Author Topic: Advice on how to FIRE  (Read 434 times)

rewardthisman

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Advice on how to FIRE
« on: September 28, 2019, 03:02:29 PM »
Hi all! Long time blog reader here seeking advice on early retirement.

Financially I've had some luck while maintaining a high savings rate. However I'm struggling to translate this into FIRE. A brief snapshot of our situation is set out below. Appreciate my situation is privileged and thanking you in advance for any helpful input.

* Status: Married (both mid 30s)
* Networth: $2,400,000
* Breakdown:
   - Cash: $50k
   - Property: $2,450,000 (PPOR: $1,150,000; 2 x IP: $975,000 & $325,000)
   - Pension Pot: $250,000
   - Shares: $150,000
   - Mortgage: ($500,000)
* Expenses: $50,000 per annum, excluding any IP mortgage repayments
* Savings Rate: 70-85%, depending on whether you include estimated capital gains

(Perceived) Barriers to FIRE:

* IVF: We've been trying to have a child for years without success. Every IVF cycle costs us a fortune ($10,000+) and I'm unsure when it'll finally work out, if ever. With my wife it's a non-negotiable to attend an expensive clinic with higher expected success rates.

* Children: Related to the above. We're living as DINKS and I have no idea how a child may impact our annual expenses. I've read the materials from Mr Money Moustache and elsewhere. But it may be a challenge getting my wife on board with any frugality directed towards the next generation.

* Career: I'm a lawyer who has invested a massive amount of time and energy into my career. The partnership carrot is being dangled and I keep getting sucked into the game. Having said that, unsurprisingly my workplace is toxic and I'm having serious physical and mental ramifications from all the stress. Briefly I've gained 20kgs over the past 12 months and I'm in serious burnout / (non-drug) addiction territory. It's not fun being miserable all the time and not seeing light at the end of the tunnel.

* Family: I'm worried about the possibility of having to financially support either or both sets of parents down the track. In particular one of our parents is living with a terminal illness which may lead to some unexpected costs.

* PPOR: I cannot really rent and/or sell this house and move into lower cost accomodation in the short to medium term without upsetting people. Understand this one is a bit cryptic, apologies, but I'm reluctant to get into too much further detail for the sake of preserving anonymity.

* Mortgage: This one is self inflicted. But until it is paid off, all the rental income generated by my IPs are going towards serving the debt. I'm right now on a 15 year repayment plan with an interest rate of 1.5%.

The upshot is our situation looks promising on paper. But right now, maybe due to stress, I am struggling to see the forest from the trees. If I remove the PPOR from the calculation and assume the IPs continue to service the outstanding mortgage, then using a 4% withdrawal rate I cannot generate enough passive income to retire anytime within the next 5-10 years. Also with my wife's IVF and then potential pregnancy, it's hard to see us reducing our lifestyle costs substantially or moving to a lower cost destination anytime soon.

Any advice would be much appreciated. Thank you. 

Sibley

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Re: Advice on how to FIRE
« Reply #1 on: September 28, 2019, 04:42:35 PM »
So, you've got a lot moving pieces. You're doing the very expensive route of IVF. I'm sorry that it's necessary. But it also creates a potentially very tough decision: what do you do if it doesn't work? Because that happens. I hope you're talking honestly, about all of it - the stress, the worry, the heartache, the fear it won't work, the fear it works but the pregnancy isn't viable. ALL of it. If marriage counseling or individual therapy is needed, then do it.

If you do have children, yes you end up spending money on them (clothes, food, medical, toys, etc), but there are pretty simple ways to cut costs. If your wife isn't on board with frugality re children, then she's not on board in general and you've got a much bigger problem to address. Plus, it's often much better for the kid to be frugal than to buy everything in sight, so there's angle to work as well.

Job: Right now, you're burned out and dealing with (non-drug) addiction stuff. That doesn't get better without fixing the underlying problems, and the longer it goes the worse it gets. You need to seriously consider a new job/career shift. Which may in turn have income ramifications. Plus, if you are able to have a baby, do you really want to only see that baby for a few minutes a day?

Family: why would you need to support parents? Do they have savings, pension, social security? If they're living beyond their means, that's not something you have to fix. As for the medical costs, I get it. But before you kick in money, they need to be getting whatever benefits they're entitled to. Medicare, Medicare, private insurance, etc.  It often just takes time to organize that and deal with the paperwork, and right now, it sounds like you have no time. Which is why you're defaulting towards potentially throwing money at the problem.

House: You're cash poor. Whatever the situation is that has prompted you to buy the house you're currently in, it's locked up a ton of your net worth. You can't FIRE right now, not without selling and dramatically reducing your housing costs. You say people would be upset if you sold/rented: well, unless those people are you or your wife, they don't get a voice. You and your wife live there, you pay the bills, thus you make the decisions. Not these other people. If other people are going to get so upset if you chose to rent/sell, then they're welcome to buy it from you. It doesn't really matter what the situation IS - either they can shut up, or they can buy the place from you so they can do whatever they want with it.

Expenses: you're spending $50k a year for 2 people. Unless that includes $20k of IVF, your budget has a ton of fat in it.

Bottom line:
You have some pretty serious LIFE decisions to make. What do you want? Because right now, you're bringing in a lot of money and destroying your physical and mental health in the process. You're locking the majority of your networth into real estate that you're not necessarily willing to change. At some point, the wheels are going to fall off the bus. This isn't a how do I FIRE question, it's a "how do I build a life that I'm happy with and can sustain" question. Good luck.