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July 16, 2013

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Nice job @KP.

Everything you posted details you are on the right track. But just like you would front load those 529s, front load your retirement now by putting a bit aside in a taxable brokerage weighted toward long term buy and hold stocks/etfs etc. Siphon a little in each month from then on. You seem like a "do-it-yourself" guy so read up and you will be fine if your time horizon is age 55/65/75 whatever. Get a fee based FP if that doesn't suit your fancy. You may also be a candidate for real estate with your hands on approach to your current house.

You have what us married guys with kids don't - TIME!

You didn't detail what you are looking for in a lower stress job.

I am VERY interested in this minimalist closet approach. Any tips?

Best of luck regardless!

Thanks Jake!

Miminimalist closet approach is simply not buying more clothes than you need. I usually only something new when I have to discard an older piece of clothing.

The lower stress job is more about not burning out and also doing something I would be proud of. My current job is a typical corporate job; help produce profits. I would like to do something that can help reduce poverty or fight climate change.

You're on a great track KP. Not much room for improvement. As @Jake said, fee-based financial planner is next step.

@Paul,

Why should I use a fee based financial planner?

I can directly invest in very low cost index funds myself.

What benefit would a financial planner give? I would like 1% each year for their fees.

If your goal is early retirement, I would say to start investing your extra cash into things that will create extra income streams (dividend stocks, real estate, online businesses, etc). That way, when you look to retire you will already have income to support you.

@KP,

Saving the world happens one small influence at a time. If you want to make a difference look around you and find ways to make a difference right where you are. If you keep thinking you want to tackle global problems the odds are slim that you will ever make a real difference. Make a difference where you are. And perhaps that will grow into something with wider reach.

@KP Fee based planned work for a fixed fee, not a percentage.

a CFP can guide you beyond your current portfolio. One big benefit is tax minimization strategies.

And if you think you're sitting on too much cash, they can help you fix that problem too.

KP, I think you're mostly on track with your thinking about money as well as your net worth. The one thing I'd say is I think you have too much of your net worth tied up in company stock. Maybe it's not possible to sell it, but if it is, I would sell at least some of it.

I'm going to be a contrarian and suggest that you either invest your cash or pay down your mortgage (unless it's sub 3%) and get a HELOC in case of an emergency. I know everybody else will tell you to have sizeable emergency fund and they're more prudent than I. If you got fired, you could always take a loan against your 401k or use the HELOC. No use paying interest on a mortgage when your cash isn't doing you any good. I doubt anyone else will agree but that's my two cents.

It looks like you are on a great track! Like a commenter above posted I think focusing on different income streams will allow you do to more things. If you are thinking of quitting what's holding you back?

@BH interesting approach on the HELOC. I would probably open the HELOC and use it as a "last line of defense" (but be wary of the closing costs, fees etc and don't use the credit card they give you - store it away). If it hit the fan and you tapped the HELOC you are now in debt and have to make regularly scheduled payments. Hopefully at that time you still have equity in the house and the bank doesn't shut you off.

@Jake - yes, he would need to avoid fees and do research. My general philisophy is to be an interest-collector rather than an interest-payer, so KP has good equity in his house and a relatively sizeable 401K if an emergency arises - I would advocate putting $40,000 of the cash to work, but admittedly it's not the best course for most people (psychologically, if nothing else). Another option is to put the cash in a whole life insurance policy that he could borrow against if bad stuff happens. Again, there is a lot of reasearch required, and most policies are a rip off due to fees, but at least the cash wouldn't be sitting there making the bank money and doing nothing for KP.

Couple of points: if that company stock isn't somehow restricted, I'd be looking to diversify out of it. It's like a seventh of your net worth, and its value is tied to the same institution that pays your salary. If things go very wrong there, you could lose (most of) both at once.

Also, why ETFs in the 401(k)? It's not like you're going to be trading them on a regular basis.

HELOCs are never a great idea because the bank can and will freeze them if it thinks you're getting into trouble. So, just when you might actually need the money, it's not there.

I, too, am in a situation where I have taken maximum advantage of retirement accounts, don't have any debt, and don't have anywhere good to put short- to medium-term cash. For now, I've been gritting my teeth and overweighting my supplemental retirement fund. My sense is that there are very few good options (i.e., ones that don't charge ridiculous fees and/or offer inadequate return for the loss of FDIC protection in a simple bank account) out there right now. I spent my twenties as a broke grad student so I don't suppose the shot in the arm hurts.

P.S. If your heart is telling you to get out of the corporate environment, you should do it. You've been doing a pretty good job at avoiding lifestyle inflation, which is the first, and hardest, step towards escape.

@Sarah,

Can only use company stock since it is profit sharing; not too bad since it's free money and the stock yields 3% a year.

For 401k, we only havae choice of a few ETF's

@BH,

I don't see why whole life insurance is a good idea at all.I have term and I can just invest the difference.

I like having $25k in a just incase fund if anything were to arise.

@KP: It's probably a bad idea for most people. But for those of us who own our own business, a keyman policy has advantages: it is a good asset protection tool (my state it is judgment proof and bankruptcy proof), the returns are actually quite decent and consistent, you can borrow against it or you can pledge it as security for a loan. We hired an insurance consultant to negotiate the policy for us though. I hate having more than $10,000 in cash sitting around, but I knew this would not be a well-received strategy. Maybe I have a higher tolerance for risk.

I cannot help but soak up every detail of this kind of article.

Peering into the statements of strangers is addicting!

In summary, this guy has an embarrassment of riches!

Well done!

I'm relatively conservative on investing as well but there instead of just cash I'd recommend looking at some balance mutual funds. The kind that invest not only in stocks but bonds as well. you generally get more growth than in cash but aren't as exposed to the volatility of the market. Start slow and gradual.

Oh KP, I just read your what you's like to do addition. You can start to work on bettering the world at your current job as well. A friend of mine works as a corporate lawyer and runs a charity that operates 2 schools in Uganda. She goes there every other year to check on the actual facilities and does her fundraising every year. Not saying this is what you want to do but don't wait to start contributing to the "world"

KP,

You are doing great, with a good net worth for your age. Think about a higher paying or equal paying job with less stress. For example- I used to run a business / manufacturing facility but I stayed with the same company and am the head of Sales for a few business units, including the one I previously ran. I earn the same salary but find the job much less stressful and with much more flexibility- perfect timing as we are raising a newborn (first child).

Think outside the box and put your request out there and the answer will come... just make sure you are open to hearing it.

-Mike

@KP

$110k/year income is incredible. Mind sharing your secret on how you did it with just a 4 year degree?

Wow... you are killing it. Wish I had half your maturity when I was in mid-late twenties. Keep up the good work!

Great job KP, I was reading and said wow we have alot in common...income, age, status, and desire to leave the well paying job to make more of an impact on society and to most likely come out better off based on work ethic & passion alone.

Definitely consider all the comments provided...they are great. Less stressful job with similar pay is key and using your disposable cash to build income streams (cash flow) is the key to early retirement. My gateway is Real Estate. Good Luck!

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