debt

[NOFX]

One day in the fall of 2007 I decided to change my ways and get completely out of debt. I had about $4500 on one credit card and about $2000 on another credit card. I also had about $8000 in student loans. My credit cards weren't raping me in interest charges. Although I had the debt, I was smart enough to find 0% cards. Also, I did not have just random stuff on the cards. I had actual assets. One of them was for a car I had purchased and the other was just left over from where I had been trading vehicles around and I looked at it as payment on my main vehicle.

 

The first debt I ever had was when I first got my job in 2005 and had 16,900 in student loans. Here I have worked for 2 years straight and have only knocked out 2k in total debt. At this current rate, I would be living most of my life in debt to other people.

 

So one day I wake up and decide to change my ways. I sold all of my vehicles. a 2000 honda civic and a 2003 Jeep Wrangler. This gave me enough money to knock out the credit cards and I bought a crappier vehicle for $8000(looking back, I would not have spent that much). So now I am left with about 8k in student loans and very little capital. Over the past year and a half, I have changed my spending habits quite a bit. Cut cable TV, don't eat out every day, stopped spending money at bars. Just generally being conservative. You don't save money by buying your gas for 5 cents cheaper across the street. You don't save money by buying at Sam's or Costco either. You save money buy changing your spending habits. Just question yourself if you really need that stuff your about to drop $20 on. Can you go without it? Live frugal and smart. Don't deprive yourself of everything, just be smart about what your wasting money on to keep the same lifestyle.

 

Basically I started spending money like I did the first 23 years of my life when I had very little. I got by just fine then, why was it so hard now? Once you start making money, you have this image in your head that you have an unlimited supply because you will be bringing in more in two weeks. And if you already have debt, you don't really care because what's an extra $200 debt when you already owe 10k? right? Wrong.

 

So I started not spending so much and just trying to grow my checking account. Whenever my checking account would get a substantial amount, I would move it over to my savings and just pretend like I never saw it. Finally, I'm actually starting to see the money that I work for. The more I do this the more hooked I get on it.

 

My next hurdle was to get rid of my student loans. Over the course of the past 1.5 years I now sit with $5700 in student loans. At one point, I dropped dropped 1k on them, but then realized as long as I'm fiscally responsible I might as well keep the money in my savings rather pay them off slowly. By doing that, it has saved my donkey a couple of times, when I ran into unexpected expenses...

 

As of today, I just made my final payment of $5686 and I have enough left over in my savings to make myself feel comfortable. It's an awesome feeling and hard to describe, but 4 years of working and I'm right back to where I started. Now that it's over I feel like I wasted 4 years of savings, but living this way to reach a goal has taught me some lessons and I plan to continue down this path. Not only that, but now I get to keep all that money that was going out in payments, which will help my savings grow even faster. I can 100% say that I will never be in debt again for the rest of my life. If you want something, save up for it. Once you have that money in your hand, you realize exactly how much it is and how long it took you to get it. Then and only then can you have a clear mind about whether to spend $15,000 on a car. You might actually start to think that buying a $8000 used vehicle isn't such a bad idea.

 

I do realize sometimes it is necessary to take out a loan, but if you are like me, have a full time job and a pile of debt, it is totally not necessary and you are just living beyond your means. Just set your goal and work toward it. My next goal is to rid my life of a mortgage.

Edited March 17, 2009 by .fx

[mohawk]

good post, but I wouldn't ever suggest paying off your student loan ahead of schedule. You are better off saving the money and maintaining some liquidity, while paying your monthly balance. Student loan interest rates are ridiculously cheap.. and it also helps you establish credit.

 

other then that, congrats.. It's got to be a great feeling for you.

Edited March 17, 2009 by mohawk

[NOFX]

yea, that's what I was told by many others, but you know I just wanted to get it out of the way. My interest rate was only 3.5%, but still I would be making monthly payments every month for the rest of my life if I just paid the balance every month. I want the comfort of knowing that the only reason I am working is because I want the money. I absolutely hated knowing that I had to go to work so that I can pay bills/debt to other people. I want the flexibility in life that if I lose my job or just quit, I could be perfectly fine for a while doing whatever it is that I want to do.

 

EDIT* Also here is another tip to help manage your money. I buy EVERYTHING on my credit card. I mean everything. Even phone and internet bills. I have nothing that gets deducted out of my checking account. At the end of the month I pay the entire bill off. With everything on my credit card and it's in real time, I can manage my debt to income ratio very easily. I know how much I bring in each month and I know how much my credit card bill can be to have X amount left over. If it's mid month and I'm already above half of what my bill usually is, I can see that I need to bring lunch from home for the next few days/week.

Edited March 17, 2009 by .fx

[boiler]

Nice post! I wish more people would be more conscious of their debts and rethink their spending to pay off credit card debts and such. My ex-girlfriend had close to $10k in credit card debt (this did not include her student loans) and seemed to have no serious intention of paying it off in the near future. Major contributing factor to her getting dumped.

 

I do view some debt as necessary such as mortgages and (for me) my car (and eventually the massive student loan I will need if my future pans out in the next year like I hope), but everything else I have is paid for in full. I charge as much as I possibly can to my credit card, collect the 1-5% rebate, then pay it off in full at the end of every month.

 

I am curious though, how do you intend to "rid yourself of a mortgage"? Does this mean you're going back to renting for housing? To me, this doesn't make any sense at all. You might as well be throwing that money away, as you will never see a single dime of it ever again. Home ownership is a goal to strive for as all that money you spend putting a roof over your head eventually becomes an asset and can increase your wealth over time (increasing home values). Obviously this is your life to live as you see fit, but I just don't understand why someone with the ability to own a home (instead of renting) would choose to rent instead of investing that money into something in which they will have equity. Yeah, you can say "I don't own my home, the bank does", but you're still accumulating positive equity towards the goal of owning it free and clear. For short term goals (such as changing jobs and moving, extensive travel, etc.) maybe renting makes sense due to the flexibility, but it makes no long term sense.

[Fairweather]

professional school alone is gonna set me in the hole 80G's... excellent. its at the point i really dont care anymore and spend like a drunken sailor

[NOFX]

I am curious though, how do you intend to "rid yourself of a mortgage"? Does this mean you're going back to renting for housing? To me, this doesn't make any sense at all. You might as well be throwing that money away, as you will never see a single dime of it ever again. Home ownership is a goal to strive for as all that money you spend putting a roof over your head eventually becomes an asset and can increase your wealth over time (increasing home values). Obviously this is your life to live as you see fit, but I just don't understand why someone with the ability to own a home (instead of renting) would choose to rent instead of investing that money into something in which they will have equity. Yeah, you can say "I don't own my home, the bank does", but you're still accumulating positive equity towards the goal of owning it free and clear. For short term goals (such as changing jobs and moving, extensive travel, etc.) maybe renting makes sense due to the flexibility, but it makes no long term sense.

 

excellent response.. Changing jobs, flexibility and extensive travel are life goals for me. These are my main goals and anything that is not helping me work toward these goals is a burden. Owning a home is a goal, but at this point in life it's not a top priority and the mortgage and the fact I'm stuck in one location is considered a burden to me. If you don't plan on moving around, then a mortgage is definitely the way to go. But I really don't like being in one are more than 4 or 5 years. So I have a totally different plan.

 

A long term goal in life is to eventually build a place on my families land back home. I enjoy traveling and living in other places, but I can't think of any other place where I would want to own a house. By renting wherever I live I save money(opposed to a mortgage). I am thinking that eventually I will be able to save up enough money to put a HUGE down payment on a house to build or be able to pay for it fully outright. Keep in mind, I don't plan on building a big expensive house. I want something that is reasonable and I've already got some really cool ideas. I really want to build a place with the majority of it being underground. It's cheaper in every aspect from the initial build to the costs of heating it. Flooding would not be of any concern because I have a place picked out on top of the ridge. If I stay within a modest lifestyle, get to travel and build myself a place of my own, I will be a happy person.

Edited March 17, 2009 by .fx

[Unclean]

I wasn't sure how to answer the poll... there is "good debt" and "bad debt". Here are some examples of each:

 

Good debt

Mortgage

Student loans

 

Bad debt

Credit cards

Car loans

Mafia loans

 

Now I've struggled with the question - is it better to save or pay down debt? Paying down debt = smaller savings, so less compounding interest over time. Saving = more money paid in interest.

 

I think everyone's circumstances are different. The only "bad debt" I have is my car loan. I still owe $11k on it, and make double payments. I pay off credit cards each month, so the credit card companies are paying me to use their card. Well, the merchants are actually paying it, but money saved is money saved imo. The only "good debt" I have is my student loan, which is at $30k. I haven't focused on paying that down because the interest rate is under 2%, which is under inflation. I could cash out my 401k and have that paid off, but I'm instead hoping to leverage an upswing in the market and make more.

 

How does everyone else feel about the "Save or pay down debt" debate?

[NOFX]

I honestly see no debt as good debt. I think it is as simple as this.. If there is such a thing as good debt, would you take that over having no debt? Why would anyone have debt, when they could have none? Keeping debt for the sole purpose of a good credit score is a worthless cause in my opinion. I think they just tell you that stuff to make you stay in debt. I was approved for a 16k car with zero credit right out of college and had been working only two weeks.

 

I hate to say it but in today's market, you are getting very little interest from your savings account. And the way I see it, I can always fill my savings account back up(as long as I have my current job).

 

I'm worried about losing my job, having to move or something and I need some security. Any debt I can remove from my equation will make it that much easier for me if worse comes to worst.

 

The number one priority is to have a savings, that has to be more important than paying off your debt. It all depends on your situation and goals, but in my situation I would never break myself to get out of debt. To be completely honest, before I felt comfortable enough to drop what I did on my student loans, I had saved up enough to just about pay my the loans off twice.

 

 

EDIT* Now if we are talking about big money here thats a whole different story. If you have millions, then you should take our mortgages because your invested money is earning more than you are paying out in interest.

 

But I really have no interest in earning millions, I'm just looking for the easiest and best way to be happy.

Edited March 17, 2009 by .fx

[Magruter]

I'm a spender. I'm always looking for stuff to buy.

[Xterminator]

I've always considered myself pretty good with finances. I try to save as much money as possible without spending. I needed a replacement car last year and found a 2004 Honda CR-V for $12,000 (CDN). I had it paid off in about 10 months. I am currently debt free.

 

One thing I can thank to this is (and laugh if you will) is my European heritage. Kids are expected to stay home until they are married. Financially this makes sense to me. I have no living expenses to pay. I give my parents $200 a month for rent even though they dont ask for it. I found that people who moved out at young ages lived pay cheque to pay cheque because they were renting. If you are going to move out, at least buy the place so that you're paying it off to keep it. Renting to me is a waste of money, that's just my thought though. I'm putting money a side right now for a house potentially, that's my next big purchase in a few years.

 

So many people out there are bad with their finances. My sister is a classic example. At 26 years old she's in and out of jobs, no post-secondary education. What does she do? she goes out and buys a $30,000 car. Now with the economy she has no work and no way to make her payments. I think her b/f is helping out which is dumb but that's his problem. I've never been a car person. I see a car for what it is, a mode of transportation. I needed a new car that fit my needs and this was a pretty good deal. I have a friend at work who dumps money into his car. One friend who used to work with me did the same and he got into a car accident, car was a write off. I understand people have hobbies but that's a huge risk when it's with your car.

 

Savings are important as well. I try to put money aside when I can. I have RRSP's and stock's through work which now aren't doing the best but i'm seeing long term. They will recover and the more I can put aside now the better i'll be in the future.

[ZeroDamage]

Interesting post. I have a couple of finance radio experts on my RSS reader every day. One is Clark Howard who I used to listen to when I lived further south. Just recently, they added Dave Ramsey to the AM talk radio station here. His "baby step" program is highly recommended and it seems to have worked for a lot of people. If you are currently in debt, this is his method for getting out. http://www.daveramsey.com/etc/cms/baby_steps_2867.htmlc

 

You first make yourself an emergency fund of $1000 bucks. Then step two is to pay off your debt using the debt snowball. Step 3 is you build on step one and have enough in savings to cover living expenses for 6 months or so.

 

I think that these steps will work for anyone. Getting out of debt is a lot harder for married couples than it is for a single guy with only himself to take care of. It is tough to do no matter what but a lot more difficult for married couples and then multiple that by 2 for every kid that you have.

[Unclean]

The whole good debt/bad debt thing is for people that need to decide what to pay off first. The ideal situation is no debt at all, of course.

 

Here's the very simplified way I've been handling my debt/assets:

Which way is the most profitable? Does it make more sense to carry debt or pay it off? In my case, it's been more profitable for me to carry debt because of the interest rates.

[All Kill3r]

Debt free is the way to be !

 

GJ Sam

 

For me cars are disposable. If i can't buy it with cash i don't buy it. I try to save as much as possible by eliminating as many monthly expenses as possible. A few lifestyle changes can save big bucks. Not buying a new dvd or game every week, or eating out every other day adds up in your pocket pretty quick... I've learned to love cooking lol.

[dragonfly]

Good job man! I get to start paying mine back this school-year-end. Hurray!

 

I know the M word is popular - but I have a lot of respect for my dad. For the last 13 or 14 years he's been building a new house (started when I was in grade 8, now I'm graduating Uni). Instead of taking out a mortgage he decided he was going to build it all himself, when he had the time/money. It has been a long process, but he has no debt over it, and he's almost done. That and the satisfaction of doing it yourself, plus all the awesome learning possibilities that come along, it's a learning experience like nothing else.

 

(For those interested, it's a White Pine log home 60x40, 11' ceilings, cathedral livingroom, full basement and second floor (except for balcony over cathedral ceiling livingroom). It's so beautiful. We sawed our own lumber too - white pine tongue and groove flooring, cedar ceilings and some walls, the rest will be drywalled.)

 

Anyway, congrats man! Dont spend all your new-found money on some fancy new tape deck for your car!

Edited March 19, 2009 by dragonfly

[NOFX]

I think that these steps will work for anyone. Getting out of debt is a lot harder for married couples than it is for a single guy with only himself to take care of. It is tough to do no matter what but a lot more difficult for married couples and then multiple that by 2 for every kid that you have.

 

Man, I don't even want to think about that.. I could barely handle a girlfriend. I don't think I could have ever dug myself out if I had those other responsibilities.

 

My monthly expenses except my mortgage are now down to about $250 and when my cell phone plan is up, I'm canceling it and getting a prepaid one.

 

I'm about $50 bucks short of keeping one full paycheck to myself after mortgage and bills. My next goal is to get myself in a situation where one full paycheck will be able to pay for mortgage/rent bills and food. Basically I want to be able to put on paycheck into savings and it not have any effect on me.

 

The whole thing is sort of strange to me now that I look at the big picture. If I am able to sell my house this year I will be back to square one(right where I started). So then I question myself, what the hell was I doing the last 4 years? I only have 2% of what I have brought home over the past 4 years saved. I don't really have anything expensive. I have a $5000 car, a 52" TV and a 28" computer monitor and a DSLR camera.. Those are the most expensive things I own..

 

With all that money I wasted away, just imagine the traveling I could have done. I've read that spending your money on travel/life experiences is far more rewarding in the long run than spending $100 here, $50 bucks there for new gadgets and games.. I will totally agree in that of all the stupid crap I have bought over the past few years... gadgets, games, etc.. I'm probably using less than 5% of them and I'm sure I don't even remember most of them. On the other hand, I was able to take three trips to Norway and although the last one was 2 years ago, I would never trade those experiences for any sort of material good you can buy from a store. One trip to Europe > 52" Plasma TV. <-- That realization is what motivated me to start doing this. I'm not sure if I will get to do any extended traveling, but I'm going to try. One thing is for sure, that dream sure as hell will never happen as long as I keep buying stupid crap and have 14k worth of debt hanging off my shoulders.

[Xterminator]

You all bring up some good points.

 

I myself have several sources of income but i'm always finding myself with not enough money left over. I'm trying to change my lifestyle but it's hard. For example, everyday for lunch at work I go out. I havn't made a lunch since I can remember. I think i'll start with that. Maybe instead of going out 5 days a week i'll cut it down to 3.

 

I've given up on my impulse shopping. I used to think oh my I need that! and buy it. The last time I did that I blew $600 on paintball gear which yes, it's nice. But it's not like i'm a pro paintball player.

 

My cell phone is also costing me a pretty penny. I'm addicted to my blackberry lol. What's tough is now I have a g/f in the states and whenever I visit her I sometimes use my phone and get nailed for roaming. I'll try to cut down on this too.

 

I want to put more money aside but it's just tough. Tax season is here and as I always I'll get a refund because I always overpay my taxes (I made sure of it when I was hired at this company). I'll put all that money into my savings. I wont touch a penny! I wanna get a laptop but I can't justify it. I want a desktop PC of my own but once again, I can't justify it. I do use computers yes but I havn't played a game in a couple months. Now with the g/f my priorities have changed and gaming no longer appeals to me as it once did.

 

I remember my friend once telling me that Financial independence/success is a happy balance of controlling your time and money. Not just one or the other.....just my 2 cents today

[monthos]

I am trying to bring my debt down, slowly... I was an idiot after high school and worked a crap job for a few years without looking toward the future, though at least at that point I was debt free. At some point other people convinced me I needed schooling, so I followed my older brother to an open house and ended up enrolling in a technical school. In my opinion it cost WAY too much money and did not end doing much for my job outlook. I met some guys and did the whole networking thing, which I can thank for my current job, but the schooling itself was not worth it.

 

So at this point I am 38K in school debt, and owe about 5K on my car. I could pay off the car right now but that would deplete my cash altogether. I recently changed jobs and moved to Virginia outside of DC, and to be honest did not take into account the cost of living difference, which is staggering compared to Cleveland...

 

I currently pay about $200 extra to my school loans a month, though my car loan is just going and paying the bare minimum. I want to try and finance a house later this year, which I consider a good long term decision considering I like the area and plan on staying awhile. I would be so much better off without that useless school debt though

[[VOA] Vinas]

It's hard to get credit when you have no debt.

 

So I think the OP will be in debt again. I too paid my stuff off a long time ago. As we grow older we realize how to be responsible with debt to increase the quality of life for our families. Once you have kids it's even better because you will work harder for them and hopefully will be making more money than ever!

 

So no, we don't need 300k houses and 40k vehicles, but if you can pay for it, then I think you should do it without feeling guilty. This is the basis of our economy and capitalism in general. Some people live frugal, and I don't fault them. To think a person is any better than another based on their debt/income ratio is short sighted IMHO. It goes both ways.

[NOFX]

To think a person is any better than another based on their debt/income ratio is short sighted IMHO. It goes both ways.

 

I'm not thinking someone is better based on their debt/income ratio. I'm just trying get ahead in this system. One thing is for sure, as long as I owed money on credit cards, cars, student loans, etc.. and didn't have the captial to pay it off at anytime, I was never going to get ahead.

 

And here is an update one year later...

 

I sold my townhouse and got rid of my mortgage. Luckily I was about to sell it for $173k and I owed $172k. This meant that it only cost me 1k at closing to get rid of it. So minus the work I did to it, I walked away owing nothing. Now Im renting a one bedroom apartment, which is quite a bit smaller, but three major factors here are

 

1. It's $300 cheaper a month

2. I have the flexibility to move. I plan on looking for a job elsewhere soon, as well as a pay increase.

3. No upkeep. I dropped about 3-4k into the house last summer, just so I could sell it.

 

As far as my debts go... I have stuck to my plan very well.. I'm still above water.. in fact, I'm way above water. I have zero amount of debt and let's just say I have more liquid assets now than the total debt I had accrued. I have been putting 33% of every paycheck into a savings account that gets a measly 2% APR.

 

I'm at the point now where I'm actually looking for substantial investments. You know how people tell you to "snowball" your debt.. Well, snowballing can also work for you the other way.

Edited March 7, 2010 by .fx

[Unclean]

I was thinking about your situation, and wondered if it made sense for you to sell right before a market rebound. You had a townhouse though - odds are that didn't dip in value too much, nor would it increase a ton when home values do rise.

 

So overall, it sounds like you're doing really well, definitely better than the average American carrying $11k in credit card debt. Very nice!

[NOFX]

I have absolutely no regrets about selling that townhouse. My monthly expenses when I posted this were about $1400 for house bills. The fact that if something happens and I'm in the position to pack my bags and leave and live comfortably for a while without a job far outweighs the benefits of owning a townhouse.

 

I've gotten my monthly housing expenses down from $1400 when I originally posted this to about $600-$700 tops now. I moved in with an old buddy from college. I'm still dropping 33% of my paycheck into savings. I could easily do more, but I'm now treating myself to everything that I sacrificed myself from after years of getting straight.

Edited June 15, 2010 by .fx

[samurai nightling]

Stumbled upon this today, and realized how much money I'm spending per month on all my bills and stuff. I'd say between everything such house bills, car, student loans, insurances, food, I'm spending almost as much as I make. Am i putting a lot away in savings? No. But right now I don't mind spending the money because it's on all things that i want in life. I wanted the house for my family that will be starting in May and the new car that i bought because well, i like it Once I have my fiance living here all the time we'll actually then be saving money because we'll both be saving money then, splitting the bills and the amount going in the bank should be almost as much as she makes per paycheck.

[Unclean]

I have absolutely no regrets about selling that townhouse. My monthly expenses when I posted this were about $1400 for house bills. The fact that if something happens and I'm in the position to pack my bags and leave and live comfortably for a while without a job far outweighs the benefits of owning a townhouse.

 

I've gotten my monthly housing expenses down from $1400 when I originally posted this to about $600-$700 tops now. I moved in with an old buddy from college. I'm still dropping 33% of my paycheck into savings. I could easily do more, but I'm now treating myself to everything that I sacrificed myself from after years of getting straight.

Sounds like someone is about to go on a DSLR shopping spree!

 

Have you plugged your numbers in to a calculator to see if you can retire early if you continue at your current savings rate? How did you fare?

[NOFX]

Haha nah.. I'm not dropping any money on SLR's... I have plugged some numbers in, but I don't really see the point. How much money does a person need to retire? What if I have $350,000 in 20 years. Is that enough to retire? I doubt it. If I made 50k a year, that's only 7 years of income. I don't think your ever going to retire early working for someone else.

 

I don't want to spend my life working toward a goal of having money to support myself the last few years before I die. Might as well live while your young right? My work is alright. There are many things that I would rather not be doing, but do I enjoy it? Do I really look forward to waking up and sitting in front of a computer for the next 8 hours? No. I'm actually very tired of it and how boring it is. At the very least, I need a long break from this environment. We weren't made to sit in chairs and stare at screens all day.

 

With all that said.. I saved up enough money so I could move and maybe do what I want for a while. I'm walking away from everything this fall and moving to most likely Blacksburg, Va. Probably go back to school at Tech and work on my Masters. I'm thinking maybe Industrial Design or something that could compliment my comp sci degree and experience. Maybe get a part time job outdoors at one of those backpacking, kayaking, mountain biking places... I really just want a long break for this mundane work. What better way than to take some time off and get my masters? So when I'm ready to enter the scene again, I'll have a masters and and 5+ years experience as a software engineer. Even if my plans don't pan out. I still have my current degree and experience, so if I decide that I really need money... I'm sure it wouldn't be much of a problem to get a job as a programmer again.

Edited June 28, 2010 by .fx

[Unclean]

Haha nah.. I'm not dropping any money on SLR's... I have plugged some numbers in, but I don't really see the point. How much money does a person need to retire? What if I have $350,000 in 20 years. Is that enough to retire? I doubt it. If I made 50k a year, that's only 7 years of income. I don't think your ever going to retire early working for someone else.

 

I don't want to spend my life working toward a goal of having money to support myself the last few years before I die. Might as well live while your young right? My work is alright. There are many things that I would rather not be doing, but do I enjoy it? Do I really look forward to waking up and sitting in front of a computer for the next 8 hours? No. I'm actually very tired of it and how boring it is. At the very least, I need a long break from this environment. We weren't made to sit in chairs and stare at screens all day.

 

With all that said.. I saved up enough money so I could move and maybe do what I want for a while. I'm walking away from everything this fall and moving to most likely Blacksburg, Va. Probably go back to school at Tech and work on my Masters. I'm thinking maybe Industrial Design or something that could compliment my comp sci degree and experience. Maybe get a part time job outdoors at one of those backpacking, kayaking, mountain biking places... I really just want a long break for this mundane work. What better way than to take some time off and get my masters? So when I'm ready to enter the scene again, I'll have a masters and and 5+ years experience as a software engineer. Even if my plans don't pan out. I still have my current degree and experience, so if I decide that I really need money... I'm sure it wouldn't be much of a problem to get a job as a programmer again.

Whoa. It sounds like you're about to go on a sabbatical - nothing wrong with that. I do see some very dangerous statements in your post though:

 

1) "$350k is only 7 years of income"

Assuming you have that in an interest-bearing account, that'll stretch out beyond 7 years. But, that's not taking inflation into account. $350k in 20 years would be like having $210k now. Your target should be in the 1-2mil range, maybe more. Your needs may change too - you may or may not have a house payment, you won't commute to work anymore, etc. But you may have more medical/travel bills. So there's a give and take there.

 

2) "I don't want to spend my life working toward a goal of having money to support myself the last few years before I die. Might as well live while your young right?"

I'd rather live while I'm alive. And I'd rather not be a Walmart greeter or grocery bagger when I'm 80 because I didn't save enough for retirement and Social Security can't cover the bills.

 

You can live for today AND tomorrow if you're smart about it. The trouble is most of us aren't - we live beyond our means. And it's usually the "live for today" types that splurge on stuff and have 0 or negative net worth. It's a very dangerous mentality to have.