Are some expectations here naive/unrealistic?

[Bernard]

I think we cannot always assume that FI and RE go hand in hand. "The Wealthy Accountant's" NW is now about $12,7M, and he still drives clunkers with a salvage title and has no plans on retiring, ever. Frankly, one has to wonder when enough is enough. Even if I had a job I loved more than life itself, at some point I'd up my spending a bit. That would most likely be way before I hit $5M NW. Is it possible that, perhaps, the extreme savings habit can turn into an addiction, like alcoholism or gambling?

[Cassie]

Given the 3 choices offered I would take number one.  Then I would quit work and start traveling.

[justinhurt]

My granny tells if I am able to save 15% of my income from age 30 onwards, retirement at 60 should be a relatively easy goal. I am trying to follow her advice but I understand it's not easy to save money when you're so young and you want to spend it on the fun stuff. But finally, you need to understand that if you start saving money later, the amount you have to save increases. For example, if you start at 40, the amount you need to save for a comfortable retirement cushion increases to 25%. So, at the moment I've accepted the fact that all these savings are for good and I'll not be in need if I start to save money now.

[mistymoney]

Given that we face a trade off of losing with certainty years-of-youthful-life versus gaining some probability of higher long-term prosperity, consider the following scenario.

As a 55 year old worth 3.5M you find a lamp, rub it, and out pops a genie. Instead of 3 wishes, the genie offers you 3 options:

1) Remain in your current age and wealth.
2) Trade your 55 year old body for your 40 year old body, but your net worth is now only $1M. You must live solely off the portfolio for the rest of your life.
3) Trade in your 55 year old body for your 30 year old body, but your net worth is now $450k. You must live solely off the portfolio for the rest of your life.

I would choose #3 without a second thought. Yea, it’s poverty, but that’s still great money in 90% of the world and I would have half an adult lifetime back in exchange for sewing my own socks when they rip. Plus there’s no rule against the portfolio increasing, which it has a chance of doing despite my withdrawals.

This is an interesting way to look at it! Am I weird that I don't have an immediate urge for door #3?

I think that this would be a nobrainer for someone who never enjoyed their profession and never had kids. If I go back to 30 yo, are my kids still grown and educated? or are they young again too?

I was thinking if I had the expense of raising them again, #3 would not be a pick, to do that on 18k/year. But if I got to have those little kids again, then I think I would do it, but I am hard pressed to think how I could do it on 18k/year with no housing, and not sure that is at all doable. Are housing prices current housing prices, or 25 yo prices? We'd be teetering on homelessness for the long haul, and then I don't think that would be a good experience for them, and if I dipped into principal just here and there, and never able to earn another penny, I'd likely be looking at eventual homelessness for myself, for the long haul.

[MonkeyJenga]

$18,000 a year for an individual is well over the poverty guideline. It's even above the 2019 poverty guideline for a 2-person household. (Source.)

I retired in my early 30's and am spending less than $1,500 a month, so my answer is pretty obvious. The one problem is that I have more than $450,000 now and can weather emergencies and market downturns better. Would I feel comfortable with 450k? cFIREsim shows that in many historical periods, I end up with more money than I need with an annual spend of 18k. If I give myself 5 years of my current, lower spending first, I do even better.

There are still a lot of options if I can't increase my portfolio through work. I don't need to do these things now, so it's not worth it, but for an extra ten years of youth? Hell yeah.

* A PT nanny situation in exchange for free room and board
* A few years of super cheap travel and hope the market does well in the interim
* Long camping trips
* Work harder to understand real estate and get higher returns
* Move further out in the city for cheaper rent
* Move to a different city entirely
* Get more into credit card hacking
* Gold-digging

[mistymoney]

@mistymoney yoh got me thinking (a rare event ;-)) about how a person who had 3 kids could live on a stash of $450k $18k/year $1500/month if renting and it would be hard. There are probably ways but the options are pretty limited. I'd probably choose to move to a LCOL area and buy a cheap place with low monthly mortgage to keep my housing cost fixed over the years. Or buy something for $100k and pay cash. That would lower my stash to $350k or approx $1200/month but that would likely lower my housing costs by more than $300/month I'd lose in monthly income. Maybe stuff the kids in one room and get a roommate to cover the housing expenses. Not ideal but doable.

Obviously this is something a kidless person could do as well much easier. And probably what I'd do if I had a $450k stash and nothing else and wanted to RE. Move to na LCOL area and a low prop tax area, buy a place for $100k and then just get a roommate or 2 to cover all my housing costs and probably much of my living expenses including travel and hobbies and little luxuries. I did this (and am kind of doing it now) and I've been able to keep my expenses much lower than $1200 or $1500/month. But people with kids are going to have to make big trade offs and probably have to consider some non-tradition housing/living arrangements to make it happen. There are also a lot of families choosing the RV or sailboat life as a way to RE with kids on a smaller income.

This one has got me thinking too! Although in my case - the only real draw is if the kids are tiny :)

I would figure out a way to make it work. But - I am very averse to being on medicaid, or other welfare, so that is the one thing that is hard for me to figure out, the medical care side.

If I was on my own, it would be super easy and I would likely pick intentional homelessness/vagabond for 10 years - maybe more - to try to live on as little as possible to let the stach grow.

That wouldn't be doable as a single parent with 2 tiny ones.

I think the difficult thing - for me and maybe others questioning the super-low approach - is I grew up in a HCOL area. I don't understand non-big-city lifestyles, RE prices are high, taxes are high, but it's all I know, where everyone I know is - family, friends, etc. I go back 4 generations and everyone in my family are from big cities....

My property taxes just got jacked up and 18k year would likely just cover property taxes, insurance, and utilities for my current home. So without any debts or dependents - I still couldn't even begin to make it on 18k.

Of course there are options for moving - but I've built a life in this city for 50 years. I was born here. What would relocating mean? Particularly on a very low budget, I'm just confused on what I would do with myself after uprooting my life.

[ontheway2]

I think the difficult thing - for me and maybe others questioning the super-low approach - is I grew up in a HCOL area. I don't understand non-big-city lifestyles, RE prices are high, taxes are high, but it's all I know, where everyone I know is - family, friends, etc. I go back 4 generations and everyone in my family are from big cities....

My property taxes just got jacked up and 18k year would likely just cover property taxes, insurance, and utilities for my current home. So without any debts or dependents - I still couldn't even begin to make it on 18k.

Of course there are options for moving - but I've built a life in this city for 50 years. I was born here. What would relocating mean? Particularly on a very low budget, I'm just confused on what I would do with myself after uprooting my life.

This does really seem to be the hard part to get past for many and where I, on the other end, don't get spending so much on housing. I feel a little stuck in my L/MCOL area as taxes on my last house were $254/year and the new larger house in the city is ~$900

[Metalcat]

I think the difficult thing - for me and maybe others questioning the super-low approach - is I grew up in a HCOL area. I don't understand non-big-city lifestyles, RE prices are high, taxes are high, but it's all I know, where everyone I know is - family, friends, etc. I go back 4 generations and everyone in my family are from big cities....

My property taxes just got jacked up and 18k year would likely just cover property taxes, insurance, and utilities for my current home. So without any debts or dependents - I still couldn't even begin to make it on 18k.

Of course there are options for moving - but I've built a life in this city for 50 years. I was born here. What would relocating mean? Particularly on a very low budget, I'm just confused on what I would do with myself after uprooting my life.

This does really seem to be the hard part to get past for many and where I, on the other end, don't get spending so much on housing. I feel a little stuck in my L/MCOL area as taxes on my last house were $254/year and the new larger house in the city is ~$900

It's also why MMM specifically challenges people to question the assumption that they must live in a HCOL region. MMM didn't grow up where he now lives, he's from Canada, where all of the big cities are terrifyingly expensive.

Does that mean everyone needs to move to a LCOL area? Absolutely not, but it does mean that if you want a very low spend that you either need to drastically minimize your costs in a HCOL city or consider a LCOL location.

@Zikoris lives in North America's second highest cost of living city and manages a very very low spend by living with minimal expenses, no kids, no car, etc.
MMM lives in a low cost area, but has a nice big house, and a car, and a kid.

It's all about trade offs.
No one ever said that a super low spend was realistic for a normal middle class life in an HCOL area, but that doesn't mean a super low spend is unrealistic. There's a reason so few people donut, because most don't find the trade offs worthwhile.

There's a reason there are so very few people here actually living on such low numbers. I see far more $75-100K spends here than $20-30K spends.

I'm personally not willing to make a lot of the trade offs for a super low spend, so I just don't. However, I do spend A LOT less than most people do to maintain my quality of life, and that's the whole point that MMM tries to make.

It's not that you should do whatever it takes to live on $X amount of spend, it's that if you look closely at your life and what you want from it, you probably don't need to be spending $XYZ to get it.

If where you live is that important to you, then yes, a super low spend is unrealistic in terms of meeting your expectations of lifestyle. Your options are then to optimize within the adaptive capacity of your preferred lifestyle.

That's what we all have to do.
I sure as shit am not living off of 18K, and feel absolutely no pressure to do so just because others do.

[Zikoris]

I can't say I've ever really made any trade-offs/sacrifices either. I'm been VERY childfree since literally as far back as i can remember (childhood?), and sealed the deal with a tubal many years before I ever got into FIRE (which was a five year battle to get done). Being car-free is also due to deeply-held beliefs, and I had fairly major fights with parents/in-laws/extended family for about a decade over my complete unwillingness to even get a license (everyone finally threw their hands up and gave up when I got close to 30). So those two examples, kids and cars, were not only NOT trade-offs for me, they were things I so vehemently did not want that I was willing to fight hard for 5-10+ years to avoid.

Small-space living is the same - a combination of my personal beliefs re: environmentalism/low consumption, my desire to minimize housework, my sleepwalking habits, and a VERY strong aesthetic preference. Let me put it this way: If someone offered me a 100% free normal-size house on the condition that I had to live in it (and couldn't just sell it and pocket the $), I WOULDN'T TAKE IT. I would literally say nope and walk away from a free house because I dislike large living spaces that much.

[Metalcat]

^Just to be very clear, when I say trade-offs, I do not mean sacrifices that you don't want to make. I use the term synonymously with lifestyle choices.

Someone who wants a big house in an HCOL area has to trade off time and energy at work for money in order to afford it. Whereas someone else may make the trade off of living with a roommate in order to have much lower housing costs.

Everything is a trade off, as every decision involves an exchange of some sort between time/money/energy.

[Schaefer Light]

I think in some cases, there is a paid off house implicit in those numbers.  Remove rent/mortgage from the equation, and $16,000 goes a lot further.

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

[mistymoney]

Perhaps @ChpBstrd could share if the scenarios in post #53 include or exclude a paid off residence?

[Zikoris]

I think in some cases, there is a paid off house implicit in those numbers.  Remove rent/mortgage from the equation, and $16,000 goes a lot further.

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

That's true but I think much of it is also personality based. @Zikoris @2Birds1Stone e and I could probably have zero problems living on a stash of $500k or less even while renting or shared renting. And in many cases that may be our desired state. When I first quit my job (second time ) I thought I'd need about $2000-$3000/month in FIRE. Discovered that with my paid off house and no roommate I could happily live on $1000/month - with about half going to fun discretionary fun stuff like budget travel stuff or any house repairs if needed. Although having a roommate (like I do now) is very helpful financially and it was nice to have a built in house sitter when I travelled. After I sold my house and rented I found I needed more but was still able to live under $1500/month for everything.

Totally. We rent and currently have a net worth of about $420,000, which would give us about $1,400/month for everything That's almost what we spend for two people (excluding overseas travel). For one person, it would be an absolute breeze to live on that.

[MonkeyJenga]

I think in some cases, there is a paid off house implicit in those numbers.  Remove rent/mortgage from the equation, and $16,000 goes a lot further.

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

That's true but I think much of it is also personality based. @Zikoris @2Birds1Stone e and I could probably have zero problems living on a stash of $500k or less even while renting or shared renting. And in many cases that may be our desired state.

I'm spending between $1,000-$1300 a month while renting. During my half a year of travel, I was spending somewhere around $100-$400.

[BicycleB]

I think in some cases, there is a paid off house implicit in those numbers.  Remove rent/mortgage from the equation, and $16,000 goes a lot further.

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

@ScheaferLight - I am not many, just one, but my net worth is about 500k including real estate. Home equity about 235k, other assets about 265k last time I checked. The "other assets" include pension accounts that could be fairly valued at about 60k more than stated value. I guess you could exclude me for having the equivalent of 560k instead of 500k, but if I "cash in" the pension accounts, I'd have 500k. FIREd about 6 years at this point, though.

[ender]

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

People have a hard time imagining life either up/down a few levels of spending from where they are.

If you spend $100k/year, you can likely imagine what it'd be like to spend $80k or $120k a year. But most people can't fathom spending $40k or $500k a year.

Similarly, if you spend $60k a year, you might imagine spending $50k a year but not be able to imagine what spending $30k or $20k a year looks like. It doesn't mean it's impossible, it means it's impossible to empathize with because it reflects different values/life goals than where your worldview is.

I don't know what the magic percentage is that defines this range of possible empathy. But there definitely is a range of possible empathy.  You likely are far enough away from the "can survive on stash of $500k" threshold that you cannot imagine doing so. However, your inability to not imagine it does not mean that it is impossible - which is a common leap that we make. "I can't imagine it to be true, therefore it isn't true" is an oft believed fallacy.

[2Birds1Stone]

That's true but I think much of it is also personality based. @Zikoris @2Birds1Stone e and I could probably have zero problems living on a stash of $500k or less even while renting or shared renting. And in many cases that may be our desired state. When I first quit my job (second time ) I thought I'd need about $2000-$3000/month in FIRE. Discovered that with my paid off house and no roommate I could happily live on $1000/month - with about half going to fun discretionary fun stuff like budget travel stuff or any house repairs if needed. Although having a roommate (like I do now) is very helpful financially and it was nice to have a built in house sitter when I travelled. After I sold my house and rented I found I needed more but was still able to live under $1500/month for everything.

ETA: Although I'm buying a small house again soon and roommate is moving in also so I expect my housing expenses to drop quite a bit - probably to zero since roommate's amount will cover everything except future major expenses.

Spot on Spartana.

I'm currently living on less than $18k, while renting in a HCOL area.

Trailing 12 month spending has actually been <$17k all in. The trick was finding a nice 1 bedroom apartment to share with my fiance. We pay $1,100/month including utilities (of which $550 is my half).

This spending also includes vehicle depreciation on a 10 year old sports luxury car, employer subsidized health insurance (ACA plans similar cost at my income).

[MonkeyJenga]

Well damn that's awesome! I know you did some serious travel hacking and some couch surfing (and so many forum members have yet to recover ;-)).

Hah! I never ended up needing the official couchsurfing site, but I have slept on many a couch and disturbed many a forumer's routine.

[Schaefer Light]

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

People have a hard time imagining life either up/down a few levels of spending from where they are.

I knew I would have been better off leaving out that last sentence - the one about retiring on $500k.  That's what everyone focused on, and I'm not saying it can't be done.  It absolutely can be accomplished, but the point I was trying to make was that in order to do valid comparisons we need to account for the value of paid off residences.  Some people have them, and some people don't.  If a person says "I'm retiring with a $450k nest egg" but that person also has a paid off $350k house, then that's not nearly as badass as someone who's retiring with a net worth of $500k.

[BicycleB]

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

People have a hard time imagining life either up/down a few levels of spending from where they are.

I knew I would have been better off leaving out that last sentence - the one about retiring on $500k.  That's what everyone focused on, and I'm not saying it can't be done.  It absolutely can be accomplished, but the point I was trying to make was that in order to do valid comparisons we need to account for the value of paid off residences.  Some people have them, and some people don't.  If a person says "I'm retiring with a $450k nest egg" but that person also has a paid off $350k house, then that's not nearly as badass as someone who's retiring with a net worth of $500k.

^All true.

I think most of us aren't as far as the numbers appear at first. I woke up thinking about this for some reason, and concluded that my situation is close to OP Chairman5's even though he has $3 million more than I do.

One person's view here, but factors that produce similar safety results with a different net worth number include:
1. Number of people in household
2. HCOL area vs LCOL area
3. Amount of educational spending parents choose
4. Whether the above cause significant tax expenses, especially in retirement
5. Consumer spending
6. Emotional need for safety

OP's original focus in raising his case in other threads was to ask safety questions and express worry about retiring, implying item 6 as his focus. Many of the responses suggested resolving 6 by cutting item 5. To my eye, most of the difference between me (FIREd on 500k or 560k, depending on how you count) and OP (working and worried at $3.5 million net worth) is from 1 through 4.

Roughly, here's how the step ups look to me:
1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.
2. Not sure how much impact from HCOL, but let's guess 40%. Running total, 5.6x net worth needed.
3. Let's say kids cost less than parents because they're small and temporary, but OP chooses substantial education spending, so a wash.
4. At OP's level, taxes have impact. Let's say 25% extra; now 7x is needed.
5. Maybe 15% higher spending on the consumer side...some categories much higher than others, but not all. I waste 15%; OP could be argued to waste 30%, but I think half of that is rational or near-rational purchasing of valuable items. In any case, proportionally no more than a 15% bump. Now we're at 8x.
6. Barring emotional need for safety, it seems to me that OP needs about 8x. His comfort level wants a little more safety, but is financially same. Let's say 12.5% more.

Final result? To achieve the same level of emotional and financial safety I have, OP's choices require about 9x as much net worth. That doesn't mean they're all bad choices. The biggest difference is simply more people in the family, which is a wonderful human thing. But each of the other choices adds to it, so that the outcome requires a hugely different dollar amount. Valuing my stash at 560k (to include fair value of tiny pension account), OP would need about $5 million to achieve my level of safety. Yet he only has $3.5 million! It's no wonder he's hesitant about retiring.

We can discuss details endlessly on how to optimize and what to do. OP or other very high dollar forum members can run the analysis in the other direction, calculating step downs to imagine what 500k FI would be like. But I think that the financial safety and comfort level of posters at very different wealth levels can be much closer than a mere dollar amount would suggest.

[ChpBstrd]

Perhaps @ChpBstrd could share if the scenarios in post #53 include or exclude a paid off residence?

I was assuming no home ownership. In different areas the rent vs buy calculation comes out different, so this is one of the puzzles you get to solve.

[BostonBrit]

This is a crucial point.  It's tough to compare nest eggs when one person's includes a paid off residence another person's does not.  Folks who own their homes outright probably need to add the value of their homes to their retirement savings to do a valid comparison.  My guess is that you wouldn't see too many people retiring with a net worth (including the value of their real estate) of $500k.

People have a hard time imagining life either up/down a few levels of spending from where they are.

I knew I would have been better off leaving out that last sentence - the one about retiring on $500k.  That's what everyone focused on, and I'm not saying it can't be done.  It absolutely can be accomplished, but the point I was trying to make was that in order to do valid comparisons we need to account for the value of paid off residences.  Some people have them, and some people don't.  If a person says "I'm retiring with a $450k nest egg" but that person also has a paid off $350k house, then that's not nearly as badass as someone who's retiring with a net worth of $500k.

^All true.

I think most of us aren't as far as the numbers appear at first. I woke up thinking about this for some reason, and concluded that my situation is close to OP Chairman5's even though he has $3 million more than I do.

One person's view here, but factors that produce similar safety results with a different net worth number include:
1. Number of people in household
2. HCOL area vs LCOL area
3. Amount of educational spending parents choose
4. Whether the above cause significant tax expenses, especially in retirement
5. Consumer spending
6. Emotional need for safety

OP's original focus in raising his case in other threads was to ask safety questions and express worry about retiring, implying item 6 as his focus. Many of the responses suggested resolving 6 by cutting item 5. To my eye, most of the difference between me (FIREd on 500k or 560k, depending on how you count) and OP (working and worried at $3.5 million net worth) is from 1 through 4.

Roughly, here's how the step ups look to me:
1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.
2. Not sure how much impact from HCOL, but let's guess 40%. Running total, 5.6x net worth needed.
3. Let's say kids cost less than parents because they're small and temporary, but OP chooses substantial education spending, so a wash.
4. At OP's level, taxes have impact. Let's say 25% extra; now 7x is needed.
5. Maybe 15% higher spending on the consumer side...some categories much higher than others, but not all. I waste 15%; OP could be argued to waste 30%, but I think half of that is rational or near-rational purchasing of valuable items. In any case, proportionally no more than a 15% bump. Now we're at 8x.
6. Barring emotional need for safety, it seems to me that OP needs about 8x. His comfort level wants a little more safety, but is financially same. Let's say 12.5% more.

Final result? To achieve the same level of emotional and financial safety I have, OP's choices require about 9x as much net worth. That doesn't mean they're all bad choices. The biggest difference is simply more people in the family, which is a wonderful human thing. But each of the other choices adds to it, so that the outcome requires a hugely different dollar amount. Valuing my stash at 560k (to include fair value of tiny pension account), OP would need about $5 million to achieve my level of safety. Yet he only has $3.5 million! It's no wonder he's hesitant about retiring.

We can discuss details endlessly on how to optimize and what to do. OP or other very high dollar forum members can run the analysis in the other direction, calculating step downs to imagine what 500k FI would be like. But I think that the financial safety and comfort level of posters at very different wealth levels can be much closer than a mere dollar amount would suggest.

1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.


It think this is the biggest miss-calculation, I see on this site and it has multiple issues:

a) The cost base is actually more like 6x (so 50% higher) with 2 children for a wide variety of reasons. Obviously, some of these choices are discretionary but this is more the direction you're talking.

b) The emergency fund not only has to be bigger in absolute terms because of the above but also needs to cover a far longer duration (depending on the volatility of employment). E.g. I now run two years of net cash as I work in a volatile industry which could see a significant employment gap if I were cut.

e.g. as a singleton in 20s, worst case in job loss scenario return key on rental property after 1-3 months notice, head to Thailand and live off $1,000 a month whilst having a ball and waiting for improvement in job market.

Compared to as a dad of 2, - mortgage/rent still needs to be paid (probably on a larger property), utilities on larger property, maintenance (as higher proportion will own vs rent), kids clothing costs, kids activities, car payments, school payments etc. Probably more senior and so fewer opportunities for comparable roles to open up (think seniority pyramid).

Again many of the above items sound discretionary, but realistically, few parents are going to turn around and cancel the kids swim lessons at $XYZ/week on day 1 of redundancy... as its kind of a safety/life-skill that does need to be maintained.

Full disclosure, these are optional costs (to some extent) and individual circumstances will dictate an individual approach (if spouse works, income discrepancy between spouses, safety nets, volatility of employment etc.)

For me personally this means that my emergency fund has had to grow 10x over the last decade.

So going back to your original calc which concluded a stash of 9x. If the first assumption is understated by 50% then its actually even higher than that!!

At the risk of sounding patronizing, its almost impossible to comprehend this until you have kids of your own and have been through a recession/downturn in the market.

[ender]

One person's basic needs are another person's luxuries.

Perhaps the single most important part of "Mustachianism" is recognizing wants vs needs.

[BostonBrit]

One person's basic needs are another person's luxuries.

Perhaps the single most important part of "Mustachianism" is recognizing wants vs needs.

100%. And everyone will have a personal view and a tolerance level for what they think is worth sacrificing and in the best interests of their family unit.

For share my experiences, taking swimming lessons as an example, getting children to a point where they are competent and safe in the water is a need. Swim teams and competitive swimming etc.. is a want. This ramps up when the kids are aged 2/3 - 6 really.

Going back to my pre-kid swimming days (lets say me aged 18-35). My entire swim spend for the year would be $0.00 today, with 3 kids under 6 its materially higher than that. This is just a single example of a cost you are unlikely to have thought about prior to having kids (as in the OPs case). I can give you 20-30 examples like this and I'm sure those with kids aged 6-20 can give me plenty more!!

Other examples would be: life insurance ($0 vs $XYZ), cars ($0 vs $XYZ), house size and location (one room in a house share in a less desirable area vs something more costly), TV ($0 - as out enjoying myself, vs $XYZ... as 3 kids 24/7 can be head-wrecking), babysitting/child care costs ($0 vs $XYZ)...

Its obviously a case of each to their own, how much value you want to place on something, want vs need but until you walk that path its hard to appreciate the additional cost pressure. Again - my personal perspective.

[Zikoris]

^All that is true but many people with kids who are FIREing with $500k or less and don't own a home are choosing non-traditional lifestyles. Lots of world travellers, full time RVers and sailors here and elsewhere who have retired early and are raising kids without all the middle class trappings of houses, cars, expensive kid hobbies, etc.  There are a million stories out there about people who are doing this and there are many forum members here who have posted about doing it. This couple and 3 kids do it on.about $25k/year but there are many who do the same on less. https://www.google.com/amp/s/amp.businessinsider.com/sailing-around-the-world-gifford-family2018-1

Agree, and I also wonder how many of the high-cost expectations are more of a city vs rural thing. Where I grew up, for example, most kids learned to swim for free with friends/family in some outdoor body of water - I learned in a local slow-moving river, and I think my sister learned in a lake? Parents are also a LOT more likely to just send kids outdoors to play versus tv or structured activities. Babysitting costs end once the oldest kid is like, 12, because it's assumed at that point they can keep things under control for a few hours.

[Villanelle]

^All that is true but many people with kids who are FIREing with $500k or less and don't own a home are choosing non-traditional lifestyles. Lots of world travellers, full time RVers and sailors here and elsewhere who have retired early and are raising kids without all the middle-class trappings of houses, cars, expensive kid hobbies, etc.  There are a million stories out there about people who are doing this and there are many forum members here who have posted about doing it. This couple and 3 kids do it on.about $25k/year but there are many who do the same on less. https://www.google.com/amp/s/amp.businessinsider.com/sailing-around-the-world-gifford-family2018-1

Yes.  I think in general, humans are programmed to think of things as "needs" when in fact they are wants.  I assume that serves us by allowing us to resign ourselves to those things and not take a hard look at things we strongly want, because we mentally categorize them as needs.  It can make things more comfortable (in the shorter term especially), but means we end up living a less-examined life, and that we don't make adjustments that might actually have little to no effect on our quality of life, because we don't see them as option or see changes as possible.

Our lives are, as MMM would say, exploding volcanoes of choices.  I think it's okay to look at life and say that paying for kids' sports and college, or a large house, or two cars (or even just one!), or dinners out, or a housekeeper (sorry, Pete!) are important to us and worth extra time spent in the workplace.  But we at least need to consider these things and realize they are very much choices, no matter how much the consumer complex wants is to believe otherwise. 

People tell themselves these things are needs because it excuses them from the hard mental work of evaluating the expense, and because it assuages any guilt they might have for choosing them.  It's much easier to be a victim of world that requires a bedroom per kid (plus a spare for the two weeks a year one has guests!), a new SUV, a $1000 swim club and $1000 club soccer spot, and a gardener; than it is to admit that we *choose* those things.

[index]

The people who are spending 25k or less a year are relying on on government subsidized healthcare.  Those of us who are saving enough to pay the for a non-subsidized plan have an additional ~$900 to $1,100 monthly expense. Two couples on this forum can be effectively living the exact same lifestyle with 18k per year in spending, but one couple owns their home and takes advantage of ACA subsidies and the other couple does not:

Couple 1: spending $1500/month (18k per year) during retirement + $900/month assuming they rent + 1000/month for healthcare is spending is spending 41k/yr and needs $1M to retire.

Couple 2: Spends $1500/month, no rent, and negligible healthcare expenses is spending 18k and needs $450K.     

Edit:

All this is to say you may look at a 40k/yr budget at $1M in savings and reasonably see how the poster could make their budget work, but this is roughly the same general budget as someone who posts they are taking off with $450k in savings and is going on medicaid and has a paid off home.     

[ontheway2]

For share my experiences, taking swimming lessons as an example, getting children to a point where they are competent and safe in the water is a need. Swim teams and competitive swimming etc.. is a want. This ramps up when the kids are aged 2/3 - 6 really.

Going back to my pre-kid swimming days (lets say me aged 18-35). My entire swim spend for the year would be $0.00 today, with 3 kids under 6 its materially higher than that. This is just a single example of a cost you are unlikely to have thought about prior to having kids (as in the OPs case). I can give you 20-30 examples like this and I'm sure those with kids aged 6-20 can give me plenty more!!

This is a good example of being able to imagine spend levels near your own but not too many bands outside. To me, swim lessons are not a need, but taking your kids to a pool/lake/etc and teaching them to be comfortable in water and how to not drown is a need. My kid is not a competition level swimmer, but he can jump in and get himself to the side; he can pass the rec pool swim test, and he did it just from practice

Edit: He is 7 and has been swimming short distances for a few years and able to pass the swim test for maybe 1. I expect him to continue to improve with more practice

[BostonBrit]

^All that is true but many people with kids who are FIREing with $500k or less and don't own a home are choosing non-traditional lifestyles. Lots of world travellers, full time RVers and sailors here and elsewhere who have retired early and are raising kids without all the middle-class trappings of houses, cars, expensive kid hobbies, etc.  There are a million stories out there about people who are doing this and there are many forum members here who have posted about doing it. This couple and 3 kids do it on.about $25k/year but there are many who do the same on less. https://www.google.com/amp/s/amp.businessinsider.com/sailing-around-the-world-gifford-family2018-1

Yes.  I think in general, humans are programmed to think of things as "needs" when in fact they are wants.  I assume that serves us by allowing us to resign ourselves to those things and not take a hard look at things we strongly want, because we mentally categorize them as needs.  It can make things more comfortable (in the shorter term especially), but means we end up living a less-examined life, and that we don't make adjustments that might actually have little to no effect on our quality of life, because we don't see them as option or see changes as possible.

Our lives are, as MMM would say, exploding volcanoes of choices.  I think it's okay to look at life and say that paying for kids' sports and college, or a large house, or two cars (or even just one!), or dinners out, or a housekeeper (sorry, Pete!) are important to us and worth extra time spent in the workplace.  But we at least need to consider these things and realize they are very much choices, no matter how much the consumer complex wants is to believe otherwise. 

People tell themselves these things are needs because it excuses them from the hard mental work of evaluating the expense, and because it assuages any guilt they might have for choosing them.  It's much easier to be a victim of world that requires a bedroom per kid (plus a spare for the two weeks a year one has guests!), a new SUV, a $1000 swim club and $1000 club soccer spot, and a gardener; than it is to admit that we *choose* those things.

^^^^^

@Villanelle @Zikoris @spartana @index

The entire point the OP makes and that I also suggested is that its extremely difficult to understand the implications and associated costs of children and the trade offs parents need to make around decisions. I only have children under the age of 6. My opinions, views and expectations of costs have changed from when we had a single 2 year old.  I'm sure if I was to share my expectations/forecasts for costs for the next decade with someone with college age kids they'd equally laugh on the inside at my naivety.

All the points that you make are very interesting but are philosophical suggestions from you given (I believe) none of you have kids. They are idealistic rather than experienced based.

Again, apologies to simplify it back to the swimming point. Compare it to life insurance. Few get life insurance when they are single as worst case, in death your estate sells the asset, settles the liability and move on. Typically the key catalyst for thinking about life insurance is when there is a/multiple dependents.

Investing in teaching your child to swim - be that financially through lessons, or time by yourself is insurance that if they get stuck in a body of water, with or without you or your supervision then you're increasing the chances of them being "ok"... and you know not dying.

Is it a high probability event... no. Are the consequences if it happens high - yes. So you do what you need to do.

As a parent, you're also trying to do your absolute best every day to do the right thing by your kids. And the reality is no one has a rule book on how to do that. The end result you're targeting is typically well-rounded individuals, with good moral compass, who are healthy and happy. Above and beyond that I'm sure there are needs and wants, but these are the basic targets for most parents. And its a tight-rope on how you get there.

Some of the "extra curricular" activities you suggest 100% are not essential. They are unnecessary. But they are a tool (not the answer, not the only way, and certainly not cost efficient) in increasing social interaction, self-confidence and working towards the goal of making a well rounded individual.

All things being even.... the lowest absolute financial cost to aged 25-30 probably has a massive list of negative's and is probably not the answer (choose your own path). And in the same breath throwing money at kids, their education and lifestyle is obvious to most on here as not the right path either.

The point I'm just making, and trying to bring it back to, is that the OP thought some of the assumptions from younger, childless posters were unrealistic and I would directionally agree.

[BostonBrit]

For share my experiences, taking swimming lessons as an example, getting children to a point where they are competent and safe in the water is a need. Swim teams and competitive swimming etc.. is a want. This ramps up when the kids are aged 2/3 - 6 really.

Going back to my pre-kid swimming days (lets say me aged 18-35). My entire swim spend for the year would be $0.00 today, with 3 kids under 6 its materially higher than that. This is just a single example of a cost you are unlikely to have thought about prior to having kids (as in the OPs case). I can give you 20-30 examples like this and I'm sure those with kids aged 6-20 can give me plenty more!!

This is a good example of being able to imagine spend levels near your own but not too many bands outside. To me, swim lessons are not a need, but taking your kids to a pool/lake/etc and teaching them to be comfortable in water and how to not drown is a need. My kid is not a competition level swimmer, but he can jump in and get himself to the side; he can pass the rec pool swim test, and he did it just from practice

Edit: He is 7 and has been swimming short distances for a few years and able to pass the swim test for maybe 1. I expect him to continue to improve with more practice

Totally agree with the route that you have taken here. You identify the need and decide to deploy your resources time/money as you see fit.

Different people will assess and priorities differently either due to circumstances e.g. there is a nearby lake or from experience, e.g. a kid in school drowned. Or completely prioritize the risk - I live in a CBD, have more pressing needs on time and/or money and the nearest water body is 5 miles away!

First rule of parent club - everyone is going to do things differently.

[Zikoris]

I think it's a bit of a cop-out to say "But you don't have kids!" when we are literally talking about our own experiences as children NOT doing any of those things, or the people we're friends/family with who have kids and don't do those things. I mean, I literally learned how to swim in a river with friends (along with most of my peers), so I think it's a bit of a stretch to say that whether or not I have kids changes how realistic that is.

I know a couple of FIREd families with young kids and I'm pretty sure they don't have life insurance because, you know, they FIREd first then had kids, and have a big enough FIRE stache that it's not really relevant anymore.

[havregryn]

I don't know about the US, but here a lot of parents are paying a lot of money for swimming lessons. We are a tiny landlocked country with no real water to swim in, but the even more absurd part is that swimming is part of regular school curriculum and kids have weekly swimming lessons at school from ages 3 to 8. They keep swimming after that too but they are only awarded swimming "graduation" after 5 years of this. I have no idea what they're doing exactly (my son is only two years into this, I haven't tried checking if he can swim without aids, but I would guess so as he complained that the school was trying to get him killed by taking them off lol).  But it is obviously available and it is not a very pressing need as there is literally nowhere where a kid could come across a body of water and end up in it. And yet there are long waiting lists for private swimming lessons. I don't get it.

[BostonBrit]

I know a couple of FIREd families with young kids and I'm pretty sure they don't have life insurance because, you know, they FIREd first then had kids, and have a big enough FIRE stache that it's not really relevant anymore.

Again, its everyone's own prerogative to review the risks that they see to their individual or family unit and decide what level of probability they want to ascribe to different scenarios and assess the impact of those outcomes.

I can only speak from my personal experience, but I would suggest that the risk tolerance for most reduces when they have children/dependents. Another way to put that it is the buffer I want to have need to increase.

Separately, the other comment I made is that for the lifestyle I wanted to pursue for my children, I personally underestimated the costs associated with that. 100% this is not a lean fire route (because that is not the path I or my wife want to follow for our family) but my experience would suggest that whatever route I had chosen from "lean" to "obese" my cost assumptions probably would have been incorrect. Most of my friends with kids are in a similar boat.

I'm just sharing my experiences and view point. This doesn't mean that there aren't others.

[BostonBrit]

I don't know about the US, but here a lot of parents are paying a lot of money for swimming lessons. We are a tiny landlocked country with no real water to swim in, but the even more absurd part is that swimming is part of regular school curriculum and kids have weekly swimming lessons at school from ages 3 to 8. They keep swimming after that too but they are only awarded swimming "graduation" after 5 years of this. I have no idea what they're doing exactly (my son is only two years into this, I haven't tried checking if he can swim without aids, but I would guess so as he complained that the school was trying to get him killed by taking them off lol).  But it is obviously available and it is not a very pressing need as there is literally nowhere where a kid could come across a body of water and end up in it. And yet there are long waiting lists for private swimming lessons. I don't get it.

I'm really sorry if I've directed this towards a swimming orientated discussion. That wasn't my intention, I was just trying to use it as an illustrative example. Where we are in the US, swimming is not part of the young years curriculum nor is it in the UK. Some school systems may vary.

[ontheway2]

I know a couple of FIREd families with young kids and I'm pretty sure they don't have life insurance because, you know, they FIREd first then had kids, and have a big enough FIRE stache that it's not really relevant anymore.

Again, its everyone's own prerogative to review the risks that they see to their individual or family unit and decide what level of probability they want to ascribe to different scenarios and assess the impact of those outcomes.

I can only speak from my personal experience, but I would suggest that the risk tolerance for most reduces when they have children/dependents. Another way to put that it is the buffer I want to have need to increase.

Separately, the other comment I made is that for the lifestyle I wanted to pursue for my children, I personally underestimated the costs associated with that. 100% this is not a lean fire route (because that is not the path I or my wife want to follow for our family) but my experience would suggest that whatever route I had chosen from "lean" to "obese" my cost assumptions probably would have been incorrect. Most of my friends with kids are in a similar boat.

I'm just sharing my experiences and view point. This doesn't mean that there aren't others.

I do agree with you on this. While I do have a 7 year old, I also have a 14 year old, and they can easily get more expensive as they get older. I do not want to live lean now as I want to give them opportunities. However, I do realize what is a want vs need vs true luxury (swim lessons/learn to swim/swim team). I understand costs with kids, but I will be 37 when my oldest graduates. Not everyone planning to fire by early 40s is ignorant in regards to the costs associated with kids

[BicycleB]

I don't think the fundamental point here is whether childless people are unable to understand what it's like to be a parent. The Original Post featured someone with $3.5M and a couple of kids asking whether people who retired on 500k were planning to move back in with their parents. The issue is whether the parent with the expensive lifestyle is correct in his assumption that people with a smaller stash will fail because 500k is naive.

I would argue the naivete here is more on the part of OP, and anyone else who doesn't look closely enough at the plans and lives of the people with net worths or net worth targets in the 400k-700k range. As other posters have pointed out, lots of people on this board have net worths in that range, and are quite unlikely to ever "move back in with their parents." Poster after poster has journals, case studies and personal experience documenting their stability, careful planning and success. In this forum, it's on the person who spends a lot to understand the lifestyle of the person with a smaller stash or thriftier way of living.

TL;DR - There's a difference between "realistic" and "realistic for you."

[BostonBrit]

1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.


It think this is the biggest miss-calculation, I see on this site and it has multiple issues:

a) The cost base is actually more like 6x (so 50% higher) with 2 children for a wide variety of reasons. Obviously, some of these choices are discretionary but this is more the direction you're talking.

b) The emergency fund not only has to be bigger in absolute terms because of the above but also needs to cover a far longer duration (depending on the volatility of employment). E.g. I now run two years of net cash as I work in a volatile industry which could see a significant employment gap if I were cut.
[/quote]

If you go back to the original point I was highlighting that for most people I know, the expenditure line is materially higher as a family than as a singleton/couple in their late 20s. e.g the assumption in the example of the budget for a family of four is 2x the cost of a couple. This is an assumption I see on this site a lot and in my personal opinion is incorrect.

If I look at our costs from when we were in our late 20s as a couple vs today, they have more than doubled.

I'm looking at this though the lens of a male, with a wife who has transitioned to the role of homemaker (with no family near by)

I would be interested to hear from other parents as to how their expenditure patterns have changed from their pre-kids days to having 2+ children +5 years old. e.g not with a single newborn who essentially have their pre-kid lifestyle and home set up but have a baby in their room (which we did for the first 2 years).

[ontheway2]

1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.


It think this is the biggest miss-calculation, I see on this site and it has multiple issues:

a) The cost base is actually more like 6x (so 50% higher) with 2 children for a wide variety of reasons. Obviously, some of these choices are discretionary but this is more the direction you're talking.

b) The emergency fund not only has to be bigger in absolute terms because of the above but also needs to cover a far longer duration (depending on the volatility of employment). E.g. I now run two years of net cash as I work in a volatile industry which could see a significant employment gap if I were cut.

If you go back to the original point I was highlighting that for most people I know, the expenditure line is materially higher as a family than as a singleton/couple in their late 20s. e.g the assumption in the example of the budget for a family of four is 2x the cost of a couple. This is an assumption I see on this site a lot and in my personal opinion is incorrect.

If I look at our costs from when we were in our late 20s as a couple vs today, they have more than doubled.

I'm looking at this though the lens of a male, with a wife who has transitioned to the role of homemaker (with no family near by)

I would be interested to hear from other parents as to how their expenditure patterns have changed from their pre-kids days to having 2+ children +5 years old. e.g not with a single newborn who essentially have their pre-kid lifestyle and home set up but have a baby in their room (which we did for the first 2 years).
[/quote]


Not sure what is happening here with the quotes


If your expenses more than double when you add kids, you're doing it wrong (TIC).  Housing should not more than double. Transportation should not more than double. Food should not more than double. Looking at the expectations, poverty lines do not double from 1 to 2 or 2 to 4. USDA monthly food charts actually show a reduction in each person's additional cost as you add more.  There are new line items that would not exist without children, but they for sure are not large enough to more than double pre-kid costs.

Edit: You also have to consider the tax savings with kids. I didn't take it into consideration when saying the above, but compare tax liability with and without kids and reduce their costs by the difference

[ender]

First rule of parent club - everyone is going to do things differently.

I thought the first rule of parent club was "you can do anything you want as a parent, but my way is the Correct and Right way and I will judge you mercilessly?"

Anyways plenty of people raise families on $40k a year and are not FIRE. The idea that kids have to be dramatically expensive is one of the most "keeping up with the Jones's" things that exists in American middle class culture. There is a long list of social pressures for parents of children now. So many "wants" have become de facto needs.

The reality is that almost all children will be better off with parents who are engaged in their lives rather than parents trying to mash them into a mold of "successful children." FIRE enables parents to expend a considerably larger amount of time in things that matter - engaging with their children and dedicating time to their lives.

I had a ton of extracirricular activities when I was a kid. I would have traded all of them for having two parents who were more actively interested/involved in my life. YMMV.

[BostonBrit]

1. OP has spouse and at least 2 kids, so 4 people vs 1. Perhaps 4x more costs.


It think this is the biggest miss-calculation, I see on this site and it has multiple issues:

a) The cost base is actually more like 6x (so 50% higher) with 2 children for a wide variety of reasons. Obviously, some of these choices are discretionary but this is more the direction you're talking.

b) The emergency fund not only has to be bigger in absolute terms because of the above but also needs to cover a far longer duration (depending on the volatility of employment). E.g. I now run two years of net cash as I work in a volatile industry which could see a significant employment gap if I were cut.

If you go back to the original point I was highlighting that for most people I know, the expenditure line is materially higher as a family than as a singleton/couple in their late 20s. e.g the assumption in the example of the budget for a family of four is 2x the cost of a couple. This is an assumption I see on this site a lot and in my personal opinion is incorrect.

If I look at our costs from when we were in our late 20s as a couple vs today, they have more than doubled.

I'm looking at this though the lens of a male, with a wife who has transitioned to the role of homemaker (with no family near by)

I would be interested to hear from other parents as to how their expenditure patterns have changed from their pre-kids days to having 2+ children +5 years old. e.g not with a single newborn who essentially have their pre-kid lifestyle and home set up but have a baby in their room (which we did for the first 2 years).

Not sure what is happening here with the quotes


If your expenses more than double when you add kids, you're doing it wrong (TIC).  Housing should not more than double. Transportation should not more than double. Food should not more than double. Looking at the expectations, poverty lines do not double from 1 to 2 or 2 to 4. USDA monthly food charts actually show a reduction in each person's additional cost as you add more.  There are new line items that would not exist without children, but they for sure are not large enough to more than double pre-kid costs.

Edit: You also have to consider the tax savings with kids. I didn't take it into consideration when saying the above, but compare tax liability with and without kids and reduce their costs by the difference
[/quote]

I suppose it all depends what your base is pre-kids.

An example would be, at the end of the day if you rent a room and live in a shared house (4 rooms) in an undesirable part of town (which is fine since you're out 16-18 hours a day) in order to keep rent low and maximise your saving rate through your 20s - say at $500/month, it's really not difficult to imagine a scenario where you ultimately move to a generally safer part of the city, with better public schools, and get something more than a single room.

Running some super simple math:

Pre-kid rent: $6,000pa.
Pre kid Utilities (shared house) = $400pm /4 = $100pm = $1,200pa


Post kid:

Buy House: $250k
Mortgage interest = $625/month = $7,500pa
Mortgage capital (non-optional savings) = $560pm / $6,700pa
Total mortgage = $14,200pa

Property tax (1-2%) = $2,500-5,000pa
Maintenance (~1%) = $2,500pa.
Property tax/maintenance costs = $5,000-7,500

Utilities = $400pm = $4,800pa

So just using the above:

Pre kid = $7,200pa
Post Kid = $24,000 - 26,500pa or $12,000 - 13,250pa if you say 50:50 split between parents.

So best case you could argue that there is a 66% increase in housing costs, but it could be significantly more should the household go to a single income (again by choice). Through that lens, the costs go from $7,200pa pre-kids to a scenario of $26,500pa. You can decide how you want to treat the mortgage capital.

You can obviously nuance the costs with taxes, property price structures etc. but equally on the other side would be furniture costs for a full house etc. (I literally spent $500 on furniture total aged 20 to 30).

You talk about transport costs not doubling, but if you go from having close to zero costs through walking or cycling pre-kids anything other than taking those options is an additional line item or cost. There are obviously examples where people have two kids and no cars... but I'd suggest that's the exception rather than the rule (even among the MMM community) and so you're realistically in for $2-3k per year on there when you take into account car cost ($500-1,000pa), Maintenance ($400), Insurance ($1,000) and fuel ($600). Then add in kids car seats etc. is it safe? What is the opportunity cost in your life if its not reliable?

Again, there are some who will live with no car - your call but I would say the bar to owning a car with kids moves lower.

The key metric of comparison to a degree, and as highlighted above is what is your pre-kid baseline and how does that inflate (or not) post kids? Obviously if the person was renting a $3,000pm apartment downtown with their partner pre-kids then they'll probably be able to find something for a similar cost albeit in a different location. If you had a car (of some sort) pre kids then any differential will be negligible.

There was a poster higher up the thread who talked about our ability to only think one or two bands outside of our situation. And I think that this is a fantastic point. Certainly one I'm sure I'm guilty of. I don't reference poverty line charts as tbh (rightly/or wrongly) they're not a benchmark I want to measure against - that's my choice.

It's also worth noting and contextualizing all of the above in that the buffer and savings rate needs to be taken into account and again returns to that point of "operating bands". if when you take all of the above into account and it moves your savings rate from 70% to 60% then its more debatable than if if it takes your savings rate from 40% to 10%.

[ender]

You seem completely convinced that having kids dramatically increases spending.

That's fine. But stop trying to act like everything increases when you have kids. Plenty of people have kids and don't dramatically increase their standard of living.

I have a friend with two kids who bikes almost everywhere still. In your world, this is an impossible reality. That's fine. But again, this doesn't mean that it is a requirement to having kids. For you? sure. But not everyone.

[BostonBrit]

You seem completely convinced that having kids dramatically increases spending.

That's fine. But stop trying to act like everything increases when you have kids. Plenty of people have kids and don't dramatically increase their standard of living.

I have a friend with two kids who bikes almost everywhere still. In your world, this is an impossible reality. That's fine. But again, this doesn't mean that it is a requirement to having kids. For you? sure. But not everyone.

I literally said "Again, there are some who will live with no car - your call but I would say the bar to owning a car with kids moves lower". This is totally a trade off you can decide to make and a world I can fathom. I'm just saying the benefits to having a car when you have kids are probably more plentiful. This is certainly the case for myself when for instance.

Just simplistically going anywhere.. there's the option to throw everyone in the car for a fixed cost or by 5x tickets for planes/trains/buses delete as appropriate.


... Feel free to come back in a couple of years and share your personal insights.... when you have a couple of kids that are school age.

[2Birds1Stone]

It's funny seeing someone cherry pick numbers to prove a point.

No one is going from living in a $500/month rented room to buying a quarter million dollar house because, *children*.

If anyone reads here, or somewhere like Bogleheads regularly, you can see that on both ends of the spending spectrum, kids are not that expensive unless you make it so on purpose. The notion that going from DINKS to a family of 4 suddenly doubles your costs is silly, but you could inflate your lifestyle 10x and make any excuse for you that you would like.

@ontheway2, you make some great points. People just suck at life, and if you outsource your entire life, then yes.....kids are expensive. You can always give them away.

[Villanelle]

yeah, I guess I'm just a naive child-free person, but you are never going to convince me that paying for swim lessons is a need.  I can see why you'd strongly recommend it, and I certainly wouldn't judge or condemn the choice.  But I can't see how any definition of the word" need" really applies.  If they need to swim in order to be safe (and even that is an "if" that should be considered), then there are free options.  There are millions of American kids who never had swim lessons, many (most?) of whom learned to swim. 

I feel like your insistence that things like this are needs instead of wants just proves my earlier point.  People frame things as needs because then they don't have to consider that they are making a choice to do them, at the expense of something else.  It's how people end up saying that it's impossible to save, or to save more than a minimal amount.  Because their kids need separate bedrooms.  And swim lessons.  And new (not used) shoes.  And paid-for college.  And a room full of toys.  And...

I'm not arguing that kids don't increase expenses.  Of course they do.  Of course there are *true* needs to cover, like foods and medicine and basic clothing.  And of course, there are going to be wants that are provided for kids, just as we all provide for wants for ourselves.  I'm not judging paying for things your kids want (or you want for your kids).  But yeah, I see people claiming they "need" things that they pretty demonstrably don't is intellectual dishonesty that I will call out. 

[ender]

It's also worth pointing out that Mr. Money Mustache's phrase from his blog is, "financial freedom through badassity."

And that they don't spend all that much more now that their kid is older than when they had a baby..

[BicycleB]

@BostonBrit, when quoting, it looks like you're pasting the begin quote tag but not the end quote tag, or vice versa. Just make sure that you include both of the tags that include the word "quote" and your quotes should work.

The begin quote tag is in square brackets and starts with the phrase "quote author" followed by an equals sign and a user's name.

The end quote tag is also in square brackets and contains only a slash mark followed by the word "quote".

PS. It sounds like your case is one where you had a very frugal single lifestyle but don't feel comfortable maintaining similar details with kids. So you went from carless to paying for a car because kids. The cost logic you describe follows in that case, but many people don't have that case.

For example, I have a car and no children. At 50something, I'm not likely to add a child, but if I did, the extra vehicle cost would be zero. You can see from my example that not all cases would have more-than-100% ratio of cost to family size. Many forum members here do experience a cost per child that is less than the cost per parent was during single life. I congratulate you on your thrifty single life.

[SwordGuy]

Just simplistically going anywhere.. there's the option to throw everyone in the car for a fixed cost or by 5x tickets for planes/trains/buses delete as appropriate.

And there are cargo bikes or bike trailers that can be used to transport one or more kids.    There are quadricycles - with electric assist - that also can be used.

There are lots of ways to do things that don't involve "the normal way".

[BostonBrit]

Just simplistically going anywhere.. there's the option to throw everyone in the car for a fixed cost or by 5x tickets for planes/trains/buses delete as appropriate.

And there are cargo bikes or bike trailers that can be used to transport one or more kids.    There are quadricycles - with electric assist - that also can be used.

There are lots of ways to do things that don't involve "the normal way".

A) non of which you would buy unless you had kids - so an extra cost. Debate how much more.
B) can be somewhat seasonal in their use
C) have their limits - time, weather, range.

For context depending on where I lived in the world I would have periods with cars and equally periods when it was more convenient (and cheaper not to have cars); e.g living in Manhattan, central London etc.

I fully hear you that you don’t need to follow the herd and the “normal way” which is why most our engaged in The FIRE movement and MMM, but at the same time it is also worth acknowledging that there are many luxuries/wants that can be quite useful - e.g. a car to transport two parents from boston to all Montreal for an incremental cost of $80 return in gas rather than having to pack with precision, get to an airport and drag everyone through security, leave at a certain time etc. vs just jumping in the car.

Or alternatively, a house cleaner. I’d be surprised if anyone on MMM would pay $250/week to a cleaner but there is certainly a point where everyone would - and the “normal way is pretty appealing and you’d see value in that transaction- say if it was $5 week.

My personal decision isn’t to try  and follow or equally not follow the herd at all costs. It’s simply to do why I (and my wife) feel is the best value proposition for our family. This is fluid and at times of deep stress we would be the first to use “normal” help options for a short duration (e.g illness in the extended family), but equally would shun “normal” options if we thought it was a poor use of resources (time/money) or if we thought there was a more holistic lesson for our kids.

Again the goal isn’t to purposely “not follow the crowd”.

Choose your own path.

[BostonBrit]

And of course why even buy a house when you have a kid? A 2 bedroom apt doesn't seem to cost that much more than a 1 bedroom. Especially if you are retired and can move somewhere inexpensive without having to worry about  job opportunities. What you pay in prop tax, insurances, maintenance and repair, extra utilities and investment opportunity costs to buy a house would probably cover a large portion of your monthly rental costs. In hindsight I would have been better off renting but I had pets (the fur kids ;-)) and its a lot harder (and often more expensive) to find rentals with multiple pets than kids.

Again, the point I come back to is that every parent is trying to stumble along and make the right call for their children. Not trying to choose a predetermined path and ultimately thread the needle and try and create a well rounded individual and provide a safe, stable environment for them to grow in.

Everything that you say is A PATH and whilst it may make the most financial sense and get you personally to FIRE quickly, it would contain trade offs and compromises which parents may not believe is in the best interests of their family unit.

Certainly what is generally in the back of my mind when making decisions as a parent come back to risk.

At a macro level, you’re trying to make decisions that minimize the chances of screwing your kid up in the long run (and to be super clear this has nothing to do with your suggested path... as I say pros and cons).

At the micro level, it probably makes you err on the side of caution. E.g see my comment on emergency fund cash size (in order to prevent disruptions to the stability of the kids environment). An even more micro example would be picking an airbnb, ultimately the scenario of picking somewhere in a rough part of town, a dodgy street, or that is in a filthy condition is a lot more manageable when your just dealing with yourself coming off a jet lagged flight, rather than when you’re dragging along a clan of 5 (and in our case under 6) who are frazzled and understandably don’t grasp the concept of jet lag. In that scenario, you probably err on the side of caution and pay slightly more to eradicate some of the risks. (On top of having to get a bigger place).

EVERYONE will take a slightly different path and it’s your prerogative, and it’s everyone's natural bias to have their individual circumstances and experiences shape their decision making process. (Eg living away from family, long term illness disability, childhood experiences - wanting the opposite or exactly the same, moral priorities).

Whilst other of the above I would imagine is not that controversial, I truly believe that until you have kids it’s difficult to really understand the impact it has on your decision making process... with cost base being one (but not the only measure).

[insufFIcientfunds]

So when I was 27 I was making good money, going to bars, having fun; no kids.

Then I got married an adopted a 5 y/o. Sure, some costs increased. Instead of buying one t-shirt (for me); I bought 2 (for me and kid.) T-short budget: Doubled.

The other things didn't. Kid got cold easy, so A/C in the summer went to 78. Money saved.

Sure, kids cost money. They need stuff. I need stuff. I need my basic needs fulfilled. So do they. Anything above that is a luxury. However, the definition of basic needs seems subjective.

OP is much older than I am and has a much difference life experience that I have had so far. I heard a lecture by Chuck Underwood about generational differences and it was the highlight of an event I attended over the summer. I think it honestly made me understand other people more. This MMM blog here is really interesting because we have some serious generational gaps, different life experiences, different multi-cultural experiences, among other things.  I think most friction in threads is probably a result of one or more of those.

Anyways, long bullshit post to say: PTF