ago like I "should" have, my long term financial picture would look "better", but I'm more of a conservative/sure thing when it comes to a lot of things. I was happily debt free aside from a house payment by the time I was 26, and I wouldn't change that, even if it meant losing out on 3-5 years of a head start on investments.

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28 and my wife is 26 and both are debt free. By the end of next school year, we'll have 1.5x our salaries saved. Could have much more but we choose to travel more than most. Next step is investing, I suppose. Or buying a house to rent out during the ten months we aren't in the states.

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2 hours ago, titansNvolsR#1 said:

28 and my wife is 26 and both are debt free. By the end of next school year, we'll have 1.5x our salaries saved. Could have much more but we choose to travel more than most. Next step is investing, I suppose. Or buying a house to rent out during the ten months we aren't in the states.

Being an overseas landlord...yeesh. I'd invest in mutual funds.

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