Am I FIRE?

[clairebonk]

I realized just this evening that my husband and I have 260k in retirement accounts and 440k in house equity (2 homes, 1 we live in, 1 we rent). That is 700k. Wow. WOW. It doesn't really do us much good now... we have two really little kids and live in an expensive area that we like. I am taking some time off to learn how to rock as a stay-at-home-mom. And I'm thinking... do I ever have to go back to work? My husband likes his job. The kids like having me around a lot. Can I stop worrying about the future finances and enjoy life?

[patrickza]

Yes, I think you can stop worrying. $700k is a level where should the worst happen and you both lose your jobs, you can downscale to a low cost of living area and be ok.

My only worry about being in your position, is that the $440k isn't really working for you in the way it could. It's not an issue for you, but I'm a compulsive optimizer.

[Counting_Down]

Wonderful work!  I do think you should use this as peace of mind - you can pursue what you want, and you have a fail safe.  But you can't access a lot of your money without substantial lifestyle changes, like selling your or your rental house, so you need to be realistic about that.

Like Patrickza, I am also a bit conservative.  In our circumstance, we only count our investable cash and liquid investments towards our FIRE number.  If we rent our house in the future, we'd also include the monthly cashflow, but not the equity because we don't plan to sell in the short term where the money would benefit our stash.  In your case, I'd include the retirement accounts, and the cashflow of the rental, but not the equity in either unless you plan to sell and move.  So, you have [(260/25)+ (yearly rental income- expenses)= Passive Income Yearly Spend] and that is what I'd compare to your FI number. 

[clairebonk]

Would love to hear both of your ideas on how to optimize my situation to make it work better! I like the bay area but if the housing market crashes we could be in trouble... although we bought at the lowest point in the last 15 years so it would have to REALLY crash. I love the concept of FIRE but I can't let go of the worrying aspect. I think that is a philosophical issue rather than a numbers issue. Like I should read more stoics & Tolle.

[tonysemail]

hard to comment unless you post more information.
what are your annual expenses?

[ulrichw]

My two cents' worth:

No, you're not FIRE.

To me it doesn't make sense to count yourself as FIRE if as a household you are still dependent on income from work. Because your husband still has to continue to work, neither of you is FIRE.

The question of whether you can be a stay-at-home parent is a different one. You definitely didn't include enough information to confirm that this is possible, but the fact that you accumulated a reasonable amount of retirement savings is an indicator that you may have a sufficiently high savings rate to manage this.

Just be aware that that choice is potentially delaying your real FI date (the date when neither you nor your spouse has to work).

Note that home equity in your primary home is often not counted in net worth assessments because it can be hard to access, and you need a place to live. The only real way to realize your gains is to move somewhere else with much lower housing costs, which I'm guessing is not in your short-term plans.

[Landlady]

Looking awesome!

I'd err on the safe side though if you ask me and say you need more savings (not home value) since the Bay area will likely only go up in taxes and expenses. I had similar numbers when living in Seattle and I just didn't feel comfortable retiring on it yet.

I definitely think you could continue being a stay at home mom if you wanted, but that really just delays a complete FIRE unless you can convince your husband to keep working longer than you. :)

I'm not sure how old your kiddo is, while it is formative to be around your kid when they are super tiny, they won't remember it. On the flip side, if your kid is preschool age this would be a really sweet time to semi retire so you can spend time together before they go off to school. Then once the kid is school age you can go back to work to save up enough money to really FIRE.

My plan is similar to the one above so I'm sure I'm projecting my wishes! Take it with a grain of salt.

[aceyou]

No, you are not FIRE, but stealing a Jim Collins term, you've got a hefty amount of F-you money.  Enough to buy yourself the ability to stay home and rock it as an amazing mama!!!  And enough to not worry one bit about doing it.  And enough that even while you stay home, you should be able to grow your stache and work towards FIRE. 

[MDM]

Can I stop worrying about the future finances and enjoy life?

Start a thread based on How To: Write a "Case Study" Topic and you'll get more specific answers.  Good luck!

[NoNonsenseLandlord]

I have a sizable rental portfolio.  You cannot buy a cup of coffee with a paid off 4-plex, or SFH...

$260K is nothing.