The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: desert_phoenix on November 15, 2018, 04:18:31 PM
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I am a renter. The area I live in is very high cost, and I do not see myself staying here for life. I basically live in the expensive area to access the higher-paying job. I have no intention of retiring in this area.
How should I conceptualize growing my 'stache? Do I still use the chart, or try to project what my expenses would be in the future place I live? I am aiming to get my expenses down to $2150 a month. This would need a 'stache $645,000 to follow the 4% rule.
Obviously, getting my expenses down to invest more is good regardless of the future. But I feel as if many FIRE folks already own their house. Do I just do a lot of research of where I plan to be and aim for a 4% worth of 'stache for *that* area? Say I budget well enough, and choose a place I want to end up, where total cost of living will be $1700 a month. That would mean I'd need $510,000 to make that happen with the 4% rule. How does being a renter impact that? Or should I consider diversifying by buying a rental or something now in the place I want to end up that I then move into knowing what the mortgage amount is so I can plan more explicitly?
I guess I am having trouble weighing whether to "rush" to X-sized pot of money now and figure it out, or if it might be better to relocate to the area I plan to settle even if that meant a pay-cut and delaying FIRE a couple of years. Thanks for any guidance!
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Renting vs buying doesn't affect the stash you will need. After all, you will use the total cost of living per month/year to calculate the stash you have. For a renter this amount will include rent, for a homeowner this will include mortgage, maintenance, taxes and insurance.
If you are interested in retiring to a place you've never lived before or haven't lived for a long time, I would definitely want to experience living there before I pull the trigger, because if you FIRE with only enough money to live in the LCOL area, and you end up not being happy there, it's not easy to go back to your pre-FIRE life in the HCOL area to save up some extra money. How badly do you want to FIRE? Are you totally unhappy in your job and completely burned out
Even if I was planning to relocate to a LCOL area after retirement, I'd still like to have a stash high enough to allow me to live in a MCOL area, for several reasons:
- you might want to move to another area at some point and with a lower stash, your options are limited
- LCOL areas are cheap, but this comes with a price tag: often the job market isn't that great and the available services are limited.
At some point you might want to work again in some capacity or need certain services (like specialist medical care) that aren't available where you plan to live.
- if you aren't planning to ever work for money again, it's especially important that your stash is high enough, because life might throw a few unexpected emergencies at you that cost money from your stash. If you can just about pay your bills following the 4% rule (a barebones FIRE) then an unexpected emergency could negatively affect your income permanently.