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July 10, 2012


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I love the organizing of the financial wisdom in that order: life energy should be aligned with goals, possessions own you, and once you fully understand the above, dial it back just enough to have some fun today. (I do feel the term "life energy" is a little touchy-feely, but it is an important concept).

HSA Question:
Do you mean to say that you deposit the max, and just don't have much medical expense? Or do you actually dump money in to the HSA and pay out of pocket for medical expenses? If so, you should take another look at that practice because the most tax advantaged result is to use the HSA for all qualified expenses...

Homebuying rant:
Where I live, buying is so much cheaper than renting it is almost unbelievable. However, to many of the people I know that buy, some switch in their brain flips, and suddenly there are no more wants, only needs. They complain when their dishwasher breaks, and they HAVE TO spend all kinds of money for a brand new set of stainless appliances. They whine because the NEED to spend 3 weekends and two thousand dollars refurbishing the home office... What?? last year you were in a one bedroom apartment!!! Don't complain to me because you CHOSE to inflate your lifestyle. /rant

Seriously though, you shouldnt feel too bad spending only 380 on an apartment. In fact, that relatively cheap rent may keep you from inflating your lifestyle...

All in all one of the most detailed reader profiles I have ever seen. Kudos to you on keeping such good track (Also it seems you use Mint- the categories are recognizable lol).

Sounds like you are doing well for yourself and have a good head on your shoulders. If you feel you are saving enough in retirement accounts don't be afraid to start a taxable account.

Sounds like you are doing well for yourself and have a good head on your shoulders. If you feel you are saving enough in retirement accounts don't be afraid to start a taxable account.

I agree with your comment that "The less you own the better". I think simplicity is the way to go. Lighten up as much as possible.

You talk about how you reduced your 401(k) contributions. If you are comfortable with maxing it out, I would consider doing that for a few years and then considering leaving it alone. I really like MMM's take on this: So you could contribute a TON now, for the next 5 years, and then not put as much money into it later.

I don't count income taxes or retirement contributions as spending. The former reduces my net income (I base my savings/spending calculations off of net, not gross) and the latter is savings.

Why do you have a year of salary life insurance? Do you have dependents? I have some life insurance as a benefit from my employer that I am stuck with.

Shop around for car insurance, but it might be all expensive until you turn 25...

$380 for rent though?! That is amazing. The monthly difference in my salary when I first started working about covers the difference in what our rent was though.

The splurge on corrective vision surgery was a good one! I'm not sure how much more you could have saved than $3,300 and I would argue that that is something where you're better off going based on referrals than shopping around.

You have a lot of different funds in your 401(k). Why do you have emerging Asia, China, India, South Korea, and Japan all separately when you also have an allocation to international? Also, I would recommend that you either use the target date fund OR split it up yourself. They're meant to be used as all-in-one funds.

Do you want to buy a house or a condo at some point soon? If so, I would consider accumulating a good deal of cash.

It takes time to build up a good social circle in a new city, so I would be wary of moving after spending two years where you are because then you'll just have to start all over again.

Sounds like you're doing really well overall :)

Nice paragraph on Net Worth. It has a very familiar ring to it. I think I might have seen it somewhere else. :)

Well considering your age, income, and the fact that you got almost a full scholarship to complete a college degree, it seems like you are doing very well for a 24 year old. I know theres others around your age who would die to be in your financial situation. Take advantage of the fact that you're in demand by other companies. Although you may be comfortable where you are now, the life experiences you could acquire while living somewhere you're obsessed with would definitely be worth the move. Especially if these "renowned" companies will be offering you similar salary.


You are off to a great start at age 24, I do have a few suggestions:
I wouldn’t rush to buy a home- for a few reasons: it is a lot more work to maintain than an apartment- do you want to mow the lawn, trim the trees, repair the house? I would enjoy the freedom of renting at your stage in life! You don’t really need a ton of space for a single person and it will cost more to cool/heat a home. If you decide to move you will lose a lot in commissions and closing costs… Not to mention when you do find the right woman she might not like the home you picked out and then you will have to move again…
Hobbies are a great way to meet people- is there a cycling club in your area? That would be a good way to both make use of your $1000 bike and meet some new people, plus you would have something in common.
> But at the same time seeing what quality engineers are capable of is daunting … and makes me question my skills and true passions.
Skills are developed over time- I wouldn’t worry that much if you need to develop skills at age 24. My experience is that most people are happy to help teach younger employees skills… You just have to ask and really listen to them. There are also tons of CS classes available on iTunes university, so if you didn’t get an OS class or some other useful CS class in you CE degree you could easily fill in the knowledge gaps that way.
As for passion- you should consider if you enjoy your job enough to do it well long term. You don’t need to be ecstatic all the time, but do you generally like your job? If not you might want to see if you can start your own company on the side. Be warned that even if you make a software company, the technical work is just a small part of what you will need to do to make your company succeed. Marketing and sales are big parts of every company, and at least initially you will need to fill the VP of Marketing and VP of sales roles. If you don’t do these roles acceptably well your company will not grow.
On Asset allocation: Depending on target fund you may have no bonds. You are pretty young, but a small % of bonds may actually improve your portfolio’s performance. You could also consider adding REITs (although that may be included in target fund/small cap).

-Rick Francis

AT age 24 you sound like you are a Tony Robbins self help guru, Take that as a compliment. Good job on the finances at such a young age. If I were you I would add large cap funds to retirement accounts as I only noticed small cap and international. Also why did you reduce the 401K percentage, do you plan to allocate those funds to a taxable account?

You've got a lot of left over money to contemplate with. You should have a great retirement.

Are you living in a high crime area? Gated can mean good or bad and your low rent is hard to fathom for any other reason than high crime.

You talk about work/life tradeoffs, how about money/safety and health tradeoffs? If crime is a problem in your area, it would be feasible for you to take a portion of $1867 and get an apartment in a safer neighborhood with little consequence to your financial goals.

Lastly, eat well, exercise, and good luck finding someone to share your life with.

You're doing very well for yourself for your age especially, kudos to you. You seem wise beyond your years. Many people your age are drowning in various kinds of debt and have no real job prospects. You are off to a great start.

A few comments and bits of advice:

* I love that you have been frugal on your apartment and your car. Those are two HUGE money sucks for a lot of people.

* Find a cycling club in your city and go on regular rides. See if you can ride to and from work on a regular basis. I agree with you - you should use the bike more (I'm a rider myself). On the other hand, I always tell people, unless you are a serious rider, there is no reason in the world to spend more than about $200 on a bike. You bought the bike for a reason, make use of it, or bite the bullet and sell it for a loss and get something more reasonable.

* Rebalance your retirement portfolio. I hate, hate, hate target date funds because they are a fund of funds. Not only does that bump up the cost of management, it also allows the managers of the funds that make up the target date fund to game the system and make their funds look better (gee, fund A isn't doing so well, let's re-allocate the target date funds to make fund A look better - happens all the time - and it is NOT in your interest). You also should not be 20% in cash at your age. I also don't like seeing anything in company stock. You are already hugely invested in your own company by virtue of having a job there. I would suggest 30% to 40% in a low-cost S&P 500 index fund, to be supplemented with 10% to 15% in each of the following: a value-oriented fund, a mid-cap fund, a small-cap fund, and international fund, and a bond fund. That gives you good balance across large/small, growth/value, domestic/international, plus gives you some stability with the bond fund.

* For what it's worth, I agree with your approach of bumping your 401k contribution down to 10%. There is a such thing as oversaving for retirement. You work hard for your money, you should enjoy as much of it as you can without jeopardizing your retirement. Also, you have other things to save cash for, primarily, a down payment on a house at some point.

* As an MBA myself, I can tell you that the MBA would expose you to a vast array of people, industries, and career paths that you never would have thought of. To me, that may have been the single most valuable component of it. Don't just think of it as school, think of it as a huge networking opportunity and an investment in exploring possibilities. And it would never hurt you to have it on your resume.

* You should be giving more to charity. It sounds like you are a Catholic. If you are uncomfortable with just giving money to your Church's general fund, look into specific Catholic charities and find one that you really believe in. There are many, many worthwhile Catholic and broader Christian missions out there.

* If you don't like the city you are in, create a path to get yourself out of there. Life is too short to not really enjoy where you live, and you make enough money and have enough skills and education that you have a lot of flexibility in that department.

* Above all, leverage this time of your life. I'm 37 and have a wife, 3 kids, and a mortgage. I've had to turn down some amazing opportunities just because I'm somewhat shackled by my responsibilities. You have none of that. You are young, healthy, intelligent, ahd highly mobile. Take heart in the fact that many, many people would love to be you. But back to the point - now is when you should be taking those risks. Take that job overseas. Take that semi-risky job with the start-up. Invest two years and get that MBA. You won't always have easy freedom to pursue these kinds of opportunities. There is a window, and when it closes, it may close for good. Take advantage while you can.

Thanks! Totally agree with the idea of "dialing it back just enough to have some fun today" expecially in terms of spending for experiences versus possessions.

RE: HSA. I simply don't have any notable healthcare costs. I payed for the eye surgery with an FSA. I don't have any problem spending the money on certain future costs. The HSA probably won't make it to retirement if I ever switch health plans and use the HSA to pay for deductibles etc.

Do you recommend any specific investment accounts/trading houses? My Uncle stands by eTrade for taxable stuff. Though I may want to stick with low fee funds in taxable accounts also.

Thanks for the link, I will do the math suggested tonight and those loopholes look promising :) didn't read in-depth because I'm just on a lunch break at the moment. Though the option of buying a house or other things that require liquid assets is one of the reasons I reduced the 401k contributions.

The one year life insurance comes with the job. No benefits but I allocated the beneficiaries so that my mom could pay for my funeral and my sister could get a small amount.

I agree that health is something you don't necessarily want to skimp on. But I do think I could have saved at least a few hundred dollars with the same results. But I am nitpicking here. The doctor was very good and I am very happy with the results!

Ha! Indeed. Thanks a bunch for the advice. I thought that bit was especially succinct and enlightening.

Thank you very much. I owe it all to my parents and other figures in my life for shaping who I am today. Your bit about "life experiences you could acquire while living somewhere you're obsessed with" really fuels the spark I have for moving.

The additional costs that go with home ownership are what have kept me from really looking past the surface. I've used this great tool to help, though it still misses a few components. As you say, the hassles deserve some weight and also the unknown factors like being in a serious relationship or moving.

I will take your advice and join a club. Or at least a group that rides on Saturday mornings. I know there are such groups but just haven't gone. Killing two birds with one stone indeed.

Also, thanks for the advice on career/passion. I agree most people at my company are willing, even happy, to help out the young gun. I have developed a (good) niche at work though that makes it less natural to be seeking learning from senior co-workers.

I reduced the 401k contributions to increase my liquidity a little in case I need it or want to invest outside of retirement. Will have to look into more detail or follow Leigh's link's guidance.

I will take it as a compliment. Haven't really seen his work but just read his wiki page. Hopefully I can start making some $$ or helping others like he has.

Thanks! The area doesn't have any real crime problems from what I have seen. Mostly just lower income minority families who mostly have jobs (judged by the number of cars gone from the parking lot during the day). Lots of kids always outside after school/work playing near the street etc. Less than a mile away you could find some really nice, expensive homes. So the part of town is not a bad one, but this small area is just not really all that nice. My apt. is 1.5 blocks from the highway.

Great sentiment! Thanks!

Haha, I feel so honored that you liked my profile! :)

Sounds like you are doing really well for someone my age. In your case I would definitely hold off on getting a house until you are very ready to settle down. Housing can be one of the most expensive monthly costs and you're keeping it down to a bare minimum while still living in a place you enjoy. Keep riding that $380/month place for as long as you can, and reap the savings! At the rate you're going, you'll have more than enough to put a good down payment on a house when you're REALLY ready.

I would personally pay down all your (meager) debt just to get it off the books, though it depends on the interest rate, I suppose. :P

I think 10% is awesome at your age for a 401(k) contribution. I assume you're getting the full match at that rate. :)

Thanks for the comments and advice!
Since sending this post, I have been riding my bike more. Had a great tour across the city to a cool coffee shop and back on July 4. My next step will be joining a club/group that knows the good routes.

I do indeed need to re-balance. I'll take your advise and get out of the target date fund. I've been underwhelmed the past couple years by it's performance while there are better options out there for my goals. Not sure i'll follow a strict 10% split for each category, but will have a lot in the low cost S&P 500 as you stated.

I am Catholic indeed. There are some interesting ones out there for sure. Could you share why you think I should be giving more? Interested to hear. Is it along the lines of FMF's recent post about what constitutes sacrificial giving?

Good last two points also


Nice profile. I also liked that you articulated your financial values and your thoughts about possessions vs experiences. I have a similar mindset, and have seen too many cases of possessions owning their owners :-)

You are in a great position to take some calculated risks in your career. Have you thought about exploring opportunities in the Bay Area? It seems like there are a lot of good opportunities for skilled engineers there and you could use that to build up your base salary while keeping the same approach to minimizing spending. And it could provide new experiences / new people to work with that could open up avenues that are unforeseen as of now.

My only advice would be to ensure you get a very significant jump when making a move and take the time to ensure that your future employer is really keen on you and then negotiate for a nice bump.

I look forward to hearing some updates on your progress, as you seem to have a nice foundation and a great outlook.


It was mentioned above the hassles of starting your own software company. If you ever need the extra money, and who doesn't, I know several software developers, including myself, that program on the side outside of work. There is no overhead, no VP positions to fill, no employee payroll, etc. to worry about and most of the time we work whenever we want. And if the work isn't there for a stretch of time, you always have your day job. I know I've made at least $4K annually doing it on the side and I'm positioned to make at least double that this year for less than 10 hours a month on average.

BB - yeah, that's pretty much it. I've always advocated that any time your compensation goes up, your giving is the first thing that should increase, and it should increase in % terms faster than your income. I've tried to live by that mantra. I challenge others to do the same. As I re-run the math, you're actually doing better than I thought - $480 per month is almost $6000 per year, on a gross income of $70,000 or $80,000, that's not bad, but could be a bit more without you having to sacrifice much. Just my two cents.

Yeah, I think a house is definitely for when I am ready to settle. Though the investor in me always wonders about those foreclosure sells or tax auctions!

Definitely getting full match of 4% on first 4%. Wish it were more :)

@Mike Hunt
Thanks Mike! I've definitely considered the Bay Area and if I were to get wind of a good enough opportunity I would consider it even more. There are definitely a few drawbacks though; mostly typical. The valley is definitely the center of so many things as it relates to computing. Good tip for when to consider the jump.

Do you use any specific websites to find these odd jobs or do you actually have your own sort of business?

Nice challenge! Being so young makes it a little difficult to project too much into the future to come up with some nice +x% per year.. I will work on increasing the contribution rate and also finding better ways to donate my money or time.

As a side note. Automating your savings really is great. My charitable giving is automated and not tracked in my net worth calculations at all (while there is a balance) and I have not missed the money at all (wait.. is that not sacrificial? grr). I have always heard stories of how people's lifestyle adapts to their salary. The trick is to automate those direct deposits so that it doesn't feel like your (discretionary) salary is that high or that when you get raises you really only see a mediocre % of that raise.

I kind of fell into my current gig. I don't have a business license (I believe they are at least $600 in CA) because I see no benefit. I simply receive a W2 at the end of the year. My former employer folded and I was asked by a former client to help maintain and improve his billing system. I did all the original programming so it's been easy money.

If you are interested, I would look at Craigslist. I might also post something about being available to help with assorted programming tasks. You could list your skills and see if anyone emails you. It would be an interesting experiment and you wouldn't have to list your information. There is also no obligation if it's not something you are interested in.

Good luck!

Correction: I meant I receive a 1099 at the end of the year, not W2.

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