Author Topic: Net worth = $433,00. When can I retire?  (Read 8929 times)

clairebonk

  • 5 O'Clock Shadow
  • *
  • Posts: 59
  • Location: Walnut Creek, CA
  • Off-and-on FIREing
Net worth = $433,00. When can I retire?
« on: December 03, 2014, 04:56:03 PM »
I know this is a super general question but it has been one of those days at work. I am 37 (family of 3) and since graduating at 22 I have only worked for 7 years (traveling and grad school sprinkled throughout).  I've been working at this job for 3 years and am feeling the itch to... move to a new country, become a ski bum, start my own consulting firm...

Doesn't it make more sense to quit now while my son isn't in school (he is 1.5) and play, and go back to work (hopefully at a job I like) when he is in kindergarten and we will need to be somewhat rooted anyway?

It is really worth it to suck it up and work full time for the next 5 years, then become financially independent when my son starts school? Doesn't it make more sense to work when my son doesn't want to spend any time with me, like in high school, rather than now when he only wants to spend time with me?

TN_Steve

  • Bristles
  • ***
  • Posts: 257
  • Age: 59
  • Location: fly-over country
Re: Net worth = $433,00. When can I retire?
« Reply #1 on: December 03, 2014, 05:05:23 PM »
Way too many unknowns from what you've given.  I assume you left a "0" off the end of net worth?  (At first, I thought you'd meant to put a period rather than a comma!).

One wage earner or two; if two, is the other the large one?  How flexible is your field/skillset?  Living expenses/budget both now and if you stay home?  If you are "secondary" wage earner, how much net are you really out if you don't work outside home?  etc. etc.

I quit to stay home with our kids when I was several years younger than you, and our youngest was 18 months.  Planned to go back when all were in school, and ended up choosing to be out of full-time work for 15 years.  Luckily, my skills and mindset turned out to be sufficiently flexible to come back in ....  (and I did part-time gig in my field for almost all of that time).

Dan_at_Home

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Net worth = $433,00. When can I retire?
« Reply #2 on: December 03, 2014, 05:32:51 PM »
I assume you mean $433,000, it sounds like you are well on track if not really close, it really depends on your monthly expenses, you have to figure out how much it takes for you to live each month, i.e. how much is your rent or is your house paid off, then figure out your withdrawn rate (ussually around 4-5% of your savings).  You have to match your passive income verses your expenses, remember to add in health care if you and your SO is not working in FI.

Like you said, your son would probably want to spend more time with you when he is in kindergarden rather than when a teenager in HS.  So if you can pull it in off, then retire while he is young and starting working again if you want when he gets older in my opinion.



Ricky

  • Pencil Stache
  • ****
  • Posts: 842
Re: Net worth = $433,00. When can I retire?
« Reply #3 on: December 03, 2014, 07:35:47 PM »
Saving $62k a year in your working years (big assumption) is very impressive.

We literally can't recommend anything based on the vagueness of your post. In general, I'd say don't make any drastic change in your life without something of a plan. Have an exit strategy as well as an re-entry strategy. You'll obviously need to work again in your life if you want to retire comfortably so just make sure you have a good plan.

Also, you can't just "move to a new country", which I'm assuming you know. At least not for any meaningful amount of time (permanence). So I'm assuming you mean an internet business or you must have a spouse who is of foreign descent?
« Last Edit: December 03, 2014, 07:37:52 PM by Ricky »

mozar

  • Magnum Stache
  • ******
  • Posts: 3002
Re: Net worth = $433,00. When can I retire?
« Reply #4 on: December 03, 2014, 07:49:51 PM »
I think it's better to suck it up and FIRE at kindergarten. 6 years old is pretty far from 16. The thing is that it's easier to find quality care when they are younger, and will need you more emotionally as they get older. It's tough to juggle after school care once school starts but daycare is all day. And teenagers may roll their eyes, but they need their parents too.

Mr. Frugalwoods

  • Bristles
  • ***
  • Posts: 296
  • Location: Greater Boston Area
    • Frugalwoods
Re: Net worth = $433,00. When can I retire?
« Reply #5 on: December 03, 2014, 08:04:05 PM »
Living off of $17K/yr (4% of your savings) is cutting it pretty thin in America.  Not saying you can't do it, but there's not a whole lot of room to weather a small disaster.

However, if you plan on spending say $24,000 / yr and you think you can predictably bring in $10k / yr in consulting... then you look pretty good to me.

All depends on what you spend.

bogart

  • Handlebar Stache
  • *****
  • Posts: 1052
Re: Net worth = $433,00. When can I retire?
« Reply #6 on: December 03, 2014, 08:13:09 PM »
I ... am feeling the itch to... move to a new country, become a ski bum, start my own consulting firm...

Doesn't it make more sense to quit now while my son isn't in school (he is 1.5) and play, and go back to work (hopefully at a job I like) when he is in kindergarten and we will need to be somewhat rooted anyway?


Well, maybe.  I'm OK (not an advocate of, but OK) with someone leaving the workforce to spend more time with preschool-aged children if that's what they want to do, even if their net worth is $433.00, assuming they have a partner with good prospects who's willing to shoulder the financial responsibilities and that they plan sensibly (insurance and such). 

But of the 3 things you've listed as wanting to do, only one of them strikes me as really being compatible with spending more time with a preschooler than WOH, and that's the "living somewhere else" bit -- and even that could go either way.

Do you want to spend more time with your child?  Or do you want to leave your current job?  Those aren't necessarily the same things, and that's OK, I'm just wondering about the motivation here.

(For the record I am a WOHM who is very happy about my choice to remain in the workforce).

It's true that school ties you down more once kids get older; mine's now in elementary school.  But my own experience is that they also become a lot more interesting and fun and able to participate in a meaningful/useful way in fun activities (skiing...), and there's still a long gap between starting-school and not-wanting-parents-around. 

For me, being kind to my future self was staying in the workforce so I could enjoy the kind of salary and job flexibility I do now, and have more time (and $$$) to spend with my kid over the course of his life rather than concentrating a bunch of those resources on a few years.  For you, it might be leaving the workforce now so you can look back fondly on those halcyon pre-school days together while he's slogging through school and you're slogging at work, but you should make sure that's what you want before you bail.

(Of course, how wrong you got that decimal place does affect how many years you'll be slogging once you return to work, so that should factor into your answer as well)


EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 2340
  • Age: 45
  • Location: Houston
    • EscapeVelocity2020
Re: Net worth = $433,00. When can I retire?
« Reply #7 on: December 03, 2014, 09:02:42 PM »
Trust me Clairebonk, you are not alone on being 'somewhere on the path yet still not there, and today was one of those days'.  Lay some more information on us though.  There is a lot of experience here, a lot of optimism, but even MMM himself only had one child and waited for 600k plus a 24k/yr rental income before he 'called it'.  His wife worked a little longer, although she didn't need to, but you can get a pretty relevant GenX / Millennial assessment on your situation if you can put in just that little more time to fill us in on the relevant details.  We want to help :) 

My wife went SAH when we had our second child and it was the best decision of our life, in hindsight.  She is back at work now, full-time just starting this year, 9 years after being at home / part time, substitute teaching.

Good luck, these are tricky years, but there is no necessarily right or wrong answer.

clairebonk

  • 5 O'Clock Shadow
  • *
  • Posts: 59
  • Location: Walnut Creek, CA
  • Off-and-on FIREing
Re: Net worth = $433,000. When can I retire?
« Reply #8 on: December 03, 2014, 10:19:13 PM »
Wow thank you for the replies.  I have to say, finding MMM and this forum was a mental lifesaver for us.  Knowing there are sane people out there makes us much more optimistic about the future of the world.

Yes it is 430,000! Sorry for the typo!

Details: I make 91,000 a year.  We have a rental house (in Davis!) that we break even on and rent an apartment.  We couldn't afford to buy a house where we live in the Bay Area.  I can currently bike 4 miles to work all on protected trails and we live in the crappiest apartment in downtown. We have 30,000 in cash and 240,000 in investments and 260,000 in the house. We have so much in cash because we were thinking of buying another house but will add a 4th bedroom to the rental house to bring in an extra 500/month and put the rest in IRA.  Rent is 17,400 a year and an estimate of our expenses is 26,000 so we are living a luxurious MMM lifestyle.

We have a Honda Fit that takes us to the rental house and the mountains, pay $20/month for internet and $20/month for phone and camp/backpack at least once a month. So we're living pretty minimally, not much to cut out.  My husband is a stay at home dad and loves it (I prefer working over being a stay at home mom) so it is a really, really good fit for us. But, I'm just not a person that is content staying in one place too long- I'm always ready for the next adventure. 

We did a 2-year honeymoon to 25 countries for $35,000 total. That kind of experience makes it really hard to wake up in the same bed for 3 years in a row.

I have an MS in both biostatistics and computer science but not a lot of experience working with those skills.  The "retirement" job is hopefully doing data analysis for non-profits, but am having trouble finding the time to start getting into the field.

Thanks for listening! Also am trying to have a 2nd child...







MDM

  • Walrus Stache
  • *******
  • Posts: 9607
Re: Net worth = $433,00. When can I retire?
« Reply #9 on: December 03, 2014, 10:35:57 PM »
clairebonk, welcome to the forums.

You could probably help yourselves (primary reason) and make it easier for people to give good suggestions (secondary reason) by
  - Collecting the information needed for a Reader Case Study.  In particular see
     > http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/msg147056/#msg147056
     > http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/msg274228/#msg274228
  - Going to www.cfiresim.com and evaluating your situation using that tool.

It appears you have done some good things already - good luck for more to come.

hexdexorex

  • Stubble
  • **
  • Posts: 159
Re: Net worth = $433,00. When can I retire?
« Reply #10 on: December 03, 2014, 10:47:03 PM »
Maybe you can work overseas for a few years before calling it quits? You seem to save well compared to most but I personally wouldn't retire till around the same point net worth wise as MMM did.

Congrats on the kiddos....all you have to do is save enough for 18 years than they can take care of you ;)

greaper007

  • Handlebar Stache
  • *****
  • Posts: 1129
Re: Net worth = $433,00. When can I retire?
« Reply #11 on: December 03, 2014, 10:49:06 PM »
I quit my job around the time that I was in your position 5.5 years ago.   But I was making $40,000 and paying to live in two places.    I ended up only being out $1200 a month after we added everything up.    Cooking every night, fixing the cars and house myself and some other handy traits helped bring that down even lower.   

Staying home was definitely the right move for me.   It would be even easier for you because sahms fit into the system better than sahds.    Is there anyway you guys could move?    You could always turn the rentals over to a property manager and bank on major appreciation in the next couple of decades.     It sounds like you guys would love the Denver area, and while it's not the cheapest area of the country, it's much cheaper than the Bay area.   And I think it would dovetail better with your recreational activities.     I'm in a nice suburban neighborhood with a great school system.    Bus/bike-able to Denver or Boulder and you can pick up a smaller house for less than 300k.

It was tough at first, but I wouldn't give up my time with my kids for anything.     I never find myself pining for the baby, toddler, preschool years.    I think it's because I was right in the middle of all of them.     Find a way and do it.    Life is too short for regrets.

PS, what do you mean by data analysis?    My wife owns a consulting firm that works with health and human service non-profits.    She's always looking for stats wizards that can consult on the side.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 2340
  • Age: 45
  • Location: Houston
    • EscapeVelocity2020
Re: Net worth = $433,00. When can I retire?
« Reply #12 on: December 04, 2014, 10:54:51 AM »
Wow, that is a tricky one, bacause there really is no right/wrong answer.  We have been abroad 5 of the last 8 years, so I know 'the feeling' of itchy feet.  I can't wait to get out there again, and we've only been back in Houston for 1.5 yrs.  We were fortunate to get expat opportunities (well, I switched jobs with the knowledge that I would at least start out on an assignment for 2 years, then I chased after another expat assignment before our kids got too old).

In your case, although finances are always a consideration, I think you have that part of life in pretty good order.  The bigger piece (and I'm a guy, just so you know) is getting the travel in 'at the right time'.  If you are expecting to have another child, then you need to think more about the timing of when that might happen, and it might be best to have your children close together and have a stable home life for a little longer.  With that being said, don't delay travel too long because it does get harder the older kids get.  Two distinct cut-off points are 2 y.o. (from my somewhat questionable memory - free airline travel and still able to use a baby-backpack) and ~tweenager (kids start to need stability and have a 'real' social circle around 5th-6th grade, and there's going to be more than enough drama once hormones arrive on the scene).

Just my very feeble 2 cents.

Cromacster

  • Handlebar Stache
  • *****
  • Posts: 1696
  • Location: Minnesnowta
Re: Net worth = $433,00. When can I retire?
« Reply #13 on: December 04, 2014, 11:13:22 AM »
Going with the few details you have given us I certainly see some red flags.

1 Networth: 430,000 but 260,000 is your rental house, that doesn't make you any money at the moment.

2 Rental:  You break even?  So you don't make any money on this other than any equity you may have in it?  What do you mean with break even?  IE is the mortgage, insurance, taxes 1400/month and you rent it at 1400/month?

3 Expenses:  You claim  17,400/yr in rent and total expenses of 26,000.  Does that include the rent?  Otherwise very impressive with owning a car and a child.

4 We, We, We:  Who is we, what do they earn?  You only list your income, atleast you use "I" when you listed 91,000,

5 Income: 91,000 post or pre deduction?


So can when can you retire?  If you could get your spending down to around 10,000 you could retire now.  If you actually make money on your rental you could spend more.  If you sell your rental you could spend around 17,000/yr and retire.

BUT if all you are looking for is a buffer to not work for a few years and stay home with your kid.  Yes you have a buffer, but you will need to eat into your savings in order to maintain your lifestyle, or if you clairfy #4 above you might not need to eat your savings at all.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 2340
  • Age: 45
  • Location: Houston
    • EscapeVelocity2020
Re: Net worth = $433,00. When can I retire?
« Reply #14 on: December 04, 2014, 11:24:07 AM »
Doesn't it make more sense to quit now while my son isn't in school (he is 1.5) and play, and go back to work (hopefully at a job I like) when he is in kindergarten and we will need to be somewhat rooted anyway?

It is really worth it to suck it up and work full time for the next 5 years, then become financially independent when my son starts school? Doesn't it make more sense to work when my son doesn't want to spend any time with me, like in high school, rather than now when he only wants to spend time with me?

I think the subject header is a bit misleading, but the OP is not talking about FI / permanent 'retirement' on 433k and spending 26k, and she is realistic that they will spend down some/all of the buffer if she stops working. 
« Last Edit: December 04, 2014, 11:30:22 AM by EscapeVelocity2020 »

Dan_at_Home

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Net worth = $433,00. When can I retire?
« Reply #15 on: December 04, 2014, 11:47:51 AM »
2 Rental:  You break even?  So you don't make any money on this other than any equity you may have in it?  What do you mean with break even?  IE is the mortgage, insurance, taxes 1400/month and you rent it at 1400/month?

Cromacster is right, this is a serious problem for the OP if no money is being made on the rental house.  Because if you have 260k tied up in a house that is not bringing in any income then this money cannot help at all with FIRE.  This is the equivalent of buying 260k worth of bonds that have a 0% interest rate.

Right now your total possibly monthly income is really $433,000 - $260,000 = $173,000 * 4% withdraw rate / 12 months = $577 per month

Of course if your goal is not to build a permentant sustainable passive income flow, you could simply spend down the entire 173k on ordinary living expenses while not working.  Thus, would probably last you for a few years, the length of time would depend on how fast you spent it down.
« Last Edit: December 04, 2014, 11:52:21 AM by Dan_at_Home »

opnfld

  • Stubble
  • **
  • Posts: 129
  • Age: 44
Re: Net worth = $433,00. When can I retire?
« Reply #16 on: December 04, 2014, 03:58:13 PM »
With plans to FIRE just as my oldest goes into kindergarten, I oftentimes feel like you.  But if i quit work now, what am I actually going to do on a daily basis with two small children?  In my experience, traveling with a 2 and 4 year old can be a drag.  (For some vicarious experience to the contrary, check out http://www.bumfuzzle.com/.  They make it look pretty good and do so inexpensively.)  I'd rather put the time at work in now and have every summer, winter, and spring break available to do whatever we want when the kids are older and get more out of the experience.

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3519
Re: Net worth = $433,00. When can I retire?
« Reply #17 on: December 04, 2014, 07:14:52 PM »
It is really worth it to suck it up and work full time for the next 5 years, then become financially independent when my son starts school? Doesn't it make more sense to work when my son doesn't want to spend any time with me, like in high school, rather than now when he only wants to spend time with me?
No comments on whether to work or not . . . but don't assume that your son won't want to spend time with you once he's in high school.  My kids are 17 and 20, and they LOVE to spend time with me. 

A long time ago I read that if you genuinely listen to them when they're two, they'll want to talk to you when they're teens.  It's been true in our family. 

Also, I supervised LOTS of their youth activities.  When you supervise the scout sleepover at the mall, drive the church youth group, and sit with them through the school chorus concert in which that cute boy has a solo (no fair attending but playing with your phone) . . . they realize you're interested in their lives, and later they still want to be with you. 

clairebonk

  • 5 O'Clock Shadow
  • *
  • Posts: 59
  • Location: Walnut Creek, CA
  • Off-and-on FIREing
Re: Net worth = $433,000. When can I retire?
« Reply #18 on: December 08, 2014, 10:15:54 PM »
Oh wise Mustachians, thank you for filling my mind with your knowledge, diverse life experience, and especially for asking me the hard questions in life. It's hard to admit sometimes, but frequently I look forward to Mondays at the office after spending the weekend chasing around a 1.5 year old. I like hearing about all of your different lifestyles- it is very inspiring when I only see traditional family life around me.

Yes, it's true, $156k is tied up in our rental house that breaks even (rent covers mortgage+insurance). And, $175k is tied up in retirement accounts. The rest (roughly $100k is available). That doesn't leave much to pull from.

The next time I post I'll definitely have an appropriate user case written up, thanks for the links.

Some questions answered: it is only me with a salary, my husband handles the rental house and everything else. Everything. It is nice. We've thought about moving to Colorado but I've tried to move away from California twice and always pined for it.  Can you really choose your home or does it choose you?  Is it worth it to live in Davis which is so expensive but the only town in the world where I haven't felt weird?  We LOVE back country and cross country skiing, but do I really want to live in a cold climate again (native Minnesotan)?

Some people know exactly what they want and they go for it.  Sometimes I'm so paralyzed by all the options, they constantly spin like a merry-go-round in my head, over and over and I can't think about anything else and move forward in my life.

The parenting advice is the best, shouldn't be surprised but that is what has resonated the most.




Bob W

  • Magnum Stache
  • ******
  • Posts: 2947
  • Age: 60
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: Net worth = $433,00. When can I retire?
« Reply #19 on: December 09, 2014, 09:57:12 AM »
It makes abundant sense to stay home with the little one.   While your doing that start a blog something like "Father Knows Best" that gives financial and parenting advice for people who wish to be stay at home parents. 

I stayed at home with my now 7 year old son for around 4 years prior to first grade.  It wasn't a thought out plan but perhaps it was God's plan.   We are totally bonded and love the shit out of each other. 

This morning when I dropped him off at school, unprompted he said,  "I love you dad."   Did I cry in the drop off lane?   No but I'm tearing up a little thinking about it now.

You'll never get a chance like this with your child again.  Don't even do the math.   Just do it and figure out a stay at home gig to supplement. 

In my neck of the woods,  20K per year would be plenty of money to live a very nice Mustachian lifestyle.   Rent/utes - 900,  car - 80,  food - 300,  misc- 300 --- Boom your at 1,700 a month in a vibrant college town with lot of little tykes running around.   If you buy a home,  you could cut that to 1,300 a month with a low interest, interest only,  fixed rate, 30 year note.   Your stash should generate and average of 20K per year, so you're golden. 

If you're doing a ski bum thing,  pick a cheap town and do a little work. The next 4 years will be the best of your life!

FLBiker

  • Pencil Stache
  • ****
  • Posts: 985
  • Age: 43
Re: Net worth = $433,00. When can I retire?
« Reply #20 on: December 09, 2014, 10:24:49 AM »
Thanks for this thread!  I've wondered the same thing myself.  We've got $400K in mutual funds, mostly in retirement accounts, and we have ~$100K mortgage on a ~$160K house.  Both my wife and I are English language teachers, and I've lived overseas in the past (and really enjoyed it).  We're expecting our first kid in April, and she's planning to do a year leave of absence (unpaid, once her sick leave is used up).  After that, we'll figure out what to do next.

Currently, our plan is to retire / work overseas when the kid is in middle school, with the intention of coming back for high school (and remaining retired).  Our thinking is that when the kid is really little, it will be good for me to have a stable income, health insurance, etc.  It will also be good to be close to family / friends.  And, assuming my wife goes back to work when the kid is ~2, we should reach FIRE sometime during elementary school.  I like teaching, though, and it's a good way to get long term visas in other countries.  Plus, in a lot of places, it's quite easy to just work 12-16 hours a week.

Good luck!

BPA

  • Handlebar Stache
  • *****
  • Posts: 1191
Re: Net worth = $433,00. When can I retire?
« Reply #21 on: December 09, 2014, 11:03:47 AM »
I declared myself FI when I reached a net worth of $450k at the end of October.  It's just me and my 16 year old son, so I'm hoping once he's 18 and finished high school, he'll start pitching in for his own expenses (he will be doing an apprenticeship if all goes according to plan).

If all goes well, I plan to RE at the end of next year, stay living here for another five years until he's on his feet, and then move east.  Like you, I am anxious to be done working.

New developments at work might make it so that I bail earlier than a year from now.  I'm just about fed right up.  I likely need surgery though, so I'm waiting until after that. 




GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 14046
  • Age: 38
  • Location: Toronto, Ontario, Canada
Re: Net worth = $433,00. When can I retire?
« Reply #22 on: December 09, 2014, 11:19:46 AM »
If your net worth is 433$, then you can retire as soon as you get your yearly costs below 17.32$.