Saving for Retirement/Financial Independence as a Young Person

I read a great article (http://the-military-guide.com/2011/01/03/how-many-years-does-it-take-to-become-financially-independent-2/) which basically showed that as increase your savings you also decrease your expenses which means you end up needing even less time to become financial independent. As a concept, it is hard to argue but it brings up some ideas specifically for this generation. Though my DH and I are only saving 14%-15% of our net income towards retirement we are spending about 14-15% towards paying off debt and an additional 4% towards our next move and our EF.

So does that mean it will take 39 or 26 years (or some where in between) for us to be financial independent? Do we say it will take 39 years until we pay off the debt and then we can claim the 26 years? What about the fact that we will likely need health insurance? To COBRA my husband's health insurance it costs more than $500/month. Once my husband graduates some of his student loans will be 6.55%. I would like to pay those off quickly but the loans at 5.75% and 3.75%(both mine and his) and the mortgage (4.75%) I would keep until the end. I won't need to pay those every month until I die (just 10-30 years) so how do I decide how much I need to be financially independent?

These are tough questions and because of the amount of debt most people our age have, valid ones. I see many bloggers either ignoring retirement, for our age range, or geared towards 40-50 year age range and ignoring the debt load. Our generation needs to save for retirement and we need to start younger than most of our parents because we won't have pensions yet we start in hole because of both student loans and the need for higher education. So how do you start?

There is no way I am saving 80% of my income but I don't want to wait 30 years for financial independence. I started by saving 10% of my income and as time passed and we increased our income we increased our savings. We now save 14-15% into our Roths but I don't want to stop there. I want to get up to 20% but for me, I'll wait until we have paid off the 6.55% student loans. This could take another 8-10 years but I am fine inching towards financial independence while still living well. Twenty-eight from now I'll be able to be saving over 30% but by then I'll be 55. I want to be able to retire at 60. But even with just saving 15% I could retire by 66. Do you think I can retire at 60 with my plan? What would you do different? What are you doing to save/invest towards financial independence?

W-2s, 1099, 1098Ts and taxes...What does it all mean?

Any income you earn, you must give a portion to the government in taxes but how do you determine how much? By January 31th, your employer must send you a W-2 which includes how much you earned working for them, how much was taken out and sent to the federal government, the state government, social security and medicare. Then by February 15th any bank or brokerage firm must send you a 1099, which is any interest or capital gains you receive over the year. Be careful because some companies will only send out a 1099 if you make more than $10 but you still have to report the income to the IRS even if you do not receive a W-2 or 1099. So once you have your W-2 and 1099 (if any) what do you do?

If you go to the free file section on the irs website (http://www.irs.gov/efile/article/0,,id=118986,00.html), you can find companies that allow you to use their programs for free if you earn under $57,000. My favorite is turbo tax. It will walk you through your taxes and allows you to file online. You do have to pay for the state but you can print out your federal and use it to do your state taxes and avoid paying for anything.

Remember if you are a student, wait for your 1098-T Tuition Statement which says how much you spent in tuition and fees before you file. You can either get a tax deduction or tax credit for your tuition and fees. Turbo tax or most other tax programs will help you determine which will save you the most money but normally, the credit is best.

Feel free to leave any questions about taxes in the comments. I can answer tax questions for federal, California and New York taxes but I am not a CPA or EA.

Cheap Dating

As a college student or recent graduate often we do not have much money for fun yet who wants to stay home all weekend? There are many free and cheap fun activities if you know where and how to look for them. For example during the winter in buffalo there is a free ice skating rink (it cost $3 if you need to rent skates) which we discovered because the rink is near our credit union and we checked the prices out. Yes, sometimes the hours are not the best but it is still a fun afternoon event. Also, you can sign up for groupon (www.groupon.com/) or living social (subscribe.livingsocial.com/) to get discounted meals or events. Remember to sign up for upromise and get cash back if you buy anything from groupon. Also, check http://www.restaurant.com/ to see if any restaurants you like are on there. Then google restaurant.com/ and coupon code to get it for even cheaper.

Keep in mind, though, you don't have to go out for fun. Invite people over for a small party, a barbeque in the summer or a potluck in winter. It might cost a bit but not as much as going out the bar and others might like the idea and start having parties at their places. One of the best ways to meet people is through your friends. And cooking with a boyfriend or girlfriend can be fun as well. You can teach other how to make new meals and show off a bit at the same time.

Also, check out if your city or nearby cities has free concerts. I saw smashmouth in concert for free at the San Jose Concert in Park Series. It is a great way to hear new bands and maybe listen to some old favorites. Check with the universities in the area, they often have events that can be fun to go to as well. Some cost money, but often they are subsidized if you are a student. At the State University at Buffalo my husband and I saw the former prime minister of England, Tony Blair, speak for free as students of the university.

Does anyone have any other ideas for cheap dating or other frugal fun?

Update on the millionaire goal-2011

I now have $10,520 towards my millionaire goal, which is great since that mean I am back over my $10,000 minigoal and can start focusing on the $25,000 minigoal. However, I have no money to be putting into retirement because we do not have any tenants and have not since October 2011. This is the second time we have looked for tenants and I don't know why we are getting less interested perspectives tenants. I have changed the ad many time, updated the apartment and repost the ad often. Hopefully we will get a tenant soon and we can start putting money towards retirement again.