Smoking Your Retirement Fund Away

413 days of not smoking! Wooho. Don't worry, I'm not out to sway smokers to stop smoking. Because that's just about the most impossible thing to do; I know it because no one, not even my wife, could stop me. She could only help me stop, but I did the stopping myself. It's mind over matter, baabey!

The MSN Money article 'The high cost of smoking' describes various costs associated with smoking. I didn't find anything new there that I have not read before back while I was smoking. I am sure any smoker has heard them too.

But, a snippet from the article is particularly relevant to my final goal, the end goal of these mini-goals I set out before myself.

Sloan and his colleagues found that the effects of smoking on lifetime Social Security benefits were $1,519 for 24-year-old female smokers and $6,549 for 24-year-old male smokers. This is money paid into Social Security but never collected, because the beneficiary died prematurely of a smoking-related illness.

"You could be paying into Social Security year after year, and if you die at 66 because you're a smoker, it's money down the drain," says Sloan.

What a waste of efforts. After working so hard, enduring various unpleasantness in life, experiencing so many things, one dies without the chance to reap the benefits.

If I am socking away most of my income for retirement, living frugally, not tuning in to the gotta-have-the-latest-iPod insanity, then I better stay around long enough to enjoy it. Deferred enjoyment is possible only if you are still around to do the enjoying.

So, I'm planning to stay around long enough so I don't smoke my retirement fund away.

Net Worth Review: November 2007

I finally finished preparing my first for-public net worth and put it over at networthiq.com. I put a badge on the right side of the page.

So, we are worth $107K now, if zillow.com's valuation of our house is accurate. We started from $0 net worth 4 years ago. Before that, at one point, we were $30K in debt. Through discipline, a lot of hard work, luck and allowing for time to help us, we are now $138K away from that point. Phewww....

Now we need to do what took us 4 years in only 1.5 years. That's the goal!

I also discovered that the money we bring home has increased unnoticed over the years because of raises. We now actually bring home $8.9K/mo. It simply means more for us to save since our private lifestyle is still college-student like.

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.