Author Topic: My expenses and earnings  (Read 1516 times)

whywork

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My expenses and earnings
« on: May 24, 2018, 07:53:32 AM »
All, here are my current expenses and networth. Please let me know your thoughts

Rent:   3300
Grocery & misc. items: 500
Eat out: 200
Entertainment & Clothes/shopping: 200
Car (gas+insurance+maintenance): 250
Wireless:   100
Utilities (pge+internet+misc):   200
Kids classes & tuition:   300
Health Care (Insurance+Payments): 300
unexpected expenses: 300
Vacations: 300
Life insurance: 400 (big health issues for me)

Total: ~6400

Total current Networth: 630k

My salary is ~260k and including ROI I can save about 130k per year. 27k in 401k including 9k company match, 27k in after tax 401k which gets megabackdoor rothed, 50k savings, plus 25k ROI to a total of 130k

Goal is to comfortably retire on 4-5k per month including rent. Pay college fee for my 2 kids (25k/kid/year) and basing on how long I work, be able to leave them some money too. Given this I can look at the below scenarios, let me know your thoughts.

FIRE with 1.25 mill in 4.5 years: Move to low COL area, Pay kids school, retire with 4k comfortably
FIRE with 1.5 mill in 6.5 years: Move to low COL area, Pay kids school, retire with 4-5k and leave kids 750k to 1M
FIRE with 2 mill in 9.5 years: Not sure if we can move immediately to low COL area as elder kid will be in college, but eitherway it will be a comfortable retirement 4-5k per month and leaving each kid 1.5M.

There is also lean FIRE with 1 mill in 3.5 years where I may not be able to pay school.
« Last Edit: May 24, 2018, 04:35:29 PM by whywork »

2Cent

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Re: My expenses and earnings
« Reply #1 on: May 24, 2018, 08:12:56 AM »
7k/month = 84k
260k-84k = 176k
Saving = 105k
So what happened to the 71k?

whywork

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Re: My expenses and earnings
« Reply #2 on: May 24, 2018, 08:26:46 AM »
7k/month = 84k
260k-84k = 176k
Saving = 105k
So what happened to the 71k?

tax

2Birds1Stone

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Re: My expenses and earnings
« Reply #3 on: May 24, 2018, 02:39:44 PM »
Your spending is ridiculously high.

4alpacas

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Re: My expenses and earnings
« Reply #4 on: May 24, 2018, 04:14:27 PM »
Your spending is ridiculously high.
Absolutely true.

FIRE with 1.25 mill in 4.5 years: Move to low COL area, Pay kids school, retire with 4k comfortably
FIRE with 1.5 mill in 6.5 years: Move to low COL area, Pay kids school, retire with 4-5k and leave kids 750k to 1M
FIRE with 2 mill in 9.5 years: Not sure if we can move immediately to low COL area as elder kid will be in college, but eitherway it will be a comfortable retirement 4-5k per month and leaving each kid 1.5M.
If you're paying $100k/kid (and you don't state how many kids you have), I would want at least $1.2M for FIRE and ~$200k (?) for college costs.
I'm calculating $1.4M as a barebone + college costs. 

You also might want to share your $4k budget.

diapasoun

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Re: My expenses and earnings
« Reply #5 on: May 24, 2018, 04:30:31 PM »
1. What's your health plans for retirement? You say you have health issues; what kind? Are they accounted for in your 1.25-2mm budget?

2. How old are you? Are you funding thirty years of retirement, or fifty? (Especially relevant with health issues.)

3. How well do you understand what your expenses will be in retirement, especially if you're moving? It sounds like you're expecting to downsize significantly. Are you truly prepared for what the difference in lifestyles will be? A huge chunk will be taken out just by reducing your rent, but what about other changes?

3. Your spending IS super high.

a. Rent -- $3300 is not small change. I live in the Bay, so I get how that happens, but you should look into the many different ways your rent could be lowered. Go down a bedroom? Move to a perfectly nice but less fancy area? Keep looking for cheaper versions of what you already have? Go remote and move to your LCOLA early? Really go through the list of changes you could make, and don't just knock things out of the running without thought; give them real consideration and think through your real priorities.

b. What's the "misc" in grocery and misc items? And yes, definitely attack your food spending. $1100/mo is a lot of money for 4 people (I'm guessing you have 2 kids since you mentioned the "elder" child).

c. Entertainment/clothes/shopping -- what's in here? Does it actually make you happy?

d. Wireless -- phones? You don't need this high a plan, unless you need incredible amounts of wireless for work (in which case you are hopefully being reimbursed by your company). Lower your data and consider changing carriers.

e. Kids classes/tuition -- what classes are they taking? Are they enjoying them and getting the most out of them? If not, are there better, cheaper activities they'd enjoy more?

f. Unexpected expenses -- like what?

g. Your total came to ~6450 for me, not ~7000. Where's the other 550 going?

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What is it that you really want out of your financial planning here? Do you want to stop working because of health issues? Do you want more time with your kids? Is the rat race driving you crazy? Etc. Knowing what your real goals are will help.

2Cent

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Re: My expenses and earnings
« Reply #6 on: May 25, 2018, 02:49:11 AM »
7k/month = 84k
260k-84k = 176k
Saving = 105k
So what happened to the 71k?

tax
I'm not familiar with your local tax laws but maybe you could see if you can defer paying some taxes to spread it beyond retirement and get a lower rate.