Author Topic: Junior with Stubble Looking to Grow First Mustache  (Read 507 times)

Montecarlo

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Junior with Stubble Looking to Grow First Mustache
« on: January 17, 2019, 04:53:46 AM »
Hi,

I'm 32 years old and I want to grow my first mustache.  I haven't saved much despite being an above average earner most of my adult life, but the two past two years have given me the opportunity to build considerable wealth with the payout of company stock options.

I now:
  • Am completely debt free including mortgage
  • Own a house
  • Own a too-expensive car
  • Have 20K in 401k
  • Have 70K in brokerage
  • Have 60K in a deferred comp account
  • have (guestimating) 300-500K in stock options

I figure my BASIC expenses of utilities, food, and property taxes can be reduced to 7K a year.  I like using a 50 multiplier on that, so that means I need (excluding bonds and 401K, being conservative) about 350K in stocks to retire.  Which means if I got let go and they paid the severance and options I'm owed, I'm there.  My real goal is $1.25M though.  I'd like to have the option of just living on dividends alone for a few years and let the capital appreciate, increasing both my spending power and my nest egg every (average) year.  Probably start off with a part time, 20 hour a week job as well, because that alone should cover basic living expenses, and I'm not sure how to fill up what will be all my free time.

Which brings me to my question for all you who have achieved FIRE - how do you fill up your days?
« Last Edit: January 17, 2019, 06:26:24 AM by Montecarlo »

MrOnyx

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Re: Junior with Stubble Looking to Grow First Mustache
« Reply #1 on: January 17, 2019, 05:41:38 AM »
You say you're looking to grow your first 'stache, but honestly, it sounds as though you're way past that point - almost FI by all standards. You aren't - like the young, new starters here (myself included) - building your wealth starting from a five- or even four-figure net work - you're already at six, possibly seven.

Even though you're using an almost too cautious 2% WD, you're basically there once you sell your stock and/or move it to an index fund (which I think you should definitely do btw).

Anyway, what's with such a low withdrawal rate? What are you anticipating will happen? The only thing that has historically broken the 4% SWD rule is when your country has a nuclear bomb land on it (Japan, historical SWD 0.6%), so what exactly do you think will happen in the future that could be worse than the World Wars, the Great Depression and every recession since - that have all survived 4% (outside of those who lost those wars)? 3% is understandable, but 2% seems almost too bonkers imo. Not saying it's wrong, just wanted to ask.

And your last question, you fill your days by doing exactly what you want. The best advice I would give is to come up with some long-term goals that will stretch your creativity and skills in some way, that will also allow you to continue growing and learning. "Fill your days" makes it sound like one would just spend their time looking for things to do, and that seems too shallow for me. That's how you end up playing golf or watching TV all day. I'd say you have to work towards something - or even just join a club, start a hobby and pursue your interests.

Montecarlo

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Re: Junior with Stubble Looking to Grow First Mustache
« Reply #2 on: January 17, 2019, 06:19:45 AM »
You say you're looking to grow your first 'stache, but honestly, it sounds as though you're way past that point - almost FI by all standards. You aren't - like the young, new starters here (myself included) - building your wealth starting from a five- or even four-figure net work - you're already at six, possibly seven.

Even though you're using an almost too cautious 2% WD, you're basically there once you sell your stock and/or move it to an index fund (which I think you should definitely do btw).

Anyway, what's with such a low withdrawal rate? What are you anticipating will happen? The only thing that has historically broken the 4% SWD rule is when your country has a nuclear bomb land on it (Japan, historical SWD 0.6%), so what exactly do you think will happen in the future that could be worse than the World Wars, the Great Depression and every recession since - that have all survived 4% (outside of those who lost those wars)? 3% is understandable, but 2% seems almost too bonkers imo. Not saying it's wrong, just wanted to ask.

And your last question, you fill your days by doing exactly what you want. The best advice I would give is to come up with some long-term goals that will stretch your creativity and skills in some way, that will also allow you to continue growing and learning. "Fill your days" makes it sound like one would just spend their time looking for things to do, and that seems too shallow for me. That's how you end up playing golf or watching TV all day. I'd say you have to work towards something - or even just join a club, start a hobby and pursue your interests.

Thanks for the reply.

As far as being a junior... while my net worth is nice, my spending habits and frugality need a lot of work.  I'm doing better this year.  I've spent $1,000 YTD, and that includes $400 in vet bills for a new dog from the shelter.

As far as the withdrawal.  I'm perfectly fine with 4% for my lifestyle of choice, which would be $50K spending / $1.25M nest egg.  But for bare survival basics, my design point is 50% market correction, and 4% withdrawal rate after the correction.  That would essentially enable me to scale down my spending with the market.  If I retired now with 350K in the market and 4% withdrawal was barely enough to cover expenses, what would I do if the market corrected?

I did mention living on dividends only.  That's just a thought if I didn't have the savings I wanted, I could let it grow more for a few years so I could engage in more consumerism be less frugal for future years.
« Last Edit: January 17, 2019, 06:25:10 AM by Montecarlo »