Author Topic: How do you calculate your FI date?  (Read 13958 times)

homeymomma

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How do you calculate your FI date?
« on: May 16, 2014, 08:53:52 AM »
Income: 66,500/year before taxes
Expenses: 24,000/year WITHOUT rent or mortgage
Current retirement contributions: 11,000/year Roth IRAs, 1200/year taxable investment account. - overall allocation approx 90/10
     Current investment total: 20K
Whenever I try to calculate for retirement I get totally stuck on all the unknowns. We have two kids now, we may have more. We live in an incredibly high COL area where neither of us wants to stay, but we are on a single income and can't uproot with no prospects. Housing here adds at LEAST an additional 20K to our annual expenses (brings it up to 44K). We would love to buy a modest home some day, likely not surpassing 300K, hopefully lower depending on location (we'd have to move from here!).

If spouse stays at current job, his pay increases 4-5% annually.

I'm 27, spouse is 30. We don't currently plan to pay for our kids' college, but would love to help if we are able to down the line. We are so young there's no way to know about things like social security, health care, etc.

Have others figured out a way to factor in all these unknowns, or are we just too young/unstable to really be able to calculate our FI age yet?


... Help?  :)

arebelspy

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Re: How do you calculate your FI date?
« Reply #1 on: May 16, 2014, 09:13:08 AM »
Here's the numbers that matter:
How much do you net each year? (Gross minus taxes, add in any bonuses, 401k matches, etc.)
How much will you spend in retirement?
How much is your portfolio now?

Obviously if you can't answer those questions (for example the second, how much you'll spend in retirement, will depend on how many kids you'll have, the COL where you'll be living, etc. etc. - so you won't have an exact figure, but can you get a reasonable estimate?) then how could we?

If you can answer them, then the calculation of time to FI is pretty trivial.  :)

You may also want to figure a range (the most we will spend is M, the least N, so our time to retirement is between X and Y years).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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homeymomma

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Re: How do you calculate your FI date?
« Reply #2 on: May 16, 2014, 09:21:10 AM »
Net: 51,600
Current portfolio (do I get to call it that yet? Lol): 20K (piddly, but we just started!)
Retirement spending: 40Kish, though when I try to calculate I find I'm more comfortable planning for 45K because of scary healthcare costs. But this is in today's dollars? Does it matter if we want to own a home? That would make it more like 30K but would take time to pay off the mortgage, during which expenses are obviously higher.

arebelspy

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Re: How do you calculate your FI date?
« Reply #3 on: May 16, 2014, 09:34:21 AM »
You've got a long way to go.

If your net is 51.6k and you're spending 44k (20k housing + 24k everything else) your savings rate is 14.7%.

That puts you at about 43 years to retirement with just a simple ballpark: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

The home part should be a wash as long as you aren't buying in an area it's stupid to buy in (i.e. much better to rent financially in some places), or perhaps even in your favor.  In other words, whether you buy a paid off home for 500k that drops your spending by 25k, or you rent for 25k and withdraw 4% from that 500k, it works out to the same.

Running these numbers:
Income of 51.6k
Expenses of 44k now, 45k in retirement
9% nominal return, 3% inflation (so 6% real return)
4% annual raises
4% SWR

I get a time to FI of 49 years, 5 months.

If you're 20 right now, that puts you retiring around age 70.

EDIT: I see above you posted you're 27 and spouse is 30.  That puts them retiring around age 80.  More likely you'll be eligible to retire when you hit SS age, since this calculation is just figuring when you'll be FI based on the current numbers. /END EDIT

...in other words, you may want to make some major changes.  :)
« Last Edit: May 16, 2014, 09:38:37 AM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

rubybeth

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Re: How do you calculate your FI date?
« Reply #4 on: May 16, 2014, 09:45:00 AM »
The basic calculation is that you need 25x your annual expenses with a safe withdrawal rate of 4%. So at $40k of spending per year, you'll need $1 million. Using a simple savings calculator with an adjustment for inflation, you're about 24 years away from $1 million: http://www.bankrate.com/calculators/savings/saving-million-dollars.aspx

You're saving $12,200/year currently, with $20,000 already saved. Using this calculator, and plugging in $51,600, $12,200, and leaving $39,400 in expenses, it looks your savings rate is 20% and you can retire in 31 years: http://networthify.com/calculator/earlyretirement

Blog posts to review:
http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

nereo

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Re: How do you calculate your FI date?
« Reply #5 on: May 16, 2014, 09:57:56 AM »
with all due respect to arebelspy and MMM, I've never much cared for the "shockingly simple math" for a number of reasons, mostly that it assumes a lot and tends to fall apart near the longer end of hte spectrum.  For example, I find his estimate of 49+ years to be waaaay off the mark. 

I approach it a different way. 
First, determine how much you plan to SPEND in retirement (today's dollars)>  I'll use arebelspy's $45k.
Second, divide that by your SWR (using 4% here gives you $1,125,000). That's how much you need your nest egg to grow to.
Third, use your current portfolio + expected annual contributions to estimate how long it will take to reach $1,125,000.

in your case, $20k + annual contributions of $12,200 (mostly in ROTH, some taxable)
with 7% returns you will hit that mark in 29 years
with 6% returns you will hit that mark in 31 years
with 5% returns you will hit that mark in 35 years.

While opinions differ, I find somewhere between 6-7% to be a logical real-rate of return over 20+ year time frames.  This is adjusted for inflation so you can basically ignore that now (in actuality, you might get 8-10% returns before factoring inflation, but a dollar in 30 years will be worth 47¢ at 2.5% inflation.  At 9% growth your portolio will be worth over $2M in 30 years, but it will have the same purchasing power as about $1M today).

Of course these are all simplified projections.  It's useful to re-evaluate where you are every year or so, and constantly update your FI plan. 
Right now, the single most important thing you can do is to boost your annual contributions.  That will help you more than anything else.  Later on your rate of return and tax benefits become more important than annual contributions.

arebelspy

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Re: How do you calculate your FI date?
« Reply #6 on: May 16, 2014, 10:04:14 AM »
You're saving $12,200/year currently

How did you calculate that?

EDIT: I see OP posted:
Quote
11,000/year Roth IRAs, 1200/year taxable investment account.

I don't see how that's possible when they also posted:
Quote
Net [income]: 51,600

and

Quote
Expenses: 24,000/year WITHOUT rent or mortgage ... Housing here adds at LEAST an additional 20K to our annual expenses (brings it up to 44K).
« Last Edit: May 16, 2014, 10:16:01 AM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

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Re: How do you calculate your FI date?
« Reply #7 on: May 16, 2014, 10:14:01 AM »
For example, I find his estimate of 49+ years to be waaaay off the mark. 

It wasn't an estimate, just math based on the numbers I posted:
Running these numbers:
Income of 51.6k
Expenses of 44k now, 45k in retirement
9% nominal return, 3% inflation (so 6% real return)
4% annual raises
4% SWR

Literally plugging those into a formula, and popping out an answer.  It's not an estimate, but exact.  Now granted, those numbers may will change, be wrong, etc.  But it doesn't:
tends to fall apart near the longer end of hte spectrum.

It's math.  Math works at every end of the spectrum, and it's as accurate as your assumptions are.

Also, where do you get 12.2k annual contributions?  I see a 51600 net income and 44k spending (20k housing, 24k other) which is 7600 annually. (EDIT: See above post.)

Now rerun your method with that savings, and let me know what answer you get, and if you think my estimate of 49 years is "waaaay off the mark."  ;)

EDIT 2: If I run my calculation with 12.2k annual contributions (though that's impossible based on the numbers OP provided, but to test the time to FI under saving 12.2k, I changed their gross from 51.6k to 56200, which minus their 44k spending is 12.2k annual savings), I get a time to FI of 39 years, 1 month.
« Last Edit: May 16, 2014, 10:18:47 AM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

homeymomma

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Re: How do you calculate your FI date?
« Reply #8 on: May 16, 2014, 10:55:54 AM »
Yikes. Sorry everyone. I was not bringing enough info to the table. (I usually have the opposite problem, so I was trying to be brief.

We currently live rent/utility free while we save for a down payment on a house. We'd rather just move when we are ready to buy, but housing here runs around 1600/mo minimum to rent. 1600x12=19,200. Hence the 20K estimate. When we move hopefully my spouse's income will be higher enough to cover it, or we will have to do do some serious cost cutting and/or live 1hr+ from his job.

Net income: 51,600
Current (actual) expenses: 22,400
Retirement contributions: 12,200
(The remaining 17,000 goes toward our down payment fund)

I guess I was wondering how others figure this stuff out if they don't own a home or don't know where they'll be living forever. Obviously if we FId completely we would like to move to somewhere with a lower COL. Maybe estimate half of where we currently are for housing? That would make it 35K/year, in today's money, as our target?

matchewed

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Re: How do you calculate your FI date?
« Reply #9 on: May 16, 2014, 11:01:17 AM »
Yikes. Sorry everyone. I was not bringing enough info to the table. (I usually have the opposite problem, so I was trying to be brief.

We currently live rent/utility free while we save for a down payment on a house. We'd rather just move when we are ready to buy, but housing here runs around 1600/mo minimum to rent. 1600x12=19,200. Hence the 20K estimate. When we move hopefully my spouse's income will be higher enough to cover it, or we will have to do do some serious cost cutting and/or live 1hr+ from his job.

Net income: 51,600
Current (actual) expenses: 22,400
Retirement contributions: 12,200
(The remaining 17,000 goes toward our down payment fund)

I guess I was wondering how others figure this stuff out if they don't own a home or don't know where they'll be living forever. Obviously if we FId completely we would like to move to somewhere with a lower COL. Maybe estimate half of where we currently are for housing? That would make it 35K/year, in today's money, as our target?

We make educated guesses based on our plan for the future. The GF and myself are thinking of moving to a low COL area. Since I currently live in a high COL I still use my current expenses as my estimate, I sometimes inflate it too to see how the future estimates change based off of that but that's a bit more tricky. Using your higher expense as your baseline if you plan on moving to a lower COL builds its own buffer.

Thegoblinchief

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Re: How do you calculate your FI date?
« Reply #10 on: May 16, 2014, 11:18:01 AM »
Mine is based on a very loose estimate of how long it will take us to get to debt-free, and then our resulting savings rate. We have a lot of debt that will retire over the next 5-7 years, sooner with prepayment. One day I will sit down with pencil and paper and actually figure it out year by year, it's too hard for me otherwise.

Except for friggin' debt, we're at an 80% savings rate (depending on variable income), so our NW graph is going to accelerate quite quickly once we get out if the mud.

arebelspy

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Re: How do you calculate your FI date?
« Reply #11 on: May 16, 2014, 11:26:25 AM »
Yikes. Sorry everyone. I was not bringing enough info to the table. (I usually have the opposite problem, so I was trying to be brief.

No problem.  :)

Net income: 51,600
Current (actual) expenses: 22,400
Retirement contributions: 12,200
(The remaining 17,000 goes toward our down payment fund)

Okay, got it.

1) How long do you anticipate having these (lowered) expenses?
2) To confirm, 20k is currently in your retirement accounts?
3) How much, if any, is currently in your down payment fund?
4) How much is the house you're looking to buy (for living in while still working, the one that you say would cost 1600/mo rent - just a rough approximation on what that general size house goes for in that location)?
5) Do you anticipate selling and moving elsewhere in ER?  If so, what would the cost of that house be?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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arebelspy

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Re: How do you calculate your FI date?
« Reply #12 on: May 16, 2014, 11:27:23 AM »
Except for friggin' debt, we're at an 80% savings rate (depending on variable income), so our NW graph is going to accelerate quite quickly once we get out if the mud.

Isn't it be accelerating quite quickly now, as you're rapidly paying off that debt at an 80% savings rate?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

homeymomma

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Re: How do you calculate your FI date?
« Reply #13 on: May 16, 2014, 11:48:31 AM »
Okay, got it.

1) How long do you anticipate having these (lowered) expenses?
   Another 1.5-3.5 years

2) To confirm, 20k is currently in your retirement accounts?
   Yep! Almost entirely in two Roth IRAs

3) How much, if any, is currently in your down payment fund?
   Only 1400. We just finished paying off our student loans and replenishing our emergency fund.

4) How much is the house you're looking to buy (for living in while still working, the one that you say would cost 1600/mo rent - just a rough approximation on what that general size house goes for in that location)?
  The 1600/mo is estimated looking at rents for 2 bedroom apartments within an hour of my husbands job.
The lowest price for a house here (condos can be lower but the fees are outrageous) is 250,000. That would be for a townhouse at least 45 minutes from my husbands job. Or a small, dated house 1.25 hours drive, minimum. (This is dc suburbs, VA side, so the commute can be 2+ hours if you're out a major road and it's raining or something)
   For all these reasons it would probably make more sense to rent as long as we stay here. It would be closer in for his commute than anywhere we could afford to buy. (All these numbers are of course based on our current salary and the 30-60K down payment amount we will save in the next couple years)

5) Do you anticipate selling and moving elsewhere in ER?  If so, what would the cost of that house be?
I would move somewhere in North Carolina, Colorado, Montana, Oregon. If we were truly FI I suppose we could go anywhere we wanted. More likely we will end up moving for a new job to a second tier city somewhere and buy a house, long before we are FI. My ideal home price is around 200K, second tier city or smaller, room for kiddos, rural-ish but driving/biking distance to somewhere interesting with a nice grocery store :). Lol

Thank you so much! Sounds like we just have to keep the faith and keep saving and an eventual FI date will become clearer as we go.
« Last Edit: May 16, 2014, 12:34:02 PM by homeymomma »

Thegoblinchief

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Re: How do you calculate your FI date?
« Reply #14 on: May 16, 2014, 11:49:41 AM »
Except for friggin' debt, we're at an 80% savings rate (depending on variable income), so our NW graph is going to accelerate quite quickly once we get out if the mud.

Isn't it be accelerating quite quickly now, as you're rapidly paying off that debt at an 80% savings rate?

What I was trying to say is that it will go that much faster when that 80% savings rate isn't getting eaten (partially) by interest on debt, particularly the mortgage.

nereo

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Re: How do you calculate your FI date?
« Reply #15 on: May 16, 2014, 12:00:44 PM »
It's math.  Math works at every end of the spectrum, and it's as accurate as your assumptions are.

Now rerun your method with that savings, and let me know what answer you get, and if you think my estimate of 49 years is "waaaay off the mark."  ;)

EDIT 2: If I run my calculation with 12.2k annual contributions (though that's impossible based on the numbers OP provided, but to test the time to FI under saving 12.2k, I changed their gross from 51.6k to 56200, which minus their 44k spending is 12.2k annual savings), I get a time to FI of 39 years, 1 month.
I agree it's math, and I love math, and math will always give you the same answer based on the equation or model you are using.  My issue isn't with your math, but with the model itself.

FYI, here's how I arrived at my above calculations (I'm showing my work!)
Based on the OP's information,
starting balance: $20,000
Yearly contributions: $12,200

Assuming a return of 7% per year (yes, returns will fluctuate):
F = D( ( (1 + r/n)nt – 1) / (r/n) ) + B(1 + r/n)nt
&
a return of 7%
F = $1,125,000 (from 4% SWR of $45k annually)
r = 0.07 (an estimate from historical returns after inflation, dividends reinvested)
B = $20,000 (from OP's numbers)

at 28 years, 9 months said account will be worth: $1,257,868, setting ups a 4% SWR of just over $45k.
The equation itself is in an excel spreadsheet.

I agree that some of the numbers from the OP don't add up.  But what's different about your two calculations is that I'm running this solely on the amount saved each year, and not bothering with savings rate as a percentage of income.   
Did I screw up anywhere?

arebelspy

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Re: How do you calculate your FI date?
« Reply #16 on: May 16, 2014, 12:10:56 PM »
Will come back and reply more later nereo, but here's this to play with for now.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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homeymomma

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Re: How do you calculate your FI date?
« Reply #17 on: May 16, 2014, 12:18:11 PM »
Can anyone tell me if I should in fact be using the Roth IRAs or switch/split with a traditional IRA? I have literally zero understanding of taxes. I don't even know what our current tax bracket is. I picked Roth before because withdrawing tax free seemed like a good thing... But apparently sometimes the traditional ones are better for gaming the tax system?

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Re: How do you calculate your FI date?
« Reply #18 on: May 16, 2014, 12:27:45 PM »
Can anyone tell me if I should in fact be using the Roth IRAs or switch/split with a traditional IRA? I have literally zero understanding of taxes. I don't even know what our current tax bracket is. I picked Roth before because withdrawing tax free seemed like a good thing... But apparently sometimes the traditional ones are better for gaming the tax system?

The answer depends on what your income in retirement will be (compared to now) and what Congress will do with tax rates.  In your situation, I would go with the Roth, because chances are you wont be in a lower tax bracket in retirement.  But in the grand scheme of things, it probably wont make too much of a difference one way or another.

matchewed

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Re: How do you calculate your FI date?
« Reply #19 on: May 16, 2014, 12:36:58 PM »
Can anyone tell me if I should in fact be using the Roth IRAs or switch/split with a traditional IRA? I have literally zero understanding of taxes. I don't even know what our current tax bracket is. I picked Roth before because withdrawing tax free seemed like a good thing... But apparently sometimes the traditional ones are better for gaming the tax system?

The answer depends on what your income in retirement will be (compared to now) and what Congress will do with tax rates.  In your situation, I would go with the Roth, because chances are you wont be in a lower tax bracket in retirement.  But in the grand scheme of things, it probably wont make too much of a difference one way or another.

Not 100% true with making much of a difference. http://www.madfientist.com/traditional-ira-vs-roth-ira/ Traditional retirement accounts (pre-tax) reduce your taxes now. Yes if there is a chance you will be paying more in taxes in the future you'll want to do a Roth but given that we don't know what taxes will be like but we do know what your expenses will be like and we do know it affects time to FIRE, deferring taxes now is usually the superior decision. Use a traditional IRA unless you need some liquidity for some reason. It makes your FIRE faster usually.

You'll have to run some solid numbers to determine what is best for you. http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx Lots of calculators out there to help you.

homeymomma

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Re: How do you calculate your FI date?
« Reply #20 on: May 16, 2014, 01:41:50 PM »
Can anyone tell me if I should in fact be using the Roth IRAs or switch/split with a traditional IRA? I have literally zero understanding of taxes. I don't even know what our current tax bracket is. I picked Roth before because withdrawing tax free seemed like a good thing... But apparently sometimes the traditional ones are better for gaming the tax system?

The answer depends on what your income in retirement will be (compared to now) and what Congress will do with tax rates.  In your situation, I would go with the Roth, because chances are you wont be in a lower tax bracket in retirement.  But in the grand scheme of things, it probably wont make too much of a difference one way or another.

Not 100% true with making much of a difference. http://www.madfientist.com/traditional-ira-vs-roth-ira/ Traditional retirement accounts (pre-tax) reduce your taxes now. Yes if there is a chance you will be paying more in taxes in the future you'll want to do a Roth but given that we don't know what taxes will be like but we do know what your expenses will be like and we do know it affects time to FIRE, deferring taxes now is usually the superior decision. Use a traditional IRA unless you need some liquidity for some reason. It makes your FIRE faster usually.

You'll have to run some solid numbers to determine what is best for you. http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx Lots of calculators out there to help you.

Ok, so I ran the bankrate calculator and it spat out that at ago 60, the roth would have 570K, traditional would have 588K. Does this mean traditional is better? Because wouldn't it also matter that my Roth withdrawals after age 60 would be tax free, therefore allowing me to keep more of my 570K? Or is a bigger balance always better.

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Re: How do you calculate your FI date?
« Reply #21 on: May 16, 2014, 01:51:56 PM »
Ok, so I ran the bankrate calculator and it spat out that at ago 60, the roth would have 570K, traditional would have 588K. Does this mean traditional is better? Because wouldn't it also matter that my Roth withdrawals after age 60 would be tax free, therefore allowing me to keep more of my 570K? Or is a bigger balance always better.
Well... no.
There are two things to consider; 
1st) putting money into a t-IRA today means you have more total money to save (or spend) today, because it will lower your overall tax bill.  For example, if you are in the 15% bracket at you max out your t-IRA you will 'save' $850 in taxes (vs contributing to a ROTH), which you could put into other investments.  In other words, for every $5500 you put into a ROTH, you could put $5500 into a t-IRA plus another $850 into a taxable account, without earning a dime more.

2) When you withdraw money you will pay taxes from a t-IRA but not the ROTH.  This end of the equation is much less certain since no one knows what the tax code will look like years or decades from now.  So you have to make some assumptions about what the tax code will be like when you start withdrawing funds.  For most people, they assume they will need less money in retirement than while working (since during retirement you aren't contributing to savings, and possibly not to a mortgage or other loans). 


Eric

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Re: How do you calculate your FI date?
« Reply #22 on: May 16, 2014, 02:06:20 PM »
I guess I was wondering how others figure this stuff out if they don't own a home or don't know where they'll be living forever. Obviously if we FId completely we would like to move to somewhere with a lower COL. Maybe estimate half of where we currently are for housing? That would make it 35K/year, in today's money, as our target?

I think I can speak to this a little bit.  I'm currently in the SF Bay Area, so I can relate to your ridiculous DC area rents.  I've been a renter my whole life and will remain so until FIRE, which should be in about 6 or 7 years.  The plan is to move to a lower COL area upon FIRE.

While it's hard to anticipate exactly how much I'll spend on housing, especially when I haven't even picked the exact city yet, it should be less than now for a larger space.  But the idea I've been kicking around is that I'm going to plan as if my rent will remain the same, and I'll use that extra money in the budget as part of my safety margin.  I think this is especially important if I stay a life long renter (and it can be challenging getting a mortgage w/o a job, so the choice may be made for me), as renters don't have the inflation hedge of the fixed mortgage payment to fall back on.  This would also give me the option to move back into a higher COL area, as I'd have the housing amount already in my budget, in case I get bored not living in a large city.

matchewed

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Re: How do you calculate your FI date?
« Reply #23 on: May 16, 2014, 02:12:24 PM »
Can anyone tell me if I should in fact be using the Roth IRAs or switch/split with a traditional IRA? I have literally zero understanding of taxes. I don't even know what our current tax bracket is. I picked Roth before because withdrawing tax free seemed like a good thing... But apparently sometimes the traditional ones are better for gaming the tax system?

The answer depends on what your income in retirement will be (compared to now) and what Congress will do with tax rates.  In your situation, I would go with the Roth, because chances are you wont be in a lower tax bracket in retirement.  But in the grand scheme of things, it probably wont make too much of a difference one way or another.

Not 100% true with making much of a difference. http://www.madfientist.com/traditional-ira-vs-roth-ira/ Traditional retirement accounts (pre-tax) reduce your taxes now. Yes if there is a chance you will be paying more in taxes in the future you'll want to do a Roth but given that we don't know what taxes will be like but we do know what your expenses will be like and we do know it affects time to FIRE, deferring taxes now is usually the superior decision. Use a traditional IRA unless you need some liquidity for some reason. It makes your FIRE faster usually.

You'll have to run some solid numbers to determine what is best for you. http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx Lots of calculators out there to help you.

Ok, so I ran the bankrate calculator and it spat out that at ago 60, the roth would have 570K, traditional would have 588K. Does this mean traditional is better? Because wouldn't it also matter that my Roth withdrawals after age 60 would be tax free, therefore allowing me to keep more of my 570K? Or is a bigger balance always better.

Realistically you'll probably have various investment vehicles which have different tax treatments; Roth, Traditional, and standard after tax investment. Ideally you'd use all three to minimize your tax impact in the future. Much like nereo said putting money into a t-IRA today reduces your tax bill today. This is a knowable situation. The uncertainty he mentions in section 2 of his response will be something that you have to decide on for yourself. As you educate yourself in these manners you may change you mind. That's ok. Like I said in the beginning realistically you'll have all different accounts with regards to tax treatment. I'd put in traditional today while I do the research. Especially if you've got goals like saving up for a house, this frees up more money today as you reduce your tax bill today. But again it is up to you.

homeymomma

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Re: How do you calculate your FI date?
« Reply #24 on: May 16, 2014, 02:34:19 PM »
I assume if I open a traditional IRA I can still keep what we already have in Roths in those accounts? Could I contribute half to each kind or is it an all or nothing thing?

Say I have a Roth at betterment and I open a traditional at vanguard... Is it simply the honor system that keeps me from contributing the max to both? Not that I would do this, I'm just wondering how/if the govt keeps tabs on these things.

We don't have access to a 401K, no pension, don't plan on investing in real estate. So matchewed, I guess I don't feel as confident as you about having a diversity of investment vehicles. Aside from a small taxable account, our two Roths are it at the moment. The 800/year is certainly interesting. Is this basically guaranteed or could it be negated by a "standard deduction" or child tax credits or anything? All I know is we put my husbands W-2 into turbo tax every year and then we get money back, more now that we have kids. I'd hate to go to all the trouble of switching IRAs only to learn that we can only get X amount back anyway...

Eric, this is a good plan, and makes a lot of sense. I suppose I waver between wanting to know our very earliest FI date if we retired and moved into the cheapest COL area north of the Mason-Dixon Line and started making our own soap, vs. that solid number that I think of older, well-to-do, retired boomers having, with their endlessly flowing check books, ability to travel on a whim, and propensity for shopping at whole foods. But of course the difference between the two is enormous!!

RetireAbroadAt35

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Re: How do you calculate your FI date?
« Reply #25 on: May 16, 2014, 04:03:48 PM »
Like this: http://forum.mrmoneymustache.com/ask-a-mustachian/years-to-fi-apps/msg294005/#msg294005

Essentially:
  • Estimate post retirement expenses and use the 25x rule to come up with The Number
  • Use the Future Value function in Excel/LibreOffice to calculate annual balance, factoring in assumed monthly contributions and investment returns
  • Take the previous years balance to seed the next year's FV function in a new row
  • Repeat until I come to a row that exceeds The Number.

I make assumptions on: pay increases, investment returns, 401k matching limits and post-retirement expenses

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Re: How do you calculate your FI date?
« Reply #26 on: May 17, 2014, 08:41:29 AM »
Will come back and reply more later nereo, but here's this to play with for now.
@ arebelspy: Interesting spreadsheet, I've been playing around with it, and thinking a fair bit about the back-and-forth of our conversation.

Here's what's sticking with me:
Quote
EDIT 2: If I run my calculation with 12.2k annual contributions ... I get a time to FI of 39 years, 1 month.
I agree that with your spreadsheet you get a FI date of 39yrs 1mo.  However, just try this for me.  Calculate how much money someone with $20k and $12.2k annual contributions would ahve after 39 years. 
Whenever I do these calculations I get over $2,5M @7%, $2M @ 6%, $1.5M at 5% and $1.2M at 4%. 
In order to have <$1.125M after 39 years a portfolio would need to average a pathetic 3.6% over almost four decades.
The values change slightly depending on whether I included contributions monthly or as a lump sum at the beginning or end of the month, but even at 4% returns I have the OP with more money than he/she will need for a $45k withdraw rate.

That's the crux of my argument with the "shockingly simple math."  If I'm making some mistake I'd love to know what I'm doing wrong,

arebelspy

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Re: How do you calculate your FI date?
« Reply #27 on: May 17, 2014, 09:12:35 AM »
I agree with you that someone with 20k and 12k annual contributions will end with about 1.9MM, which should support 76k annually at a 4% SWR.

I'm not sure what is wrong with the spreadsheet.

What you were missing though is that it does not use the shockingly simple math. All it is is a series of columns incrementing your pay rate by inflation and raise, incrementing amount you spend by inflation, and checking for when the amount you have saved will pass the amount you need to save.

I'm not sure where it's going wrong, I'll have to dig into it further later.

Or maybe someone good at math can look at it. Insert Warfreak2 signal here!

Either way you criticism of the shockingly simple math is invalid - it's just math. ;)
« Last Edit: May 18, 2014, 08:15:47 AM by arebelspy »
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homeymomma

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Re: How do you calculate your FI date?
« Reply #28 on: May 17, 2014, 09:40:17 AM »
I couldn't edit your spreadsheet for some reason, so I downloaded retirement napkin just for fun. Does it take into account inflation in terms of expenses? Or is it just calculating how long it would take to amass enough to withdraw your current expenses in today's dollars at your preferred withdrawal rate?

With retirement napkin I get 26.6 years for an "annual expenses" assumption of just under 40K. That's definitely sooner than I thought! Hopefully with each raise that number will move a little closer :)

SDREMNGR

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Re: How do you calculate your FI date?
« Reply #29 on: May 17, 2014, 10:04:38 AM »
Easiest advice and hardest solution - find a new job in area that you want to move to ASAP.

It's not easy to find a new job while working (too tired, don't want to get found out, how to interview during work hours) but it can be done and people do do it all the time.  Just don't do it on company dime, since that is unethical, but you can phone interview before and after work, make a weekend trip, etc.  If you are worth your salt, then people will want to hire you.

Once you wrap your head around the idea that finding a new job is possible, then you must initiate the steps to undertake this challenge.  You must do all the job hunting things that are effective.  Job hunting to be effective must become your 2nd job and you must work it like a 2nd job, with dedication and set hours.  If you believe in the possibility, you can make it happen. 

Good luck.

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Re: How do you calculate your FI date?
« Reply #30 on: May 17, 2014, 01:31:31 PM »
I agree with you that someone with 20k and 12k annual contributions will end with about 1.9MM, which should support 76k annually at a 4% SWR.

I'm not sure what is wrong with the spreadsheet.
OK - well i'm just glad that I wasn't completely miscalculating things.  I had a moment of panic when I thought "if saving $12k/year means you'll need 4 decades just to retire, then maybe i'm way off on my own FI calculations".
As long as we can agree that saving $12k/year with historically typical returns will get someone to a SWR of $40k in less than 4 decades I'm happy.

Quote
What you were missing though is that it does not use the shockingly simple math. All it is is a series of columns incrementing your pay rate by inflation and raise, incrementing amount you spend by inflation, and checking for when the amount you have saved will pass the amount you need to save.

Either way you criticism of the shockingly simple math is invalid - it's just math. ;)
Agreed - I see now you weren't using the shockingly simple math.  My bad.    My criticism (above) of the shockingly simple math took a wrong turn, mostly because I worded it poorly and didn't put much thought reviewing before I hit Post.  What I should have said is that I prefer to determine the $ amount needed to reach retirement (based on 25-30x of anticipated FI spending) and then calculating how long it will take to get there with different savings rates and interest rates.  It's just how my brain thinks.  I find calculating the % of savings (as a function of total earnings) an odd way to do it, in part because I have radical changes in my income year-to-year.  To each their own.

matchewed

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Re: How do you calculate your FI date?
« Reply #31 on: May 19, 2014, 06:45:36 AM »
I assume if I open a traditional IRA I can still keep what we already have in Roths in those accounts? Could I contribute half to each kind or is it an all or nothing thing?

Say I have a Roth at betterment and I open a traditional at vanguard... Is it simply the honor system that keeps me from contributing the max to both? Not that I would do this, I'm just wondering how/if the govt keeps tabs on these things.

We don't have access to a 401K, no pension, don't plan on investing in real estate. So matchewed, I guess I don't feel as confident as you about having a diversity of investment vehicles. Aside from a small taxable account, our two Roths are it at the moment. The 800/year is certainly interesting. Is this basically guaranteed or could it be negated by a "standard deduction" or child tax credits or anything? All I know is we put my husbands W-2 into turbo tax every year and then we get money back, more now that we have kids. I'd hate to go to all the trouble of switching IRAs only to learn that we can only get X amount back anyway...

Eric, this is a good plan, and makes a lot of sense. I suppose I waver between wanting to know our very earliest FI date if we retired and moved into the cheapest COL area north of the Mason-Dixon Line and started making our own soap, vs. that solid number that I think of older, well-to-do, retired boomers having, with their endlessly flowing check books, ability to travel on a whim, and propensity for shopping at whole foods. But of course the difference between the two is enormous!!

Yes money in a Roth IRA will stay in a Roth IRA even if you open a traditional IRA. Yes you can contribute to both a Roth IRA and a traditional IRA but only up to a max of $5.5k for all IRAs under your name. That is not individual IRAs, all of them. If you have 10 IRAs you could put $550 in each one or $5,500 in one of them. Read through this - http://www.irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs The companies that the IRAs are with send paperwork to the government about your annual contributions so there is no getting around that particular cap. You'll get taxed.

As for the various tax treated investment vehicles, you already have them. Between a traditional IRA (pre-tax or tax deductible contributions and tax free growth, treated as income when withdrawn) a Roth IRA (post-tax contributions and tax free growth, not treated as income when withdrawn) and a taxable account you've hit the basics on having the tools necessary for minimizing your taxes in the future.

I haven't contributed to a traditional IRA so I'm not sure about the particulars but it shouldn't affect your taxes too much. Basically you're just going to tell the government that you contributed $X to a traditional IRA. Using the 1040 Turbo Tax will just calculate how much you've already paid in taxes on $X and give it back to you.

oldtoyota

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Re: How do you calculate your FI date?
« Reply #32 on: May 19, 2014, 07:17:36 AM »
Lots of great advice here, and I do not have more to add on that front. Although what I have to say may not be directly related to the original question, it  *will* be related in terms of reducing expenses from the fat $40K to something more frugal-like.

I respectfully challenge the notion that "DC is expensive." With all due respect, DC is nothing like San Francisco in that regard as DC still has pockets of less expensive areas.

In many cases it is overly expensive if you are not willing to live in slightly less desirable area. If the zip code is important to you--the status, I mean--then, yes, it is expensive. I get many odd looks when people from certain parts of town ask where I live, and I tell them.

You *can* find less expensive places to live. It won't be in one of the many new luxury condos being built all over the city, but there are still deals to be had and deals to be had near metro stations. H St NE, Ft. Totten, Rhode Island Avenue, and Brookland come to mind. Look into where EYA is building and then buy something that was not built by them. EYA has probably spent a lot of $$ researching what will become hot. If you see them building in an area, it is not quite too late to buy in that area…but it could be too late in 10 years.

If you are that young, you probably do not remember DC "back in the day." Areas that were once very dangerous--as in bullets whizzing by--are now filled with people walking their tiny dogs.
« Last Edit: May 19, 2014, 07:21:21 AM by oldtoyota »

nushagak

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Re: How do you calculate your FI date?
« Reply #33 on: May 19, 2014, 08:13:37 AM »
The basic calculation is that you need 25x your annual expenses with a safe withdrawal rate of 4%. So at $40k of spending per year, you'll need $1 million. Using a simple savings calculator with an adjustment for inflation, you're about 24 years away from $1 million: http://www.bankrate.com/calculators/savings/saving-million-dollars.aspx

You're saving $12,200/year currently, with $20,000 already saved. Using this calculator, and plugging in $51,600, $12,200, and leaving $39,400 in expenses, it looks your savings rate is 20% and you can retire in 31 years: http://networthify.com/calculator/earlyretirement

These were great links - thanks for sharing them.

...
Blog posts to review:
http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
...

^^And of all the posts on MMM - this one in particular is what really made me "get it".

The conundrum anyone in debt must run into though - how do you calculate a FIRE date while you're still paying off debt? Just assume you'll continue contributing in the future as much as you're using to pay off debt now?

homeymomma

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Re: How do you calculate your FI date?
« Reply #34 on: May 19, 2014, 08:47:27 AM »
Lots of great advice here, and I do not have more to add on that front. Although what I have to say may not be directly related to the original question, it  *will* be related in terms of reducing expenses from the fat $40K to something more frugal-like.

I respectfully challenge the notion that "DC is expensive." With all due respect, DC is nothing like San Francisco in that regard as DC still has pockets of less expensive areas.

In many cases it is overly expensive if you are not willing to live in slightly less desirable area. If the zip code is important to you--the status, I mean--then, yes, it is expensive. I get many odd looks when people from certain parts of town ask where I live, and I tell them.

You *can* find less expensive places to live. It won't be in one of the many new luxury condos being built all over the city, but there are still deals to be had and deals to be had near metro stations. H St NE, Ft. Totten, Rhode Island Avenue, and Brookland come to mind. Look into where EYA is building and then buy something that was not built by them. EYA has probably spent a lot of $$ researching what will become hot. If you see them building in an area, it is not quite too late to buy in that area…but it could be too late in 10 years.

If you are that young, you probably do not remember DC "back in the day." Areas that were once very dangerous--as in bullets whizzing by--are now filled with people walking their tiny dogs.

Yes, I agree that there are less expensive places in the dc metro area, many of them on the md side around the 95 corridor. Aside from the potentially dangerous neighborhoods (I won't speak to that because I don't know the areas well), the main issue is that my husbands office is not actually in the district, it's in THE most expensive adjacent VA suburb. Even the closet possible MD locations (where we currently live) top an hour commute for him. These MD suburbs are so far out of our price range it's laughable. I don't know if living in the district itself and having a sort of reverse commute would be feasible. To my knowledge district prices are also insane. Keep in mind that status is not an issue for us in the slightest, but as a stay at home mom with two young kids, safety is VERY high on the list.

Unfortunately, like I said above, a VA rental with a decent commute (45-60 mins) will run us 1500+, and buying options are much further out and might top 1.5 hours commute, which is insanity.

We need to move. That much is clear. But we currently live on less than 24K/year because we live with family, so until that option expires we're just sticking it out and saving as much as we can.

Anyone on here work in VA but actually live in the district? It's an option we haven't considered too much, because of the city traffic and not knowing the neighborhoods too well. We'd be a family of 4, needing 2 bedrooms, and proximity to outdoor space, even a small playground. Purchasing target 225-250K, rental target 1500/mo. Anyone? I know there are other dc people on these forums...

warfreak2

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Re: How do you calculate your FI date?
« Reply #35 on: May 21, 2014, 07:31:13 AM »
Or maybe someone good at math can look at it. Insert Warfreak2 signal here!
The main problem is you assume that your salary grows above inflation, but that your savings rate stays the same. In this case, your spending would grow above inflation, i.e. you'd be expanding your lifestyle to match your income. It's our old nemesis, The Lifestyle Creep!

Your spreadsheet also got confusing because everything was done as a percentage of your starting salary. I've changed it to using nominal dollars. You were also using i/12 rather than (1+i)^(1/12) - 1 to convert between annual and monthly interest rates, but this doesn't make a large difference. Finally, I assumed you only get a raise once per year, rather than every month, which seems more realistic.

The day is saved! Maybe! With the figures provided, you're now FI after 26 years, 5 months, with a stache of $1.25MM in today's dollars ($2.5MM in 2040 dollars). That seems more in line with what the other calculator was quoting.
« Last Edit: May 21, 2014, 07:34:58 AM by warfreak2 »

arebelspy

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Re: How do you calculate your FI date?
« Reply #36 on: May 21, 2014, 08:21:46 AM »
Or maybe someone good at math can look at it. Insert Warfreak2 signal here!
The main problem is you assume that your salary grows above inflation, but that your savings rate stays the same. In this case, your spending would grow above inflation, i.e. you'd be expanding your lifestyle to match your income. It's our old nemesis, The Lifestyle Creep!


Ah HAH!  Nice catch.



Thank you warfreak2!  You may be in line for a promotion to warfreak1!

Also, I don't know how I didn't know about this, but line B8: = POWER(1+B7,1/12) - 1

Is amazing, and I immediately thought of multiple ways to make my spreadsheets more efficient with that.

EDIT: Duh, went back and reread your post and that's what you pointed out.  :P

EDIT2: Something else was wrong besides the salary growth part, because comparing the two with a salary growth of 0% still gets a different answer (that is larger than I'd expect from the change of monthly interest to CAGR instead of simple dividing by 12).  Hmm..
« Last Edit: May 21, 2014, 08:58:14 AM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

warfreak2

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Re: How do you calculate your FI date?
« Reply #37 on: May 21, 2014, 10:02:42 AM »
EDIT2: Something else was wrong besides the salary growth part, because comparing the two with a salary growth of 0% still gets a different answer (that is larger than I'd expect from the change of monthly interest to CAGR instead of simple dividing by 12).  Hmm..
The two should give the same answer if the real salary growth is 0% - i.e., salary growth rate = inflation rate. In that case, your expenses grow in proportion to your earnings and hence your savings rate is constant.

arebelspy

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Re: How do you calculate your FI date?
« Reply #38 on: May 21, 2014, 10:27:17 AM »
EDIT2: Something else was wrong besides the salary growth part, because comparing the two with a salary growth of 0% still gets a different answer (that is larger than I'd expect from the change of monthly interest to CAGR instead of simple dividing by 12).  Hmm..
The two should give the same answer if the real salary growth is 0% - i.e., salary growth rate = inflation rate. In that case, your expenses grow in proportion to your earnings and hence your savings rate is constant.

And a real salary growth of 1% (4% salary growth, 3% inflation) was enough to add 50% longer work time (from 26 years to 39)?  I feel like something is still missing.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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mango

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Re: How do you calculate your FI date?
« Reply #39 on: May 26, 2014, 06:03:52 PM »
Lots of great advice here, and I do not have more to add on that front. Although what I have to say may not be directly related to the original question, it  *will* be related in terms of reducing expenses from the fat $40K to something more frugal-like.

I respectfully challenge the notion that "DC is expensive." With all due respect, DC is nothing like San Francisco in that regard as DC still has pockets of less expensive areas.

In many cases it is overly expensive if you are not willing to live in slightly less desirable area. If the zip code is important to you--the status, I mean--then, yes, it is expensive. I get many odd looks when people from certain parts of town ask where I live, and I tell them.

You *can* find less expensive places to live. It won't be in one of the many new luxury condos being built all over the city, but there are still deals to be had and deals to be had near metro stations. H St NE, Ft. Totten, Rhode Island Avenue, and Brookland come to mind. Look into where EYA is building and then buy something that was not built by them. EYA has probably spent a lot of $$ researching what will become hot. If you see them building in an area, it is not quite too late to buy in that area…but it could be too late in 10 years.

If you are that young, you probably do not remember DC "back in the day." Areas that were once very dangerous--as in bullets whizzing by--are now filled with people walking their tiny dogs.

Yes, I agree that there are less expensive places in the dc metro area, many of them on the md side around the 95 corridor. Aside from the potentially dangerous neighborhoods (I won't speak to that because I don't know the areas well), the main issue is that my husbands office is not actually in the district, it's in THE most expensive adjacent VA suburb. Even the closet possible MD locations (where we currently live) top an hour commute for him. These MD suburbs are so far out of our price range it's laughable. I don't know if living in the district itself and having a sort of reverse commute would be feasible. To my knowledge district prices are also insane. Keep in mind that status is not an issue for us in the slightest, but as a stay at home mom with two young kids, safety is VERY high on the list.

Unfortunately, like I said above, a VA rental with a decent commute (45-60 mins) will run us 1500+, and buying options are much further out and might top 1.5 hours commute, which is insanity.

We need to move. That much is clear. But we currently live on less than 24K/year because we live with family, so until that option expires we're just sticking it out and saving as much as we can.

Anyone on here work in VA but actually live in the district? It's an option we haven't considered too much, because of the city traffic and not knowing the neighborhoods too well. We'd be a family of 4, needing 2 bedrooms, and proximity to outdoor space, even a small playground. Purchasing target 225-250K, rental target 1500/mo. Anyone? I know there are other dc people on these forums...

I'm gonna guess you're talking about McLean or Vienna. I have a friend who rents in Reston for about $1300 for a really spacious (like really, we were in awe when we were there a week ago) 2 bedroom apartment. Right next to RTC, she can walk on over in about 10 minutes. Can't comment on how to calculate FI but as far as your living situation goes, just keep saving since you're living rent free right now and when you need to leave, don't write off less fancier options. Because as far as safety goes, I've never felt unsafe living in NoVA (if anything, the boredom of living in the suburbs compounded by relying on cars to get around is what'll kill you), and I grew up in the District.

homeymomma

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Re: How do you calculate your FI date?
« Reply #40 on: May 26, 2014, 06:32:13 PM »
Lots of great advice here, and I do not have more to add on that front. Although what I have to say may not be directly related to the original question, it  *will* be related in terms of reducing expenses from the fat $40K to something more frugal-like.

I respectfully challenge the notion that "DC is expensive." With all due respect, DC is nothing like San Francisco in that regard as DC still has pockets of less expensive areas.

In many cases it is overly expensive if you are not willing to live in slightly less desirable area. If the zip code is important to you--the status, I mean--then, yes, it is expensive. I get many odd looks when people from certain parts of town ask where I live, and I tell them.

You *can* find less expensive places to live. It won't be in one of the many new luxury condos being built all over the city, but there are still deals to be had and deals to be had near metro stations. H St NE, Ft. Totten, Rhode Island Avenue, and Brookland come to mind. Look into where EYA is building and then buy something that was not built by them. EYA has probably spent a lot of $$ researching what will become hot. If you see them building in an area, it is not quite too late to buy in that area…but it could be too late in 10 years.

If you are that young, you probably do not remember DC "back in the day." Areas that were once very dangerous--as in bullets whizzing by--are now filled with people walking their tiny dogs.

Yes, I agree that there are less expensive places in the dc metro area, many of them on the md side around the 95 corridor. Aside from the potentially dangerous neighborhoods (I won't speak to that because I don't know the areas well), the main issue is that my husbands office is not actually in the district, it's in THE most expensive adjacent VA suburb. Even the closet possible MD locations (where we currently live) top an hour commute for him. These MD suburbs are so far out of our price range it's laughable. I don't know if living in the district itself and having a sort of reverse commute would be feasible. To my knowledge district prices are also insane. Keep in mind that status is not an issue for us in the slightest, but as a stay at home mom with two young kids, safety is VERY high on the list.

Unfortunately, like I said above, a VA rental with a decent commute (45-60 mins) will run us 1500+, and buying options are much further out and might top 1.5 hours commute, which is insanity.

We need to move. That much is clear. But we currently live on less than 24K/year because we live with family, so until that option expires we're just sticking it out and saving as much as we can.

Anyone on here work in VA but actually live in the district? It's an option we haven't considered too much, because of the city traffic and not knowing the neighborhoods too well. We'd be a family of 4, needing 2 bedrooms, and proximity to outdoor space, even a small playground. Purchasing target 225-250K, rental target 1500/mo. Anyone? I know there are other dc people on these forums...

I'm gonna guess you're talking about McLean or Vienna. I have a friend who rents in Reston for about $1300 for a really spacious (like really, we were in awe when we were there a week ago) 2 bedroom apartment. Right next to RTC, she can walk on over in about 10 minutes. Can't comment on how to calculate FI but as far as your living situation goes, just keep saving since you're living rent free right now and when you need to leave, don't write off less fancier options. Because as far as safety goes, I've never felt unsafe living in NoVA (if anything, the boredom of living in the suburbs compounded by relying on cars to get around is what'll kill you), and I grew up in the District.

It's FC city. That sounds sweet! RTC is cute. That would be a great place to live with kiddos. Only concern would be the commuting costs on the toll road every day... That would run 80-100/mo right there. Ugh! But still less than rent out the 66 corridor perhaps. Thanks for the rec!
Definitely agree on the suburban boredom and car reliance getting really old really fast! We used to live in the very walkable part of Richmond and we miss that atmosphere so much. NoVA sucks but I like it better than the MD side of things. Agreed on safety pretty much anywhere in NoVA. My concerns about safety would only be prominent if we were to look in the city, because I don't know the nieghborhoods at all.
Thanks mango!

nereo

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Re: How do you calculate your FI date?
« Reply #41 on: May 26, 2014, 06:44:58 PM »
Quote
Definitely agree on the suburban boredom and car reliance getting really old really fast! We used to live in the very walkable part of Richmond and we miss that atmosphere so much. NoVA sucks but I like it better than the MD side of things. Agreed on safety pretty much anywhere in NoVA. My concerns about safety would only be prominent if we were to look in the city, because I don't know the nieghborhoods at all.
Hey!  I happen to like NoVA!  there's some great (albeit expensive) places to live with vibrant neighborhoods.  Metro may not be cheap anymore but it's still a good option for going into the d.c. for all the free stuff available there.  True FC City suffers from some suburban complexes, but there's Mason nearby and plenty of places to go on your bike.
how long have you lived there?  What are your interests?

mango

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Re: How do you calculate your FI date?
« Reply #42 on: May 26, 2014, 08:18:03 PM »

I'm gonna guess you're talking about McLean or Vienna. I have a friend who rents in Reston for about $1300 for a really spacious (like really, we were in awe when we were there a week ago) 2 bedroom apartment. Right next to RTC, she can walk on over in about 10 minutes. Can't comment on how to calculate FI but as far as your living situation goes, just keep saving since you're living rent free right now and when you need to leave, don't write off less fancier options. Because as far as safety goes, I've never felt unsafe living in NoVA (if anything, the boredom of living in the suburbs compounded by relying on cars to get around is what'll kill you), and I grew up in the District.

It's FC city. That sounds sweet! RTC is cute. That would be a great place to live with kiddos. Only concern would be the commuting costs on the toll road every day... That would run 80-100/mo right there. Ugh! But still less than rent out the 66 corridor perhaps. Thanks for the rec!
Definitely agree on the suburban boredom and car reliance getting really old really fast! We used to live in the very walkable part of Richmond and we miss that atmosphere so much. NoVA sucks but I like it better than the MD side of things. Agreed on safety pretty much anywhere in NoVA. My concerns about safety would only be prominent if we were to look in the city, because I don't know the nieghborhoods at all.
Thanks mango!

I have a reverse commute from that area to Herndon, so I understand. You don't have to take the toll road but I get why it would seem like a necessity if you're not doing the reverse commute (although I'll say that term is losing its definition quickly). Since the work location is FC City, why not rent in Annandale/Springfield/Burke/Bailey's Crossroads? Wont be as cheap as the Reston place (in unit w/d) but they're also options you can consider. I sympathize with the cost of rent/housing, it sucks but you need to hustle if you don't want to give up certain things. You're competing with two income families. Right out of college, I have friends who got married and now instantly make $120k combined even though they're working entry level positions. Lots of it fuels ridiculous consumption but hey whatever, its how it is around here. Easiest thing to do would be to focus on making more money in addition to cutting expense. Are you sure your husband isn't underpaid? 67k seems a bit low depending on how much experience he has, especially given that it doesn't seem to include basic benefits like a 401k match (correct me if I'm wrong, not sure if I read/followed the thread correctly with your updates).

As an aside, I personally love FC. It's a shame other parts of NoVA aren't exactly more like it. I can walk around everywhere just like how I used to get around when I lived in the city as a kid.