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Catie T. who bears the name Millennial money honey on her various social media platforms plans to retire at 35. At 29, according to insider documents, she is only six years away from her goal. And about 30 years ahead of most other people their age.
Catie is part of the FIRE (financial independence / early retirement) community; It’s a movement that came from a 1992 book entitled “Your Money, Your Life” by Vicki Robin and Joe Dominguez.
Corresponding Investopedia, Millennials – who were kids when the book was published – are increasingly the generation embracing FIRE. It is characterized by aggressive savings and investment practices that allow participants to be unemployed before the traditional age of 65.
“I’ve just lived the average millennial life in LA, hanging out with my friends, doing my hair and trying to keep up with the latest fashion trends,” said Catie of her lifestyle before embarking on her FIRE trip.
But at 26, she was at a point in her career where she was making enough money to build decent savings and start thinking more seriously about her financial future.
“I was like, ‘When people are investing, I know I should be investing. I should look at this and find out,” she says. She started doing personal finance research and eventually learned about the FIRE ideology. “I came in headfirst,” she says.
It recently reached an impressive milestone which is known as “Coast FIRE. “Assuming $ 375,000 deposited in various accounts regular market trends, her savings will grow so much that she won’t have to invest another dollar to become financially independent at 65. In this way, it can “expire” into retirement without any problems.
While this is a great accomplishment and an important step in her journey, Catie plans to continue saving and investing at her current rates so she can meet her retirement goal – $ 1.5 million saved and invested – by 35 .
As she gets closer to her ultimate goal of retiring at 35, she shares her journey and the strategies she has implemented in hopes of inspiring others in financial independence as well. That’s how she got this far so quickly.
How she set her retirement goal
To find out how much she needed to save, “I estimated my yearly spending to be about $ 30,000 a year, and then I doubled it just to allow for a margin of safety,” she explains.
For example, suppose she needs $ 60,000 for each year of retirement, she has it 4% rule to determine their target amount for the annuity portfolio. An easy way to work out this number is to multiply your desired annual income by 25, which Catie did and gave her $ 1.5 million.
“It would only be $ 750,000 for me, but I’m just on the nervous and cautious side,” she said. Doubling their annual amount provides them with convenience and a safety net.
1. She tracked – and changed – her spending habits
Before making any major lifestyle changes, she tracked her expenses for a few months to get a better picture of her financial condition. “I didn’t even know where my money was going beforehand,” she explains.
After that, she was able to be more strategic with her decisions. It’s about figuring out those “little tweaks,” she says.
For example, Catie quickly found that she was spending more money on personal hygiene and aesthetic services than she wanted. Between an Equinox membership of $ 230 a month, an eyelash appointment for $ 30 every three weeks, and about $ 600 twice a year for hair treatments, she found she got about $ 1,000 every three months for them Purchases made.
So she got creative about how to minimize it. For starters, she let her hair grow back to its natural color instead of keeping a pale blonde hue that she had before. She quit Equinox, stopped having her eyelashes done, and gave up the fancy hair salon in favor of a local ad with a $ 15 cut.
2. She has increased her income
A graphic designer by profession, she has taken a strategic career move to grow her income quickly and save more money by default. Before FIRE, Catie worked for an advertising agency and Industry known for lower wages.
“I was able to steer my same skills toward a higher paying industry,” she says. Now she works as a graphic designer for a technology company. “I didn’t know how much more lucrative it was to be a designer in this field, even though the skills are exactly the same.”
It wasn’t much of a linchpin, there was no need to go back to school or invest in additional education, but “it was about being creative about how I could increase my income,” she says.
3. She invests her money in various investment accounts
While a big aspect of being successful at FIRE is cutting costs and saving aggressively, arguably the most important part is investing that money.
Due to inflation, for most people, the path to retirement involves at least some form of investment, be it through a 401 (k), 403 (b), IRA, or other selected account. The same goes for those who want to achieve FIRE.
Catie had saved about $ 30,000 prior to her FIRE trip, which she invested in a wealth front
Robo-Advisor
Account. Now the majority of their income is invested between their employer-matched 401 (k), their Roth IRA, and their HSA (Health Savings Account).
Outside of these accounts, it invests almost exclusively in index funds. “I’m a total stock exchange fund at Schwab,” she says.
4. Because of the COVID-19 pandemic, she moved back in with her parents
Although it was never originally part of her plan, she moved back to live with her parents due to the pandemic. Since she lives rent-free, she was able to drastically reduce her expenses in the past year.
“‘I’m very fortunate that my parents let me live rent-free to help me with my dream,” she says. This change has helped accelerate your invested income.
5. While saving a large portion of her income, she still enjoys life
Catie saves about 80% of her income, a common percentage for many who participate in FIRE. But for some, this high savings rate is one of the most unattractive qualities of the movement.
It is often assumed that putting so much aside must also mean depriving yourself of today’s joys.
But she doesn’t live like that. “I am extremely conscious of my expenses,” she explains. She still goes out to eat and drink with friends. She will spend money on travel – if the pandemic allows it. “I found out what makes me happy,” she says.
To do the things she loves, she cuts out other things, like expensive clothes or hair treatments. She doesn’t plan her daily expenses, but she knows her expenses and makes sure that she always has enough in her checking account to cover them.
She also makes sure that she uses some of her money to celebrate her victories and milestones. “It’s a long journey, it doesn’t happen overnight, it will take years and years,” she says. But she is determined to enjoy the ride as much as the destination.
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