Author Topic: Going out on a limb  (Read 3418 times)

FIREmenow

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Going out on a limb
« on: November 03, 2016, 06:58:22 AM »
I'm going out on a limb with this post. I know criticism will come, but I need to confide something to this community.

Some background:
I am relatively new to this scene. I have been reading and implementing MMM strategies for the last 4 months or so, but with little impact. I graduated in May with an M.S., I am 25, married, and have been working as an engineer for the last 5 months. My wife is still in physician assistant school with 15 months left. We moved to Philadelphia before starting the MMM journey, so cost of living right now is super high. We thought we wanted a lavish lifestyle in Center City, but slowly realized it is negatively affecting who we are and now we are stuck with an expensive lifestyle.

The Issue:
I have been diligently reading FIRE blogs, and listening to podcasts. Hearing all of the success stories of people retiring in their early to late 30s, living their dream and accomplishing their goals, and frankly I think it is incredible. However, I have found myself playing a dangerous game with this information; I compare myself to others and their success. As I read about people who are building their real estate investment empire, saving 75% of their income or more, whose spouses are on board with the FIRE goal, or the lucky ones who have retired, I compare myself to them. To be completely honest, I find myself becoming discouraged and frustrated with my lack of success. I am not sure where to go from here, but I want get away from the grips of the comparison game and I thought confessing it to this community would help. So there it is.

MostlyBearded

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Re: Going out on a limb
« Reply #1 on: November 03, 2016, 07:04:57 AM »
I think the best way to help with implementable advice is if you could take the time to post a case study with the numbers for everything... that way people will be able to give you an ass kicking in the right direction!

crispy

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Re: Going out on a limb
« Reply #2 on: November 03, 2016, 07:07:02 AM »
This is an individual journey.  I have always thought about retirement, but I never really thought about early retirement until reading this blog.  I am 41 and hope to retire when I am in my mid-50's. We save a nice chunk of our income and have always saved for retirement, but we are not necessarily high income (I just went back to work FT last year). All that to say, you can't measure your life by someone else because you will always feel like a failure.  Focus on your own realistic goals and work to achieve those. 

FrugalFan

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Re: Going out on a limb
« Reply #3 on: November 03, 2016, 07:15:38 AM »
Go easy on yourself! You are still very young, just graduated, just got your first good-paying job. Your wife is still in school. Progress will seem slow at first, but if you keep working at it, momentum will pick up and compound interest will work in your favor. It would be easier to give advice if we knew some of your financial situation, but the principles are easy. 1 - avoid debt (or pay it down if you have some), 2 - spend less than you make, and 3 - invest the rest. Those three factors are key in getting you going in the right direction.

Also, are you tracking your net worth? Things seem to move slowly over short time periods, but when you can look back over months and years, you will be amazed at the progress.

Finally, try not to compare yourself to others. You are just starting out your adult lives. Give yourselves time to catch up and with two incomes things will move much more quickly. The stories you are reading are meant to be inspirational. If you spend time on this forum, you will notice there are many more of us retiring "early" in our 40s, 50s, and 60s than in our 30s. Those people retiring in their 30s are in small minority of exceptional people in an already exceptional group. If they motivate you, keep reading. If they discourage you, it might be time to focus on something else for a while (hobbies, time with your wife), while at the same time trying to streamline your finances. Once things are optimized and you are saving as much as you can, there is not much point dwelling on it too much. Automate the finances and focus on living your life now, not pining for FIRE, or it will be a long ride and you will regret not living in the moment and enjoying life now.

FIREmenow

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Re: Going out on a limb
« Reply #4 on: November 03, 2016, 09:14:43 AM »
I appreciate the encouraging words. I am going to take some time today to put together a case study and post it here by tomorrow.

alewpanda

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Re: Going out on a limb
« Reply #5 on: November 03, 2016, 09:40:05 AM »
I understand your pain!  Our household income isn't bad, but by our own choices, it isn't as high as it could be (i could work outside of non-profits, we could move from our much beloved community, ect.) so our pace seems slow at times.  The best thing to do is to remember that ultimately, FIRE isn't the end all goal -- its living a full life with freedom to make the differences you want to make.  Sure, FIRE will provide ample opportunity, but don't wait till your FIRE to appreciate and live a full life!  Comparison will rob you of that joy...so instead find inexpensive or free ways to live it up or make the impacts you want to make now, instead of just waiting till later!

Ways we do this:
I paint...its a joy, brings me some income, and is cheap when reusing canvases and painting with reclaimed/leftover paints.  It becomes an endeavor in recycling too!
We get outside and we enjoy our time with our dogs.  They bring us joy and don't push back our savings too horribly much. 
We volunteer -- church youth group, mentoring kids, projects for ministries in need, ect.
We spend time with one another.  The simple things become the favorite things when you are connected and your relationship is healthy and dedicated. 


deeshen13

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Re: Going out on a limb
« Reply #6 on: November 03, 2016, 11:45:04 AM »
FIREmenow, If it helps you, know that probably a vast majority of us FIRE-seekers have struggled with  these comparisons at one time or another. Others have already mentioned some useful aspects of living deliberately and meaningfully in the here and now while the FIRE journey starts.

I want to also mention to you the significant (and much less daunting) milestone of achieving FU money has had for me. Everyone has to define FU money differently, but in my head it was reaching between 150-200k, or 6-8 my annual living expenses. Since reaching that, I feel tremendously less work anxiety/stress, know that I have a massive cushion, and even have the ability to take a year (or three) sabbatical years off if I get too burnt out. Additionally, the momentum is picking up and things are so streamlined, that if I continue putting forth a reasonably good effort, FIRE starts to seem inevitable in just 5-7 more years. Finally, achieving FU money has allowed me to create a favorable work situation in which I work remotely Wednesdays, and have significant autonomy. I'm also at the point where I'm not sure if I would full-on retire when I reach FIRE -- which sounds absolutely asinine to my 2012 self.

So, perhaps set smaller goals along the way that will keep you encouraged. FU money is a great one. Before that, merely trying to hit X% savings rate is another good one.

FIREmenow

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Re: Going out on a limb
« Reply #7 on: November 03, 2016, 03:10:24 PM »
Thanks everyone for the replies. I appreciate everyone's input. Gaining FU money I think is a great step towards lessening the anxiety of reaching FI.

Additionally I have put together a case study:
Life Situation: Married, Philadelphia, PA
Gross Salary/Wages: $68,000 + $4000 signing bonus + 5% to 15% bonus in March
Monthly Pay: $3,684.08

Pre-tax deductions: 401k - $340/month (min. to meet employer match), insurance - $254/month
Other Ordinary Income:  NA

Qualified Dividends & Long Term Capital Gains: NA

Rental Income, Actual Expenses, and Depreciation: NA

Adjusted Gross Income: $44,208.96 approximately

Taxes: Adjusted Gross Income is after taxes

Current expenses:  October Expenses from Personal Capital
Entertainment (This is eating out, drinks, general entertainment): $649
Gasoline: $183
Groceries: $156
Pet Care: $129/year for dog running side hustle
ATM/Cash: $129 (spending money for each of us)
Service Charges” $77(parking ticket, international service charges on debit card (discover card didnt work internationally)
Utilities: $76
Gifts: $75 (gift for friend's wedding)
Restaurants: $72
General Merch.: $66
Tithing: $50
Commute: $250
Rent: $1500
Phone and car insurance: $0 (covered by wife's father as a gift until 2018)
renter's insurance: $26.50
Internet:$0 (live over a hotspot and have free VPN)

Total Monthly Expenses in Oct.: $3,438.50

Emergency Savings Account: $4400

Assets: 2 cars, worth a total of $8K. One is driven

Liabilities:
Federal Loan: $20,500 @ 5.86% currently accruing
Private Loan: ~$90,000 @3% accruing after graduation (Dec. 2018)
Other school loan: $4000 @ 5% accruing after graduation (Dec. 2018)


Specific Question(s):
I have set myself a goal of reaching retirement for both my wife and I by 45.  I want to know what guidelines I can set up for her and I now that will benefit us in the long run. We grew up in very well to do families, with parents that are going to work until at least 65. I do not want to fall into this trap. I am completely open to any and all advice/criticism. Thanks
« Last Edit: November 03, 2016, 05:23:29 PM by FIREmenow »

ooeei

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Re: Going out on a limb
« Reply #8 on: November 03, 2016, 03:24:15 PM »
Fear not, every little bit counts.  I remember when I first discovered MMM I was living in a downtown apartment in Austin paying around $1300/month.  I was also eating at restaurants all the time, buying food at work, going "out" with friends and buying $6 beers, etc etc.  I was bummed for the 4-5 months I had left on my lease, but I saved where I could and did all right.  Once the lease was up, I moved to a cheaper place, got a roommate, and cleared the 6 figure club about 3 years later. 

I'm still not as on point with my savings as some people, and my girlfriend has had some health problems and job instability the last year or two, so we've spent a lot on that.  I also recognize that some of these things are temporary, and since she's on board with FIRE I'm not too worried about completely maxing out my savings every single year. 

For now, I'd focus on reducing that eating out/fun budget.  Try inviting friends over, cook something fancy, cook something together.  Go to a hole in the wall ethnic restaurant instead of a rooftop oyster bar.  Do the "no eating out for a month" challenge and have fun with it.  We invite friends over and call it "family dinner."  It usually costs almost as much as a restaurant, but they bring the booze, and occasionally they cook or bring the food.

I'm confused how your commute is $250, but you also pay $183 for gas.  Also, what kind of gifts are you buying that cost $75/month?

Once your lease is up, try to find a cheaper place.  Keep in mind that once your wife starts working, her income will be added to this and boost it nicely.  If you can keep your expenses the same once she starts working you'll be on a path to freedom in no time.  My girlfriend was mostly on board, but occasionally mentioned wanting to rent a bigger apartment or a house.  We had a LONG talk the other day about all things FIRE, and something clicked and now she's totally on board.  It helped me immensely de-stress about the whole situation.

accolay

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Re: Going out on a limb
« Reply #9 on: November 03, 2016, 03:32:06 PM »
What does you wife want?

If you're in the same boat, then with your combined salaries after she gets out of school, you could pay off your debt in a couple of years if you don't expand your lifestyle.

You can really work on these:

Entertainment (This is eating out, drinks, general entertainment): $649
Gasoline: $183
Groceries: $156
Pet Care: $129
ATM/Cash: $129
Service Charges” $77
Gifts: $75
Restaurants: $72
General Merch.: $66
Commute: $250
Rent: $1500

I realize this isn't a real budget. You need one. You're missing things. Many from your list seems like the same outpouring of money. Why 129/month for the pet? Do you both like where you're living, or could you move somewhere cheaper? Do you need both cars if you live in the city? How much are cell phone bills? How much for insurance? How far do you live from work? What does your internet access cost? Do you pay for cable tv? Are you paying to park your cars?

Write down a budget and track every penny.

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FIREmenow

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Re: Going out on a limb
« Reply #10 on: November 03, 2016, 03:40:38 PM »
ooeei thanks for the response.

The city lifestyle is definitely a killer. Looking at the numbers and digging in hit me today. Eating out and entertainment will certainly drop. The commute/gas is a tough one. I work outside of the city and commute by train which costs anywhere from $219 - $250 per month, October seemed to be particularly expensive for that, and my wife has been driving to work, hence the gas money. Where we live was super convenient when she was going to school, but now she is in rotations we are both commuting out of the city. The $75 was for a wedding gift for friends who gave the same.

How did you start the conversation with your girlfriend? I am having trouble getting my wife on board. She has never had to think about money before and it's completely overwhelming to her. I have read through the 50 things for the SO, and am trying to implement some of them. Also my insistent talking about FI and excitement over it doesn't exactly help.

as for the the other expenses the 129/pet was a one time cost for business insurance, I have started a dog running business in the city im currently trying to get off the ground. We could potentially sell a car, which i have been thinking about. Phones and insurance are covered for at least the next few months, her father cut a deal with us that he would help out with these until she graduated (he did this with other siblings). Internet is free (we live over a hotspot and use a free VPN) and we don't have cable. Parking in philly is $35/year which was covered through Sept. 2018.

November is going to be about tracking every single penny moving in and out of our bank account.

accolay

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Re: Going out on a limb
« Reply #11 on: November 03, 2016, 03:55:19 PM »
How much do you have in emergency savings? If little or none, could you put the possible car sale towards that?

frompa

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Re: Going out on a limb
« Reply #12 on: November 03, 2016, 04:09:13 PM »
Hi FIREmenow, thanks for the forthrightness of your post and follow-ups.  Living in the city does not have to be a high $$ experience.  You have access to public transit (excepting right now with the SEPTA strike, but that's temporary), as well as a pile of free culture, park facilities, music, and the like.  You could get down to one car, probably quite easily.  Philadelphia is eminently bike-able -- I personally know quite a few people living there, happily and successfully car-free.  You also have access to some great thrift stores.  Make some solid short term goals and go at them.  Establishing an adequate emergency fund is probably step one.  Then, as others have said, focus on spending less than you earn, and putting aside the extra.  As others have said, go easy on yourself -- you are early on your financial (and life) journey.  Best of luck. 

Northwestie

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Re: Going out on a limb
« Reply #13 on: November 03, 2016, 04:31:34 PM »
Cut yourself a bit of slack - you are very young yet and kudos for starting to think about finances seriously.  Sheesh - when I was 25 and a year outta grad school I bummed Europe for 3 months and then worked the Alaska fishing season.  THEN I started thinking - what the hell do I do now.   

You will do awesome.  Take it stepwise.

With This Herring

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Re: Going out on a limb
« Reply #14 on: November 03, 2016, 04:54:11 PM »
Would you update you case study post to show more details on the lines that have already been questioned? Otherwise, you will get later posters asking you the same questions when they only read the case study and not the responses.

Side-gig insurance: $129 (annual charge for dog walking hustle)
Gifts: $75 (friend's wedding this month)
Phone: $0 (covered by wife's father as a gift until 2018)
Car insurance: $0 (covered by wife's father as a gift until 2018)
Renter's insurance: $0 (covered by wife's father as a gift until 2018)
Internet: $0: $0 (we live over a hotspot and use a free VPN)

What are "service charges"?  Is this an annual fee for a credit card?  Overdrawn checking fees?  ATM fees?

You have $129 for ATM/Cash.  You should start keeping track of where that cash goes.  I'm not sure if Personal Capital lets you input manual transactions, but if it does then you should do so.

Until you two can get an apartment that is closer to where you go to school and job, can you get a long-term train pass that will cut the cost of train commuting a bit?

You're not putting very much into your 401(k).  Is the current contribution amount just enough to take full advantage of an employer match?  If you aren't getting the full match, increase your contribution ASAP.  Once you have an emergency fund built up,  pay off that federal student loan that is accruing interest, and then you should get as close as you can to maxing out the 401(k).  When you've trimmed your spending, you might also look to see if it makes sense to refinance that student loan to get a lower rate.

FIREmenow

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Re: Going out on a limb
« Reply #15 on: November 03, 2016, 05:26:33 PM »
Updated the case study.

We have 6 months left on our apartment, unfortunately our landlord is NOT flexible in terms of tenants leaving. I completely agree that we need to move closer to work and into a cheaper apartment.

when we begin to cut expenses should the excess go to paying off the student loans or putting towards the 401K?


aceyou

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Re: Going out on a limb
« Reply #16 on: November 03, 2016, 08:35:10 PM »

How did you start the conversation with your girlfriend? I am having trouble getting my wife on board. She has never had to think about money before and it's completely overwhelming to her. I have read through the 50 things for the SO, and am trying to implement some of them. Also my insistent talking about FI and excitement over it doesn't exactly help.


Welcome.  Every person and relationship is different, so I know there's no magic bullet, but I went through this too.

I found the site 2 years ago and had a similar thing to you with my wife.  I didn't start with the money, I started with what we wanted life to look like.  My wife is fluent in spanish and loves to travel.  I started showing her blogs about people like GoCurryCracker to show the things they were doing together as husband and wife.  She would be like "yeah, that sounds awesome, and that it's cool that they were in a position to do that".  I told her that we could be too, and I laid out what it would take.

I signed up for doing some basic Spanish learning at Dualingo.  I want to make it very clear that we are NOT sacrificing, rather we are trading for a much cooler life.  I take care of the heavy hitting stuff like retirement account allocations, long term financial planning, but she's on board and in the loop. 

So, what does your girlfriend want life to look like?  How can being FI make that happen faster, or make it more enjoyable when it does happen?  And how will the two of you share in that together and make it happen together?  Is it travel, is it raising kids, is it philanthropy, is it adventure?

Kinda feel like I'm rambling, I hope there was something valuable in that:)

ooeei

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Re: Going out on a limb
« Reply #17 on: November 04, 2016, 07:32:25 AM »
How did you start the conversation with your girlfriend? I am having trouble getting my wife on board. She has never had to think about money before and it's completely overwhelming to her. I have read through the 50 things for the SO, and am trying to implement some of them. Also my insistent talking about FI and excitement over it doesn't exactly help.

Well, part of your problem with talking to her is she hasn't started working yet.  I know if someone had talked to me about all of this in college, I would've rolled my eyes and told them how I was going to be a super rich baller living in a downtown loft.  Once I actually started working, I found out that the reality of working 40+ hours EVERY SINGLE WEEK for 40 YEARS is not how I want to live.  It's one of those things that you know is going to be tough, everyone tells you is going to be tough, but the gravity of it doesn't really hit you until you're doing it.  I had summer jobs and internships, but they were always temporary.  About my 5th month at work I remember thinking "So I'm supposed to do THIS for 40 years, holy shit this sucks."

My girlfriend was already somewhat frugal when I met her, but she spent a ton on her family and friends.  Fancy meals, buying them presents, more fancy meals.  Mostly it was food she was buying.  I ran the numbers on her loans (which she hated), and told her if she cut back on some of the spending she could pay them off in a year or two.  She was skeptical, but then surprised when I showed her the numbers.  A year later, she'd paid off her $20k in student loans.  That was 2-3 years ago.  That was where she realized saving a lot of money was actually possible (unlike what the media leads you to believe).

In the last year, she's been a little bummed about our 1 bedroom apartment, and the fact that we don't go out to eat as much as she used to.  One thing that helped, was we took a trip to another state and had a really fun long weekend, and probably spent more than we should've.   At the end of it, I reminded her this sort of travel is a big part of wanting FIRE.  It's not that I don't want to spend any money and live like a miser, it's that I want to spend money on the most fun things that will actually make us happy.  Rather than spending $300/month on restaurants, maybe we spend $100/month, and take a $2400 trip every year.  We still get the restaurant experience, but don't make it a routine thing that ends up being the "new normal" that we don't appreciate. 

In the most recent conversation she was asking about our budget for early retirement.  It turns out she thought I was only planning on saving enough for us to live in a tiny apartment, never go to restaurants, and never take trips.  She thought I was saving for necessities only and planned to quit after that.  When I told her the numbers, and that it'd be based on what we spend now and nearer retirement, she had a bigtime relief.  Having an extra $1000 or so a year for restaurants, and enough for a nice trip or two helped put her at ease.  She also asked if she could just work part time to pay for extra things, which obviously is doable.

A big part of it for you will be finding what motivates your wife.  Maybe she loves her work, but also loves having time to travel.  FIRE lets her have leverage in making her own hours.  Maybe she is kind of a control freak and doesn't like having decisions made for her, FIRE gives you a lot of freedom. Maybe she wants to stay home with kids someday, and FIRE will let you/her do that.   

Leading by example is also good.  Save up a lot of money, and show her the numbers.  You can also try with showing her the "here's how much this generates per year" using the 4% rule.  Save some of your "fun budget" and still have a fun time.  Do fun activities with her that aren't super expensive.  Take her on a surprise trip sometime in the next year or two using CC rewards points.  Show her that a life of moderate frugality can be really great.  New cars and cell phones don't make people happy for more than a few days (or maybe weeks if they're lucky).  Memories last a lifetime.