Author Topic: How did you calculate your FIRE day and patiently wait ...?  (Read 2094 times)

GeekyGirl

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Hello all,

I am new to MMM forum, (posted on general discussion few days ago) and fairly new follower of MMM principles. MY mustache is tiny ...
I have no debt and started saving 50% of my income six months ago. I am aiming for 60% at the end of the year (reduced expenses and increased income yay!!).
I am married and DH takes care of 60% of the charges (he earns more). He's already frugal and would gladly follow along on the FIRE path.

I have two questions:
-I have read many articles on FIRE calculators and how FI bloguers did it but while I am saving as much as I can and investing, I do not have a clear idea of when I will be FIRE. Do you just calculate how much you need by year and multiply that by 25?
-Since I discovered teh idea of being early retiree by living frugally, I am beating myself up for not realising earlier that I could do it. I mean I like my job but I'd like more doing it out of passion not because I need an income to live on. How do you manage to be patient for 5-10-15 years? I think I'll need between 6 to 10 years. How to stop myself from counting the days?

Thanks in advance.

Note: Any reference to similar posts if existing would be welcome.

Regards
GeekyGirl

Playing with Fire UK

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #1 on: June 01, 2016, 03:48:28 AM »
Welcome GeekyGirl,

There are two main paths:

1. Set up everything on autopilot, trust that you will get there and spend your time productively building a life as close to your ideal FIREd life as you can.

2. Spend the intervening 5-10-15 years obsessing over every cent, building new spreadsheets and avidly reading this and every other personal finance blog you can find.

For the number, it is 25 x your expected annual spend in FIRE. I take last year's spending, subtract commuting and direct work costs, add my travel budget and times that by 25. If you have a mortgage/child care expenses now that you won't have in FIRE, you can take those off too. You've seen 'the shockingly simple math' MMM post? Also search for thefirestarter.co.uk 'Calculating your Savings Rate: Debunking the Myths', if you want to add some complexity to your spreadsheet.

Good luck


StockBeard

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #2 on: June 01, 2016, 04:06:12 PM »
-I have read many articles on FIRE calculators and how FI bloguers did it but while I am saving as much as I can and investing, I do not have a clear idea of when I will be FIRE. Do you just calculate how much you need by year and multiply that by 25?
Yup, that's the general idea: try to understand how much you will need every year (including things that could be invisible to you today as an employee: taxes, healthcare, etc...) once you're retired, multiply that number by 25, and that's your target. Also you'll need to take inflation into account! if you need $1000 a month today, that might mean $1200 a month in 10 years.

Try to see how much you save every year, and make assumption on how much your investments will grow as well. For example, maybe you're saving 25'000 a year, and you already have 100'000, which grow at 7% a year, meaning next year you'll save 25'000 + 7'000 from your investments, meaning your wealth will be 100'000 + 7'000 + 25'000, and so on. There are calculators out there.
 
It's a lot of approximations as soon as you involve guesses on your investments returns. But many people have said that you should set a date, not necessarily an amount, as your target.

Quote
-Since I discovered teh idea of being early retiree by living frugally, I am beating myself up for not realising earlier that I could do it. I mean I like my job but I'd like more doing it out of passion not because I need an income to live on. How do you manage to be patient for 5-10-15 years? I think I'll need between 6 to 10 years. How to stop myself from counting the days?

I think that part is extremely tough. Many people will tell you that if you forget to be happy during these 6-10 years, you're missing the point of financial independence. But honestly, I can't help but check my accounts daily, read as many personal finance blogs as I can... I'm kind of obsessed when I have an idea like that in mind so it's tough for me to think about anything else.

If you're like me, one of your solutions is to really turn this whole thing into your main hobby: create a blog, read other blogs, try to find any possible mean to increase your income and decrease your expenses. In other words, stay completely focused and busy on the Financial independence goal.
Pros: it should accelerate your path to FI
Cons: you'll become even more obsessed and anything that goes against your goal might be even more painful to you

Alternatively, the best option is probably to set everything on autopilot and not worry about it... if you can. 10 years is a long way, so try to not think about it, enjoy life as if you didn't know FI was coming. In my case, easier said than done, but some people seem to be able to do that, somehow...

Note: you mention you're in Paris. If you're French, you might want to check some French forums about Financial independence. France has some pretty different rules, (the "impot sur la fortune" tax on wealth comes to mind) that could make some of the advice on US forums less relevant to you.

GeekyGirl

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #3 on: June 02, 2016, 04:07:10 AM »
Welcome GeekyGirl,

There are two main paths:

1. Set up everything on autopilot, trust that you will get there and spend your time productively building a life as close to your ideal FIREd life as you can.

2. Spend the intervening 5-10-15 years obsessing over every cent, building new spreadsheets and avidly reading this and every other personal finance blog you can find.

For the number, it is 25 x your expected annual spend in FIRE. I take last year's spending, subtract commuting and direct work costs, add my travel budget and times that by 25. If you have a mortgage/child care expenses now that you won't have in FIRE, you can take those off too. You've seen 'the shockingly simple math' MMM post? Also search for thefirestarter.co.uk 'Calculating your Savings Rate: Debunking the Myths', if you want to add some complexity to your spreadsheet.

Good luck

Thank you. Yeah I read that MMM post and the math seems simple; it helps to know how others are applying it though.
Hope to take 80% path 1 and only 20% path 2.... well now it's the other way around lol

GeekyGirl

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #4 on: June 02, 2016, 04:16:33 AM »

Alternatively, the best option is probably to set everything on autopilot and not worry about it... if you can. 10 years is a long way, so try to not think about it, enjoy life as if you didn't know FI was coming. In my case, easier said than done, but some people seem to be able to do that, somehow...

Note: you mention you're in Paris. If you're French, you might want to check some French forums about Financial independence. France has some pretty different rules, (the "impot sur la fortune" tax on wealth comes to mind) that could make some of the advice on US forums less relevant to you.

Yeah I'm trying to concentrate my hubbies on that and DH is already complaining that I'm obsessing over frugality and God forbid 'Money'.

I'm French resident so that tax on wealth above some net worth is sure something to keep on mind, though I 'm far from it now. Also I'll have some of my investments back home in Africa, needs to check more on legal implications/ taxes and so on. One of the good things about France though is that I don't have to stress a lot about healthcare coverage (it's a universal right for everybody, at least for now, who knows what will happen in 20-30 years) and retirement income is okay ..... when you're 67. The amount of money you'll need either here or at my home country is a lot less than an American needs to live on. But there's no Vanguard, no 401K, no IRA and when I read financial blogs or books I just skip that part.

FLBiker

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #5 on: June 02, 2016, 08:17:50 AM »
There are two main paths:

1. Set up everything on autopilot, trust that you will get there and spend your time productively building a life as close to your ideal FIREd life as you can.

2. Spend the intervening 5-10-15 years obsessing over every cent, building new spreadsheets and avidly reading this and every other personal finance blog you can find.

Good summary!  I've fluctuated between the two, but I'm much happier on path 1 than path 2.  One thing I try to remember -- for me, a huge benefit of living frugally is NOT having to obsess over every cent, etc.

Playing with Fire UK

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Re: How did you calculate your FIRE day and patiently wait ...?
« Reply #6 on: June 02, 2016, 08:57:08 AM »
There are two main paths:

1. Set up everything on autopilot, trust that you will get there and spend your time productively building a life as close to your ideal FIREd life as you can.

2. Spend the intervening 5-10-15 years obsessing over every cent, building new spreadsheets and avidly reading this and every other personal finance blog you can find.

Good summary!  I've fluctuated between the two, but I'm much happier on path 1 than path 2.  One thing I try to remember -- for me, a huge benefit of living frugally is NOT having to obsess over every cent, etc.

Cheers, I also learnt it first hand. I'm hoping GeekyGirl can shortcut the process somewhat.