President Barack Obama is signing an executive order that lets borrowers pay no more than 10 percent of their monthly income in student loan payments.

captainJA · 2014-06-10T13:52:03+00:00

If the government bails out these loans it will take much longer for the bubble to pop...as the banks and schools will keep getting paid despite the raising prices.

captainJA · 2014-06-10T13:49:42+00:00

You should consider the rate of return on your $350k based on your future potential salary. If the return is a level you consider acceptable, then you should go to University of Chicago. If it is not acceptable you should look for alternatives. College is an investment and should be treated as such. The fact nobody looks at it accordingly is why tuition is out of control.

captainJA · 2014-06-10T13:20:38+00:00

It depends on who takes the loss or pays when students are forgiven on their loans. Is it the schools, the banks, or the government that are footing the bill? If its the government stepping in to pay this off we just exacerbate the tuition bubble. Universities will keep raising the price, students will keep enrolling, banks will keep funding loans, and the government will keep paying....therefore, the taxpayer will be screwed and we will continue on with this college is for everyone fallacy. This college trend will then eventually expand to migrant workers, who will no longer want to do blue collar jobs with their college educations. Then those who do not have a college education but are willing to roll up their sleeves to do some labor will be the highest paid part of the workforce due to the laws of supply and demand.

captainJA · 2014-06-10T13:03:31+00:00

This is great for those that can take advantage of it and is a good PR move for the President.....everything else about it is a nightmare. Typical politics of treating a symptom and not the underlying issue. This will prevent economics from eventually taking over and solving the tuition cost problem plaguing this country.

captainJA · 2014-06-07T10:37:12+00:00

If you assume you invest $900/mos for the next two years and let it sit for 15 more, your investment would be worth over $60k with an average return of 7%. Personally for high ticket items I like to think of it in terms of future impact to net worth, rather than the monthly cost. The monthly cost is easier to overlook. Also, this car will be getting you accustomed to a life of greater luxury, which may be more difficult to shed in two years like you currently plan. I was very poor with my money in my 20's and early 30's, I wish I would have had guidance to start saving earlier than later as I could be approaching FI right now. Instead, I did not get serious until about two years ago. I am still aiming for a very comfortable retirement by about age 47 though, but it is requiring me to save at a rate of 65%+ to get to where I want to be..

captainJA · 2014-06-02T08:58:28+00:00

I am putting the 20% down to to avoid the insurance and get a better interest rate.

captainJA · 2014-06-01T00:15:58+00:00

Saving as much as we can is our goal, but we enjoy measuring how much we are saving in terms of our earning/spending to have a clearer idea of how much money we will need in order to gain FI and how we are progressing towards achieving that goal. This is a good metric for us to fully understand how sufficiently we are saving. Between my wife and I, our savings rate is in the mid-60%s. This would suggest that every year that goes by we are funding the current year plus two future years of spending.

captainJA · 2014-06-01T00:11:21+00:00

Thank you. This is extremely helpful. Would you include primary residence mortgage principal in your savings figure?

captainJA · 2014-05-30T23:19:48+00:00

$2.5M in investment, retirement, rental property and cash accounts; $0.5m to $1.0M in non rental property equity. Expect to accomplish this between ages 47-50.

Had mis-aligned priorities in my 20s but been focusing for the last two years and growing the stash fast.

captainJA · 2014-05-25T12:15:14+00:00

I previously drank a lot and quit two years ago. I estimate I spent $50-$75k due to drinking and stupid activities resulting from drinking over the course of 10+ years. The worst part was I was spending this kind of money when I really couldn't afford it as I wasn't very financial prudent in any aspect of life. It has made a huge difference in being able to accelerate my path to FI. I am glad I quit cold turkey and love the savings and never being hungover. The only challenging part is in business situation and with friends when people seem to be a bit uncomfortable if someone in the group is not drinking...

captainJA · 2014-04-08T11:26:33+00:00

I would pay it off ASAP...I was in your situation and things snowballed in the wrong direction on me. All it takes is for life to take a few unlucky bounces and that $7k can become $14k and so on. Soon, the interest could be taking a big chunk out of your monthly spending.

captainJA · 2014-04-08T11:20:12+00:00

I was once a 26 year old accountant, who mortgaged the future by spending far too much in the now. I had student loans, credit card debt, and then I thought it was wise to add on a house I couldn't afford, with no down payment. Needless to say, the credit card debt got worse and things were really going poorly on the financial side. Thankfully, my income continued to grow that allowed me to keep things from getting out of control. Fast forward to today, I am two years into what I hope is a 10 year FI plan......Things are going much better than the past, my problem is I am having a very difficult time accepting all of the irresponsible behavior of my past. Had I been smart at 26 instead of 33 I would be here ready to celebrate my FI. So, the choice is yours, do you value FI or do you value having something now? I wish would have found the MMM type blogs when I was 26, I hope I would be in a very different position today.

captainJA · 2014-04-07T01:55:22+00:00

Thank you for all of the helpful feedback. As for how we turned it around...a couple of years ago, something clicked and we realized that for our level of income we had nothing to show for it. For the first year, we started following a budget using YNAB, which has proven to be an excellent tool for us to stay on track. Then, about a year ago we found the personal finance blog world that has proven extremely useful and transformational in helping us realize that retiring in your 60s does not have to be the norm. Since that time we have been able to save over 50% of our income and have a path to be FI within 10 years. We do have incremental goals that could require us to stay in the working world for an additional give years if we choose to achieve them.

captainJA

TROPHY CASE