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« Help a Reader: When to Refinance | Main | Don't Pre-Buy at Best Buy Unless You Want to Risk ID Theft »

October 26, 2011


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KM sounds very well-rounded -- congrats to her on her balance in life finances! In answer to the extra cash question, I think saving specifically for travel would be a great way to ensure that she experiences everything she wants to. Have fun in your travels, KM!

Ok, I have to ask this question: How does everyone on this forum graduate from college and find such high-paying jobs right away?

When I graduated college cum laude as a graphic designer in 1994, the best job I could find in my field paid $7.50 an hour. I know that a dollar went a bit further back then than it does now, but the equivalent today of $7.50 back then is what...around $12 an hour in today's dollars?

Yet, so many folks fresh out of college and in their early and mid 20's are making salaries in the $55,000k through $75,000k range. How do they do it?

How did you find such a high paying job, KM?

It sounds like you're doing pretty well, KM! I am a few years younger than you, but in a similar situation. I think the hardest part for me right now is not knowing what I want to do with my life since I'm single and not sure whether I want to stay in my current city for long enough to buy a place.

I would also love to travel more, but to me, traveling by myself isn't nearly as much fun as traveling with other people and I have a hard time finding other people to travel with. I am starting to take trips with my mom.

I would argue that spending $50 on dinner sometimes is important (say once a month or so) when you have the disposable income since it is fun to get dressed up and go out for dinner, even if you're not dating.

I view my "down payment savings fund" more as a "medium-term savings fund". If I decide in a few years that I want to move cities, go back to grad school, or spend a year traveling the world, I can use those funds for that too. I also could end up buying a condo in a couple of years. We'll see what plays out. Somehow I doubt I would go traveling around the world for a year by myself though.

BD - first of all, recall that many of the readers of this blog (and, it seems, many of the reader profiles that have been published here) are self-selected among the ranks of higher earners with good money-management skills, and a lot of them seem to be 20-somethings who think we can do it better than our parents' generation.

Second, as one of those 20-somethings, I'll tell you how I did it: I graduated with an undergrad engineering degree in 2006 and found an entry-level job in southern California making $40k. This was before I got very smart about spending, and it proved to be enough to live on and save a few hundred dollars a month, and buy a new car with a 5-year payment plan. In the 5 years since, my first company was acquired, then a few of us broke off to form a new small company, and through the process I have worked smart (not incredibly hard, but always looking for ways to work smart) and made myself indispensable to my small company, and my salary has approximately doubled. At the same time I got a lot smarter about spending and investing, got married to a wonderful, like-minded woman, and we are able to save/invest about $5k each month.

I attribute our success so far to a combination of being fairly driven, working in fairly high-paying fields with upward mobility (well at least mine), having long term goals that we talk about and refine constantly, and a fair amount of luck (regarding the way my job situation has worked out).

I would say the next thing to do is save for down payment on a home. That is the ultimate in planning but not making any real plans. You may be buying a home solo or with a future partner someday, either way saving for a home will serve you well.

My advice would be not to feel that you need to be in a race to retire early, particularly when you are very happy in your job. Marriage and having children can be a problem when you have a promising career but it doesn't have to be, especially if you and your future husband are both high wage earners.

I retired at 58 and for me it was the perfect time. My career started in 1956 a few months after we were married when I was 21 and my wife 22, the children came along in '58, '60, and '63. My career ended in 1992 and my wife's a year later and we both loved every minute of it. My wife took time off while the children were young and that also had many benefits.

As for an MBA there are many possibilities of obtaining it while you are still working, that's how I got my MS, and my employer paid for everything but the books.

While I was working my vacation time started at 2 weeks and was bumped up by a week every five years, maxing out at 5 weeks. This gave us the time to do a lot of our travelling while we were working, especially the more arduous and adventurous trips such as Africa, China, Indonesia, Nepal, Turkey & Morocco, and then saving the easier trips for retirement.

Whatever you do, its absolutely vital to make a wonderful choice when it comes to marriage. It will be the biggest decision of your life and ours is still going strong after 55 happy years together.

How best to invest is very tough right now because America has lost its way and the American Dream has vanished for lots of people. I would not consider real estate at your age and while you need to be able to change locations at any time. I invested in no-load mutual funds and did extremely well being an active investor in a great economy after retiring. Now I think if I was your age I might be tempted to try to decide upon some excellent US or Global, recession proof, Blue Chip companies that can weather this bad economy while paying out decent dividends along the way. One great example is McDonalds.

This sounds really familiar in a lot of ways. Good luck to OP. I would love to get in touch and talk about the things that I can relate to.

@Old Limey I just want to note that we finally agree on a piece of investment advice! I own MCD in the part of my portfolio that I actively manage. It's a truly outstanding company from an investor's standpoint. It has top-tier dividends growth, recession-proof sales in the USA, steady growth abroad, and a lot of real estate assets that aren't reflected on the balance sheet. It's one of my more conservative picks, but I love it, and I don't expect that I'll ever sell.

@BD @Jonathan I agree, this is a classic selection effect. Not only are high-earners more likely to read FMF in the first place, they're also more likely to enjoy writing up and sharing their finances. Talking about your successes is more fun than talking about your struggles!

Another trend I'm noticing: young singles who want to travel but prefer not to do so alone. What to do?!


It sounds like you are managing your finances very well, I suspect you will do very well for yourself.
>Plans for the future: wish I knew! Right now, I'm focusing on growing my career and saving now so that I have options later.
At 26 I think it would be pretty unusual to know exactly what you were going to do with the rest of your life, so not knowing is perfectly normal. I agree that saving will give you more options. The good news is that you don't have to know exactly what you are going to spend the money on. You just need to decide on approximately how long before you are likely to spend it.
If I were in your shoes I would pick some % of your salary to save, and save it in different categories:
Some % for retirement savings- this is ultra long term and should take advantage of tax sheltering.
Some % for low risk short term savings- emergency fund or travel - start a CD ladder.
Some % for longer term non-retirement savings, say 10 years out do a conservative mix of stocks and bonds (50%/50%) or a balanced fund kept outside a retirement account so that you can spend it as you need it. Be sure to consider tax efficient investments and don't get too aggressive.
Deciding the exact %es is going to be more of an art than a science, but consider some of the classic big expenses someone your age might make in several years:
Down Payment on a House
A new Car
Additional Education (i.e. MBA)
NOTE: You don’t have to get the %es exactly right- you can make corrections as you go. For example say you find you have been putting a lot toward retirement but have a wedding coming up in a year. You could scale back the retirement savings and put more into short term savings.

> I feel guilty about that from time to time but also feel that I'm saving enough to have a little freedom with the rest of my money
I would make the savings automatic- i.e. payroll deduction or automatic transfers right after you get paid. That way you never forget and- any money left over you can spend without guilt. I suspect you will make a fairly large savings %, so enjoy spending the rest even if it isn't the best possible use of that money. Becoming a miser won’t make you happy- and since you know you are saving at your target rate you can even make occasional frivolous purchases.

-Rick Francis

The reason you agreed with my MCD recommendation was that it was intended for a 26 year old with a very long time horizon. I don't own a single share of any stock myself. Personally I am not interested in capital growth investments, only in investments where I am earning tax deferred and tax exempt income and my principal is returned to me when the investment matures.

There are wonderful adventure travel companies that cater primarily, but not exclusively, to groups of young single people, two that I travelled with in my younger days were Wilderness Travel and Mountain Travel Sobek. With them I went on three treks to the Himalayas (one with my wife), one to the Andes, and a camping safari in the Okovango Delta of Botswana, Africa (also with my wife). They were the most memorable and satisfying trips of our lives.

@BD My first job out of college paid me a whooping $4.75 per hour. ....but that was a long time ago. ;-)

Also, not every one on here is a high earner. After working at my job for 31 years I only make 56K per year. I'm fine with it. I live comfortably, I'm frugal. I don't feel like I'm hurting. And my job is nice/mellow/easy. I'm also able to save..alot.

Congrats on your success so far, KM. I am older than you but also single/urban/female, and I love, love, love to travel. Often times to remote places that no one wants to go to with me. One way to do this is to find an activity that you love (hiking, biking, etc.) and then go on a group trip. I am going surfing in central america next month by myself, but at a surf camp where 90% of the people (women) go alone. So I'm excited to meet cool people and enjoy my trip. I don't always go alone, but it's nice to not have to rely on someone else to go where I want to.

@ brooklyn money and KM. If you are looking for others that share some of your interest, like travel,hiking kayaking or whatever, google " Meet Up " These are groups of people that are getting together to do stuff they love. It's free to join and it's fun. I joined the kayaking group in my area and they had events planned through the whole summer. Some stuff locally and some that required travel. My sister joined a Spanish ( speak spanish )meet up group. I went with her to one of their get togethers. Lots of great people. You should check them out. There's a group for everything. If can start a new (meet up) group for your area.

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