Author Topic: My 7 year plan to FI. Advice needed  (Read 9990 times)

zzxxyy352015

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My 7 year plan to FI. Advice needed
« on: March 05, 2015, 12:55:45 PM »

Current Situation:

both of us are 37 years old
3 kids, ages 19-16

Oldest is finishing sophmore year of community college (both years already paid off).
The next two kids will be starting community college this summer/fall (will probably cost around 4K a semester for both)
I have agreed to pay for the first 2 years of college for all my kids and they are responsible for the 2nd half.

Mortgage is currently 345K at 2.8% interest
Monthly payment is 2,072  (includes PMI which is 159) PMI will stop at 322K (about 3 years away under current payment schedule)

401K: 200,000 (Employer matches 3%) I currently save the max 17,500 plus my employer matches 6,180 a year
Savings on hand: 9K
Husband Salary: 168K (with overtime / bonus 180K)
Wife Salary: just started going back to work after being stay at home mom. Salary is 13-14 an hour, part time at the moment

I anticipate my expenses will go down as my kids move out on their own etc over the next 4 years or so.

Goal:

To be become FI in 6-7 years

I am sure I will do some type of self employed work to make extra income, will most likely move to a low cost living area.
I Hope that 2K a month would be enough for us to get by on.


Question:

Should I stop maxing out my 401K (only save the 3% that my employer matches) and take the rest and invest it in a taxable vehicle (Vanguard index funds) so that i can gain access to
the money when I am 45 years old?

I would invest $6,708 into my 401K (3%), employer would match it with 6708 bringing total up to 13,416 a year into 401K
Assuming 8% return over the next 22 years (when i turn 60) I should have roughly 1.8 Million there.

The money I was saving in my 401K and combine that with my wife's income and invest close to $1,500 a month into Vanguard.
Assuming an 8% return over the next 7 years I should have roughly 160K. The interest should be around 11K a year, If i took out another 15K a year from the principle that should get me close to 2K a month (after taxes). If I figure this correctly I would run out of money right around the time I turn 60 and could then start living off of our 401K which in theory would give my 134K a year in interest alone.


Does this seem reasonable (barring major events?) I feel like I am overlooking something or my assumptions are off. I would appreciate any advice


boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #1 on: March 05, 2015, 01:01:31 PM »
first you should max your 401k... also you need to know what you spend.  stating 2k a month i hope is enough doesnt really cut it.  You can access these funds pre normal retirment age quite easily using a roth ladder or a SEPP 72t

you didnt give enough information

ZiziPB

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Re: My 7 year plan to FI. Advice needed
« Reply #2 on: March 05, 2015, 01:07:23 PM »
Hmm, so you make $180,000 per year, save 10% of it and spend the rest.  But somehow magically in 6 years you would only need $2K per month to live on?  Your mortgage payment alone is $2,000 and it didn't sound like your house would be paid off in 6 years.  These numbers don't add up.

sirdoug007

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Re: My 7 year plan to FI. Advice needed
« Reply #3 on: March 05, 2015, 01:10:54 PM »
Your 401k money is not locked away until you turn 60.  There are some hoops to jump through but they are by no means inaccessable until 60.

Read this and think about how that changes your plans: http://www.madfientist.com/retire-even-earlier/

You need to think about your investments as an integrated portfolio.

The most important things for financial independence are the amount you are saving each year and your spending each year.  Without knowing your spending in detail we won't be able to help much.

rpr

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Re: My 7 year plan to FI. Advice needed
« Reply #4 on: March 05, 2015, 01:12:04 PM »
There really is not enough information. At the moment it looks like you are saving 18K in your 401K out of an income of 168K-180K. You need to figure out where the rest of it is going. After taxes and other deductions such as health insurance, you should be having a take home of between 9-10K per month.


waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #5 on: March 05, 2015, 01:12:39 PM »
Unless you both just started working, you have an insane spending problem. Paying PMI when you have one half of the couple with a $180k/year job? WTF?

If you can actually cut your expenses to $2k/mo, then yes, you can easily be FI in 6-7 years. I am dubious, though - it sounds like you have NW around ONE OR TWO YEARS SALARY after at least a decade (and probably longer) of employment in a good job? That means you've consistently spent 90%+ of your earnings. You'll need a major rethink of how you live. Not impossible, but it will require a lot of what feels like sacrificing.

Post a full case study.

-W
« Last Edit: March 05, 2015, 01:15:50 PM by waltworks »

zzxxyy352015

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Re: My 7 year plan to FI. Advice needed
« Reply #6 on: March 05, 2015, 01:18:44 PM »
Thank you both for such a quick reply.

The plan is to move in 6-7 years and when we move the goal is to live off of 2K a month. We currently live in a high cost area hence the inflated income, and its only been in recent years that we have been able to save more. I am not familiar with a roth ladder or the SEPP 72 I will look into those to see how they work.

Boarder42, was there something specific I left out? I know i didn't go into details about the monthly expenses but essentially $1,500 a month is the max that we could save consistently. If I understand you correctly you would advise to keep the 401K maxed and use the left over funds to put into taxable account (ie vanguard index fund)?

Thanks again for the feedback.

waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #7 on: March 05, 2015, 01:23:39 PM »
Yes, details of monthly expenses would help. You have take home (after taxes, health insurance, 401k contributions) of at least $10k/mo unless something really weird is going on or you are wrong about your husband's salary. You are saying you are spending $8.5k of that. $2k on the house. Where is the other $6.5k going?

-W

Thank you both for such a quick reply.

The plan is to move in 6-7 years and when we move the goal is to live off of 2K a month. We currently live in a high cost area hence the inflated income, and its only been in recent years that we have been able to save more. I am not familiar with a roth ladder or the SEPP 72 I will look into those to see how they work.

Boarder42, was there something specific I left out? I know i didn't go into details about the monthly expenses but essentially $1,500 a month is the max that we could save consistently. If I understand you correctly you would advise to keep the 401K maxed and use the left over funds to put into taxable account (ie vanguard index fund)?

Thanks again for the feedback.

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #8 on: March 05, 2015, 01:26:16 PM »
I think your expenses are way out of whack for 1. High COL's are more often than not related to housing your house isnt grossly over expensive on your close to 200k a year income.  So to just assume you're going to go down to 2k is an oversight IMO

order i use for retirement
1. Max 410k
2. Max HSA
3. Max Roth IRA (i cant do Trad. but i also am planning to use this in my 5 year bridge for my ladder)
4. Taxable. 

our income is around half yours and i have about 35% less of a mortgage than you.  you do have kids but i think you're spending too much money based on the 3% of your annual income being
6708 that puts you at a gross of over 223K ...

So if you can make it down to 24k a year annual spend awesome i just think you should lay your finances out there and we can help you more. b/c you're currently spending over 205k a year(including taxes and FICA). so you're going to magically spend 10% of that in 6-7 years??? i just dont see it.  Even if your taxes and FICA are 60k annually.  you're still spending 140k a year

SeniorLibertarian

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Re: My 7 year plan to FI. Advice needed
« Reply #9 on: March 05, 2015, 01:32:53 PM »
Dear OP:

I disagree with the posters above. I'd ask how many of them have three children under the roof.

You are doing well. You are so young, have three children nearly launched (and in cost-effective community colleges, no less), and have a nice nest egg going. I fall well-short of MMM-status, so count me among those who believe children are expensive. You seem to be pulling out of the nose-dive of the high-cost child-rearing years -- and doing so while you are both so young. So your future years can be devoted to other pursuits, including savings.

Good grief, you both could live 60 more years. So you are fine.

I also commend your sacrificing one salary in prior years to have a stay-at-home parent during critically important years in your children's lives.  Successfully launching children is also an economic choice for the parents, so again, kudos to you.

So max out your 401Ks and keep doing what you are doing. And don't fret when a single 24 year-old hiding behind an anonymous nick suggests you should be eating the leather from the bottom of your shoes to save money. You are living the life and doing it well. Keep going.

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #10 on: March 05, 2015, 01:41:34 PM »
Dear OP:

I disagree with the posters above. I'd ask how many of them have three children under the roof.

You are doing well. You are so young, have three children nearly launched (and in cost-effective community colleges, no less), and have a nice nest egg going. I fall well-short of MMM-status, so count me among those who believe children are expensive. You seem to be pulling out of the nose-dive of the high-cost child-rearing years -- and doing so while you are both so young. So your future years can be devoted to other pursuits, including savings.

Good grief, you both could live 60 more years. So you are fine.

I also commend your sacrificing one salary in prior years to have a stay-at-home parent during critically important years in your children's lives.  Successfully launching children is also an economic choice for the parents, so again, kudos to you.

So max out your 401Ks and keep doing what you are doing. And don't fret when a single 24 year-old hiding behind an anonymous nick suggests you should be eating the leather from the bottom of your shoes to save money. You are living the life and doing it well. Keep going.

so kids cost 4.5k a month ... i dont see how unless they are brushing their teeth with gold and whiping their ass with benjamins.  Thats 1500 a kid per month.  seems crazy high to me.  that means they expect to spend less on the 2 of them living per person than they are currently spending on kids that share housing and other costs with them.  something is fishy. in the numbers if thats the case
« Last Edit: March 05, 2015, 01:45:07 PM by boarder42 »

RexualChocolate

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Re: My 7 year plan to FI. Advice needed
« Reply #11 on: March 05, 2015, 01:47:50 PM »
Dear OP:
So max out your 401Ks and keep doing what you are doing. And don't fret when a single 24 year-old hiding behind an anonymous nick suggests you should be eating the leather from the bottom of your shoes to save money. You are living the life and doing it well. Keep going.

It's delusional to think you can save 10% of your gross and be financially independent in 7 years with a net worth of approx 1x gross salary. The math just doesn't add up.

Your argument is 80% of costs will fall away without the kids. The above posters doubt that for good reason. From the numbers above, he wants 2k/month after tax a year, currently spending ~10k a month, 2k of that being housing alone.

That said, OP you are in a great place and ahead of most americans. You need to ramp back the spending and ramp up the savings, and you guys can definitely get there. 7 years may be doable depending on how low a COL area you're willing to move to.

rpr

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Re: My 7 year plan to FI. Advice needed
« Reply #12 on: March 05, 2015, 01:53:04 PM »
zzxxyy352015 -- The good thing is that you really have a very high income with no debt other than a mortgage.

But, a Case Study will really be helpful for others to provide you with good advice to answer the question you have asked. See the following thread

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

and the following post within that thread by MDM for a useful spreadsheet.

http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/msg274228/#msg274228

SeniorLibertarian

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Re: My 7 year plan to FI. Advice needed
« Reply #13 on: March 05, 2015, 02:16:14 PM »
you do have kids but i think you're spending too much money based on the 3% of your annual income being 6708 that puts you at a gross of over 223K ...

I interpreted this to mean you don't have one child, let alone three.

It is hard for non-parents to appreciate the unanticipated costs of multi-children households, with all due respect and no insult intended.

Unique User

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Re: My 7 year plan to FI. Advice needed
« Reply #14 on: March 05, 2015, 02:18:21 PM »
I agree with other posters that more details are needed, but I also don't see how you can go from spending a conservative $10k-$11k after tax to $2k.  We make less than you, but manage to save about 50% of our income or $65k per year and I have a teenager also, although just one.  This year we are on track for $70k.  It is doable, but you need to slash expenses and be willing to sock the cash away.  You mention a HCOL area, but your housing is only $2,100 a month so not too high. 

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #15 on: March 05, 2015, 02:34:10 PM »
you do have kids but i think you're spending too much money based on the 3% of your annual income being 6708 that puts you at a gross of over 223K ...

I interpreted this to mean you don't have one child, let alone three.

It is hard for non-parents to appreciate the unanticipated costs of multi-children households, with all due respect and no insult intended.

oh yeah totally... kids do cost more.... but to say a kid is costing you but lets do some really easy math

monthly spend after house 6.5K cost per person including kids 1.3k/month
Anticipated retirement spend (assuming house is owned) 2k  cost per person including the kids not living with you 1k/month

Efficiencies gained having kids.  1 house, 1 roof, 1 untility bill. 

so not even accounting for the fact that they live under one roof, can cook meals in bulk and buy bulk food.  let just throw that out and their current spend is 300 dollars more a month per person than anticipated retirement spend.

600X12 = 7200 a year

600/2000 = 30% more than the OP's projected retirement budget. 


zzxxyy352015

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Re: My 7 year plan to FI. Advice needed
« Reply #16 on: March 05, 2015, 02:36:15 PM »
Thank you all for such a response! More than what i was expecting (I'm sorta new here)


Some more background info may help clarify some thoughts

My actual take home pay after deductions (fed, SS, State, Medicare, life insurance, medical, dental, vision, FSA, disability, legal, 401K) is under 7,800 a month. (total tax and deductions is 2,600+ bi-weekly)

My family was almost homeless 12 years ago, so we didn't start with much. Most of the extra money I have made over the years has went to paying off the wife's student loans, "medical issues" with our kids over the years. Heck i have spend 20K out of pocket on my kids teeth over the years (all 3 had braces) and yes I had the best dental plan my employers offered.

Regarding the comment about kids, yes older kids are alot more expensive than young kids (kids under 12). My wife will appreciate the kind words about staying home all of these years...for us that was a non-negotiable topic. Not that I am trying to kick my kids out but, I do expect are costs to do down significantly when all of our kids are living on their own (less house space needed, less car insurance, less health insurance, less life insurance, less food, less on school, etc etc) as well as when we move.

@ walt, I don't know what you mean by "it sounds like you have NW around ONE OR TWO YEARS SALARY"

regarding the cost of living. yes our home is expensive and everything in the area is expensive (I live in a well off area of the country). The avg household income in my zipcode is 160K. So it may look on paper that I have a high income the reality is, im really just average. The average house cost is between 511K-624K.

With that all being said. Is the best path to still Max the 401K, and put the rest into a taxable account? and do the roth ladder technique when i get closer to 45?

Again thanks for the advice and feedback
« Last Edit: March 05, 2015, 04:39:08 PM by zzxxyy352015 »

waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #17 on: March 05, 2015, 02:38:56 PM »
BS. We have 2 kids, have NEVER made even 1/3 of what the OP has, and are the same age. Our NW is many times higher, our expenses are a fraction of his and we pay for a TON of child care (to the tune of $1500-2000 a month). And we are not some kind of nutjobs eating shoe leather, either.

OP is spending 90% of his/her income. That alone should tell you something isn't right.

-W

Dear OP:
You are doing well. You are so young, have three children nearly launched (and in cost-effective community colleges, no less), and have a nice nest egg going. I fall well-short of MMM-status, so count me among those who believe children are expensive. You seem to be pulling out of the nose-dive of the high-cost child-rearing years -- and doing so while you are both so young. So your future years can be devoted to other pursuits, including savings.

Good grief, you both could live 60 more years. So you are fine.

I also commend your sacrificing one salary in prior years to have a stay-at-home parent during critically important years in your children's lives.  Successfully launching children is also an economic choice for the parents, so again, kudos to you.

So max out your 401Ks and keep doing what you are doing. And don't fret when a single 24 year-old hiding behind an anonymous nick suggests you should be eating the leather from the bottom of your shoes to save money. You are living the life and doing it well. Keep going.

waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #18 on: March 05, 2015, 02:43:43 PM »

My actual take home pay after deductions (fed, SS, State, Medicare, life insurance, medical, dental, vision, FSA, disability, legal, 401K) is under 7,800. (total tax and deductions is 2,600+ bi-weekly)

@ walt, I don't know what you mean by "it sounds like you have NW around ONE OR TWO YEARS SALARY"


$13k (gross) x 12 months is $156k, not $180k. Are you not counting your bonus or something?

What I meant is that your net worth (NW) is only a year or two of income. That means you really have not been saving much.

-W

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #19 on: March 05, 2015, 02:44:02 PM »
Roth ladder is after retirement starts.  otherwise it will be taxed at your higher current rate or more. 

i still think you need to get a handle on what your real expenses are and set up a case study detailing it here if you want real help b/c you still havent told us enough info to answer the question or given us a real 7 year plan.

your plan is: kids move out - i hope to live on 2k a year - can i get there in 7 years i take home 7800 and spend 2k on a mortgage.  and with that info there isnt a lot of help we can give you.  detail where the other 5800 is going and we can give much better advice than all these assumptions we are making

congrats on homeless to 350k house though thats baller

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Re: My 7 year plan to FI. Advice needed
« Reply #20 on: March 05, 2015, 02:55:19 PM »
With that all being said. Is the best path to still Max the 401K, and put the rest into a taxable account? and do the roth ladder technique when i get closer to 45?

Max your 401k, at your income you need those tax savings.  Then a Roth for each of you, then other taxable accounts.  Depending on your health insurance, you could also look at a HSA rather than FSA.  You can sock away another $6,550 in a HSA tax free and FICA free. 

AZlawyer

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Re: My 7 year plan to FI. Advice needed
« Reply #21 on: March 05, 2015, 03:10:12 PM »
How is everybody overlooking the assumption of 8% returns forever? 

It seems like you have $55k in home equity.  If you are planning to downsize to a $100,000 home, perhaps you'll be able to do so without a mortgage in 7-8 years.  You'll still have property taxes and insurance, plus your medical, dental, and vision insurance that is greatly reducing your take-home.  Are those included in your $2k/month budget?

You still need $600k to retire on a $2k/month budget.  The 401k is a start, but that's pre-tax money.  You also need funds to get you to age 60 if you're banking on the 401k money from then on.

Making some assumptions about your current path, I'd estimate you're on a 15-20 year retirement plan.  I agree with the other posters that we need a more complete breakdown to offer any more meaningful advice.

SeniorLibertarian

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Re: My 7 year plan to FI. Advice needed
« Reply #22 on: March 05, 2015, 03:32:25 PM »
BS. We have 2 kids, have NEVER made even 1/3 of what the OP has, and are the same age. Our NW is many times higher, our expenses are a fraction of his and we pay for a TON of child care (to the tune of $1500-2000 a month). And we are not some kind of nutjobs eating shoe leather, either.

OP is spending 90% of his/her income. That alone should tell you something isn't right.

-W

Go it. You have never made more than $60K/yr but are spending $24K/yr on child care. That makes complete sense now. Thanks for the clarification.

waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #23 on: March 05, 2015, 03:37:05 PM »
Glad to help. It is by far our largest expense but we want them to get plenty of preschool socializing before starting big-kid school. Luckily it'll be over in another year or two.

-W

BS. We have 2 kids, have NEVER made even 1/3 of what the OP has, and are the same age. Our NW is many times higher, our expenses are a fraction of his and we pay for a TON of child care (to the tune of $1500-2000 a month). And we are not some kind of nutjobs eating shoe leather, either.

OP is spending 90% of his/her income. That alone should tell you something isn't right.

-W

Go it. You have never made more than $60K/yr but are spending $24K/yr on child care. That makes complete sense now. Thanks for the clarification.

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Re: My 7 year plan to FI. Advice needed
« Reply #24 on: March 05, 2015, 04:01:26 PM »
Zzy,

Most of this blog is about living efficiently so that costs are low, in order for investments to cover the costs.  So the key assumption isn't necessarily about which investment vehicle is better, but whether the $2k in projected costs is realistic.  Please do post the case study - it's the fastest way to develop a realistic plan. 

Good luck on your decisions, and congratulations on raising your kids with a united family, as well as progressing so much on the income side.  With some cost improvement, you will be able to accelerate your investing so that either choice of investment vehicles will achieve your independence goal.

lavidaportland

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Re: My 7 year plan to FI. Advice needed
« Reply #25 on: March 05, 2015, 04:14:02 PM »
If you have the $23k to put toward your mortgage principle to eliminate PMI, I would do that. If you pay that now then in three years you will have saved $5724 in PMI. If you invested $23k you would need to earn about 8% above inflation to earn more than you would have saved. So eliminating PMI is like a guaranteed 8% return on your investment.

zzxxyy352015

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Re: My 7 year plan to FI. Advice needed
« Reply #26 on: March 05, 2015, 04:37:07 PM »


***** correction to my last post *******

I am sorry but, I made a typo in my post above on my take home..

On a bi-weekly my numbers are

Gross: 6500
Tax-deductions: 2600
Net: 3900

I apologize for the confusion that one caused..i was thinking monthly in one context and bi-weekly in the other.

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #27 on: March 05, 2015, 04:40:04 PM »
How is everybody overlooking the assumption of 8% returns forever? 

It seems like you have $55k in home equity.  If you are planning to downsize to a $100,000 home, perhaps you'll be able to do so without a mortgage in 7-8 years.  You'll still have property taxes and insurance, plus your medical, dental, and vision insurance that is greatly reducing your take-home.  Are those included in your $2k/month budget?

You still need $600k to retire on a $2k/month budget.  The 401k is a start, but that's pre-tax money.  You also need funds to get you to age 60 if you're banking on the 401k money from then on.

Making some assumptions about your current path, I'd estimate you're on a 15-20 year retirement plan.  I agree with the other posters that we need a more complete breakdown to offer any more meaningful advice.

This is annoying. Please do research before you say your 401k IRA etc funds aren't accessible til 60. They are readily accessible before thru means mentioned above. I'm retiring at 35 with 85-90% of my money all in tax advantaged accounts.

kib

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Re: My 7 year plan to FI. Advice needed
« Reply #28 on: March 05, 2015, 04:56:21 PM »
If you were to get out of that mortgage situation and into more affordable quarters when your younger kids finish up community college, I think you could manage this goal.  Waiting until you're already FI to sell the savings-killer house you're planning to sell anyway seems counterproductive.

zurich78

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Re: My 7 year plan to FI. Advice needed
« Reply #29 on: March 06, 2015, 07:02:57 AM »
I would not max my 401K.  You have 9K in savings.  That is not enough.  At your current situation, you should 6-9 times that amount in an emergency fund.

401K up to match, then save for a hefty emergency fund.  Then push to max, then Roth.  Just my $0.02

RexualChocolate

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Re: My 7 year plan to FI. Advice needed
« Reply #30 on: March 06, 2015, 07:24:39 AM »
I would not max my 401K.  You have 9K in savings.  That is not enough.  At your current situation, you should 6-9 times that amount in an emergency fund.

401K up to match, then save for a hefty emergency fund.  Then push to max, then Roth.  Just my $0.02

54k-81k in emergency fund is a little ridiculous but I do agree they can beef it up a bit.

The chief problem here is spending, no way around it. Once they can get that number down to a reasonable level, then they can see what they actually need for retirement. Without more specifics, it's not feasible at this spending level. We don't know what they're actually spending on kids, but I doubt if they have this level of support now (1000/mo/kid) they're not going to continue it through college.

Early retirement not feasible.

zurich78

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Re: My 7 year plan to FI. Advice needed
« Reply #31 on: March 06, 2015, 07:55:29 AM »
I would not max my 401K.  You have 9K in savings.  That is not enough.  At your current situation, you should 6-9 times that amount in an emergency fund.

401K up to match, then save for a hefty emergency fund.  Then push to max, then Roth.  Just my $0.02

54k-81k in emergency fund is a little ridiculous but I do agree they can beef it up a bit.

The chief problem here is spending, no way around it. Once they can get that number down to a reasonable level, then they can see what they actually need for retirement. Without more specifics, it's not feasible at this spending level. We don't know what they're actually spending on kids, but I doubt if they have this level of support now (1000/mo/kid) they're not going to continue it through college.

Early retirement not feasible.

Yeah, maybe that was a bit high, but it's hard to gauge what their current level of spending is on a monthly basis.  With only $9K stashed away, beefing that up should be the #1 priority, not investing it, IMO.

immocardo

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Re: My 7 year plan to FI. Advice needed
« Reply #32 on: March 06, 2015, 08:16:57 AM »
Is it bugging anyone else that OP wants help but won't post his spending?

I guess my question to OP is do you have any idea what you are actually spending on and where your money is going?  Even just doing this for one month will make a huge difference in being able to play for FI.

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

reading the sticky would be good


boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #33 on: March 06, 2015, 08:54:03 AM »
^^^ yes this drives me up a wall.  to the point i dont really care to comment on them even after posted b/c he wont post. 

I understand you're new here but dont ask questions like this without being prepared to divulge your finances.  Its okay to be embarrassed about where your spending is going.  People will give you advice and you can pick and choose what works for you. 

I have a boat and live on a lake 19 miles from my work and 30 miles from my wife's ... very non mustachian things but there is a lot that can be cut to help you maintain some luxuries you want. 

Just post it and you will get way more info that you need.

waltworks

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Re: My 7 year plan to FI. Advice needed
« Reply #34 on: March 06, 2015, 09:03:14 AM »
OP is long gone, I bet.

-W

Rezdent

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Re: My 7 year plan to FI. Advice needed
« Reply #35 on: March 06, 2015, 12:39:43 PM »
OP
You got a lot going for you.
You absolutely could get there in 7 years, just not with these numbers.
Even if you don't post it, I recommend you go through the exercise of doing the case study.  Keep reading other studies and the forums recommendations.
You are coming up to a fork in your road when the kids leave.  NOW is the time to make a decision.

A. Want to retire soon?  You'll have to get a handle on your spending asap.
B.  Don't want to ruthlessly cut spending?  You'll need to accept that you won't retire soon.

There is no right or wrong answer - it boils down to which one you want more.

If you decide you do want to retire on 2000/month it would be wise to live that budget for a year or more before you retire.

rocketman48097

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Re: My 7 year plan to FI. Advice needed
« Reply #36 on: March 06, 2015, 01:11:43 PM »
Absolutely not, at 180k you have a serious tax problem on your hand, very serious, even with 3 kids. 

First, max out your 401k, $18,000 for 2015.

Next, have your wife contribute to a tIRA for a spouse, since you've reduced your adjusted gross income by 18k, she will qualify for full deduction.  Then, and only then, are you allowed to invest your money in a taxable account.  Focus on cutting back your expenses instead. 

zzxxyy352015

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Re: My 7 year plan to FI. Advice needed
« Reply #37 on: March 07, 2015, 02:34:42 PM »
Thanks everyone for the feedback, I appreciate the positive feedback from some of you, others I seem to have made upset somehow? I have looked over the case study spreadsheet that was posted above. I am planning on filling it out, it will take me a couple of weeks to get to it. I can fully appreciate everyone wants to see my monthly spending so they can give me creative ideas on how to save an extra $300 a month. If it makes you feel better my full family (wife and 3 kids) survived on 18K one year...it wasn't pretty but, we survived by making every penny count.

I think first thing, I need to do is take the advice above about increasing my emergency fund first. I think 15K would be sufficient to weather any job loss. After that it looks like Maxing the 401K and then tradional IRAs.

Thanks again

AZlawyer

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Re: My 7 year plan to FI. Advice needed
« Reply #38 on: March 08, 2015, 01:14:10 AM »
The 401k is a start, but that's pre-tax money.  You also need funds to get you to age 60 if you're banking on the 401k money from then on.

This is annoying. Please do research before you say your 401k IRA etc funds aren't accessible til 60. They are readily accessible before thru means mentioned above. I'm retiring at 35 with 85-90% of my money all in tax advantaged accounts.
No, this is annoying.  Please read the post before being a jackass.  I clearly said he needs more funds to get to 60 if he's banking on that money from then on.  I never said the funds weren't accessible until then.

If you read the original post, you'd know OP has $200k in his 401k now, and is counting on the growth of that account until age 60.  His parameters, not mine.  Kind of hard for them to grow when they're being withdrawn, no?  But thank you for your contribution, now OP knows he CAN draw from an account that he CANNOT afford to draw from.

boarder42

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Re: My 7 year plan to FI. Advice needed
« Reply #39 on: March 08, 2015, 04:57:31 PM »
The 401k is a start, but that's pre-tax money.  You also need funds to get you to age 60 if you're banking on the 401k money from then on.

This is annoying. Please do research before you say your 401k IRA etc funds aren't accessible til 60. They are readily accessible before thru means mentioned above. I'm retiring at 35 with 85-90% of my money all in tax advantaged accounts.
No, this is annoying.  Please read the post before being a jackass.  I clearly said he needs more funds to get to 60 if he's banking on that money from then on.  I never said the funds weren't accessible until then.

If you read the original post, you'd know OP has $200k in his 401k now, and is counting on the growth of that account until age 60.  His parameters, not mine.  Kind of hard for them to grow when they're being withdrawn, no?  But thank you for your contribution, now OP knows he CAN draw from an account that he CANNOT afford to draw from.


OP obviously doesnt have a plan and is new to this so was probably on the same page as most people who first enter these forums that the money there is inaccessible til 60.

Calling me a jackass accomplishes nothing but violating the forum rules congrats dude.