Author Topic: Case Study Help a Family with Special Needs Child pull the trigger on RE  (Read 6653 times)

jeffnhl

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A little help from this great group of folks please - happily married father with 3 great kids looking to RE and be a stay at home dad and husband along side my amazing wife (high school sweethearts :-)).  I think we are in good shape but would really appreciate another set of eyes on this with so much on the line.

Why now?  3 months ago I got laid off from my last IT job (long un-interesting story better told as Greek tragedy than on a forum) but I got a taste of the good life.  What I thought was going to be a 3 - 5 year plan to FIRE got a serious reexamination.  I LOVED BEING HOME.  Projects, time with the family, less stress.  IT WAS AMAZING.  Finding a new gig was easy (I am in a high demand field with great experience) and I started there about a month ago.

Now I am thinking we are 20 months for FIRE - what do you think?

Disclaimer - Face-punches welcome; have at it!  I would rather hear your honest opinions.

Life Situation:
Married filling jointly with 3 kids. 
Me: 38, wife 37, Kids 11, 7, and 5

7 year old has significant medical special needs - Cerebral Palsy, wheelchair bound, tracking really well to age level school wise; but gets Physical and Speech Therapy at school and privately 2 - 4 times a month so a few expenses are higher than you might expect.   

Living in the relatively low cost mid-west - Ohio

Gross Salary/Wages:
Me: 145k (nice right!)
Wife:  Stays at home with the kids

Financially we have always lived below our means; we thought we were Dave Ramsey folks for years because we were allergic to debt but when we found MMM last year we found out were were something much more sinister!  ;-)

Current Net Worth:  ~750k

Paid for house:  ~165k
Paid for 2003 camper popup trailer: ~2k
Paid for 2008 Mazda 3 hatchback: ~8k
Paid for 2012 Honda Odyssey minivan: ~18k
(Van size door needed for wheelchair transfers, carrying the wheelchair and family of 5 and also can tow our camper)

*No consumer debt.*

Investment Accounts:
529 Plans: $ 39,700
Medical HSA:  $ 11,850
Taxable Mutual Funds (VTSAX 85%, VFWAX 15%): $ 39,300
401K (FEAMX 70%, IVIFX 30%): $ 800 (yes $800; just started a new job last month - best funds available).
Roth IRA (TRIGX): $12,800
IRAs (TRRJX 50%, VTSAX 40%, VFWAX 10%, ): $ 446,600

Put together a current and post FIRE budget to live off of until we pull the trigger to make sure it is doable.  Budget is setup line by line with current and postFIRE budgets.

Our current budgets has us saving over 60% after taxes (~50% if you include taxes) and honestly we feel like we have a lot of fat in the budget (as you can see below) which either translate to cushion or crazy livin.

A couple line items to get in front of expected questions - the gym membership and coach; I have been an avid age group triathlete for the past 10 years and these keep me sane.  Since I started working with a coach (only for 6 months of the year) I have had more time with the family because my workouts are more targeted and I have much fewer injury and health related costs.  I do plan on dropping both post-FIRE when I will have more time and options for less structured play.  I would cut both to achieve my larger goals those just not sure what the real impact would be on the overall picture so if it is worth it I would but I don't see it...

Grocery budget is a WIP but also includes ~100 a month on special needs diapers (6 months ago it averaged 900 so we are getting it together!).

We plan on selling my Mazda and going down to 1 car post-FIRE.

Cell phone is high because of my job; Verizon is the only plan that gets me cell coverage in my house (had ATT and Sprint before).  Wifi phones weren't so go a year ago but plan to switch to republic or similar either once off contract or post FIRE).  Company subsidizes plan (75$ a month) anyway included in pay.  NO Way we pay that much post FIRE though.

All other expenses is an accrual account for those midterm emergencies like we just had a termite swarm and are looking at an 800$ bill, or a few months back had a bigger dental bill than budgeted, etc.

Specific Questions:

- Seems like we need to FIRE at the end of the year in order to be in open enrollment period for ACA (aka Obamacare ) to make sure we are set up for the right yearly income and to avoid having to carry COBRA at $1800 a month until the start of the next year.  Right?  So either we FIRE in 8 months or 20 and 8 seems to tight.

- What am I missing?  Seems like we are about there and we are not the types to do the OMY thing.  Dec 5 2016 would be my last day.  (So I can retire in my 30s!  Sure sure 39.99999 but it counts!)

- Big Time Extra Credit if you can tell me how to make it happen this year instead of next year!

- I am willing to take a bit more risk on SWR; We figure we can always get a side job here and there or seasonal work if the market tanks and even with a gap in my employment if things just blew up early in FIRE going back to work and calling it a sabbatical would be doable - painful but doable.

- Any special considerations for RE with small kids (and one with special needs?)

- I do expect SS at 62 of ~22k per year

Full Budget attached. 

Highlights:
(Numbers are current / PostFIRE)

Income:
Wages - 12,000 / 3,100 - expected from the stash

Savings (all stop after FIRE):  5,700 / 0
529 Plans- 250
HSA - 550
Taxable investments - 3,400
401K - 1,500
(We make too much this year to contribute to IRAs but will max next year)

Expenses: 12,250 / 3,100
Taxes - 2,700 / 220
Autos - 350 / 150
Utilities - 610 / 450
Entertainment - 710 / 550
Food - 700 / 600
Gift & Donations - 175 / 125
Heath Care - 675 / 480
Household - 160 / 160
Shopping - 275 / 250 (Still working on getting a handle on this one)
All other expenses - 200 / 100

(Some rounding in there - more detail in the attachment).

Hit me with your collective wisdom!  I have been so impressed reading through the forum history hoping I can get some of that knowledge sent my way!



« Last Edit: April 26, 2015, 07:52:03 PM by jeffnhl »

okits

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:) I love your excitement about being home more with your family!

I'm not American so I don't know what kind of assistance exists for people with special needs. Are the costs of special equipment, therapy and anything else beneficial to your 7 yo's development borne by you?  Are his/her needs fairly predictable or might there be large, unexpected expenses in the future?  Are his/her disabilities severe to the point that there may be some dependency (financial, emotional, assistance with day-to-day tasks) in adulthood?  When you're elderly or deceased is there likelihood that your 7 yo will need to pay someone to provide the support previously given by you?

If there's a chance your special needs child may not be totally self-sufficient in adulthood I would plan to build a much heftier stash to help care for him/her.  If there's a likelihood your child will never be able achieve a self-sustaining income, without making provision for this you can't responsibly choose to turn off your fire hose of cash just because work sucks.

Some rough math shows me your planned WR is about 5.6%, and you need that to last 22 years, until you get to 62.  I'm conservative, so that rate makes me nervous. Would you consider downshifting to part time to cover your living costs (maybe add to the 'stash a bit more) and give yourself more of a safety buffer?  Depending on what you do for a living, you may not be able to count on a hospitable job market indefinitely. Just about every profession must deal with downward pressure on wages, threat of cheaper substitutes, obsolescence.  I believe in getting while the getting is good.

lpep

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Someone else linked to this, and I've found it useful - maybe you will too. You can test your portfolio based on past returns, kind of like cFIREsim but better looking :)

www.portfoliovisualizer.com

terran

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I say this as someone with a special needs sibling who will be living with my wife and me one day: what (if anything) do you want to do to provide for your special needs child and his/her siblings once you're not around? Is this something you've accounted for in your plan?

jeffnhl

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I say this as someone with a special needs sibling who will be living with my wife and me one day: what (if anything) do you want to do to provide for your special needs child and his/her siblings once you're not around? Is this something you've accounted for in your plan?

Thanks for the reply, it is something we talked about prior to FIRE but probably should take another look at it.  The current thinking is we have an estate plan and caregivers lined up (and we talked about how much $ would be needed to get them to 18 ish) and that is covered.  Longer term he could be self sufficient, may need long term care... Hard to say right now.  As long as my wife or I are around we would carry that load, afterwards our stash would continue with him to supplement.  Its a tough one to predict which is why we are huge fans of ACA because he would be able to get insurance ...

jeffnhl

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:) I love your excitement about being home more with your family!

I'm not American so I don't know what kind of assistance exists for people with special needs. Are the costs of special equipment, therapy and anything else beneficial to your 7 yo's development borne by you?  Are his/her needs fairly predictable or might there be large, unexpected expenses in the future?  Are his/her disabilities severe to the point that there may be some dependency (financial, emotional, assistance with day-to-day tasks) in adulthood?  When you're elderly or deceased is there likelihood that your 7 yo will need to pay someone to provide the support previously given by you?

If there's a chance your special needs child may not be totally self-sufficient in adulthood I would plan to build a much heftier stash to help care for him/her.  If there's a likelihood your child will never be able achieve a self-sustaining income, without making provision for this you can't responsibly choose to turn off your fire hose of cash just because work sucks.

Some rough math shows me your planned WR is about 5.6%, and you need that to last 22 years, until you get to 62.  I'm conservative, so that rate makes me nervous. Would you consider downshifting to part time to cover your living costs (maybe add to the 'stash a bit more) and give yourself more of a safety buffer?  Depending on what you do for a living, you may not be able to count on a hospitable job market indefinitely. Just about every profession must deal with downward pressure on wages, threat of cheaper substitutes, obsolescence.  I believe in getting while the getting is good.

Thanks for the reply... We had been looking at trying to stay in the 4 to 4.5% withdraw rate while still keeping some additional safety nets that way the core stash could be relatively untouched over time.  Long term if he wasnt able to work he would qualify for Social Security Disability and Medicaid (plus our stash and family all around).   We would always keep a separate HSA stash for a bad year where we might need to run up to the out of pocket max on insurance (and picking the right plan helps a lot). 

On the flip side of the fire hose is the time I am away I don't get to be a part of the day to day.  For example when I was at home I was able to do extra Physical Therapy with him here (sure it looks like play but it has a purpose) to the point we cut out some otherwise expensive pt appointments. 

There is a bit of a philosophical question here floating around too that all parents struggle with... Long term support for our kids.  I just see a lot of value in the time right now helping all 3 develop and am trying to find the right balance. 

Retired To Win

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It really doesn't look to me like you have enough of a stash yet.  Have you looked hard at the possibility of "going consultant"?  This would allow you to work from home (thus BE home), reduce your hours and still be able to pull in enough income to bridge the gap between your SWR and your expenses.

Good luck.

jeffnhl

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Someone else linked to this, and I've found it useful - maybe you will too. You can test your portfolio based on past returns, kind of like cFIREsim but better looking :)

www.portfoliovisualizer.com

Thanks!  I thought I had seen all the calculators out there but missed this one.  I'll check it out.

lhamo

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I think you should look more closely at the ACA options.  Leaving a job and losing your employer provider coverage SHOULD allow you to start ACA coverage even if you aren't in the open enrollment period -- at least I think that is how it works in Washington.  If that is the case, your options in terms of timing open way up.  Best strategy would probably be to work enough into the new year to earn whatever would keep you under the ACA income thresholds, and then pull the plug.  You could work longer/earn more if you are putting money into your 401k as well.

Is there any chance you could go part time, or work as a consultant?  Seems like you are pretty close and going semi-FIRE a bit early might give you more of the work/life balance you are looking for.  If you could bring in 70-80k working part time or intermittently (a few months on a project, a few months off), that might be the real sweet spot.  Especially as your kids are still quite young -- they grow and change so quickly!  I love my kids as they are now at almost 14 and 10, and we have a great relationship, but I do regret a bit that their pre-teen years flew by so fast when I was working pretty hard at my day job. 


jeffnhl

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I think you should look more closely at the ACA options.  Leaving a job and losing your employer provider coverage SHOULD allow you to start ACA coverage even if you aren't in the open enrollment period -- at least I think that is how it works in Washington.  If that is the case, your options in terms of timing open way up.  Best strategy would probably be to work enough into the new year to earn whatever would keep you under the ACA income thresholds, and then pull the plug.  You could work longer/earn more if you are putting money into your 401k as well.

Is there any chance you could go part time, or work as a consultant?  Seems like you are pretty close and going semi-FIRE a bit early might give you more of the work/life balance you are looking for.  If you could bring in 70-80k working part time or intermittently (a few months on a project, a few months off), that might be the real sweet spot.  Especially as your kids are still quite young -- they grow and change so quickly!  I love my kids as they are now at almost 14 and 10, and we have a great relationship, but I do regret a bit that their pre-teen years flew by so fast when I was working pretty hard at my day job.

Ah!  I must have misread the ACA FAQ.  I thought if you were eligible for cobra you would not qualify for a special enrollment period but that is only if you elected to have cobra then voluntarily terminated that.  I was think if you voluntarily elected to not start cobra that would also disqualify you from a special enrollment period.

I have been considering moving to project based independent consulting, might be a good half step to FIRE... Preferencewise though I would prefer to make some lifestyle changes and just go all in... Not set in stone, just the goal.

MDM

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It really doesn't look to me like you have enough of a stash yet.  Have you looked hard at the possibility of "going consultant"?  This would allow you to work from home (thus BE home), reduce your hours and still be able to pull in enough income to bridge the gap between your SWR and your expenses.

Good luck.

Don't want to rain on the parade, but do tend to agree with RTW's comment here.  See attached, based on the numbers given in the OP and your spreadsheet.  Quite possible that I fat-fingered something, so it would be good for you to confirm and provide your own assumptions.  Immediately below is a portion of the spreadsheet (it's the same one referenced in the case study sticky, just with numbers entered here).

Time to FIRE?:
Time to FIRE5.5years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments5.00%percent
Real, after tax, return on taxable investments4.25%percent
Expected retirement total tax rate10.00%
Current Savings
Taxable$39,300
Tax-deferred (e.g. trad. IRA/401k)$459,250
Roth$12,800
Projected Savings at Retirement
Taxable$301,106
Tax-deferred (e.g. trad. IRA/401k)$711,415
Roth$16,740
Total projected stash$1,029,260
Projected Expenses in Retirement
Non-loan, non-work expenses$48,852
Income taxes$4,095
Change in spending after RE-$12,000/year
Total$40,947
Stash needed for retirement @4.0% SWR$1,023,667
Have $5,594 extra.

sarah8001

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I agree with the person who suggested contract work. My fiance is a recruiter for a firm that handles IT contracts, and from what he says about work, it seems like you will probably need an in-demand specialty to do purely remote work. Remote work can come with it's own challenges too, he was just telling me the other day how sorry he feels for a consultant working for a firm in a time zone six hours ahead of where he lives; the consultant's work day starts at 330 am (this may not be typical, it's just what he has talked about). But even if you don't do remote work, it's worth looking into. I don't think you can FIRE yet for the reasons everyone explained above, but you could proabably do something like take one three month contract a year, or a couple of six week contracts, or something like that. There may be opportunities that are relatively close to home, so you wouldn't have to be gone too long, or there may be opportunities which will offer compensation for travel so you can go home on the weekends.

I will also say you could probably retire sooner if you lower some expenses. I consider our utilies high at 225 a month, so maybe you could cut that. Entertainment and shopping are also areas you could target for cuts. If the coach and gym are necessary, maybe you could cut some other entertainment stuff (unless the entire budget is coach/gym, in which case you could maybe look for a cheaper way to train?) Try figuring out WHY you shop (I'm guessing with a food budget like that, it's not on food, so what are you buying? Do you really NEED it, or does buying it serve an emotional need? Is there another way to meet that need?) Doing a Whole 30 (somewhat restrictive diet, I didn't eat out at all) helped me realize my eating out habbit wasn't about the food or how it tasted, it was about wanting to "reward" myself and getting tired of eating my own cooking. Now I can deal with my desire to "reward" myself and with kitchen battle fatigue instead of endlessly berating myself for going out AGAIN.

Lastly, maybe you could change careers. You need to take home about 40k to be sufficient, right? Maybe you could turn that expensive gym habbit into gold by being a fitness instructor part time, or offering private coaching. You could maybe even do this partly out of your house, and spend more time at home. You could open a home daycare. You could offer fitness coaching for special need kids. Explore some alternative options.

jeffnhl

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I agree with the person who suggested contract work. My fiance is a recruiter for a firm that handles IT contracts, and from what he says about work, it seems like you will probably need an in-demand specialty to do purely remote work. Remote work can come with it's own challenges too, he was just telling me the other day how sorry he feels for a consultant working for a firm in a time zone six hours ahead of where he lives; the consultant's work day starts at 330 am (this may not be typical, it's just what he has talked about). But even if you don't do remote work, it's worth looking into. I don't think you can FIRE yet for the reasons everyone explained above, but you could proabably do something like take one three month contract a year, or a couple of six week contracts, or something like that. There may be opportunities that are relatively close to home, so you wouldn't have to be gone too long, or there may be opportunities which will offer compensation for travel so you can go home on the weekends.

I will also say you could probably retire sooner if you lower some expenses. I consider our utilies high at 225 a month, so maybe you could cut that. Entertainment and shopping are also areas you could target for cuts. If the coach and gym are necessary, maybe you could cut some other entertainment stuff (unless the entire budget is coach/gym, in which case you could maybe look for a cheaper way to train?) Try figuring out WHY you shop (I'm guessing with a food budget like that, it's not on food, so what are you buying? Do you really NEED it, or does buying it serve an emotional need? Is there another way to meet that need?) Doing a Whole 30 (somewhat restrictive diet, I didn't eat out at all) helped me realize my eating out habbit wasn't about the food or how it tasted, it was about wanting to "reward" myself and getting tired of eating my own cooking. Now I can deal with my desire to "reward" myself and with kitchen battle fatigue instead of endlessly berating myself for going out AGAIN.

Lastly, maybe you could change careers. You need to take home about 40k to be sufficient, right? Maybe you could turn that expensive gym habbit into gold by being a fitness instructor part time, or offering private coaching. You could maybe even do this partly out of your house, and spend more time at home. You could open a home daycare. You could offer fitness coaching for special need kids. Explore some alternative options.

Thanks this and RTW and MDM's post got me thinking about the expense side of the equation more.  The current job isn't bad it just isn't where my heart is. 

We will definitely be taking another pass at the budget too.  I had been using the cashflow sheet for a while now; really great tool and then using cFIREsim. 

I used TurboTax to project actual tax rates instead of using the default 10% in the sheet which brings down the annual needs closer to what would I would expect to see.

Stash Needs:
4% SWR  and 37k in postFIRE annual expenses: 930k
4.5% SWR and 37k in postFIRE annual expenses: 827k

Cutting 450$ a month out of the budget (a bit less shopping, grocery, and discretionary leisure spend)
4% SWR  and 31.8k in postFIRE annual expenses: 792k
4.5% SWR and 31.8k in postFIRE annual expenses: 704k

I do project our expenses quite a bit higher right now because of the 3 small kids.  As they move out I would expect several utilities to drop some as well as grocery and health expenses (even if the one needing more help stayed with us longer).  Drawing a bit more percentage wise earlier and reducing expenses again as the kids leave.

So when I take some of this over to cFIREsim (704k stash, 22k SS starting when I am 62, 31.8 drawn down, inflation adjusted) it comes back with 88.24 success rate and that assumes we never make another dime outside the passive income and that our expenses don't drop over time.)

It just seems with no debt of any kind and a family that does enjoy living pretty simply we should be able to make this work. 

One of the goals this next 8 - 20 months is really to live as close as possible to the new budget to see where the cracks are.

So it seems to me the goal is to get to ~700k stash (personal inflation adjusted* based on however long that takes) then pull the ripcord?

(* Personal inflation adjusted meaning we track and adjust our spending based on costs we see.  Applying a flat CPI or other inflation number may be okay for back of the napkin math but I don't think they apply so great to us - these tend to be super consumption focused for some things and assume certain categories matter - for example what do I care that the typical cloths dryer has gone up 20% this year in cost when we line dry our cloths, new home construction costs may be out of hand but we have a paid for house, gas prices may climb a dollar a gal. but i the motor on my bicycle only takes red beans and rice ;-),  etc etc.)

Sibley

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I don't see anyone looking at your budget and giving you appropriate facepunches. So I have. Basically, you're right, there's a lot of fat in your budget. Your monthly expenses, less savings/taxes, roughly equal my monthly income. You are a victim of lifestyle inflation.

Under bills & utilities - what is "online subscriptions"? Given that netflix and spotify have their own lines, this probably shouldn't exist. I suspect this is a facepunch.
Your Gas and electricity - this looks high. work on improving energy efficiency. Weatherproofing, turning things off, LED bulbs, etc. There are resources elsewhere on the forum that can help.

Your entertainment is unbelievable to me. Cut that way down. Do free stuff. Gym, coach, massage/spa, travel adventures (adventures? huh? I travel to see family and weddings, and I limit!) - these are unknowns in my budget. Limit the kids to one paid activity, send them outside to run around and play instead (kinda like your parents did to you probably). Major Facepunch applied here.

Groceries - I get that it's not completely food. Optimize to reduce this as much as possible, and hopefully your kid won't need the diapers much longer. There's tons of stuff on MMM and forums about food. (No, children don't get their own meal. They eat the family meal or they go hungry. Exceptions for severe illness are allowed. A cold is not a severe illness.)

Restaurants - do you want to RE, or do you want to eat out? Your choice, but the amount isn't bad.

Gifts and donations - See above. Also, homemade items count, as do regifting random stuff people have given you. Gifts of time are great (one evening of babysitting! you'll help one day with yard work!). You don't have to give presents to everyone you know. There are very few people who get gifts from me, and I don't do birthdays usually.

Household - I suspect that you're paying someone to do yard work/cleaning/whatever. If you are, congratulations, you just saved a bunch of money! It is your new workout! Make the kids work too - all 3 of them. You'll need to figure out what the 7 year old can do to help, but I'm sure there's something. The other two are certainly capable of helping out. Remember, humans have spent thousands of years putting everyone to work, regardless of age and limitations. It will be good for them to be productive.

Shopping - just stop. You have plenty of stuff, I promise. If you really need something, get creative.

Clothing - you and your wife don't need more clothes. Practically guarantee it. If you think you do, wait at least a season before buying. Asking for gift cards to your favorite store is good as well, helps reduce the stuff you don't want. Kids clothes come really cheap at thrift stores, and ask for clothes for birthdays/Christmas.

Cash withdrawal - code for you don't know what you spent it on. Facepunch.
Everything else - assuming this isn't a total line, then you also don't know what you spent it on. Facepunch.

Your stuff:
I'm guessing you have lots of stuff. Sell what you can that isn't used. You'll feel better with less clutter anyway. Do you have clothes that you don't wear? Stuff in boxes? There's threads on the forum about decluttering, maybe find a few.

You need to nail down your budget better. Mint, YNAB, PC, quicken, excel, pen and paper, whatever.

Good luck!

MDM

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We will definitely be taking another pass at the budget too.  I had been using the cashflow sheet for a while now; really great tool and then using cFIREsim. 

I used TurboTax to project actual tax rates instead of using the default 10% in the sheet which brings down the annual needs closer to what would I would expect to see.
Appears you are analyzing this well - good work!  The cFIREsim approach (looking at year-by-year expenses instead of a one time snapshot) is definitely the better way for a full analysis. 

Also seems people often ignore/forget taxes (including state/local taxes) - they will likely be lower in retirement but (notwithstanding the occasional gocurrycrackers) will likely be non-zero.

jeffnhl

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I don't see anyone looking at your budget and giving you appropriate facepunches. So I have. Basically, you're right, there's a lot of fat in your budget. Your monthly expenses, less savings/taxes, roughly equal my monthly income. You are a victim of lifestyle inflation.

...


Big thank you Sibley for the details!  Online subscriptions right now is 2 items a Safaribooksonline subscription (no not animals, access to a ton of technical resources I use to stay up to date on technology I use at work.  These books and technical how to videos are super expensive one by one and not library or freely available.)  All specialty stuff and I fully expect to cut it once I stop working - that is 40$ of it; the other 35$ is a digital tutors subscriptions that really is a cross between education and entertainment for my oldest son who is learning to program and do graphic design.  I see that going away though once he gets a good base or finds another area he gets interested in.  Frankly I could help him learn to code and design as well once I bail on work... just not enough hours in the day right now.   

The entertainment, household, and shopping - noted and good call outs.  These will be getting the magnifying glass for the next 3 months at least to see why they are so high.  We run every expense through Mint so we can see it all (have for at least 3 years now.)  AMAZING TOOL!

I love the comment "Do you want to RE, or do you want to eat out?"

I see this being a reoccurring line in my head for a long time now...

"Do you want to RE, or do you want to ... buy that hilarious new tee-shirt?"
"Do you want to RE, or do you want to ... buy that pack of M&Ms?"
"Do you want to RE, or do you want to ... buy that extra fancy craft beer 12 pack over an equally good 6 pack for 1/3rd the cost?"


You weren't supposed to notice the Cash and Misc columns  ;-)  We are appropriately busted there.  Cash withdraws show up in Mint but it serves as a un-traceable slush fund - primarily for me.  Consider that category completely wiped starting May 1!
« Last Edit: April 27, 2015, 12:29:39 PM by jeffnhl »

MDM

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You weren't supposed to notice the Cash and Misc columns  ;-)  We are appropriately busted there.  Cash withdraws show up in Mint but it serves as a un-traceable slush fund - primarily for me.  Consider that category completely wiped starting May 1!
Some people do track to the penny - more power to them if that works.  If you can get your "uncategorized" down to ~2-3% of your spending (you're currently ~10% IIRC?), that's better than most.

Sibley

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Why are you paying for work expenses? Ask your employer to pay for them. If not, look into deducting them for taxes, hopefully save a few dollars at least.

When I read MMM, a lot of what I get is the mindfulness. Don't spend money thoughtlessly. You should be thinking every time you pull out your wallet. Eventually, it'll become subconscious. Things you buy, I won't, and vice versa. But think about it.

southern granny

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I think you should look more closely at the ACA options.  Leaving a job and losing your employer provider coverage SHOULD allow you to start ACA coverage even if you aren't in the open enrollment period -- at least I think that is how it works in Washington.  If that is the case, your options in terms of timing open way up.  Best strategy would probably be to work enough into the new year to earn whatever would keep you under the ACA income thresholds, and then pull the plug.  You could work longer/earn more if you are putting money into your 401k as well.


I believe that this is correct, you can work a few months into the new year and then quit and sign up for ACA.  But you need to make sure that you quit before your income for the year get too high for the assistance.  Also watch out for cobra.  If you sign up for cobra, then you cannot drop it until the next open enrollment begins.  Also be sure to look at what type withdrawals you will be making.  Standard IRA or 401 K withdrawals will count as income for the year, but I don't think ROTH withdrawals will.   There is a lot of homework for you to do before you pull the trigger.

Argyle

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You talk of wanting to leave money to supplement your disabled child's income, but reflect that government payments may not allow more than the most basic existence.  If he needs substantial help, like an aide etc., when he's grown, it will be best if he can pay more than minimum wage.  Someone I know in a similar position has provided for his handicapped child to basically be financially independent.  Even if they're well-qualified, sadly it is much harder for people with mobility and other handicaps to find and move jobs.

MrsPete

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I agree that I think you need a bigger stash to be SURE that you're comfortable. 

And I'll bring up something no one else has mentioned.  Your kids are currently in the cheapest time period you're ever going to experience:  They're past the infant stages with constant doctor visits for vaccinations and day care; they're no longer outgrowing their clothes every couple months, but clothes are still easy to find used; they've not yet reached the expensive activities stage (that is, they're not asking for guitars or permission to play on a traveling volleyball team); and you haven't yet reached the expensive teen years. 

As someone whose kids are almost out of the teen years, I can assure you that even with kids who've been raised to be frugal and who understand that NO is an acceptable (and oft used) answer, teens are more expensive.  You're going to be surprised at the grocery bill, you're probably not going to escape braces and wisdom teeth, you're going to be surprised at the cost of teaching a teen to drive, and then there's college. 

Yes, you can economize:  Last month we bought my daughter's prom dress.  $35.  Her "group" is going to eat dinner at our house beforehand, and they're driving together in a car (no limo, etc.).  Yet the prom tickets are still $45, and nothing we can do about that.  You can skimp on some things, but others are going to hit you squarely in the face.  For example, both my children needed expensive dental work; I just finished paying the 8K for my daughter to have a full set of teeth.  Yes, you can probably handle this better than the average person:  You can give an allowance and have them pay for their football tickets, etc. from this.  But you're still going to run into the "your family must fund raise $1000 for the high school band trip. 

It's also easy to say that they'll work part-time jobs to cover a portion of their expenses /learn the value of a dollar.  Great idea, but it's not something that's guaranteed.  Will your special needs kid be able to manage this?  Will the other two be able to find jobs?  I teach high school, and years ago MOST of my students had part-time jobs; today a whole lot of them can't find those jobs.  Stores hire fewer workers than they did a decade ago, and more adults are taking these jobs.  Regardless, they won't pay everything themselves. 

You haven't mentioned college savings.  What are your plans for the kids?  If you have money in reserve, your kids won't get financial aid -- they'll be offered loans, of course.  Scholarships are a pipe dream; hopefully some money will come your way, but it won't be ALL. 

You're on the road to a good stash, but -- given that you're just about to enter the most expensive decade of your life -- I fear you're going to come up short.  I think your choice is 1) stay in your current job a while longer and build up a stronger reserve faster.  OR 2) quit and work a part-time job at a lower rate ... for the forseeable future. 



jeffnhl

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I think you should look more closely at the ACA options.  Leaving a job and losing your employer provider coverage SHOULD allow you to start ACA coverage even if you aren't in the open enrollment period -- at least I think that is how it works in Washington.  If that is the case, your options in terms of timing open way up.  Best strategy would probably be to work enough into the new year to earn whatever would keep you under the ACA income thresholds, and then pull the plug.  You could work longer/earn more if you are putting money into your 401k as well.


I believe that this is correct, you can work a few months into the new year and then quit and sign up for ACA.  But you need to make sure that you quit before your income for the year get too high for the assistance.  Also watch out for cobra.  If you sign up for cobra, then you cannot drop it until the next open enrollment begins.  Also be sure to look at what type withdrawals you will be making.  Standard IRA or 401 K withdrawals will count as income for the year, but I don't think ROTH withdrawals will.   There is a lot of homework for you to do before you pull the trigger.

Thanks, getting a better understanding of when a Special Enrollment Period for ACA has been really helpful.  It certainly gives me a bigger 'exit window' timing wise; keeping an eye on total income for the year to date is a good point.  With my current employer I am able to front load my 401k contributions (all the way to 100% of my income up to the 18k yearly max) so I could work the first 1 to 2 months of the year and still show zero MAGI - as I understand it IRA contributions go back into MAGI from AGI but 401k doesn't and ACA uses MAGI for income checks.)

jeffnhl

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You talk of wanting to leave money to supplement your disabled child's income, but reflect that government payments may not allow more than the most basic existence.  If he needs substantial help, like an aide etc., when he's grown, it will be best if he can pay more than minimum wage.  Someone I know in a similar position has provided for his handicapped child to basically be financially independent.  Even if they're well-qualified, sadly it is much harder for people with mobility and other handicaps to find and move jobs.

The 'how much assistance to plan for' question is something I think we will wrestle with both for the RE question and general parenting.  I would not want to plan on having our special needs son to have to live off SSI disability any more than I would want my other two boys to plan on living off TANF / welfare.  We are big believers that 'fair' doesn't mean 'equal' so we would be setting up our estate plan to provide more help for the one's that need it.

Keep in mind one of my big RE motivations isn't a retire to the beach and sit around all day it is to more fully embrace the lifestyle we already live - being an active, experience based, engaged, family.  The messages we hear from a lot of corners of the MMM community really resonated with us.

What I see in the math around simulations is that at reasonable SWR rates odds are there will be an income stream of some sort to support aides or similar.  Not to mention the economics of living with minimum wage (when you do have medical covered through medicaid) is a little different when you have a paid for house to live in.     


jeffnhl

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I agree that I think you need a bigger stash to be SURE that you're comfortable. 

And I'll bring up something no one else has mentioned.  Your kids are currently in the cheapest time period you're ever going to experience:  They're past the infant stages with constant doctor visits for vaccinations and day care; they're no longer outgrowing their clothes every couple months, but clothes are still easy to find used; they've not yet reached the expensive activities stage (that is, they're not asking for guitars or permission to play on a traveling volleyball team); and you haven't yet reached the expensive teen years. 

...

You're on the road to a good stash, but -- given that you're just about to enter the most expensive decade of your life -- I fear you're going to come up short.  I think your choice is 1) stay in your current job a while longer and build up a stronger reserve faster.  OR 2) quit and work a part-time job at a lower rate ... for the forseeable future.

Good point MrsPete about the ages of the kids and their costs.  In terms of college costs we have 529 plans setup we contribute too (listed) that we do not include in our retirement stash.  We are targeting paying for not more than half of in-state college or technical school for the kids that want that.  Both my wife and I worked at least part time for our colleges and think that skin in the game is important.

The braces and other larger medical costs is interesting and will have to make sure we have some additional medical costs thought through for all the kids.

I think our lifestyles may be a bit different though - I believe I am entering the lowest costs decades of my life.... I started work in Chicago as a strong consumer (frugal by my peers standards though.)  We bought houses, cars, went on frequent travel and outings.  Monthly Grocery and food spends was well over 1k.  Now we are in a lower COL city with no consumer debt of any kind and a paid for house.

Even if we let our kids force some lifestyle creep (can they do that?) I can't imagine they won't get us back to our car / house paying consumer lifestyle.  I do take the point though that what we forecast for RE at current budget (+ inflation) over time probably needs to get to the next level of detail to determine the stash to have some buckets of budgets where 3 teenage boys may in fact have a meaningful hit to things like food budgets).  Based on some of the genetics braces will certainly be a predictable expense.

I really appreciate the perspective though from someone further down the child rearing road.

MrsPete

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Good point MrsPete about the ages of the kids and their costs.  In terms of college costs we have 529 plans setup we contribute too (listed) that we do not include in our retirement stash.  We are targeting paying for not more than half of in-state college or technical school for the kids that want that.  Both my wife and I worked at least part time for our colleges and think that skin in the game is important.

The braces and other larger medical costs is interesting and will have to make sure we have some additional medical costs thought through for all the kids.

I think our lifestyles may be a bit different though - I believe I am entering the lowest costs decades of my life.... I started work in Chicago as a strong consumer (frugal by my peers standards though.)  We bought houses, cars, went on frequent travel and outings.  Monthly Grocery and food spends was well over 1k.  Now we are in a lower COL city with no consumer debt of any kind and a paid for house.

Even if we let our kids force some lifestyle creep (can they do that?) I can't imagine they won't get us back to our car / house paying consumer lifestyle.  I do take the point though that what we forecast for RE at current budget (+ inflation) over time probably needs to get to the next level of detail to determine the stash to have some buckets of budgets where 3 teenage boys may in fact have a meaningful hit to things like food budgets).  Based on some of the genetics braces will certainly be a predictable expense.

I really appreciate the perspective though from someone further down the child rearing road.
College:  I've never bought into the "skin in the game" concept in terms of college.  The reality is that if you wait 'til college to teach your kids to be grateful for the opportunities they're given, it's too late.  You're going to teach the children to understand the value of a dollar and help them develop a work ethic before they turn 10 or so; once they're actually in college, you're just finishing what you've already started.  At MANY steps in their childhoods we've required our kids to work /cover a portion of the cost of things they've wanted, but we see basic college expenses in a different light-- the financial lessons have been learned, and it's time for them to put the lion's share of their efforts into classwork. 

We're paying the basics for our oldest, and she's responsible for her wants.  She's absolutely done her share by working hard to make the most of our investment and by living frugally.  We're very pleased with what she's accomplished, and we feel sure her just-about-to-finish-high-school sister will follow in her footsteps.

We have made it clear from the beginning that we're on the "semester plan".  Because our oldest excelled in high school, we gladly paid for her first college semester.  When we saw good grades and progression towards graduation, we gladly paid for the second semster, etc., etc., etc.  If at any point we didn't see what we wanted to see, we would've immediately stopped and reconsidered the situation -- but that didn't happen with our oldest, and we don't expect it to happen with our youngest either. 

Perhaps we have lived different lifestyles.  We've always been frugal and have been completely debt-free including mortgage for ... well, more than a decade.  Honestly, I know we paid car payments and a mortgage, but it seems like forever ago.  We've always been frugal, and that didn't change when our kids became teens.  I wouldn't say it was "lifestyle creep" that increased our costs; rather, things just begin to cost more when your kids reach that age:  We didn't suddenly start buying them more clothes or designer clothes, but adult clothes cost more than children's clothes.  We didn't suddenly start eating out more, but the quantities they put on their plates increased.  By the time they're teens, you're sort of "done" testing out whether your kid is a music kid or a soccer kid or whatever ... and with that often comes increased activity costs:  Once you know, for example, that your kid is really into track, you're going to buy him the GOOD running shoes; or once you know that the guitar is more than a passing fancy for him, it's time to invest in a GOOD instrument for him.  And you'll want your kids to take part in career exploration activities, even though they'll cost you money; for example, my girls volunteered at the hospital, which required some cost on my part ... but it was a good experience for both, and now my oldest is almost finished with her RN.  A frugal family will probably require the kid to earn the first $100 or so of a major expenditure, or will have some other plan for instilling appreciation for the money spent, but it'll still add up to MORE than the younger-kid expenses. 

For example, the first year our oldest had her license, adding her to our family cars cost as much as my car insurance ... and my husband's car insurance ... and our homeowner's insurance COMBINED.  Yet what's the choice?  Don't teach her to drive?  Keep her on a learner's permit until she's ready to go to college, then expect her first solo driving trip to be her college orientation weekend?  It's things like that that make you say, "Wow, everyone said ___ would be expensive, but I didn't realize how expensive!" 

I suppose if you've been spendy in the past and are newly-frugal, you could decrease your spending during the teen years -- but that's a change in your perspective, not the cost of raising teens.  All things being equal, your cheapest childhood years are the elementary and middle school years.