Author Topic: Semi-retiring without a proper stash?  (Read 1918 times)

FrenchMustache

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Semi-retiring without a proper stash?
« on: September 01, 2017, 08:27:00 AM »
Topic Title: semi-retiring without a proper stash?

Hi everyone, I wanted to get some thoughts on my situation/plans. English is not my native language so sorry for the mistakes!

Life Situation: I live in France where there is cheap healthcare, social support, and basic retirement for everybody. Due to my job I have build up an OK retirement that will kick in at 62. If we keep our COL low that should cover us.  I am 34, married to DH 39, and together we have 3 kids (7, 4, 2). We both come from pretty well off families and even though I'm not counting on them giving us anything it's nice to know somebody has our backs just in case.

We are both not very ambitious and we dont like to work (we like to be busy and learn, but not to hold a job). What we do want is to watch our kids grow up, be there for them. Be outside and move around most of the day. Grow food. Learn new things. start projects not with money at the centre, but with our interests and our heart.

We are in the position where we can buy a bit of land with a house on it for a small price (35.000). After that we would have another 75.000 euros in savings left.
I currently work in publishing, but my main skills are in proofreading, copyediting, copywriting, lay-out/bookdesign. I am not allowed to make money on the side otherwise I would give this freelance thing a go before quitting. Also we cant move after I quit my job because we'll need my job to be able to rent a place in the period between selling our house and buying the new one. My OH is basically a SAHD but he is also doing his PHD research (unfunded).

Gross Salary/Wages: We make about 5000 Euros net of tax, all my things like health care, tax, retirement etc have been deducted already.

Rental Income, Actual Expenses, and Depreciation: After I quit my job we would have an income of about 700 euros a month due to an appartment that we rent (worth about 100.000 euros, it's paid off) and the child support that we receive.

Adjusted Gross Income: At the moment we make about 1500 more then we spend

Taxes: I live is France so this is all different, and not very relevant to my case study

Current expenses: We figure that to have a nice lifestyle (or continue our current lifestyle, where we mostly swap almost never buy, but we do spend money on good food (we cook all of our food but we want to eat only responsibly grown food and animals), and we spend money on visiting family that lives in another country), we will need about 2500 euros a month of income. That would mean that we each have to bring in about 1000 euros a month. Like stated above we would be covered for health insurance and would receive retirement income after 62.

At the moment we pay 1000 in mortgage payments but after we move that would be 0

Assets: Just the one flat and the house that we will buy

Liabilities: I have student loans of about 20.000 with 0.4% interest

Specific Question(s): Now here's our plan:
We buy the house cash (35.000). We keep the 75.000 euros in savings.
We each work where we can. Most likely I would work freelance on projects while my OH would be more involved with keeping up the house /garden/kids. When we dont earn enough we take from our savings. In the worst case scenario where we make 0 money, we can live like this for 3 years before we would have to find 'real jobs' or sell the appartment that we rent out now. In the best case scenario we could keep our savings and work only a few hours a week, or a few months a year. And we could keep up this life untill the kids move out and then we could do whatever.

worries:
- we would have to move about 2 hours away from where we are now. we would have to build a whole new network of people, we might find ourself surrounded by old people who are very poor. the kids would be further away from schools
- we would be working a lot to get that money together maybe even worrying a lot about it, afraid to touch our savings
- the house would be hard to sell, so it's not easy to move on unless we had a good income and then could keep the house as a countryside house
- being far away from a big city so difficult to find jobs

excited about:
- being free of workhours/job that i dislike
- spending more time with the kids
- being more in nature/outside
- trying to get my own business going with something that I am excited about
- I always love starting over

Any comments or advice are welcome. Did I miss anything? Are there any risks I didnt think of? What would you do in our situation? Writing it out like this really helps to organise my thoughts and reading your comments will help me to think differently about the situation.

Thanks!

Playing with Fire UK

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Re: Semi-retiring without a proper stash?
« Reply #1 on: September 01, 2017, 08:59:29 AM »
Hi there,

What an exciting idea!

2k5 seems quite high spending on savings of 75k. Have you thought about how your costs might change if you made this move? For example, is there enough land to grow sufficient food to cut down on food purchases? Do you have childcare costs at the moment that would reduce?

What condition is the house in? I'd be concerned that if the roof needed to be replaced or there was a problem with damp it could take out a lot of your savings.

Have you found out what other freelancers in your field (with similar experience) can earn? How confident are you that you could build this income? Do you think your current employers would allow you to work remotely or on a freelance basis?

Gael1130

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Re: Semi-retiring without a proper stash?
« Reply #2 on: September 08, 2017, 02:19:28 AM »
Hello there!
I am French (living in Paris) so maybe one day we could talk about it in real life. I will keep it in English for the sake of other potential readers.
I am very new to this community. However on your case I think you could start testing the waters with a side hustle (read Tim Ferriss the 4 hour workweek and look for what Noah Kagan is talking about). If you can't work freelance now, talk to people who work freelance with your expertise. You need to know how much they make, how long it took them to make money, how they find customers etc. My concern is that if you move out, it will be hard for you to network in real life. So better move out with a list of contact.

Have a great day
Gael

okits

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Re: Semi-retiring without a proper stash?
« Reply #3 on: September 09, 2017, 11:25:12 PM »
I would gather more specific information about the incomes you can expect to earn in the new location.  What's a realistic freelance income for you to achieve?  Is there no possibility you could work remotely in your current job (would it be possible to keep this job but only part time?)

It seems very much a question of how much risk you are comfortable with, and what you would regret more (missing a greater part of your kids' childhoods, or not setting yourselves up with greater financial security).  I would be careful in assuming that in 10-15 years you will still have the same earning opportunities as you have, now.  Crippling or fatal illnesses, ageism in the workplace, industry changes that leave you behind, a difficult economy, other responsibilities that come up (your kids may be grown but what if your parents need you, then?)  If you take a step back in order to spend more time with your kids, now, will you be okay if, in their adulthood, you won't have the means (financial, or time) to give them any assistance (or even the feeling of security that you have their backs)?  Will it be okay if they give you gifts or ongoing financial support in your retirement, to increase your standard of living, should you not have wealth of your own to use?

I am expecting my own country's social safety net to be less generous in a few decades, when I'm at traditional retirement age.  Would you choose differently if you knew this was likely, in France?

How long do you have this opportunity to buy the land and house?  Could you rent a place, first, to make sure the new lifestyle is right for your family?  That way, if you change your mind, you don't have a hard-to-sell house on your hands.

Definitely look closely and thoroughly into the income details.  That would be my next step, in your situation.
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Walligattor

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Re: Semi-retiring without a proper stash?
« Reply #4 on: September 09, 2017, 11:34:28 PM »
Hi everyone!

I'm French as well and now live in New Zealand. We are in our mid 30's and have one child (7 yo). Our lifestyle hasn't changed (enjoying simple things in life) despite our wealth increase with the last 10 years. It's essentially why we are now very close to ER. Actually we both resigned from our jobs this year, not looking for another job but rather to start our own business. We're taking our time......

Now to reply to you, I'm curious to understand why you want to move 2h away from where you are. Would it be close to a city? How far would be the closest school? Bus/Petrol cost. You should add maintenance expenses for the house to your budget as it could be significant considering its location. Could you make an offer on a house conditional to you selling yours so you have to worry about renting in between? It's fairly commom in NZ but not sure if it is in France. 25k living expenses sounds quite high if you grow your own products. You should be able to chop that down quite a bit. Can you start doing some freelance work just to feel where the market is but keep it small so it doesn't affect your current job?

I would encourage you to compare your current situation with your future situation more clearly.
Current net salary
Current child support if any
Current interest from your savings/investments at the bank

Current debt and interest

Rental Property: value, net rent, maintenance cost, body corp., agent fees, taxes, insurance

Current house: value you own, debt and interest rate (repayment is irrelevant), maintenace, taxes, insurance

Current cars: value, insurance, taxes, petrol, maintenance, depreciation

Detailled living expenses (power and water bills, grocery, leisures, travel, etc...)

Do the same for the future situation. Some expenses will go up, some will go down. Only then you will know what to do to keep your lifestyle. Also look at your overall wealth, not only your saving. Part of your wealth cost you money (car) and part of it brings you money (rental, savings).

Laura Ingalls

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Re: Semi-retiring without a proper stash?
« Reply #5 on: September 10, 2017, 12:20:41 PM »
I had a lot of questions when I read this.  Basically, if you did this you would have a net worth of 190k euros and 700 passive income per month with expenses of 2500.  The liquid part of your stache is only 55k.  Using the 4% rule (which would require putting it in a mix of stocks and bonds) you only have 183 per month from the stache.  The shortfall you need to cover with earnings is 1617 which may be a lot in a rural place.  Also any system that relies on an ex paying child support sounds a bit problematic.  First,  kids will grow up and second, ex's often can not or will not pay.

Having a "proper" stache in my opinion would be having all expenses from rental profits and/or a 4% withdrawal rate on investments.  You are currently almost 500k shy of that.  You certainly can work less but I think less still needs to include continuing to accumulate not just subsistence or breaking even. 

havregryn

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Re: Semi-retiring without a proper stash?
« Reply #6 on: September 10, 2017, 01:41:14 PM »
I read your post twice but there is one thing I don't get. Where do you guys live now that you are making 1000 mortgage payments on and is that not going to leave you some money when you sell it?
Because in your assets you mention only the paid off apartment that you are renting out and the future house you would buy but no reference is made to the actual house you are going to be selling.

In general, I think you two can probably do what you want. If you two know that you are going to inherit significant assets by the time you grow old you can probably afford to experiment like this. I mean, I know people doing crazier stuff based entirely on the security provided by being in a rich European country (health insurance and education for kids are never a concern) and having wealthy parents. 

In general I think that someone who wants to live modestly by Mustachian standards doesn't really need any kind of a stash in most European countries. The child support stuff she is referring to is not from an ex, it's from the state, pretty much all  (wealthy) European countries give you free money if you have kids.
I feel you're setting your budget quite high, 2500 per month in a paid off rural residence in France sounds wildly unMustachian to me (we spent less than that living in a mortgaged apartment in Stockholm, Sweden).

havregryn

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Re: Semi-retiring without a proper stash?
« Reply #7 on: September 10, 2017, 01:59:24 PM »
I'm a bit too lazy to try to do a calculation but I am guessing you are now getting cca 300 ( http://www.cleiss.fr/docs/regimes/regime_france/an_a1.html) and if your income goes below threshold you will be entitled to more stuff so you might be getting 500+. So that + 700 + whatever you can randomly earn + savings in the context where you could probably be just fine with way less than 2500 per month should probably sustain you just fine if that is what you really want to do..so it's probably more a matter of really knowing if you will be happy if you do that...and of course it will always be a rather lean early retirement. Your income sounds a bit high for a one income family (guessing based on statistical averages, I have no first hand knowledge of France even if we are about 20 km away from it) and combined with wealthy backgrounds you may be used to a certain sense of security that will make living like that difficult.

lhamo

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Re: Semi-retiring without a proper stash?
« Reply #8 on: September 10, 2017, 02:14:36 PM »
Why is your partner doing an unfunded Ph.D?   Is that really necessary for the kind of life you want to lead?  And what is the plan when it is finished?  Here in the US it is very difficult to get academic jobs, and even more difficult to find one that doesn't require relocating.

I personally would not be comfortable making the kind of changes you are contemplating without the income stream to support it for more than a few years.   I would focus on building up the freelance work to create a reliable income first.
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Mountainstaches

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Re: Semi-retiring without a proper stash?
« Reply #9 on: September 16, 2017, 12:23:32 PM »
Having done a similar thing to what you're considering (bought a house in the country as young people who are not quite FI), I'll say we love our house and a lot about the lifestyle. However, even as introverts who like to be at home and are mostly self-entertaining, we find it a little lonely out here and very boring in terms of local culture. We have to drive at least 45 minutes to 2 hours to events that we find exciting which is hard to do often with little kids. We would love to be able to just walk to a nice park with our baby. Our house IS hard to sell and so we're considering making it our vacation house while we explore other areas to live and try to grow our stash to be truly FI. 

If there is a way to really explore the country option in depth before you move, I'd try that.