Author Topic: 2020 FIRE Cohort  (Read 147453 times)

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #700 on: March 18, 2019, 01:53:45 AM »
Random Sunday afternoon musing.

For those of us with FIRE dates which are now 1-2 years away, I'm thinking about the potential 'jolt' of change that is coming.  These thoughts came after reading the article: https://www.caniretireyet.com/fire-make-life-harder/

Unintentionally, we've already begun taking steps toward making some necessary changes needed for our ultimate FIRE goal.  It got me thinking that it is probably a bit easier that way ... to spread out the "change jolts" a bit, rather than start everything new at T=0 once we reach our FIRE date.  It is a luxury to be able to do so, but some of it just requires building a gradual exit plan toward reaching the desired FIRE lifestyle goal.

Things I'm thinking about:

1. Selling / Downsizing a House / Moving:  Mission accomplished for us, as we've already purchased our FIRE home, sold our HCOL home and moved into a downsized rental for the home-stretch.  But I remember the "change jolt" that we felt for months after selling that HCOL home.  I didn't realize how emotionally attached we were to it.  Today, it's a lot better; 1-year later, and we are now in the phase where we look forward with anticipation to move out of this rental into our future FIRE home.  I'm glad that 1st transition step is behind us.

2.  Leaving a Job Environment:  This will be harder for us, no doubt.  We actually like our jobs for the most part, and work with great people doing things that feel valuable.  I spend ~50hrs per week and DW 30+hrs per week related to our jobs - that's a lot of hours to replace each week!  New routines, new hobbies, new town, new everything!  I'm excited as we have goals & hobbies directly associated with our new FIRE location dreams, but they are still relative unknowns at this time.  Who's to say how that transition will actually unfold?  Something we are trying to do now to ease the "change jolt" here for me is to practice using remote work schedule opportunities, and for DW to transition into a sabbatical mindset before our FIRE date.  These will be big changes for us after working consistently for 15-20 years.

3.  Leaving Social Circles:  Another category that will likely be a "change jolt".  We have developed great community here from our work, gym and church here.  While this will be irreplaceable in some ways, we know we can develop relationships again over time in a new town.  For those who might be leaving family networks (not our situation), that could also be a big transition.  Part of our FIRE timing goal is that we think we can re-develop new social circles easier in our early 40s vs. potentially trying to do so in our 60s following a traditional retirement timeline.  That said, I'm sure that first couple of FIRE years will be a challenge.  Something we have unintentionally / intentionally done, is 'market' our FIRE location to some good friends.  One couple has already relocated (!!) to our FIRE location, and we have invited others to join us on vacation trips these next 2 years to the area.  So maybe our marketing plan will help, haha ... always fun to adventure with others!

4.  Spending Plan Changes:  Most of us likely have this aspect more dialed-in ... less subject to "change jolts".  That said, normal expenses in one city (before FIRE) relative to normal expenses in another part of the country (after FIRE) carry uncertainty.  We do what we can to track & project expenses, but who's to say what new hobbies, experiences or lifestyle changes FIRE will bring.  Another vote for reasonable contingencies!

Y'all have a great day,

FIREby2021

Yeah, this is an exciting time. I recognize all your concerns as they also apply to our situation.

1: Selling/moving: We need to sell our home (with high price estimate) in MCOL area. We are depending on a certain minimum sales price to be able to FIRE according to plan. I am pretty nervous to synchronize the sale with quitting our jobs. I would preferably sell first, to know the price. But as we have a really long notice period (3 months!), we also need to live somewhere while we still work. But, if we sell our home for a good price, we don't need to work half of 2020. So it's difficult. Almost so that your strategy of selling first, might have something to it. We have decided to first rent something semi-local (max 2 hours driving) immediately after, because we don't know what our FIRE community will be. We think that by renting semi-locally, we will have less stress when moving, as we can just drive up and down with our stuff.
Of course we will also need to sell even more stuff, like the big dining table. But that can take time. Better not to stress with it.

2: Leaving the job: I don't think I would miss having a job. But if I would want to be attached to my former employer by doing some occasional consultancy work, I should keep in touch. I think it is easier to keep that contact immediately than coming back after 1-2 years and asking for consultancy work. I also wonder how we will fill our days. I love being outside, hiking, picking mushrooms and greens. Especially plants are something I have a lot to learn about. DH has his sewing projects. We also have other hobbies, but some of them are weather dependent and others location dependent. As long as we don't live at our FIRE location, we will need to travel. Travel is probably something we want to do anyway. Norway is a country with at least 1 month every spring that sucks a bit, with very dirty snow remains and slippery roads. It varies through the country when that period is. It would be good to travel around, to avoid this period.

3 Leaving social circles: I have a bit less contacts with friends than earlier. But I have gained a new friend. I am also convinced that I can make new friends, when I only have the courage to talk to conone new. This latest new friend is married to a new colleague of mine. When I heard she didn't work (for medical reasons), I invited her to go on a few trips with me on my Friday off. DH used to have a social circle through his sports club. But for medical reasons, DH is not capable of doing those sports in the same way as before. So this contact has almost vanished. I am a little more worried about him and social contacts them about myself.

4 Spending plan changes: As we will rent, we will get a pretty high monthly cost that we currently don't have. But I have calculated that the sum of our future house will gain in the stock market over time (counting 4%), and checked what that is in monthly rental price. We should be able to rent something half decent for that price, but not anything high end. When we move out into the country, at some later time, I am curious about the life cost. I know that houses in some cases cost very little. But are there as many cheap shops are there are in our current region? Will the goods in shops have the same prices throughout the country? On the other hand, will we be able to shop in Sweden more frequently, where stuff is cheaper? Nowadays it is too far driving to be profitable. I hope we can catch and eat a lot more fish and buy less meat. How much will socializing in a new life cost? Will we more often visit festivals and such?

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #701 on: March 19, 2019, 07:45:25 AM »
Made a little change in my use name, to increase privacy. Not easy when being quoted often, but ever mind.

I think my FIRE date for October 2020 is not correct. If we indeed manage to sell our home in the winter, I think we will FIRE much earlier, around April 2020. But it is all very uncertain how such a sale would go.

Bateaux

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Re: 2020 FIRE Cohort
« Reply #702 on: March 19, 2019, 12:16:27 PM »
Currently at 82% of FIRE goal.  Hope that is possible.   We need a good 2019 and 2020 to get there.

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Re: 2020 FIRE Cohort
« Reply #703 on: March 20, 2019, 03:44:32 PM »
I introduced DH to Firecalc today. Once he realized that he was aiming above 100% success rates, even for our highest ever annual spend, he came back down to earth.  We will see where that new info leads next.

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Re: 2020 FIRE Cohort
« Reply #704 on: March 20, 2019, 03:50:01 PM »
I introduced DH to Firecalc today. Once he realized that he was aiming above 100% success rates, even for our highest ever annual spend, he came back down to earth.  We will see where that new info leads next.
That is a win!
I introduced my parents to cFIREsim and that was fairly eye-opening for them when they saw how much they could spend and still be at 100% success rate.
I wish I had done that several years earlier and saved them the extra work.

Bateaux

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Re: 2020 FIRE Cohort
« Reply #705 on: March 20, 2019, 04:04:32 PM »
I introduced DH to Firecalc today. Once he realized that he was aiming above 100% success rates, even for our highest ever annual spend, he came back down to earth.  We will see where that new info leads next.


We're well beyond what we'll likely ever spend.  The calculation says we can spend 60k a year, with our current balance, that's a little under 3% withdrawal.  We'll likely end 30 years of retirement with between 2MM and 13MM.   I've come to desire leaving millions to a few charities.   This is past my needs now and on to something better.  You never know where FIRE will lead you.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #706 on: March 21, 2019, 02:46:59 AM »
My DH recently read about the 4% rule on his own. He realized that it was a very safe rule. I had probably never explained it equally well or clearly. (I only remembered it was safe).
Bit it is always nice if your spouse collects their own information from reliable sources and make up their own mind and hopefully ends up being equally convinced that 2020 is a very good year for retiring.

rab-bit

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Re: 2020 FIRE Cohort
« Reply #707 on: March 23, 2019, 12:41:21 PM »
I've made my first step toward winding down.    Between 2 weeks and 2 months from now I'm cutting back to 32 hour / 4 day workweeks.  I'll still get 3 weeks vacation and 10 federal holidays, but pay will be cut 20%.   I am looking forward to some 4 day weekends.

[...]

In April 2020 I'll  either retire or drop to 3 day workweek until some time in December.

Congrats on going part-time, and welcome to the club! It makes work so much more tolerable, I should have done it long ago.

I'm thinking the same as you. If I hit my number in 2020, as I'm expecting, I may ask to go down to 3-day weeks. If they say no, I'll just quit, which I was planning to do anyway. If they say yes, I'll try that out for a while and see how it feels. It would be nice to not be at the mercy of the market for health insurance, and it'll give my stash a little more time to grow without interference.

This is my plan also. Shortly after 2020 begins, I'll request a 3-day workweek and do that for 1-3 years depending on how well it's working. And if they say no, I'll just quit.

DW recently requested part-time (3 days per week) and is supposed to get an answer today.

Even if we were both working 3 days per week, we'd still be earning nearly twice our living expenses. If I thought I could do 2-day weeks, I'd probably do that, but my employer requires at least 24 hours per week for health insurance coverage.

Update: DW has been approved for part-time with benefits! She has already started working 4-day weeks and will transition to 3-day weeks once they hire a new FT person and she has trained them. After that, she starts working on "special projects".

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #708 on: March 23, 2019, 12:55:47 PM »
I've made my first step toward winding down.    Between 2 weeks and 2 months from now I'm cutting back to 32 hour / 4 day workweeks.  I'll still get 3 weeks vacation and 10 federal holidays, but pay will be cut 20%.   I am looking forward to some 4 day weekends.

[...]

In April 2020 I'll  either retire or drop to 3 day workweek until some time in December.

Congrats on going part-time, and welcome to the club! It makes work so much more tolerable, I should have done it long ago.

I'm thinking the same as you. If I hit my number in 2020, as I'm expecting, I may ask to go down to 3-day weeks. If they say no, I'll just quit, which I was planning to do anyway. If they say yes, I'll try that out for a while and see how it feels. It would be nice to not be at the mercy of the market for health insurance, and it'll give my stash a little more time to grow without interference.

This is my plan also. Shortly after 2020 begins, I'll request a 3-day workweek and do that for 1-3 years depending on how well it's working. And if they say no, I'll just quit.

DW recently requested part-time (3 days per week) and is supposed to get an answer today.

Even if we were both working 3 days per week, we'd still be earning nearly twice our living expenses. If I thought I could do 2-day weeks, I'd probably do that, but my employer requires at least 24 hours per week for health insurance coverage.

Update: DW has been approved for part-time with benefits! She has already started working 4-day weeks and will transition to 3-day weeks once they hire a new FT person and she has trained them. After that, she starts working on "special projects".

Sounds good. According to my MIL, many years ago, 3 days a week was the best length of a working week.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #709 on: March 27, 2019, 06:05:01 AM »
Isn't this (almost) last year the hardest?
Last year, I hoped to FIRE in October 2019. Then, after we went in detail through my spreadsheet, DH and I decided to postpone FIRE to somewhere in 2020. So this extra year to me feels extra heavy.

On the one side, it is easier to deal with the BS part of my job, as I know I don't have to do it for another 20 years like most my colleagues. But is still about a whole year from now, give or take some months longer of shorter (we don't have an exact end date).
But as we have financially optimised our life already, and decided to work 80%, which is not financially optimal, there isn't much we can do to improve our finances, other than start working 100% again. And that last thing is not attractive, as we have started to appreciate the longer weekends. We just need to sit it out.

As we plan to relocate during FIRE I still want to visit some more places in my region that I haven't visited before. So far I have seen two, although they weren't in the best time of the year. I have more plans for when the snow is gone. That will probably be in another couple of weeks.

FIREby2021

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Re: 2020 FIRE Cohort
« Reply #710 on: March 27, 2019, 11:35:19 AM »
Isn't this (almost) last year the hardest?
Last year, I hoped to FIRE in October 2019. Then, after we went in detail through my spreadsheet, DH and I decided to postpone FIRE to somewhere in 2020. So this extra year to me feels extra heavy.

On the one side, it is easier to deal with the BS part of my job, as I know I don't have to do it for another 20 years like most my colleagues. But is still about a whole year from now, give or take some months longer of shorter (we don't have an exact end date).
But as we have financially optimised our life already, and decided to work 80%, which is not financially optimal, there isn't much we can do to improve our finances, other than start working 100% again. And that last thing is not attractive, as we have started to appreciate the longer weekends. We just need to sit it out.

As we plan to relocate during FIRE I still want to visit some more places in my region that I haven't visited before. So far I have seen two, although they weren't in the best time of the year. I have more plans for when the snow is gone. That will probably be in another couple of weeks.

I think this "year before final year" can be hard, particularly if there is a gap between expectations and reality.  I also think some people make it harder on themselves by focusing more on the negatives (reasons I 'must' FIRE) vs. the positives that are often still a real part of everyday working life.  Not saying we should ignore the reality of things that are causing harm, but to be careful and not make more of them than we should be.

Your situation sounds tricky, given you made decisions to change work schedules before knowing the details of what your FIRE spreadsheet needs were.  I think it's a good reminder for all of us to do our best to double-check / triple-check before taking significant actions.  I'm glad for you guys that you seem to really enjoy the shorter work week and that it is an acceptable trade-off along your journey.  That's really what we're all doing here anyway ... taking time to assess what trade-offs make the most sense for each of our situations.  It's helpful to hear how others go about it as well!


Rubyvroom

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Re: 2020 FIRE Cohort
« Reply #711 on: March 27, 2019, 11:49:07 AM »
Isn't this (almost) last year the hardest?

As a continuation of the other thread I saw us both post in regarding this topic, yes, many times yes.  Some days at work I think, man I really love who I work with, what a great family of coworkers, I am really going to miss them. Other days I'm over here Googling #vanlife and thinking, I mean really I could walk out of here right now if I just lived in a van... ha.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #712 on: March 27, 2019, 12:29:49 PM »
Isn't this (almost) last year the hardest?

As a continuation of the other thread I saw us both post in regarding this topic, yes, many times yes.  Some days at work I think, man I really love who I work with, what a great family of coworkers, I am really going to miss them. Other days I'm over here Googling #vanlife and thinking, I mean really I could walk out of here right now if I just lived in a van... ha.

I do think there is some comraderie between me and a number of my co-workers. I do appreciate a good number of them. At times I feel I do something useful too. For a job, it is not a bad place to work, overall. Every time I walk home from my work, I am very happy that I am in a situation that I can actually do that, even though it takes time.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #713 on: March 27, 2019, 12:40:38 PM »
Isn't this (almost) last year the hardest?
Last year, I hoped to FIRE in October 2019. Then, after we went in detail through my spreadsheet, DH and I decided to postpone FIRE to somewhere in 2020. So this extra year to me feels extra heavy.

On the one side, it is easier to deal with the BS part of my job, as I know I don't have to do it for another 20 years like most my colleagues. But is still about a whole year from now, give or take some months longer of shorter (we don't have an exact end date).
But as we have financially optimised our life already, and decided to work 80%, which is not financially optimal, there isn't much we can do to improve our finances, other than start working 100% again. And that last thing is not attractive, as we have started to appreciate the longer weekends. We just need to sit it out.

As we plan to relocate during FIRE I still want to visit some more places in my region that I haven't visited before. So far I have seen two, although they weren't in the best time of the year. I have more plans for when the snow is gone. That will probably be in another couple of weeks.

I think this "year before final year" can be hard, particularly if there is a gap between expectations and reality.  I also think some people make it harder on themselves by focusing more on the negatives (reasons I 'must' FIRE) vs. the positives that are often still a real part of everyday working life.  Not saying we should ignore the reality of things that are causing harm, but to be careful and not make more of them than we should be.

Your situation sounds tricky, given you made decisions to change work schedules before knowing the details of what your FIRE spreadsheet needs were.  I think it's a good reminder for all of us to do our best to double-check / triple-check before taking significant actions.  I'm glad for you guys that you seem to really enjoy the shorter work week and that it is an acceptable trade-off along your journey.  That's really what we're all doing here anyway ... taking time to assess what trade-offs make the most sense for each of our situations.  It's helpful to hear how others go about it as well!

You are right. One way to avoid (mild) depression is to count your blessings. I often have a tendency to focus on negatives, but should focus more on the positive things in my life.

Working parttime was necessary for us also from a medical point of view. We were both very stressed out from work. As we weren't going to FIRE any time soon, this was the solution we could live with to improve life a bit. We have saved up our FIRE stash and what we save this year is just a safety bonus. But it was the extra year not taking out that will make us confident to FIRE next year. But with the uncertainty about the price of our home. We do now have a good plan of when we will put it out for sale, either November or January.

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Re: 2020 FIRE Cohort
« Reply #714 on: March 30, 2019, 08:52:34 PM »
Hello Class of 2020, it is I, an obvious refugee from the class of 2019.  I will be joining you guys for the 2020 exit on April 10th, 2020.

EscapeVelocity2020

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Re: 2020 FIRE Cohort
« Reply #715 on: March 30, 2019, 09:15:04 PM »
Dipping my toe in the 2020 cohort, despite the moniker that seemed deterministic.  I had intended to ER earlier, when I hit FI or maybe OMY or two after, but I'm enjoying FI-but-working life way too much thus far.  I like being busy and having a full time job (with international travel and learning French) seems to help.  Structure, intellectual challenge, and freedom to do some pretty silly things with money like give deserving people outrageous tips and (hopefully) good advice.  Life is so much more interesting the more 'free' you are (without drugs, that's a sad shortcut people seem to frequently get sucked in to).  I guess giving large tips/charity and chatting with people about their dream is my drug.

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Re: 2020 FIRE Cohort
« Reply #716 on: March 31, 2019, 02:32:25 AM »
Dipping my toe in the 2020 cohort, despite the moniker that seemed deterministic.  I had intended to ER earlier, when I hit FI or maybe OMY or two after, but I'm enjoying FI-but-working life way too much thus far.  I like being busy and having a full time job (with international travel and learning French) seems to help.  Structure, intellectual challenge, and freedom to do some pretty silly things with money like give deserving people outrageous tips and (hopefully) good advice.  Life is so much more interesting the more 'free' you are (without drugs, that's a sad shortcut people seem to frequently get sucked in to).  I guess giving large tips/charity and chatting with people about their dream is my drug.

Itís okay to be a SWAMI (Satisfied Working Advanced Mustachian Individual). Iím also OMY-ing...well actually, Iím three-more-year-ing because thatís the length of the contract. I still consider myself in the 2020 cohort because thatís the year we should be FI.

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Re: 2020 FIRE Cohort
« Reply #717 on: March 31, 2019, 05:14:39 AM »
I'm going to cross-post a bit from my journal.

Quote
On the good news front, all of this uninterrupted time has allowed me to delve into our financial spreadsheet in a lot more detail. I re-did our "magical number" calculation from a simplistic 25x expected spending in two different ways.
  • I separated out our core spending and 25x'd that, then added a side pot of money equal to our mortgage balance
  • I ran cFIREsim scenarios modeling mortgage as a finite additional expense and our core spending as everything else

In addition I played around with variables to understand how things like being a little flexible with our spending, the reverse equity glide path asset allocation versus static, pension-or-not, social-security-or not all played into the success ratios. I learned that modeling a mortgage payoff and a little spending flexibility (-10% spending reduction in bad stock market years) together have a BIG impact on our overall success rate. As in, it took our "magical number" from $2.6M to $2.3M. Given that we JUST crossed the $2M invested mark, this seems huge to me.

Provided there is some solid reasoning to move to a lower magical FI number and I'm not just massaging the math to give me the answer I want, that would mean we are currently at 87% of FI, versus 77%. How does the expression go? "Bringing success through lowered expectations!" :)

For anyone going into FIRE with a mortgage, I'm curious how you choose to treat that in your calculations. I'm of two minds about it. On one hand, all of the cFIREsim simulations I have ever run show better success rates and more wealth carrying the mortgage to term. On the other hand it does increase the required spend, decreasing our ACA subsidies. There is also the more complex considerations of this post that I haven't fully digested. https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/ How do you smart people think about this?

CoffeeR

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Re: 2020 FIRE Cohort
« Reply #718 on: March 31, 2019, 07:30:06 AM »
For anyone going into FIRE with a mortgage, I'm curious how you choose to treat that in your calculations. I'm of two minds about it. On one hand, all of the cFIREsim simulations I have ever run show better success rates and more wealth carrying the mortgage to term. On the other hand it does increase the required spend, decreasing our ACA subsidies. There is also the more complex considerations of this post that I haven't fully digested. https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/ How do you smart people think about this?
I like to decrease the number of variables. I like to KISS. To me, a mortgage is a variable I like to remove from the equation(s) as I plan for the future. I also agree that a mortgage increases tail risk, but smart people will disagree on this (e.g. perhaps identifying other tail risks by not carrying a mortgage). To each his own, but for me I do not want a mortgage. I also, do not consider my home part of my NW for FIRE calculations. If I were planning on selling and netting $, then it would be different, but I already live in a relatively LCOL area. I also do not overthink portfolio allocation and slicing-and-dicing by trying to find an optimal allocation with the "perfect" asset allocation. I think the inherent variability of the unknown future trumps Monte Carlo simulations based on the past. Yes, I do use the past to inform the future and it helps design my strategy, but flexibility is more important than trying to find the optimal strategy.
« Last Edit: March 31, 2019, 01:21:29 PM by CoffeeR »

Rubyvroom

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Re: 2020 FIRE Cohort
« Reply #719 on: March 31, 2019, 07:35:09 AM »
For anyone going into FIRE with a mortgage, I'm curious how you choose to treat that in your calculations.

We have decided not to pay our mortgage off for one reason only - we asked ourselves if this home in this location was an asset we'd want in our portfolio, and the answer was no. We took that approach because if and when the housing market declines again, we don't want to feel stuck with a substantial amount of equity wrapped up in an asset we didn't really want to own in the first place.

Now, we do want to build our own home on land we purchased last year, and I run two scenarios when I look at our modeling: one scenario with increased spending required to pay a mortgage on the newly built home, and one scenario where we self-fund the build and require a smaller stash to live there due to no mortgage. We have yet to decide which path to take, but I highly favor the no debt scenario (if we can make it work), even though the new debt may have a lower rate of interest than we'd earn in the market. The problem with the self-funded scenario is it would take a chunk out of the investments meant to keep us afloat while we build up the 5-year Roth pipeline, making some part time work inevitable.

ACA subsidies are definitely another consideration, though the ACA always feels under threat and I try not to base my decisions on what may or may not happen with the ACA. I do however view having no mortgage payment as an optimal situation, only because it allows more flexibility with income and tax management. However, after watching my dad struggle with heart problems in his late 50s, I would not be willing to trade in a few more years of conventional (ie, stressful) work to make a no-mortgage FIRE possible, though I would certainly be open to part time or consulting work on a temporary basis to make it happen.

So to sum it up, I agree that having no mortgage in FIRE would be optimal, but I've accepted that I'm not going to be FIREing at an optimal level. We don't have children so I believe that allows us quite a bit of flexibility to FIRE at "enough" and tweak our spending or income as necessary, being mindful of the "broke vs. dead" probability chart.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #720 on: March 31, 2019, 08:56:36 AM »
I think mortgage should count as a normal expense that might disappear after x years. I only count equity on our current house that we want to downsize. Our house is mortgage free and I count 50% as stash. The rest will be used for buying a smaller house. The house in which you live usually generates no money. In case of emergency you can always sell your home and rent from that money.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #721 on: March 31, 2019, 09:09:58 AM »
Dipping my toe in the 2020 cohort, despite the moniker that seemed deterministic.  I had intended to ER earlier, when I hit FI or maybe OMY or two after, but I'm enjoying FI-but-working life way too much thus far.  I like being busy and having a full time job (with international travel and learning French) seems to help.  Structure, intellectual challenge, and freedom to do some pretty silly things with money like give deserving people outrageous tips and (hopefully) good advice.  Life is so much more interesting the more 'free' you are (without drugs, that's a sad shortcut people seem to frequently get sucked in to).  I guess giving large tips/charity and chatting with people about their dream is my drug.

Welcome. Good for you that you like your job. You are perhaps one of the lucky few.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #722 on: March 31, 2019, 09:12:11 AM »
Hello Class of 2020, it is I, an obvious refugee from the class of 2019.  I will be joining you guys for the 2020 exit on April 10th, 2020.

Welcome. I will update the list later when I'm not in a driving car on a bumpy road like now.

FIREby2021

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Re: 2020 FIRE Cohort
« Reply #723 on: March 31, 2019, 12:44:51 PM »
For anyone going into FIRE with a mortgage, I'm curious how you choose to treat that in your calculations. I'm of two minds about it. On one hand, all of the cFIREsim simulations I have ever run show better success rates and more wealth carrying the mortgage to term. On the other hand it does increase the required spend, decreasing our ACA subsidies. There is also the more complex considerations of this post that I haven't fully digested. https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/ How do you smart people think about this?
I like to decrease the number of variables. I like to KISS. To me, a mortgage is a variable I like to remove from the equation(s) as I plan for the future. I also agree that a mortgage increases tail risk, but smart people will disagree on this (e.g. perhaps identifying other tail risks by not carrying a mortgage). To each his own, but for me I do not want a mortgage. I also, do not consider my home part of my NW for FIRE calculations. If I were planning on selling and netting $, then it would be different, but I already live in a relatively LCOL area. I also do not overthink portfolio allocation and slicing-and-dicing by trying to find an optimal allocation with the "perfect" asset allocation. I think the inherent variability of the unknown future trumps Monte Carlo stimulations based on the past. Yes, I do use the past to inform the future and it helps design by strategy, but flexibility is more important than trying to find the optimal strategy.

We killed our mortgage through the downsizing process; sold our (too large) HCOL home and used the proceeds to aggressively pay off our FIRE location home.  We wouldn't have purchased the downsized home unless we knew it was for the long haul, and definitely ascribe to the KISS principle mentioned above.  Pros and cons abound for keeping a mortgage, but heading into FIRE we don't want the annual mortgage payment expense.  Expenses require Income, which has domino effects on healthcare subsidies and Roth Pipeline / Conversion tax brackets.

Tradeoffs come with each decision, and ultimately each of our personal scenarios will affect the importance we place on the likelihood of either positive or negative tail events.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #724 on: March 31, 2019, 01:00:40 PM »
2020 cohort members:

??/2020     apurplelife
02/2020     aspiringnomad
08/2020     Bateaux
12/2020     BFGirl
??/2020     BlueMR2   
??/2020     catccc   
12/2020     david_shin
12/202?     desk_jockey
04/2020     DreamFIRE
??/2020      EscapeVelocity2020
04/2020     Exit2019
10/2020     Farmgirl
??/2020     FIREby2021
??/2020     FireLane
??/2020     Freedomin5   
??/202?     Gumption
06/2020     ixtap (date uncertain)
??/2020     letsdoit
??/2020     LadyMaWhiskers
??/2020     Linea_Norway
10/2020     Maenad
12/202?     meatgrinder
12/2020     MoneyTree
??/2020     onlykelsey   
04/2020     Pennycounter
03/2020     rab-bit
05/2020     Rcc
05/2020     RedefinedHappiness   
04/2020     robtown (maybe 12/31/2020)
10/2020     Rubyvroom
12/2020     Sand101
03/2020     TheContinaltalOp
12/2020     TheFIExplorer
11/2020    ToughMother
??/2020     tooqk4u22   
05/2020     Unique User (maybe 06/2020)
12/2020     ysette9


OLY:
2Birds1Stone

FIREing later:
FIPurpose (date to decided)

« Last Edit: April 01, 2019, 09:38:37 AM by Linea_Norway »

FIREby2021

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Re: 2020 FIRE Cohort
« Reply #725 on: March 31, 2019, 01:07:10 PM »
Howdy 2020 crew!  It's been fun to see a bit more activity in this cohort, as well as some new (to me) faces, so welcome to all!

One quarter down for 2019 ... we've had a lot of fun so far this year, and Mr. Market continues behaving after the Q4-2018 drawdown.  I do expect sentiment to swing back down & back up for some time before ultimately grinding higher ... in the meantime, we take each month as it comes and stick to the process while enjoying the ride.

March Highlights:

- As discussed over the last few monthly entries, I've been positioning myself to be able to work remotely for 2-week chunks of time this year in order to be able to support my aging parents with health appointments and work around their property.  This month was my first such trip (to the NE US), and I have to say it was really successful!  I was able to conduct my business, help out on the property and balance some time for myself ... very thankful to have been helpful, and very thankful for the chance to show MegaCorp that productivity can exist away from the boundaries of an office.  I will be doing this again in April and July ... TBD beyond that.

- Work-wise, this last couple of weeks has been my least favorite time of year - annual performance reviews!  I'm nearly worn out from all of the reviews, but after next week I should be done with 95% of everything.  Looking forward to that ending and some cool projects coming our team's way this summer.

- Health-wise this has been an up & down month.  DW and I both finished March dealing with some crud but are back to good health now. Ready to resume my weight training and yoga ... again, this year has been so nice finding full relief from rehabbing that old back injury from a few years back.  It's so nice to not have those worries about re-tweaking something again!  Had to reschedule my annual physical for May, but I do look forward to those results.

- Financially we met all of our savings goals and the market continues moving in our favor.  Q1-2019 was some of the best progress we've seen in quite a while.  While I can't imagine this pace will continue, we are just going to keep on track.  April savings will not be as green, as we got quite the surprise on our Fed taxes this year and will owe quite a bit.  Ugh.  Anyway, it's a huge blessing to have cash flow to handle those sorts of surprises (FIRE behaviors pay dividends via flexibility even pre-FIRE!) ... and wow it has been so nice being mortgage free these last couple of months (re: our future FIRE home)!!!

- Countdown:  If you've been following along, our 'original' FIRE target was Q1-2021, but we've been pursuing a path toward Q2-2020.  Current math tells us we could reach FI by Q3-2020.  If so, we'd have lots of incentive to work two extra quarters into the original target date.  Decisions around doing a new lease on our FIRE home and other pros / cons will definitely be part of our Summer 2019 conversation.  Onward through the fog!

EOY 2015 = 53.8%
EOY 2016 = 67.8%
EOY 2017 = 75.5%
EOY 2018 = 81.6%


// FI target defined as 3.75% SWR, mortgage-free + giving/lump sum funded //

END OF MONTH PROGRESS:
JAN 2019  84.5%
FEB 2019  86.9%
MAR 2019 88.4%

Have a great weekend, happy Spring!

FIREby2021
[/quote]

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Re: 2020 FIRE Cohort
« Reply #726 on: March 31, 2019, 04:01:33 PM »
I appreciate all of the input on the mortgage question I posed earlier. If our mortgage was small I wouldn’t hesitate to wipe it out. Being in a HCOL area it is a significant chunk of change. While on paper we have enough to kill it, it would close to wipe out our taxable account and have unknown tax implications. Overall, an area to proceed with caution.

FireLane

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Re: 2020 FIRE Cohort
« Reply #727 on: March 31, 2019, 06:46:30 PM »
March was an amazing month for me in terms of NW gain. I'm so close to my FIRE number, it would only take two more months this good to hit the target! Here's hoping the market cooperates.

I'm not planning to OLY, even if I hit my number in 2019. But I'd be happy to go into 2020 with some extra padding. It'd make me more confident about pulling the plug.

aspiringnomad

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Re: 2020 FIRE Cohort
« Reply #728 on: March 31, 2019, 06:54:33 PM »
We're in the beginning of the end, so to speak, as we sell our place and begin renting for a year before we really pack things up and say adeus to the 9-5 lifestyle and start our slow travels. So it's also a prelude to a beginning. I'm not calling it FIRE outside this forum, though we should (somewhat coincidentally) hit FI using the 4% rule this year barring a market crash. If anyone asks me about our plans in person, I just say it's a sabbatical. Unless they really want to get into the details. Then I say it's FIRE-inspired and maybe send them here.

Right now we're so busy getting the place ready to put on the market while preparing for the move that I haven't had much time to process how big a change this will be. If I do step back and think about it, the hardest thing will be saying goodbye to friends. We have two separate groups of 6-8 friends here who are all pretty much family. Second hardest will be getting used to the spigot being turned off on the firehose of cash. But modern technology makes the social connections easier to maintain. With the cash, unless I work indefinitely, I'll have to deal with that someday anyway. Just a matter of when.

Still targeting an earlyish 2020 departure, but lots of living and preparing to do between now and then.

TheContinentalOp

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Re: 2020 FIRE Cohort
« Reply #729 on: April 01, 2019, 06:01:48 AM »
1 year out and I'm at 103% of my FIRE goal. I'm moving my last day from April 1, to Friday, March 20th. 51 weeks (216 work days) to go.

princeradar

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Re: 2020 FIRE Cohort
« Reply #730 on: April 01, 2019, 06:25:24 AM »
So question to this group.  How are you calculating your taxes when you hit fire?  I assume you are doing 4% of your gross then deducting expected taxes etc. to achieve your FIRE number.  Just curious as I haven't got that detailed yet.

TheContinentalOp

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Re: 2020 FIRE Cohort
« Reply #731 on: April 01, 2019, 07:42:30 AM »
So question to this group.  How are you calculating your taxes when you hit fire?  I assume you are doing 4% of your gross then deducting expected taxes etc. to achieve your FIRE number.  Just curious as I haven't got that detailed yet.

My plan:

1. Move to a state with no state income tax
2. Configure my investments to take advantage of the extended  0% brackets for dividends and LT capital gains
3. Withdraw $12,000 (inflation adjusted) from tax advantaged accounts each year once I hit 59.5

That should results in zero income tax paid.
If I am forced to make larger withdrawals from the 401-k/IRA and have to pay the tax, I will still be okay. my FIRE number is pretty conservative. (close to a 3%)
Any tax I have to pay on additional income from writing, doesn't affect the FIRE number.

rab-bit

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Re: 2020 FIRE Cohort
« Reply #732 on: April 01, 2019, 10:11:49 AM »
So question to this group.  How are you calculating your taxes when you hit fire?  I assume you are doing 4% of your gross then deducting expected taxes etc. to achieve your FIRE number.  Just curious as I haven't got that detailed yet.

My plan:

1. Move to a state with no state income tax
2. Configure my investments to take advantage of the extended  0% brackets for dividends and LT capital gains
3. Withdraw $12,000 (inflation adjusted) from tax advantaged accounts each year once I hit 59.5

That should results in zero income tax paid.
If I am forced to make larger withdrawals from the 401-k/IRA and have to pay the tax, I will still be okay. my FIRE number is pretty conservative. (close to a 3%)
Any tax I have to pay on additional income from writing, doesn't affect the FIRE number.

@TheContinentalOp, I see that you are located near Philly. I assume that you know that PA does not tax 401k distributions? Does this still make it necessary for you to move to another state?
« Last Edit: April 01, 2019, 10:13:29 AM by rab-bit »

TheContinentalOp

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Re: 2020 FIRE Cohort
« Reply #733 on: April 01, 2019, 10:18:08 AM »
So question to this group.  How are you calculating your taxes when you hit fire?  I assume you are doing 4% of your gross then deducting expected taxes etc. to achieve your FIRE number.  Just curious as I haven't got that detailed yet.

My plan:

1. Move to a state with no state income tax
2. Configure my investments to take advantage of the extended  0% brackets for dividends and LT capital gains
3. Withdraw $12,000 (inflation adjusted) from tax advantaged accounts each year once I hit 59.5

That should results in zero income tax paid.
If I am forced to make larger withdrawals from the 401-k/IRA and have to pay the tax, I will still be okay. my FIRE number is pretty conservative. (close to a 3%)
Any tax I have to pay on additional income from writing, doesn't affect the FIRE number.

@TheContinentalOp, I see that you are located near Philly. I assume that you know that PA does not tax 401k distributions? Does this still make it necessary for you to move to another state?

Correct. I believe that PA and MS are the only states with an income tax that don't tax distributions.

I am still going to leave PA, because:

1. I am in the HCOL suburbs.
2. I am sick of the cold.
3. The state will still tax my dividends and capital gains.

ysette9

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Re: 2020 FIRE Cohort
« Reply #734 on: April 01, 2019, 07:33:09 PM »
My tax planning so far has been a combo of burying my head in the sand and presuming it won’t be much. ;)

We will have state taxes but I am anticipating our federal taxes to be pretty much zero. We’ll be living off of our taxable accounts initially and since almost all of that money has been put in in the last several years, our tax basis should be high. I will need to revisit that over time as we have more and more gains in that account. Once we finally do get to real retirement age and start tapping the tax-advantaged accounts we will tailor our income to minimize taxes through the use of both traditional and Roth.

Bateaux

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Re: 2020 FIRE Cohort
« Reply #735 on: April 01, 2019, 11:46:54 PM »
We bought a house in Florida.   LCOL and a similar climate to our home state of Louisiana, without all the taxes.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #736 on: April 02, 2019, 12:39:27 AM »
We bought a house in Florida.   LCOL and a similar climate to our home state of Louisiana, without all the taxes.

Are you renting it out until you move in?

Bateaux

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Re: 2020 FIRE Cohort
« Reply #737 on: April 02, 2019, 06:05:59 AM »
We bought a house in Florida.   LCOL and a similar climate to our home state of Louisiana, without all the taxes.

We're just using it as a vacation home for now.  Not likely we'll rent it.  We're headed down next week with some of our friends.   It will be the third week we've used it this year.   Not very Mustacian but we're in a position to afford it now.  We've slowly been furnishing it with good used stuff and putting in fresh paint.  Can't wait till it's home for good.

Are you renting it out until you move in?

Unique User

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Re: 2020 FIRE Cohort
« Reply #738 on: April 02, 2019, 06:25:36 AM »
Just put a meeting on my boss's calendar to discuss how I am going to pull off the large project I committed to that ends in May 2020 and a succession plan for my main role no later than December 2019 so I can focus on said project.  Planning will start around the August time frame, but it starts off slowly.   I'll use up vacation in May/June and use the rest of June to wrap things, so final day will be July 1, 2020.  Feels so far off.  DH's will definitely be before me, but no idea yet when that will be. 

itchyfeet

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Re: 2020 FIRE Cohort
« Reply #739 on: April 05, 2019, 12:47:48 AM »
I am Australian so our taxes are quite different to the US but I thought Iíd share anyways...

In Australia our retirement accounts (accessible after 60) are taxed at a max of 15% until retire,met then at zero post retirement. About half my savings are in retirement accounts (Superannuation).

On other savings we are exposed to progressive income tax with a tax free threshold of $18K, so $36K for a couple. The next $19K ($38K for a couple) is taxed at 19%.

Timing of income can be managed somewhat by taking capital gains instead of dividends/ rent.

If companyís have paid tax before distributing dividends then you get a tax credit called a franking credit which reduces or even eliminates taxes on dividends.

In the end, with al, the tax concessions, I have just decided to make a provision of 10% of my spending to be on income tax.
« Last Edit: April 05, 2019, 12:57:26 AM by itchyfeet »

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #740 on: April 05, 2019, 06:35:18 AM »
I am Australian so our taxes are quite different to the US but I thought Iíd share anyways...

In Australia our retirement accounts (accessible after 60) are taxed at a max of 15% until retire,met then at zero post retirement. About half my savings are in retirement accounts (Superannuation).

On other savings we are exposed to progressive income tax with a tax free threshold of $18K, so $36K for a couple. The next $19K ($38K for a couple) is taxed at 19%.

Timing of income can be managed somewhat by taking capital gains instead of dividends/ rent.

If companyís have paid tax before distributing dividends then you get a tax credit called a franking credit which reduces or even eliminates taxes on dividends.

In the end, with al, the tax concessions, I have just decided to make a provision of 10% of my spending to be on income tax.

Sounds like a complicated system for an outsider. But you should try the best you can to pay as little taxes as you legally can.

MoneyTree

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Re: 2020 FIRE Cohort
« Reply #741 on: April 13, 2019, 01:10:09 PM »
Joined the double comma club yesterday! none of it is in home equity. a nice milestone, but there's still work to be done!

I told myself that this point would be a soft starting point for making some pre-FIRE moves. I'm reviewing the pre-FIRE checklist and thinking through ways to mitigate sequence of returns risks. Some have mentioned using a CD Ladder, others seem to be going with a rising equity glide path.

Leaning towards the glide path right now but I know very little about bond funds. Is there a difference in the tax treatment between VBTLX (fund) and BND (ETF)? For those of you doing a glide path, do you keep your bond funds in a taxable account or a tax advantaged account?
« Last Edit: April 13, 2019, 01:15:27 PM by MoneyTree »

ysette9

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2020 FIRE Cohort
« Reply #742 on: April 13, 2019, 08:49:03 PM »
We are doing the reverse equity glidepath for our asset allocation. We are keeping our bonds in tax-advantaged accounts (401k, IRA).

friedmmj

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Re: 2020 FIRE Cohort
« Reply #743 on: April 14, 2019, 03:49:31 AM »
Iím also considering the reverse equity glide path route (retirement in 2022 or 2023).  How low of an equity allocation are you using going into retirement?  Iím currently at 60% 3-4 years out.  Considering dropping to 55% this year and 50% after that.

Freedomin5

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Re: 2020 FIRE Cohort
« Reply #744 on: April 14, 2019, 03:58:34 AM »
Wait...I thought reverse equity glide path meant that equities INCREASE as the years pass? So equity allocation should not be dropping. The % in equity should be going up the longer you are retired.

Did I get it mixed up?

The terms are confusing because some sites call it a rising equity glide path or inverse glide path. My understanding is that they all mean the same thing?

friedmmj

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Re: 2020 FIRE Cohort
« Reply #745 on: April 14, 2019, 06:11:08 AM »
Wait...I thought reverse equity glide path meant that equities INCREASE as the years pass? So equity allocation should not be dropping. The % in equity should be going up the longer you are retired.

Did I get it mixed up?

The terms are confusing because some sites call it a rising equity glide path or inverse glide path. My understanding is that they all mean the same thing?
Correct.  However, in order to implement this strategy you need to first reduce your equity exposure to a relatively low level heading into retirement if you are starting from a high level of equity allocation.

Linea_Norway

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Re: 2020 FIRE Cohort
« Reply #746 on: April 14, 2019, 08:47:12 AM »
At the moment we have all our savings in index funds and in our house, and cabin. When we sell the house and have 50% if it to invest, we will start thinking about buying more bonds.

MoneyTree

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Re: 2020 FIRE Cohort
« Reply #747 on: April 14, 2019, 09:46:54 AM »
currently I'm essentially 100% equities. Im thinking about dropping to somewhere between 70% or 80% sometime this year and then using that as as a starting point for the glidepath back up to 100% equities sometime in the future, when I'm well into FIRE. nothing set in stone yet. An ending allocation of 100% equities does sound unnecessarily aggressive, so I'm still mulling that over.

100% equities has served me well so far, but I have read that you want to drop down to a lower allocation before FIRE to mitigate retirement date risk.

ysette9

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Re: 2020 FIRE Cohort
« Reply #748 on: April 14, 2019, 12:42:48 PM »
This is our recipe for the reverse equity glidepath:

https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/

So we are increasing our bonds now as we approach FI. Our goal is to req h 40% bonds and then slowly ramp back down to finally attain 95-100% equities ten years into retirement. From what I have read if you can make it through the first ten years then you are overwhelmingly likely to be fine as your portfolio should have reached a ďtoo big to failĒ status.

2Birds1Stone

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Re: 2020 FIRE Cohort
« Reply #749 on: April 14, 2019, 12:44:35 PM »
A great book on this research and implementation is Michael McClung's "Living Off Your Money"

https://www.goodreads.com/book/show/30269060-living-off-your-money