24 and wanting to retire early

bostonerimus

MEM62 said:

Thus far, nobody has stated the obvious - don't stop living today and look after yourself.  Many have lived frugal lives in the hope of a long and comfortable retirement only not to live long enough to enjoy it.  Tomorrow is not a given.  

Frugality does not necessarily mean that you are living a less enjoyable or fulfilling life than someone who is more spendthrift. My chosen hobby is cycling and that can be done quite inexpensively and has the practical advantage that I can use the bike instead of the car for many trips. I've ridden my bike thousands of miles and explored and met amazing people. My bike holidays are far less expensive than a trip to a fancy resort, but I prefer them.

Bravepants

bostonerimus said:

MEM62 said:

Thus far, nobody has stated the obvious - don't stop living today and look after yourself.  Many have lived frugal lives in the hope of a long and comfortable retirement only not to live long enough to enjoy it.  Tomorrow is not a given.  

Frugality does not necessarily mean that you are living a less enjoyable or fulfilling life than someone who is more spendthrift. My chosen hobby is cycling and that can be done quite inexpensively and has the practical advantage that I can use the bike instead of the car for many trips. I've ridden my bike thousands of miles and explored and met amazing people. My bike holidays are far less expensive than a trip to a fancy resort, but I prefer them.

+1 for this.This is definitely my view of life nowadays. I get enjoyment from a number of hobbies that don't cost much...

1. Cooking...food is a necessity. My partner and I generally cook from scratch, and I enjoy learning/trying out different recipes and we have a bunch of favourites. Made a lemon sponge the other day...fantastic it was too!

2. Piano..apart from capital cost of a good piano, sheet music is free or relatively cheap. A subscription to Musecore costs me $30 (yes dollars) a year, but I also have a bunch of scores I haven't even started to learn yet.

3. Guitar...same...lots of free tutorials on Youtube!

4. Language learning...My French has sadly lapsed, but you can get a lot out of Duolingo, and older books like the BBC's French Experience can be bought cheaply.  And there's some free online resources too.

5. Reading...can be free if you use a local library. Electronic reader like Kobo can link to your library so you can borrow eBooks.

6. Repairing stuff...if you are technically minded, buying borken stuff on EBay and fixing it for the challenge and maybbe seeling on for a few quid to buy the next thing. A bit of cost for equipment, but can be bought second hand. I have done this with electronic keyboards, it's a bit hit and miss but still fun and something to do over a beer in the man shed!

7. Walking...finding unexplored routes. May council websites have local walking routes. Good to find a pub or cafe a the end of a walk with a loved one.

barnstar2077

I would definitely put more into a pension than your colleagues do, but the date you can access that money will probably just keep going up as you get older, so personally I would put the lions share towards the house purchase.

An inexpensive hobby (I enjoy a good walk myself) and spending your money with friends and family instead of on "stuff" is always a good idea too (Instead of buying presents for friends offer to pay for a lunch together with them instead for instance.)

But as others have said, have fun.  The chances are when you are in your forties and fifties you won't have a twenty something year old girlfriend.  You don't want to look back and think how you let money come between you, or didn't have some adventures together while you were still young!

As for the money wasted on VHS tapes, mine all went on gadgets and games before I bought my house.  I still feel the pain of all the thousands I spent on Hi-Fi seperates and computer parts (All the while ignoring my social life for a game of Doom/Quake.)  What a fool I was, a pale, penniless fool, haha! :  )

MalMonroe

You're 24 and your plans will change as you get older. I had such wonderful plans and they all went wrong. Life just doesn't work out as you'd like it to, even for those who insist that it has. My advice is the same as some other folks, enjoy your life, you have only one. My first mistake was tying myself down to my first great love when I was 16. Sixteen!! A baby. Although we did go round the world having a great time for at least five years. But you still have to work to live.

Anyhoo, try to find a job you really enjoy because if you do then you won't mind staying on a bit longer and accumulating some pension. But also don't forget that you can't take it with you and material possessions are just that. Things and stuff. Can't take them either.

But DO have kids. Or at least one. I had mine when I was 28 and she's an absolute star. Would never want to be without her and prefer her to all the material things anywhere. 

I'm retired now and I'm also self employed because I know that if I want more (experiences rather than things) then I'm going to have to earn more to pay for it. But I don't mind. I have family who love me and I have my fabulous daughter - and I honestly don't know how other people manage without at least one fabulous offspring.

These words from Mary Oliver might help -

Tell me, what else should I have done?
Doesn't everything die at last, and too soon?
Tell me, what is it you plan to do
With your one wild and precious life?

I'd say don't waste your life worrying about money and possessions. Just get on with enjoying it. (And I mean a bit more than a holiday to Tenerife!) Think about it.

Murphy_The_Cat

so far, noone has suggested starting a business, working hard to make it successful, use it to contribute to your pension and then sell it at aged 55 and take full advantage of Business Asset Disposal Relief.

Then Robert is your Mothers brother.

bostonerimus

Murphy_The_Cat said:

so far, noone has suggested starting a business, working hard to make it successful, use it to contribute to your pension and then sell it at aged 55 and take full advantage of Business Asset Disposal Relief.

Then Robert is your Mothers brother.

The OP is doing the basics very well. If they have a good idea for a business then that might be in their future, but being self employed or employing others can be risky and stressful. Many small businesses will fail so tread with care.

Grumpy_chap

hugheskevi said:

 Salary is a priority to increase, at younger ages investing in yourself has amazing returns, so seeking out training, skills and new opportunities is key, especially in your 20s. I think the ideal salary to aim for would be at least £50,000 so you can fully use 20% income tax band and ideally up to around £80,000 as then you can use pensions to stay tax efficient, anything more than that leads to very high tax rates so isn't such a priority.

I can't agree with this fully. 

There is no point at which you should not seek to earn higher if you can just because 20% income tax rates and tax-efficient pension contributions are capped out.  At all salary levels, the more you earn, the more you take home.  With the exception of a narrow anomalous band just over £100k, you always get to keep more than half of every extra pound earned.

That is, of course, a purely financial assessment - you may find that when other factors such as impact to quality of life are considered, earning more is less attractive against the sacrifices.  That type of consideration is not the most conducive to FIRE.

Thumbs_Up

Just be a good boy, love your parents, keep your nose clean. Karma brings many rewards.

Murphy_The_Cat

bostonerimus said:

Murphy_The_Cat said:

so far, noone has suggested starting a business, working hard to make it successful, use it to contribute to your pension and then sell it at aged 55 and take full advantage of Business Asset Disposal Relief.

Then Robert is your Mothers brother.

The OP is doing the basics very well. If they have a good idea for a business then that might be in their future, but being self employed or employing others can be risky and stressful. Many small businesses will fail so tread with care.

It can also be very rewarding, especially if you are fortunate enough to do something that you enjoy doing and can be very good for the soul not having a boss to answer to.

& many small businesses flourish and provide their owners with an excellent quality of life

hugheskevi

Grumpy_chap said:

hugheskevi said:

 Salary is a priority to increase, at younger ages investing in yourself has amazing returns, so seeking out training, skills and new opportunities is key, especially in your 20s. I think the ideal salary to aim for would be at least £50,000 so you can fully use 20% income tax band and ideally up to around £80,000 as then you can use pensions to stay tax efficient, anything more than that leads to very high tax rates so isn't such a priority.

I can't agree with this fully. 

There is no point at which you should not seek to earn higher if you can just because 20% income tax rates and tax-efficient pension contributions are capped out.  At all salary levels, the more you earn, the more you take home.  With the exception of a narrow anomalous band just over £100k, you always get to keep more than half of every extra pound earned.

That is, of course, a purely financial assessment - you may find that when other factors such as impact to quality of life are considered, earning more is less attractive against the sacrifices.  That type of consideration is not the most conducive to FIRE.

I absolutely agree mathematically, but I think it helps to have tax efficient thresholds in mind with FIRE, rather than just "as much as you can." A target tends to focus the mind, especially in the early days.

If nothing else, it focuses the mind on avoiding child benefit tapers (which would take marginal deduction rate over 50%, especially if student loans are present). avoiding higher rate tax and reducing National Insurance - in my experience, not many are thinking about this as their income goes past £50K, and a lot is left on the table compared to if they planned efficiently as a couple, or even on an individual basis although the opportunities are fewer.

If someone does get up to £80K, then that is a good point to reassess things to bring in lifestyle considerations (and arguably before then too, but certainly no later). I've a variety of colleagues who found the escalation in responsibility and stress at those levels was not worth the relatively small increase in take home pay, and the impact it has on FIRE date is surprisingly minor (assuming escalations are not enormous of course). I once worked out that I could take promotion and retire after around 10 years, or stay at the same level and retire after 12. It wasn't worth the stress.