Author Topic: Why will it take so long?  (Read 5643 times)

Mgmny

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Why will it take so long?
« on: July 25, 2018, 08:30:11 AM »
Specific Question(s):
Hello! My wife and I are expecting a baby this November, and we looking dropping to my income only and how it impacts our FIRE. I have outlined our current expenses and situation, but this could change in the future. Whenever I use online calculators if we drop to 1 income, it says we have about 13 years left to FIRE - which puts me at 40/41, and my first child at 13! That seems CRAZY to me! How do I get to slow-travel with my family if my first child will be 5 years from graduating HS? How can I enjoy being a stay-at-home dad if my first son is already 13?? What are we doing wrong? In the calculators, Iím assuming we have $3k a month in saving, and $3k a month in Post-FIRE spending. We have a current net worth of $275k, with $165k in the market. Whenever I look online, this should put us at a HUGE advantage compared to our peers (weíre 27, and 24 years old), but it still seems like we have a long road ahead of us. What can we be doing to get there quicker/what are we doing wrong?

I guess I just feel like we're really "piling it in" (went from NW of $50k in January 2016 when we married to $275k today) and our post-FIRE expected spending isn't exuberant (is it??).

Life Situation: Married, 2, baby boy due 11/30. homeowners in Minnesota. I'm 27, wife 24.

Gross Salary/Wages: Me: $90,000 Wife: $67,000 (plus sales comission anywhere from $0-$15k)

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc.:

401k: $36k (+8k annually from employer)
HSA: $6900 ($1750 is by employer, though)
Insurance: $4152

Other Ordinary Income: None

Qualified Dividends & Long Term Capital Gains: None

Adjusted Gross Income: $110,000

Taxes: I can give you 2017 numbers for this: (2017 AGI: $134627)
Line 63 on 1040 "Total Tax": $25093
State Income Tax: $9348
Real Estate Taxes: $2635



Current expenses:
Provide breakdown and relevant details.  Aim to have ďMiscellaneousĒ somewhere ~2.5%.  Much lower and you may be providing too much detail, much higher and you have an obvious problem of not understanding your spending.

Current Monthly Take Home Pay: $5,500 (this might look low to some of you, but I just got access to an HSA account a few months ago, and I started maxing out a 401k at a new employer at the same time, so monthly deductions are artificially inflated through end of 2018)
Utilities (electric 150, gas 25, water/sewar 30, garbage 15): $220
Internet: $77
Grocery: $350
Restaurant: $500
Gas: $80
Emergency Stockpile/future car fund: $1,200
Cell Phones: Free through work
Mortgage Principle: $435
Mortgage Interest: $575
Insurance, Prop Taxes: $315
Car Insurance: $50
Roth IRA: $920
Netflix, Spotify, Amazon Prime: $37
Clothing: $150
Target/Home Improvement: $200
Amazon Junkets: $150
Leftover: $241 (usually thrown at mortgage or spent on vacations/travel)

Assets:
Home: $265,000
Car: $6,000
IRAs: $11,402
401ks: $59,795 (currently get $8k annually matched by employer, not sure where else to mention this)
Roth IRAs: $57,521
Taxable Accounts: $34,666
Emergency Fund: $18,800
Checking: $1,000
HSA: $200 (pregnancy is expensive, I guess)

Liabilities:

Home mortgage: $167,371 (originated Nov. 2015, $209,237, 30 year, 4.12%)
« Last Edit: July 25, 2018, 08:38:50 AM by Mgmny »

ysette9

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Re: Why will it take so long?
« Reply #1 on: July 25, 2018, 10:26:39 AM »
I haven’t run your numbers, but I don’t see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Mgmny

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Re: Why will it take so long?
« Reply #2 on: July 25, 2018, 10:35:31 AM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

rockstache

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Re: Why will it take so long?
« Reply #3 on: July 25, 2018, 10:50:47 AM »
I'm sure you're doing vastly better than your peers. But still, you're spending nearly all your take home pay, so you really can't get ahead too quickly that way. I'm no housing expert but if you cut that restaurant spending down to $100 and throw the extra $400 at your mortgage payment, can you eliminate the PMI? The electric bill seems high to me also, have you looked into methods of increasing efficiency?

letsdoit

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Re: Why will it take so long?
« Reply #4 on: July 25, 2018, 10:57:44 AM »
$100/ year for dropping Netflix to watch movies via amazon prime

lemanfan

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Re: Why will it take so long?
« Reply #5 on: July 25, 2018, 11:02:59 AM »
Car  / Emergency-fund.  You already have close to $20k.  Whats your goal and reasoning here?

bacchi

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Re: Why will it take so long?
« Reply #6 on: July 25, 2018, 11:10:02 AM »
+1 restaurant is too high. $500?!? Get a rice cooker/crock pot/whatever and throw some lentils in it.

+1 car fund. Are you planning on buying a Tesla? $20k is plenty. If the shit-hits, use the $20k + HSA + Roth contributions + credit cards. A cash e-fund is losing each month via inflation.

$150 a month for clothes? Go to a thrift shop. Buy some lightly used clothes for 1/4 the cost. The ones near rich neighborhoods and colleges are the best if you want name brands.


Mgmny

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Re: Why will it take so long?
« Reply #7 on: July 25, 2018, 11:18:32 AM »
I'm sure you're doing vastly better than your peers. But still, you're spending nearly all your take home pay, so you really can't get ahead too quickly that way. I'm no housing expert but if you cut that restaurant spending down to $100 and throw the extra $400 at your mortgage payment, can you eliminate the PMI? The electric bill seems high to me also, have you looked into methods of increasing efficiency?

I mean, we're "spending" it, but also saving a lot of it into an emergency fund, Roth IRA too.

We don't have PMI, but you are absolutely right that the restaurant expenses need to be reduced. So, if we cut restaurants down to $100, that will probably shave 1 year off of the date.

it seems like between my gas in the winter and electricity in the summer we're usually spending between $75 total (spring, fall) and $185 in the summer.

Mgmny

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Re: Why will it take so long?
« Reply #8 on: July 25, 2018, 11:20:54 AM »
Car  / Emergency-fund.  You already have close to $20k.  Whats your goal and reasoning here?

So, my wife has a car through work. If she quits her job after the baby, we'll probably need to purchase her a vehicle ~$10k. For 3-6 months of expenses, I would like to have about $15k. So, I need to keep funding this account reasonably aggressively until we get to 25-30k. Does that make sense to you?

Mgmny

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Re: Why will it take so long?
« Reply #9 on: July 25, 2018, 11:23:18 AM »
+1 restaurant is too high. $500?!? Get a rice cooker/crock pot/whatever and throw some lentils in it.

+1 car fund. Are you planning on buying a Tesla? $20k is plenty. If the shit-hits, use the $20k + HSA + Roth contributions + credit cards. A cash e-fund is losing each month via inflation.

$150 a month for clothes? Go to a thrift shop. Buy some lightly used clothes for 1/4 the cost. The ones near rich neighborhoods and colleges are the best if you want name brands.

Agreed restaurant is too high.

e-fund: $10k car, and 3-6 months expenses $15k = $25k. I thought a small 3-6 emergency fund was ubiquitous?

Clothes is also outrageous. It doesn't help that my wife is pregnant and needs growing maternity clothes, but yes, this is high.

ysette9

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Re: Why will it take so long?
« Reply #10 on: July 25, 2018, 11:33:26 AM »
My very rough calculations show you would be at about a 50% savings rate on one income. Is that right? Per the MMM on the shockingly simple math of early retirement, that makes your working career around 15 years or so. You have a head start with $182k in savings/investment, so that cuts your time down. Ballpark, this looks about right.

If you were to both keep working and save more, then this time will be reduced, simply put.

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Re: Why will it take so long?
« Reply #11 on: July 25, 2018, 11:44:52 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?


ZMonet

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Re: Why will it take so long?
« Reply #12 on: July 25, 2018, 11:54:21 AM »
I think your expectations about ER are too high.  Yes, you can cut back on the spending but the reality is that the biggest luxury that you are buying is your wife staying home to care for your child/children.  If you read a lot of the case studies on here or look at MMM, there were dual high incomes for a substantial time (5-10 years) and then children.  Is it an option for your wife to go back to work to get you to FIRE as a family quicker?

You're doing great, but this isn't magic.  You can't have everything today.

Imma

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Re: Why will it take so long?
« Reply #13 on: July 25, 2018, 12:02:33 PM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

Well, it's quite simple. They have a higher income than you have, they continue to have two incomes, or they have a lower FIRE goal. It's a matter of choices and there are some choices you can make that will bring your FIRE-date closer.

If you want to spend more time with your children or slow-travel with them when they are young, you can consider taking a career break or work parttime when your children are young. This will push back your FIRE date, but it does mean you can spend time with your kids now. Another option would be that your wife doesn't quit working when your child is born, or that she finds some kind of parttime / work from home job to bring in some income.

When she's home fulltime she can try to cook every day and stick on a budget, so you can bring down the $850 you spend on food, and she probably doesn't need as many clothes either. If she can save $600/month, that's $7200 / year  - more than you earn in a month. That's one extra paycheck a year to put into your investment account.

Also, stating your net worth at 270k is kind of cheating (at least, for the purpose of FIRE calculations). A third of your net worth is locked up in your house. It's not money you can access unless you sell your house, and if you do that, you'll need to buy another house, increase your FIRE goal so you have money to rent a place, or go live in a van.

jezebel

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Re: Why will it take so long?
« Reply #14 on: July 25, 2018, 12:21:12 PM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

I haven't run your numbers either but 13 does not seem long to me.  Other people retire earlier and faster because they started saving earlier and/or at a higher rate.  Also, your NW may be 270K, but your investments are only $165K.  And if you are only adding 30K a year to that, yeah, it's going to take longer.   Much of your NW seems to be your house, which isn't going to help you reach FI unless you sell it, and even then you still need somewhere to live. 

It's just numbers.

Mgmny

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Re: Why will it take so long?
« Reply #15 on: July 25, 2018, 12:31:27 PM »
My very rough calculations show you would be at about a 50% savings rate on one income. Is that right? Per the MMM on the shockingly simple math of early retirement, that makes your working career around 15 years or so. You have a head start with $182k in savings/investment, so that cuts your time down. Ballpark, this looks about right.

If you were to both keep working and save more, then this time will be reduced, simply put.

50% is just about correct, yes. I've listened to the first 30 episodes of the "Choose FI" podcast, and they use the 10 year number a lot, so I was thinking that was relatively achievable for someone who has a reasonably high income, and is saving at 50%. I guess you're right that the math just doesn't support this!

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Mgmny

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Re: Why will it take so long?
« Reply #17 on: July 25, 2018, 12:39:28 PM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

ysette9

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Re: Why will it take so long?
« Reply #18 on: July 25, 2018, 12:41:57 PM »
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
My memory was a little off: 50% savings rate is 17 years, not 15. So cutting that down to 13 is pretty good.

Mgmny

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Re: Why will it take so long?
« Reply #19 on: July 25, 2018, 12:44:12 PM »
I think your expectations about ER are too high.  Yes, you can cut back on the spending but the reality is that the biggest luxury that you are buying is your wife staying home to care for your child/children.  If you read a lot of the case studies on here or look at MMM, there were dual high incomes for a substantial time (5-10 years) and then children.  Is it an option for your wife to go back to work to get you to FIRE as a family quicker?

You're doing great, but this isn't magic.  You can't have everything today.

Thanks ZMonet! I like that: "the reality is that the biggest luxury you are buying is your wife staying home to care for your children." That puts a really great spin on it. Obviously, I want to be there to help raise them as well, but I suppose it's better that she is there 100% of the time vs neither of us there for 50% of the time, do you think?


ysette9

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Why will it take so long?
« Reply #20 on: July 25, 2018, 12:44:51 PM »
That is touching on a huge debate that has been had several times around here. The answer is that it depends on you and what you want and your kids and how life turns out. Being a parent has been humbling in that a lot of what I thought I wanted or how I would react turned out to be very different when the reality of a little baby showed up. Our family is happier when my husband and I both work (though less work would be better). I am not a naturally inclined “kid person” and desperately need my alone time and adult time. Being at home for maternity leave was hands-down the hardest thing I have ever done. Quality daycare is a godsend and a wonderful addition to my kids’ lives. My oldest learns more and interacts with more kids that way. My youngest is happier because she gets bored easily and is naturally social, so daycare is more fun than being stuck at home with me (during maternity leave) or my husband (during paternity leave).

Maybe you or your wife will take great to the SAHP thing or maybe you won’t. You just don’t know. But there is absolutely nothing inherently wrong or right about having two working parents or one working parent. Keeping an open mind about How Things Will Be is my best parenting advice. Guaranteed something will not work it how you had planned and you need to be willing to just roll with that.
« Last Edit: July 25, 2018, 12:51:12 PM by ysette9 »

jezebel

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Re: Why will it take so long?
« Reply #21 on: July 25, 2018, 12:45:44 PM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

Other than one new outfit, all of my maternity clothes across two pregnancies was borrowed or bought in a consignment shop.  It can be done for very little money. 

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

Mgmny

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Re: Why will it take so long?
« Reply #22 on: July 25, 2018, 12:47:42 PM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

Well, it's quite simple. They have a higher income than you have, they continue to have two incomes, or they have a lower FIRE goal. It's a matter of choices and there are some choices you can make that will bring your FIRE-date closer.

If you want to spend more time with your children or slow-travel with them when they are young, you can consider taking a career break or work parttime when your children are young. This will push back your FIRE date, but it does mean you can spend time with your kids now. Another option would be that your wife doesn't quit working when your child is born, or that she finds some kind of parttime / work from home job to bring in some income.

When she's home fulltime she can try to cook every day and stick on a budget, so you can bring down the $850 you spend on food, and she probably doesn't need as many clothes either. If she can save $600/month, that's $7200 / year  - more than you earn in a month. That's one extra paycheck a year to put into your investment account.

Also, stating your net worth at 270k is kind of cheating (at least, for the purpose of FIRE calculations). A third of your net worth is locked up in your house. It's not money you can access unless you sell your house, and if you do that, you'll need to buy another house, increase your FIRE goal so you have money to rent a place, or go live in a van.

Those are some great suggestions, and I think the $850 number will definitely go down (but baby expenses will go up!). The $7,200 number should shave 1 year off of the FIRE date. Thank you!

The $270 probably is cheating, but $165k in investments is still pretty good (I think) compared to anyone else in our peer group. I just see a lot of people hitting FIRE in their 30s, and unless my wife keeps working, that doesn't seem super possible.

Mgmny

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Re: Why will it take so long?
« Reply #23 on: July 25, 2018, 12:50:05 PM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

Mgmny

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Re: Why will it take so long?
« Reply #24 on: July 25, 2018, 12:51:50 PM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

I haven't run your numbers either but 13 does not seem long to me.  Other people retire earlier and faster because they started saving earlier and/or at a higher rate.  Also, your NW may be 270K, but your investments are only $165K.  And if you are only adding 30K a year to that, yeah, it's going to take longer.   Much of your NW seems to be your house, which isn't going to help you reach FI unless you sell it, and even then you still need somewhere to live. 

It's just numbers.

Good point - the house doesn't help, but we do need a place to sleep!

Mgmny

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Re: Why will it take so long?
« Reply #25 on: July 25, 2018, 12:53:39 PM »
That is touching on a huge debate that has been had several times around here. The answer is that it depends on you and what you want and your kids and how life turns out. Being a parent has been humbling in that a lot of what I thought I wanted or how I would react turned out to be very different when the reality of a little baby showed up. Our family is happier when my husband and I both work (though less work would be better). I am not a naturally inclined ďkid personĒ and desperately need my alone time and adult time. Being at home for maternity leave was hands-down the hardest thing I have ever done. Quality daycare is a godsend and a wonderful addition to my kidsí lives. My oldest learns more and interacts with more kids that way. My youngest is happier because she gets bored easily and is naturally social, so daycare is more fun than being stuck at home with me (during maternity leave) or my husband (during paternity leave).

Maybe you or your wife will take great to the SAHP thing or maybe you wonít. You just donít know. But there is absolutely nothing inherently wrong or right about having two working parents or one working parent. Keeping an open mind about How Things Will Be is my best parenting advice. Guaranteed something will not work it how you had planned and you need to be willing to just roll with that.

Great points - we really have no idea until we physically have the child and begin to raise him. That will be a big indication as to whether we are dual or single earners, too.

ysette9

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Re: Why will it take so long?
« Reply #26 on: July 25, 2018, 12:57:32 PM »
That is touching on a huge debate that has been had several times around here. The answer is that it depends on you and what you want and your kids and how life turns out. Being a parent has been humbling in that a lot of what I thought I wanted or how I would react turned out to be very different when the reality of a little baby showed up. Our family is happier when my husband and I both work (though less work would be better). I am not a naturally inclined “kid person” and desperately need my alone time and adult time. Being at home for maternity leave was hands-down the hardest thing I have ever done. Quality daycare is a godsend and a wonderful addition to my kids’ lives. My oldest learns more and interacts with more kids that way. My youngest is happier because she gets bored easily and is naturally social, so daycare is more fun than being stuck at home with me (during maternity leave) or my husband (during paternity leave).

Maybe you or your wife will take great to the SAHP thing or maybe you won’t. You just don’t know. But there is absolutely nothing inherently wrong or right about having two working parents or one working parent. Keeping an open mind about How Things Will Be is my best parenting advice. Guaranteed something will not work it how you had planned and you need to be willing to just roll with that.

Great points - we really have no idea until we physically have the child and begin to raise him. That will be a big indication as to whether we are dual or single earners, too.
As others have said before, it is easier to plan to return to work after a baby and later decide to quit than quitting and then deciding you would be happier working. Just something to think about as you consider all options.

ZMonet

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Re: Why will it take so long?
« Reply #27 on: July 25, 2018, 01:00:36 PM »
I think your expectations about ER are too high.  Yes, you can cut back on the spending but the reality is that the biggest luxury that you are buying is your wife staying home to care for your child/children.  If you read a lot of the case studies on here or look at MMM, there were dual high incomes for a substantial time (5-10 years) and then children.  Is it an option for your wife to go back to work to get you to FIRE as a family quicker?

You're doing great, but this isn't magic.  You can't have everything today.

Thanks ZMonet! I like that: "the reality is that the biggest luxury you are buying is your wife staying home to care for your children." That puts a really great spin on it. Obviously, I want to be there to help raise them as well, but I suppose it's better that she is there 100% of the time vs neither of us there for 50% of the time, do you think?

I'm glad you see it that way because freedom is the most important thing you can buy.  In terms how best to optimally structure that freedom (e.g., 100% your wife/0% you for X years), ysette is correct that it is highly individual.  Also, not all jobs are the same.  Some value work-life balance and flexibility such that you can be a part of the major events in your children's lives...others not so much.

You'll have to know yourselves for some starting ideas and then, thankfully, you can adjust.  There are all the cliches about how much your life will change...and they are all true!  Your wife may find that her preconceived notions of motherhood may not be exactly what she thought and that she needs some "grown-up time" in her life.  The best thing both of you can do is keep your options open.

Imma

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Re: Why will it take so long?
« Reply #28 on: July 25, 2018, 01:16:50 PM »
I havenít run your numbers, but I donít see why you are surprised that dropping down to one income would increase your time to FI. If it is that important to you, then you need to sacrifice the luxury of having one parent st home with a baby in favor of future family together time once you reach FI.

Well, sure, i'm not surprised that dropping income will increase time to FIRE, but I see other people FIRE-ing in their 30s, and that doesn't seem possible for me on 1 (reasonably high) income. Starting at $270k plus $30k a year savings = 13 years just seems long? I don't know how others can do it in less than 10?

Well, it's quite simple. They have a higher income than you have, they continue to have two incomes, or they have a lower FIRE goal. It's a matter of choices and there are some choices you can make that will bring your FIRE-date closer.

If you want to spend more time with your children or slow-travel with them when they are young, you can consider taking a career break or work parttime when your children are young. This will push back your FIRE date, but it does mean you can spend time with your kids now. Another option would be that your wife doesn't quit working when your child is born, or that she finds some kind of parttime / work from home job to bring in some income.

When she's home fulltime she can try to cook every day and stick on a budget, so you can bring down the $850 you spend on food, and she probably doesn't need as many clothes either. If she can save $600/month, that's $7200 / year  - more than you earn in a month. That's one extra paycheck a year to put into your investment account.

Also, stating your net worth at 270k is kind of cheating (at least, for the purpose of FIRE calculations). A third of your net worth is locked up in your house. It's not money you can access unless you sell your house, and if you do that, you'll need to buy another house, increase your FIRE goal so you have money to rent a place, or go live in a van.

Those are some great suggestions, and I think the $850 number will definitely go down (but baby expenses will go up!). The $7,200 number should shave 1 year off of the FIRE date. Thank you!

The $270 probably is cheating, but $165k in investments is still pretty good (I think) compared to anyone else in our peer group. I just see a lot of people hitting FIRE in their 30s, and unless my wife keeps working, that doesn't seem super possible.

You are absolutely doing very well, I certainly agree with that. And it's not unusual for someone of our age (I'm a year older than you) to have a relatively high part of their net worth tied up in their home. My NW is currently about twice my yearly income, with half of that tied up in my house. So you're doing better than me :) It's a great foundation for the future to have a low mortgage on your home. It means your monthly payment is low and will stay low while your income goes up. Low bills give you flexibility. 

I see your wife is quite young, probably only out of college for a few years. So she's quitting her job in the very early stages of her career. Many people who FIRE in their 30s have a double income for 6 to 8 years after college, while still living a pretty cheap lifestyle - living with roommates or in a cheap rental apartment. This allows them to retire by the time they become parents in their 30s. I think this is the exact path MMM took and many bloggers have a similar life story. But there are lots of advantages to young parenthood as well - there is no right or wrong. Just many different choices and every choice you make will have certain consequences.

You might be one of the first in your group of friends to have kids, but if you don't already have friends with children, try to find them asap. There is so much baby stuff given away for free or almost free. The first few years, outside of medical expenses, children don't seem to be that expensive at all. 

Mgmny

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Re: Why will it take so long?
« Reply #29 on: July 25, 2018, 01:32:53 PM »
That is touching on a huge debate that has been had several times around here. The answer is that it depends on you and what you want and your kids and how life turns out. Being a parent has been humbling in that a lot of what I thought I wanted or how I would react turned out to be very different when the reality of a little baby showed up. Our family is happier when my husband and I both work (though less work would be better). I am not a naturally inclined ďkid personĒ and desperately need my alone time and adult time. Being at home for maternity leave was hands-down the hardest thing I have ever done. Quality daycare is a godsend and a wonderful addition to my kidsí lives. My oldest learns more and interacts with more kids that way. My youngest is happier because she gets bored easily and is naturally social, so daycare is more fun than being stuck at home with me (during maternity leave) or my husband (during paternity leave).

Maybe you or your wife will take great to the SAHP thing or maybe you wonít. You just donít know. But there is absolutely nothing inherently wrong or right about having two working parents or one working parent. Keeping an open mind about How Things Will Be is my best parenting advice. Guaranteed something will not work it how you had planned and you need to be willing to just roll with that.

Great points - we really have no idea until we physically have the child and begin to raise him. That will be a big indication as to whether we are dual or single earners, too.
As others have said before, it is easier to plan to return to work after a baby and later decide to quit than quitting and then deciding you would be happier working. Just something to think about as you consider all options.

Yeah! My wife has it lined up to take 12 weeks FMLA (mostly unpaid, unfortunately) afterwards, and then a  6 month trial period where she will continue working, and our moms provide care. Unless something goes horribly wrong, we will re-assess after those six months. I'm just planning as though we don't have her income.

Mgmny

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Re: Why will it take so long?
« Reply #30 on: July 25, 2018, 01:34:54 PM »
I think your expectations about ER are too high.  Yes, you can cut back on the spending but the reality is that the biggest luxury that you are buying is your wife staying home to care for your child/children.  If you read a lot of the case studies on here or look at MMM, there were dual high incomes for a substantial time (5-10 years) and then children.  Is it an option for your wife to go back to work to get you to FIRE as a family quicker?

You're doing great, but this isn't magic.  You can't have everything today.

Thanks ZMonet! I like that: "the reality is that the biggest luxury you are buying is your wife staying home to care for your children." That puts a really great spin on it. Obviously, I want to be there to help raise them as well, but I suppose it's better that she is there 100% of the time vs neither of us there for 50% of the time, do you think?

I'm glad you see it that way because freedom is the most important thing you can buy.  In terms how best to optimally structure that freedom (e.g., 100% your wife/0% you for X years), ysette is correct that it is highly individual.  Also, not all jobs are the same.  Some value work-life balance and flexibility such that you can be a part of the major events in your children's lives...others not so much.

You'll have to know yourselves for some starting ideas and then, thankfully, you can adjust.  There are all the cliches about how much your life will change...and they are all true!  Your wife may find that her preconceived notions of motherhood may not be exactly what she thought and that she needs some "grown-up time" in her life.  The best thing both of you can do is keep your options open.

Yes, that's what this is all about - time, right??

ysette9

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Re: Why will it take so long?
« Reply #31 on: July 25, 2018, 01:38:25 PM »
Your plan sounds really smart. It is a tragedy that we can only take 12 unpaid weeks in the US unless you live in a couple lucky states. I hope it goes as well as it possibly can.

Allie

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Re: Why will it take so long?
« Reply #32 on: July 25, 2018, 01:41:26 PM »
13 years may seem like a long time, but if you cut your expenses back by cooking at home, managing the groceries more efficiently, not buying things at Target, skipping random amazon purchases, borrowing or going second hand with clothing, being a 1 car family, etc. and at the same time increase income through raises, side hustles, and your wife finding some paid work at some point in the next 10 years, the time that it will actually take can be decreased significantly.  Decrease your expenses by $550 (fewer clothes, stop eating out, don't shop at Target, buy used clothes or do clothing swaps, etc) then you have increased your savings by 10%, right?  Add another $550 in income a month through side hustles or a working spouse, and you are at 70%*.  Then, even with 0 savings, you would only have to work 8.5 years...and you aren't starting from 0**.  If you can cut down on spending by $800 (new clothes, target, and eating out make this an easy #) and increase income by $600, you are down to 7 years (if you start from 0).  Maybe a bonus happens...or a promotion...or the Mrs. goes back to work...or we have a dip and then a rebound and you get to buy a bunch of stocks at discount and get a higher return rate for a year or two.  So, just keep in mind that every little bit that's saved (or not) adds up and can take or give you additional years! 

Since slow travel with a small kiddo can be great fun, maybe at year 4 you sell the house and buy an RV and cruise the country at an even lower spending rate.  Maybe, you decide to head to Thailand for a year a la gocurrycracker.  Maybe you want to stay exactly where you are and love the idea of roots and your neighborhood and you start working part time or on freelance projects that allow you to be with your kid a lot or take moments here and there to wander the country. 

*I get that the math isn't perfect and that if you increase income/decrease spending, it effects the rate in a more complicated way.  But, I don't want to have to do the math.

**Again, I get the math isn't perfect, but I don't want to do math this morning.

Mgmny

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Re: Why will it take so long?
« Reply #33 on: July 25, 2018, 01:45:17 PM »
13 years may seem like a long time, but if you cut your expenses back by cooking at home, managing the groceries more efficiently, not buying things at Target, skipping random amazon purchases, borrowing or going second hand with clothing, being a 1 car family, etc. and at the same time increase income through raises, side hustles, and your wife finding some paid work at some point in the next 10 years, the time that it will actually take can be decreased significantly.  Decrease your expenses by $550 (fewer clothes, stop eating out, don't shop at Target, buy used clothes or do clothing swaps, etc) then you have increased your savings by 10%, right?  Add another $550 in income a month through side hustles or a working spouse, and you are at 70%*.  Then, even with 0 savings, you would only have to work 8.5 years...and you aren't starting from 0**.  If you can cut down on spending by $800 (new clothes, target, and eating out make this an easy #) and increase income by $600, you are down to 7 years (if you start from 0).  Maybe a bonus happens...or a promotion...or the Mrs. goes back to work...or we have a dip and then a rebound and you get to buy a bunch of stocks at discount and get a higher return rate for a year or two.  So, just keep in mind that every little bit that's saved (or not) adds up and can take or give you additional years! 

Since slow travel with a small kiddo can be great fun, maybe at year 4 you sell the house and buy an RV and cruise the country at an even lower spending rate.  Maybe, you decide to head to Thailand for a year a la gocurrycracker.  Maybe you want to stay exactly where you are and love the idea of roots and your neighborhood and you start working part time or on freelance projects that allow you to be with your kid a lot or take moments here and there to wander the country. 

*I get that the math isn't perfect and that if you increase income/decrease spending, it effects the rate in a more complicated way.  But, I don't want to have to do the math.

**Again, I get the math isn't perfect, but I don't want to do math this morning.

Really great points - thank you!!! I will work on cutting the spending, and seeing about some type of side-hustle/income opportunities my wife could have while being a SAHM.

FIFoFum

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Re: Why will it take so long?
« Reply #34 on: July 25, 2018, 01:55:39 PM »
I see your wife is quite young, probably only out of college for a few years. So she's quitting her job in the very early stages of her career. Many people who FIRE in their 30s have a double income for 6 to 8 years after college, while still living a pretty cheap lifestyle - living with roommates or in a cheap rental apartment. This allows them to retire by the time they become parents in their 30s. I think this is the exact path MMM took and many bloggers have a similar life story. But there are lots of advantages to young parenthood as well - there is no right or wrong. Just many different choices and every choice you make will have certain consequences.

This.

You are having kids 5 to 10 years younger than many people do, earning less as DINKs now than someone in your exact same career/position would be in the same 5 to 10 year time-frame, & looking at removing one income from the picture. That's all before dialing in your spending to get expenses down.

You're not doing anything wrong - it's just a question of what you're comparing yourself to.

wordnerd

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Re: Why will it take so long?
« Reply #35 on: July 25, 2018, 02:03:36 PM »
Lots of good side hustles for SAHMs. Depending on her talents and interests, she could teach English online before the baby gets up (VIPKid), lead a Stroller Strides class, sell things on Etsy, help watch someone else's kid while she watches yours, freelance in her previous field, etc.

But you'll get the most bang for your buck by decreasing your expenses, since that both increases how much you put away each month and decrease the amount you need to retire. Consider following a Frugalwoods Uber frugal challenge. It can actually be really fun to find ways to save.

You guys are in a great place and have tons of options. I'm sure you'll find the balance that works best for your family.

Finances_With_Purpose

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Re: Why will it take so long?
« Reply #36 on: July 25, 2018, 11:57:12 PM »
Sounds about right to me. 

I would look to cut restaurants (500/mo?!?), Netflix/etc., Amazon spending, and so on: those can all cut down your time.  It'll also drop if you pay PMI now and can eliminate that faster. 

gpyros85

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Re: Why will it take so long?
« Reply #37 on: July 26, 2018, 02:06:04 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

Other than one new outfit, all of my maternity clothes across two pregnancies was borrowed or bought in a consignment shop.  It can be done for very little money. 

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

Wife just went to ross bought 3 pair of pants and washed them.. It really is only for 5-6 months.... I never understood the fancy maternity clothing stores that sell $60-80 pants... Again it is only for 5-6 months...

jezebel

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Re: Why will it take so long?
« Reply #38 on: July 26, 2018, 06:59:53 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

What's wrong? I don't understand this comment about 17 years.

Villanelle

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Re: Why will it take so long?
« Reply #39 on: July 26, 2018, 07:12:39 AM »
I skimmed some of the responses but didn't see this addressed.

It seems like a few of your number (especially the HSA and the car fund) are fairly short term and will go away or decrease significantly in a fairly short time.  So it doesn't really make sense to include those full numbers in your FIRE calculations.  Once you "catch up", what will your HSA contributions look like?  That's the number you should be using.  Once you have created this massive car fund (even with the explanation about your wife's work vehicle, this seems excessive...), then car expenses will simply be maintenance and perhaps a very small amount set aside toward a future car in another 8-10 years, or more (after the purchase of the work car replacement).

Similarly, you say the clothes fund is based on maternity wear. First, you can get that incredibly cheap at thrift and consignment stores, and often from friends, too.  Is your wife as on board with FIRE as you are?  if so, a commitment to buy her maternity wardrobe, as well as 98% of baby clothes from thrift and consignment stores seems a very small price to pay.

I suspect with some tweaks to both the math and your spending, you can pretty painlessly decrease that FIRE date to about 10-11 years.  You can also look at things like side hustles (both before and after FIRE).  Once your little one(s?) are out of the super high maintenance baby years, she could perhaps baby sit another child, for example.  Or, substitute teaching is the job I always hawk for post-FIRE (or partial FIRE) because generally it only requires a college degree and maybe passing a state test, and there really isn't a more flexible job out there.  You and your wife would never have to work on the same days, and when you wanted to go off to Europe or South America for 3 months, or just to have a few weeks at home working on a side project, you would simply not accept jobs during that time.  Committing to bringing in $8-10kyr for the first 5-8 years of FIRE will make a big difference.   (Obviously more than that would make an even bigger difference, but you have to find the balance that works best for you, and you probably won't know that answer until you are closer.  Is quitting the "real" job a year sooner worth having to make $15k in retirement, or does it feel better to you to work a year longer and only have to make $8k?  Or two years longer and not have to make anything at all? )

rockstache

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Re: Why will it take so long?
« Reply #40 on: July 26, 2018, 07:24:40 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

What's wrong? I don't understand this comment about 17 years.

Because if you only save 50% it takes 17 years and it doesn't matter what your income level. If the 150K income person saves 50% then they are spending $75K, while the 90K person is only spending $45K. If spending is the same, then you're right, and the $150K person will get there faster.


jezebel

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Re: Why will it take so long?
« Reply #41 on: July 26, 2018, 07:53:22 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

What's wrong? I don't understand this comment about 17 years.

Because if you only save 50% it takes 17 years and it doesn't matter what your income level. If the 150K income person saves 50% then they are spending $75K, while the 90K person is only spending $45K. If spending is the same, then you're right, and the $150K person will get there faster.

Right, but it was unclear since nothing was said about spending after FIRE, which is obviously critical to one's date.  Being that this is the MMM forum, I would never assume that one's spending will be the same after FIRE just because their savings rate is currently 50%. 

rockstache

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Re: Why will it take so long?
« Reply #42 on: July 26, 2018, 08:27:04 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

What's wrong? I don't understand this comment about 17 years.

Because if you only save 50% it takes 17 years and it doesn't matter what your income level. If the 150K income person saves 50% then they are spending $75K, while the 90K person is only spending $45K. If spending is the same, then you're right, and the $150K person will get there faster.

Right, but it was unclear since nothing was said about spending after FIRE, which is obviously critical to one's date.  Being that this is the MMM forum, I would never assume that one's spending will be the same after FIRE just because their savings rate is currently 50%.

Interesting. I've never considered that people plan to spend less in FIRE (although I know sometimes they DO end up spending less). I think the rule of thumb is based on the assumption that if you're saving 50% then you're spending the rest. It's certainly possible for some people to reduce their expenses in FIRE, but I think in the accumulation phase most people assume their FIRE spending will be the same or more for safety. It's a little hard to believe that someone would be spending $90K per year but then expect that to go down to $45K in retirement unless there were some extenuating circumstances.

Mgmny

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Re: Why will it take so long?
« Reply #43 on: July 26, 2018, 10:39:23 AM »
Is it just two of you?
Why do you need $350 in groceries and $500 (!!!!!!!!!) in restaurant spending?  It seems like the grocery spending alone would suffice.
Do you need $150 a month in clothing? That's closer to my annual, and I consider that I splurge a bit on clothes.  Most people rarely actually need new clothes.

What are you buying from Amazon? Is it needed?

It is just the two of us. I agree that we really need to cut down on restaurant spending.

Part of the clothes is because my wife is starting to purchase maternity clothing. The other part is because it's not managed well.

I'm not sure you can generalize as much as you seem to be.  Even at a reasonably high income, it's going to take someone saving 50% at 150K/year less time to reach FI than someone saving 50% at 90K/year.  Again, it's math.

I think that's wrong? I think 50% takes 17 years regardless of income level.

What's wrong? I don't understand this comment about 17 years.

Because if you only save 50% it takes 17 years and it doesn't matter what your income level. If the 150K income person saves 50% then they are spending $75K, while the 90K person is only spending $45K. If spending is the same, then you're right, and the $150K person will get there faster.

Right, but it was unclear since nothing was said about spending after FIRE, which is obviously critical to one's date.  Being that this is the MMM forum, I would never assume that one's spending will be the same after FIRE just because their savings rate is currently 50%.

Interesting. I've never considered that people plan to spend less in FIRE (although I know sometimes they DO end up spending less). I think the rule of thumb is based on the assumption that if you're saving 50% then you're spending the rest. It's certainly possible for some people to reduce their expenses in FIRE, but I think in the accumulation phase most people assume their FIRE spending will be the same or more for safety. It's a little hard to believe that someone would be spending $90K per year but then expect that to go down to $45K in retirement unless there were some extenuating circumstances.

I tend to agree with you here. "Build the life you want so you have something to FIRE to." Is a good way to put it. There will be some reduced spending that occurs naturally during FIRE (not gas to work, less expensive clothing for the office, etc.), and some people (myself included, as you can see above!) use work as a good excuse to skip cooking and dine out (if I forget lunch or work late and didn't plan ahead). It also may allow you to become 1 car family instead of 2, or geographical arbitrage after FIRE and move to lower cost of living area and not worry about career ops. At any rate, I'm personally not planning on dropping my FIRE spending just from a conservative/planning perspective. If I spend $50k now, I want to plan to spend $50k in the future, to be safe.

Mgmny

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Re: Why will it take so long?
« Reply #44 on: July 26, 2018, 10:53:04 AM »
I skimmed some of the responses but didn't see this addressed.

It seems like a few of your number (especially the HSA and the car fund) are fairly short term and will go away or decrease significantly in a fairly short time.  So it doesn't really make sense to include those full numbers in your FIRE calculations.  Once you "catch up", what will your HSA contributions look like?  That's the number you should be using.  Once you have created this massive car fund (even with the explanation about your wife's work vehicle, this seems excessive...), then car expenses will simply be maintenance and perhaps a very small amount set aside toward a future car in another 8-10 years, or more (after the purchase of the work car replacement).

Similarly, you say the clothes fund is based on maternity wear. First, you can get that incredibly cheap at thrift and consignment stores, and often from friends, too.  Is your wife as on board with FIRE as you are?  if so, a commitment to buy her maternity wardrobe, as well as 98% of baby clothes from thrift and consignment stores seems a very small price to pay.

I suspect with some tweaks to both the math and your spending, you can pretty painlessly decrease that FIRE date to about 10-11 years.  You can also look at things like side hustles (both before and after FIRE).  Once your little one(s?) are out of the super high maintenance baby years, she could perhaps baby sit another child, for example.  Or, substitute teaching is the job I always hawk for post-FIRE (or partial FIRE) because generally it only requires a college degree and maybe passing a state test, and there really isn't a more flexible job out there.  You and your wife would never have to work on the same days, and when you wanted to go off to Europe or South America for 3 months, or just to have a few weeks at home working on a side project, you would simply not accept jobs during that time.  Committing to bringing in $8-10kyr for the first 5-8 years of FIRE will make a big difference.   (Obviously more than that would make an even bigger difference, but you have to find the balance that works best for you, and you probably won't know that answer until you are closer.  Is quitting the "real" job a year sooner worth having to make $15k in retirement, or does it feel better to you to work a year longer and only have to make $8k?  Or two years longer and not have to make anything at all? )

Thanks for the response! The HSA fund will drop to about $500 a month (still want to max it), and my 401k will drop to $1550 a month (vs the $3000 I am contributing from July 1-December to hit 18.5), and the car/emergency fund will probably drop to $300 a month (to pay for inflation and future cars/replenishment of funds if there are unexpected events) vs $300 weekly. I still feel better if we have 3-6 months of expenses, which I'm pretty happy to leave around $15k - especially with a baby. That said, we probably will start contributing some amount to a 529 plan for our kiddo (all while trying to get them to hack college/trade school as much as possible!).

My wife is committed, and loves the idea, but she isn't super great about tracking expenses, and clothes are her weakness. I'm hopeful this changes with a baby! We got enough clothes from her boss's wife to cover our baby for the first 6 months of his life, so that is good as well, and should reduce those costs.

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week everyu other week is probably far more lucrative than bagging groceries.

FireHiker

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Re: Why will it take so long?
« Reply #45 on: July 26, 2018, 03:14:34 PM »
Can you drop Spotify and listen to music via Amazon Prime?

Is your grocery & restaurant spending based on both you and your wife working full time or what you project it will be once she's home? $850 per month is a huge amount to spend on food for just 2 people. I have one of the more ridiculous food budgets on MMM, and for my family of 2 adults, 1 17 year old male athlete (eats more than the 2 adults combined), 2 elementary kids, and however many teenagers happen to be in my house for lunch and/or dinner on a given day, we are around $1200/mo average. And, we could probably cut $400 of that easily if I would just reduce the eating out...it's a weakness for us with two full time jobs and running around to kid activities; it's my single biggest MMM failure, but we're re-prioritizing it, again. I know it's common to go out to eat when both people work, but if she's home with kids then she should be able to get your total food spending closer to $500/mo without a lot of effort. I recommend the @APowers sub $200/mo food budget for some ideas; it's really impressive.

I think building up your EF to have 6 months of expenses is reasonable if you're on one income. Once you hit that, just keep saving that same money into your stash. Every time you get a raise, put it to your stash. You won't miss it because you're already used to not spending it.

Bee21

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Re: Why will it take so long?
« Reply #46 on: July 26, 2018, 05:12:20 PM »
Try to livo on your income only until the baby arrives snd see how it feels. What can you cut from your budget comfortably without feeling you are making a sacrifice?

 You definitely need to adjust your spending on food. Try to get into the habit of skipping restaurants and cooking at home. It takes s while until this new cooking at home/packing lunches habit establishes. And don't assume restaurant spending will go away after the bub arrives. If your default reaction to hunger is to eat out,  it will be hard to get cooking with a baby around.

The clothes spending will not get better, I am afraid. Pregnancy does weird things to the body, it is possible that your wife will be able to wear the same size as before baby but nothing will look the same, and she will need a different wardrobe. IT is not unusual for women to go through different sizes in the 2 years following childbirth, so prepare for the wardrobe expenses. Plus if she has a shopping habit, those tiny adorable baby clothes will cost a fortune. Not that you need all that stuff, but it will not be easy to refrain from buying it. Be prepared for it. I suggest she gets a minimalist capsule wardrobe for herself and the child, but obviously, this is the best case scenario. It is worth having a conversation about wardrobe planning and the budget.

Villanelle

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Re: Why will it take so long?
« Reply #47 on: July 26, 2018, 06:22:01 PM »
I skimmed some of the responses but didn't see this addressed.

It seems like a few of your number (especially the HSA and the car fund) are fairly short term and will go away or decrease significantly in a fairly short time.  So it doesn't really make sense to include those full numbers in your FIRE calculations.  Once you "catch up", what will your HSA contributions look like?  That's the number you should be using.  Once you have created this massive car fund (even with the explanation about your wife's work vehicle, this seems excessive...), then car expenses will simply be maintenance and perhaps a very small amount set aside toward a future car in another 8-10 years, or more (after the purchase of the work car replacement).

Similarly, you say the clothes fund is based on maternity wear. First, you can get that incredibly cheap at thrift and consignment stores, and often from friends, too.  Is your wife as on board with FIRE as you are?  if so, a commitment to buy her maternity wardrobe, as well as 98% of baby clothes from thrift and consignment stores seems a very small price to pay.

I suspect with some tweaks to both the math and your spending, you can pretty painlessly decrease that FIRE date to about 10-11 years.  You can also look at things like side hustles (both before and after FIRE).  Once your little one(s?) are out of the super high maintenance baby years, she could perhaps baby sit another child, for example.  Or, substitute teaching is the job I always hawk for post-FIRE (or partial FIRE) because generally it only requires a college degree and maybe passing a state test, and there really isn't a more flexible job out there.  You and your wife would never have to work on the same days, and when you wanted to go off to Europe or South America for 3 months, or just to have a few weeks at home working on a side project, you would simply not accept jobs during that time.  Committing to bringing in $8-10kyr for the first 5-8 years of FIRE will make a big difference.   (Obviously more than that would make an even bigger difference, but you have to find the balance that works best for you, and you probably won't know that answer until you are closer.  Is quitting the "real" job a year sooner worth having to make $15k in retirement, or does it feel better to you to work a year longer and only have to make $8k?  Or two years longer and not have to make anything at all? )

Thanks for the response! The HSA fund will drop to about $500 a month (still want to max it), and my 401k will drop to $1550 a month (vs the $3000 I am contributing from July 1-December to hit 18.5), and the car/emergency fund will probably drop to $300 a month (to pay for inflation and future cars/replenishment of funds if there are unexpected events) vs $300 weekly. I still feel better if we have 3-6 months of expenses, which I'm pretty happy to leave around $15k - especially with a baby. That said, we probably will start contributing some amount to a 529 plan for our kiddo (all while trying to get them to hack college/trade school as much as possible!).

My wife is committed, and loves the idea, but she isn't super great about tracking expenses, and clothes are her weakness. I'm hopeful this changes with a baby! We got enough clothes from her boss's wife to cover our baby for the first 6 months of his life, so that is good as well, and should reduce those costs.

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week every other week is probably far more lucrative than bagging groceries.

And with bagging groceries, you will have a set schedule.  With subbing, you won't. 

So when you ran the numbers that resulted in the 13 year timeline, were you using the inflated HSA, car, etc. numbers?  Or did you use the numbers in your budget that are realistic long term expenses.  Even shifting some money to a 529 means you need to subtract that part of your monthly "spend" from your future needs, since that won't go on forever. 

Mgmny

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Re: Why will it take so long?
« Reply #48 on: July 27, 2018, 09:31:41 AM »
I skimmed some of the responses but didn't see this addressed.

It seems like a few of your number (especially the HSA and the car fund) are fairly short term and will go away or decrease significantly in a fairly short time.  So it doesn't really make sense to include those full numbers in your FIRE calculations.  Once you "catch up", what will your HSA contributions look like?  That's the number you should be using.  Once you have created this massive car fund (even with the explanation about your wife's work vehicle, this seems excessive...), then car expenses will simply be maintenance and perhaps a very small amount set aside toward a future car in another 8-10 years, or more (after the purchase of the work car replacement).

Similarly, you say the clothes fund is based on maternity wear. First, you can get that incredibly cheap at thrift and consignment stores, and often from friends, too.  Is your wife as on board with FIRE as you are?  if so, a commitment to buy her maternity wardrobe, as well as 98% of baby clothes from thrift and consignment stores seems a very small price to pay.

I suspect with some tweaks to both the math and your spending, you can pretty painlessly decrease that FIRE date to about 10-11 years.  You can also look at things like side hustles (both before and after FIRE).  Once your little one(s?) are out of the super high maintenance baby years, she could perhaps baby sit another child, for example.  Or, substitute teaching is the job I always hawk for post-FIRE (or partial FIRE) because generally it only requires a college degree and maybe passing a state test, and there really isn't a more flexible job out there.  You and your wife would never have to work on the same days, and when you wanted to go off to Europe or South America for 3 months, or just to have a few weeks at home working on a side project, you would simply not accept jobs during that time.  Committing to bringing in $8-10kyr for the first 5-8 years of FIRE will make a big difference.   (Obviously more than that would make an even bigger difference, but you have to find the balance that works best for you, and you probably won't know that answer until you are closer.  Is quitting the "real" job a year sooner worth having to make $15k in retirement, or does it feel better to you to work a year longer and only have to make $8k?  Or two years longer and not have to make anything at all? )

Thanks for the response! The HSA fund will drop to about $500 a month (still want to max it), and my 401k will drop to $1550 a month (vs the $3000 I am contributing from July 1-December to hit 18.5), and the car/emergency fund will probably drop to $300 a month (to pay for inflation and future cars/replenishment of funds if there are unexpected events) vs $300 weekly. I still feel better if we have 3-6 months of expenses, which I'm pretty happy to leave around $15k - especially with a baby. That said, we probably will start contributing some amount to a 529 plan for our kiddo (all while trying to get them to hack college/trade school as much as possible!).

My wife is committed, and loves the idea, but she isn't super great about tracking expenses, and clothes are her weakness. I'm hopeful this changes with a baby! We got enough clothes from her boss's wife to cover our baby for the first 6 months of his life, so that is good as well, and should reduce those costs.

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week every other week is probably far more lucrative than bagging groceries.

And with bagging groceries, you will have a set schedule.  With subbing, you won't. 

So when you ran the numbers that resulted in the 13 year timeline, were you using the inflated HSA, car, etc. numbers?  Or did you use the numbers in your budget that are realistic long term expenses.  Even shifting some money to a 529 means you need to subtract that part of your monthly "spend" from your future needs, since that won't go on forever.

I used the $18500 401k, 6k HSA, 11k Roth IRA, and 6k employer match = $41,500 which is 46% savings rate plus $165,000 "head start" I looked at it from an annual perspective vs monthly, so the numbers don't change much.

I haven't given TOO much thought into other post-FIRE expenses with the exception of mortgage vs no mortgage. I also didn't consider a 529 as a "non-forever" expense, because to me my children aren't even born/conceived yet, so it's crazy to think that someday I won't need to contribute to their college fund anymore. Weird thought...

jezebel

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Re: Why will it take so long?
« Reply #49 on: July 27, 2018, 10:42:47 AM »
I skimmed some of the responses but didn't see this addressed.

It seems like a few of your number (especially the HSA and the car fund) are fairly short term and will go away or decrease significantly in a fairly short time.  So it doesn't really make sense to include those full numbers in your FIRE calculations.  Once you "catch up", what will your HSA contributions look like?  That's the number you should be using.  Once you have created this massive car fund (even with the explanation about your wife's work vehicle, this seems excessive...), then car expenses will simply be maintenance and perhaps a very small amount set aside toward a future car in another 8-10 years, or more (after the purchase of the work car replacement).

Similarly, you say the clothes fund is based on maternity wear. First, you can get that incredibly cheap at thrift and consignment stores, and often from friends, too.  Is your wife as on board with FIRE as you are?  if so, a commitment to buy her maternity wardrobe, as well as 98% of baby clothes from thrift and consignment stores seems a very small price to pay.

I suspect with some tweaks to both the math and your spending, you can pretty painlessly decrease that FIRE date to about 10-11 years.  You can also look at things like side hustles (both before and after FIRE).  Once your little one(s?) are out of the super high maintenance baby years, she could perhaps baby sit another child, for example.  Or, substitute teaching is the job I always hawk for post-FIRE (or partial FIRE) because generally it only requires a college degree and maybe passing a state test, and there really isn't a more flexible job out there.  You and your wife would never have to work on the same days, and when you wanted to go off to Europe or South America for 3 months, or just to have a few weeks at home working on a side project, you would simply not accept jobs during that time.  Committing to bringing in $8-10kyr for the first 5-8 years of FIRE will make a big difference.   (Obviously more than that would make an even bigger difference, but you have to find the balance that works best for you, and you probably won't know that answer until you are closer.  Is quitting the "real" job a year sooner worth having to make $15k in retirement, or does it feel better to you to work a year longer and only have to make $8k?  Or two years longer and not have to make anything at all? )

Thanks for the response! The HSA fund will drop to about $500 a month (still want to max it), and my 401k will drop to $1550 a month (vs the $3000 I am contributing from July 1-December to hit 18.5), and the car/emergency fund will probably drop to $300 a month (to pay for inflation and future cars/replenishment of funds if there are unexpected events) vs $300 weekly. I still feel better if we have 3-6 months of expenses, which I'm pretty happy to leave around $15k - especially with a baby. That said, we probably will start contributing some amount to a 529 plan for our kiddo (all while trying to get them to hack college/trade school as much as possible!).

My wife is committed, and loves the idea, but she isn't super great about tracking expenses, and clothes are her weakness. I'm hopeful this changes with a baby! We got enough clothes from her boss's wife to cover our baby for the first 6 months of his life, so that is good as well, and should reduce those costs.

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week every other week is probably far more lucrative than bagging groceries.

And with bagging groceries, you will have a set schedule.  With subbing, you won't. 

So when you ran the numbers that resulted in the 13 year timeline, were you using the inflated HSA, car, etc. numbers?  Or did you use the numbers in your budget that are realistic long term expenses.  Even shifting some money to a 529 means you need to subtract that part of your monthly "spend" from your future needs, since that won't go on forever.

I used the $18500 401k, 6k HSA, 11k Roth IRA, and 6k employer match = $41,500 which is 46% savings rate plus $165,000 "head start" I looked at it from an annual perspective vs monthly, so the numbers don't change much.

I haven't given TOO much thought into other post-FIRE expenses with the exception of mortgage vs no mortgage. I also didn't consider a 529 as a "non-forever" expense, because to me my children aren't even born/conceived yet, so it's crazy to think that someday I won't need to contribute to their college fund anymore. Weird thought...

We forecast not having daycare and a mortgage payment in RE so that's not an insignificant reduction in our future costs.   By inflated, I think the poster above was suggesting that you cannot count on 6K in your HSA unless you're not going to spend it, which you've already mention doing this year.