Author Topic: Are these numbers adding up?  (Read 2226 times)

Mr Z

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Are these numbers adding up?
« on: February 04, 2016, 12:05:44 PM »
Hi,

I would like to ask more experienced forum members take on this.

So here is my situation. I live in a East European (post communist) country with GDP/per capita of ~13 000 USD.

I am 38 years old and live with my girlfriend. No kids at this point.

Investments: 115 000 USD in stocks (various emerging markets and developed EU countries; no US stocks)
House: Fully owned, worth ~70 000 USD, comfortable for 2 persons. Renovated and good condition
Car: worth 7000 USD owned, 8 years old and expected to run for 8 more years
Emergency fund: 3500 USD (cash)
My future wife does not have a job
No Debt

Had I stopped working today I would get 300 USD/month pension from age of 65. This is based on today's rules and nobody can predict what will happen in 30 years with the pension system here.

Living costs:
Minimum needed 500 USD/Month (tested, we could probably still go down ~10% but that would be a real pain)
Comfortable living needs 730 USD/month

... and here comes the issue. I got a real soul sucking job. It's a SW engineering position in a very specific domain. Its extremely well paying (2900 USD/month after taxes). This is basically an expat salary in my country; Had I quit, at best I would likely get an average job that pays 700 USD/month (after taxes) because in this area no one needs that very specific knowledge I have. Moving to somewhere else is not an option.

So my plan is to stick to this position for a maximum of two more years.
This would allow us to stash away an additional 50 000 USD in savings.

Do you guys think the numbers add up? How far are we from FIRE?

Part of my worry is, that as the gaps slowly close between developed and developing economies, I would need more than what the 4% rule suggest....

Sorry for my English.

Best Regards,

Mr Z
« Last Edit: February 04, 2016, 05:57:43 PM by Mr Z »

2Birds1Stone

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Re: Are these numbers adding up?
« Reply #1 on: February 04, 2016, 12:10:16 PM »
Sounds like you have a ways to go.

Based on 4% draw down rate you need $225,000 to meet your spending requirement. How much buffer does this give you?

I would milk that high paying job as long as possible if you aren't willing to relocate.

Mr Z

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Re: Are these numbers adding up?
« Reply #2 on: February 04, 2016, 12:53:15 PM »
> I would milk that high paying job as long as possible if you aren't willing to relocate.

I know; but its easier said than done; I've always enjoyed my job and worked hard before but this time I am really hitting the wall. I am not complaining, after all its nice to have 1st world problems in 2nd world :)   

I am relatively sure that I could land a low paying job in my area for a while if needed; so there needs to be some safety margin in this, but I think we're flexible enough to bridge some gaps if things don't go as planed.

I also cannot imagine myself doing nothing whole day; I am sure some of my activities would result in a small side income.

Where I see a bit more risk is if we happen to have 2 kids, then we'd need ~900 USD/month for ~17 years. On the other hand we will likely inherit some amount (this is something I don't plan with).

So I think all comes down how much safety margin we want to put into this. I am also a bit concerned because what works in the US might won't work here; I just could not find enough historical etc data for developing economies (Germany, Japan, UK etc is somewhat different than here)...

Bucksandreds

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Re: Are these numbers adding up?
« Reply #3 on: February 04, 2016, 12:59:26 PM »
I imagine with your low expenses that you could quit your job whenever and pick up a hobby that pays a little and be fine.  If I were in your position I would stick it out as long as possible but you spend so little that you'll be fine.

ooeei

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Re: Are these numbers adding up?
« Reply #4 on: February 04, 2016, 02:57:19 PM »
There are a couple of issues you need to take care of, or at least be aware of, before quitting.  First, as you alluded to earlier, emerging market stocks are not generally used when calculating the 4% rule, so I'd hesitate to use that as a target without further research.  Even so you're about halfway there right now.  Second, you're in a position where re-entering the workforce will result in a very significant ~80% salary cut.  This means it will really benefit you to get everything right the first time instead of having to go back for another job later in life. 

You mention a pension, is there a cash out value of that you could take instead of waiting until later?  If that's an option it may be worth doing if you aren't certain of its stability.

As far as your expenses over time rising due to country development, I wouldn't be TOO worried about that.  If cost of living increases, chances are wages will increase as well.  It still may force you to go back to work, but your wage would probably be enough to live on.

Bucksandreds

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Re: Are these numbers adding up?
« Reply #5 on: February 04, 2016, 03:52:01 PM »
You are 38 with a house paid off and 6 figures saved. You know what you're doing. Trust your instincts.

aFrugalFather

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Re: Are these numbers adding up?
« Reply #6 on: February 04, 2016, 04:37:29 PM »
You are 38 with a house paid off and 6 figures saved. You know what you're doing. Trust your instincts.

+1  So far so good it seems.  You have boots on the ground and know your situation best.  Just taking the time to be here I have confidence you are going to be okay.  Sorry if that doesn't really give you any tangible advice...  How is the rental market there for real estate?  Plans on having kids and starting a family?

MrFrugalChicago

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Re: Are these numbers adding up?
« Reply #7 on: February 04, 2016, 04:53:59 PM »
Can you get overseas software work?  10k+ a month is pretty common in the states, if you could consult at that rate you would fill up your bank accounts real quick.

lpb0306

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Re: Are these numbers adding up?
« Reply #8 on: February 04, 2016, 05:23:49 PM »
I don't really have too much advice other than what was already mentioned. I just wanted to say that I thought you were a native English speaker...seriously! It's perfect. I always think it's interesting that people apologize for their English because it's almost always fantastic. If anything we should be sorry as Americans that we don't speak another language at all, let alone fluently. (I do speak Spanish, but that's just growing up with it at home..I don't count it as learning a language like you have!)

If I were in your shoes...I'd probably do something similar to what you have in mind. Quit after saving up as much as possible, and find a part time or side job to make some money to live on along with what you have saved and your pension (not sure when that would begin though). It could be you'd need to just find a lower paying job after a few years just to pay for your monthly necessities. I don't think any amount of money is worth a "soul sucking job", as you said. I don't LOVE my job, or even always like it, but it doesn't make me feel the way you described.

Rosy

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Re: Are these numbers adding up?
« Reply #9 on: February 04, 2016, 05:40:28 PM »
1. Would it be possible for your wife to find something that would pay say $200 and perhaps you could find something for $300? - so that you could shore up that minimum of $500 you must have and add it on while you stick it out at your job for another two years? That would mean a couple of extra years saved up - just in case.
2. Hang in there for those two years and don't despair - a lot can happen in two years that would completely change your outlook, prospects and your perspective.

Worst case scenario is obviously that you lose your job prematurely (before you are ready to give it up) - how would you get by? Are there sidejobs or online jobs you or your wife could start now, so that you are prepared - no matter what?

Mr Z

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Re: Are these numbers adding up?
« Reply #10 on: February 04, 2016, 05:51:41 PM »
Thank you for your thoughts and insights!

A couple of more details:

Our living costs are relatively low not because we sacrifice a lot, but it's rather our life style; we love cooking at home, we don't go on expensive holidays and we try to save on fuel (which is relatively expensive here).  Of course, like most of us :) I also did some antimustachian purchases earlier; probably I burned ~15 KUSD on cars that could have been avoided.

There is no cash out value for the pension here; I wish there was! In fact the rules/law keep changing, so it is very difficult to predict what will happen.

Rental market: I don't have experience with it and this kept me away so far; I have the skills to renovate a flat; probably its not a bad idea to have a small rental apartment just to diversify a bit away from stocks. I'll likely have to look into this.
 
Kids are "planed" in the next 3-4 years :). 

Emerging market stocks: yes, the lack of extensive historical data also bugs me a bit; However I'd not feel comfortable to shift to US stocks now with current market valuations. 

Overseas work:

There was an opportunity to move to US ~2 years ago but I did not go for it; I already worked for ~5 years abroad at age 25 and travel does not excite me that much any more.  Also my future wife could not have joined me because of family (health...) issues. so basically this is why we cannot move.


« Last Edit: February 04, 2016, 06:04:53 PM by Mr Z »