I am in my second year of FIRE (Fired in August 2016).
In the accumulation phase I was in 90% stocks, a bit of cash and about 8% bonds.
Using the last few paychecks leading up to FIRE, I tried to get as close to my target allocation of 70% stocks / 25% bonds / 5% cash as possible and then did one final balancing act to get there before I fired.
I had a full year of living expenses plus a small efund in my bank account and the rest of the cash in Vanguard VMMX
The goal was to always have 3 years worth of expenses in easily accesible cash equivalents between those two accounts.
Planned SWR was 3-3.5%
I don't have any side hustle or other money coming in, so I fully rely on the portfolio.
(The little bit I make from piggybacking gets donated right away.)
So there really is no incoming cash flow other than dividends from Vanguard, that hit the VMMX.
Once those are deposited, the idea was to sell a little at a time to maintain the 3x expenses plus efund buffer.
Great plan, right?!
After the first year of FIRE, I was right at my planned WR (3-3.5%) using the money in the bank account and I did not feel the need to rebalance, as I was still very close to the target AA.
We recently had a bigger repair, so I needed to use most of the efund as well, which is ok, that's what it's for.
But now for the first time I actually had to replenish my cash buffer from the investment account over to the regular checking acount
AND
at the same time I had to rebalance from stocks to replenish the cash equivalents in the investment accounts.
It's really straight forward, that's what planning, asset allocation etc. are for. The funds are there, it's REALLY NO BIG DEAL!
But boy was it a tough mental hurdle to get over.
Maybe that's just me, but it took me logging in and staring at Vanguard three different times, before I finally moved some money out of VMMX into the bank account for the next few months of expenses. I expected going from net saver to net spender being hard. But seriously, that is RIDICULOUS!
Then it took me another three to four times to see which stocks to rebalance out of ..... and replenish VMMX then then from there buy CD's for some of that cash allocation.
Trigger capital gains, yes or now? Sell the poor dogs, like Jim Collins suggests even if it means paying a fee. Ex dividend date, relevant or not!? Arrrggggghh! I don't want to sell...!
I was telling myself, it's really only such a "small" amount, because the dividends replenish some of the money already, so what you have to SELL on top of that is really not all that much.
But finally hitting that stupid SELL button, it took me like three or four attempts to actually do that.
I am finally there! Yay me!
Back up at 3 years in cash equivalents between bank account and investment account, some of it in CD's as they yield more than VMMX now, but I really feel it has been more painful than it should have been.
Anybody else experience the same?
I don't know of many people who just rely on the portfolio. It seems everyone nowadays has a side hustle or blog or real estate or other gig that provides some cash flow.
It certainly has been an adjustment for me to not see anything coming in.
I do realise, I could just have the dividends deposited in the bank account, so it feels like a paycheck (DH does this), but I feel, I get a bit more for keeping them in VMMX or CD's until I need them.
Laugh at me all you want, I agree this has been ridiculous. But I still thought I'd share some of my FIRE SWR realities to see if others feel the same way ;)