First post from a wanna be mustachian

[WilliamWallace]

Apologies for the long first post, but was looking for some advice since I've power read all of MMM's articles over the past week.

It's been a tough year for me - switched jobs and my father passed away right before I started.  I was put in charge of managing a large group of people and it didn't work out.  Luckily, my degree of FI allowed me to go back after a bit and say the role wasn't the right fit for me.  I'm now transitioning to another role without a base pay cut.  I found MMM and other FI sites b/c I found myself incredibly anxious (actually went on light meds) about potentially getting fired and being out of work for an extended period of time and settling for something for little $ (this is not reasonable as I've never been out of work for a single day over the last 18 years and am on my 5th new company) - think it was the loss of my Dad and stress of a new job that I didn't feel good about.

The beauty of the MMM community is that you all have framed up the philosophy that I believed in, but just couldn't get my arms around.  Reading MMM's articles and positivity was a breath of fresh air, nourishment for my soul and an elixir for much (not all) of my anxiety.  My wife and I are both 40 yrs old and have 2 kids - 11/8.  She has had a great career but negotiated a severance that will pay out in April 2017. So that is our first step to FIRE - she will be stepping off the rat wheel.

I am carrying on due to a lucrative position ($150k + $70k bonus) and the fact that all my $ is in retirement accounts and I am not optimistic about the future of market returns.  Here's a quick look at our balance sheet:
Cash - $10k
Betterment - $100k (taxable - 90/10 portfolio)
529's - $150k
401k - 900k (both my wife and I)
Roth IRA - 85k
HSA - 37k
Home - $600k
2 cars - 2016 Pilot and 2013 Accord

No debt other than credit cards we pay off in full each month for the rewards.

We live in the most affluent county in the country, so we pay through the nose to make time - house cleaners ($320/month), lawn care ($120 8 months of the year), daycare ($350/month now that my daughter is older, was paying $30k/year), and eating out.  I went through our average monthly expenses and we're paying ~$1,500/month in eating outside the home.  That's killing me!  My wife isn't cognizant of money and figures she's making big $'s, so she can spend for convenience.

I am not a world traveler.  When I imagine FIRE, it looks like this:
wake up, have coffee with my wife
maybe go for a run
play a round of golf
come home and get fresh food to make lunch/dinner with my wife
sit on the back porch and eat and drink some wine
Wash, rinse, repeat

I'm not looking to move despite HOA fees of $180/month (includes internet and basic cable) and property taxes around $7k/year b/c I want my kids to stay in the same school district for their entire academic careers.

My current plan is to work 10 more years until my son graduates high school and then downsize the house and move somewhere that is less kids-centric where my wife and I can have access to activities (hopefully not costly ones!).  Maybe live on a golf course?  Figure I could do some part-time consulting or whatever for another 5 years thereafter until the kids are out of college and then totally stop any required work.

 I can't say I'm happy (anxious every morning I get up early to get to work early (1/2 hour commute) and then feel guilty leaving earlier to get home and see my kids.  Hoping the new role will alleviate that anxiety once I'm fully in it.

I should mention that between my bonus and her severance, we'll net ~$100k in April; which I plan on putting $28k in 529, $11k in roth conversion, $20k to pay uncle sam in more taxes, and the rest in betterment as a safety net fund (40/60).

What do you guys think?  Any suggestions on how to focus on making more $ accessible at 50 or 55...or earlier?  Read some on the Invest in Yourself whole life strategy, but it seems like I'd do better on my own.  Passive income is elusive.  I'm in real estate, so you'd think buying properties would make sense - but it's tough to find attractive cap rates from my cursory searches.

Thanks - really looking forward to your responses as I feel ok but certainly not ready to RE yet.

[starguru]

Im curious what your monthly expenses are.  You only mention some (HOA, Cleaning, daycare, eating out, etc).

  I think the philosophy around here is get yourself to a 4% withdrawal rate and you have a good shot at not having to work anymore.  How close are you?  You have ~$1.7MM in non 529 accounts, which should support $68k in yearly spending, or $5600 a month.  You might not need to follow your plan and work 10 more years, which is important depending on how unhappy you are.  Also, you mention you have no debts; your house is paid off?

Most affluent county in the country?  Loudoun in VA?

[Dicey]

Yes, please. Objects in mirror may be closer than they appear. More details needed post haste.

[mlejw6]

Accessing money before 59.5 is easy to answer:

http://rootofgood.com/roth-ira-conversion-ladder-early-retirement/


As for the rest, we need to know what your expenses are, as starguru pointed out.

And, I was thinking Fairfax? I couldn't remember if Loudoun has surpassed Fairfax.

[WilliamWallace]

Thank you for the reply.

Yes, house paid off as are the cars.  And yes, live in LoCo, Virginia.

We're spending about $110k/year right now.  Had been saving about $150k, but that will drop big time once my wife stops working in April.

Budget expenses once wife stops working is:
Home insurance/HOA/Prop taxes - $10k
Auto insurance/tolls/gas - $4k
Utilities (electric/gas/water/cell/cable) - $7k
Clothes/Kids activities - $7k
Dry cleaning - $1k
Groceries - $24k
Food out - $3k

total Expenses - $56k

529 - $8k (state tax deduction)
Vacation - $5k

Total expenses - $70k

But I always feel the need for cushion - so call it $75k/year should be perfectly fine.

I should mention that I max out the 401k and have a 6% match (so ~$9k more, or $27k/yr total).

[FrugalFan]

You are in amazing financial shape for your age. It seems like your investments will not quite cover your expenses yet, but you are close. And some of the kid expenses will disappear when they leave home (thought that is still a while away). It sounds like you are anxious/stressed about work. Is there any chance you could find a less stressful job that could cover your 70k in expenses and just let the stash grow for a while?

[starguru]

Thank you for the reply.

Yes, house paid off as are the cars.  And yes, live in LoCo, Virginia.

We're spending about $110k/year right now.  Had been saving about $150k, but that will drop big time once my wife stops working in April.

Budget expenses once wife stops working is:
Home insurance/HOA/Prop taxes - $10k
Auto insurance/tolls/gas - $4k
Utilities (electric/gas/water/cell/cable) - $7k
Clothes/Kids activities - $7k
Dry cleaning - $1k
Groceries - $24k
Food out - $3k

total Expenses - $56k

529 - $8k (state tax deduction)
Vacation - $5k

Total expenses - $70k

But I always feel the need for cushion - so call it $75k/year should be perfectly fine.

If you need 75k a year, 75x25 is 1.875, so you need $1.875m to retire.  You are close, probably around a year away.

As a note, most people report spending goes down after FIRE, so upping your desired spend by 5k might be unnecessary.

[Nick_Miller]

Thank you for the reply.

Yes, house paid off as are the cars.  And yes, live in LoCo, Virginia.

We're spending about $110k/year right now.  Had been saving about $150k, but that will drop big time once my wife stops working in April.

Budget expenses once wife stops working is:
Home insurance/HOA/Prop taxes - $10k
Auto insurance/tolls/gas - $4k
Utilities (electric/gas/water/cell/cable) - $7k
Clothes/Kids activities - $7k
Dry cleaning - $1k
Groceries - $24k
Food out - $3k

total Expenses - $56k

529 - $8k (state tax deduction)
Vacation - $5k

Total expenses - $70k

But I always feel the need for cushion - so call it $75k/year should be perfectly fine.

If you need 75k a year, 75x25 is 1.875, so you need $1.875m to retire.  You are close, probably around a year away.

As a note, most people report spending goes down after FIRE, so upping your desired spend by 5k might be unnecessary.

$2000 in groceries per month? Cut that in half (which is still a LOT, $1000 for 4 people), and you slash $12K off your yearly expenses and you retire now, right? I don't get it.

[WilliamWallace]

Thanks Nick - I don't get it either (blaming my wife - ha).  Spend too much on quick prep things I think.  Also throw too much away (that kids don't finish or spoil).  A big push is to cut down on eating out - so perhaps that is why I inflated groceries.  Also, that included my wife's $100/month make-up habit and costco runs.

Appreciate all the feedback.  Feels good to talk about it (money is taboo in general).  Thanks again.  Hope to be active on these forums going forward.

[Classical_Liberal]

I wouldn't count your home equity in a withdrawal calculation since you plan to stay.  So, if you maintain your expenses you fall shorter than other posters have stated.  Even going on "as is" you are a lot closer than 10 years though. 

IMO some of your expenses are pretty outlandish (like the food mentioned above).  Do some experimentation in your budget and try cutting back on various items.  Decide what actually enhances your happiness and what doesn't.  I would guess that after a year or two of this you could make some real headway in spending, that plus some additional savings over the period will probably put you FI. Then you can chose whether or not that daily anxiety is worth it.

Welcome and good luck!

[WilliamWallace]

I wouldn't count your home equity in a withdrawal calculation since you plan to stay.  So, if you maintain your expenses you fall shorter than other posters have stated.  Even going on "as is" you are a lot closer than 10 years though. 

IMO some of your expenses are pretty outlandish (like the food mentioned above).  Do some experimentation in your budget and try cutting back on various items.  Decide what actually enhances your happiness and what doesn't.  I would guess that after a year or two of this you could make some real headway in spending, that plus some additional savings over the period will probably put you FI. Then you can chose whether or not that daily anxiety is worth it.

Welcome and good luck!

Thank you!

[Dicey]

Lots of low hanging, relatively painless fruit to be harvested from this budget. I highly recommend reading the dated, but still worth its weight in gold, "The Complete Tightwad Gazette", aka the Big Blue Book. Awesome, ahead-of-her-time Amy Dacyczyn has a wealth of information about how to live gloriously on one income.

Note: that line item of 10k per year costs on a paid-for house is a great example of why it's so important to salt away money at least concurrently (if not before) escalating payments on the mortgage. Those fuckers are expensive, even after they're paid off and not just in LoCo, VA.

Overall, grand kudos to you. You are most definitely closer than you appear. To yourself, that is. We mustachians can see quite clearly how close you are. You'll be there sooner than you think.

[Charlie Foxtrot]

Hey Braveheart,

Remember what William declared at the end of the movie. Freedom!!!!!!!!!

Are you willing to trade all of your days in the next ten years for a little more safety/luxury?

Your are there man. Today if you wanted to be. Congratulations sir!

[WilliamWallace]

Lots of low hanging, relatively painless fruit to be harvested from this budget. I highly recommend reading the dated, but still worth its weight in gold, "The Complete Tightwad Gazette", aka the Big Blue Book. Awesome, ahead-of-her-time Amy Dacyczyn has a wealth of information about how to live gloriously on one income.

Note: that line item of 10k per year costs on a paid-for house is a great example of why it's so important to salt away money at least concurrently (if not before) escalating payments on the mortgage. Those fuckers are expensive, even after they're paid off and not just in LoCo, VA.

Overall, grand kudos to you. You are most definitely closer than you appear. To yourself, that is. We mustachians can see quite clearly how close you are. You'll be there sooner than you think.

Thank you.  Really appreciate the response.

[WilliamWallace]

Hey Braveheart,

Remember what William declared at the end of the movie. Freedom!!!!!!!!!

Are you willing to trade all of your days in the next ten years for a little more safety/luxury?

Your are there man. Today if you wanted to be. Congratulations sir!

Yeah - think that is a lot of what I'm looking for...freedom.  Thank you much

[meghan88]

Thanks Nick - I don't get it either (blaming my wife - ha).  Spend too much on quick prep things I think.  Also throw too much away (that kids don't finish or spoil).  A big push is to cut down on eating out - so perhaps that is why I inflated groceries.  Also, that included my wife's $100/month make-up habit and costco runs.

Appreciate all the feedback.  Feels good to talk about it (money is taboo in general).  Thanks again.  Hope to be active on these forums going forward.

Hi WW,

Sounds like you can make a few changes happen by observing some of the recommendations here:  http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

Maybe also remind your wife to avoid spending money on crap to impress people she doesn't like.  I'm assuming that you love her with or without the make-up ... beauty creams are nothing more than snake oil.  And make-up in general is bad for the skin.

Spending too much on quick-prep stuff:  it's probably not the healthiest option and the convenience is illusory.  If you have more time on your hands after FIRE, maybe you can bike to the markets / grocery stores and help out more in the kitchen?  Might also be time to teach the kids about where food comes from, all the energy it takes to get it to the table, and waste in general.

Yes, money issues are taboo in "polite society" but not here, and they also shouldn't be taboo with your wife.

[Cwadda]

I really like the first two paragraphs you wrote. It spoke a lot about you as a person.

Is there any way you could track your expenses exactly for 3 months? It doesn't sound like you know exactly what you're spending. A lot of folks on here use Mint or YNAB (You Need A Budget).

Financial independence comes down to two numbers: your income and your expenses. The more information you know the better informed your FIRE plan and decisions will be. And you'll feel a lot more comfortable about things.

One thing off the top of my head is it sounds like you guys go out to dinner way too much. How about investing in a cooking class for $100/month that you and your wife attend and learn about cooking. That way when she gets out of work she will be prepared to do more cooking and will actually enjoy it!

[EZcurrency]

WW,

You are the opposite of me financial wise -- you are heavy on investments and light on real estate, and I'm the opposite (heavy on real estate, light on investments).

I personally am not comfortable investing in the stock market at these levels.  I see as baby boomers are retiring and reaching 70 1/2 (mandatory age to start withdraws from IRA's), this will be a constant draw on the market.  I don't see that much upside.

Whereas in real estate ... mortgage rates are probably the lowest we will see in our lifetime, and property values have been going up.  You also get many tax writeoffs (depreciation, expenses, etc), which you don't get in the stock market.

IMO, I'd liquidate half (or more), and buy many single family homes to rent out.

EZ

[icemodeled]

Wow the numbers are blowing my mind haha. With that income we would retire within 5 years max. Our monthly expense is $1300, granted no kids yet but.. That's a lot of dining out! We eat out 2x a week(probably more often then most will say it should be) but we only spend $120-150 a month. We're trying to cut back though. Also.. I would eliminate the house cleaning.. Especially when your wife no longer is working. Lawncare  to, if possible. Groceries... $2000 a month? No idea how you are eating out a lot AND buying so many groceries. For a family of 4, $600 would be a bit more reasonable.. Maybe try to cut it back to $1500 then $1000 and see how low you can get it down to. Sounds like a lot is in waste from food spoiling.

Most important is to have a serious conversation with her wife and introduce her to MMM and FIRE. Let her know your feelings on it and see if you can start making some adjustments. It doesn't have to be all at once but start slowly even and compromise with her on things. That may help her lean towards the idea more. I'm sure she doesn't need $100 a month of makeup.. I bet she is beautiful without it at all!

Try tracking expenses monthly and then see exactly where every dollar goes and start the changes. There was a lot just combined in your list. Cell/utilities/cable.. I would write out each expense every month in detail to see the numbers plainly.

Definitely a job well done though with having the house paid, debt free and having a great income to work with. I hope the job gets better and stress lessens some. More the reason to fight towards FIRE!

[Dicey]

WW,

You are the opposite of me financial wise -- you are heavy on investments and light on real estate, and I'm the opposite (heavy on real estate, light on investments).

I personally am not comfortable investing in the stock market at these levels.  I see as baby boomers are retiring and reaching 70 1/2 (mandatory age to start withdraws from IRA's), this will be a constant draw on the market.  I don't see that much upside.

Whereas in real estate ... mortgage rates are probably the lowest we will see in our lifetime, and property values have been going up.  You also get many tax writeoffs (depreciation, expenses, etc), which you don't get in the stock market.

IMO, I'd liquidate half (or more), and buy many single family homes to rent out.

EZ

Dear EZ,
I have always had a portfolio that's heavy on RE, due to rentals (1/3) and primary home ownership in a HCOLA (1/3). The truth is that RE can be just as cyclical as the stock market, if not more so. My equities (1/3) never have toilets that overflow or pipes that break or tenants that skip town or bounce checks. Equities, particularly a balanced (indexed, low-cost, etc.) portfolio, are a helluva lot easier to manage than rental properties.

OP, please take EZ's advice with a grain of salt. There's more than one way to get there and I am sure that you will.

[WilliamWallace]

Wow the numbers are blowing my mind haha. With that income we would retire within 5 years max. Our monthly expense is $1300, granted no kids yet but.. That's a lot of dining out! We eat out 2x a week(probably more often then most will say it should be) but we only spend $120-150 a month. We're trying to cut back though. Also.. I would eliminate the house cleaning.. Especially when your wife no longer is working. Lawncare  to, if possible. Groceries... $2000 a month? No idea how you are eating out a lot AND buying so many groceries. For a family of 4, $600 would be a bit more reasonable.. Maybe try to cut it back to $1500 then $1000 and see how low you can get it down to. Sounds like a lot is in waste from food spoiling.

Most important is to have a serious conversation with her wife and introduce her to MMM and FIRE. Let her know your feelings on it and see if you can start making some adjustments. It doesn't have to be all at once but start slowly even and compromise with her on things. That may help her lean towards the idea more. I'm sure she doesn't need $100 a month of makeup.. I bet she is beautiful without it at all!

Try tracking expenses monthly and then see exactly where every dollar goes and start the changes. There was a lot just combined in your list. Cell/utilities/cable.. I would write out each expense every month in detail to see the numbers plainly.

Definitely a job well done though with having the house paid, debt free and having a great income to work with. I hope the job gets better and stress lessens some. More the reason to fight towards FIRE!

Thank you - these comments are very much appreciated!

[BrettB6]

I really like the first two paragraphs you wrote. It spoke a lot about you as a person.

Is there any way you could track your expenses exactly for 3 months? It doesn't sound like you know exactly what you're spending. A lot of folks on here use Mint or YNAB (You Need A Budget).

Financial independence comes down to two numbers: your income and your expenses. The more information you know the better informed your FIRE plan and decisions will be. And you'll feel a lot more comfortable about things.

One thing off the top of my head is it sounds like you guys go out to dinner way too much. How about investing in a cooking class for $100/month that you and your wife attend and learn about cooking. That way when she gets out of work she will be prepared to do more cooking and will actually enjoy it!

I found MMM about two years ago, and I think Cwadda is on the money here (Ha! I kill me.) After reading all the posts and getting some encouragement from MMM himself, I started tracking my expenses. I found out very quickly that I was hung up on all those meaningless rules of thumb like needing 80% of your working income.

I've gotten really good at tracking spending, and now my spreadsheet matches my credit card, pay stub and bank statements pretty much to the penny. I do that because I find enjoyment in it, so don't worry about being obsessive like me. My point is, I discovered that I have a job I enjoy, but I can stop going in any day I choose, and I won't ever have to worry about money. I think figuring out just what you're consuming is the key to finding your way around here.

Now, for a punch in the face: although I've cut back a bit on consumerism, I'm a pretty serious spendypants. And my grocery + eating out + wasting random $20 bills budget is $7200. Now you're 4 people and I'm 1, but you have got to figure out where that food money is going. That's enough to run a Gordon Ramsay restaurant kitchen!

I agree with others here that you're probably much closer than you think. Good luck!

[sisto]

Honestly I think you would be best off cutting expenses to the bone for maybe a year at most while banking as much money as possible and then FIRE. You sound like you'd be MUCH happier not working and you pretty much could just do it now, but I think the year long cut and banking money would be a great transition first.

[WilliamWallace]

I really like the first two paragraphs you wrote. It spoke a lot about you as a person.

Is there any way you could track your expenses exactly for 3 months? It doesn't sound like you know exactly what you're spending. A lot of folks on here use Mint or YNAB (You Need A Budget).

Financial independence comes down to two numbers: your income and your expenses. The more information you know the better informed your FIRE plan and decisions will be. And you'll feel a lot more comfortable about things.

One thing off the top of my head is it sounds like you guys go out to dinner way too much. How about investing in a cooking class for $100/month that you and your wife attend and learn about cooking. That way when she gets out of work she will be prepared to do more cooking and will actually enjoy it!

I found MMM about two years ago, and I think Cwadda is on the money here (Ha! I kill me.) After reading all the posts and getting some encouragement from MMM himself, I started tracking my expenses. I found out very quickly that I was hung up on all those meaningless rules of thumb like needing 80% of your working income.

I've gotten really good at tracking spending, and now my spreadsheet matches my credit card, pay stub and bank statements pretty much to the penny. I do that because I find enjoyment in it, so don't worry about being obsessive like me. My point is, I discovered that I have a job I enjoy, but I can stop going in any day I choose, and I won't ever have to worry about money. I think figuring out just what you're consuming is the key to finding your way around here.

Now, for a punch in the face: although I've cut back a bit on consumerism, I'm a pretty serious spendypants. And my grocery + eating out + wasting random $20 bills budget is $7200. Now you're 4 people and I'm 1, but you have got to figure out where that food money is going. That's enough to run a Gordon Ramsay restaurant kitchen!

I agree with others here that you're probably much closer than you think. Good luck!

I agree.  Thanks again to the MMM community!

[WilliamWallace]

Honestly I think you would be best off cutting expenses to the bone for maybe a year at most while banking as much money as possible and then FIRE. You sound like you'd be MUCH happier not working and you pretty much could just do it now, but I think the year long cut and banking money would be a great transition first.

I'm really hoping that when my wife stops working in April that we can get off the quick fix meals.  But damn it - if I really want to be a mustachian I need to take control.  I should be preparing meals on the weekend to serve during the week.  Be the change, right!

Thank you all - this has helped me more than you know.

[pbkmaine]

Another way to pare down costs is to get rid of the house cleaner and clean the house yourself, with the help of your kids. It will teach them valuable life and frugality skills. If done at speed, it is great exercise.

When one spouse gets on the frugality bandwagon, frequently the other spouse sees More Work, Less Fun. Make sure that does not happen to your wife.

[Charlie Foxtrot]

A big opportunity seems to be with the 600k paid-off house. Sounds like you live in the most expensive part of the country but what about downsizing to a short-sale 350K project (in the same school district) when it becomes available and do the cosmetic fix ups with all that new free time on your hands. 100K Taxable+ 100k Severance + 250K Home Sale Equity gives you a 450K cash account to set you up nicely for the first five years. Also save on Home Insurance and no HOA.

[WilliamWallace]

A big opportunity seems to be with the 600k paid-off house. Sounds like you live in the most expensive part of the country but what about downsizing to a short-sale 350K project (in the same school district) when it becomes available and do the cosmetic fix ups with all that new free time on your hands. 100K Taxable+ 100k Severance + 250K Home Sale Equity gives you a 450K cash account to set you up nicely for the first five years. Also save on Home Insurance and no HOA.

Thanks - a very good idea indeed!

And that's why we do this right...to give ourselves options.

[gggggg]

I have absolutely nothing to add, other than my total living expenses per month are less than your eating out bill alone. That's a lot of in and out flow! Keep reading the forums, of course, and you'll discover some more places to cut.

[Dee18]

I think the biggest issue for you is what will your wife's life be like when she quits working?  Is she going to quit spending  money on prepared foods and prepare most of the family's food at home? Is she going to take over the housecleaning?  Or is she going to spend more money because she will entertain herself by going out for lunch, taking expensive exercise classes, and shopping?

You could easily, really easily, cut your projected budget expenses by $2000/month.  Read more MMM and see what others spend on phones, cable ($0 for most of us), food, eating out, dry cleaning, clothes and kids' activities.  Begin by looking at MMM's own expenses. Figure out your plans to fund college.  You could retire very soon, but your wife would have to be on board. 

[Cwadda]

Another way to pare down costs is to get rid of the house cleaner and clean the house yourself, with the help of your kids. It will teach them valuable life and frugality skills. If done at speed, it is great exercise.

When one spouse gets on the frugality bandwagon, frequently the other spouse sees More Work, Less Fun. Make sure that does not happen to your wife.

Second this. My mom had us cleaning the bathroom top to bottom when we were 12 years old. Years later I'm cleaning my own house and saving thousands of dollars. Also, my peers don't even know how to clean bathrooms so they live in filth.