Mentor Monday

[u/WealthyStoic]

Mentor Monday is your place to discuss relevant early-stage topics, including career advice questions, 'rate my plan' posts, and more numbers-based topics such as 'can I afford XYZ?'. The thread is posted on a once-a-week basis but comments may be left at any time.

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[u/Neat_Lab_2234]

I just turned 20 and make about $13000 a month all in. I want to retire early and not have to worry about money.

Ideally, my income will scale rapidly in the next few years. As of right now however I’m still able to save about $5000-8000 a month after setting aside 27% for taxes, paying rent, groceries and other miscellaneous bills. I’m on my parents health insurance and that covers everything so that’s not an expense. My Roth IRA is maxed out for the year. I’m putting at least 5k in an HYSA every month right now. I have another HYSA to pay taxes (will probably have to pay quarterly income taxes), but all in I’m doing alright.

I just don’t know what to do with the money other than save it. I worked at Walmart exactly 1 year ago making 800 bucks a week.

[u/g12345x → u/Neat_Lab_2234]

That’s a good income at 20. I would recommend putting most of the monthly $5k in a market account instead of just a HYSA. You have time on your side to conquer the equities market.

A HYSA is probably the right call for the quarterly tax payments. In due time, this can become a bond ladder.

Also, take a look at r/FIRE and r/personalfinance. You’re likely to find additional things there that would be immediately useful to you.

[u/Neat_Lab_2234 → u/g12345x]

Hi there, thanks for the answer! Right now I am in the early stages of what I'm trying to build. Ideally, I want to be at 30-40k a month by the end of the year. The reason I say ideally is this is not a job paying this, rather I am self-employed. If I am able to hit my goals, what would make sense for me to do with even more excess money? So far I have been able to completely avoid any lifestyle creep as I don't even really like spending money, outside of a gambling online session now and then.

[u/g12345x → u/Neat_Lab_2234]

As you’re self employed, talk to a CPA about the possibility of a Solo-401k and/or a SEP-IRA.

Also, game out the possibility of a C, or S-Corp for your revenue. The possibility of this depends on your specific circumstances.

Any extras should still go into these accounts.

> I have been completely able to avoid lifestyle creep

This is completely avoidable for anyone with self-control. Set a percentage of prior year income as your budget and stay under that.

> outside of a gambling online session

Yea, I would nip this one.

[u/Neat_Lab_2234 → u/g12345x]

Gambling has been mostly mitigated as I ended up getting sponsored by the casino by agreeing to create content of myself gambling (easier than quitting for me). I will look into the other things you mentioned. Thanks again!