Author Topic: Reader Case Study - Does 2023 look doable?  (Read 2415 times)

ACyclist

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Reader Case Study - Does 2023 look doable?
« on: December 15, 2018, 09:16:21 AM »
Reader Case Study - Hoping for FIRE in 2023 or 2024

Life Situation: Married, 0 children, both File zero, married
My age is 50
My partner is 48

Gross Salary/Wages: 112K

Individual amounts of each Pre-tax deductions: 18.5 for him, 23k for myself (I max what I can afford to do after tax, and medical needs). 

Qualified Dividends & Long Term Capital Gains: Trying to re-invest those. 

Rental Income, Actual Expenses, and Depreciation: We sold the rental last week. Have to see the tax lady.

Taxes: Have not done these for 2018.

Current expenses: $175 (T & I) Home
                           $300 (monthly self impound towards newer truck goes in e fund)
                           $125 (monthly self impound towards future home needs goes in e fund)
                           $200 (saving monthly toward a Summer in Italy in 2024-We sometimes miss this contribution 15K goal)
                           $90 vehicle insurance
                           $364 utilities (water, gas, power, Netflix, phones, garbage, internet)
                           $650 food
                           $200 gasoline used towards fun (We ride bikes to work most days)
                           $200 Misc. (bike parts, stuff)
                           $2304  Grand total

For mortgage payments, separate the P&I (which stop when the mortgage is paid) from the T&I (and anything else) which continue as long as you own the property.

Expected ER expenses: (optional, if relevant)

Assets: Amount & description -

 Truck - 5K bluebook,
 Trailer 4K,
Cash in emergency fund 23K
Cash for a trip to Italy when we retire (2024): 1.5K (Goal 15K by 2024)
Money in pretax accounts: 310K
Money in taxable trading account: 180K
Money in a work retirement account that I can't see until 60: 53K, they add to it yearly 1.8K
Cash: 14000 in other forms - sellable assets

Basically, if we could cash out now, we have about .5 mil, give or take with market gains and losses.  :)

Liabilities: 0

Specific Question(s): We have a goal of 830K in retirement savings (Roths, pre-tax), and 175K in another fund to be spent before we reach 59.5, when we can unlock the nest egg. We want to live on about 40K Does look to be enough? We hope to work part time for medical insurance premiums. I have a pre existing condition

Our records show that we personally save about 6K a month towards retirement if you average out the year. This number doesn't include the money we stash for home, car and a trips. This also doesn't include workplace savings by employer $ 4000/yr him  $1800/yr me

I would have done the spreadsheet, but my computer doesn't have excel.  We think we look good. We live on so little. So, long as we can have some new bikes here and there.
« Last Edit: December 15, 2018, 09:42:00 AM by ACyclist »

lhamo

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Re: Reader Case Study - Does 2023 look doable?
« Reply #1 on: December 15, 2018, 12:13:47 PM »
I find the way you have laid this out somewhat confusing.

Your current assets are relatively low given your combined income/low reported spending.  Did you recently get an income bump or reduce spending considerably?  If not, then hard to explain the gap. 

How do your tax-deferred retirement accounts break out?  Would you be able to tap any of them penalty-free if you "separated from service" at age 55?  Do you have any Roths, or are your planning to add them to the mix?  Will you qualify for SS? 

I think the chances of you making it to stated goal on current savings levels are slim -- 5 years is a very short term to be trying to more than double net worth, especially given that we are likely in for a significant market decline within that period.  But maybe you don't need that much if you are able to tap retirement accounts at 55 -- definitely something to look into. 

I also don't think you need 15k for the Italy trip -- do some travel hacking for the flights, 5 years advance notice is more than enough to build up points to cover one or both tickets.  Go in the off or shoulder season to further reduce costs -- could probably get a nice Air BnB for a good price.  Cook for yourselves using local markets most of the time.  You can probably have a lovely trip for no more than 4-5k.

ysette9

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Re: Reader Case Study - Does 2023 look doable?
« Reply #2 on: December 15, 2018, 01:41:27 PM »
You can use the G-suite for free with a gmail email address. Their Sheets program works with the case study template and is a pretty powerful tool. No need to pay money for Excel.

ACyclist

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Re: Reader Case Study - Does 2023 look doable?
« Reply #3 on: December 15, 2018, 04:32:26 PM »
I find the way you have laid this out somewhat confusing.

Your current assets are relatively low given your combined income/low reported spending.  Did you recently get an income bump or reduce spending considerably?  If not, then hard to explain the gap. 

How do your tax-deferred retirement accounts break out?  Would you be able to tap any of them penalty-free if you "separated from service" at age 55?  Do you have any Roths, or are your planning to add them to the mix?  Will you qualify for SS? 

I think the chances of you making it to stated goal on current savings levels are slim -- 5 years is a very short term to be trying to more than double net worth, especially given that we are likely in for a significant market decline within that period.  But maybe you don't need that much if you are able to tap retirement accounts at 55 -- definitely something to look into. 

I also don't think you need 15k for the Italy trip -- do some travel hacking for the flights, 5 years advance notice is more than enough to build up points to cover one or both tickets.  Go in the off or shoulder season to further reduce costs -- could probably get a nice Air BnB for a good price.  Cook for yourselves using local markets most of the time.  You can probably have a lovely trip for no more than 4-5k.

We will both qualify for SS.

He is recently all trained up for his field.  We started this about a year ago. Even if we just save for the next 5 years, we can likely reach another 300k.

15k for 3 months. 5k a month. <shrug> Plane tickets? bike transfers?

I have 55K + 26K in a workplace saving, can't touch really easily without penalty, TIA or the like

55k in 403b

30K in my roth

39K in his roth

70K in his 401K (old)

21K in taxable trading account Fidelity

70K Vanguard (40K cash from check)

87k in cash waiting for ink to dry on check to be invested between fidelity and Vanguard (we may owe a modest amount of tax on this) no concerns there.)

We don't intent to need to touch the egg too much in the first 5 years. We are buying cds to carry us to 2028, plus we could work part time. His career is very portable.

This year him:

$81234
-18500 403b
-10106 taxes
ytd net:  45670.21

Me: 32K Gross, and about 1K take home per year, which we invest and or save.  My income is not necessary to live on. I about max my 24K contribution each year. I just turned 50. We are looking at 5 years from now. Just invest and save over the next 4 years.



 
« Last Edit: December 15, 2018, 04:39:53 PM by ACyclist »

MDM

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Re: Reader Case Study - Does 2023 look doable?
« Reply #4 on: December 15, 2018, 04:49:42 PM »
You can use the G-suite for free with a gmail email address. Their Sheets program works with the case study template and is a pretty powerful tool. No need to pay money for Excel.
At one point (see Any Google Sheets knowledge?), Sheets had some notable drawbacks vs. Excel.  Have the ones pertinent to the case study spreadsheet (e.g., the chart problem noted in that thread) been rectified?

Rob from Canada

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Re: Reader Case Study - Does 2023 look doable?
« Reply #5 on: January 13, 2019, 08:47:23 AM »
Right of the bat you have to bring down that 15k trip to Italy to something reasonable. Biking, train, bus, backpacking, hostels, b&b's, airbnb etc. Do not follow the masses on this trip, be creative. I would gladly rent a room cheap to anyone super responsible for a day or a month if they find me. It works both ways when you are looking to rent or wanting to rent out short term.

Rule no.1 of a Mustaschian is go frugal. Unless your planning to go for 6 months and if that's the case you can rent your house short term to offset some of the cost.

Gotta get creative with that dream. 

MrThatsDifferent

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Re: Reader Case Study - Does 2023 look doable?
« Reply #6 on: January 13, 2019, 01:13:02 PM »
This isnít going to help, but I actually think you should keep the $15k Italy goal. Thatís awhile away and seems to be your only major vacation. Enjoy it! Donít go bare bones. Sure, thereís plenty of ways to save, look into them, many lead to new adventures, but also give yourself the freedom to enjoy and celebrate.

Iíd think what you want to look at is $650/month food for 2 people!?! Check out some of the food challenges and maybe give yourself the challenge of only using what you save from your food budget of $650 for Italy? 2 birds, 1 stone.

Blahhhh456

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Re: Reader Case Study - Does 2023 look doable?
« Reply #7 on: January 25, 2019, 09:16:40 PM »
I agree with keeping the goal of $15k for your trip to Italy. First, it's a savings goal but that does not mean you need to spend it all. You might find the trip costs a lot less, but at least you have funds. I do encourage you to look into "hacking" the trip as much as possible with credit card rewards. Second, this trip is planned for five years away and we have no idea how the exchange ratio will be. So best to have a bit of a cushion just in case. I would also suggest to put the savings in a high yield savings account, so you can maximize the interest earnings.

Hirondelle

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Re: Reader Case Study - Does 2023 look doable?
« Reply #8 on: January 25, 2019, 11:24:47 PM »
I don't think there's anything wrong with spending $15k on a trip to Italy, but holy moly I hope you're gonna stay for at least half a couple months in that case?