Any and all of the above. It's open-ended on purpose. Though I was specifically thinking about logistical things like financials and insurance.
I agree with you completely regarding cost control, @LADoc00. Fortunately, I've never had an issue with conspicuous consumption. Because of my good "defense," I'll still be able to afford to retire at age 45 even though I didn't start making an attending salary until age 39.
Sure there is. You just have to have a high enough savings rate and a low enough COL. Never mind "The Millionaire Mind"; are you familiar with the MMM blog? He takes things to a bit more of an extreme than most people would be able/willing to do, but it gives you a sense of what's possible if you're really serious about cutting expenses and retiring early. I spend quite a bit more money per year than he does (more like $30,000/yr and I don't have any dependents). However, my attending salary is also significantly higher than his salary was when he was still working, so I can still maintain a higher absolute savings rate than he did even with all of my "frivolous" spending. [If you're interested, MMM supports a family of three (himself, his wife, and one child) on ~$24,000/yr.]
Life doesn't have to be that way dude. Like QQ mentioned, early retirement types save considerable amounts of money, then live off of either the interest or sustainable income streams that are derived from that saved money (such as properties). If you are a physician that makes 300k a year in, say, Texas, that equates to $217,987 after taxes, assuming no deductions aside from the two standard ones. Spend $27,987 of that a year, and you've got $190,000 left to invest. The first thing you do is pay down your home- get something reasonably priced, and you can knock it out in 1-2 years. After that, just bank it all. At a relatively conservative rate of interest (7%), you would have $1,454,233.39 in 6 years. At a steady withdrawal rate (4%) that money will allow you to live on $58,169.33 a year that will automatically adjust for inflation, assuming your relatively conservative portfolio continues to adjust itself for inflation. Better still, this money will be considered capital gains, so you will only pay 15% tax on it.
That was how I did it. Expenses $30K, income 6+ figures.
He's a nontrad and already financially independent beyond what most of us will ever dream of achieving. I don't think we have to worry about him being a serial killer because of his "asceticism".
Well, I have 10 yr level term life insurance for 250K (the lowest that qualified for multi policy discount, don't necessarily need it but this way my husband can pay off the mortgage and live off insurance alone for more than enough time to grieve-he can easily support himself on his own income when he works and there are no kids) and 6K/month disability insurance with a 90 day wait (I have more than 6 mths of expenses easily accessible so I don't mind the longer wait which drops the price, and 6K is enough to cover all truly necessary expenses-not so much the luxuries or frequent travel- and still put some away for retirement even if my husband doesn't work at all, which I can't really see happening since I wouldn't want to be kept alive if I am not able to do self care). Then I have a dumb accidental death and dismemberment policy that I only got because for the $26 yearly premium I get a discount on the other premiums that is a lot more than that (not sure how that works). The disability is own occupation, specialty specific. Even with my history described previously in this thread my total premium for all three policies is about $800 a year. For that money I won't be as quick to cancel once I have about enough to retire but am still working (although I will eventually get rid of them).
No, I have disability insurance (both own-occupation individual disability that would pay $5000/mo costing me ~$330/mo, and group disability as a benefit from the university that employs me). I would like to stop paying for it though. Even at my rate I feel like it's exorbitant. Maybe yours is protecting a lot higher of an income than mine is?
Kids throw things off because not only do you spend money on them now but you are also probably trying to save money for their schooling later (although your retirement planning should take priority I think). Can a family of 4 live on 50k per year? Absolutely, that is double the poverty level (which is based on gross income i think). Actually one of my fellow residents had a family that size and were doing ok on just his resident salary (maybe family was helping out though). Wouldn't be a nice lifestyle everywhere but doable (unless you have a lot of debt). You have to balance lifestyle now with lifestyle later and decide where your priorities lie. It isn't always that easy to do but it is that simple. Taking a look at expenses and making sure things are justified based on your priorities is key. It may be that you value your current level of spending enough that you are willing to delay financial independence or perhaps you want to look into ways to increase income (perhaps your wife can find a way to earn money even if she still wants to be a stay at home mom, perhaps you can find addl work to do or get a higher paying job). Just don't decide not to do anything. Have a plan that respects your needs and wants.
You might try keeping track of what you and your wife are spending your money on for a few months. Seriously, write down every dollar you spend and what you spend it on for the next 2-3 months. When I did this, it was pretty eye-opening. And again, I strongly recommend reading the MMM blog (linked in post #10). Not that everything he recommends to save money is necessarily going to be something you want to adopt, but again, it does make you re-evaluate whether you are really spending your time and money the way you want to be. In particular, I think his advice to live close to your job is hugely helpful in minimizing work stress/unhappiness (not to mention expenses) due to long commutes.
Well, I already mentioned the Vanguard Target Retirement funds. In particular, I threw all my liquid assets into VTTHX. It's target retirement is 2030 or 2035, I forget.
I wouldn't pay that much for disability insurance. How are you guys finding such expensive policies (or is it just that you don't have a long enough waiting period or are covering really high income)? I am comfortable with the coverage i have at the price i am paying. I had to have a rotator cuff repair last year and could not operate at all for a few months, then for a few months could only operate because i had residents to do most of the work. I was a salaried employee at the time and managed to use my sick days and show up enough that i just got paid the whole time, but if i was doing my current job i would have had to take probably 6 months of no call if not more (the bulk of my income is from call) and then work around my 2-3 days a week of pt i was doing for months afterward. That was easily a situation that my insurance should have covered.
Yes, as I said, I'm buying it. Though I agree with you that it's a "turd." (Feel free to insert different four letter word here.) I don't know anyone who has collected it either, and again, I too look forward to being able to stop paying it.
This is a nice representation on how easily you can fall into spending more when you earn more. There is no way i could save 800k a yr because i don't even earn close to 800k a yr. But 16k a month is an enormous amt that cutting cable and stuff like that isn't likely to touch. I'm guessing it is either a really big mortgage or really expensive school that is driving a big portion and decreasing those things is going to be more difficult especially without family buy in. Instead of relying on a future about face with spending it would probably be better to sit down with your wife (and kids if appropriate) to discuss goals and priorities to reduce spending now.
The whole point of financial independence is to have a consistent, inflation adjusted income that is guaranteed to passively come your way. You don't need disability insurance because you no longer need to work for your income, it passively accrues without effort.
16k/mo as a baseline spending level is insane. Your saving rate is fine, certainly, but my god, dat spending...
It is because many (maybe most?) people allow their spending to follow their income and become adjusted to that level. Add in the fact that the people posting in this thread want to achieve the kind of financial status that would allow us to maintain a desired lifestyle level indefinitely even if we were to walk away from working many years before normal retirement age. The more expensive that chosen lifestyle is, or the earlier you wish to reach that status, the more you will have to put away. Of course one big benefit of putting a lot away if that you don't have that money around to get used to spending.
This.
Now you can consciously avoid falling into the same trap.
I understand this. I'm currently in the saving/accumulation phase. Once I reach financial independence, I will probably drop the disability income. But, until that point is reached, I'm going to keep my salary well insured.
I worry about the person only saving 5% of their 200k income getting used to the amount of spending that means suddenly "only" having 100k a yr to live on, especially if life stuff happens and that 100k becomes smaller. I have seen plenty of older docs still working, not because they love the job so much, but because they need the income to pay the bills. Meanwhile the doc saving half their 200k income may be perfectly content with what they do and do not spend their money on, and since they may have paid off their sensible house and cars by the time they retire will be able to afford those added costs you talk about.
