Author Topic: Hope to FIRE in 10 years  (Read 2052 times)

InPursuitOfFIRE

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Hope to FIRE in 10 years
« on: June 04, 2018, 07:43:14 PM »
I posted last week about my 2 car loans, home equity loan, and 401K loan and presented a snowball plan to attack the installment debt and got slammed... I should have seen that coming!

Got a lot of different advice from my post and people agreed a case study is needed to know more about our financial situation.  I used the spreadsheet from the Case Study forum and plugged in my numbers.  I also decided to only attack the 401K loan and let the other 3 loans ride it out as is, until I decide to sell my car which is the larger of the auto loans.

As of today (and not reflected in this spreadsheet) is that my wife is now maxing out her 401K.  If we can still to this budget we should have close to $5,000 to start investing in an after-tax account.

One last thing, I couldn't find out where in the spreadsheet to put my current cash savings?  We have $23,000 in an Ally savings account.

Here are my numbers and based on this plan it looks like we can FI in 9 years but the plan would most likely be my wife leaving her job since she hates her job, has no schedule flexibility, and has a long commute due to traffic not distance.  I enjoy my job, have a 10 minute commute and schedule flexibility.  I could work for another 15 years if I wanted.

I'm sure there is still a lot of fat we could cut from our budget but I guess I would consider ourselves fatFIRE instead of leanFIRE.

Paycheck frequency:BiweeklyBiweekly
Paycheck ItemsEarner #1Earner #2Annual
Gross Salary/Wages
$7,392$4,573$311,066
Pretax Health/Dental/Vision Ins.$0$154$4,000
Daycare FSA$0$218$5,657
Employer-sponsored HSA$0$208$5,417
FICA base salary/wages
$7,392$3,993$295,993
401(k) / 403(b) / TSP / etc.$706$457$30,234
W-2 Box 1
$6,686$3,536$265,759
Employer Match$591$274$22,499
1040 AGI
$265,759
Payroll TaxesBiweeklyBiweeklyAnnual
Social Security$306$248$14,397
Medicare$107$58$4,292
Income Taxes
Federal tax$1,6472018, MFJ, item., 2 dep$42,828
State+local tax$556VA state calc'n$14,465
Total income taxes$2,922$75,982
Monthly
Add Health + Daycare reimb.$4710$5,657
Income before other expenses$16,286$195,434
Monthly Average ExpensesComments
Mortgage$1,862Input to Item. Ded.$22,346
HOA$20$240
Property Tax$466Input to Item. Ded.$5,594
Home/Rent Insurance$112$1,343
Car Insurance$81$970
Car Maintenance, Registration, etc.$50$600
Child activities $300$3,600
Christmas/Holidays$200$2,400
Clothing/Shoes$300$3,600
Dining (Lunch/Dinner/Etc.)$450$5,400
Gifts (not charitable contributions)$25$300
Electricity$85$1,020
Emergency Fund$1,000$12,000
Entertainment$200$2,400
Financial Fees$10$120
Fuel/Public Transport$300$3,600
Gas/Oil for heating$60$720
Groceries$800$9,600
Hair Care$40$480
Household; Maintenance$878$10,536
Internet$40$480
Landscaping/Yard work$20$240
Life/LTD Insurance$70$840
Medical (Doctor, Hospital, etc.)$50Input to Item. Ded.$600
Medicine (OTC + Prescription)$300Input to Item. Ded.$3,600
Miscellaneous$200$2,400
Pets$100$1,200
Phone (cell)$132$1,582
Recycling/Trash$42$504
Subscriptions (paper/magazines/etc.)$112$1,344
Travel/Vacation$250$3,000
Water/Sewer$82$984
Wine/Beer/Tobacco$150$1,800
Non-mortgage total
$6,925$83,096
Loans
401k Loan$145$1,744
Home Equity Loan$549$6,589
Jeep Loan$645$7,737
Audi Loan$559$6,705
Total Expense
$10,685$128,218
Total to invest$5,601$67,216
Additional Loan payments$5000$6,000
Available for taxable investment:$5,1010$61,216
Summary:
"Gross" income$25,922$311,066
Income taxes$6,332$75,982
After-tax income$19,590$235,084
IRA+401k/403b/TSP/457$1,529$991$30,234
Living expenses$9,120$109,442
Non-mortgage loans$1,898$22,776
After-tax investable$5,601$67,216
Time to FI?:
Guess at time to FI9.years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments5.00%percent
Real, after tax, return on taxable investments4.25%percent
Current Savings
Tax-deferred (e.g. trad. IRA/401k)$801,256
Projected Savings at Retirement
Taxable$837,543
Tax-deferred (e.g. trad. IRA/401k)$1,824,468
Roth + HSA$59,726
Total projected stash$2,721,738
Projected Expenses in Retirement
Non-loan, non-work expenses$83,096
Change in spending after RE-$4,000
Annual non-tax retirement expense$79,096
Income taxes$6,446
Total$85,542
Total loan principal due at FI$305,464
Stash needed for retirement @4.0% SWR$2,444,024
Have $277,714 extra.


Filing Status21=S, 2=MFJ, 3=HOH
# Dependents2
# Children <172
# Children <132
Adult #1Adult #2
Age4042
Full-time student?00
AGI$265,759
Std. Deduct.$24,000
Act. Deduct.$24,777
Exemption$0
Taxable$240,981
1040 Tax$46,415
Non-refund. CTC$4,000
Tax after n-r credit$42,415
Add'l Medicare tax$414
Net Tax$42,828
Mtg. Int. (approx.)$14,7771000000
State tax$14,465VA
Prop tax$5,594
Item. Deduct.$24,777
VersionV11.11

Loans:Orig. Prin.Orig. LengthCurr. Prin.Yrs leftRate
Mortgage$396,00030$385,206283.875%
401k Loan$33,40030$29,82843.25%
Home Equity Loan$30,0005$24,42943.75%
Jeep Loan$37,0165$25,03931.75%
Audi Loan$33,5265$14,89820.0%

MDM

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Re: Hope to FIRE in 10 years
« Reply #1 on: June 04, 2018, 10:28:36 PM »
Well done!

For a nine-year gaze into the crystal ball, that seems a reasonable projection.  It may be a little conservative in that you may not add $12K/yr to the emergency fund every year, but then again "who knows?" so close enough.

The spreadsheet ignores current cash savings: the assumption is that those sit there as an emergency fund, more or less keeping up with inflation but not contributing to FI.

You can do some "what if?" calculations now.  E.g., ~$7K/yr reduction in spending (and investing that amount instead) cuts your time to FI by ~1 year.  Depending on where those reductions would occur, that may or may not be worthwhile for you.

A lot of water will flow under the bridge in the next 8-10 years, and time will tell how this projection does with age.  At some point you may want to use more sophisticated projections, such as one of those mentioned in Best and/or Recommended Retirement Calculator.

For now, you have a snapshot and a plan.  Good luck!

InPursuitOfFIRE

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  • Posts: 13
Re: Hope to FIRE in 10 years
« Reply #2 on: June 05, 2018, 05:04:27 AM »
Thank you for taking a look!  Appreciate the feedback :)

Fomerly known as something

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Re: Hope to FIRE in 10 years
« Reply #3 on: June 05, 2018, 07:33:14 AM »
So my question to you is.  Is this plan do-able for you and your family.  What has been your previous spending.  I see what you want to budget not what you have been because you would have more assets if this has been your budget unless you just received a large increase in income.

Based on your debt pay-off question before yesterday there was no maxing out of your retirement accounts nor was there any money going to after-tax investments.

The other minor question I have is about your $1000 a month to your emergency fund.  How much larger are you going to make your e-fund.  Are you going to have this as a true emergency fund or will you find yourself add this money to the Miscellanous part of your budget.  (ie is it an emergency fund or a slush fund.  Neither is a bad thing but define it for yourself.)

patchyfacialhair

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Re: Hope to FIRE in 10 years
« Reply #4 on: June 05, 2018, 08:18:14 AM »
I'm far from the best person to take advice from, so I figured I'd just add a few thoughts for a few line items...



Paycheck frequency:   Biweekly   Biweekly   
Paycheck Items   Earner #1   Earner #2   Annual
Gross Salary/Wages
$7,392   $4,573   $311,066
Pretax Health/Dental/Vision Ins.   $0   $154   $4,000
Daycare FSA   $0   $218   $5,657
Employer-sponsored HSA   $0   $208   $5,417
FICA base salary/wages
$7,392   $3,993   $295,993
401(k) / 403(b) / TSP / etc.   $706   $457   $30,234
W-2 Box 1
$6,686   $3,536   $265,759
Employer Match   $591   $274   $22,499
1040 AGI
$265,759
Payroll Taxes   Biweekly   Biweekly   Annual
Social Security   $306   $248   $14,397
Medicare   $107   $58   $4,292
Income Taxes         
Federal tax   $1,647   2018, MFJ, item., 2 dep   $42,828
State+local tax   $556   VA state calc'n   $14,465
Total income taxes   $2,922      $75,982
Monthly      
Add Health + Daycare reimb.   $471   0   $5,657
Income before other expenses   $16,286      $195,434
Monthly Average Expenses      Comments   
Mortgage   $1,862   Input to Item. Ded.   $22,346
HOA   $20      $240
Property Tax   $466   Input to Item. Ded.   $5,594
Home/Rent Insurance   $112      $1,343
Car Insurance   $81      $970
Car Maintenance, Registration, etc.   $50      $600 This seems low for the expensive cars you have
Child activities   $300      $3,600 Consider limiting kids to one activity at a time, could help save time and sanity
Christmas/Holidays   $200      $2,400
Clothing/Shoes   $300      $3,600 This is a ton, and should be cut down
Dining (Lunch/Dinner/Etc.)   $450      $5,400
Gifts (not charitable contributions)   $25      $300
Electricity   $85      $1,020
Emergency Fund   $1,000      $12,000 What's your end goal with this? Will you contribute to other investments once this is fully funded?
Entertainment   $200      $2,400
Financial Fees   $10      $120 This is negligible, but random. Why is this here? What are you paying for?
Fuel/Public Transport   $300      $3,600 Seems like a lot...getting rid of the jeep would help here a ton
Gas/Oil for heating   $60      $720
Groceries   $800      $9,600 Could be cut down with some planning, but not completely out of this world
Hair Care   $40      $480
Household; Maintenance   $878      $10,536
Internet   $40      $480
Landscaping/Yard work   $20      $240
Life/LTD Insurance   $70      $840
Medical (Doctor, Hospital, etc.)   $50   Input to Item. Ded.   $600
Medicine (OTC + Prescription)   $300   Input to Item. Ded.   $3,600
Miscellaneous   $200      $2,400
Pets   $100      $1,200
Phone (cell)   $132      $1,582
Recycling/Trash   $42      $504
Subscriptions (paper/magazines/etc.)   $112      $1,344 Do you really use all your subscriptions?
Travel/Vacation   $250      $3,000 This seems super low, maybe it's true but i'd bet you're way off here
Water/Sewer   $82      $984
Wine/Beer/Tobacco   $150      $1,800 Holy moly, seriously?
Non-mortgage total
$6,925      $83,096
Loans         
401k Loan   $145      $1,744
Home Equity Loan   $549      $6,589
Jeep Loan   $645      $7,737
Audi Loan   $559      $6,705
Total Expense
$10,685      $128,218
Total to invest   $5,601      $67,216
Additional Loan payments   $500   0   $6,000
Available for taxable investment:   $5,101   0   $61,216
Summary:         
"Gross" income   $25,922      $311,066
Income taxes   $6,332      $75,982
After-tax income   $19,590      $235,084
IRA+401k/403b/TSP/457   $1,529   $991   $30,234
Living expenses   $9,120      $109,442
Non-mortgage loans   $1,898      $22,776
After-tax investable   $5,601      $67,216
Time to FI?:         
Guess at time to FI   9.   years   
Safe Withdrawal Rate   4.00%   percent   
Real return on tax-deferred investments   5.00%   percent   
Real, after tax, return on taxable investments   4.25%   percent   
Current Savings         
Tax-deferred (e.g. trad. IRA/401k)   $801,256      
Projected Savings at Retirement         
Taxable   $837,543      
Tax-deferred (e.g. trad. IRA/401k)   $1,824,468      
Roth + HSA   $59,726      
Total projected stash   $2,721,738      
Projected Expenses in Retirement         
Non-loan, non-work expenses   $83,096      
Change in spending after RE   -$4,000      
Annual non-tax retirement expense   $79,096      
Income taxes   $6,446      
Total   $85,542      
Total loan principal due at FI   $305,464      
Stash needed for retirement @4.0% SWR   $2,444,024      
Have $277,714 extra.      


Filing Status   2   1=S, 2=MFJ, 3=HOH   
# Dependents   2      
# Children <17   2      
# Children <13   2      
Adult #1   Adult #2   
Age   40   42   
Full-time student?   0   0   
AGI   $265,759      
Std. Deduct.   $24,000      
Act. Deduct.   $24,777      
Exemption   $0      
Taxable   $240,981      
1040 Tax   $46,415      
Non-refund. CTC   $4,000      
Tax after n-r credit   $42,415      
Add'l Medicare tax   $414      
Net Tax   $42,828      
Mtg. Int. (approx.)   $14,777   1000000   
State tax   $14,465   VA   
Prop tax   $5,594      
Item. Deduct.   $24,777      
Version   V11.11      

Loans:   Orig. Prin.   Orig. Length   Curr. Prin.   Yrs left   Rate
Mortgage   $396,000   30   $385,206   28   3.875%
401k Loan   $33,400   30   $29,828   4   3.25%
Home Equity Loan   $30,000   5   $24,429   4   3.75%
Jeep Loan   $37,016   5   $25,039   3   1.75% (Sell this car, get something paid off)
Audi Loan   $33,526   5   $14,898   2   0.0% (Sell this car, get something paid off)

InPursuitOfFIRE

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  • Posts: 13
Re: Hope to FIRE in 10 years
« Reply #5 on: June 05, 2018, 02:51:11 PM »
Quote
Car Maintenance, Registration, etc.   $50      $600 This seems low for the expensive cars you have
OK, honestly I never held onto a car long enough to have any major maintenance done on them.  For my wife's Q5 I did change out the rotors and pads myself savings a couple grand from what was quoted at a mechanic.  My Jeep had 2 year free maintenance.  After that Jeep's are easy to work on yourself.  Regardless I still went ahead and bumped up the monthly budget to $200 or $2,400 per year.

Quote
Child activities   $300      $3,600 Consider limiting kids to one activity at a time, could help save time and sanity
Agreed, I was just being generous here. They only do one sport at a time, then there's summer camp since we both work, or something irregular to do with the kids like the Cirque du Soleil show that was in town last week.

Quote
Clothing/Shoes   $300      $3,600 This is a ton, and should be cut down
I agree, and since this should be a budget I expect post-FI we definitely won't be needing newer clothes anymore.

Quote
Emergency Fund   $1,000      $12,000 What's your end goal with this? Will you contribute to other investments once this is fully funded?
Agree, no need to keep saving once we FIRE.

Quote
Financial Fees   $10      $120 This is negligible, but random. Why is this here? What are you paying for?
Agree it is negligible... this was the turbo tax fee to file state and federal if i recall.

Quote
Fuel/Public Transport   $300      $3,600 Seems like a lot...getting rid of the jeep would help here a ton
True... and I figured during post FIRE we would be driving more (i.e. day trips or road trips).

Quote
Subscriptions (paper/magazines/etc.)   $112      $1,344 Do you really use all your subscriptions?
Nope don't need them all... I lowered to only Netflix, Hulu, and HBO and some other stuff... even that could be scrapped except for Netflix.

Quote
Travel/Vacation   $250      $3,000 This seems super low, maybe it's true but i'd bet you're way off here
Agree, I beefed this up to $700/month or $8,400 year.

Quote
Wine/Beer/Tobacco   $150      $1,800 Holy moly, seriously?
This is for wine and bourbon... bourbon is my weakness and my wife enjoys wine.  I have gotten better with bourbon but I figured I would still budget for it and see what happens.

I included my updated numbers and now it's telling me I can FIRE in 7 years! The only expense I am not sure how to calculate or budget is my medical/dental insurance in post FIRE.

When I first went about creating this budget I assumed the budget was for today and not in FIRE.  Hence the budget for kids and such.  Without those my budget is looking much better.


Paycheck frequency:BiweeklyBiweekly
Paycheck ItemsEarner #1Earner #2Annual
Gross Salary/Wages
$7,392$4,573$311,066
Pretax Health/Dental/Vision Ins.$0$154$4,000
Daycare FSA$0$218$5,657
Employer-sponsored HSA$0$208$5,417
FICA base salary/wages
$7,392$3,993$295,993
401(k) / 403(b) / TSP / etc.$706$457$30,234
W-2 Box 1
$6,686$3,536$265,759
Employer Match$591$274$22,499
1040 AGI
$265,759
Payroll TaxesBiweeklyBiweeklyAnnual
Social Security$306$248$14,397
Medicare$107$58$4,292
Income Taxes
Federal tax$1,6472018, MFJ, item., 2 dep$42,828
State+local tax$556VA state calc'n$14,465
Total income taxes$2,922$75,982
Monthly
Add Health + Daycare reimb.$4710$5,657
Income before other expenses$16,286$195,434
Monthly Average ExpensesComments
Mortgage$1,862Input to Item. Ded.$22,346
HOA$20$240
Property Tax$466Input to Item. Ded.$5,594
Home/Rent Insurance$112$1,343
Car Insurance$81$970
Car Maintenance, Registration, etc.$200$2,400
Christmas/Holidays$200$2,400
Clothing/Shoes$100$1,200
Dining (Lunch/Dinner/Etc.)$450$5,400
Gifts (not charitable contributions)$50$600
Electricity$85$1,020
Entertainment$300$3,600
Fuel/Public Transport$300$3,600
Gas/Oil for heating$60$720
Groceries$700$8,400
Hair Care$60$720
Household; Maintenance$700$8,400
Internet$40$480
Landscaping/Yard work$30$360
Life/LTD Insurance$70$840
Medical (Doctor, Hospital, etc.)$50Input to Item. Ded.$600
Medicine (OTC + Prescription)$300Input to Item. Ded.$3,600
Miscellaneous$200$2,400
Pets$100$1,200
Phone (cell)$132$1,582
Recycling/Trash$42$504
Subscriptions (paper/magazines/etc.)$67$804
Travel/Vacation$700$8,400
Water/Sewer$82$984
Wine/Beer/Tobacco$150$1,800
Non-mortgage total
$5,847$70,160
Loans
401k Loan$145$1,744
Home Equity Loan$549$6,589
Jeep Loan$645$7,737
Audi Loan$559$6,705
Total Expense
$9,607$115,282
Total to invest$6,679$80,152
Additional Loan payments$5000$6,000
Available for taxable investment:$6,1790$74,152
Summary:
"Gross" income$25,922$311,066
Income taxes$6,332$75,982
After-tax income$19,590$235,084
IRA+401k/403b/TSP/457$1,529$991$30,234
Living expenses$8,042$96,506
Non-mortgage loans$1,898$22,776
After-tax investable$6,679$80,152
Time to FI?:
Guess at time to FI7.years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments5.00%percent
Real, after tax, return on taxable investments4.25%percent
Current Savings
Tax-deferred (e.g. trad. IRA/401k)$801,256
Projected Savings at Retirement
Taxable$704,470
Tax-deferred (e.g. trad. IRA/401k)$1,556,795
Roth + HSA$44,102
Total projected stash$2,305,367
Projected Expenses in Retirement
Non-loan, non-work expenses$70,160
Annual non-tax retirement expense$70,160
Income taxes$5,257
Total$75,417
Total loan principal due at FI$325,657
Stash needed for retirement @4.0% SWR$2,211,077
Have $94,290 extra.


Filing Status21=S, 2=MFJ, 3=HOH
# Dependents2
# Children <172
# Children <132
Adult #1Adult #2
Age4042
Full-time student?00
AGI$265,759
Std. Deduct.$24,000
Act. Deduct.$24,777
Exemption$0
Taxable$240,981
1040 Tax$46,415
Non-refund. CTC$4,000
Tax after n-r credit$42,415
Add'l Medicare tax$414
Net Tax$42,828
Mtg. Int. (approx.)$14,7771000000
State tax$14,465VA
Prop tax$5,594
Item. Deduct.$24,777
VersionV11.11

Loans:Orig. Prin.Orig. LengthCurr. Prin.Yrs leftRate
Mortgage$396,00030$385,206283.875%
401k Loan$33,40030$29,82843.25%
Home Equity Loan$30,0005$24,42943.75%
Jeep Loan$37,0165$25,03931.75%
Audi Loan$33,5265$14,89820.0%


Now that I think about it, isn't the FI number calculated using my budget now?  It thinks (based on my post-FIRE budget) that I have a lot more money to invest today based on my income minus expenses (which I budgeted for post-FIRE).

MDM

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Re: Hope to FIRE in 10 years
« Reply #6 on: June 05, 2018, 03:36:01 PM »
I included my updated numbers and now it's telling me I can FIRE in 7 years! The only expense I am not sure how to calculate or budget is my medical/dental insurance in post FIRE.

When I first went about creating this budget I assumed the budget was for today and not in FIRE.  Hence the budget for kids and such.  Without those my budget is looking much better.
...
Now that I think about it, isn't the FI number calculated using my budget now?  It thinks (based on my post-FIRE budget) that I have a lot more money to invest today based on my income minus expenses (which I budgeted for post-FIRE).
Yes, your initial and most recent thoughts are the correct ones.

The "Change in spending after RE" number is how to distinguish between "while working" vs. "after retirement". 

patchyfacialhair

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Re: Hope to FIRE in 10 years
« Reply #7 on: June 05, 2018, 04:11:09 PM »
Yep, agree w MDM.

Also, don't forget to include expected income taxes paid in retirement if you're pulling from traditional aka pre-tax retirement accounts.

Regarding the health insurance thing: my state allows me to run "hypothetical" cost estimates on our state exchange to see what an out of pocket health plan would cost with various ages and family sizes. See if yours can do the same. I add 25% to the cost estimate provided as a safety margin.

radram

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Re: Hope to FIRE in 10 years
« Reply #8 on: June 05, 2018, 07:10:43 PM »
I wrote this 4 hours ago. Just sending now. Some of my points may have been addressed.

Very detailed, well thought out plan. Congratulations on your great success

Do you really spend $10,000 per year just on maintenance for your home?

Grocery bill looks high($10,000), especially after spending $5,000 a year eating out.

You mentioned you would spend $4,000 less once FIRE. Is this more of a best guess? Have you ever detailed where that savings would come from? Maybe add 2 columns after annual expenses to include estimated monthly and annual expenses in FIRE. Some likely will be higher (travel), while others might be cut quite a bit (clothing?).

What about healthcare? I know it is next to impossible to accurately know where we go from here, but what is your estimated cost?

Numbers seem to add up. Your spending is much higher than mine, and probably higher than 95% or so of the readers here. Are you looking for ways to reduce spending, or just looking to see if your plan numbers work? You already have the advice regarding your cars.

InPursuitOfFIRE

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  • Posts: 13
Re: Hope to FIRE in 10 years
« Reply #9 on: June 06, 2018, 04:57:42 AM »
Numbers seem to add up. Your spending is much higher than mine, and probably higher than 95% or so of the readers here. Are you looking for ways to reduce spending, or just looking to see if your plan numbers work? You already have the advice regarding your cars.

Yes my spending is still higher... i just wanted to see what our FIRE number would be with that spending.  We have plans to sell the cars and pay cash with the equity.  That will speed things up some.  Our grocery bill is my number one priority I am trying to cut back on.  Lately I have been planning recipes and making a list and STICKING to the list at the store.   It's been working so far.  We'll see how the June budget ends up.

Thank you all for the advice!

seemsright

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Re: Hope to FIRE in 10 years
« Reply #10 on: June 06, 2018, 11:12:35 AM »
I am going to chime in.

I personalty think your 401k loan needs to be the first loan that you pay off in a 'your hair is on fire' mode.

How much food is in your house. Could you spend some time eating up things that have been in your pantry for a long time? I see that you have 2 kids how old are they? Because if they are toddlers vs. teenagers your food bill might not be that far off.

I see that your property taxes are insanely high and you have a hoa. Is moving a option to a cheaper house? Just getting away from a hoa with a fee would save you money in the long haul.

You all ready have been hounded on the cars. I have a fancy car (a '12 Outback that we paid cash for) but we will drive that thing forever. Hubby has a '05 Tacoma (which was his dream truck at the time) and he too will drive that thing till it dies. So you could suck it up and take the mode 'your hair is on fire' and pay them off and keep them or sale them and find others.

I do not think you have a cash problem...you have I keep up with the Jones problem.

Pick one or two things that are important to you and ditch the rest. Find cheap booze. There are some amazing wines out there for $6 or less a bottle. Bourbon is amazing and I have found a few that I really like in the $25 a bottle range. I pay for XM radio for my house and my car at the tune of $300 a year...and it would be the very last thing I would cut if I had to. Once you learn more about MMM and the tricks we use to have the most amazing life ever with ample freedom and time you will learn that keeping up with the Jones is for suckers and you will be busy not giving a rats ass. Being debt free is very important to me and Hubby and we are. We have simplified our life to the point where I will never have to get a job again. Our investments are making enough that I can say I am RE. And we will be FI in about 3 years. There is a method to this madness and it is pretty damn awesome.

It does get annoying at times. But knowing the freedom is amazing.

Work on developing the mindset while you work on cutting your budget. Ditch the coffee out, take it in a thermos from home, make your own lunch.  Look at your net worth and try to make that number grow.
« Last Edit: June 06, 2018, 12:34:06 PM by seemsright »
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InPursuitOfFIRE

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Re: Hope to FIRE in 10 years
« Reply #11 on: June 06, 2018, 02:22:02 PM »
How much food is in your house. Could you spend some time eating up things that have been in your pantry for a long time? I see that you have 2 kids how old are they? Because if they are toddlers vs. teenagers your food bill might not be that far off.

I see that your property taxes are insanely high and you have a hoa. Is moving a option to a cheaper house? Just getting away from a hoa with a fee would save you money in the long haul.

Pick one or two things that are important to you and ditch the rest. Find cheap booze. There are some amazing wines out there for $6 or less a bottle. Bourbon is amazing and I have found a few that I really like in the $25 a bottle range. I pay for XM radio for my house and my car at the tune of $300 a year...and it would be the very last thing I would cut if I had to. Once you learn more about MMM and the tricks we use to have the most amazing life ever with ample freedom and time you will learn that keeping up with the Jones is for suckers and you will be busy not giving a rats ass. Being debt free is very important to me and Hubby and we are. We have simplified our life to the point where I will never have to get a job again. Our investments are making enough that I can say I am RE. And we will be FI in about 3 years. There is a method to this madness and it is pretty damn awesome.

My kids are 7 and 9 years old and don't have large appetites yet fortunately.

I have been a SiriusXM subscriber for years but the trick is not to pay full price which seems to be what your paying.  Every 6 months I call to cancel, then they offer a slightly cheaper deal... don't take that deal but say sorry not good enough and you would still like to cancel.  They will try to entice you with a slightly cheaper one.  Still don't take it.  The 3rd is a deal where the per month basis works out to be about $6.  I think I won't be renewing this time around since I been podcasting a lot lately in the car and not missing the music or other talk radio I was listening too.

DebtFreeinPhilly

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Re: Hope to FIRE in 10 years
« Reply #12 on: June 06, 2018, 02:46:52 PM »
To ease the the pain of adjusting to the new MMM lifestyle, I would focus on one portion of your budget each month. The mistake I made when I first learned of MMM & FIRE was trying to do everything at once. Reduce your expenses in one category each month (i.e. groceries, restaurants, sports, bourbon, etc.) and then stick with that new level of spending for a few months while you focus on another area.

If I was in your shoes, here is the approach I would take given the numbers:
1) Sell your Jeep. Take the equity and buy another car. You make the first sacrifice because I am sure you've told your wife that this was your dream car.
2) Take $15k from savings and pay off your wife's car. Your wife gets to keep her car for the long commutes and is hopefully happier for it.
3) Apply $1k from no car payments towards other loans. Get paid off faster right from the get go.
4) Apply remaining $204 to investment fund. Helps grow non-retirement accounts for your FIRE date.
5) Concentrate on reducing my other expenses. Reduces your outflow expenses faster, thus freeing up more cash to pay off debt or invest. 

I am debt adverse, so I'd pay that off as quick as possible. Its your choice, and this is just what I would do in your shoes.

BONUS: I buy Woodford Reserve at Costco. Largest bottle is 1.5L which lasts me a good while.
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seemsright

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Re: Hope to FIRE in 10 years
« Reply #13 on: June 06, 2018, 03:10:36 PM »


My kids are 7 and 9 years old and don't have large appetites yet fortunately.

I have been a SiriusXM subscriber for years but the trick is not to pay full price which seems to be what your paying.  Every 6 months I call to cancel, then they offer a slightly cheaper deal... don't take that deal but say sorry not good enough and you would still like to cancel.  They will try to entice you with a slightly cheaper one.  Still don't take it.  The 3rd is a deal where the per month basis works out to be about $6.  I think I won't be renewing this time around since I been podcasting a lot lately in the car and not missing the music or other talk radio I was listening too.
[/quote]

Thanks for the tip on the Xm I will try that come Oct. I have the radio on from the time I get up till I go to bed and get complete joy in going from the house to the car and the same song is playing all with no ads. So even at $300 a year as a per hour cost it is not much. My almost 8 year old just discovered Classic Rewind and is having a grand time with it.

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InPursuitOfFIRE

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Re: Hope to FIRE in 10 years
« Reply #14 on: June 06, 2018, 03:16:17 PM »
To ease the the pain of adjusting to the new MMM lifestyle, I would focus on one portion of your budget each month. The mistake I made when I first learned of MMM & FIRE was trying to do everything at once. Reduce your expenses in one category each month (i.e. groceries, restaurants, sports, bourbon, etc.) and then stick with that new level of spending for a few months while you focus on another area.

If I was in your shoes, here is the approach I would take given the numbers:
1) Sell your Jeep. Take the equity and buy another car. You make the first sacrifice because I am sure you've told your wife that this was your dream car.
2) Take $15k from savings and pay off your wife's car. Your wife gets to keep her car for the long commutes and is hopefully happier for it.
3) Apply $1k from no car payments towards other loans. Get paid off faster right from the get go.
4) Apply remaining $204 to investment fund. Helps grow non-retirement accounts for your FIRE date.
5) Concentrate on reducing my other expenses. Reduces your outflow expenses faster, thus freeing up more cash to pay off debt or invest. 

I am debt adverse, so I'd pay that off as quick as possible. Its your choice, and this is just what I would do in your shoes.

BONUS: I buy Woodford Reserve at Costco. Largest bottle is 1.5L which lasts me a good while.

Thank you for the advice!  We transferred the money from savings just now so we can pay off her car.  I'm still holding on to my Jeep for now but may rethink this and sell sooner (still debating).  Mean time we will attack the 401K loan since it puts our money back into the market as well and increasing our net worth that much faster. 

I don't have a Costco membership (feel like I am the only person I know who doesn't have one) but might get one to do bulk purchases on basics in hopes to bring down the grocery bill more.  I like your idea about tackling one thing at a time.  This month is the grocery bill.

I also just found out I was able to start investing in our HSA.  Any funds over $1,000 can be invested so I just sent $2,000 to a Vanguard large cap, low fee fund (.07%).  Unfortunately I am not able to max out the HSA until open enrollment.  We currently have it set for $4,400.

DebtFreeinPhilly

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Re: Hope to FIRE in 10 years
« Reply #15 on: June 08, 2018, 02:55:57 PM »
Thank you for the advice!  We transferred the money from savings just now so we can pay off her car.  I'm still holding on to my Jeep for now but may rethink this and sell sooner (still debating).  Mean time we will attack the 401K loan since it puts our money back into the market as well and increasing our net worth that much faster. 

I don't have a Costco membership (feel like I am the only person I know who doesn't have one) but might get one to do bulk purchases on basics in hopes to bring down the grocery bill more.  I like your idea about tackling one thing at a time.  This month is the grocery bill.


Great job on paying off the car! As you move down the debts, improve your expense outflow, increase investing powers, and begin to shift your thinking, you are really going to see the differences in your before & after financial pictures. If you can, I would begin to include the kids in some of your decision making. Show them the financial quagmire you're in , the plan to get out, how they can help, and what they think. Also, have them help with the weekly grocery shopping. This was an easy way for kids to learn about budgeting, what goes into each meal, and how to make multiple meals from one ingredient. Plus, its more time you spend with the kids in a positive way!

Keep it up and keep us updated. As you knock out a debt, adjust your expenses, or your net worth increases, please update your original post so others can see your progress.
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ChesterT

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Re: Hope to FIRE in 10 years
« Reply #16 on: June 09, 2018, 12:38:37 PM »
The HSA plan I am in allows us to change contributions at least monthly before open enrollment, and that is not a company policy, it is a general rule, I thought. It is usually an FSA that doesn't allow changes. You may have already checked, but it might be worth it to check again or to do some research.

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Re: Hope to FIRE in 10 years
« Reply #17 on: June 09, 2018, 05:14:14 PM »
I can add money to my HSA directly from my back account.  IF you are under FEHB, either Aetna or GEHA you can just link you bank account and make the change.  Also I can edit a payroll contribution starting any pay period.

CalBal

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Re: Hope to FIRE in 10 years
« Reply #18 on: June 10, 2018, 09:26:12 AM »
I can't change my payroll contribution either until open enrollment but you should be able to contribute directly. Mine is through Bank of America. (Log onto your HSA account to see if you have that option, or call your provider.) The only thing is you have to keep track (they don't send forms until after taxes are due) and you have to record your personally contributed amounts separately. Someone on this site told me how to do it, but I can't find it on my quick search of my journal (so maybe it was on another thread), but I think you should be able to, even if it is a little bit of a hassle for the current year. Then you can change your contributions for next year during open enrollment.

freya

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Re: Hope to FIRE in 10 years
« Reply #19 on: June 10, 2018, 10:07:36 AM »
Wow, this is a beautifully detailed case posting...

I thought I'd chime on in the general principle of investing on margin, which is what you're doing if you invest while the non-mortgage loans are still outstanding.  Doing things sequentially is simpler and may even get you where you want to go faster.  Basically: direct all your taxable cash including the savings earmarked for the emergency fund and net from the car sale toward the loans.  You can temporarily do without an emergency fund, because of your high income, the home equity line, and the safety of having two jobs.  Once the loans are paid off, put all after-tax money into rebuilding the emergency fund to your desired level. After that, all after-tax savings can be invested.

I agree with paying off the 401K loan first - in fact, that would be higher priority than taxable investing no matter what, because that money gets invested tax-deferred immediately.  That loan can be gone within a month.  Home equity is next (gone in 4 months based on current income alone), then the 1.75% car loan (another 3.5 months).  You can argue not to prepay that 0% loan though - it's free money!

My other suggestion is to estimate the cost of your wife's job.  That includes the long commute with its gas and car costs, the high grocery spending which probably has a lot to do with buying convenience foods, day care, and work-associated clothes/personal care spending.  And even the alcohol budget, which probably has a lot to do with decompression at the end of a long day.   I assume the job will still show a good profit, but it might put things into perspective and make it easier to consider alternatives that might pay less, but show similar profit and provide better quality of life.