Author Topic: I wonder what you all will say to me?  (Read 12069 times)

zee dot

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Re: I wonder what you all will say to me?
« Reply #50 on: May 06, 2019, 11:17:57 AM »
There is a lot of great advice in this thread.
You've made some progress already.

I'm really, really concerned about your idea that an extra paycheck month is going to solve a lot of your problems.

I'd like to see something like this:

2290   mort   REFINANCED, LOWERED MONTHLY PAYMENT BY $XYZ
310   gas/heat  DID ENERGY AUDIT, LOWERED MONTHLY PAYMENT BY $XYZ
95   electric    STARTED KEEPING UNUSED ITEMS OFF, LOWERED MONTHLY PAYMENT BY $XYZ
150   cell     CHANGED TO CHEAPER PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
105   internet   CHANGED PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
550   healthcare 
190   car ins ALTERED PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
100   other transport   WHAT EVEN IS THIS??? LOWERED MONTHLY PAYMENT BY $XYZ
545   SLs
650   food  CHANGED HABITS, LOWERED MONTHLY PAYMENT BY $XYZ

Total cut each month: $XYZ


Bernard

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Re: I wonder what you all will say to me?
« Reply #51 on: May 15, 2019, 05:35:34 PM »
1) Never close your credit card accounts. I have a FICO of 841 now, still climbing, and I use my credit cards very little, usually only at the gas station.

2) Wasted $142 per month on DirecTV, for about 10+ years. That's $20K with compound interest. Bought a couple of Roku boxes (and Roku stock), and now my TV bill is $0. Sooooo much to watch!

3) Wasted about $200 per month on 3 AT&T cell phone lines, so about $67 each. Switched to T-Mobile's 50+ plan . . . 2 lines, unlimited, all taxes, etc. included, for $60 per month. A couple months later they offered a 3rd line for $30 extra, so now we 3 are paying $30 each for this, and that rate is locked in for good. Fantastic deal.

4) You have $675K in your 401K. Let that simmer 'til you are eligible for retirement benefits, and you'll be able to enjoy a safe retirement. I would actually live off that and delay benefits 'til you are 67. Combined with SS, you'll be fine. Thus, your focus has to be to eliminate debt now, one after the other.

MountainFlower

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Re: I wonder what you all will say to me?
« Reply #52 on: May 16, 2019, 06:47:05 PM »
Hi,

I had been using mint previously, but I started using YNAB last month and wow, now I can really see where my money is going every day.  It has been shocking to me to see the vast difference between what I "thought" was spending in certain categories and what I actually am spending.  I found a two month free trial to try it out because it does cost something like $8/month.  I have already saved waaaay more money than that just be using the program.  Just google "YNAB 2 month trial" and you'll see a link. 

Right now it is so critical with your huge raise to ensure that it doesn't evaporate.  I really think that YNAB will be able to help you.  It seemed a little complicated at first, but I did the free webinars and jumped in.  I am also reading the book You Need a Budget, which might seem like overkill, but it's helping to reinforce my enthusiasm for budgeting! 

Definitely get a 0% balance transfer.  It will save you money. 

Good luck! 


mistymoney

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Re: I wonder what you all will say to me?
« Reply #53 on: June 15, 2019, 12:03:11 PM »
There is a lot of great advice in this thread.
You've made some progress already.

I'm really, really concerned about your idea that an extra paycheck month is going to solve a lot of your problems.

I'd like to see something like this:

2290   mort   REFINANCED, LOWERED MONTHLY PAYMENT BY $XYZ
310   gas/heat  DID ENERGY AUDIT, LOWERED MONTHLY PAYMENT BY $XYZ
95   electric    STARTED KEEPING UNUSED ITEMS OFF, LOWERED MONTHLY PAYMENT BY $XYZ
150   cell     CHANGED TO CHEAPER PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
105   internet   CHANGED PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
550   healthcare 
190   car ins ALTERED PLAN, LOWERED MONTHLY PAYMENT BY $XYZ
100   other transport   WHAT EVEN IS THIS??? LOWERED MONTHLY PAYMENT BY $XYZ
545   SLs
650   food  CHANGED HABITS, LOWERED MONTHLY PAYMENT BY $XYZ

Total cut each month: $XYZ

No - I didn't think it would solve everything, just that it would help a little! And it did, a little!

One thing I realized that Ihamo will be glad to hear regarding food budget. So for food I added up all grocery and restaurant for the year/12. On a work trip this month I realized that that was including many restaurant meals during work trips that are ultimately reimbursed, I am estimating 100-200/month on average, so maybe 150 month.

that leaves the actual food budget at about 500/month.

I'm not able to go back and forensically see that actual amounts for 2018 (I could! but a lot of work for relatively little additional information!) - So I will try to keep track of that better going forward.

So I made a few steps forward (signed up for 401k, started baby EF), but have not done a whole lot on my action plan.

I'm struggling to really address things one by one. I look at list or think about the situation and get overwhelmed and a week or two drift by and I've done nothing. I see it is almost 2 months since I posted - with interest and enthusiasm to get better I may add - but feel like things are difficult to take hold of and make changes. Work is busy, behind on household tasks, all the things about life that take time and thought and effort.

Am I the only who struggles to focus on this? Seems I can only really keep on this when there may be a struggle to pay the bills. A few extra $$$ in the checking and then other issues are more pressing.


Working on my 2 month trial in YNAB.
Visited bank about a refi  - no banker available and took them a week or longer to get back to me. Have not returned message.
also looking at car insurance and internet prices.

So I guess my update on my case study is......not much, but still trying?

freya

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Re: I wonder what you all will say to me?
« Reply #54 on: June 16, 2019, 10:21:13 AM »
Mistymoney, instead of beating yourself up about this how about congratulating yourself on what you've done so far?  Here's what I see you having accomplished:

1.  Started up 401K contributions <== In your situation, only contribute to get matching funds.
2.  Started saving an emergency fund <==  This is good for your mental health.  Go for 3 months expenses.
3.  Started using YNAB.  <==  Hooray!!  This one step will bring down your spending more than you might realize.
4.  Taken steps to getting a mortgage refinance.  <== Excellent.  Call again tomorrow.
5.  Investigated car and home insurance prices.  <==  So what did you find out?  Can you reduce your insurance costs?

I would definitely check mortgage rates with your bank AND either a second bank OR look at current mortgage rates on bankrate.com.  If your bank is giving you a decent rate, then just go for it.  This is a fantastic time to refi.   The loan application form is one page.  Fill it out at home or bring your paycheck stub and copy of your 2018 1040 form to the bank.
 Be sure to let them know you want a cash-out refi for as much as you can get (80% of whatever the appraiser says your home is worth).  And you want a 30 year fixed with 0 points.  Once that's done, the whole thing will be on autopilot.  You'll need to be at home when the appraiser comes, and a few weeks later you'll need to go to the bank to sign a bunch of forms.  That's all there is to it!

So that's Monday and maybe Tuesday.  On Wednesday you can start looking at alternative insurance plans.  OR, if you aren't stuck on a cell phone contract, you might try tackling that first as it's simpler and may be higher yield.

Sound like a plan?



mistymoney

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Re: I wonder what you all will say to me?
« Reply #55 on: June 16, 2019, 10:28:21 AM »
Thank you Freya!!

For the helpfulness and also the kindness of your words. Yes - I will try to organize my thoughts/documentation a bit today and start tackling things again on Monday.

The most important thing to do is to keep moving forward, no matter how small each step may be.

lhamo

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Re: I wonder what you all will say to me?
« Reply #56 on: June 16, 2019, 10:30:28 AM »
And well done on figuring out the grocery spending, too -- knowledge is power!  And $500/month for your household is very reasonable spending, though by employing some of the strategies discussed elsewhere on the forum (strategically shopping loss leaders, batch cooking, etc) you might still be able to bring it down.

zee dot

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Re: I wonder what you all will say to me?
« Reply #57 on: October 06, 2019, 09:24:53 AM »
It is really hard to keep up the enthusiasm.
Chip away at it.
It took me a long time to work through the list of suggestions ppl gave me when I posted my case study.
I'm probably due for another round of feedback.
It's never going to be done...there will always be something else to do. Knowing that helped me get started since I didn't have to do everything all at once.
P.s. if possible use a separate credit card for work so you 1) know your own budget is accurate and 2) submit for all reimbursements. I can't tell you how many taxis, parking costs, etc I ate before I did that.

Blackadder

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Re: I wonder what you all will say to me?
« Reply #58 on: October 10, 2019, 03:08:32 AM »
I just saw this thread resurfacing. How did the last few months go?

+1 regarding all the comments suggesting budgeting and/or YNAB. After buying our house we had some serious cash-flow issues, and I tracked expenses meticulously in spreadsheets for three years before I finally went from backwards-looking tracking to actual forward-looking budgeting (using YNAB). Everyone is different in this, but before, I was only able to do some rough adjustments (like changing contracts), but for other spending I was just beating myself up all the time for "not staying in the budget" or "that's one of the things you can't do anything about" without really changing something. After, I gained a lot more actual control over where each <currency unit> goes and was able to reduce expenses by another 20% even.

The "rainy day" categories are particularly relevant in your case. If you just average out what expenses for unexpected house repairs etc. cost you in the past, divide them by 12 (or 24 if you expect them to happen every 2 years) and - boom, they're suddenly in control. I have separate categories for house repairs, car repairs, car replacement, etc. and when something happens, the cost is usually covered by the budget category, and if it isn't, it triggers me to either find different solutions that ARE in the budget (e.g. DIY for house stuff, find a cheaper auto shop), and/or trigger me to think of other solutions "hmm, the second car used to be much cheaper to maintain; actually we're using it much less then before. Maybe time to bike/replace it/...". Of course, there's no guarantee that your house doesn't spontaneously collapse, blowing the house repair budget category, but it's a statistical thing: things that happen more often most likely keep happening, and freak catastrophes is what we have insurance for.

That way (by having no out-of-budget expenses any more, and not lumping everything into "savings/emergency"), you gain control over expenses that you earlier thought were uncontrollable. This was a big change for me, as I knew that, even when something breaks, I know immediately if it has the potential to derail my financial planning -- and most of the time, it didn't.

MoneyizHere

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Re: I wonder what you all will say to me?
« Reply #59 on: October 10, 2019, 09:12:38 AM »
Just saw the thread...

I would have sold the company stock and wiped out that Credit Card debt today.  Submit your receipts and get that $4k of company reimbursement and then wipe out the personal loan - also ask for a tad more back for the interest charges 20% as you are floating them.

Then refinance the mortgage to a 30 year recast at today's lower rates - use that to create a tad more cash flow to max out the 401k at contribution of $25k per year (this will reduce your fed/state tax liability. 

Make sure your W4 withholding is up to date to not give the govt a free loan (aka getting a refund in April).


Expenses:
Utilities:  When you're not using your electronics like TV - put it on a power strip and turn off (it sucks alot of power when you're not aware).  Turn off the heat or set your thermostat to 58 in the winter and 90 in the summer.  This saves alot of utility cost.

Internet - since you're on unlimited plan with your cell phone- get rid of internet hook up. 
Cell Phones-  there are cheaper unlimited plans out there - look for the one that works for you.  You use internet on your phone and internet at home - its the same internet - decide which one is more important to have. 

Food:  shop and prepare items that are on sale on the weekly ad instead of just getting what you're used to getting.  Eggs are pricey?  then don't buy them until they're on sale...

Mortgage:  If you're good at establishing an emergency fund - try to take the property taxes off escrow and pay only when its due.  Usually you get what a couple of months notice before the Property tax bill is due?  You should be able to prepare for that through the year to better manage for cash flow. 

Also evaluate your insurance and risk tolerance.

 


mistymoney

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Re: I wonder what you all will say to me?
« Reply #60 on: October 11, 2019, 09:07:10 AM »
I was hesitating to post any updates as I felt everything was unchanged, but I noticed today that the thread has received a few more posts so putting what updates I have here for the curious.

And - putting together the updates did make me feel that I have had made more progress than I realized!

Negatives:
Virtually no investment contributions, and no growth either!
Took out more student loans
Property tax increase increased mortgage by 98/month

Positives
Have made good progress on the credit card and personal loan balance
Established a baby EF fund


I have been on and off contributing to the 401k as I grapple with debt paydown and tuition for this year.
I did need to take out some additional student loans, but not as much as previously and I have been focusing on clearing the CC and personal loan debt. I should be set to clear these out by year's end. Feels good to have some EF! Won't be enough for a lot of true emergencies, but will help prevent some unexpected expenses from going on the credit card.



I think it is a bit too late to RE but I still have FI ambitions, and not sure where to focus. I will give you a quick snapshot of where I am.

Assets               negligible changes since April
401k 675k             
Roth   70k               
HSA     6k
company stock 12k


NEW:
EF was 0            now 1k


Debts                                       updated 10/11/2019
Mortgage 260k (redfin value 500k)       mortgage 257, value 505
student loans 115k                                   127
CC  16k                                                       3
pers loan 2k                                                 1

income/outgo
Income 128k
Monthly bills ~5k


Quote
Based on last year averages and rounded to nearest $5 increment:

2290   mort                       now 2388
310   gas/heat
95   electric
150   cell
105   internet
550   healthcare
190   car ins               now 179
100   other transport
545   SLs
650   food                  now 500
   
4985                          now ~4922


mistymoney

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Re: I wonder what you all will say to me?
« Reply #61 on: October 11, 2019, 09:14:50 AM »
I have been tracking expenses very rigorously - but it is time consuming (!), and I haven't gotten to a lot of my financial tasks as yet. I am still looking to refinance the house and to call providers to negotiate or change providers, etc. to whittle down the monthly outgo. But so far only got the car insurance done.

Overall debt is down by 5k, so I am going to take that as a positive.

Plan is to clear all consumer-type debt by 2019, try to take out as low an amount of student loans as I can for the winter 2020 semester (hoping to cap that at 5k), and I am hopeful that I can avoid student loans for the final year for DD.

After all credit card and personal loans are paid off, I will rejoin the 401k club.


zee dot

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Re: I wonder what you all will say to me?
« Reply #62 on: October 11, 2019, 09:16:59 AM »
Nice work!  It takes a lot of effort to stem the tide.

Every bit helps.

mistymoney

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Re: I wonder what you all will say to me?
« Reply #63 on: October 11, 2019, 09:34:54 AM »
It is really hard to keep up the enthusiasm.
Chip away at it.
It took me a long time to work through the list of suggestions ppl gave me when I posted my case study.
I'm probably due for another round of feedback.
It's never going to be done...there will always be something else to do. Knowing that helped me get started since I didn't have to do everything all at once.
P.s. if possible use a separate credit card for work so you 1) know your own budget is accurate and 2) submit for all reimbursements. I can't tell you how many taxis, parking costs, etc I ate before I did that.

Thank you! This is really helpful! I need to focus on each step and be good with the progress made and not beat myself up on those things as yet undone! Will keep them on the radar though!

Work expenses have been ok and not carried since I got things cleared and I have been submitting as immediately as I can.

My main focus has been on paying down the credit cards, and that has been really going well. Thankfully! Nothing has cropped up to derail that effort, which almost makes me think another gotcha! could be just around the corner.....but at any rate, am in a much better position to handle that whenever that may arise.


mistymoney

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Re: I wonder what you all will say to me?
« Reply #64 on: October 11, 2019, 11:01:22 AM »
Just saw the thread...

I would have sold the company stock and wiped out that Credit Card debt today. can only be sold end of the year, will check into that for this year  Submit your receipts and get that $4k of company reimbursement and then wipe out the personal loan - also ask for a tad more back for the interest charges 20% as you are floating them. this is done, did not ask for extra, but have not had issues since

Then refinance the mortgage to a 30 year recast at today's lower rates - use that to create a tad more cash flow to max out the 401k at contribution of $25k per year (this will reduce your fed/state tax liability.  still looking into this!

Make sure your W4 withholding is up to date to not give the govt a free loan (aka getting a refund in April). I did adjust with an extra exemption to get a little more cash each paycheck, will reevaluate after filing taxes for 2020

Expenses:
Utilities:  When you're not using your electronics like TV - put it on a power strip and turn off will give this a whirl! (it sucks alot of power when you're not aware).  Turn off the heat or set your #4 thermostat to 58 in the winter and 90 in the summer. this is too spartan for me!  This saves alot of utility cost.

Internet - since you're on unlimited plan with your cell phone- get rid of internet hook up. 
Cell Phones-  there are cheaper unlimited plans out there - look for the one that works for you.  You use internet on your phone and internet at home - its the same internet - decide which one is more important to have. 

Food:  shop and prepare items that are on sale on the weekly ad instead of just getting what you're used to getting.  Eggs are pricey?  then don't buy them until they're on sale...

Mortgage:  If you're good at establishing an emergency fund i'm a fail here, feel more secure keeping this with the bank for now - try to take the property taxes off escrow and pay only when its due.  Usually you get what a couple of months notice before the Property tax bill is due?  You should be able to prepare for that through the year to better manage for cash flow. 

Also evaluate your insurance and risk tolerance.

 


mistymoney

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Re: I wonder what you all will say to me?
« Reply #65 on: October 11, 2019, 11:12:09 AM »
I just saw this thread resurfacing. How did the last few months go?

+1 regarding all the comments suggesting budgeting and/or YNAB. After buying our house we had some serious cash-flow issues, and I tracked expenses meticulously in spreadsheets for three years before I finally went from backwards-looking tracking to actual forward-looking budgeting (using YNAB). Everyone is different in this, but before, I was only able to do some rough adjustments (like changing contracts), but for other spending I was just beating myself up all the time for "not staying in the budget" or "that's one of the things you can't do anything about" without really changing something. After, I gained a lot more actual control over where each <currency unit> goes and was able to reduce expenses by another 20% even. this is interesting...I have been kind of feeling like I'm not doing or learning anything new with my obsessive tracking. Like I'm spending hours a week recording and monitoring for no reason than to just see it. Hopefully, I will get to a position of greater power as you describe.

The "rainy day" categories are particularly relevant in your case. If you just average out what expenses for unexpected house repairs etc. cost you in the past, divide them by 12 (or 24 if you expect them to happen every 2 years) and - boom, they're suddenly in control. this is good, and I'm going to strive to get to this point. I built up my mini EF, and then I have been putting nearly everything I can towards the credit cards. I feel those and the personal loan need to be paid off (so the interest stops!), and then I can start with this kind of advance planning for the budget. Well - I do need to spend a few dollars on myself after it's all paid off, then back to buckling down I have separate categories for house repairs, car repairs, car replacement, etc. and when something happens, the cost is usually covered by the budget category, and if it isn't, it triggers me to either find different solutions that ARE in the budget (e.g. DIY for house stuff, find a cheaper auto shop), and/or trigger me to think of other solutions "hmm, the second car used to be much cheaper to maintain; actually we're using it much less then before. Maybe time to bike/replace it/...". Of course, there's no guarantee that your house doesn't spontaneously collapse, ooo very sobering thought! blowing the house repair budget category, but it's a statistical thing: things that happen more often most likely keep happening, and freak catastrophes is what we have insurance for.

That way (by having no out-of-budget expenses any more, and not lumping everything into "savings/emergency"), you gain control over expenses that you earlier thought were uncontrollable. This was a big change for me, as I knew that, even when something breaks, I know immediately if it has the potential to derail my financial planning -- and most of the time, it didn't.

Thanks - starting to see a new level to the budget monitoring as I go forward.....

mistymoney

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Re: I wonder what you all will say to me?
« Reply #66 on: October 11, 2019, 11:16:54 AM »
Nice work!  It takes a lot of effort to stem the tide.

Every bit helps.

Thanks!

I can start to see the light at the end of the tunnel. I'm feeling confident about moving forward.


snorr

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Re: I wonder what you all will say to me?
« Reply #67 on: October 12, 2019, 02:07:07 AM »
Hi mistymoney, you're doing great, seems you've dug and are still digging your way out of a bleak hole. It's very inspirational to see someone do it and take bumpy path while doing it. Reality and spreadsheets don't align 100%, but you seem to be making it work.

Well done & keep going!

freya

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Re: I wonder what you all will say to me?
« Reply #68 on: October 12, 2019, 09:25:24 AM »
Congrats mistymoney, looks like you're making progress!  Paying down your overall debt $5K in < 4 months while absorbing a big property tax increase?  Good for you!  And, are there ongoing college costs?

Sounds like you're not using YNAB in the most efficient way.  The website interface is clunky and you only want to use it for tasks that you can't do on the phone app:  monthly budgeting, reconciling accounts, and viewing spending reports.   Do everything else on the phone app, which is very well designed and efficient to use.   The other important usage tip:
 don't just track spending, enter transactions as you go.  Prospectively recording transactions is YNAB's secret sauce, and it's why you paid for it instead of just using Mint.

Every time you buy anything at a store or online, record it immediately on the phone app.  For recurring expenses like your mortgage, you enter as a recurring transaction.  I pull up the app while I'm waiting on line at the register, and enter the amount the moment the cashier rings it up, before I pull out the credit card or fire up Apple Pay.  The app autofills most things, and the geotracking feature is especially awesome.  Then, when the transaction imports it matches with the one you entered, and you approve it on the phone app in seconds - I do this when I'm waiting for elevators or on line for something.   Total additional time spent for YNAB tracking:  ZERO, except for monthly budgeting and expense review, which takes just a few minutes.

This is very important!!!  It puts you into a mindful spending mode, so you have to think about every transaction.  If you see that less than half of your grocery budget is left and it's mid-month, you might put back that expensive treat; or conversely, you'll be ok with it because you stocked up on something that was on sale.  That alone will work to cut your spending.   

With the time you have now freed up by using YNAB correctly, definitely prioritize the mortgage refinance.  The rates are low right now, don't put it off any longer!  After that...start chipping away at these expenses.  The heating bill looks like a good place to start.  How about weatherstripping/caulking your windows and doors?   It's easy work that you can definitely do on weekends.  Next up would be cell phone/internet...you can shave $100 off those costs easily.





mistymoney

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Re: I wonder what you all will say to me?
« Reply #69 on: October 12, 2019, 12:23:25 PM »
Hi mistymoney, you're doing great, seems you've dug and are still digging your way out of a bleak hole. It's very inspirational to see someone do it and take bumpy path while doing it. Reality and spreadsheets don't align 100%, but you seem to be making it work.

Well done & keep going!

Thank you! I'm very excited to get back to building up instead of digging!

mistymoney

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Re: I wonder what you all will say to me?
« Reply #70 on: October 12, 2019, 01:06:09 PM »
Congrats mistymoney, looks like you're making progress!  Paying down your overall debt $5K in < 4 months while absorbing a big property tax increase?  Good for you!  And, are there ongoing college costs? Yes, one more student, just started her Jr. year

Sounds like you're not using YNAB in the most efficient way.  The website interface is clunky and you only want to use it for tasks that you can't do on the phone app:  monthly budgeting, reconciling accounts, and viewing spending reports.   Do everything else on the phone app, which is very well designed and efficient to use.   The other important usage tip:
 don't just track spending, enter transactions as you go.  Prospectively recording transactions is YNAB's secret sauce, and it's why you paid for it instead of just using Mint.

Every time you buy anything at a store or online, record it immediately on the phone app.  For recurring expenses like your mortgage, you enter as a recurring transaction.  I pull up the app while I'm waiting on line at the register, and enter the amount the moment the cashier rings it up, before I pull out the credit card or fire up Apple Pay.  The app autofills most things, and the geotracking feature is especially awesome.  Then, when the transaction imports it matches with the one you entered, and you approve it on the phone app in seconds - I do this when I'm waiting for elevators or on line for something.   Total additional time spent for YNAB tracking:  ZERO, except for monthly budgeting and expense review, which takes just a few minutes.

This is very important!!!  It puts you into a mindful spending mode, so you have to think about every transaction.  If you see that less than half of your grocery budget is left and it's mid-month, you might put back that expensive treat; or conversely, you'll be ok with it because you stocked up on something that was on sale.  That alone will work to cut your spending.   

With the time you have now freed up by using YNAB correctly, definitely prioritize the mortgage refinance. I did abandon YNAB, it just wasn't working for me......
The rates are low right now, don't put it off any longer!  After that...start chipping away at these expenses.  The heating bill looks like a good place to start.  How about weatherstripping/caulking your windows and doors?  Yes, I have some needed tasks in this direction that I want to do before winter... It's easy work that you can definitely do on weekends.  Next up would be cell phone/internet...you can shave $100 off those costs easily.

Thanks, I can put a lot of this on the docket! Heating is high, winter is coming, will focus on that next.

Big

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Re: I wonder what you all will say to me?
« Reply #71 on: October 12, 2019, 03:03:12 PM »
One of the most important questions that I was ever asked was by my financial advisor, and it was simply what do you envision your retirement looking like?  Something simple but profound and inherently complex.  This could lead to a bunch of questions about your current situation, but what are your true goals?  Are you looking at retiring to a lcol area once retired?  Do you plan on traveling, or do you plan on keeping your house or renting?  I know these don’t solve your immediate situation, but they are obviously impacted by your current decisions on how to handle your situation.

For the immediate situation, there are some unanswered questions or I may have simply missed the data

What are your kids contributing to their monthly expenses, phone bills, insurance, etc.
Have you talked to your kids about finances, I know you mentioned your daughter is a “fixer” and you have concerns, but a simple fix may be just helping contribute a few more bucks a month to her expenses and not immediately assuming she will want to drop out.
How long til your mortgage is paid off?

With that said, I’d be doing a few immediate things.
1.  Cash out the company stock and pay off any remaining high interest debt.  It is likely you are not getting a return on that stock that is greater than your current cc interest.
2.  Refinance the house if you plan on staying for any length time, do a refinance analysis to see if it pays.  Interest rates are lower than your current.  I’m assuming, your credit is ok to do this.
3.  Start building an emergency fund with the funds you were using to pay of cc debt and any expense cuts that you make..
4.  Focus on talking to kids about there contributions and set some expectations.
5.  I hate to say don’t take advantage of your companies match in your 401, but right now you are using high interest debt to take care of emergencies and will continue to be forced to do so until you build a emergency fund.  Emergency fund takes precedence imo.

I see you are making progress but the reality is that there seems to be a missing component, I have a sneaking suspicion that lifestyle expenses are higher than reported.   I believe you mentioned you’d like to retire early, but it is unlikely to happen given your current trends and long term debt obligations. 

I don’t know the specifics about your house, but it is a much bigger liability than you think, given that you lack the proper emergency funds for any contingencies that pop up.  Furthermore, you mentioned selling was a reality in retirement or when the kids move, well it sounds like that situation is fast approaching.  I think I would be seriously considering unloading the house now, if it is inevitable anyway when they move out, and go into rent.  The appreciation on the house isn’t nearly what it is costing you in terms of interest, taxes, maintenance, higher utilities, and opportunity cost to extinguish your debt.  You could literally wipe all of your debt just by selling and take advantage of then ccontributing to your investments, which are what you will truly need in your retirement vs a house. 

I don’t mean to sound pessimistic, but if your goal is to pay for your children’s education and retire at a fairly early age, you need to eliminate all debt by whatever means possible and adjust lifestyle.  Like the poster above mentioned, I don’t see how you can retire early, maintain current lifestyle, and pay for education all at the same time.  Cutting minuscule costs like cable, insurance, etc. will help, but ultimately you have a lot of debt at a high carrying cost.

I don’t mean to take the wind out of any sails, but I see the house as your biggest burden/opportunity. Mostly in terms of foregone opportunity costs on the equity. Selling and using the equity to extinguish all debt would reduce liabilities and create new found cash flow to fund retirement.   If the house is super important, then possibly refinancing to a 30 yr at a lower rate might get you some extra cash flow, which you can use to fund emergency account then 401k. 

What would your life look like paying off all your debt and using the cash flow to take advantage of 401k, etc.  Would that fulfill the two biggest priorities you have, which you mentioned was retirement and helping your kids?  Or is adjusting your life style, going into rent, etc, not worth that?  Only you can answer that question.

« Last Edit: October 12, 2019, 07:31:21 PM by Big »

freya

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Re: I wonder what you all will say to me?
« Reply #72 on: October 13, 2019, 09:08:35 AM »
Mistymoney, please give YNAB another try using the tips I listed above.  By "it didn't work for me" I wonder if you're really saying that you got discouraged when you saw what your spending habits truly are.

Several posts back I'd suggested a cash-out refinance which would wipe out the majority of the debt and improve cashflow.   If you want to stay put, this is absolutely the right move to make - but ONLY in tandem with measures to get control of future spending.  If you intend to move, then doing it now could make sense.

Either way, I agree that some serious action is called for.  There's a little not-seeing-the-forest-for-the-trees thing going on.  We can help by doing a little handholding, but you've still got to be the one to take the steps.

mistymoney

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Re: I wonder what you all will say to me?
« Reply #73 on: October 13, 2019, 10:15:55 AM »
One of the most important questions that I was ever asked was by my financial advisor, and it was simply what do you envision your retirement looking like?  Something simple but profound and inherently complex.  This could lead to a bunch of questions about your current situation, but what are your true goals?  Are you looking at retiring to a lcol area once retired?  Do you plan on traveling, or do you plan on keeping your house or renting?  I know these donít solve your immediate situation, but they are obviously impacted by your current decisions on how to handle your situation.

For the immediate situation, there are some unanswered questions or I may have simply missed the data

What are your kids contributing to their monthly expenses, phone bills, insurance, etc. I do pay phone and insurance but older pays everyday expenses themselves, younger is looking for on-campus job this year to do same. Older has recently gotten a career-adjacent position for what they plan to do professionally for the near future and is planning to move out in spring, and I am encouraging them to save, contribute to Roth, etc. I'm willing to continue to pay these bills for 6 more months as they do that and prepare for independence.
Have you talked to your kids about finances, I know you mentioned your daughter is a ďfixerĒ and you have concerns, but a simple fix may be just helping contribute a few more bucks a month to her expenses and not immediately assuming she will want to drop out.I have talked a bit about this since originally posting, likely more conversations are in order. But - I'm not overly concerned about this with the older planning to move out and younger looking to pay for incidentals with a job soon.  That will help and all I am expecting from them currently
How long til your mortgage is paid off? a little less than 21 years

With that said, Iíd be doing a few immediate things.
1.  Cash out the company stock and pay off any remaining high interest debt.  It is likely you are not getting a return on that stock that is greater than your current cc interest. there is only 1 window per year to do this, and will do when that opens. But it is likely I will have paid off those debts by then, I think the window is in Dec.
2.  Refinance the house if you plan on staying for any length time, do a refinance analysis to see if it pays.  Interest rates are lower than your current.  Iím assuming, your credit is ok to do this. on my list of more immediate tasks
3.  Start building an emergency fund with the funds you were using to pay of cc debt and any expense cuts that you make..in progress, and will ramp up when high interest debt is gone
4.  Focus on talking to kids about there contributions and set some expectations. Think this is in a good spot right now, as above explanation - but I do think it is a good idea to clarify with older about what moving out means in terms of independence and bills I am currently paying and expect not to after they move
5.  I hate to say donít take advantage of your companies match in your 401, but right now you are using high interest debt to take care of emergencies and will continue to be forced to do so until you build a emergency fund.  Emergency fund takes precedence imo.I'm inclined to agree with you about the importance of an EF for me being a huge priority, see below for comments and questions about that.

I see you are making progress but the reality is that there seems to be a missing component, I have a sneaking suspicion that lifestyle expenses are higher than reported.   I believe you mentioned youíd like to retire early, but it is unlikely to happen given your current trends and long term debt obligations.  I did get a promotion and large raise in Feb, prior to that my salary was more than 30k less than it is now

I donít know the specifics about your house, but it is a much bigger liability than you think, given that you lack the proper emergency funds for any contingencies that pop up.  Furthermore, you mentioned selling was a reality in retirement or when the kids move, well it sounds like that situation is fast approaching.  I think I would be seriously considering unloading the house now, if it is inevitable anyway when they move out, and go into rent.  The appreciation on the house isnít nearly what it is costing you in terms of interest, taxes, maintenance, higher utilities, and opportunity cost to extinguish your debt.  You could literally wipe all of your debt just by selling and take advantage of then ccontributing to your investments, which are what you will truly need in your retirement vs a house. 

I donít mean to sound pessimistic, but if your goal is to pay for your childrenís education and retire at a fairly early age, you need to eliminate all debt by whatever means possible and adjust lifestyle.  Like the poster above mentioned, I donít see how you can retire early, maintain current lifestyle, and pay for education all at the same time.  Cutting minuscule costs like cable, insurance, etc. will help, but ultimately you have a lot of debt at a high carrying cost.I can't disagree, and it is important to me to consider this. Definitely, setting up my kids is the most important to me. They will each have their own student loans of about 30-40k, and I think that is enough for them starting out. So that is priority #1 for me. Once that is done, which is soon!!!, then I can focus on other priorities, and if I don't retire early - so be it! By early - I was just hoping for maybe 58-62, and not 65-70. So - pretty modest on the RE part!

I donít mean to take the wind out of any sails, but I see the house as your biggest burden/opportunity. Mostly in terms of foregone opportunity costs on the equity. Selling and using the equity to extinguish all debt would reduce liabilities and create new found cash flow to fund retirement.   If the house is super important, then possibly refinancing to a 30 yr at a lower rate might get you some extra cash flow, which you can use to fund emergency account then 401k.  I agree with this! Winds in sails are up and down, so don't worry about that. I think I am pretty realistic about potential for a capsize! Although I am continuing with the journey and hoping the weather continues my way for a bit while I shore up the vessel!

I will continue to look into a refi, and selling is always a possibility. Current plan is to keep the house at least for the next few years although I recognize that things outside of my immediate control could force my hand - sudden job loss, etc. I don't want to sell impulsively, but I'm ready to do so if need be.


What would your life look like paying off all your debt and using the cash flow to take advantage of 401k, etc.  Would that fulfill the two biggest priorities you have, which you mentioned was retirement and helping your kids?  Or is adjusting your life style, going into rent, etc, not worth that?  Only you can answer that question.Good points, and things for me to think about. I don't want to do anything too impulsively, and want to see where things fall out at about 2 years into my new salary

thanks - and very thought provoking!

I am hampered by a big "i don't know" for most of these big-picture questions! I had thought I had a good handle on what I wanted mu life to look like post-retirement - but somehow that picture has faded over the past 5 years but I don't have anything that has taken it's place. At least - nothing that is practical and within my price points!

So - that is important for me to suss out for sure - but in the meantime I do want to take solid steps month by month.

some specific questions answered above in bold. Extended EF vs 401k discussion below:

I am planning to address EF and 401k in 2020. According to my current projections - I will pay off the high interest debt by December, in 2020 my plan is to set the 401k up to the match (6% from me plus 3% employer match). I should be able to put about 1k/month into the EF.

Additional questions to you all would be:

How long should I do 1k/month into the EF before lowering, or curtailing that altogether in favor of 401k?

What I am thinking is to do 1k/month to the EF until I have 2 months worth of expenses in EF. Perhaps August - October of 2020, and maybe later if any emergencies do crop up.

Once I hit 2 months worth (10k): lower EF contributions to 250/month and up my 401k contribution to 15%. That would be upping my 401k contribution by 960/month vs the 750 not going into EF - but I think that should be doable with the tax savings. Then I would stay at that until the EF hits 6 month worth of expenses (30k). That should take several years.

My plan is 1 month worth of expenses in money market, and the rest into an ETF, either sp500 or total stock market, or something along those lines.

This all assumes things continue on at current salary and expenditures. The current expenses for DS will be eliminated, but then I will pick up an additional student loan payment for the loans I take out on DD. Hoping that payment won't be more than 600/month, if I can pay out of pocket for final year.


mistymoney

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Re: I wonder what you all will say to me?
« Reply #74 on: October 13, 2019, 11:45:49 AM »
Mistymoney, please give YNAB another try using the tips I listed above.  By "it didn't work for me" I wonder if you're really saying that you got discouraged when you saw what your spending habits truly are.

Several posts back I'd suggested a cash-out refinance which would wipe out the majority of the debt and improve cashflow.   If you want to stay put, this is absolutely the right move to make - but ONLY in tandem with measures to get control of future spending.  If you intend to move, then doing it now could make sense.

Either way, I agree that some serious action is called for.  There's a little not-seeing-the-forest-for-the-trees thing going on.  We can help by doing a little handholding, but you've still got to be the one to take the steps.

LOL, no, that wasn't my issue with YNAB. Perhaps it was user error on my part, but I was on a 2 month free trial and I just didn't find it flexible enough for me - I couldn't see long term tracking and while I liked the category spend/remaining feature, I couldn't imagine paying monthly for that service, so I deleted my account. I set it up very enthusiastically, linked everything, but maybe that wasn't the way to go with it? Somethings were never balancing out, I may have made an input error, but there was no way to correct it that I could find. I couldn't program my income to just record automatically every other week, or bills to be automatic on the same day every month. If they were withholding some functionality for the 2 month trial, then they didn't give me enough to see the value of continuing.

I am still tracking everything, but there haven't been any real surprises. I usually reconcile all expenditures on a weekly or every other week basis and check the overall categories that are variable.

I do frequently over-spend in the food category - but fairly modestly over the budget. Maybe just 25-50 and never more than 100 at most. Usually that is occasion-related. Birthdays, etc. so splurging or eating out. Getting drinks or coffee with friends or coworkers to celebrate any milestones. I don't have any line items for clothing or other personal expenditure, gifts, home maintenance, etc. And I do realize that is a problem - but I have been living in this manner for well over a year so it is somewhat accurate. Haven't bought clothes, growing out hair, etc. Although - I know that it can't continue on that level. And I will need to add those back in at some point, particularly home maintenance. I do need to think about the 1% rule for that, so estimating 5k/yr on average per year.

My usual monthly take home is 6800, my usual budget is about 5k, and I've been paying at least 1500/month to the debts and putting 1-200 towards the EF. I budget on 2 paychecks/month. I guess I'm just confused about this ongoing sense that I'm missing something? I pay 25% of gross in total taxes, and 5% for benefits. There may be 1-200 month I'm not careful about maybe sometimes 300!, but I'm not seeing any larger issues. At least not with current month to month cashflow.

I get that keeping my house and taking on significant debt for my children's education isn't the most mustachian approach, is that perhaps what you are referring to? I am trying to pull this off, and I might fail! But I feel I have sufficient assets and should have some decent choices to choose from if I do fail.

Now - if the housing market and the stock market both take significant dives at the same time, and I lose my job, and I can't find another, yeah, could get kind of gloomy for me! But I'm not sure of the efficacy of trying to prep for all of that when the likelihood is that only 1-2 of those 3 will occur, and I can deal with that.

Big

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Re: I wonder what you all will say to me?
« Reply #75 on: October 13, 2019, 12:58:33 PM »
I think the sense of missing something comes from the fact that you aren’t accounting for some of the expenses that most do.  This would include clothing, home maintenance, entertainment, etc.   You mentioned that some of your free cash flow 100-300 a month isn’t accounted for, so I think that is probably where these categories come into play.  As a dollar amount it isn’t much, but as a percentage it is rather large, $300 a month represents 17% of your free cash flow.

I tend to be a pessimist (something I’m working on) but I think it helps in terms of risk, planning, etc on my personal situations.  So most of what I write will probably have a negative tone, I apologize in advance.

I’m fairly new to this board, so I may be off on a few things that may be “mustachian style”. 

I understand your kids are everything.  The harsh reality is that it is coming at a tremendous cost to your financial outlook, so much so that you admit that you lost track of what you expect your life to look like in retirement.  I’m sure this isn’t something your kids would like to hear, but given your situation need to imo.  It will provide a sense of urgency, relief, and also be a learning lesson for them.   My parenting style is directly opposite of yours, so again my thoughts come from that perspective.  I truly believe you need to push your kids into being independent of you starting tomorrow.  Urgency on your end, will create urgency on their end.  Most kids are resourceful, and once they are pushed they figure it out rather quick.  This may be an unpopular statement, but I think the last thing your kids need to worry about is contributing to Roths, savings, etc as it is just being subsidized by you and your financial future.  The harder you push them to be self sufficient, the more they will figure out their situation.  Every expense that you pick up for them has a compounding negative impact on your ability to achieve your goals and right your ship.

In terms of the company stock, I still say sell it when possible, even if cc debt is paid off.  Allocate it to your EF and this will lessen future likelihood of having to use high interest debt to pay for emergencies. 

The more I think about your situation, the more I think I would sell the house.  You seem to be ok with the fact that you would sell if you had to in an emergency.  This makes me feel there is no real emotional attachment to it.  I’d also say you already are in somewhat of an emergency situation already (my pessimism shining through).  This thought comes from the fact that your time frame is relatively short, and the risk you face (market down turn, real estate price decline, etc) could have a huge impact with little time to allow for recovery..

My main concern about the house, even in a cash out refi, is your ability to reign in spending (kids, etc) and also future cash flow issues.  You will be shifting debt (albeit at a lower rate) and pushing the obligation further into retirement.  Will your nest egg be able to support that payment in combination with your desired lifestyle and other obligations?  That is where the big picture thinking comes into play.  More numbers are needed on the refi option and anticipated length of keeping the house.  I still say if likelihood of selling the house is pretty good within 2-3 years, I’d sell now while the market is still strong and eliminate the risk of a downturn in the market.  I’m not familiar with the market in your area, so I am generalizing here.

I get the feeling that a lot of the hard discussions and decisions for the future have yet to occur.  Those conversations and decisions are probably more important than anything else at this point.  Having a long-term goal will help guide your short-term strategy.

Again, I hope that none of this feels like an attack, you’ve done some tremendous things and what you’ve done for your children goes above and beyond your duty in my opinion.  It’s time to focus on what is best for you at this point and start developing your plan on what you want your future to look like. 



« Last Edit: October 13, 2019, 02:06:53 PM by Big »

mistymoney

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Re: I wonder what you all will say to me?
« Reply #76 on: October 13, 2019, 02:59:24 PM »
I think the sense of missing something comes from the fact that you arenít accounting for some of the expenses that most do.  This would include clothing, home maintenance, entertainment, etc.   You mentioned that some of your free cash flow 100-300 a month isnít accounted for, so I think that is probably where these categories come into play.  As a dollar amount it isnít much, but as a percentage it is rather large, $300 a month represents 17% of your free cash flow.

I tend to be a pessimist (something Iím working on) but I think it helps in terms of risk, planning, etc on my personal situations.  So most of what I write will probably have a negative tone, I apologize in advance.

Iím fairly new to this board, so I may be off on a few things that may be ďmustachian styleĒ. 

I understand your kids are everything.  The harsh reality is that it is coming at a tremendous cost to your financial outlook, so much so that you admit that you lost track of what you expect your life to look like in retirement.  Iím sure this isnít something your kids would like to hear.  My parenting style is directly opposite of yours, so again my thoughts come from that perspective.  I truly believe you need to push your kids into being independent of you starting tomorrow.  Urgency on your end, will create urgency on their end.  Most kids are resourceful, and once they are pushed they figure it out rather quick.  This may be an unpopular statement, but I think the last thing your kids need to worry about is contributing to Roths, savings, etc as it is just being subsidized by you and your financial future.  The harder you push them to be self sufficient, the more they will figure out their situation.  Every expense that you pick up for them has a compounding negative impact on your ability to achieve your goals and right your ship.

In terms of the company stock, I still say sell it when possible, even if cc debt is paid off.  Allocate it to your EF and this will lessen future likelihood of having to use high interest debt to pay for emergencies. 

The more I think about your situation, the more I think I would sell the house.  You seem to be ok with the fact that you would sell if you had to in an emergency.  This makes me feel there is no real emotional attachment to it.  Iíd also say you already are in somewhat of an emergency situation already (my pessimism shining through).  This thought comes from the fact that your time frame is relatively short, and the risk you face (market down turn, real estate price decline, etc) could have a huge impact with little time to allow for recovery..

My main concern about the house, even in a cash out refi, is your ability to reign in spending (kids, etc) and also future cash flow issues.  You will be shifting debt (albeit at a lower rate) and pushing the obligation further into retirement.  Will your nest egg be able to support that payment in combination with your desired lifestyle and other obligations?  That is where the big picture thinking comes into play.  More numbers are needed on the refi option and anticipated length of keeping the house.  I still say if likelihood of selling the house is pretty good within 2-3 years, Iíd sell now while the market is still strong and eliminate the risk of a downturn in the market.  Iím not familiar with the market in your area, so I am generalizing here.

I get the feeling that a lot of the hard discussions and decisions for the future have yet to occur.  Those conversations and decisions are probably more important than anything else at this point as they will direct what you need to do now to help your situation.

Again, I hope that none of this feels like an attack, youíve done some tremendous things and what youíve done for your children goes above and beyond your duty in my opinion.  Itís time to focus on what is best for you at this point and start developing your plan on what you want your future to look like.

I think your post is very kind! No worries on it sounding like an attack. :)

I am a rounder and estimator by nature, big picture, general trends, not too focused on details, just a sufficient idea of the error terms. To me, +/- $300 is an error term I'm comfortable with.

I have been tracking very closely - and as I said, no big surprises.  It is not the case that $1-300 was spent and I don't know on what, just that I accept that level of variability/wiggle room. The past few months have not been paying for heat, so that is kind of what I was thinking of by not being careful with it. I guess I should have banked it for when the heating is more than 300/month, but I didn't! A lot of it went towards the credit cards, so it wasn't a big party. There were 2 months that over 2k went toward the debts and EF savings.

I do question if the time and effort spent doing all this tracking is worth it, honestly! Without selling the house, there isn't a whole that is variable right now. I am looking into things that are. But I wonder if tracking something really makes a difference? maybe. so I am trying it. It has been very time consuming, to my mind anyway.

As a clarification, the retirement outlook isn't all due to money. I was hugely into gardening for many years, and then, I just stopped. Other interests changed too. Maybe that just happens around 50? I'm going to try to rekindle some interests, explore new ones, etc. But as for having a plan, and a direction - I just don't right now. So - it makes sense not to make big decisions right now to me. Like selling the house. I don't want to make a decision like that and regret it.

I want to give the current situation a couple of years and see where I'm at. Housing could drop and I'd be out. Could appreciate and I'd come out much better selling in a few years than selling now. I just feel that there are too many unknowns right now, and that I need more clarity. I don't want to try to time the market.

If DS is independent in 6 months, then I think no further action from me required! DD I think will likely do a quicker transition so I am not too concerned at the moment. But point taken, I may have been too protective not letting my worsening financial situation impact them. I do think this is largely resolved with the promotion (optimist here I suppose!), but definitely if anything else comes up I will be more forthcoming and set more limitations.

I like the idea of the company stock becoming a more accessible EF, and I think refinancing the house for better cash flow is also a good idea. So those are things I will pursue in the very near term.

I agree that decision need to be made, but these aren't decision I can make quickly. So - you all will be stuck with me planning on not making any big decisions/changes for at least a few years.

I think I addressed everything! Let me know if I missed something!


happy

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Re: I wonder what you all will say to me?
« Reply #77 on: October 13, 2019, 03:41:19 PM »
In 2012 when I committed to the way of the mustachio, I had a lot of changes to make, and to me it felt like trying to turn the Queen Mary. Some folks do a quick mustachian 180, but I needed slow but consistent change: I was a bit overwhelmed with life and good at procrastinating. So I plugged away at it, and a bit of 6 years later I retired.

Just keep picking away at things you can do right now, and if something seems too hard or you're not sure about, put that to one side and do something else.

I hear you on YNAB and tracking, but if you can get a years worth of data, you will find it ever so useful. Like you I'm not a details person, and when I tracked I didn't find huge amounts of money going places I wasn't aware of.

I confess, I didn't use YNAB properly, I used it like a tracking tool and projected out expected incoming expenses for the year. Once you build up a picture, you can see months you might be behind, and times you can catch up. You can play with ideas like : if I spend $20 a week less in that category ( eg food), that will give me an extra $1000 over the year. Frequent ( daily or weekly)  repeating expenses really add up and you can make a ton of difference here.

I tracked  for over a year in the first instance...but then only intermittently  every few years after that.

The other thing about tracking is that if you spend less, you'll have fewer entries to make, another positive incentive.


Kronsey

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Re: I wonder what you all will say to me?
« Reply #78 on: October 13, 2019, 03:59:11 PM »
With all due respect, you are killing your personal finances by coddling and sheltering your kids.

You may think you are protecting them, but unfortunately you are doing the opposite.

And my comments have nothing to do with you paying for their college.

For your son, he is still mooching off of you and you frankly can't afford it. If he can't find a high paying job, he can work two jobs. You mentioned a while back that he was working part time after graduating college... You are basically teaching him to NOT grow up and take responsibility for his life.

For your daughter, she could be working at least 15-20 hrs a week. Whether they are ready or not, they are into adulthood and need to fly the nest. You can't afford to support them any longer.

I can promise you that your kids would rather you tell them now in their early 20s "hey my finances have taken a huge hit trying to help you pay for college. I have been happy to do so, but I can no longer afford to support your lifestyles" rather than coming to them in 20 years for financial help because you haven't properly saved for your own retirement.

Each of the other commenters on this thread have tried to gently tell you that your kids are a huge financial drain that you can't afford.

You've made excuses for why that is.

I'm encouraging you to look at this with a fresh eye. You are NOT helping them by coddling them. Even if you were worth $50M you should stop teaching them to be irresponsible and rely on you into adulthood for things they should be responsible for.

mistymoney

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Re: I wonder what you all will say to me?
« Reply #79 on: October 14, 2019, 08:13:12 AM »
With all due respect, you are killing your personal finances by coddling and sheltering your kids.

You may think you are protecting them, but unfortunately you are doing the opposite.

And my comments have nothing to do with you paying for their college.

For your son, he is still mooching off of you and you frankly can't afford it. If he can't find a high paying job, he can work two jobs. You mentioned a while back that he was working part time after graduating college... You are basically teaching him to NOT grow up and take responsibility for his life.

For your daughter, she could be working at least 15-20 hrs a week. Whether they are ready or not, they are into adulthood and need to fly the nest. You can't afford to support them any longer.

I can promise you that your kids would rather you tell them now in their early 20s "hey my finances have taken a huge hit trying to help you pay for college. I have been happy to do so, but I can no longer afford to support your lifestyles" rather than coming to them in 20 years for financial help because you haven't properly saved for your own retirement.

Each of the other commenters on this thread have tried to gently tell you that your kids are a huge financial drain that you can't afford.

You've made excuses for why that is.

I'm encouraging you to look at this with a fresh eye. You are NOT helping them by coddling them. Even if you were worth $50M you should stop teaching them to be irresponsible and rely on you into adulthood for things they should be responsible for.

Well - you've kind of boxed me in here as anything I say is an excuse.

But I'm honestly not sure if these comments have missed a few details in my recent posts or not. I did have some conversations with them. Likely gentler and vaguer than this commentariate would like! I'm sure of that!

DS did get his career-starter job and is saving up to move out. It isn't exactly where he wanted to start - both type of job and pay level - but after looking for a while he broadened the search and has a start. And he's happy about it. And DD is looking for part time work.

And - excuses aside - I will not be a financial burden later in life to them! I'm not sure where that idea is coming from. I have a net worth of about 850k (assets-liabilities) an estimated 20k/year from social security at 62. I could sell the house, pay all debts, and have over 100k to work with on establishing myself somewhere somehow and stretch that out until needing to tap the investments, hopefully without penalties! By most of the metrics on this board - I could retire right now to something very modest with a budget of 25-30k a year until SS kicks in. Since posting, I've joined the 53 club - so only 9 years away from early social security. So I do find that comment confusing!

So - at 850k NW,  I'm still currently gainfully employed, paying down debts, and adding at least a little bit into savings currently. So - to my mind every paycheck takes me just a little bit closer to FIRE. Right now, a very very little! Maybe 1-2 grains of sand every other week to build my beach. But it is not a negative, and it is not 0 either! Having nearly all of my investments in retirement protected funds might be a bit of liability for an instant liquidation scenario, so I am planning to build some funds outside of that.

I get that this tiny bit of positive is very very low for this community. But - I am just at the very cusp of turning this tide, and I'm feeling very positive! I'm excited to see where I am at my 1-year update, and particularly the 2-year update.

But aside from those projections - I do have some FIRE-worthy numbers here, no? Aside from liquidating and doing a leanFIRE, I could coast without any more accumulation until social security early retirement age at 62 and my stache would be nearly 2 million. At 65 to get to medicare age, the stache would about 2.5 million, and at full retirement age of 67 - it would be about 3 million.  So - I feel like my retirement is very secure. Social security payments would also grow over those years, especially as my income has jumped the last year. And I'm more than willing to work until I have a vision of what I want to do and my numbers make sense to do that.

I'm sorry - I just can't see this as the disaster you see. I don't see myself killing my finances or becoming a burden to anyone. I don't see my son as mooching - I see a hard working young man who is about to fly solo at 23, he has his own student loans he's been paying out of his PT income, buying whatever else he may want, conducting a rigorous job search, and is now saving up for security deposits, rent and getting his ducks in a row to move out.


mistymoney

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Re: I wonder what you all will say to me?
« Reply #80 on: October 14, 2019, 08:45:02 AM »
I guess I have one additional comment to make!

In mulling this over, I really haven't made any excuses at all!

I've tried to be very clear and explicit about my constraints. What my goals are, what my nonnegotiables are. I am very grateful for everyone's time and attention in responding to my case study, and so in return I have taken pains to try to address every point and offer clarifications or comments where I thought they were helpful for mutual understanding.

There have been a lot of useful posts, suggestions, and topics for me to think more deeply on. And I'm very happy to work on the things I find useful, prioritize, and tackle them one by one. And to clarify what I will and won't undertake, and timeframes for doing so, or considering alternatives.

But excuses? I don't need no stinking excuses! This is my life! You all may not like my life nor my choices, but I'm very content with what I've accomplished and where I am at right now. So many goals are on the cusp of being realized! I'm happy, excited, proud of myself (and my children!). If you can't see the positives here, that's ok! I'm good with it!

zee dot

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Re: I wonder what you all will say to me?
« Reply #81 on: October 14, 2019, 09:19:59 AM »
You're handling all the comments well, mistymoney! 

Everyone is coming at this from difference perspectives.  Example: I'm shocked a 23yo is having any bills paid by a parent.  But that's more about me than you!

Keep on with your to-do list.  :)

Kronsey

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Re: I wonder what you all will say to me?
« Reply #82 on: October 14, 2019, 10:28:11 AM »
Hi @mistymoney - I first just want to say that I am happy that you have such a positive outlook on your life and financial situation. If I were in your shoes, I would not be seeing things so rosy, but that isn't a knock on you. I could use a dose of your positive outlook on life. So good job on that!

I'm not commenting to knock you down or give you a face punch, I'm commenting to try to help you see things from a different perspective. Maybe I can help you see how things aren't all roses and sunshine and you can help me see the future more positively :)

As @zee dot said, if you see your 23 year old as a responsible, young adult while you are still paying most of his bills while he works part time, there may be just too large of a difference in perspective to overcome.

I think you have a hair on fire debt emergency between the CCs (which I know you are working on), the personal loan, and the student loans. Because my perspective is that of hair on fire emergency, I can't understand why you wouldn't be FORCING your son to work at MINIMUM 40 hours/week, pay for all his own bills (including food), and pay a small amount of rent/utilities to pitch in and help. He doesn't need to be buying anything he WANTS, he needs to learn to buy only that what he needs and is responsible for in life (like food, shelter, student loans, etc).

In my first reply to your thread above, I used the word "coddling" and a perfect example of that is your phrases/replies quoted below:

DS did get his career-starter job and is saving up to move out. It isn't exactly where he wanted to start - both type of job and pay level - but after looking for a while he broadened the search and has a start. And he's happy about it.

I don't see my son as mooching - I see a hard working young man who is about to fly solo at 23, he has his own student loans he's been paying out of his PT income, buying whatever else he may want, conducting a rigorous job search, and is now saving up for security deposits, rent and getting his ducks in a row to move out.

Regarding your daughter looking for a job, unless she has a criminal record, getting a job at a fast food restaurant should be about a 2 hour expedition. Walk into every restaurant within walking distance of her dorm (I think I read she lives on campus), apply, get hired. We all understand that isn't glamorous work, but that is the difference in perspective between a financial emergency and "life is good, no worries" attitude. Once she has a job and some income, she can then look for more glamorous opportunities.

And DD is looking for part time work.

When I look at your financial picture, I do not see you being anywhere close to FIRE worthy numbers. You are now 53. Unfortunately, that means expendable in most non government and/or union jobs. You could walk into work tomorrow and be terminated. You could have a health crisis that prevents you from working.

From everything you've written, I still don't think you have a good handle on how much money you're spending. With your numbers, many on this forum could FIRE (or lean FIRE), but that is because most of us know exactly what is going out each month, we budget monthly for big, reoccurring expenses like HVAC, roof, etc. From everything you've written, you're probably spending between $70,000 - $80,000 per year. With a liquid net worth of much less than $850k, that may not last you until 62 when you could draw SS early if you were to lose your job or be unable to work.

As someone who is used to spending roughly $70,000 per year, to think you could just magically flip a switch and start spending $25-30k a year is a pipe dream IMHO. Especially since you seem so averse to actually tracking your spending!



And - excuses aside - I will not be a financial burden later in life to them! I'm not sure where that idea is coming from. I have a net worth of about 850k (assets-liabilities) an estimated 20k/year from social security at 62. I could sell the house, pay all debts, and have over 100k to work with on establishing myself somewhere somehow and stretch that out until needing to tap the investments, hopefully without penalties! By most of the metrics on this board - I could retire right now to something very modest with a budget of 25-30k a year until SS kicks in. Since posting, I've joined the 53 club - so only 9 years away from early social security. So I do find that comment confusing!

So - at 850k NW,  I'm still currently gainfully employed, paying down debts, and adding at least a little bit into savings currently. So - to my mind every paycheck takes me just a little bit closer to FIRE. Right now, a very very little! Maybe 1-2 grains of sand every other week to build my beach. But it is not a negative, and it is not 0 either! Having nearly all of my investments in retirement protected funds might be a bit of liability for an instant liquidation scenario, so I am planning to build some funds outside of that.


But aside from those projections - I do have some FIRE-worthy numbers here, no? Aside from liquidating and doing a leanFIRE, I could coast without any more accumulation until social security early retirement age at 62 and my stache would be nearly 2 million. At 65 to get to medicare age, the stache would about 2.5 million, and at full retirement age of 67 - it would be about 3 million.  So - I feel like my retirement is very secure. Social security payments would also grow over those years, especially as my income has jumped the last year. And I'm more than willing to work until I have a vision of what I want to do and my numbers make sense to do that.

As I stated above, I really do admire your positive attitude. I am not suggesting you completely flip the switch to "the sky is falling" type of thinking, but I think you need a little more perspective on your actual financial scenario without thinking everything is going to work out just perfectly until you hit 62 (or whatever age you plan on pulling the plug on work).

For someone who spends as much as you do, who has the non-mortgage debt amounts that you do, and who has two adult children who show signs of not being able to spread their wings and fly, I think there is reason for concern, which is why I spent my time trying to point out a few of the glaring issues I see. I wish you the best as you move forward!

Big

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Re: I wonder what you all will say to me?
« Reply #83 on: October 14, 2019, 10:42:26 AM »
I like the fact that you are receptive to comments and not taking offense to them, that is the only way to learn.  There is no doubt that your kids have in a sense derailed you to some extent in your FIRE goals, but that is trumped by your satisfaction in providing them with a head start, which is particular to your situation. 

I am a bit confused by your numbers, however.

You have mentioned that you could coast to fire without any additional accumulation.  Unless I'm completely missing something (super huge returns for example, which would be indicative of very high risk investments, not wise for your age), I fail to see how you get to $2 million "without contributing more". 

Right now, you are sitting on $745,000 in investments.  If nothing further is contributed assuming an 8% return, you'd be sitting on $1,489,258, not $2 million as indicated at age 62.  Again this is assuming a pretty healthy return of 8%, going into what is looking like market correction in the near future (not trying to time, but it is a very much a reality).  You have to also remember that little thing called inflation of course. 

Your NW is not really $850,000 - You have $745,000 in investments, and about $245,000 in home equity- When you pay your credit cards off, you will have the student loan and mortgage debt of $387,000 (if nothing is added), therefore your NW is more to the tune of $603,000 not $850,000 at this point in time. 

I do think FIRE is possible at some point if everything goes in your favor, but not even close to age 58-62.  Health care will eat away at your monthly budget in particular.  I think is some potential to FIRE at 65, but you will have to be hoping for a few things, which are no downturn in the housing market, a healthy return on your investments, and no more added expenses/student loans/major housing expenses, etc.  You may also have to readjust your life style to a lcol area.  Which, if you want to stay around the kids, might be hard. 

I don't think anyone is attacking you, or trying to "box" you in, I just think most are seeing that you are walking a very tight rope that hinges on a whole lot going right in terms of markets, real estate, etc.  I think there is also some confusion as to how you will continue to fund 401k and pay tuition up front in cash from here on out (there is only so much income coming in).  Which means you are going to either add to your debt obligations or short change your retirement. 

Your original question on this post was to ascertain whether you could retire at an earlier age than 65.  I think that has lead into a good conversation about your options and what you'd need to do.  Unfortunately at your age, FIRE will not come early without some major adjustments and incredibly good luck.

I think a lot of the answers given here are not an attack, but rather a brutally honest way to get you to make the adjustments to hit your goal.  I'll say it again, the other missing component here is that you don't know exactly what you want to do in retirement and the associated expenses.  It's hard to know exactly how to align your short-term strategy without a long-term vision on the income needed during FIRE. 

I feel the need to agree with Kronsey on his last post.  We are here to help, but it requires one to be brutally honest with themselves.  From the outside looking in, I see a very steep uphill battle based on what is being portrayed and the sense of urgency that is being portrayed.  I don't say this to get you down, but for you to realize the severity of the situation that you are actually in when it comes to not only FIRE but any other major expense that may pop up in the near future. 









   


 
« Last Edit: October 14, 2019, 11:10:25 AM by Big »

freya

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Re: I wonder what you all will say to me?
« Reply #84 on: October 14, 2019, 05:42:34 PM »
Perhaps it would help to see some actual numbers.  Based on my quick reading of the original + recent posts, here's where mistymoney stands:

Monthly savings:  $1800/month BUT let's set aside some $$ for unforeseen expenses such as home repairs.  Call it $1500/month.

Non-mortgage debts:  $129K (estimated)
Mortgage $260K
Home value $500. 

Current retirement savings $763K

We don't know the interest on your various debts, but let's assume the average is 6%.  If you put $1500/month consistently toward the debts, you will pay them off in a little over 9 years.

At that point, you can resume saving for your own retirement.  If you are spending $5000/month now, adding on $300/month for stuff you haven't budgeted for, adding in 10% to cover taxes and otherwise completely ignoring health insurance, you need to compile a nest egg of a little over $1.7 million.   Assuming 7% real market return, this will grow to $1.4 million  during the 9 years you are paying off debt. 

At that point you start contributing $1500/month.  You will reach $1.7 million in another 3 years.

So, this says that provided these assumptions aren't wildly off base, you can retire in about 12 years.

Does that time horizon work for you?




mistymoney

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Re: I wonder what you all will say to me?
« Reply #85 on: October 14, 2019, 06:54:21 PM »
Hi @mistymoney - I first just want to say that I am happy that you have such a positive outlook on your life and financial situation. If I were in your shoes, I would not be seeing things so rosy, but that isn't a knock on you. I could use a dose of your positive outlook on life. So good job on that!

I'm not commenting to knock you down or give you a face punch, I thought face punches were part of the process? ;)I'm commenting to try to help you see things from a different perspective. Maybe I can help you see how things aren't all roses and sunshine and you can help me see the future more positively :)

As @zee dot said, if you see your 23 year old as a responsible, young adult while you are still paying most of his bills while he works part time, there may be just too large of a difference in perspective to overcome.

Maybe I'm just not being clear? but this is where I start to get confused by the comments and unsure if the situation is understood. So I try to clarify and then maybe that is "excuses"?  I thought I mentioned he got a new job a couple of times. The PT is over and he's made a start in a career type position.  I said career-adjacent, maybe that was where it went wrong? it is a career, office, 9-5 type job, but adjacent to the field he wanted. The PT was old job, new job is FT with benefits that kick in at about 90 days - 90 days, and then wait for the next 1st of the month to be enrolled (weird!). Except 401k which is after more time - maybe a year - not really sure about that. I didn't want to get in his business, but wanted to be sure I knew when the health insurance kicked in so he could be taken off mine. He is moving out in April getting a shared apt with a friend and then that's it. I guess we will see if the extra months of coddling does permanent damage. :) But even if he was still part time, he's moving out and that's it so it really doesn't affect my situation at all if he is PT or FT.

The other side of being responsible is that he is always doing stuff around the house - the lawn, the snow, the dishes, the garbage, food shopping, the pets, he takes an elderly relative to dr. appts, does some lawn care for them too, takes them shopping, that kind of thing.


I think you have a hair on fire debt emergency between the CCs (which I know you are working on), the personal loan, and the student loans. Because my perspective is that of hair on fire emergency, I can't understand why you wouldn't be FORCING your son to work at MINIMUM 40 hours/week, pay for all his own bills (including food), and pay a small amount of rent/utilities to pitch in and help. He doesn't need to be buying anything he WANTS, he needs to learn to buy only that what he needs and is responsible for in life (like food, shelter, student loans, etc).

In my first reply to your thread above, I used the word "coddling" and a perfect example of that is your phrases/replies quoted below:

DS did get his career-starter job and is saving up to move out. It isn't exactly where he wanted to start - both type of job and pay level - but after looking for a while he broadened the search and has a start. And he's happy about it.

I don't see my son as mooching - I see a hard working young man who is about to fly solo at 23, he has his own student loans he's been paying out of his PT income, buying whatever else he may want, conducting a rigorous job search, and is now saving up for security deposits, rent and getting his ducks in a row to move out.

Regarding your daughter looking for a job, unless she has a criminal record, getting a job at a fast food restaurant should be about a 2 hour expedition. Walk into every restaurant within walking distance of her dorm (I think I read she lives on campus), apply, get hired. We all understand that isn't glamorous work, but that is the difference in perspective between a financial emergency and "life is good, no worries" attitude. Once she has a job and some income, she can then look for more glamorous opportunities.

And DD is looking for part time work.

When I look at your financial picture, I do not see you being anywhere close to FIRE worthy numbers. You are now 53. Unfortunately, that means expendable in most non government and/or union jobs. You could walk into work tomorrow and be terminated. You could have a health crisis that prevents you from working.

From everything you've written, I still don't think you have a good handle on how much money you're spending. With your numbers, many on this forum could FIRE (or lean FIRE), but that is because most of us know exactly what is going out each month, we budget monthly for big, reoccurring expenses like HVAC, roof, etc. From everything you've written, you're probably spending between $70,000 - $80,000 per year. With a liquid net worth of much less than $850k, that may not last you until 62 when you could draw SS early if you were to lose your job or be unable to work.

As someone who is used to spending roughly $70,000 per year, to think you could just magically flip a switch and start spending $25-30k a year is a pipe dream IMHO. Especially since you seem so averse to actually tracking your spending!

I'm not sure where I'm being unclear, but I have been tracking. I backtracked and have every penny tracked since January 1st. I haven't found a lot of value in it because it hasn't told me anything I didn't already know, but I have continued tracking it with some poster's encouragement that it does get more useful over time.

On another note, I have lived on a lot less. I don't choose to currently, but I certainly could again! Living on 30k-ish presupposes that I sell the house, pay off the student loans, and start over. Not that I would stay in the current house, that is dependent on my current salary, no doubt about that.




And - excuses aside - I will not be a financial burden later in life to them! I'm not sure where that idea is coming from. I have a net worth of about 850k (assets-liabilities) an estimated 20k/year from social security at 62. I could sell the house, pay all debts, and have over 100k to work with on establishing myself somewhere somehow and stretch that out until needing to tap the investments, hopefully without penalties! By most of the metrics on this board - I could retire right now to something very modest with a budget of 25-30k a year until SS kicks in. Since posting, I've joined the 53 club - so only 9 years away from early social security. So I do find that comment confusing!

So - at 850k NW,  I'm still currently gainfully employed, paying down debts, and adding at least a little bit into savings currently. So - to my mind every paycheck takes me just a little bit closer to FIRE. Right now, a very very little! Maybe 1-2 grains of sand every other week to build my beach. But it is not a negative, and it is not 0 either! Having nearly all of my investments in retirement protected funds might be a bit of liability for an instant liquidation scenario, so I am planning to build some funds outside of that.


But aside from those projections - I do have some FIRE-worthy numbers here, no? Aside from liquidating and doing a leanFIRE, I could coast without any more accumulation until social security early retirement age at 62 and my stache would be nearly 2 million. At 65 to get to medicare age, the stache would about 2.5 million, and at full retirement age of 67 - it would be about 3 million.  So - I feel like my retirement is very secure. Social security payments would also grow over those years, especially as my income has jumped the last year. And I'm more than willing to work until I have a vision of what I want to do and my numbers make sense to do that.

As I stated above, I really do admire your positive attitude. I am not suggesting you completely flip the switch to "the sky is falling" type of thinking, but I think you need a little more perspective on your actual financial scenario without thinking everything is going to work out just perfectly until you hit 62 (or whatever age you plan on pulling the plug on work).

I'm not oblivious to the potential dangers here, I do see that there are dangers. But my perspective is that I am right at the start of an upswing after hitting the gradient of 0, but I see the issues and am trying to shore up. I might add that I have lived through some times of great hardship. I'm on easy street comparatively

For someone who spends as much as you do, who has the non-mortgage debt amounts that you do, and who has two adult children who show signs of not being able to spread their wings and fly, I think there is reason for concern, which is why I spent my time trying to point out a few of the glaring issues I see. I wish you the best as you move forward!
« Last Edit: October 14, 2019, 07:11:09 PM by mistymoney »

mistymoney

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Re: I wonder what you all will say to me?
« Reply #86 on: October 14, 2019, 07:27:30 PM »
I like the fact that you are receptive to comments and not taking offense to them, that is the only way to learn.  There is no doubt that your kids have in a sense derailed you to some extent in your FIRE goals, but that is trumped by your satisfaction in providing them with a head start, which is particular to your situation. 

I am a bit confused by your numbers, however.

You have mentioned that you could coast to fire without any additional accumulation.  Unless I'm completely missing something (super huge returns for example, which would be indicative of very high risk investments, not wise for your age), I fail to see how you get to $2 million "without contributing more". 

Right now, you are sitting on $745,000 in investments.  If nothing further is contributed assuming an 8% return, you'd be sitting on $1,489,258, not $2 million as indicated at age 62.  Again this is assuming a pretty healthy return of 8%, going into what is looking like market correction in the near future (not trying to time, but it is a very much a reality).  You have to also remember that little thing called inflation of course. 

ok - my numbers were unadjusted

Your NW is not really $850,000 - You have $745,000 in investments, and about $245,000 in home equity- When you pay your credit cards off, you will have the student loan and mortgage debt of $387,000 (if nothing is added), therefore your NW is more to the tune of $603,000 not $850,000 at this point in time. 

that was in the sell the house scenario

I do think FIRE is possible at some point if everything goes in your favor, but not even close to age 58-62.  Health care will eat away at your monthly budget in particular.  I think is some potential to FIRE at 65, but you will have to be hoping for a few things, which are no downturn in the housing market, a healthy return on your investments, and no more added expenses/student loans/major housing expenses, etc.  You may also have to readjust your life style to a lcol area.  Which, if you want to stay around the kids, might be hard. 

I don't think anyone is attacking you, or trying to "box" you in, I just think most are seeing that you are walking a very tight rope that hinges on a whole lot going right in terms of markets, real estate, etc.  I think there is also some confusion as to how you will continue to fund 401k and pay tuition up front in cash from here on out (there is only so much income coming in).  Which means you are going to either add to your debt obligations or short change your retirement. 

Your original question on this post was to ascertain whether you could retire at an earlier age than 65.  I think that has lead into a good conversation about your options and what you'd need to do.  Unfortunately at your age, FIRE will not come early without some major adjustments and incredibly good luck.

I think a lot of the answers given here are not an attack, but rather a brutally honest way to get you to make the adjustments to hit your goal.  I'll say it again, the other missing component here is that you don't know exactly what you want to do in retirement and the associated expenses.  It's hard to know exactly how to align your short-term strategy without a long-term vision on the income needed during FIRE. 

I feel the need to agree with Kronsey on his last post.  We are here to help, but it requires one to be brutally honest with themselves.  From the outside looking in, I see a very steep uphill battle based on what is being portrayed and the sense of urgency that is being portrayed.  I don't say this to get you down, but for you to realize the severity of the situation that you are actually in when it comes to not only FIRE but any other major expense that may pop up in the near future. 









 

Well, as I said, I'm looking to make no big decisions/changes for about 2 years, and if I haven't convinced you lot of my solvency by then, I'll consider more drastic alternatives.


mistymoney

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Re: I wonder what you all will say to me?
« Reply #87 on: October 14, 2019, 07:31:10 PM »
Perhaps it would help to see some actual numbers.  Based on my quick reading of the original + recent posts, here's where mistymoney stands:

Monthly savings:  $1800/month BUT let's set aside some $$ for unforeseen expenses such as home repairs.  Call it $1500/month.

Non-mortgage debts:  $129K (estimated)
Mortgage $260K
Home value $500. 

Current retirement savings $763K

We don't know the interest on your various debts, but let's assume the average is 6%.  If you put $1500/month consistently toward the debts, you will pay them off in a little over 9 years.

At that point, you can resume saving for your own retirement.  If you are spending $5000/month now, adding on $300/month for stuff you haven't budgeted for, adding in 10% to cover taxes and otherwise completely ignoring health insurance, you need to compile a nest egg of a little over $1.7 million.   Assuming 7% real market return, this will grow to $1.4 million  during the 9 years you are paying off debt. 

At that point you start contributing $1500/month.  You will reach $1.7 million in another 3 years.

So, this says that provided these assumptions aren't wildly off base, you can retire in about 12 years.

Does that time horizon work for you?


yes - I can deal with that!

Although I will try to up my game a little bit as I go on, and shave that number down a wee bit. :P


freya

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Re: I wonder what you all will say to me?
« Reply #88 on: October 15, 2019, 06:27:44 AM »
Great!  It's helpful to have a concrete goal.

If you change nothing, you get to retire at 64.

The measures you can take while staying in your current house could shave maybe 2-3 years off this number.   Many tips provided above, but the main three areas for improvement are:  using home equity and/or 0% credit cards to effectively reduce the interest you're paying over time, cutting expenses like the heating & cell phone bills, and getting your kids to stop depending on Bank of Mom.

To shorten your working career further, you will need to downsize into a smaller/cheaper home or apartment.  Are you interested in doing that?  If so, what time frame are you considering?

Side note - I'm not in favor of diluting an expensive college education by getting a hefty job.  The 23 year old, on the other hand, should be paying for all his own personal expenses - including cell phone - and launching his own retirement & emergency savings fund.

Big

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Re: I wonder what you all will say to me?
« Reply #89 on: October 15, 2019, 12:47:49 PM »

Right now, you are sitting on $745,000 in investments.  If nothing further is contributed assuming an 8% return, you'd be sitting on $1,489,258, not $2 million as indicated at age 62.  Again this is assuming a pretty healthy return of 8%, going into what is looking like market correction in the near future (not trying to time, but it is a very much a reality).  You have to also remember that little thing called inflation of course. 

ok - my numbers were unadjusted

I didn't adjust any numbers for inflation in my above calculation.  Just a simple FV calculation on where you'd be if you contributed nothing further and returned 8% for 9 more years.

Your NW is not really $850,000 - You have $745,000 in investments, and about $245,000 in home equity- When you pay your credit cards off, you will have the student loan and mortgage debt of $387,000 (if nothing is added), therefore your NW is more to the tune of $603,000 not $850,000 at this point in time. 

that was in the sell the house scenario

The NW above assumes the equity in the house and the liability for the house.  The above is accurate on your NW regardless if you sell the house or keep it.




Big

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Re: I wonder what you all will say to me?
« Reply #90 on: October 15, 2019, 01:34:52 PM »
Because I'm a bit bored at work today, I'd figure I'd also run some alternate math, to see what your numbers would look like making a major adjustment (selling the house).  I know this isn't a decision you want to make today, but figured I'd throw it out there just to see how it skews the numbers, more out of curiosity than anything.

If you sold the house - you'd wind up with about $240k, of which $127,000 would go to pay off student loans (I'm going to assume cc debt and personal loan will be paid off by the time the house sold)  I'm also assuming that you will have minimal closing costs and won't use a realtor.  This would leave $113,000k left in the coffer, $30,000 of which I'd use as a EF, and $83,000 which would go into a taxable brokerage account.

So the new outlook would look something like this.

$1600 rent
$100  gas/heat (assuming you would be responsible for them)
75   electric (assuming you would be responsible for them)
150   cell
105   internet
550   healthcare
140   car ins (one child off adjustment)
100   other transport
0       SLs (would be paid for by home equity)
500  food

$3320 + 300 extra for "incidentals" - new expense outlay = $3620

Take home pay is about $6800 as mentioned in prior post - $3620 new expenses = $3180 budget surplus. 

In addition, you would have $113,000 left from house sale after paying student loans.

Allocate $30,000 for emergency expense of that $113,000 so EF is taken care of.  You would have $83,000 to go into an taxable brokerage account.

You investment outlook would be the following

$745,000 investments (current)
$83,000 taxable brokerage (left over house equity after student loans and ef is funded)
New Investment Total is $828,000

If nothing was further contributed, assuming a 7% return - it would give you the following:

Age 63 - $1,522,256 safe withdrawal rate of $5074 a month 4%
Age 58 - $1,161,318 safe withdrawal rate of $3871 a month 4%

Since you have a budget surplus of $3180 (probably would actually be more once kids are out), you could also allocate $2,500 to your 401k/investments a month.  Again your EF would be funded already. 

If you contributed $2,500 a month again assuming the investments would be $828,000 after selling and returning 7%, your numbers would look like this.  Remember you'd have an approximate budget surplus of $3180. 

Age 62 $1,881,583 withdrawal rate 4% - $6271 monthly
Age 58 $1,333,835 withdrawal rate 4% - $4446 monthly

I think these numbers will actually be a bit higher of course as you have 401k match, tax benefits, and would probably reduce expenses further than what I'm thinking.

The other benefit of the budget surplus that would be created is that even after $2500 a month gets thrown into a 401k/investments, you still have about $680 a month for discretionary spending in addition to the $300 a month for "incidentals".  This would give some breathing room in the budget for sure.  Even if you needed to purchase a new vehicle, healthcare costs go up, etc.

Overall, this plan would potentially get you to fire at 58, depending on anticipated healthcare costs/deductibles, etc.  It would also prevent the potential for downside in the real estate market, emergency home expenses that could force borrowing at a higher rate again, monthly payments to student loans, etc, etc.  The budget would potentially also realize considerably more surplus when the kids are completely out of the picture, and will also begin getting better once your son is on his own.  In addition, you'd have $30,000 in a fully funded EF!

Again, I know you don't want to pursue this option quite yet, which is fine, its obviously your life and choices.  I see the above plan as a way to seriously mitigate some of the downside risk that you face given your situation.  I know that things like home value appreciation, inflation, etc isn't factored in, however, in regards to home appreciation, the elimination of the high interest debt (student loans, I'm considering at high interest), more than makes up for it.  I'm also ignoring SS at 62 at this point as the intent was to see what FIRE would look like at 58, if you go to 62, the numbers look way better of course. 

I know you didn't necessary ask for these calculations, I did feel curious to play with the numbers and figure out a way that you could potentially get to FIRE at 58.  Just some food for thought.  Also, I will put the disclaimer out, I know about regret selling houses, I sold my home 6 months ago, I'd pay 20% more for it today as I didn't realize the lifestyle change would have that much of an impact on me.  So not judging, not advocating for any major moves, just putting some additional math out there.  8^)









   

« Last Edit: October 15, 2019, 03:50:09 PM by Big »

mistymoney

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Re: I wonder what you all will say to me?
« Reply #91 on: October 15, 2019, 05:40:47 PM »
Because I'm a bit bored at work today, I'd figure I'd also run some alternate math, to see what your numbers would look like making a major adjustment (selling the house).  I know this isn't a decision you want to make today, but figured I'd throw it out there just to see how it skews the numbers, more out of curiosity than anything.

If you sold the house - you'd wind up with about $240k, of which $127,000 would go to pay off student loans (I'm going to assume cc debt and personal loan will be paid off by the time the house sold)  I'm also assuming that you will have minimal closing costs and won't use a realtor.  This would leave $113,000k left in the coffer, $30,000 of which I'd use as a EF, and $83,000 which would go into a taxable brokerage account.

So the new outlook would look something like this.

$1600 rent
$100  gas/heat (assuming you would be responsible for them)
75   electric (assuming you would be responsible for them)
150   cell
105   internet
550   healthcare
140   car ins (one child off adjustment)
100   other transport
0       SLs (would be paid for by home equity)
500  food

$3320 + 300 extra for "incidentals" - new expense outlay = $3620

Take home pay is about $6800 as mentioned in prior post - $3620 new expenses = $3180 budget surplus. 

In addition, you would have $113,000 left from house sale after paying student loans.

Allocate $30,000 for emergency expense of that $113,000 so EF is taken care of.  You would have $83,000 to go into an taxable brokerage account.

You investment outlook would be the following

$745,000 investments (current)
$83,000 taxable brokerage (left over house equity after student loans and ef is funded)
New Investment Total is $828,000

If nothing was further contributed, assuming a 7% return - it would give you the following:

Age 63 - $1,522,256 safe withdrawal rate of $5074 a month 4%
Age 58 - $1,161,318 safe withdrawal rate of $3871 a month 4%

Since you have a budget surplus of $3180 (probably would actually be more once kids are out), you could also allocate $2,500 to your 401k/investments a month.  Again your EF would be funded already. 

If you contributed $2,500 a month again assuming the investments would be $828,000 after selling and returning 7%, your numbers would look like this.  Remember you'd have an approximate budget surplus of $3180. 

Age 62 $1,881,583 withdrawal rate 4% - $6271 monthly
Age 58 $1,333,835 withdrawal rate 4% - $4446 monthly

I think these numbers will actually be a bit higher of course as you have 401k match, tax benefits, and would probably reduce expenses further than what I'm thinking.

The other benefit of the budget surplus that would be created is that even after $2500 a month gets thrown into a 401k/investments, you still have about $680 a month for discretionary spending in addition to the $300 a month for "incidentals".  This would give some breathing room in the budget for sure.  Even if you needed to purchase a new vehicle, healthcare costs go up, etc.

Overall, this plan would potentially get you to fire at 58, depending on anticipated healthcare costs/deductibles, etc.  It would also prevent the potential for downside in the real estate market, emergency home expenses that could force borrowing at a higher rate again, monthly payments to student loans, etc, etc.  The budget would potentially also realize considerably more surplus when the kids are completely out of the picture, and will also begin getting better once your son is on his own.  In addition, you'd have $30,000 in a fully funded EF!

Again, I know you don't want to pursue this option quite yet, which is fine, its obviously your life and choices.  I see the above plan as a way to seriously mitigate some of the downside risk that you face given your situation.  I know that things like home value appreciation, inflation, etc isn't factored in, however, in regards to home appreciation, the elimination of the high interest debt (student loans, I'm considering at high interest), more than makes up for it.  I'm also ignoring SS at 62 at this point as the intent was to see what FIRE would look like at 58, if you go to 62, the numbers look way better of course. 

I know you didn't necessary ask for these calculations, I did feel curious to play with the numbers and figure out a way that you could potentially get to FIRE at 58.  Just some food for thought.  Also, I will put the disclaimer out, I know about regret selling houses, I sold my home 6 months ago, I'd pay 20% more for it today as I didn't realize the lifestyle change would have that much of an impact on me.  So not judging, not advocating for any major moves, just putting some additional math out there.  8^)









 

Thank you! I appreciate this perspective, and it certainly gives me a lot to think about!


freya

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Re: I wonder what you all will say to me?
« Reply #92 on: October 16, 2019, 07:15:51 AM »
Interesting analysis, big.

Some problems with it:  in a market where house prices are in the half million range and property taxes are $9000 a year, I doubt very much that renting for $1600 a month is realistic.   I would guess more likely in the $2000-2500 range.  Also, FSBO sales are not necessarily the right move plus there are always costs involved in fixing up a house to show & sell, not to mention moving.  There may also be taxes involved if she has a lot of capital gains on the sale. 

Finally, you'd have to do a rent vs buy analysis in her local market to determine whether she is better off renting, or trading for a smaller/cheaper house or perhaps a townhouse/condo.  Over time periods of 5-7 years or longer, it's almost always better to buy than rent, especially with low mortgage rates.  There are also nonmonetary downsides of renting:  you can be booted out if the landlord decides to sell or simply not renew your lease, you can't modify anything or even paint without permission from the landlord, the landlord will buy the cheapest possible appliances and only when absolutely necessary so you're going to be dealing with junk in that department, your neighbors will likely be transient dwellers with little interest in maintaining or contributing to communal quality of life, and you have almost no recourse except to move out if there are noisy neighbors keeping you up at night.  This is why I bought into a coop that strictly limits renting and is vigilant about enforcing house rules.

Both of our figuring also discounted future college costs for the daughter.

However: the take-home for your calculation is that downsizing her home will shorten her working career by a maximum of around 6 years.  More realistically I'd guess maybe 4 years.  That could be significant enough to the OP that it's worth going to the trouble of selling and moving, but on the other hand she says she enjoys her job and is in no hurry to quit.  So, her call.

Big

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Re: I wonder what you all will say to me?
« Reply #93 on: October 16, 2019, 08:27:15 AM »
freya,

I used the number that Misty posted for rent somewhere on this post, so I used that number. 

I did ignore some cap gains, she has owned the house 10 years, so I assumed it hasn't been refinanced prior, which means she payed over $260,000 for it.  I believe cap gains for 2019 filing single is $250k. 

I also made the disclaimer in another post that  I'm not fluent in her market of course.  FSBO, could or couldn't be the right move.  She either way would be able to fund an EF and negate some serious downside risk by making this major move.  I'm not advocating one way or another, just looking at options to take risk off the table and get into a more "breathable" situation.  This of course hinges on her numbers being correct about rent, etc.