Am I wrong to assume I can save over $120k / year?

[Andrew O'Kane]

Some background info. My girlfriend and I are both 26/27. I make ~$250k / year in sales while she makes ~$100k / year as a product manager. I only see these incomes rising over time. We live in a rather expensive city, out rent is $2800 / month but aside from that, have no other major payments (no credit card, college or car loans). While we have yet to build a SOLID budget (I know this needs to be done), my assumption is we can comfortably live on $6k / month. 

I'm at the stage where I truly want my money to work for me and envision (and hope for) a passive income stream in the ~$200k / year range. I've been trying to educate myself as much as possible through reading and listening to podcasts in my free time. It seems as though we should have no issues saving $120k or so a year after maxing out our 401K?? Not sure where or how my calculations would be off.. but that just seems like A LOT of cash to be stuffing away each year at our age. 

Second part of this question is, where should I be searching for this passive income stream? My initial thought, (again, still have a lot of research to do) would be to purchase income properties and rent them out. From some case studies I've read it seems as though we can conservatively purchase a property for ~$80k / each (pay CASH) and then after ALL expenses, including a management company, have a positive cash flow of ~$500-600/month. From here I put together a quick excel sheet in which I looked at our current age of 26 and projected up to 40. I kept the rough assumptions of buying properties for $80k, cash flow of $500-600/month, input savings cash for new properties at $120k / year (in addition to re-investing the cash flow from income properties). From a high level, it seems as though we could end at roughly 36 properties with an income of ~$220k / year..... my question is what am I missing, are my assumptions way off? or is this a reasonable plan I should seriously pursue? If so, any recommendations on where to start and/or continue my research??

[Richard Sherman]

@Andrew O'Kane Dude....you should be saving 200k a year on that income....or 175k.  

You are spending 6k a month with $2800 for housing and no other debt.  WTF are you doing with the extra 3k?  I am saying what I wish someone had told me at your age. STOP being cool...stop eating out, stop spending money on Instagram worthy vacations.  YOUR INCOME IS NOT SECURE UNTIL YOU PAY YOURSELF.   401k is 40k a year PRE tax.  Here is what you should be aiming for.

350,000- 40 (401k)= $310,000

310,000 x .60 is rough taxes= 201,500

Rent= $36,000

Remaining=  $165,000  LIVE on $15k and SAVE 150k AFTER maxing out your 401k.  You could be buying a lot of property with that!

Ok, not that I have yelled at you.  You have an awesome start, are clearly intelligent and are asking the right questions.  

Stop benchmarking yourself against other people your age, or the general population at all as most will always be working and spending all they earn.

What market are you in?  It better not be one where you can buy 80k rentals, if it is I am going to flip out on you for spending $2800 a month on rent  ;)