Author Topic: Your thoughts on my FIRE timeline…  (Read 2351 times)

Gimesalot

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Your thoughts on my FIRE timeline…
« on: June 07, 2016, 05:03:18 PM »
Here is my situation, I decided two years ago that my passion in life has always been dancing.  As I am not good enough to succeed in the “artistic” dances (ballet, modern, etc.), I started taking social dance classes and fell in LOVE with Argentine Tango.  FYI, I am Argentine.

I have always wanted to retire “early,”  55 years old at the latest, but then I found my passion and MMM, and now even 34 seems too late.  To make matters worse, I am at a job I can’t stand, mostly due to 10+ hours a day at a desk and a lot of sense-less rules, but that pays very well, $130k+ per year.   Hubby earns about $50k per year.  We are childless and expect it to remain this way.  Although, I have learned to never say never.

We plan to relocate to Buenos Aires, so that I can be closer to my family and for me to immerse myself in tango lessons and practice.  Right now the plan is to move at the very beginning of 2018, but I really want to bail from my job ASAMFP!

Much like others on this board, I am very worried that I haven’t thought everything through; that I missed a small detail.  So I need fellow Mustacians to give me their HONEST feedback about my plan!

Here are the numbers on a per year basis:
Expected ER budget at luxury level: $25,000
Expected ER budget at comfortable level: $ $22,000
Expected ER Budget at survival level: $14,000
I have checked these numbers and trust them to be accurate.  Note that this includes minor medical expenses but not the “worst-case scenario” type stuff.

Income during ER on a per year basis:
Rentals until 2044: $8,800 (inc. mortgage, bills, prop manager, 50% for vacancies & repairs, and 10% income tax)*
Rentals after 2044: $17,500 (inc. bills, prop manager, 50% for vacancies & repairs, and 10% income tax)
   *Rentals are currently not able to earn this much.  We have about $20k worth of repairs to do to get us to this point.
Stache: $20,000 (Projected $500k at end of 2016, currently $450k)

I am one document (costs $30 and takes 24 hours), away from being able to legally work in Argentina and could find a job fairly easily with my English speaking skills.  Hubby will be legal to work there after some paperwork and a few months.  He will most likely not work, as the jobs that he is interested in require native fluency in Spanish, which he does not have yet (fingers crossed for someday).  So if we needed extra cash we could find a little bit of work here and there.

The options I am considering:
1.   Demanding more vacation at my current job and spending a lot of next year, 2017, traveling and finishing rentals, getting paid my cushy salary and letting the stache grow until we don’t need the rental income.  I would be pretty unhappy with work though.

2.   Try to stay on at my current job as a contractor working fewer hours per week through 2017.  (I don’t see this happening very easily)  I could focus on downsizing our life, sill travel a little, and finish the work on the house.

3.   My husband could give me a job earning $25 per hour at a low-stress wine shop for all of 2017.  I could focus on downsizing our life, sill travel a little, and finish the work on the house.

4.   Throwing caution to the wind and leaving at the end of 2016 and seeing how things work out.

Thank you in advance for your thoughts!

russianswinga

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Re: Your thoughts on my FIRE timeline…
« Reply #1 on: June 07, 2016, 05:22:24 PM »
Totally unrelated to your question, but I'm a ballroom / latin dancer, and there is just one dance I won't do - Argentine Tango. I find it too confining / close / uncomfortable / sexual.
My preferred social dance is Lindy Hop Swing, but I compete Ballroom / Latin.

CmFtns

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Re: Your thoughts on my FIRE timeline…
« Reply #2 on: June 07, 2016, 05:36:28 PM »
I like worst case scenario

So let's take your top luxury spending at 25k
Also, let's say both of you quit today with 450k in bank and let's take 20k out to repair your rental so now 430k
and and let's round your rental income down to 8k

so let's subtract rental income from spending 25k-8k = 17k

17k is a 3.95% withdraw rate on 430k

So worst case scenario I still think you got a very high success rate but I would probably somehow get your investments in the mid 500s before your 2018 retirement and have a nice cushy 3% withdraw an almost guaranteed success. It seems like no matter which of your 4 choices you pick you will make it close to that number or even way above there.

« Last Edit: June 07, 2016, 05:39:42 PM by comfyfutons »

Gimesalot

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Re: Your thoughts on my FIRE timeline…
« Reply #3 on: June 07, 2016, 05:36:37 PM »
Argentine Tango. I find it too confining / close / uncomfortable / sexual.

This is not an uncommon thought.  I am Argentine so my thoughts on sexuality an personal space are VERY different than the typical American's view, although, I will admit that I was a little defensive about truly expressing myself when I first started, for those same reasons.  Remember, we kiss on the cheek as a greeting between strangers.

mozar

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Re: Your thoughts on my FIRE timeline…
« Reply #4 on: June 07, 2016, 09:13:36 PM »
I think you can give it a go at 500k. Especially if you think you might work a little bit. So option 4. My concern would be the currency situation in Argentina. Yeah, you can get a nice exchange rate for dollars, but I would be worried about being ripped off, being robbed etc.

Mrs. S

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Re: Your thoughts on my FIRE timeline…
« Reply #5 on: June 07, 2016, 10:06:16 PM »
I would go for option 3 simply because then you actually get to see how your life will be when you retire in terms of downsizing and optimizing. Not sure how your numbers are right now but if I were you I would be working very hard to reduce them as much as possible.
That being said i love the romance (4% WR too) of option 4.
What do you expect to earn in Argentina? if you think your job there will take care of your expenses even on a bit tighter side I don't think there is anything stopping you from taking up option 4.

aFrugalFather

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Re: Your thoughts on my FIRE timeline…
« Reply #6 on: June 07, 2016, 10:26:56 PM »
Any chance to switch to another similar paying job that you won't hate as much?  Seems like if you can get a better life work balance for a small pay cut you can really finalize that extra bit of cushion so you can be FIRE safely.  If your 500K is in the stock market, I would worry that we are close to peak rather than trough and that is usually a risky point to cut out of the workforce. 

In any case though, you seem sensible and I think any of the options would be fine.  You have a good cushion for yourselves.

Gimesalot

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Re: Your thoughts on my FIRE timeline…
« Reply #7 on: June 08, 2016, 06:58:12 AM »
I think you can give it a go at 500k. Especially if you think you might work a little bit. So option 4. My concern would be the currency situation in Argentina. Yeah, you can get a nice exchange rate for dollars, but I would be worried about being ripped off, being robbed etc.
Your concerns are not unfounded.  My husband and I travel regularly to B.A. so we are familiar with the risk, although we have no personal experience.  Due to some new changes in the law, it is actually easier for us to leave our stache in the US and withdrawal from Argentina, instead of having to bring all of our cash when we move.

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What do you expect to earn in Argentina? if you think your job there will take care of your expenses even on a bit tighter side I don't think there is anything stopping you from taking up option 4.
I have no idea how much I could earn realistically.  I know that teaching English pays about $8 to $10 an hour part time.  We also have some ideas like running a tango Air BnB,  a tango retreat in a swank hotel, and some other totally off the wall ideas.  I would like to stay on as a contractor with my current job, because that pays very well, but I am not sure that it is even possible.  My industry is very resistant to remote work.

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Any chance to switch to another similar paying job that you won't hate as much?
I have tried but I kind of got stuck with a specialty I don't care for, and no one else does wither.  I am considered an expert in my field and therefore I am only wanted for the same types of projects over and over.  I hate my job because I am bored.  I have tried to look for other jobs, but I am over qualified, or under qualified, or a strange combination of both.  Believe it or not, the wine-shop is actually a job that I am qualified for as I have an extensive education in wine and wine production.

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If your 500K is in the stock market, I would worry that we are close to peak rather than trough and that is usually a risky point to cut out of the workforce. 
I think the same thing and it worries me.  However, I feel like if the stock market was at a low, I wouldn't want to quit because of the opportunity cost! 

I seems like most are in favor of some sort of "sticking it out" for a little longer.  Obviously, this would be the best and most responsible course of action.  The wine shop will be deciding whether to provide employees with health insurance later this year.  If they do, the temptation might get to big and I might just jump ship!  Thanks for all your thought and input!
« Last Edit: June 08, 2016, 07:00:51 AM by Gimesalot »

Classical_Liberal

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Re: Your thoughts on my FIRE timeline…
« Reply #8 on: June 08, 2016, 11:31:02 AM »
I like option number 3 or 4 as well.  Although option three is more appealing, not because of finances, but rather to ease yourself into what will be a very big transition.

Like a previous poster indicated, with rental income you are already at a 4%WR.  The current argument being, of course, that the high CAPE indicates stocks are high end value.  This may be true, but one could have made the same argument in 1996 when CAPE was similar and treasury yields were double todays. Look what happened, a big ole stock BOOM.  Bottom line, you can not predict short term stock returns...ever.  For a stache to survive 40+ years on 4%, you only need real returns between 2-3 percent (assuming tax efficiency).  In any drawdown scenario the earlier years are most critical. For someone who is young, plans to work part time (I'd totally be interested in a dance teaching vaca), and does not plan to leave money to heirs, this is so close to a sure thing that additional savings will have a huge diminishing return. You will know early on if 4% is in jeopardy and can make minor alterations to make the plan work.

IMO concerns about the 4% rule only apply to those who are: Totally unwilling or unable to ever have any form of paid compensation again, AND have no expectations of SSI, AND have little or no flexibility in their budget, AND have concerns about leaving money to an heir after death. If one or more of those things do not apply to you, anything more than 4% is just to help you sleep better at night and has no basis in reality.

If the rental income and expenses you posted are tested and true numbers, you're good.  Just be willing to make some minor adjustments in the off chance you see a horrible sequence of returns.

Congrats on FI and good luck in RE!

Axecleaver

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Re: Your thoughts on my FIRE timeline…
« Reply #9 on: June 08, 2016, 01:36:20 PM »
It looks like you built a pretty good buffer into your rentals, so there's potentially more earnings there (with the 50% buffer allocation) than you need for your luxury scenario. You have more than enough to guard against any large maintenance problems. I agree that pulling the trigger now appears to be well within the realm of possibility.

Suggest you discuss with your boss what you're going to do (don't ask, tell), and that if they'd like your help once you get resettled in Buenos Aires, you're open to it. You don't need it.

Keeping your money invested here and withdrawing a quarter or a year's worth to fund your retirement seems prudent to guard against currency risk and government stability.

mozar

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Re: Your thoughts on my FIRE timeline…
« Reply #10 on: June 08, 2016, 05:22:33 PM »
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Keeping your money invested here and withdrawing a quarter or a year's worth to fund your retirement seems prudent to guard against currency risk and government stability.

I was thinking that she should do it monthly. Withdrawing 6k or more and exchanging every three months, might raise some eyebrows.