Author Topic: Reader Case Study – How am I doing?  (Read 7488 times)

ak907

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Reader Case Study – How am I doing?
« on: March 13, 2014, 01:21:07 PM »
Hello Mustachians, I recently discovered MMM 2 months ago while starting to get into understanding how to better invest my money in order to achieve my goal of early retirement. I have always had a goal of retiring early; though I thought the earliest it would likely happen would be at 55, I loved discovering through reading MMM that it could be something that happens much earlier. I thought I would submit my own reader case study to the forum and see what people though, sorry in advance for it being so long. I have read a number of the previous threads and wanted to address many of the common questions and comments that come up.
Location: MD/DC area
Stats: 26 yrs old male
Income: $69k salary job
     I also earn income from my investments but I am not sure that is intended to go here, and that money is only ever reinvested.

Current expenses: I spent about $31k last year according to Mint. The big overview from Mint of those expenses looks like this:
Home                 $8,081.16
Shopping                 $5,124.32
Auto & Transport     $4,373.09
Food & Dining        $4,339.54
Uncategorized         $3,021.52
Pets                        $2,583.92
Health & Fitness        $1,763.93
Taxes                 $1,559.99
Bills & Utilities          $267.23
Gifts & Donations   $118.87
Personal: Care          $80.00
Entertainment           $29.90
Business: Services   $22.16
Fees & Charges          $13.87
   

My rough budget of predictable expenses, $1,643 per month, looks like below. It is by no means complete; there are always expenses (auto repair, health care, one time purchases, etc)  that fall outside of it, my average spending per month as you can calculate is about $2,500.
Gas                 170
Auto Insurance      63
Motorcycle Insurance   19
Cell Phone              58
Groceries              300
Rent                 600
Rental Insurance   10
Pet                 200
Restaurants      55
Movies         8
NEW* Medical Ins      160        I forgot to add Medical insurance costs, which only show up on my pay stubb, this is total cost for DENTAL, EYE and health insurance plans

Some background on the above:
   Rental insurance, cheaper to get with my car insurance than car insurance alone, go figure.
   I rent a room in a multifamily home. Rent includes all utilities, the price is an incredibly good deal for the area.  I also have access to a small fenced yard for the dog, and a garage for woodworking and the motorcycle.
   Groceries, I would like to get this lower, but I eat a lot for a single person, I am blessed with a very inefficient metabolism and an active lifestyle. Nothing to extravagant, I pack all my own lunches, premade heat up or whatnot food is fairly rare. I have been trying to do more oatmeal, as one of the suggestions by MMM, but even mixing honey and berries it can get tiresome to eat regularly and I often don’t feel like eating so many carbs, just doesn’t sit right in my belly.
   Pet, I got a dog early last year. I love him and he has been a blessing in many ways, because of him I know 10 times more about the area I live in. That being said he has been very expensive, I am coming up on a year with him now and have spent about $3,000on him total. Most of the expense comes from being a first dog and the purchase of the things necessary. The two top expenses have contributed to the majority of the cost; the first was him catching doggy pneumonia, $800. The second was me going on vacation recently, I tried to save on nearly $1000 for a kennel and left him with friends, unfortunately he was not a good match with the first family he stayed with and became destructive, costing me around $600 in replacement stuff. Feeding him is cheap; he eats less than $29 of food a month.
    Restaurants and Movies are very rarely used categories, left over from when I had a girlfriend, who often wanted to go out.
    Motorcycle, not very MMM, I have considered getting rid of it but I enjoy it and am ok with it, its staying, at least for now.

Assets: Net, I am worth about $300k.
Car: Ford Ranger 4cyl worth    $~4k
Motorcycle:                  $~5K
Cash                              $~3-4k
401k                             $31k
Vanguard Full Stock market idx    $20k
Investment Adviser accounts:
   Taxable investments             $190K
   Roth                           $42k
I just moved up 401k contributions from 12% to 14% + 5% employer match, and 401k Roth to 3%. Still not maxing out, but I am nervous about committing so much, both from a reduced paycheck coming in and from a getting them money out in early retirement perspective (even with the methods available for getting the money out that I do not entirely understand).
I also contribute the max to my Roth every year.

Liabilities: None besides credit cards paid in full every month.
 
   I have only really started seriously investigating investing in the past 2 months. From what I have read investment guys can bring down your returns significantly due to their cost. But I am still nervous going it alone. I am a big believer in efficient markets, or at the very least that at the current point in time I don’t have a strong enough feeling about any companies that would make me want to invest in them individually, and I do not want to have to dedicate much time to researching and managing a portfolio on the side. The guy I am with has a deal with my family and he charged me about $800 total last year for himself. Granted he also has my money invested in higher cost funds (whose fees are separate). The allocation he has me at currently is a bit conservative for my tastes with 40% in bonds, 20/20 domestic/foreign but I am not sure what a good allocation is, there is a lot of conflicting advice.
   While I am naturally a very risk adverse person, at this point I would consider myself to be very risk tolerant when it comes to investing given what I know of the market. Overall I am a big believer in the maxim that given enough time the stock market always goes up. I am fairly convinced that it is pretty difficult to beat the market on passive returns long term without risky speculation on winners/outside investments. But I am open to having my mind changed with good data.
   As a result the best strategy for me currently is probably some kind of stock heavy allocation. Any ideas on what the best allocation is?
I am not sure what the best move for the portfolio becomes as I reach early retirement though. Obviously given the long period the money will need to last and be productive returns will be important, but I am not sure I would be comfortable facing big market swings without at least some less volatile investment cushion. What would be the best allocation once I reach early retirement?

   In other detail, I have not been enjoying Maryland. The traffic and commute are no fun. The culture seems to be largely food, drinking and consumerism/Jones-ism . For now though I am a bit addicted/stuck to the salary I am getting plus benefits like getting paid if any overtime is required, and generous vacation time (3 weeks a year + flex time + vacation). I would long term like to find a place with much more nature, I love MMM descriptions of Colorado but during a short summer living there I found it too dry, though perhaps that varies by area, I love green, creeks, and mountains. I would love to find a place similar in lifestyle though.

   Eventually when I find this magical place I would love to buy a house. Oh I would love to buy a house, I am so sick of sharing living space with strangers. But for now, according to the giant spreadsheet I made to look at the issue it would lose me money/be risky. That spreadsheet would actually probably be very useful to the members of this forum to look at the question of buying a house or not in their area. I hate the idea of a mortgage, paying nearly double the price of the house for the house due to interest. But I can see how it can be advantageous due to tax breaks and a higher return on the money in the market. Has anyone taken a look at the issue of buying a house outright vs getting a mortgage? 

I think that about does it, punch away!

Edit: I changed a few details above. Also I looked around in the forums but couldn't find one. Does anyone have an awesome spreadsheet they would like to share that they use to track their journey to FI. I use MINT and Personal Capital, but they are both still lacking in abilities to project into the future and perform certain analysis. It would be easiest to start from something someone has already made. Excel sheets are mentioned all the time on the forums but I have not seen one made available.
« Last Edit: March 14, 2014, 08:33:26 AM by ak907 »

MissStache

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #1 on: March 13, 2014, 01:38:03 PM »
You're doing pretty great, actually, given your age and this crazy-expensive place we live in!  Your rent is low for the area and your eating/dining costs are in no way extreme!  I can sorta facepunch you on your doggie, but I have pets too and they have greatly increased my quality of life, so I totally get that.   Hopefully your average costs will go down and there won't be any more surprise vet bills.  Your investments are WAY ahead of most people your age, so major kudos there!

Have you ever been to the Shenandoah valley of Virginia, especially the Staunton/Harrisonburg area?  It is spectacularly gorgeous out there and incredibly cheap.  That is where I will retire! 

I wouldn't buy a house in the DC area.  It is so incredibly overpriced.  Renting feels like such a waste of money, but personally, if you aren't planning on being here for a lifetime, I don't think it is worth it to buy a place.  I'm also homeownership adverse, so I'm sure there are others on the forum who would disagree with me!

ak907

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #2 on: March 13, 2014, 01:52:09 PM »
@MissStache
Thanks!
I have not been to the area. Any idea what the weather is like? Its too humid here in MD it makes cold to cold and hot way way to hot. I would prefer something less humid, with short but real winters with snow that sticks around for 1-3 months. Temp range of 0-85 degrees F.

Thanks for the input on the house.


MissStache

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #3 on: March 13, 2014, 01:57:13 PM »
@MissStache
Thanks!
I have not been to the area. Any idea what the weather is like? Its too humid here in MD it makes cold to cold and hot way way to hot. I would prefer something less humid, with short but real winters with snow that sticks around for 1-3 months. Temp range of 0-85 degrees F.

Thanks for the input on the house.

GET THEE TO THE SHENANDOAH VALLEY!

Sounds perfect for you!  You do still get some hot Virginia summers, but it is up the mountains so it isn't anything like these long, steamy summers we have around the swamps of DC.  They get a good bit of snow in the winters, too, but it doesn't last too long.  Are you a camper?   You could take a few camping trips out that way at different times of the year.  It would be a good way to vacation and scout a new location for cheap!


Prairie Stash

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #4 on: March 13, 2014, 01:57:23 PM »
Home ownership can be a waste too.  Invest the difference, it's often a better plan than high cost homes. (Disclosure: I Bought a house, rented out rooms, the rent paid the mortgage)

Given your age, I would keep the motorcycle. Its an expense but it's fun. Please re-evaluate selling it every 6 months.  IMO its mustachian to have fun, as long as you know what it's cost is. My soon to be wife use to love going for rides, overall they were cheap dates.

For actual investments be careful of break fees.  Also are you sure you only pay $800? Lots of funds have trailer fees, the adviser gets kick backs from the company.  So a fund with 2% MER might include a 0.5% trailer fee, to thank them annually for keeping the money invested with them.
 
There's too many problems/suggestions to make.  I'll let others finish.

mozar

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Re: Reader Case Study – How am I doing?
« Reply #5 on: March 13, 2014, 06:07:41 PM »
If you want to buy a house
« Last Edit: May 10, 2018, 11:31:15 AM by mozar »

ZMonet

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Re: Reader Case Study – How am I doing?
« Reply #6 on: March 13, 2014, 06:12:07 PM »
Just wanted to second that you're doing great and the dog expenses are totally understandable.  It isn't like you are going to put the dog down because it has pneumonia!

I'd kill the Roth 401k and start maxing out the 401k.  Don't worry about pulling the money out, you can Roth ladder the money (do a search).  Also, I'd get rid of the managed funds and switch over to Vanguard index funds.  I'm a MMM/JLCOLLINSNH convert and you should read JLCOLLINS' stock series to see if you want to convert too -- http://jlcollinsnh.com/stock-series/.

MissStache is 100% correct.  The Staunton area is awesome and is what I call "Real Virginia" (as opposed to Northern Virginia).  I think Staunton would be an awesome place to retire -- just enough of a mix of restaurants, arts, retail stores and recreation areas.  Land, as compared to DC Metro, is ridiculously cheap as you can get an acre on a river for what a parking spot sells for in DC.  If you venture a little further into the state parks, you'll find areas that are supposedly the most sparsely populated East of the Mississippi.  I believe it. 

kkbmustang

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Re: Reader Case Study – How am I doing?
« Reply #7 on: March 13, 2014, 07:47:36 PM »
You are doing well for your age. But you need to get a handle on shopping and "uncategorized." That's over $8k right there.

MDM

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Re: Reader Case Study – How am I doing?
« Reply #8 on: March 13, 2014, 08:25:02 PM »
Ak907,

Last question first:
Quote
Does anyone have an awesome spreadsheet they would like to share that they use to track their journey to FI. I use MINT and Personal Capital, but they are both still lacking in abilities to project into the future and perform certain analysis. It would be easiest to start from something someone has already made. Excel sheets are mentioned all the time on the forums but I have not seen one made available.
Many folks can and do make great Excel files, but are reluctant to debug and make them user-friendly enough for others to use.  There are notable exceptions, e.g. http://www.bogleheads.org/wiki/Retiree_Roth_conversion_decision_model.
If you aren't happy with MINT & PC, you might use $70 from the money you'll save from other suggestions and get Quicken Premier - it does have a decent retirement planning function, along with all the other financial software basics.  Considering all the time it would take to develop and debug something similar, it's not an unreasonable price.

To your original question, I agree with Zmonet: max out the 401k (and I'd add max Roth IRA too).  Below is what your cash flow might be in that case - copy & paste into your spreadsheet and adjust as needed.


CategoryMonthly amt.CommentsAnnual
Salary/Wages$5,750 $69,000
Pretax Health Ins.$0 $0
Pretax Vision/Dental Ins.$0 $0
Health FSA$0 $0
Daycare FSA$0 $0
HSA$0 $0
Pretax Commuter costs$0 $0
FICA base salary/wages$5,750 $69,000
401(k)$1,458 $17,500
Income subject to IRS tax$4,292 $51,500
Paycheck deposit$4,292 $51,500
Other income (int., div., etc.)$0 $0
Federal Adj. Gross Inc.$4,292 $51,500
Federal tax$518 2014 rates, stand. ded., 1 exemption$6,219
State tax$211 $2,536
Medicare/SS tax$440 $5,279
Total taxes$1,169 $14,034
Add Daycare reimb.$0 $0
Add Health care reimb.$0 $0
Income before other expenses$3,122 $37,466
Monthly Expenses:
Rent$600 $7,200
Home/Rent Insurance$10 $120
Household$75 $900
Groceries$300 $3,600
Pet$200 $2,400
Dining (Pizza, etc.)$100 $1,200
Medical$25 $300
Fuel/Public Transport$170 $2,040
Entertainment$8 $96
Donations$10 $120
Sports/Recreation$150 $1,800
Phone$58 $696
Car Insurance$82 $984
Miscellaneous$500 $6,000
Roth IRA$458 $5,500
Total Expense$2,746 $32,956
Available to invest$376 $4,510

ak907

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Re: Reader Case Study – How am I doing?
« Reply #9 on: March 14, 2014, 07:58:43 AM »
You are doing well for your age. But you need to get a handle on shopping and "uncategorized." That's over $8k right there.

Thanks :). I know where the shopping spending comes from, it is reasonable (things that young people need to buy, like a new bed). Uncategorized is almost entirely buy and sell investment activity by my investment advisor that mint seems to misinterpret as spending. It doesn't show up in my regular transactions list and their are hundreds of them, not worth categorizing them.

ak907

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Re: Reader Case Study – How am I doing?
« Reply #10 on: March 14, 2014, 08:15:24 AM »
Just wanted to second that you're doing great and the dog expenses are totally understandable.  It isn't like you are going to put the dog down because it has pneumonia!

I'd kill the Roth 401k and start maxing out the 401k.  Don't worry about pulling the money out, you can Roth ladder the money (do a search).  Also, I'd get rid of the managed funds and switch over to Vanguard index funds.  I'm a MMM/JLCOLLINSNH convert and you should read JLCOLLINS' stock series to see if you want to convert too -- http://jlcollinsnh.com/stock-series/.

MissStache is 100% correct.  The Staunton area is awesome and is what I call "Real Virginia" (as opposed to Northern Virginia).  I think Staunton would be an awesome place to retire -- just enough of a mix of restaurants, arts, retail stores and recreation areas.  Land, as compared to DC Metro, is ridiculously cheap as you can get an acre on a river for what a parking spot sells for in DC.  If you venture a little further into the state parks, you'll find areas that are supposedly the most sparsely populated East of the Mississippi.  I believe it.
Why do you say not Roth 401K? Too high income to make it worthwhile?
I have actually read that series, in a flurry with a bunch of other investing opinions and FIRE blogs investing write-ups. J's arguments made a lot of sense to me and are large basis for what I believe now. I will have to go back through again though, this http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/ seems like a pretty good answer to my questions in this area. Any opinions on if this is valid strategy? It feels weird to risk so much money going it alone on one internet guys  strategy, even if the basic core principles supporting it seem sound.

Given all the input I will defiantly have to try visiting and probably camping in the the Staunton area. Any idea of where it is on the religious/redneck south scale (not a big fan)?

ak907

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #11 on: March 14, 2014, 08:18:17 AM »
Home ownership can be a waste too.  Invest the difference, it's often a better plan than high cost homes. (Disclosure: I Bought a house, rented out rooms, the rent paid the mortgage)

Given your age, I would keep the motorcycle. Its an expense but it's fun. Please re-evaluate selling it every 6 months.  IMO its mustachian to have fun, as long as you know what it's cost is. My soon to be wife use to love going for rides, overall they were cheap dates.

For actual investments be careful of break fees.  Also are you sure you only pay $800? Lots of funds have trailer fees, the adviser gets kick backs from the company.  So a fund with 2% MER might include a 0.5% trailer fee, to thank them annually for keeping the money invested with them.
 
There's too many problems/suggestions to make.  I'll let others finish.

Thanks for supporting me on the motorcycle :), its is fun. Caught me by surprise I expected to be bashed upside the head for it :).

The fee situation is still a bit of a mystery to me, but ~$800 is what my year end statement says. I had not heard of the trailer fee deal, that could be possible.

ak907

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Re: Reader Case Study – How am I doing?
« Reply #12 on: March 14, 2014, 08:48:17 AM »
Ak907,

Last question first:
Quote
Does anyone have an awesome spreadsheet they would like to share that they use to track their journey to FI. I use MINT and Personal Capital, but they are both still lacking in abilities to project into the future and perform certain analysis. It would be easiest to start from something someone has already made. Excel sheets are mentioned all the time on the forums but I have not seen one made available.
Many folks can and do make great Excel files, but are reluctant to debug and make them user-friendly enough for others to use.  There are notable exceptions, e.g. http://www.bogleheads.org/wiki/Retiree_Roth_conversion_decision_model.
If you aren't happy with MINT & PC, you might use $70 from the money you'll save from other suggestions and get Quicken Premier - it does have a decent retirement planning function, along with all the other financial software basics.  Considering all the time it would take to develop and debug something similar, it's not an unreasonable price.

To your original question, I agree with Zmonet: max out the 401k (and I'd add max Roth IRA too).  Below is what your cash flow might be in that case - copy & paste into your spreadsheet and adjust as needed.


CategoryMonthly amt.CommentsAnnual
Salary/Wages$5,750 $69,000
...


Wow, thanks! You put a lot of work into that budget!
I am checking out those spreadsheets now to see what I can integrate. The problem I have with buying software is that none of it really seems focused on something like FIRE. They are to focused on typical American problems of debt reduction and strict budgeting. Often they simply don't really show me what I really want to see.

ZMonet

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Re: Reader Case Study – How am I doing?
« Reply #13 on: March 14, 2014, 08:57:29 AM »
I'd max out your 401k rather than your Roth 401k because I think you would be better off deferring the tax since you would likely be pulling in less than the $69k you currently make in your retirement.  IMO you'd be better off maxing out the 401k and contributing to a Roth IRA if you wanted some more Roth exposure.

I think JLCOLLINS' plan is sound and it is backed up by years of historical data.  The more you read here, the more people you'll find that are big fans of index low-fee investing, maybe not always Vanguard -- although that is my low-fee index of choice.  As mentioned before too, you can check out the Bogleheads (named after the founder of Vanguard) board for a lot more information on Vanguard index investing.

I don't get the sense that Staunton is too religious/rednecky.  It is home of the American Shakespeare Center if that is any indicator.  The Woodrow Wilson Presidential Library is also there.  If you go immediately outside of Staunton, you meet people who are a bit more conservative but I wouldn't call them religious zealots or rednecky (also not a big fan).  I did meet somone who made their own moonshine though...lol.  FYI, if you go, t is pronounced Stan-tin, not Stoughn-tin (it is the New Englander in me who wants to pornounce it that way).  http://en.wikipedia.org/wiki/Staunton,_Virginia

Prairie Stash

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Re: Topic Title: Reader Case Study – How am I doing?
« Reply #14 on: March 14, 2014, 10:00:21 AM »
You are doing well for your age. But you need to get a handle on shopping and "uncategorized." That's over $8k right there.

Thanks :). I know where the shopping spending comes from, it is reasonable (things that young people need to buy, like a new bed). Uncategorized is almost entirely buy and sell investment activity by my investment advisor that mint seems to misinterpret as spending. It doesn't show up in my regular transactions list and their are hundreds of them, not worth categorizing them.

WTF! You spend $3000/year buying and selling? Or at least your broker is. Look at Vanguards returns on their Full stock market Index (you have 20k invested).  You better be beating this every year with your broker (compare 3,5, and 10 year returns). If not you are getting suckered by churning. Churning happens when naοve people trust their broker who buys and sells a lot just to earn commissions. Typically you see it on the news with some sob story about the broker generating hundreds of transactions and the recipient trusted them. Then the person tells you how they lost it all and will never retire.

I'll lead with a jab on the $800, then pummel you for the $3000. The broker is getting 1.7% of your money, before the MER of the funds he's buying.

You might have a genuine problem.

mollyjade

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Re: Reader Case Study – How am I doing?
« Reply #15 on: March 14, 2014, 10:38:22 AM »
You are doing well for your age. But you need to get a handle on shopping and "uncategorized." That's over $8k right there.

Thanks :). I know where the shopping spending comes from, it is reasonable (things that young people need to buy, like a new bed).
Cultivate good sources for used items. Especially when you're just starting out, people love to give you the dining room table/bed/whatever that's taking up space in their attic or basement. Learn to look for good deals on Craigslist, estate sales, thrift stores, and garage sales (which is better often depends on your location). Let friends and family know you're willing to accept hand-me-downs. It's good for your pocket book and good for the environment. It also forces you to take your time thinking about a purchase (how you'll use it, how long you'll use it, if you even really need it, and so on) since you can't just go to the store and buy something.

kelly1mm

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Re: Reader Case Study – How am I doing?
« Reply #16 on: March 14, 2014, 09:24:30 PM »
Just wanted to second that you're doing great and the dog expenses are totally understandable.  It isn't like you are going to put the dog down because it has pneumonia!

I'd kill the Roth 401k and start maxing out the 401k.  Don't worry about pulling the money out, you can Roth ladder the money (do a search).  Also, I'd get rid of the managed funds and switch over to Vanguard index funds.  I'm a MMM/JLCOLLINSNH convert and you should read JLCOLLINS' stock series to see if you want to convert too -- http://jlcollinsnh.com/stock-series/.

MissStache is 100% correct.  The Staunton area is awesome and is what I call "Real Virginia" (as opposed to Northern Virginia).  I think Staunton would be an awesome place to retire -- just enough of a mix of restaurants, arts, retail stores and recreation areas.  Land, as compared to DC Metro, is ridiculously cheap as you can get an acre on a river for what a parking spot sells for in DC.  If you venture a little further into the state parks, you'll find areas that are supposedly the most sparsely populated East of the Mississippi.  I believe it.
Why do you say not Roth 401K? Too high income to make it worthwhile?
I have actually read that series, in a flurry with a bunch of other investing opinions and FIRE blogs investing write-ups. J's arguments made a lot of sense to me and are large basis for what I believe now. I will have to go back through again though, this http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/ seems like a pretty good answer to my questions in this area. Any opinions on if this is valid strategy? It feels weird to risk so much money going it alone on one internet guys  strategy, even if the basic core principles supporting it seem sound.

Given all the input I will defiantly have to try visiting and probably camping in the the Staunton area. Any idea of where it is on the religious/redneck south scale (not a big fan)?

If the goal is FI then I will chose "religious/redneck south" ANY day of the week (and twice on Sundays!) as opposed to the hell that is the MD/VA DC suburbs.  To each his own though!

MDM

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Re: Reader Case Study – How am I doing?
« Reply #17 on: March 14, 2014, 10:27:28 PM »
Quote
The problem I have with buying software is that none of it really seems focused on something like FIRE. ... Often they simply don't really show me what I really want to see.
Ok, I'll bite: what is it that you want to see (but don't)?

ak907

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Re: Reader Case Study – How am I doing?
« Reply #18 on: March 15, 2014, 05:43:11 AM »
Quote
The problem I have with buying software is that none of it really seems focused on something like FIRE. ... Often they simply don't really show me what I really want to see.
Ok, I'll bite: what is it that you want to see (but don't)?

Things like what if scenarios relating to how does the ER date change with changes in expected spending or savings rate.
I would also like to see how much an expense would be worth in ten years.
I would like to see the effect purchasing a house has on the ability to retire early.
Once retired I would like to see an analysis of burn rate of the ER portfolio, how long will it last, is to much being used, is there excess.
More difficult, and probably more a fire simulator problem, I would like to answer the question of at what point has a portfolio done so well that you can take more than you initially planned to out of it without affecting its health.

Thegoblinchief

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Re: Reader Case Study – How am I doing?
« Reply #19 on: March 15, 2014, 08:08:03 PM »
GET OUT of that financial advisor at (almost) all cost. Yow.

Adjust your spending downward. Be careful about purchases just because they're what you think you need. Get a handle on what your core expenses are and what you'd be happy living on.

$300k networth would be enough for my family of 5 to pre-tire with a small PT income. If I was single, I'd be out the door already and away from the ridiculously expensive coast. My preference will personally always be for a cheaper lifestyle over working longer.

MDM

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Re: Reader Case Study – How am I doing?
« Reply #20 on: March 19, 2014, 12:05:45 AM »
Quote
Things like what if scenarios relating to how does the ER date change with changes in expected spending or savings rate.
I would also like to see how much an expense would be worth in ten years.
I would like to see the effect purchasing a house has on the ability to retire early.
Once retired I would like to see an analysis of burn rate of the ER portfolio, how long will it last, is to much being used, is there excess.
More difficult, and probably more a fire simulator problem, I would like to answer the question of at what point has a portfolio done so well that you can take more than you initially planned to out of it without affecting its health.
Easiest one first, others following:

I would also like to see how much an expense would be worth in ten years.  Y = X * (1 + i)^10, where Y is the cost in 10 years, X is the cost now, and i is the annual inflation rate.  E.g., for something costing $100 now with inflation at 3%, in 10 years it will cost $100 * (1 + .03)^10 = $134.39.  I'd be surprised if any prediction software doesn't do this.

Things like what if scenarios relating to how does the ER date change with changes in expected spending or savings rate.
I would like to see the effect purchasing a house has on the ability to retire early.

Quicken will do both, perhaps needing some manual iteration for the ER date (yes, it's not built to answer that directly but you can determine it easily enough).

Once retired I would like to see an analysis of burn rate of the ER portfolio, how long will it last, is to much being used, is there excess.
Quicken does this.  At least, I hope it does so because that is exactly how I am using it.

More difficult, and probably more a fire simulator problem, I would like to answer the question of at what point has a portfolio done so well that you can take more than you initially planned to out of it without affecting its health.
As the saying goes, predictions are difficult, especially about the future.  There are various ways to approach this.  A FIRE simulator is one, making conservative assumptions is another, etc.  This is a variant of the previous question and is another way I'm using Quicken.

FWIW and YMMV.

Miss. Takes

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Re: Reader Case Study – How am I doing?
« Reply #21 on: March 25, 2014, 10:42:04 PM »
How are you worth 300k at 26yo? Did you inherit a lot of money? Unless you chose another path, college graduates are about 22 years old and most of them don't have jobs starting at 69k, so how over 4 years were you able to accumulate that much if you didn't inherit it? The math just doesn't add up for me.

4alpacas

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Re: Reader Case Study – How am I doing?
« Reply #22 on: March 26, 2014, 09:22:53 AM »
I'm also trying to minimize my dog costs.  Look for a group in your area that does dog watching trades.  Usually the person has a dog with a similar disposition, so they're prepared to deal with the shenanigans your dog might throw at them. However you would have to be willing to watch their dog when they leave town. 

good luck!

ak907

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Re: Reader Case Study – How am I doing?
« Reply #23 on: March 28, 2014, 05:36:53 AM »
I'm also trying to minimize my dog costs.  Look for a group in your area that does dog watching trades.  Usually the person has a dog with a similar disposition, so they're prepared to deal with the shenanigans your dog might throw at them. However you would have to be willing to watch their dog when they leave town. 

good luck!

Thanks, yeah, it was a surprise that he caused as much trouble as he did for the first folks I left him with. Just not the right energy match/disposition, the second folks he stayed with he didn't cause any issues. Still I may just end up leaving him in a kennel next time due to the stress of this last experience, and the expense was almost the same.
Good luck in your own search!