Author Topic: Starting to get serious about some major changes  (Read 2901 times)

TheMCP

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Starting to get serious about some major changes
« on: January 29, 2017, 11:20:58 AM »
Thought I'd solicit some opinions and experiences from the community, as while my situation is unique, I'm sure there are others who have gone through similar scenarios.  I'll try to keep this to the point here...

DW and I, no kids, 38 years old.  Both of us have good jobs, I enjoy mine more than she enjoys hers, but in the near term things are tolerable (this is not an "I'm losing my mind at work" situation) for both of us.

A number of years ago, I stumbled into the concept of early retirement while researching general investment / financial planning.  We have followed the path that I am sure is familiar to many of you who are reading... learning leads to cutting spending leads to increasing savings leads to being surprised at how little happiness was being gained from all the extra spending.  While this has certainly supercharged our savings rate / amount, we are also looking forward to starting the next chapter in our adventure.  Working is fine, it just isn't how we would like to spend our time.  We have many interests (many of which are not particularly expensive), enjoy each others company, and would like to stop spending so much of our time toiling away trying to generate wealth.

We are not yet to a place where I feel comfortable jumping off, but that mindset of "Everything is going to be fine, go for it and figure out the details as they come" is definitely starting to tug at us in a much more tangible way than even just a year ago.  I am trying to find the balance between making the most of our current situation and enjoying it as much as possible with staying longer than we have to and wasting time that could be spent young and healthy doing whatever we feel like.

Financial stuff, we are at about 720k in invested assets, 250k of which is in taxable accounts.  We have the house and a mortgage, but I have basically been counting our home equity as a wash... estimated conservatively, our current home equity should get us at least most of the way to a house in the new location, mortgage free.  Home and land prices where I live are tricky to estimate, so maybe there will be a nice surprise there but I'm not counting on it.  It's hard for me to get an exact number on how much we are saving per year (and that amount is somewhat variable for a number of reasons), but it is in the neighborhood of 100k.

On the spending side, a couple years ago we started tracking spending more seriously and specifically.  At that point, we decided to simply be more careful about what we spent money on.  No budget, no specific rules or anything formal, and if we really wanted something we'd just buy it... the goal was to see how much we could drive our spending down without feeling like we were giving anything up.  Since then, we have averaged about 45k per year (for purposes of this discussion, this number does not include mortgage since the plan will be to eliminate that), which includes certain things that will likely go away (3k+ / year big house electric bill, 2.5k / year in gas for long commute are at the top of that list) but does not include some other things that will likely be different than they are today (health insurance is at the top of that list... no shortage of uncertainty concerning that, and I have no idea how to plan for it.  We're both healthy and active... beyond that, who knows).

I am 100% certain that if we committed to it fully, that number would go down more... potentially significantly.  There is plenty of stuff included in those spending numbers that were clearly wants and not needs, and we are both completely on board with eliminating that kind of thing if it allows us to live more freely.  We are also both open to generating income, if we can do it in a way that better aligns with how we'd like to spend our time.  I am consistently amazed when I play with firecalc or cfiresim, and how much difference an extra 5 - 10k / year in income can make over the long term.  We are both educated and well adjusted (well okay... sort of), I'm a software engineer and DW is in sales... generating some sort of future earnings feels like something that not only we could figure out if we had to, but something I could see us doing because it would be fun to do together.

The largest potential complication in our situation is that we don't want to stay where we are, geographically.  This means selling a large house and a lot of land, which could take some time.  I think we have a pretty good idea of where we'd like to go next, but knowing that for sure is a challenge that we underestimated last time we moved.  I'll be taking steps to try and mitigate that risk, but in my experience it can be a difficult problem to avoid.

I would be interested to hear how others dealt with this "balance" problem (well... "problem", I guess)... especially if it involves moving.  We could keep doing what we're doing for another 5 or 10 years and be quite wealthy... but I'm just not excited about spending my time that way.  Barring an economic catastrophe or whatever, in a year or two we may be at a point where it makes sense to go for it, and I'd like to start getting my plan organized so when that time arrives I already know what I'm going to do.  Thanks in advance for sharing any experiences on these topics...

TheMCP

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Re: Starting to get serious about some major changes
« Reply #1 on: June 14, 2017, 06:49:54 PM »
Updating my post just because

We've decided to sell our house and live in an RV for a while... perhaps a long while.  We'll travel the country and follow the weather, running, rock climbing, mountain biking etc.  I don't want to buy property again until I've had a chance to really get to know the area.  We'll just go visit them all, and see what we end up gravitating to.

We're not quite there yet financially, though I'm starting to feel pretty confident that if we really wanted to stop now we'd probably be fine.  We may end up living in the RV and continuing to work, depending on when our house sells (which I expect may take a while).  If that happens I'd consider it an advantage, as I'm very sure we will be fine living on wheels but doing it while working will be harder than it would be otherwise, and if for some reason we decide we hate it we could still change course again.  Not to mention the bump in savings rate from getting rid of the mortgage and associated expenses.
« Last Edit: June 14, 2017, 06:52:35 PM by TheMCP »

Vindicated

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Re: Starting to get serious about some major changes
« Reply #2 on: June 15, 2017, 02:08:11 PM »
Great update!  Good work on getting to where you are, and I'm excited for you and your future potential!

It may be fun for you* to start a journal chronicling your RV adventure.  There are a few others I've seen on the Journals page that have taken a similar route.  Perhaps you can learn some good tips from them.

*It would be fun for us!

slappy

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Re: Starting to get serious about some major changes
« Reply #3 on: June 15, 2017, 03:27:15 PM »
Yes, start a journal! :)

neo von retorch

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Re: Starting to get serious about some major changes
« Reply #4 on: June 15, 2017, 03:37:13 PM »
You sound a bit like me. I mean, I'm only turning 38 today but... (also I'm about half a million behind you on invested assets. Hmph!)

My wife wants to sell everything and live in an RV... we could probably retire a good bit sooner if we do. But we're not ready for it, either financially or mentally.

I also mostly didn't plan - but then I started to, more and more. Fortunately, I did always keep meticulous records of money coming in and out (for 14 years now!) so that wasn't a mystery. But more recently, I started to get better at estimating more accurately when investment income would likely cover "actual expenses." Unfortunately, we're still spending too much, so it's something like 7 years out as is, or maybe 4-5 years if we tighten things up, sell our beloved home, and buy an RV.

Have you considered being more precise with your numbers? It might help your confidence!

TheMCP

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Re: Starting to get serious about some major changes
« Reply #5 on: June 15, 2017, 05:14:51 PM »
Yeah, we weren't sure on the RV thing until we got a (smallish) one and started to use it some.  I could see how if both parties in a relationship weren't on the same page about living in an RV, it could become unworkable in a hurry but for us I think it'll be just fine.  We have both had different versions of the "corporate" story... new jobs, responsibilities, stress, layoffs, etc. and neither of us will be taking for granted the freedom that we're getting in return for the challenges that are sure to be ahead.  Listening to (and smelling) an RV waste tank emptying is just as horrible and gross as you imagine it is, yet the only thing I could think was that after I throw these rubber gloves in the trash, I get to do pretty much whatever I want the rest of the day.  I won't be losing sight of that.

The main reason for the RV thing is actually because I want to go visit different places and survey what different areas are like.  I've done enough travelling with our current RV to figure out that there are lots of really unbelievable things to go see and do, and they're all over the place not just the huge parks that everyone knows.  Compared to what we're planning, it'd probably actually be cheaper to buy a small house somewhere... but after my experience moving to the midwest from the northeast (both have their pluses and minuses, but the bottom line is that we'll never really fit in here... this will never be "home" to me), I don't want to commit to any one area before getting a REALLY good feel for it.  An RV is a depreciating asset, but I'm willing to pay that price to make more informed decisions about where we end up next (however long that happens to take).

Our estimates are probably about as good as they're going to get... I'm thinking while on the move we should be around 35k / year while on the road.  It's a rough number based on full-timer blogs, mixed in with my own numbers and assumptions.  If I'm being honest, I think we can actually do a fair bit better than that, but that number seems low enough that I don't want to be over optimistic.  We'll use our initial excitement about being on the road and living a new lifestyle to set a "baseline" expense level (as close to minimum spending as is comfortable), and go from there.  Being able to cut spending / earn income during any upcoming downturn won't be critical to the plan, but the ability to do either of those things will definitely help with the mental aspect.

An interesting "bonus" will be that when our house / land sells, that money will go into our taxable account bucket.  On one hand, we know that at some point we'll probably want to buy a house, so a big chunk may have to come back out of there someday... but on the other hand, in the meantime it's still invested dollars and we can be at least somewhat flexible about when that big chunk gets spent.  Plus, its extra buffer as we Roth-ladder money out of our pretax accounts.

One of the things I'll probably do is start a blog (because I don't want to be the only full time RV person without one), which will be mainly for family etc. but maybe I should do a journal as a precursor.  I'll think about it... its a busy time right now =]

TheMCP

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Re: Starting to get serious about some major changes
« Reply #6 on: June 15, 2017, 06:19:19 PM »
You sound a bit like me. I mean, I'm only turning 38 today but... (also I'm about half a million behind you on invested assets. Hmph!)

My wife wants to sell everything and live in an RV... we could probably retire a good bit sooner if we do. But we're not ready for it, either financially or mentally.

I also mostly didn't plan - but then I started to, more and more. Fortunately, I did always keep meticulous records of money coming in and out (for 14 years now!) so that wasn't a mystery. But more recently, I started to get better at estimating more accurately when investment income would likely cover "actual expenses." Unfortunately, we're still spending too much, so it's something like 7 years out as is, or maybe 4-5 years if we tighten things up, sell our beloved home, and buy an RV.

Have you considered being more precise with your numbers? It might help your confidence!

14 years is a treasure trove haha... we've got about 3 or 4, the last 2 being quite detailed.  The main problems for our projections are around the fact that our future expenses will be for very different things than they are today (I spend very little on diesel and propane today, those costs will go up, but in the future I won't have a giant electric bill or have to buy work clothes... that kind of thing).  Speaking of which, another interesting consideration is that with all the madness going on with the health care situation... I will be taking full advantage of the fact that I will be able to choose what state I "live" in.  It used to be mainly a state income tax question, but now it seems choosing a state of residence is as much a health insurance question as anything else.

FIREby35

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Re: Starting to get serious about some major changes
« Reply #7 on: June 17, 2017, 11:33:18 AM »
This is a cool idea. I can't believe you didn't get responses to your original post!

I think the NW you have allows you to do these sorts of things. The mental trick I employ is that I (with a NW of around 700k) have already over-saved for retirement - assuming I can cashflow my life every once in a while. Now, I'm still working and saving so its not a problem for me. But, as you stated, you can probably come up with some income at some point in the future. If you come up with income anywhere near your projected 35k in annual spend your stash is almost irrelevant. Also, you can start "cashflowing" at any point in the future. So withdrawing for a year or two and then settling down to a self-employed or otherwise income earning situation makes a huge impact and immediately makes your "retirement" sustainable. The point is, you can leave the rat race with confidence and do whatever you want.

Good luck on the adventures. It sounds like a blast.

Bicycle_B

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Re: Starting to get serious about some major changes
« Reply #8 on: June 18, 2017, 08:35:28 PM »
MCP, good luck on your adventures.  I think you should give yourself a year to just enjoy.  After that, you can decide to live on your stash or add some work/business. 

Fwiw, I have a couple of acquaintances who did several cycles of "quit job/sell company, get an RV, drive the country for a year".  By the end of each tour, they had identified their next business.  They would buy a small badly run business that they felt had good prospects, then run it for several years.  After they improved it, they would sell at a substantial profit, in addition to their business earnings.  They became worth maybe $3M or so.


TheMCP

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Re: Starting to get serious about some major changes
« Reply #9 on: June 19, 2017, 06:43:12 PM »
Thanks for the replies... yep that's basically the way we see it. 

Maybe I've just read too many arguments about "safe" withdrawal rates, but at some point it starts to feel like everything I can learn before quitting, I already know.  Everything I still need to learn, I need to quit to find out.  I'll never be "safe" and I'm okay with that.  More important than being above some specific number is that I understand how income, spending, investment and planning interact.  The future is unknowable, but it tends to happen slowly... we will have time to adjust, and I'll know if and when we're in trouble.  If something really terrible happens, it'll probably be the kind of thing that working longer would not have helped anyway.

Regarding businesses, yeah I could totally see something like that happening with us.  Our interests and skill sets are diverse, and the world is full of unsolved problems.  No matter how much money we have, I doubt we'd turn down more if we could make it by doing something we enjoy.  I have a feeling that if and when an opportunity like that arises, we'll know it when we see it.

FIREby35

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Re: Starting to get serious about some major changes
« Reply #10 on: June 20, 2017, 06:47:59 AM »
TheMCP I agree totally with you. I always thought the safe withdrawal rate and portfolio failure conversations were a little dramatic considering it would take a decade or more for the failure to occur in most cases. So, lots of opportunity to take corrective action.