Author Topic: NEED HELP PLEASE! A budgeting/excel guru to proof my FIRE calculations! (Canada)  (Read 2152 times)

Saskatchewstachian

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Hello fellow Mustachians,

So I am new to the FIRE world and new(ish) to MMM, I have read every article and just joined the forums. By reading through the articles and learning things such as SWR's and such coupled with my love of excel from my engineering background I have created a spreadsheet for myself and DW to detail our path to RE.

All of the math seems correct the only problem is that it seems TOO EASY! Even with an insanely lavish spending plugged in (facepunches welcome) we could still retire at 45 with 2.6 million invested and a NW of about 3.3 million. Are these calculations correct!?

I have just picked an arbitrary age but it can be adjusted in the spreadsheet.

I also have it calculated in the spreadsheet to have the mortgage paid off by the time we're 40.

Currently we are 25YO DINK's (Engineer and Registered Nurse) but kids will be added in a couple of years.

Would greatly appreciate any help a more seasoned expert would be able to give me.

Cheers to FIRE!

human

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I don't have excel and I'm to lazy to upload this into google docs. Many people rely on the 4% withdrawal rate and times 25 your expenses. Are your expenses in the spreadsheet? My expenses are currently 26K a year so I need 650k to retire.

You want 2.6 million! divided by 25 that's 104k a year! Assuming you could save up that and returns are what you are expecting (what are you expecting?) who the hell can't live off of 104k a year?

You guys are 25, that's your big advantage, save now. Don't be fools and wait until you are 37 like me! You have 12 years on me! The kids and house will throw a wrench in your plans, stay away from cars for each kid, $10,000 proms and Disney vacations. Save now not later, the compounding interest 20 years from now will be the big difference.

Here's a very basic retirement calculator : https://networthify.com/calculator/earlyretirement?income=74000&initialBalance=0&expenses=30000&annualPct=5&withdrawalRate=4

EDIT: Ok so I checked out the spreadsheet 80k in expenses? I see the mortgage over payment, you may want to consider investing instead of big over payments if you mortgage rate is pretty low. 3% wage increase seems optimistic.

With the wages you guys have now most people here would FIRE in 10-15 years even with a couple of kids. Keep those expenses low, I'm not sure how much of that is mortgage. How do you get to 80% tax after retirement, am I missing something here?
« Last Edit: August 25, 2016, 08:03:55 PM by human »

Saskatchewstachian

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I don't have excel and I'm to lazy to upload this into google docs. Many people rely on the 4% withdrawal rate and times 25 your expenses. Are your expenses in the spreadsheet? My expenses are currently 26K a year so I need 650k to retire.

You want 2.6 million! divided by 25 that's 104k a year! Assuming you could save up that and returns are what you are expecting (what are you expecting?) who the hell can't live off of 104k a year?

You guys are 25, that's your big advantage, save now. Don't be fools and wait until you are 37 like me! You have 12 years on me! The kids and house will throw a wrench in your plans, stay away from cars for each kid, $10,000 proms and Disney vacations. Save now not later, the compounding interest 20 years from now will be the big difference.

EDIT: Ok so I checked out the spreadsheet 80k in expenses? I see the mortgage over payment, you may want to consider investing instead of big over payments if you mortgage rate is pretty low. 3% wage increase seems optimistic.

I was being quite pessimistic with the calculations hence assuming the 80k per year and yes thats counting mortgage and property insurance (20k/yr).

The other item it was 104k per year at retirement is assumimg 20% tax rate (80% remains to take home, i didn't really make that clear) on all investment income therefore making investment income match pre-RE income.

We currently live on about 50k/yr plus the 20k/yr for the mortgage so total of 70k but are very new to mustachianism so this will come way down. Also agree that 3% may be a tad aggressive for later career, but knowing the pay structure for an engineer in a mining company it is quite reasonable for early level engineers.

The only problem with the issues that you point out is that by changing all of those items the spreadsheet will make it EVEN EASIER to FIRE as I was thinking i had missed some glaring expense. If it is the case that i'm not missing anything massive I may be looking to set the FIRE date even soon (possibly 40).

Thanks for taking the time to review!!!
« Last Edit: August 25, 2016, 08:21:33 PM by Saskatchewstachian »

human

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Just to keep the conversation going, is a basic cheapo house in Sasky really worth 380K? Did you already buy it? Maybe the market where you live is small so this could be normal. You could always move elsewhere unless this is your "forever" home.

Have fun FIREing at 40!

Saskatchewstachian

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In one of the major cities the prices are ridiculous for a city of only 300,000 people. i.e. moved out a townhouse condo which was just sold for 240k. I wish we had property prices like Dallas or Arizona lol. We just bought <1yr ago and have 90,000 in equity already built as we put a sizable down payment on it and total NW of around 190k last time I checked.

Definitely more house than just the two of us need but also bought it as a 35 year old house and plan to do upgrades as it is most definitely stuck in the 80's. I guess the overpayments were more of a mental thing of "Yay, we paid our house off before 40" although on MMM this is a small accomplishment.

MoonLiteNite

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I don't have excel and I'm to lazy to upload this into google docs.

For those guys without MS office, or OO

https://docs.google.com/spreadsheets/d/17E8PIYhoJybSAXd8TwGtkauLaAEV26riC33qvBhCTrI/edit?usp=sharing

With This Herring

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All of the math seems correct the only problem is that it seems TOO EASY! Even with an insanely lavish spending plugged in (facepunches welcome) we could still retire at 45 with 2.6 million invested and a NW of about 3.3 million. Are these calculations correct!?

Your calculations are not correct.   :)   You should be hitting FIRE sooner, as you were only picking up gains on the PY balance, when the CY investments should also see some gains.  This doesn't make a huge difference, though.  It certainly looks like it can be this easy, especially as your employers contribute enormous fractions of your base salaries as employer matches.  11%!!!   WOW!!!  And your bonuses will get up to 30%?!

I'm not seasoned, but I am a big spreadsheet person.

Please confirm the following:
  • DH bonus is based on the salary for the previous year/is received a year late, but it is counted in the total wage for the year on which it is based.
  • DH bonus percentage will increase by 5% at sporadic intervals, up to 30% before projected retirement.
  • DH will have a one-time extra 10% raise in 2021.
  • DH main RRSP contributions are based ONLY on his base wage, not his total wage including bonus.
  • DH will soon start making top-up RRSP contributions based on his delayed bonus.
  • DW will soon start making top-up RRSP contributions based on her normal wage.
  • DW will drop to 75% time in 2019 (for children, I assume), and then will receive 2% raises thereafter until she hits a salary cap of $110K, which will happen when child hits 18.

What is with those odd, incredibly variable, hard-entered amounts for additional investing?

Your mortgage balances are linked to another sheet.  This isn't a huge deal, but it does pop up a little warning whenever we open your sheet.

From my prior Excel games, I would recommend not changing forumulae mid-column without marking it somehow, such as having different formulae in a column different colors.  I would also color-code numbers that are hard-entered in a column of formulae.

Also, make your life easier and name your ranges and cells of hard-entered info.  It makes your formulae easier to proof.

Attached is a revised spreadsheet because I could use the practice in fiddling with other people's work.  It is NOT super great and does try to guess things that you left out.  I would recommend you change this to a full case study, following these instructions, or at least use the case study spreadsheet to replace your own:  http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/

I think there was a Canada-specific case study spreadsheet in process at one time, but I don't recall where it was being discussed.

Stasher

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Just throwing this website at you real quick as some good extra reading , the author lives in Regina.
I know its off topic but it's Saskabush relevant for you :)
http://blog.canadian-dream-free-at-45.com

itchyfeet

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It's great you have a plan, but in the end you will just have to save as much as you can and see what happens. 20 years is a very long time.
20 years ago my wife was still in college and I was earning about $20k USD and my Net worth was maybe 10K max.

Today our household income is $300k+ USD, and our net worth is close to $2m. Even 4 years ago I wouldn't have believed we'd be in such a great position today. Just 4 yrs ago our household income would have been maybe $160k and NW around $1m. Even if I wanted it to, our high income of today has a very short sunset date.
Things can change fast, and things can go slow. This week I have been hit with several large unexpected expenses back to back that mean we will save hardly anything this month. A bit
Of bad luck!

Over the 20 years we have seen a few stock market crashes, a housing bubble that is yet to pop (we're Australian), and many ups and downs in our personal situation. I hope you make less financial mistakes than we did along the way. When I look back I cringe at some of the waste, but we are lucky to have never had even one day of unemployment, and our relationship has stood the test of time.

FIRE is Close for us today, prob 2 or so years, but maybe 6 months and maybe 4 years. There are no guarantees even now. I would love to give my DW a most incredible 40th birthday present, but I am hesitant to call it quits when the market is on a bull run and house prices are so inflated. I'd rather be quitting when the market crashes and the housing bubble pops (if it does). Otherwise, I'll be a bit conservative. (The housing market affects us because We plan to sell out of a VHCOL area and move somewhere cheaper, but we don't want to move for maybe 5 more years. Maybe we'll have to sell now and rent to reduce the risk a little, as we are really over exposed to residential property).

Saskatchewstachian

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All of the math seems correct the only problem is that it seems TOO EASY! Even with an insanely lavish spending plugged in (facepunches welcome) we could still retire at 45 with 2.6 million invested and a NW of about 3.3 million. Are these calculations correct!?

Your calculations are not correct.   :)   You should be hitting FIRE sooner, as you were only picking up gains on the PY balance, when the CY investments should also see some gains.  This doesn't make a huge difference, though.  It certainly looks like it can be this easy, especially as your employers contribute enormous fractions of your base salaries as employer matches.  11%!!!   WOW!!!  And your bonuses will get up to 30%?!

I'm not seasoned, but I am a big spreadsheet person.

Please confirm the following:
  • DH bonus is based on the salary for the previous year/is received a year late, but it is counted in the total wage for the year on which it is based.
  • DH bonus percentage will increase by 5% at sporadic intervals, up to 30% before projected retirement.
  • DH will have a one-time extra 10% raise in 2021.
  • DH main RRSP contributions are based ONLY on his base wage, not his total wage including bonus.
  • DH will soon start making top-up RRSP contributions based on his delayed bonus.
  • DW will soon start making top-up RRSP contributions based on her normal wage.
  • DW will drop to 75% time in 2019 (for children, I assume), and then will receive 2% raises thereafter until she hits a salary cap of $110K, which will happen when child hits 18.

What is with those odd, incredibly variable, hard-entered amounts for additional investing?

Your mortgage balances are linked to another sheet.  This isn't a huge deal, but it does pop up a little warning whenever we open your sheet.

From my prior Excel games, I would recommend not changing forumulae mid-column without marking it somehow, such as having different formulae in a column different colors.  I would also color-code numbers that are hard-entered in a column of formulae.

Also, make your life easier and name your ranges and cells of hard-entered info.  It makes your formulae easier to proof.


Yes the 11% of based wage is correct, we get 8% no matter what into an RRSP then if we contribute 3% the company will match up to that 3%. So a total of 11% from the company and 3% personal contribution.
 
DH bonus is based on the salary for the previous year/is received a year late, but it is counted in the total wage for the year on which it is based.
Yes the bonus's are based off of one year and paid out at the beginning of the next fiscal year
DH bonus percentage will increase by 5% at sporadic intervals, up to 30% before projected retirement.
This is due to the fact that the bonus structure changes depending on your level within the company all the way up to 40% for senior people. I estimated the promotions based on the normal age of the people i see in those positions and am classified as a "high achiever" so i think i should be able to get atleast a couple of the promotions but never have it listed as achieving the full 40% bonus as I don't plan to be there that long :)
DH will have a one-time extra 10% raise in 2021.
I will delete this, i think it was a leftover from when I was tinkering with the spreadsheet, glad you caught it :)
DH main RRSP contributions are based ONLY on his base wage, not his total wage including bonus.
I justdouble checked this based on my pay stub from when I got my bonus last year and it turns out the RRSP contributions do also count on the bonus!!! So yay more money for me!
DH will soon start making top-up RRSP contributions based on his delayed bonus.
Correct
DW will soon start making top-up RRSP contributions based on her normal wage.
Correct
DW will drop to 75% time in 2019 (for children, I assume), and then will receive 2% raises thereafter until she hits a salary cap of $110K, which will happen when child hits 18.
All of that is correct, drop to 75% for children then if continued in the union until maxed out at the very tip top end of the payscale

The variable amount are the "other" investing above and beyond the tax sheltered ones. To avoid inflating lifestyle while inflating income I have left the budget at X. Therefore the variable amounts are
TotalIncome-Tax/RRSP/TFSA-Budget = extra amount to tuck away per year.

Also appreciate the comments on the coloring of cells that are hard entered as when playing with the formula's and numbers I can always accidcentally save it or forget to change something back

Saskatchewstachian

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All of the math seems correct the only problem is that it seems TOO EASY! Even with an insanely lavish spending plugged in (facepunches welcome) we could still retire at 45 with 2.6 million invested and a NW of about 3.3 million. Are these calculations correct!?

Your calculations are not correct.   :)   You should be hitting FIRE sooner, as you were only picking up gains on the PY balance, when the CY investments should also see some gains.  This doesn't make a huge difference, though.  It certainly looks like it can be this easy, especially as your employers contribute enormous fractions of your base salaries as employer matches.  11%!!!   WOW!!!  And your bonuses will get up to 30%?!


Just looked at your calculations and appreciate the updates the one difference is that the Shareplus and the TFSA are taken off post tax not pretax. Other than that everything else looks good.

Soooooooooooo.......... Looks like my new FIRE date is ~40!!!! Hello class of 2031!

With This Herring

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DW will drop to 75% time in 2019 (for children, I assume), and then will receive 2% raises thereafter until she hits a salary cap of $110K, which will happen when child hits 18.
All of that is correct, drop to 75% for children then if continued in the union until maxed out at the very tip top end of the payscale

Okay.  Just a note:  If she stays at 75% time, my guess would be that her pay would max out at 75% of the $110K full, so $82.5K.  I'm not sure if this will be the case, but check and adjust your calcs for it.

All of the math seems correct the only problem is that it seems TOO EASY! Even with an insanely lavish spending plugged in (facepunches welcome) we could still retire at 45 with 2.6 million invested and a NW of about 3.3 million. Are these calculations correct!?

Your calculations are not correct.   :)   You should be hitting FIRE sooner, as you were only picking up gains on the PY balance, when the CY investments should also see some gains.  This doesn't make a huge difference, though.  It certainly looks like it can be this easy, especially as your employers contribute enormous fractions of your base salaries as employer matches.  11%!!!   WOW!!!  And your bonuses will get up to 30%?!


Just looked at your calculations and appreciate the updates the one difference is that the Shareplus and the TFSA are taken off post tax not pretax. Other than that everything else looks good.

Soooooooooooo.......... Looks like my new FIRE date is ~40!!!! Hello class of 2031!

I'm glad it helped!  Seriously, though, please do check out some of the excellent spreadsheets that have been posted on this forum.  Also remember that cutting expenses where possible will help a LOT.