Author Topic: Help me FIRE  (Read 13799 times)

rupanama

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Help me FIRE
« on: September 16, 2016, 08:36:08 AM »
I'm having trouble quitting my salaried job to start working on other projects. I've saved 25-30x my annual expenses, and I have the additional savings needed to be debt free, without reducing the 25-30x savings. I'm struggling because my living expenses are pretty low, so the 25-30x amount is about $300,000, which makes me afraid of quitting my job because I don't feel like this amount of money is enough, even though the research I've done indicates that it is. Are any of you already FIRE'd? Do you all have any advice that might help me make this decision?

Thanks for your help!
-rupanama

rupanama

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Help me FIRE
« Reply #1 on: September 16, 2016, 08:51:28 AM »
I'm having trouble quitting my salaried job to start working on other projects. I've saved 25-30x my annual expenses, and I have the additional savings needed to be debt free, without reducing the 25-30x savings. I'm struggling because my living expenses are pretty low, so the 25-30x amount is about $300,000, which makes me afraid of quitting my job because I don't feel like this amount of money is enough, even though the research I've done indicates that it is. Are any of you already FIRE'd? Do you all have any advice that might help me make this decision?

Thanks for your help!
-rupanama

Yokan

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Re: Help me FIRE
« Reply #2 on: September 16, 2016, 08:56:04 AM »
Are you satisfied with your current lifestyle? Do you like your job?
« Last Edit: September 16, 2016, 09:17:45 AM by Yokan »

rupanama

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Re: Help me FIRE
« Reply #3 on: September 16, 2016, 09:03:38 AM »
@lazarus_long:

Good points. Here are the answers to your questions:
- Age: early 30's
- Location: Front Range, Colorado
- Odds of lifestyle inflation: low
- It would be easy for me to return to work, as I work in I.T. support. Moreover, I'm contemplating a couple business ideas or part-time jobs after quitting.
- Family situation: married, no kids, but possible -- a kid would require part-time work, but that's acceptable
- No side hustles currently, but I'm contemplating a couple business ideas or part-time jobs after quitting.

You're correct, I am currently living on $10k-$12k per year, excluding mortgage costs. I have the ability to pay off my mortgage without affecting the 25-30x savings amount.

rupanama

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Re: Help me FIRE
« Reply #4 on: September 16, 2016, 09:05:09 AM »
@Yokan:

I'm satisfied with my lifestyle outside of my job. I'm not nuts about my job: on a scale of 10, with 10 being "I'd do this job for free", it ranges between 2 and 5, depending on how the day goes.

erutio

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Re: Help me FIRE
« Reply #5 on: September 16, 2016, 09:09:40 AM »
how long have you been living at the 10-12k per year level?  If you are really comfortable with this, then the math says you're there. 
Does that budget include property taxes? 
Do you have means to access your nest egg without penalties?
Do you have health insurance figured into your budget?
You will probably have to decide whether you want to pay off mortgage early vs letting the money work for you in other retirement vehicles (if it's not affecting your nest egg, why not pay it off early?)

Slee_stack

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Re: Help me FIRE
« Reply #6 on: September 16, 2016, 09:37:30 AM »
You should consider if you will believe you will remain fixed at your current expense level.

For instance, would you ever want or need to move elsewhere to a higher COL area?

Of course you can always go back to work if you find your expenses rise.

rupanama

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Re: Help me FIRE
« Reply #7 on: September 16, 2016, 09:40:07 AM »
@erutio:

Good questions. Here are some answers:
- I've been living at this level of income for three years. I understand the math says I'm there, but emotionally, it feels uneasy. I'm struggling with whether this emotion is a useful warning sign or unnecessary noise that I ought to ignore.
- Yes, I have means to access my savings without penalties.
- Yes, health insurance is included in this budget, perhaps even over-budgeted for the expenses, now that the ACA exists.
- I understand and agree with your point about the mortgage: the opportunity cost associated with paying off the mortgage versus investing that capital is precisely what's keeping me from paying it off now.

nereo

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Re: Help me FIRE
« Reply #8 on: September 16, 2016, 09:42:23 AM »
Intuitively it appears that you'd have no problem retiring. 
However, for detailed responses I'd recommend doing a full case study.

Read the how to here: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/

congrats on reaching a high level of FI.

Yokan

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Re: Help me FIRE
« Reply #9 on: September 16, 2016, 09:43:25 AM »
At the very least, you can probably afford to do something you love and use your investments as a buffer until/if you decide you want to increase your lifestyle. You might surprise yourself when the thing you love might make some unexpected money. Depending on what country you're in, another thing to consider is healthcare. If you have universal healthcare it's a non-issue. If you're in the US, you might want to consider your family health history, before completely unplugging, but that's only if you have some serious family health problems.

mozar

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Re: Help me FIRE
« Reply #10 on: September 16, 2016, 09:45:40 AM »
I would wait until you have enough to cover an estimate for kid expenses, since you mentioned it.

rupanama

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Re: Help me FIRE
« Reply #11 on: September 16, 2016, 09:53:25 AM »
@Slee_Stack:

Good point. I do believe that I'll remain fixed at my current level of expenses, and returning to part-time work is an option. I don't anticipate that I'll relocate to a higher COL area, but if I did, I'd accept the need to work to cover the cost difference.

@Yokan:

I share your optimism about some of the projects I'd like to do in lieu of a day job. They would likely provide some income. Healthcare is factored into my expenses, as I do live in the US: fortunately, the ACA is kind to frugal people.

@nereo:

I agree with your intuition. The problem I'm struggling with is an feeling that I'm giving up a good thing I ought to keep simply because it's reliable income.

You have a fair point on the request for a full case study. Because my question seems more psychological than financial in nature, I'm not sure that baring the gritty details of my finances will help people recommend an answer. I suppose a follow-up question to you post-fire folks is: did you feel similarly before you FIRE'd, i.e. that you were giving up a good job that you ought to keep even though you didn't need it anymore? If so, how did you deal with that feeling?

SKL-HOU

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Re: Help me FIRE
« Reply #12 on: September 16, 2016, 09:53:49 AM »
I would wait until at least after having a kid. Then re-evaluate your expenses. Or the other option is do you have the part time option at your work? Go down to PT for a while prior to fully quitting.

erutio

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Re: Help me FIRE
« Reply #13 on: September 16, 2016, 09:59:12 AM »
the opportunity cost associated with paying off the mortgage versus investing that capital is precisely what's keeping me from paying it off now.

Ahh, this question have been debated numerous times on this forum.  I, myself, went with the pay off early route for the peace of mind, but I can easily debate for both side of the argument. 

if you don't mind me asking, how do you have an ability to pay off a mortgage without affecting the 25x nest egg you have

rupanama

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Re: Help me FIRE
« Reply #14 on: September 16, 2016, 10:09:21 AM »
@mozar:
Fair point, and I agree with you in part.

@SKL-HOU:
Fair point. The kid is still a hypothetical at this point, but your point is still well-taken. Part-time work is a question I need to broach with my manager: I'm interested in the idea, and it's something I should explore further before simply jumping ship.

@lazaraus_long:
lol -- there are indeed cloth diaper options: they're kinda crappy...
My family would be three people, at most, which still requires planning. To clarify, I'm a piece in a larger family puzzle: my partner is also working, providing half of our joint expenses. My situation is similar to that of Jacob at ERE or Brandon at the Mad Fientist, where they have partners who pay a share of joint expenses.

@erutio:
I'm not particularly interested in resurrecting the spectre of mortgage debates here. To answer your question, I have additional savings ear-marked for the mortgage.

nereo

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Re: Help me FIRE
« Reply #15 on: September 16, 2016, 11:36:36 AM »

@nereo:

I agree with your intuition. The problem I'm struggling with is an feeling that I'm giving up a good thing I ought to keep simply because it's reliable income.

You have a fair point on the request for a full case study. Because my question seems more psychological than financial in nature, I'm not sure that baring the gritty details of my finances will help people recommend an answer. I suppose a follow-up question to you post-fire folks is: did you feel similarly before you FIRE'd, i.e. that you were giving up a good job that you ought to keep even though you didn't need it anymore? If so, how did you deal with that feeling?

Feeling conflicted about giving up a good thing simply because it's reliable income (when you already have enough saved) is called "One More Year Syndrome" (OMY).
There can certainly be good reasons to stay - if, for example, you enjoy the work or the social interactions, or if staying OMY is so financially adventageous that it will allow you to do something or have a level of safety that you otherwise couldn't by pulling the plug today.  Search "OMY" or "one more year" on this forum and you'll find a lot of discussion about how to combat it, when it's actually useful and how to evaluate the differences.

Regarding the case study - your question may be more psycological than financial in nature, but one of the things a case study can do is help others see if there might be something you've missed.  IMO, the best way to fight psycological doubts is with hard data.  It's often surprising how financial data can elucidate behavioral wants/desires, and someone might look at your numbers and say "I see you spend a lot on 'X' - if you did 'Y' it might both increase your happiness and your financial security.
That said, not everyone wants to share their details (even semi-anonomously online).  A case study is just my suggestion.

rupanama

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Re: Help me FIRE
« Reply #16 on: September 16, 2016, 02:48:28 PM »
[I've deleted the financial data in this post, as most folks' analyses of my financial situation seem to revolve around catastrophic events that would either affect all people equally badly, or are tail events that would affect an employed person as seriously as it would affect a financially independent person who has a net worth less than eight figures.]
« Last Edit: September 21, 2016, 03:36:14 PM by rupanama »

badbear

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Re: Help me FIRE
« Reply #17 on: September 16, 2016, 03:11:32 PM »
Expenses after paying off your house you expect to be $24,000/yr.
Safe withdrawal rate from your remaining stash ($300,000 * 0.04) is $12,000/yr.

It would seem to me that you are only halfway there. Home equity (unless rented out) doesn't generate an income until you sell, and even then appreciation may only average out to the inflation rate in the long term. You would need an invested stash of $600,000 to cover your current expenses at a 4% SWR.

Assuming you keep the mortgage and invest your reserve, your SWR is $415,000 * 0.04 = $16,600. This is short of your listed annual spending of $18,820, and not including your mortgage payment/taxes and insurance. To make that difference up you would need to get to $35,500.

Also, you listed maxing out both your 401k and 403b plan. The limit of $18,000/yr for an individual is for the total contribution to a 401k/403b and similar accounts. If you are actually doing this (and both of those accounts are your accounts) then you may have a big tax bill at some point.
« Last Edit: September 16, 2016, 03:18:30 PM by badbear »

rupanama

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Re: Help me FIRE
« Reply #18 on: September 16, 2016, 03:33:37 PM »
@badbear:
I think you've misread my information, or perhaps I didn't write clearly. The mortgage information included in that expense report is included in the information above. I'll edit that post to make it more clear. I'm currently spending less than $24k/yr. I'm currently spending about $18k. Once my house is paid off, I expect to spend 10-12k.

Regarding the rules on 403b and 401k plans, you can contribute to both without tax implications. It is legal. I've been doing it for several years. My CPA has supported it, and there is a Mad Fientist post about doing it. If you can do it, it's a great way to protect $36k from taxation.

badbear

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Re: Help me FIRE
« Reply #19 on: September 16, 2016, 03:44:32 PM »
Ah OK, sorry about that. I didn't realize your current spending included the mortgage payment. It looked to me like you were leaving them off and mentioning them below the other spending total.

If you can really keep that spending under $12,000 a year, then $300,000 invested can support that level of spending at a 4% withdrawal rate. That being said, how confident are you that you can maintain that low level of spending indefinitely? Would you be willing to work part time or somehow bring in other income to protect against drawing down the account in a market downturn? If you are invested very aggressively, you could have a bad sequence of returns in the next few years so that you might run the risk of running out of money in the long term. If that's the case, it might be worth thinking about making your portfolio somewhat less aggressively invested in stocks.
« Last Edit: September 16, 2016, 03:52:35 PM by badbear »

badbear

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Re: Help me FIRE
« Reply #20 on: September 16, 2016, 03:46:37 PM »

rupanama

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Re: Help me FIRE
« Reply #21 on: September 16, 2016, 03:50:56 PM »
@badbear: you caught another typo. I've corrected it. The account is a 401a, not a 401k. Thanks for the due diligence.

rupanama

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Re: Help me FIRE
« Reply #22 on: September 16, 2016, 03:55:48 PM »
Ah OK, sorry about that. I didn't realize your current spending included the mortgage payment. It looked to me like you were leaving them off and mentioning them below the other spending total.

If you can really keep that spending under $12,000 a year, then $300,000 invested can support that level of spending at a 4% withdrawal rate. That being said, how confident are you that you can maintain that low level of spending indefinitely? Would you be willing to work part time or somehow bring in other income to protect against drawing down the account in a market downturn? You are invested very aggressively, so if you have a bad sequence of returns in the next few years you might run the risk of running out of money in the long term. It might also be worth thinking about making your portfolio somewhat less aggressively invested in stocks.

Having lived at this level of spending for several years now, I'm pretty confident I can maintain it. Also, part-time work is an option. I am invested aggressively. That is true. The 20% that is not in stocks can be drawn on during a long bear market. This portfolio survives  cfiresim, firecalc, and a couple other monte carlo simulators with success rates of 80% to 96%; the range of success rates is largely due to the granularity of spending assumptions available in each calculator, with cfiresim having the most granular control.

badbear

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Re: Help me FIRE
« Reply #23 on: September 16, 2016, 04:12:52 PM »
Well, it certainly seems that you've hit your 25x number, but I would still be concerned about the possibility of rising expenses due to circumstances outside of your control. For example, a serious accident or medical problems possibly requiring long term care could blow your FIRE budget. Hopefully it will not be an issue, but how would your budget be affected by a split with your partner? Having more of a cushion is never a bad thing. If you can develop post-FIRE interests that also earn some income, or simply are willing to work part time as you said, that might help a lot in insuring against unforeseen circumstances. Best of luck!

Optimus Primal

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Re: Help me FIRE
« Reply #24 on: September 16, 2016, 05:06:34 PM »
$139 per year to own, operate, maintain, fuel, license, insure, and pay taxes on a car seems fishy to me.  Am I reading that right?
« Last Edit: September 16, 2016, 05:09:21 PM by lazarus_long »

FernFree

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Re: Help me FIRE
« Reply #25 on: September 17, 2016, 11:00:10 PM »
I don't see anything for health insurance premiums or deductibles.  That is a sizable expense if you aren't including it.

Bicycle_B

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Re: Help me FIRE
« Reply #26 on: September 18, 2016, 01:35:37 AM »
Rupanama, did you state how much the mortgage payment is? 

Like Badbear, without it I keep comparing 415k stash => 16,600 income at 4% SWR vs stated expense 18,820.  Obvious conclusion "almost at FI". 

Supposing that after you subtract mortgage, you end up technically at FI, the striking things to me are:

1) You file jointly but say your finances are separate.  If you're married, isn't there some interaction with partner's finances?  With the expense and income amounts low even by Mustache standards, in your shoes I'd want to account for that before declaring FI.

2) Curious about car also. 139/yr is less than $12/month.  Is that sustainable?

3) Ya'll ever gonna have kids?  If a kid led you to return to work, would it be easy to get a new job?

4) Do you both have health coverage? 

Despite these questions, clearly you have a lot of flexibility (lots of FU $).  So it's still an emotional question to some extent.  You've obviously been efficient up to now and put a lot of ducks in a row.  My guess is you should go for it, but that's a guess without having a clue about your partner.  Is he/she in fact financially responsible?  Has he/she ventured an opinion?

PS. Completely irrelevant, but what pet costs $14/mo ($168/year)?

ash7962

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Re: Help me FIRE
« Reply #27 on: September 18, 2016, 07:54:50 PM »
I'd vote go for it.  Seems like you're all set for the SWR, and I've seen others on this forum say that expenses tend to go downward post FIRE.  I feel like most people who have the ability to achieve FIRE are also the kinds of people who are likely to do something with their new free time.  I'd be surprised if you couldn't find any way to make a bit of easy money from your hobbies (if necessary or desired).  Also even if you run across an unexpected large expense, would you really need to get the same job you had before?  You could always fall back on a temporary part time job if really necessary.

Cassie

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Re: Help me FIRE
« Reply #28 on: September 18, 2016, 10:10:47 PM »
I think it is a bad idea with the amount of $ you have now.

plainjane

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Re: Help me FIRE
« Reply #29 on: September 19, 2016, 04:13:14 AM »
How does your partner feel about you RE'ing?  If that relationship failed, would you lose economy of scale that you are counting on?

How do you plan to maintain your home under that RE budget?  Houses are expensive, and the cost to maintain year over year is not consistent, so just going by past 12 months may not be appropriate.

FIRE Artist

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Re: Help me FIRE
« Reply #30 on: September 19, 2016, 01:47:27 PM »
How does your partner feel about you RE'ing?  If that relationship failed, would you lose economy of scale that you are counting on?

How do you plan to maintain your home under that RE budget?  Houses are expensive, and the cost to maintain year over year is not consistent, so just going by past 12 months may not be appropriate.

There are quite a few people on this forum where one half of a couple FIRE's based on split expenses, while the other half continues to work to support their half of the shared expenses.  Personally I think this is incredibly risky both for the relationship and for the finances.  I would be inclined to not fire until your assets are enough to carry all of the household expenses, including your partner's.  You just never know what can happen, from relationship break down, to surprise pregnancies, to death etc. 

2Birds1Stone

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Re: Help me FIRE
« Reply #31 on: September 19, 2016, 02:25:27 PM »
I would say you have VERY little margin for error.

Health care is one huge unknown that could ruin FIRE plans quickly should certain situations arise.

Do you have other ambitions/goals that may require more $$ in the future?

Assuming you don't go back to work, can you see yourself living on $10-12k/yr when you get old? 

rupanama

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Re: Help me FIRE
« Reply #32 on: September 19, 2016, 02:59:46 PM »
Thanks for the replies everyone. I appreciate the critical looks at my situation. I've found it interesting how conservative most of the responses and critiques have been, given that my budget is similar to that of MMM, if you scale it to one person: e.g. ($25000/yr) / (2 income earners) = $12500/yr.

@lazarus_long:
The "car" heading doesn't cover all aspects of the car, due to idiosyncrasies with my cost-tracking software. However, yes, that budget does cover my car related expenses. We own one car, drive about 8k miles per year, and I perform all my own basic maintenance, so the costs are low.

Regarding your question about my posting this thread in two places, I wanted to gather opinions from post-fire'd people as well as the broader community, and I assumed that readers of one type might not check the threads of another section -- if that upsets the balance around here, I apologize.

@Fern_Free:
health insurance is included in this budget. Given my low income, it will be heavily subsidized by the ACA. With no subsidy, it's about $217/mo for a HDHP.

@Bicycle_B:
Regarding your questions about the mortgage, that is covered in earlier replies of this thread. 115k of the 415k is a cash reserve I may use to pay-off the mortgage, which leaves 25-30x expenses.
Quote
1) You file jointly but say your finances are separate.  If you're married, isn't there some interaction with partner's finances?  With the expense and income amounts low even by Mustache standards, in your shoes I'd want to account for that before declaring FI.
Yes, there is some interaction. I've addressed this in a previous post. My partner and I handle our finances in a manner similar to that of Jacob at ERE or Brandon at the MadFientist: we pay shares into a joint account to cover shared expenses.
Quote
2) Curious about car also. 139/yr is less than $12/month.  Is that sustainable?
I've addressed that above, in my comment to lazarus_long
Quote
3) Ya'll ever gonna have kids?  If a kid led you to return to work, would it be easy to get a new job?
Maybe, on the kids. Part-time work would fund the kid. A child is a variable in this whole financial equation, but it is one that can be solved for.
Quote
4) Do you both have health coverage?
Yes.

Quote
Despite these questions, clearly you have a lot of flexibility (lots of FU $).  So it's still an emotional question to some extent.  You've obviously been efficient up to now and put a lot of ducks in a row.  My guess is you should go for it, but that's a guess without having a clue about your partner.  Is he/she in fact financially responsible?  Has he/she ventured an opinion?
Yes, my partner is financially responsible and debt-free beyond the mortgage. My partner's also saving to FIRE in the next few years: this is a joint project.

Quote
PS. Completely irrelevant, but what pet costs $14/mo ($168/year)?
A sick, dying cat (now dead), minus its groceries, which are included under the "food" for the household. Euthanizing a cat is absurdly expensive!

@ash7962:
Thanks for the encouragement. Generally, I share your optimism about part-time work and the ability to find full-time work if necessary.

@Cassie:
Fair enough -- could you elaborate?

@plainjane:
My partner is supportive and working on it too. As far as risk management is concerned, I treat relationship failure in the same manner as I treat contracting a terminal disease or a 100-year disaster occurring in my area: these are tail events. They're hard to plan for. Saving 50x my expenses simply to cover an unlikely divorce seems overly conservative.

The house maintenance budget is included. I can do most of the work myself. Houses are expensive, and amortizing large expenses is a useful way to manage that.

@FIRE Artist:
Fair enough.

@2Birds1Stone:
Fair enough. Firecalc and cfiresim analyses don't demonstrate my financial situation is that dire.

I have a budget for healthcare. To be fair, extreme health problems could ruin any employment or retirement scenario: I am not unique in this risk.

At this point, my income will cover my future projects, which may produce additional income.

As much as it is possible to look thirty to sixty years into the future, yes, I can see myself living on this budget.
« Last Edit: September 19, 2016, 03:12:25 PM by rupanama »

MarciaB

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Re: Help me FIRE
« Reply #33 on: September 19, 2016, 03:28:29 PM »
I think you're not ready to retire...but you may very well be ready to find a different job. One that you like more than your current one.

badbear

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Re: Help me FIRE
« Reply #34 on: September 19, 2016, 04:14:18 PM »
I would recommend also evaluating your financial position jointly with you partner, even if you keep separate finances. The state of your joint finances is ultimately what determines your success rate. I feel like we don't get the whole picture here.

robartsd

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Re: Help me FIRE
« Reply #35 on: September 19, 2016, 04:30:14 PM »
Assuming: 1) you are very confident in your relationship with your partner and your partner's financial stability, 2) you have a reasonable expectation that projects will provide some economic return, 3) your projects will not add significant new costs or liabilities, and 4) your partner will be happy with your decision to FIRE; I think you should do it.

h2ogal

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Re: Help me FIRE
« Reply #36 on: September 19, 2016, 06:01:23 PM »
If you plan to retire and live off of your savings, then $300K is certainly below average, even among this frugal group.  Many here plan to have around $750K and although some retired with less, many waited to have much more than that.   I retired recently and would like to have had more savings, but I will never have a JOB again.  I will however do part time contracts/self employment on projects of my choosing.

I agree that your spending habits should dictate the amount you must save (4% rule etc), but I think there is a minimal baseline that everyone should have to cover real emergencies.  Suppose you have a major medical emergency, or suppose you must hire a lawyer for some reason?   The cost of these things may not be as flexible as the rest of your budget.   

If however you are looking for opinions on whether you can quit your job and find a new job or start a business, then absolutely you are in good shape to do that.  If your job is making your day a 2 on a scale of 1-10, then its a really good idea to leave.   

nereo

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Re: Help me FIRE
« Reply #37 on: September 20, 2016, 07:58:31 AM »
One question I keep having focuses on this $115k that you have 'earmarked' towards your mortgage "in cash".
Is that amount really being kept in cash (or in a chequing/savings account with <1% interest rates)?

If so, why not either invest it or use it to pay off your mortgage? Keeping such a large sum in cash is a perfect way to lose out to inflation.

Overall I concur with most of hte other people here.  Retiring now would be tight, with little margin for error.  Good news is that your expenses are low, so one option would be to 'retire' from your current job and pick up some very part-time work doing something you love.  If you earned just ~$20k/year over the next several years your retirement strategy would go from borderline to rock-solid.

robartsd

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Re: Help me FIRE
« Reply #38 on: September 20, 2016, 08:30:27 AM »
If you plan to retire and live off of your savings, then $300K is certainly below average, even among this frugal group.
We do need to remember that this is 1/2 of a couple - if partner's finances are similar this is equivalent to a couple with a paid off house and $600,000. While this is somewhat low, it is still in the ballpark many target.

One question I keep having focuses on this $115k that you have 'earmarked' towards your mortgage "in cash".
Is that amount really being kept in cash (or in a chequing/savings account with <1% interest rates)?

If so, why not either invest it or use it to pay off your mortgage? Keeping such a large sum in cash is a perfect way to lose out to inflation.
I hope that OP does have the house payoff fund invested in some mix of stocks and bonds (preferably tax advantaged bonds) with a target to stay ahead of interest on the loan and inflation. I imagine that the nature of the financial relationship he has with his partner prevents him from paying off the house.

soccerluvof4

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Re: Help me FIRE
« Reply #39 on: September 21, 2016, 05:46:13 AM »
I would say you have VERY little margin for error.

Health care is one huge unknown that could ruin FIRE plans quickly should certain situations arise.

Do you have other ambitions/goals that may require more $$ in the future?

Assuming you don't go back to work, can you see yourself living on $10-12k/yr when you get old?
This. Besides healthcare you need to consider house issues. Large repairs, increased maintenance and utilities costs, increased prop taxes and insurances. The possibilty of divorce or death of SO and your need to cover their share of expenses besides your own. Market downturns. Inflation. Zombie Apocalypse. Etc... All can wreak havoc on a very low barebones budget.  I'd continue to work longer to create a larger cushion/EF or to invest for a higher passive income for some wiggle room.

 It also sounds like you may be somewhat dependant on your SOs income to fund your current lifestyle. If that income was gone could you comfortably live like you do now on $1000/month - possibly less if divorcing during a market downturn? If not are you OK with downsizing or getting roommates or going back to work possibly late in life? If not I'd rethink FIRE for now and just look at it as being aFU money that allows you great flexibility to make career changes or take a work break.




This^  in a nutshell

DrF

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Re: Help me FIRE
« Reply #40 on: September 21, 2016, 09:26:23 AM »
Yeah, I've also run into the jihadists out there who think it is a cardinal sin to pay down your mortgage.  I'm half worried one of them will show up at my door and force me to borrow money...

Haha, I think I was one of those fundamentalists. My real point I was trying to make (on the other thread) is that while you are still working and have a fire hose of cash coming in, one should not make extra payments on their mortgage (given the current mortgage interest rates, anything more than ~4.5-5% and it's a different story). They instead should invest it and if they so choose, can use the gains to pay their mortgage off once they stop working. Or, they can continue to make the monthly payments until the mortgage is paid off. The math don't lie.

BUT... we are arguing which is best of two EXTREMELY GREAT options, that most people don't even consider. So, I won't fault a person for feeling more secure with a paid off house than a fat investment portfolio!

Guesl982374

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Re: Help me FIRE
« Reply #41 on: September 21, 2016, 12:25:22 PM »
rupanama - What are the other projects you want to work on? Do they have any potential for earning money even if it isn't the intent?

I voted quit mainly because you are probably young, know how to manage your money, know how to make adjustments to your life if needed, and can probably find a way to generate income if there was an issue with the withdrawal rate in in first 5-10 years.

rupanama

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Re: Help me FIRE
« Reply #42 on: September 21, 2016, 03:52:04 PM »
@Spartana: your view is conservative, but your point is valid. However, planning for extreme systemic risks (i.e. pandemic, stagflation, divorce, extreme injury/disability, etc.) is a bit of a moot point, because those risks either entail an eight-figure net worth or a net worth that consists of guns, ammo, water, farm land and seed corn. I assume that such tail risks, while valid concerns, are beyond the scope of a financial plan.

@MarciaB: fair enough.

@badbear: yes, my partner and I have discussed our financial situation in great detail.

@robartsd: thanks for the vote of confidence. Your assumptions are safe, in my opinion.

@h20gal: Thanks for replying. I understand there is a range of appropriate savings amounts to determine when someone is FI. What is your "minimum safe portfolio value" that everyone ought to save before they should consider themselves FI?

Regarding your concerns for lawyers, divorce, medical issues or other rare systemic risks, see my reply to Spartana.

@nereo: your question about the capital that is reserved against the mortgage is the decision I'm working to make.

@robartsd: Your observations are correct.

@soccerluvof4: fair enough.

Cassie

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Re: Help me FIRE
« Reply #43 on: September 21, 2016, 04:11:34 PM »
I knew a few people that retired on very tight budgets in their early 40's and now 20 years later are not very happy because their budgets are so small. They can't travel, etc and are merely existing.  They were professionals and I am not sure if they never considered going back to work or could not find anything they wanted to do.  Considering that Spartana lives a very frugal lifestyle I think it is telling that even she does not think you have enough $. In the end it is your life but things don't always work like we expect.  Why not work p.t. if you are tired of working f.t.?

Slee_stack

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Re: Help me FIRE
« Reply #44 on: September 22, 2016, 09:08:19 AM »
Divorce is hardly an extremely rare event.

Keep in mind that people don't get married EXPECTING to divorce afterwards.  Yet it happens to more than 50% of people, even those that are absolutely confident they have a 'sure' thing.  Life happens.

That's not to say that I advocate 'doubling up' on savings just in-case, but it does mean having Plan B reasonably accounted for.

If Plan A is heavily dependent on spousal finances, there is significant risk there.

« Last Edit: September 22, 2016, 09:09:50 AM by Slee_stack »

Retire-Canada

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Re: Help me FIRE
« Reply #45 on: September 22, 2016, 07:06:45 PM »
Quit. Retire. Do fun side-projects. See what happens.

rupanama

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Re: Help me FIRE
« Reply #46 on: September 23, 2016, 09:38:42 AM »
@Liberty Stache:
Thanks for the vote of confidence. The projects I'd like to try might produce money, which helps reduce my concern for reliance on the portfolio alone. I could always go back to work in my current field too.

boarder42

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Re: Help me FIRE
« Reply #47 on: September 23, 2016, 09:45:50 AM »
i mean making 10-12k a year isnt very hard to do thats the equivalent of 10 dollars an hour working 20 hours a week so if it wasnt looking good in the markets you could go score a couple easy jobs.

rupanama

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Re: Help me FIRE
« Reply #48 on: September 23, 2016, 10:06:31 AM »
@Cassie:
Good points. However, my current spending is not bare-bones by any stretch. This budget is built on a spending history that includes a three-week trip to Central America, as well as several 5-10 day trips around the U.S.

Part-time work is something I will explore in some capacity, whether through freelancing in a more interesting field or in my current field.

@Spartana:
Thanks for elaborating. Your situation sounds moderately similar to mine, which is heartening to see it can succeed for over a decade.

It is useful to note that both firecalc and cfiresim show a 87%-90+% success rate for this portfolio, even when it includes an unplanned $30,000 expense, which is the average cost of a contested divorce or multi-day hospital stay: the portfolio's success is most vulnerable early in the withdrawal phase. Perhaps I'm naive, but I think the canned statistic about divorce rates is over-simplified and inaccurate (https://goo.gl/39QqDi) -- I'm willing to agree to disagree on this point.

Regarding my partner's employment, it is pretty secure for several reasons. Moreover, my partner's frugal and saving for FIRE as well. Our respective spending is nearly identical.

Health insurance is accounted for in our budget without ACA subsidy.

As for market volatility, nothing is certain in life, but every monte carlo and historical back test I've run on this investment portfolio has succeeded with 80% - 100% success. That is as good as I can hope for, I think.

Thanks again for your input, it's been very helpful and useful.

@Slee-stack: your points are valid. Please see my reply to Spartana regarding divorce.

@lazarus-long: Sod and goats make great roofing :)
A new roof is on my house, and I can repair it myself. Amortizing the cost of a new roof, or other house maintenance over 30 years makes a new roof relatively affordable: less than $30/mo. We contribute several multiples of that to house maintenance each month.

@Retire-Canada: thanks for the vote of confidence.
« Last Edit: September 23, 2016, 10:08:52 AM by rupanama »

rupanama

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Re: Help me FIRE
« Reply #49 on: September 23, 2016, 10:10:28 AM »
@boarder42: I agree with your assessment of replacing my income with low-skill labor: it's simple to do. Thanks for the vote of confidence!