Tuesday, December 11, 2007

The Goal

I am a 30-ish software developer working in financial industry. I live and work in a suburb in a metropolitan.

I started to realize the importance of saving enough for retirement only since the last 6 months or so. It was a late awakening but an important one nonetheless.

My hope is to sock away $100K within 1.5 years through various (legal!) means. The $100K does not have to be in liquid form. Depending on economic conditions, I may distribute the money in house equity, stock, or other monetary mechanisms.

The difficulty of this undertaking is high, but not that high as my wife and I earn about $150K/year of gross combined income. We take home about $8K/mo. To get to $100K in 18 months, we'll have to save $5.5K/mo. Our mortgage is $2.5K/mo. 5.5+2.5 is $8K/mo, which is our monthly take home.

Fortunately, we can use some of the $5.5K/mo to live because we contribute 6% of our salary to 401k. That calculates to $9K/year or $750/month. Maintaining an expense of only $750/month for two people will be difficult. There are various expenses: car repair, house repair, emergencies, etc.

In shorts, I will need to learn and experiment with various expense-reducing and investment techniques to survive on less than $1K/month for 18 months.

One thing we have going on for us is we have no other debt beside our mortgage. And a pillow to fall on on some months, and lastly a piggy bank to break, if we really really have to.

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