Comments on: Is this what a transition to Money 201 should look like?

By: Josh

Josh — Tue, 29 Jul 2008 17:59:32 +0000

I think I will use it (my 401(k)) as basically a savings account until there is enough money to launch a real investment such as RE.
I don’t know if this is considered doing “both” but I do consider this an easy decision if I’m going to take the idea of early retirement seriously.

By: AJC

AJC — Sun, 27 Jul 2008 17:38:19 +0000

@ Josh – I’m not recommeding that anybody withdraw their 401k to make other investments; merely that you run the numbers and understand why YOU have one … and, the 401k can be a good “in case all my plans go belly-up” safety-net, so is there any way you could do both? If not, then you have a tough, but important, decision to make …

By: Joshua H.

Joshua H. — Sun, 27 Jul 2008 17:12:36 +0000

Great food for thought. On Monday I’m going to look into withdrawing my 401(k) to buy my first property.

By: AJC

AJC — Fri, 25 Jul 2008 20:53:21 +0000

@ Ethel – I’m so glad that you came back to read this and leave your comment because it addresses a false premise: retirement … it’s not an amount on a date set by your employer (or society norms), it’s a date that YOU set to do what you need. In your case, the critical date is your so-called “mid-term” date (and, associated amount), with a second cut at it based upon the date that you actually intend to stop work altogether.

Check out the posts from the last 2 to 4 weeks on http://7m7y.com … you will find some interesting exercises to help you sort all of this out. Good Luck!

By: Ethel

Ethel — Fri, 25 Jul 2008 19:49:08 +0000

“However, I feel that my audience wants more … they have a ‘big dream’ … they want it now (well, soon’ish) … and it requires fuel – lots of it (money!) – and lots of free time, to boot!”

I think this *is* me, but the issue is that I haven’t defined my dream. It isn’t the standard, “Retire at age X and live like a king” style of dream – I’m happy with a modest lifestyle. But I want to have (a) time to volunteer and (b) money to support others in volunteer and charitable work, and I want to change the world through this work.

I think I’ve been confused by all the focus on retirement (like in your magic number article). Retirement is exceedingly easy for me; I could probably have everything I need in a 401(k) and IRA by the end of a couple of years, let it sit for 30 years, and be done with retirement planning.

What I should have been defining is how I want to change the world BEFORE then, how much time this will take, how much money this will take, how much I can earn mid-dream, when I want to do it, and if I will have time after this to get all the resources for the rest of my life (retirement), or if I will need to start getting ready for retirement now as well.

So . . . when I start thinking this way, I see that most of my dreams are best accomplished in my 30s and 40s, maybe early 50′s. That’s where I’ve been messing up. I should worry less about retirement, which is a low-resource period when I dream about my life. I should worry more about ages 30 to 45, when I want to accomplish my biggest, most time-and-money intensive dreams. I don’t intend to be retired during this time, but I would like to cut back my hours at work so I can give time as well as money, and so I can spend more time with my husband and children.

The trick for us is that we are essentially just starting out. So I need to go from just over $0 to (magic number for my mid-life dreams) in 5 years. This isn’t too scary, since I will be earning during mid-life still – just not as much. But it is still ambitious – and when I reduce hours at my job, I will need either fewer expenses, or a passive income / savings to cover the gap between expenses and job income.

Thanks, you’ve helped a lot by making me question if I should even be trying to get rich(er) quick(er). Yes, I should – but now I know what I need to know to figure out how much money, how fast. My magic number is just going to take a little more work to figure out, since it’s not just “get here and then stop active earning”.

By: AJC

AJC — Fri, 25 Jul 2008 16:09:31 +0000

@ Sue – Will you represent me

Anybody, licensed or otherwise, would be foolish to attempt to give direct personal advice on the scant information available via e-mails … financial planners take a complete ‘history’ for good reason. But, we can (and do) use these types of questions to illustrate aspects of how to get rich(er) quick(er) for the broader audience, so these types of questions/comments are VERY MUCH appreciated!

By: Sue

Sue — Fri, 25 Jul 2008 14:52:05 +0000

Actually, AJC, you can give direct personal financial advice. You don’t have to be licensed. If you do not charge for advice, you are not subject to the licensing requirements. Look up the securities regulations (either SEC or your state regulations) and you should find an explicit definition that includes charging for advice.

No charge = No need for license