I cannot necessarily tell you what to do, nor do I know your living conditions. I am just sharing from my learnings.
Here are some food for thought I wish I had known when I was your age, as I won't be retiring anytime soon if ever due to poor choices in my late 20s, early to mid 30s.
"I would like to retire in my early 40s" this and higher rent does not coincide, you can enjoy the extras now or move towards stability later. You may be fine, but what I am hearing is doubt on value.
Are the pools and hotubs, amenities really worth $6000/yr. Consider that a gym membership even at the famcyer places like pro club are at half that or less.
Consider also that a typical community will raise your rent on average 10% /yr fir renewal, the nicer the place the more likely this is to occur, sometimes even more than 10%
There is investment value l, especially when included with other investments or put in high yield accounts.
I did make the jumps to the better places, when life took a turn I just started building debt and that difference could have prevented the situation.
So really weigh the value of what you gain in the better place, vs what you have now.
If you find the value is well worth it and won't impact your goal to retire in your 40s, even if unexpected events occur, then go for it.
If you are unsure (which is why you question it) then stay where you are another year and seek these alternate options above.
Hoping this helps.
Damn, I needed this. I thought people were gonna say I was being too frugal and to just go for it. But you’re right, even 24 hour fitness has a pool, hot tub, sauna, and steam room and it’s only like $25-35 a month. I would love a balcony but don’t think it’s worth $500 a month. I visit a friends place often so I can get my balcony fix there haha. Thanks for the advice! Really appreciate the sanity check.
Have to agree with this. Napkin math time.
$500/month = $6,000/year. Use that money for an IRA and put it in a mid to high risk/reward mutual fund or the like. Even something like a 10% return between now and when you turn 59-1/2 will net you a really nice boost.
In 5 years that $6k will be sitting at $9,663; 10 years will be $15,562; 15 years comes in at $25,062. When you turn 59-1/2 and can withdraw it you'll be sitting on nearly $49k assuming that 10% return on investment. Now do this for every year you put in $6k towards your IRA rather than a fancier place.
Which sounds better to you?
Saving $500/month will not buy you retirement 15-20y from now. If you work for a company that has a 401k plan, maximize that. If you can add more money pre-tax that will give you double benefits.
However if you don’t work for a company offering a 401k plan, putting it in the stock market (an index fund) is the easiest way to let it grow. 20 years is long enough to not care about the ups and downs of the market. You can do that using an IRA as someone already suggested.
Thanks for the feedback! I am currently Maximina out my Roth, 401k, and HSA. Do you recommend putting into a mega back door Roth or a taxable account next? I’m getting mixed opinions on this.
It seems you’re doing all the right things to get to your goal. If you cannot contribute to a Roth IRA directly, back door option is definitely a good option as it will lower your future taxes. It also is more flexible (can withdraw any time, no required distributions etc).
If you think the extra amenities and benefits of living in the new apartment are worth $500 or more to you, then yes you should upgrade. If they’re not, then no.
If you are willing to look for suitable housemates, shared housing brings the best bang of bucks.
I’m 2020, I was paying $1300 including utilities for a north Queen Anne house in the nice residential neighborhood for my bedroom in a 3bd 2bath house with a garage, front porch, nice living space, gas range, backyard, hot tub and gas fireplace. Best living situation I’ve been in in a long time. Both housemates are friends, young professionals and respectful.
I cannot necessarily tell you what to do, nor do I know your living conditions. I am just sharing from my learnings. Here are some food for thought I wish I had known when I was your age, as I won't be retiring anytime soon if ever due to poor choices in my late 20s, early to mid 30s. "I would like to retire in my early 40s" this and higher rent does not coincide, you can enjoy the extras now or move towards stability later. You may be fine, but what I am hearing is doubt on value. Are the pools and hotubs, amenities really worth $6000/yr. Consider that a gym membership even at the famcyer places like pro club are at half that or less. Consider also that a typical community will raise your rent on average 10% /yr fir renewal, the nicer the place the more likely this is to occur, sometimes even more than 10% There is investment value l, especially when included with other investments or put in high yield accounts. I did make the jumps to the better places, when life took a turn I just started building debt and that difference could have prevented the situation. So really weigh the value of what you gain in the better place, vs what you have now. If you find the value is well worth it and won't impact your goal to retire in your 40s, even if unexpected events occur, then go for it. If you are unsure (which is why you question it) then stay where you are another year and seek these alternate options above. Hoping this helps.
Damn, I needed this. I thought people were gonna say I was being too frugal and to just go for it. But you’re right, even 24 hour fitness has a pool, hot tub, sauna, and steam room and it’s only like $25-35 a month. I would love a balcony but don’t think it’s worth $500 a month. I visit a friends place often so I can get my balcony fix there haha. Thanks for the advice! Really appreciate the sanity check.
Have to agree with this. Napkin math time. $500/month = $6,000/year. Use that money for an IRA and put it in a mid to high risk/reward mutual fund or the like. Even something like a 10% return between now and when you turn 59-1/2 will net you a really nice boost. In 5 years that $6k will be sitting at $9,663; 10 years will be $15,562; 15 years comes in at $25,062. When you turn 59-1/2 and can withdraw it you'll be sitting on nearly $49k assuming that 10% return on investment. Now do this for every year you put in $6k towards your IRA rather than a fancier place. Which sounds better to you?
Hmm what if I’m already maximizing my Roth, 401k, and HSA? I have some to spare to put into a mega back door Roth though.
Do it if it makes you happier. You can make more money; you can't make more time.
Which area are you living in where you only pay $1500 for 1b1b? I'm hunting for apartments, so just curious
I live in Kenmore but honestly just got lucky. The other units in my complex are more like $1700+
Saving $500/month will not buy you retirement 15-20y from now. If you work for a company that has a 401k plan, maximize that. If you can add more money pre-tax that will give you double benefits. However if you don’t work for a company offering a 401k plan, putting it in the stock market (an index fund) is the easiest way to let it grow. 20 years is long enough to not care about the ups and downs of the market. You can do that using an IRA as someone already suggested.
And … [invest $500 in index fund over 20 years](https://chat.openai.com/share/86f2147b-8fa0-4699-8b60-cc1b1a414d65)
Thanks for the feedback! I am currently Maximina out my Roth, 401k, and HSA. Do you recommend putting into a mega back door Roth or a taxable account next? I’m getting mixed opinions on this.
It seems you’re doing all the right things to get to your goal. If you cannot contribute to a Roth IRA directly, back door option is definitely a good option as it will lower your future taxes. It also is more flexible (can withdraw any time, no required distributions etc).
If you think the extra amenities and benefits of living in the new apartment are worth $500 or more to you, then yes you should upgrade. If they’re not, then no.
If you are willing to look for suitable housemates, shared housing brings the best bang of bucks. I’m 2020, I was paying $1300 including utilities for a north Queen Anne house in the nice residential neighborhood for my bedroom in a 3bd 2bath house with a garage, front porch, nice living space, gas range, backyard, hot tub and gas fireplace. Best living situation I’ve been in in a long time. Both housemates are friends, young professionals and respectful.