Have Set-Up FIRE Paycheck System for 2019

[Much Fishing to Do]

So for many years I ran a business and income was ALL over the place (I could have a year where I made half of what we spend, to years where we made 10x+ what we spend).  I haven't budgeted in the past decade beyond just tracking spending in Quicken to keep an idea on what our retirement spending and thus required nest egg would be, but given the last few years income was so good we never set any limits as savings rate was so high (and so variable) anyway.

Now I've wound down the business and for this year I have a consulting position, which though that will lessen the volatility of income somewhat its still paid hourly and hours may vary as much as 2 to 1 in busier months versus less busy.

While the business was a success, as in I made a ton more most years than I could have as an employee, what this business history has done has separated me so much from the natural money management process I remember from 15 years ago of money coming in in a fairly standard amount in an account, and then I'd put some into a savings account/investments etc, and spend from what was left and then see what was left over at the end of the month.  That all is just so foreign to me now.

So for 2019 I've simulated my FIRE paycheck plans (I'm 47).  I have my work paycheck deposited directly into my vanguard MM so its variable nature is no different than the variable nature of my investments.  I've set what I think my annual spending can be for FIRE if it were to start in 2020.  I subtract out what is the amount I want going to car purchase savings (the only very large very less than annual expense I think I'll have in FIRE).  I then put in the amount of money I use in nonmonthly spending (which is mostly travel expenses & real estate taxes) on Jan 1 and have an automated monthly deposit coming in on the first of each month.  The initial non-variable spending amount will serve as a checking account buffer as it gets spent down over the course of the year.  In December whats left in the account will somewhat guide us as to how much extravagance we have for the holidays (which is always the big spending month for us and really the only month we buy "stuff".  Theoretically none of this changes whether I'm working or not, FIRE will not effect it, and I like the idea now as I approach FIRE having my work income completely separated from my spending.

Obviosuly when I do really fire the paycheck will not fill the money market.  I'll switch my dividends over to not being reinvested at that point and going into the MM, which will give me about half of what I'll need flowing in and then work on the rebalancing plan that will distribute the other 2% I'll need.

Its just excited to see this in action now.

[Ynari]

That's exciting! I like the idea of doing a trial run before FIRE. We get regular paychecks and I think I might still do some form of a simulation with how the money will move around differently. We use YNAB now, which honestly has detached me from that traditional paycheck cycle in a different way, though I think that'll help too when the time comes.

[Much Fishing to Do]

which honestly has detached me from that traditional paycheck cycle in a different way, though I think that'll help too when the time comes

Good point.  I think being detached from the regular paycheck cycle did help me approach spending in a good way during the accumulation stage. Instead of the normal course of starting with my paycheck as my monthly spending limit and deciding what percentage of that I can/should save, it let me decide what things have the value that I was willing to work longer for somewhat irrespective of my income, and helped me think of things on a Net worth basis and not a cash flow basis (learning things like a one time purchase of $5k is tiny compare to a monthly expenditure of $100, etc).