The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: WestchesterFrugal on March 11, 2014, 02:40:07 AM
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You have an interesting situation and honestly, not a lot of people on this board are going to be able to relate. I'm in the finance field and thought I was well off, but I made the decision years ago to accept a lower income track for a lower lifestyle expectation (I don't get much pressure on joining the country club, people don't seem to care that I drive a Honda Truck, and I was able to transplant my job from a big city to a smaller market).
There are 100 potential decisions to make, but what initially drove the desire for the country club, private school, and $85k sedans? Did you grow up around this, or was this something you always thought you wanted and now have it and realize it may not be the best use of money? Are there career implications if you downgrade your car and drop your membership (club memberships are declining nationwide by the way)
Question #1: Are you open to moving? Can your incomes be translated to a high income southern city like Atlanta, Charlotte, Dallas, or Houston where you can hack your lifestyle costs pretty dramatically while keeping the same level job?
I think those questions are a good start. The facepunch moment: Regarding the stability of your income, Lehman Brothers was also around for 100 years.
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My question #1: why do you care about keeping up with the Joneses? If you stopped doing just half of the things for show, would your jobs be at jeopardy?
Question #2: what the hell does an Ivy league education have to do with your spending? Trust me, I know that crowd and none of them have taken it to the level you have. Perhaps that is a location thing?
To be honest I'm having trouble wrapping my head around your numbers (you get double in a month what I get in a year) but I'll take another look later.
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I work on Long Island in a town probably very similar to where you live... I have seen this lifestyle and I can recognize how hard it would be to live in that kind of place without falling prey to that kind of all-consuming ultra-consumer lifestyle. Another poster asked this- but would your work be transferable to a southern city where col is lower and the joneses are easier to keep up with (since you seem concerned about that kind of thing...)?
What concerns me is the comments you make about your kids- about wanting to at least give them what you had, provide them with things you didn't, etc. It concerns me because... What is the endgame of all this that you see for them? That they will achieve even more than you and have even more money to give THEIR children even more things that even they didn't have with this ultra privileged upbringing? That they will consume even more expensive houses, cars, and clothes? By giving your children this obscenely luxurious life as their baseline, it's going to be very difficult for them to adjust to life if they ever don't make such an incredible amount of money. You appreciate your luxuries because you didn't have them growing up, but what is it going to take for your kids to feel successful?
You don't like to waste but you spend over $5000 a month on utilities and maintaing your yards? That really doesn't make sense.
I'm not sure what you're expecting to take away from this community, but I genuinely wish you luck in meeting your financial goals. Maybe hanging out around here will tempt you to try to keep up with the super-frugal low-spending "joneses" we look up to here. ;)
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Your heading caught my eye. You "have it all". So I guess the question is do you like your life? Are you happy? Your life sounds like the rat race many here have worked to get out of. But you may be very happy. If so, carry on. Figure out how much in assets you need to generate your monthly expenses and save that much. Then you can retire. Or change your lifestyle and retire much earlier.
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Ok, I can't quite wrap my head around that level of income/spending so let's try to approach this in the abstract.
Step 1: Figure out the end game. What do you want your future to look like? Are you just looking for financial stability for an unknown future or do you want to retire early and pursue other ambitions?
Step 2: Start estimating what the above decided life will cost you a year. You know how much your current life costs so start from there and adjust accordingly.
Step 3: Now that you know where you are going and how much it costs to get there, adjust your current spending and saving to support your goal.
Step 4: Enjoy your end goal. Easy peasy, right?
The great thing about your situation is that you have both a high income and plenty of room to shave your spending (if you so desire) to achieve any reasonable goal that you want in a fair amount of time. Right now it looks like you are saving about 26% of your income which is pretty respectable for the general population :) It's really up to you how far you want to go on the Mustachian spectrum. I personally shoot for saving 50% of my income and then don't worry about how I spend the rest. Unless you want a drastically different life in the future or want to bail from work in a few years, you don't 'need' to make drastic spending cuts to boost savings your savings rate. This is the where finances really get personal. What are your long term goals and what are you willing to give up to achieve them...your call.
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Your heading caught my eye. You "have it all". So I guess the question is do you like your life? Are you happy? Your life sounds like the rat race many here have worked to get out of. But you may be very happy. If so, carry on. Figure out how much in assets you need to generate your monthly expenses and save that much. Then you can retire. Or change your lifestyle and retire much earlier.
I don't have much to add, but I agree with this sentiment. Your lifestyle, for better or worse, is a result of a series of choice you guys are making. So the question is are you happy with it? Did you want to FIRE? If you want to FIRE, you can start making choices about your lifestyle that can have you on that path in almost no time. Move, sell your houses and downgrade, move to one car, send your kids to public school, (i might work those additional 4 years until you are fully vested, but honestly- you don't need to) then boom- you're basically FIRE. Congratulations. You might get the dreaded "looks" from your peers, but who cares... well, you seem to care. :)
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I stopped reading when I got to your income. 1 year of that would fund my entire retirement budget, with 3 kids, and probably enough to have 2 additional kids if we chose.
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I think our problems lie in trying to ‘fit in’ with our peer group. We both went to top tier universities and graduate schools, and the reality is none of our friends from school are into living drastically below ones means, or if they are they are embarrassed to show it. It isn’t fashionable for an Ivy League grad on the fast track to talk about pinching pennies and how to stretch a dollar in a budget. So we play along, sending our kids to private schools (the ‘best/most selective/established’ in the area) are members of a ‘selective’ country club that is hard to get into (took years to get 2 sponsors, 10 letters of recommendation, attend half a dozen cocktail parties with current members while being scrutinized, kissing up etc.), have an $85k luxury sedan (to drive to the club and other social events to fit in, of course) and take expensive vacations requiring lots of flying (sometimes international) every year. We both come from semi-humble backgrounds, what I would characterize as middle-ish class, where education was highly valued and material possessions beyond basic needs were desired but a practical impossibility.
Grad of two Ivies here. There are plenty of us who are thrifty. You are hanging with the wrong crowd.
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Your post is fascinating to me because I live in the next community right across the state border from you so I understand the affluenza implulses in this area. The proximity to Wall street and Greenwich hedge funds creates a false sense of the real world, even if you do meet interesting people. I've seen many million $ + homes go into foreclosure over the past 5 years and plenty of used Carrera's on craigslist so I've been striving for FI asap.
Everyone always talks about "keeping up with Joneses" but the difference in costs between our lifestyles is huge - public school, work from home in IT, 1 car (with a lot of walking and bike riding), low property taxes, joined the local beach (great island beaches too) when I bought a house here, volunteer with schools and international nonprofits, I have plenty of time to help kids with their homework, don't need to pay someone to cut the grass or trim the hedge because I like the exercise, very low carbon footprint and sustainable lifestyle.
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You choose what you want to buy into.
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What concerns me is the comments you make about your kids- about wanting to at least give them what you had, provide them with things you didn't, etc. It concerns me because... What is the endgame of all this that you see for them? That they will achieve even more than you and have even more money to give THEIR children even more things that even they didn't have with this ultra privileged upbringing? That they will consume even more expensive houses, cars, and clothes? By giving your children this obscenely luxurious life as their baseline, it's going to be very difficult for them to adjust to life if they ever don't make such an incredible amount of money. You appreciate your luxuries because you didn't have them growing up, but what is it going to take for your kids to feel successful?
You don't like to waste but you spend over $5000 a month on utilities and maintaing your yards? That really doesn't make sense.
I completely agree with Evakatharina. You don't seem to have equated your *own* upbringing in insanely expensive private schools amongst uber-wealthy peers (I'm unfairly picturing Rich Kids of Instagram) and your now-focus on caring what other people think to what you are exposing your kids to. I hope that makes sense: basically you "blame" your own current focus on Jones-ing to your being amongst wealthy classmates for your schooling. Yet you were coming home to sacrifice and modest living by your parents to balance out the reality distortion field. So how do you think your kids will be now that they are being raised in the same scenario, but now without seeing their parents sacrificing financially? Something to think about, maybe.
Private schools, totally fine. Nothing wrong with that. But $1.2 million for your two kids' K-12 education? For that kind of money I would be expecting a brain transplant from Einstein's stem cells. I just cannot imagine an education ever being worth that much money.
I've read of many people who have left the NYC area/Northeast corridor pre-retirement for a cheaper life in one of those pesky flyover states (or the West coast) and found a better life (for them and their kids) while they were at it.
{Also, I'm such a dullard that I read your $71k salary and at first thought that was annual and was really, really confused for a minute. Hahaha!}
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I completely agree with the posters above about private school. What's going to be more beneficial to your kids in the long run, having a private school education and all the expectations and desires that come along with it, or being able to go on awesome trips with their retired parents all through high school and beyond? When you put your kids in private school, you're completely altering the way they see the world. They don't come into contact with people of different backgrounds and incomes. How can you expect them to have empathy for others who are different from them if they're never exposed to anyone who's different at all?
I'm 25 and my parents paid for my undergraduate degree. I went to a public university which was my choice since I didn't want to go into debt. In retrospect, I think it would have been very beneficial for me to have some skin in the game. I was a high performing college student, graduated early with honors etc., and I still had way too much time on my hands. I'm so grateful to my parents that I'm not in debt, but I think having to work through school would have given me a lot more experience and responsibility.
Here's what I'll leave you with: you could lead an entirely different life from your peers of which they will be envious. First, you have to figure out what that life would look like. And second, you have to become secure enough in that vision to make the adjustments to make it happen. Do you want to travel to a different country every summer with your kids? Do you want to go on a cross country bike tour with your family? There's so much outside the bubble of what you have that's accessible to you if you're really dedicated to living differently.
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So what do you want to change?
- Do you want to move before retirement? Do you want to quit your jobs or slow down your jobs to spend more time with your kids?
- Do you want your kids to grow up where you are, or would they be happier in a good public school somewhere else?
- Do you want to continue to belong to the country club and do all the "STUFF" that you are currently doing?
You seem to be of two minds - you refer to the lifestyle as a "disease" of consumerism, "shackles" and "deceptiveness" but have bought into it nevertheless. You are also placing a lot of weight on sunk costs like the initiation fees and
If you don't want to move, then I think you may only be able to make incremental changes - like taking fewer vacations, shopping around for cheaper landscaping companies, etc.
If you would consider moving, then would you be moving for both jobs? Any locations in particular? Palo Alto? Seattle? Boston area? Research triangle (NC)? I live in the Boston area and we have lots of suburbs with VERY good schools (and a good peer group, similar to the private school peer group that you like), with much lower property taxes than Westchester.
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Nothing constructive to add except to say that you are brave for posting up here with those numbers, and obviously have engaged introspectively about this. You've got huge psychological obstacles to overcome if you truly want to make changes that will get you off the luxury-life treadmill, but then, it sure beats the opposite extreme, don't it?
edited to add: Also, I have many friends like you who I went to law school with (several from Ivy undergrads; and we were at a top 10-ish law school) . All are good people who just happen to make a lot of money and have the same desires you do re: giving their kids a leg up. Indeed, one of them is probably your neighbor.
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You're going to have to reconcile whether this lifestyle is something you want or not. You can keep it, but your spending and liabilities are so high that you'd be in big trouble with a job loss or other crisis. People here can suggest a lot of changes, but if you're not willing to actually make them, it won't help. Would getting out of your area, as chasesfish suggests help you reset your life and start a lot smaller somewhere else? The biggest help would be to DOWNSIZE your home. Less money on maintenance, utilities, mortgage, and property taxes.
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I'm not sure that by having a lot of stuff, your kids will realize that the stuff doesn't matter. IME the more stuff we give our kids, the more they want - saying no often does help.
JP is correct: if you want to keep this lifestyle, you can only make changes around the edges. BUT you can make changes by moving and getting different jobs.
I think the other problem is that your lifestyle comes with a package of high costs:
- job location is fixed
- real estate
- country club
- private school
Can you change any one part of that package without changing the whole thing? Or is every part integral to the package?
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Yes we know that bad decisions were made in the past, but if we can afford the ongoing upkeep and maintenance do we stick with the things that are irreversible (or at least hard to get out of)? Are there MMM lifestyle changes we can make without having to go whole hog?
I guess my question is two fold:
1) What are the things that are "irreversible"?
2) What is the end goal of any lifestyle changes that you would make? What would you want the result of your changes to be?
Before I found MMM i also thought a lot of my costs and expenses were irreversible and 'locked in' so to speak, but something that finally clicked with me is that most everything is a choice, and I was choosing to lock myself into certain things. If you have an open mind, then you soon find that pretty much everything is on the table.
If you goal however is to just increase your savings rate- i suppose the most obvious change you could make is to down size your homes(s). You spend more in maintenance, utilities and live in help per year then most people on this board MAKE in a year*. You could drastically increase your savings, by selling one house, and downsizing to something most cost efficient. That move alone would probably secure your financial future.
{edit: year, not month}
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First, props on posting despite being very different from the average mustachian around here.
I think our problems lie in trying to ‘fit in’ with our peer group. We both went to top tier universities and graduate schools, and the reality is none of our friends from school are into living drastically below ones means, or if they are they are embarrassed to show it. It isn’t fashionable for an Ivy League grad on the fast track to talk about pinching pennies and how to stretch a dollar in a budget. So we play along, sending our kids to private schools (the ‘best/most selective/established’ in the area) are members of a ‘selective’ country club that is hard to get into (took years to get 2 sponsors, 10 letters of recommendation, attend half a dozen cocktail parties with current members while being scrutinized, kissing up etc.), have an $85k luxury sedan (to drive to the club and other social events to fit in, of course) and take expensive vacations requiring lots of flying (sometimes international) every year. We both come from semi-humble backgrounds, what I would characterize as middle-ish class, where education was highly valued and material possessions beyond basic needs were desired but a practical impossibility.
Grad of two Ivies here. There are plenty of us who are thrifty. You are hanging with the wrong crowd.
Yep.
My husband and I are both Dartmouth Ivy. I went to a different Ivy law school. He went to Harvard for his PhD. (His brother did HBS, and many of our friends did other elite business schools so we know plenty of that crowd.) We have lots of friends that don't feel this need to keep up. Ask yourself this: If they are only friends with me because of the money/appearances - do I truly want them as friends? Me, I want friends that will be there for me through thick and thin, or richer and poorer as they say.
What I find most astonishing is this:
Total Assets: $7,280,000 (not including “stuff” like cars, jewelry, etc.)
Total Liabilities: $4,468,000 (including private school tuition and college costs)
Income:
Total Income: $77,000
Expenses:
Total Expenses: $59,795
Savings:
Total Savings: $19,975
bringing us to $442k net worth.
First I'm confused by the math, because shouldn't your net worth be $2.812m? In the example above I think you subtracted a house value of $1.2, but that should still leave you $1.612.
Are those income figures monthly? You make almost $1 million a year and have a net worth of $442k. My husband and I are in our mid to late 30s, make less than you save annually ($200k now) and we have including house just over a million in assets. Excluding the house, it's still well over $442k.
Is this the lesson you want to leave your kids regarding finances?
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Are there MMM lifestyle changes we can make without having to go whole hog?
Of course! Concentrate on one area of your budget to cut. For example, start with your grocery bill. None of your friends will notice if you're not buying brand name peanut butter. $1600 is a lot for 6 people. My guess is that your bill is high due to waste and convenience food. Kick the cardboard habit.
When we decided to cut our grocery bill, we started to get our groceries delivered. I know it sounds backwards, but our biggest issue was impulse purchases. $3/delivery saves us about $50/week. Look into bulk cooking, freezing stuff, etc.
I understand the difficulty of cutting back in front of peers and coworkers. I try to make it less about money (which makes people uncomfortable) and more about other things (laziness, weight issues, environmental conscience, etc.). When I was first hired, my boss told me that I needed a new car. I just shrug it off and say something about not wanting to deal with the hassle of test driving new ones. Now my car is no longer an issue. When I bring lunch from home, I make a comment about watching my weight. No one questions my lunch habits.
Good luck! Small reductions will make a big difference.
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Just another voice saying don't let your education make you feel locked into a certain lifestyle. I'm an Ivy grad, too, and most of my friends from school are working in some sort of service capacity (teaching, immigration assistance, nonprofits, public health). There's nothing wrong with your current choice, but it is a choice.
You could quit your jobs and find something else is an extremely low cost of living area if you wanted, while still giving your kids great educations and other benefits. That's easy. It's deciding what you want that will be hard.
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... but perhaps it does lop off some of the potential upside from meeting certain types of 'successful' and interesting people, be it from a networking (business) perspective or just standard human relations.
While I don't disagree that you probably meet some very interesting people, I think KNOW you would meet a whole new group of "successful" and interesting people if you took up some low-cost or free hobbies to replace some of your expensive ones.
I agree with all the other posters that you need to clarify what your goals are before you can decide what changes are needed. Truly, the world is your oyster. I think if you wanted to retire in a year or two, that would be entirely possible. But you enjoy your work, so maybe the 10 year plan is perfect. We can help point out ways to achieve your goal, but you have to define the target.
And I generally don't like to comment on how a person raises their children, but giving them every opportunity and then reminding them of how fortunate they are may not be the most powerful message. Do you (or have you considered) participating in any eye opening service/volunteer events? Something that puts them face to face with the poverty that they are spared from. I would even recommend swapping out a fancy vacation with one of service. I'm not sure how old your children are, but building houses in a developing country would probably make them feel more fortunate than any sort of lip service on the topic.
(As a side note I was brought up in an upper middle class family. Not anything close to the money that you have, but had pretty much anything I ever really wanted, traveled quite a bit, etc. Money was not discussed, simply provided. My college was payed for, including rent, food, etc with enough buffer that I had plenty to head to bar whenever I wanted. Somehow, I grew into a very frugal adult that will retire before turning 40. I'm not at all sure how this happened, as I got nearly zero lessons on money as a child. Long story short, I don't think your children are doomed, but the odds are against them. You/they need to be better than the statistics, which is kind of what MMM is about. )
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@WestchesterFrugal - I can relate to your post to some extent, I work on Wall Street too and live in a nearby community. I myself am not an Ivy Leaguerer but a great many of my friends are.
I bring my lunch to work because its healthier and at an average of $11 a day, 5 days a week 48 weeks a year that’s $2640, making my own lunch probably costs half that, I just don't care what my co-workers think, I usually make fun of them for going to Pret or Cosi or who knows where... We can all afford it, I tell them flat out I would rather keep the cash and we move on. Now when some quits/retires or it’s a birthday lunch of course we go out, that is no longer about being frugal or being healthy it is now about being social so the savings go out the window, but that is the oddity not every day.
We have live in help, I have 2 young kids and we love the extra set of hands, our Au Pair is awesome, I don't care what anyone here says she is family and we will keep in touch with her forever.
I believe in public school personally I think it builds character, we live in a great school district and pay the taxes to boot, you make enough to send your kids to private school that’s you choice, but understand the impact of the expense, and ask yourself what it buys you... If your kids are smart enough they will make the Ivy Leagues anyway, private school is just a rich person’s way to buy their way in especially for legacies and that is what it is. So ask yourself if you are doing it for them or yourself, I'm not judging just asking you to look at your reasoning, I know lots of friend who have changed their minds on how they feel about this…
Country Clubs, well this too is your choice, if you enjoy it stay a member, me I don't golf, I'm more of a skydiver personally, well not since I have kids. I have plenty of friends and don't feel the need to be a member for social interactions, if you like the experience and think it is worth the money keep it up, if not no one will judge you for reallocating the fees to other hobbies you enjoy more.
The rental house, real estate is what it is around here, if it is not causing you stress then keep trying to unload as the market moves.
I have a landscaper, plow service, pool maintainence etc... Time is more valuable to me etc...
My wife loves to shop, however she is more interested in getting deals than anything she will buy her Kooba bags but only at Marshals or TJ's when they are half price and then she wants to sell them on eBay for a profit, Louis only when she gets an employee discount from someone she knows. My wife will negotiate sales tax with NYS. Craigslist has remarkable deals, we never pay full price for anything.
So here is the only part of your post that really concerns me, I didn't really run your numbers and confirm the math or anything, however it is clear you make substantially more than I do by a multiple of over 5, I am a software engineer you are clearly closer to the money some form of trader or banker is my guess. Here’s the thing our net worth’s are about the same give or take a few hundred thousand, but our assets and liabilities are off by millions and so are our expenses. We are also in our late 30’s
I hang out with the same people as you do, maybe literally even some of the same people (not likely though) I've been around Wall Street for the last 10 years or so at many of the major IBanks.
There are lots of things in your life you can change if you want to, the question is do you want to? If so then you have the means to do whatever you want. Personally I'm not so Mustacian as much as I am fiscally responsible and save more than I spend. We just live way below our means. I like a lot of what MMM has to say and agree with a lot of his ideals, but in the end I am far too much of a consumer and capitalist to ever be considered Mustachain.
Feel free to private message me if you want to talk in more depth offline about anything. And by the way, your original post took a lot of nerve on this forum; most people here have no idea how to even think along the lines of the numbers you are talking.
Good luck,
-Mister FancyPants
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With respect to private schools/material possessions and kids, having a proper grounding can and should be independent of what school one goes to and what one has growing up. I think the fact that our kids already have a lot of 'stuff' that we didn't grow up with will help them to see that those things alone don't bring happiness and more likely than not prevent them from making acquiring things (including status) their overarching goal in life - the greediest people with the most insatiable appetites I know were born into poor, not rich, families. We are constantly reminding them of how fortunate they are, and they actually do have the chance to interact with those very different from them in various activities and environments. Our hope is that because they have enrichment and opportunities we didn't have (including a lot of the international travel mentioned) they will be more knowledgeable, well-rounded and interesting adults because of it, and be able to ultimately give back more to society and find fulfillment (and contentment) in life.
Based on my professional background (I am a nanny for people who are like you, except x100) and experience with LOTS of these kids (kids growing up with everything-fancy travel, expensive schools, all the coolest toys, clothes, and gadgets, etc)... I really question the idea that it is even possible to teach kids how privileged they are when extreme privilege is the only normal they have ever truly lived and experienced for themselves. We tend to be blind to our own privileges you know- white privilege, male privilege, etc. Those who benefit from it tend to have a hard time understand what it's like not to have it. Maybe it's possible, but I suspect incredibly few actually manage it. Children can't help but take things for granted. You have seen the MMM articles referencing hedonic adaptation, no? I see kids who are hedonically (is that a word?) ill-adapted to the extreme and will really struggle to ever not desire the material comforts they have grown up with. And it breaks my heart to think of these children growing up without ever really knowing and experiencing that happiness is truly possible without living in a fancy house or driving $$$ cars or having lots of material things or luxury vacations, etc. That is the big thing that so many of these children are NOT being given. It seems so crippling- "enabled to be disabled" is my personal phrase I use when I think about it. When you have it all, you expect it all, and then expect to achieve even more beyond that.
I can't get your case study out of my head. I grew up, like you, going to private schools and envying my peers who had all the outward trappings of wealth and success. I discovered later that my parents could have afforded for us to keep up with the joneses in those visible ways, but instead they made different choices with their money- what an eye-opening discovery that was. That discovery made it possible for me to approach my own life differently than I otherwise might have (I can very easily see myself in an alternate world winding up very much like you), and I'm deeply, deeply grateful to my parents for it. To know that they could have afforded to "have it all" and yet chose to live a modest (but very happy) life. Just to see that as an option that someone might really WANT to choose over flashier and more socially reinforced ones.
Now I work as a nanny for a family like yours- fancy NYC suburbanites- except times 100. Every other week I experience the endgame of that lifestyle-the ultimate life of luxury and privilege-and it's really just not that great. I've gone back and forth with myself countless times wondering if I tell myself that I'm happier than they are just to placate myself into not feeling jealous, or if I am actually happier having so much less material success, and I've come to the conclusion that it's the latter. For all their wealth and privilege and opportunity (opportunities to do good that are rarely seized)... It really makes them no happier than other people and it actually prevents them from being able to be happy in any situation other than the comfort bubble of wealth and privilege they've built for themselves.
If you're serious about trying to change a lifestyle that you've put so much into (emotionally
as well as in pure sunk cost), it's not going to be an easy road. I can see from the perspective of my employers how hard it would be to just walk away from that life. Unbelievably hard for many reasons. You say you are happy, yet you are reading MMM and posting here- seems like you're wondering what a different kind of life might be like. Without a real commitment to changing your lifestyle, you may be nibbling at the edges, but you can still make progress. And maybe one thing will lead to another, and then maybe things that seem impossible now might start to feel more possible.
Anyways, I feel for you and I really wish you the best. You are brave to be here. I hope you take this post in the spirit I intend it- a spirit of kindness and sympathy. The world is your oyster, you just have to identify what it is you want.
(Edited for typos)
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The other posters gave your great thinking points, but I want to address something different. I'm an elder law attorney and it makes me pause when I see someone paying for care without discussing the fact that they also investigated government benefits. If you're paying for your parent's care, then my assumption would be that this parent has limited assets and/or income. You should consider talking with an elder law attorney and looking into NY's home care benefits to help with her care. There is also a benefit from the VA if your parent or their spouse served at least 90 days in the military. If they served for that short amount of time or more, there is a pension available that is over $2,000 per month for a married couple. It's called Aid and Attendance and is a great benefit that helps my clients stay at home and get the care they need.
So bottom line for parental care is that you should talk with an elder law attorney (not any other kind of atty) and see what options are available to help mitigate that cost, if not now then in the future.
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I've started this reply a dozen times but I just don't know where to begin.
I can't imagine your life. It sounds hollow. As a poster above said, you seem to be of two minds. Hopefully, the one that senses that something is very wrong will win out.
Good luck!
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#1 on regrets of the dying:
1. I wish I'd had the courage to live a life true to myself, not the life others expected of me.
http://www.theguardian.com/lifeandstyle/2012/feb/01/top-five-regrets-of-the-dying
Also, it appears that you're thinking about sunk costs incorrectly. Sunk costs aren't supposed to affect your decisions because they're, well, sunk. See "loss aversion" or the "sunk cost fallacy."
http://en.wikipedia.org/wiki/Sunk_costs#Loss_aversion_and_the_sunk_cost_fallacy
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This is a sincere question - why do you send your kids to a private school? Rye, NY has some of the best public schools there are. I can't imagine your kids would be at an disadvantage attending them (knowing a few graduates myself). I'm not saying it's a bad thing that they're going to a private school. I'm honestly curious.
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Interesting post. I live in Western CT and I work in the finance industry, so I do understand your position. I'm in IT and don't make your salary, but I do understand. I'm also new to the MMM blog, so I'm not very bad-ass myself yet.
If I were in your shoes, I would start by cutting the private schools (until college), cut the country club, and plan cheaper vacations next year by camping or staying with friends/family. Don't fly anywhere for a couple of years. Then I would slowly find other ways to cut excess spending. (Do your kids need external tutoring? Can't one of you help them learn?) You could amass so much more wealth than you have now. Why not consume less and amass more? Your landscaping and maintenance costs seem really excessive - is this really worth it to you??
I disagree with the private school claim, but that's probably just because I went to public elementary and high school. I feel public schools offer far more diversity, and that diversity is the best catalyst for learning - I'm not talking about the learning from school teaching, but from experience and observation. Private schools are a bubble containing 100% over-privileged kids. Frankly, I would be concerned about drug and alcohol use at a private school. I would actually be more apt to home school than to send my kid to private primary school. But that's just my choice. Your choice is of course your own.
I'm sure your kids can get into an ivy league university without attending a private high school. I recall that a few kids from my high school managed this, and we were from a small town in Oklahoma. So it must be attainable for any public high school kids in America.
I won't argue about your grocery bill, because I buy all organic, free-range and grass-fed as well.
Props for posting.
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I'm kind of wondering what you're looking to get out of this thread. There's so much money leaking out of your budget that has to do with 'lifestyle costs.' It's hard to make any meaningful progress if you're not up for making meaningful changes.
If you move out of your community to a smaller home without the pressure to maintain a certain image, at the least you can cut out landscaping (get a manageable sized yard and do it yourself), your fancy car (replace with something 1/4 the cost), and country club membership. That will save you $3,770/month not counting the car. Maybe you could move to an area with pretty good public schools and get rid of the school tuition. Because, honestly, how much of them going to private school is for their benefit and how much is for the image? Maybe then your kids will start some after school sports or groups, cutting your 'kid activities' in half or more. It's all a process. Making some changes will facilitate other changes. I'm just wondering what you're really hoping to do. It's clear you can cut back in so many areas, but from your responses it doesn't seem like you're willing to.
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Maybe I'm missing something, but why don't you sell your other house? It has 0 net income...right? If not only to simplify things!
A lot of your expenses relate to your image, as others have pointed out. Does it really matter in the end? Are your friends going to care? If they do care, does that say anything about your friendships? I'm not sure, just wondering. I live in one of the nicer areas of my city, and my neighbor literally gave me a lawnmower when they saw me using a push reel. They probably think we're poorer than shit (for some reason), and I could care less.
Honestly, one of my biggest worries about your lifestyle would be your kids. You say you both came from humble-ish backgrounds...what would your kids say about you and how they grew up when they're adults? What kind of lifestyle expectations are they going to have? In the book "millionaire next door" (which you should read, I think there will be a lot of eye openers as to why a lot of us on the forum can't even begin to relate to your situation), one of the biggest concerns high-spending millionaires have is that they're kids are going to be dependent on them forever--ESPECIALLY if they don't end up with high-earning careers like you and your husband have. Just some food for thought.
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I couldn't figure out your budget. You said you had high incomes, but then only listed $71k and $49k in expenses. I was very confused until I realized you were talking PER MONTH!!!
$49k PER MONTH!!!!!!!
Just below the US median salary in spending, PER MONTH. That is insanity, in my poor/humble opinion. You could comfortably support 12 entire families on your yearly income, think about that. If you spent a still extravagant $50k a year, you could be free from everything in like 4 years.
If I had your problem I would choose freedom over hyper consumption, but then, I have never experienced this kind of hyper consumption; I'm sure it is hard to give up.
You seem to really care what other people think. That is the issue I would work on that will unlock your happiness.
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I often find a bit of extremism from this blog, which can be great if one needs to jump start a change in lifestyle that is on an unsustainable path due to the nature of actions that were not well thought out prior. I own up to a fair number of my own past mistakes, but in reality I don't think my situation is really that unsustainable or uncommon in my corner of the world. I am looking to make changes to work towards becoming better, and as Voltaire famously stated "Le mieux est l'ennemi du bien." (google translate for those who don't speak french)
I don't particularly think I make a lot of money (compared to my peers, both at work and play) and my spending, while high, is still well within our means. So while I shared my situation in hopes of getting ahead of any potential problems that might occur from unexpected events I feel comfortable that there are enough 'margins of safe' built in to get us through 99% of circumstances and potential outcomes.
I didn't go into long drawn out detail about our own values and what we instill in our kids, but I think many reading this would be surprised if I did. That is for a separate post, which I might go into at another time, but probably would need to go into a different section than "Ask A Mustachian".
You are living below your income, so you don't have to change your lifestyle if you're happy with it. However, you did mention that you were open to change. What type of changes are you looking to make?
If you're interested in flipping your thought process, try reading Status Anxiety (Alain De Botton) and The Overspent American (by Juliet Schor). While I didn't agree with everything the authors wrote, the books did help me reevaluate my spending and priorities.
Also, you're very brave to post a case study. I don't think I could handle the face punches I would receive.
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I totally understand the comments and criticisms about choosing the crowd you hang with and the lifestyle you sign up for, but the main point we are trying to convey and the question we are trying to ask is what about someone who has already invested a huge amount of time and money building up a certain lifestyle (sunk costs) but then starts to see the light, analogous to religious conversion - do you just walk away from it all? The rich young ruler couldn't when Jesus asked him to give all he had to the poor and come follow Him, when asked what was needed in order to have eternal life.
Yes we know that bad decisions were made in the past, but if we can afford the ongoing upkeep and maintenance do we stick with the things that are irreversible (or at least hard to get out of)? Are there MMM lifestyle changes we can make without having to go whole hog?
That's really the crux of the matter, isn't it? You've had an aha moment, now you either make some temporarily painful changes or you go back to the way things have always been.
Sure, consumption is a sliding scale. It's not like you're a jerk if you don't keep your expenses under 30k/yr. But I think you know the truth here - that packing a bag lunch here and there isn't going to counterbalance a vacation home, the country club, private school, and live in help. At some point you are just playing at being frugal.
You're on as much of an earn-and-consume treadmill as any factory worker, it's just that your treadmill is awfully cushy and you're already rich by ordinary standards.
Think and decide what matters most to you. Time? Money? Luxury? Being seen as successful? Freedom? Security? Once you know the path will emerge.
Good luck.
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I didn't read all the comments. Here is my general opinion:
I think you should examine the belief that you have to do all this nonsense for your kids. Is this really the best for them? Obviously since I am asking the question, I think no. I think you are maybe teaching them that keeping up with the Joneses is valuable. That is not what I want to teach my kids.
Sure a super elite private school is super elite. But what does that give your kids- lots of super elite friends who they are now supposed to try to keep up with? Don't do that to your kids. They don't need an fancy school, rich friends, and a fancy country club to be happy and successful in life. In fact I would say odds are they will be more happy without it.
I also think you should examine your environmental footprint. From what you have posted (OMG utility bills) I am guessing it is quite high. Owning a Leaf doesn;t impress me relative to all the other waste in your lifestyle.
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To answer the question in the subject, yes you can have it all and retire early.
The real issue that you seem to have is you don't know what "having it all" means. Do what makes you happy not what the Jones do. If the country club makes you happy and you like working longer to achieve it, then its fine. If you would rather work longer than take more time off with your kids in the summer, then keep working.
A main point of the MMM lifestyle is that people often equate spending to happiness. This is a huge mistake. All you need to do is stop paying for the things that don't make you happy. Once you figure out what you want to spend money on, see how long you need to work. And honestly if I had your income, I would be done in a year and spend as much time as I could with my kids while they were young. You can never get that time back.
Also, I do think you are looking at sunk costs wrong. They are sunk costs, so you shouldn't even mention them anymore. They have no factor in what you should going forward. By stating the high sunk costs, it shows you still are adding that into the equation when you shouldn't because that money is already gone.
Anyways. I think you just have to find out what makes you and your family happy and that execute that plan. From your posts, it seems like you don't know what makes you happy so you copy of the lifestyle of the rich. Make your own lifestyle your goal.
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Maybe I'm missing something, but why don't you sell your other house? It has 0 net income...right? If not only to simplify things!
A lot of your expenses relate to your image, as others have pointed out. Does it really matter in the end? Are your friends going to care? If they do care, does that say anything about your friendships? I'm not sure, just wondering. I live in one of the nicer areas of my city, and my neighbor literally gave me a lawnmower when they saw me using a push reel. They probably think we're poorer than shit (for some reason), and I could care less.
Honestly, one of my biggest worries about your lifestyle would be your kids. You say you both came from humble-ish backgrounds...what would your kids say about you and how they grew up when they're adults? What kind of lifestyle expectations are they going to have? In the book "millionaire next door" (which you should read, I think there will be a lot of eye openers as to why a lot of us on the forum can't even begin to relate to your situation), one of the biggest concerns high-spending millionaires have is that they're kids are going to be dependent on them forever--ESPECIALLY if they don't end up with high-earning careers like you and your husband have. Just some food for thought.
Thanks for the comment zarfus
As mentioned in the case study, we actually did try to sell our house, but the demand just wasn't there for our property in a weakening environment at that time. We will list it again next year when the current lease ends.
I have read the "Millionaire Next Door". Great book. The funny thing is, our kids actually don't think we make that much money (their friends are much wealthier with 'nicer stuff') - and are intimately aware of what the 'richer' parents do for a living and kind of want to emulate them. I don't think they are going to be dependent on us, and even if they weren't in a position to make oodles of cash we wouldn't indulge them - we owe them opportunities pre-18yo and education (maybe even some college), and not much else.
I don't know if it is a good thing for your kids to not think you make a lot of money. In other words, they think affording private school isn't very expensive or your lifestyle is normal. I try to let my kids know, that I do make a lot of money and we are very lucky to have the many things we do have. And I make way less than you.
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It might be fun for you to take a year sabbatical, move to a LCOL area, maybe in a middle class suburb, and experiment with what it would be like to live on less than $50k per year. Imagine what lessons it could teach your entire family.
You could use your monthly travel allowance for your ONE vacation for the year. You could use your monthly mortgage payment to pay a mortgage for an entire year.
It would probably be immensely entertaining and educational for your children to experience middle class America, and see what fun could be had at local public parks, free entertainment opportunities (movies in the park, free local concerts, etc).
You could see that interesting people abound who don't make 1m+ per year and who didn't attend Ivies.
I count myself quite lucky to live in a place where a good state college education is valued & respected. While my particular suburb can sometimes be snooty, no one really cares what country club you belong to (if any at all), or where your kids go to summer camp.
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Thanks for the comment zarfus
As mentioned in the case study, we actually did try to sell our house, but the demand just wasn't there for our property in a weakening environment at that time. We will list it again next year when the current lease ends.
I have read the "Millionaire Next Door". Great book. The funny thing is, our kids actually don't think we make that much money (their friends are much wealthier with 'nicer stuff') - and are intimately aware of what the 'richer' parents do for a living and kind of want to emulate them. I don't think they are going to be dependent on us, and even if they weren't in a position to make oodles of cash we wouldn't indulge them - we owe them opportunities pre-18yo and education (maybe even some college), and not much else.
That is shocking. Your children think that spending as much in one month as most people make in a year is not rich? That it's not much money? That is crazy. And proof that no matter how much someone has, they can get used to it and still want more.
What are you looking for? The things to change to save money are obvious. You make enough money to retire any time you want- it's up to you how long you want to work to live whatever lifestyle you decide to live. You are free to live as wasteful (driving a leaf and recycling doesn't make that level of consumption somehow not wasteful. It certainly is wasteful and environmentally unsustainable.) and extravagant a lifestyle as you want, but you're not going to get many pats on the back from people around here for doing it, so I'm baffled as to why you're here. You don't seem particularly inclined to make any changes... So why post this?
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It might be fun for you to take a year sabbatical, move to a LCOL area, maybe in a middle class suburb, and experiment with what it would be like to live on less than $50k per year. Imagine what lessons it could teach your entire family.
You could use your monthly travel allowance for your ONE vacation for the year. You could use your monthly mortgage payment to pay a mortgage for an entire year.
It would probably be immensely entertaining and educational for your children to experience middle class America, and see what fun could be had at local public parks, free entertainment opportunities (movies in the park, free local concerts, etc).
You could see that interesting people abound who don't make 1m+ per year and who didn't attend Ivies.
I count myself quite lucky to live in a place where a good state college education is valued & respected. While my particular suburb can sometimes be snooty, no one really cares what country club you belong to (if any at all), or where your kids go to summer camp.
@Carrie you should Richistan- A Journey through American Wealth
http://www.amazon.com/Richistan-Journey-Through-American-Wealth/dp/0307341453 (http://www.amazon.com/Richistan-Journey-Through-American-Wealth/dp/0307341453)
No way near as good as The Millionaire Next Door, but a very different look at America's wealth, there is part where the child of an extremely wealthy family for his birthday wants to fly commercial as he has only flown private up until that point. A very similar scenario to the one you described.
Anyway the book is worth reading, not Mustachian at all...
-Mister FancyPants
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im having panic attacks reading your numbers :) very brave post , i know its not easy and im proud of you, just by posting here, shows that you want change, and its the mustachian way right? :)
we kinda went through with what you guys are in right now, but definitely not in millions, but i know how it feels when you are 'already in it' its so hard to get out, when i was in the real estate business, i was making $30,000/month easy, but money flows in so quick i dont even realize where the $100 is going. i felt like i was holding a bunch of balloons really tight afraid to let go., but one day, i just let all the balloons fly. it's the most freeing feeling ever. real estate crashed and i dont have the same income to support our lifestyle that we had to file for bankruptcy. dont wait till you get this far. its such a humbling experience and you know what, at the end of the day, its you, your wife, your kids smiles matter most, and those dont come with a fee.
dig deeper and find your happy. its not too late.
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@WestchesterFrugal - What are you expecting to gain from your posting?
You clearly know more about high finance than most if not everyone who is going to respond to you, you have tax adjusted your deferred compensation, and future liabilities for education, your investments are managed by professionals that next to know on this forum has access to let alone even knows exist. You have assets that most people here would never even dream of accruing, your income per month is more than most people make here in a year.
What people look for here is how to manage their debt, cut their spending, and get motivated to change their lifestyles. You don't need help managing your debt, you know how to arbitrage it better than anyone, you know where to cut spending if you choose to and you don’t really need to as it is less than your earnings, from all of your responses to peoples comments you don’t seem to want to. As for your lifestyle you seem quite content with it.
So what are you looking for?
With your income you can shift your high spending for a few years to fully fund accounts to cover your expenses minus taxes which are just due to the high earnings and mortgages. Then unload the expensive house move to cheaper location and then spend like you do know of the fully funded accounts and you are retired, no mortgage, no taxes. But you know this too, 3 years of being truly frugal, banking $1m salaries and you are home free, move to Arizona.
You also know enough about the markets to take enough of you assets to easily trade speculatively, I am also sure you have enough Ivy League wealthy buddies in Hedge Funds that rock the market no problem., so you can just do this now, you don’t even need to be frugal for 3 years, that was just for a nice cushion.
So by no means are you Frugal even by Westchester standards, and there are tons of people on Wall Street making lots more and less then you who have no problem dealing with the retirement early situation...
So once again what do you expect to get out of the MMM Forums?
-Mister FancyPants
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I was interested in this thread when it started. You are an interesting case, much different than we usually see here on the forum. And it probably wasn't easy to come out to this group with your situation. With your income and position you could put your family in a great position of strength.
http://www.mrmoneymustache.com/2013/11/11/get-rich-with-the-position-of-strength/ (http://www.mrmoneymustache.com/2013/11/11/get-rich-with-the-position-of-strength/)
If you wanted to retire and spend the next however long dedicating your lives to your kids and charitable endeavors, you could set yourselves up to do that....realistically probably in 3 years time (extreme end) or easily by 10 years, which is what your current plan is. But with your current spending levels, even with you caveats you have presented, I currently have a hard time seeing how your expenses are going to decrease dramatically.
You can rationalize everything to the cows come home. From what you said so far, you don't seem truly interested in changing. Bringing your lunch? Driving Nissan Leaf? $900 on LED lightbulbs? What first comes to mind is penny wise, pound foolish, but I don't even think that applies. I think this sums it up best....
At some point you are just playing at being frugal.
@WestchesterFrugal - What are you expecting to gain from your posting?
Answering this question is the key I think.
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The kids don't pay the bills - we actually don't 'spend' that much in things that they would see in terms of physical consumption and material possessions.
They do see people coming and going to take care of the property - but as far as they know it is a function of comparative advantage; they see spending on a live-in who they adore and who shuttles them around and helps them each day when mom/dad are not at home as well as helps their grandparent; they see us cooking at home and spending quality time together as a family in evenings and weekends (oftentimes with the the TIME SAVED by outsourcing some services); and they see us going to the club we belong to to meet friends and take part in outdoor activities that they enjoy.
What I didn't mention is that they also know where the $30k/year we give goes to and what the priorities and concerns are for those organizations.
Okay... So if you're fine with all of this... Remind me again why you're here?
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I'm not sure if I read it right, but did you say your current networth is $442k???
if so.
I'm going to do something I've never done before, as I don't consider myself a senior enough mustachian.
FACEPUNCH.
Our yearly income is what you earn in one month. I'm 37.
Our networth is $530k.
You could so totally own this bitch, yet your consumption is holding you back from amassing great wealth in a very short period of time. I'd quite frankly be ashamed to be spending at your levels, even if I could afford to. But then again, I've never thought twice about what other people think of me/my lifestyle/my spending/where or if I vacation/where my kids go to school/what I drive.
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I didn't read all the comments. Here is my general opinion:
I think you should examine the belief that you have to do all this nonsense for your kids. Is this really the best for them? Obviously since I am asking the question, I think no. I think you are maybe teaching them that keeping up with the Joneses is valuable. That is not what I want to teach my kids.
Sure a super elite private school is super elite. But what does that give your kids- lots of super elite friends who they are now supposed to try to keep up with? Don't do that to your kids. They don't need an fancy school, rich friends, and a fancy country club to be happy and successful in life. In fact I would say odds are they will be more happy without it.
I also think you should examine your environmental footprint. From what you have posted (OMG utility bills) I am guessing it is quite high. Owning a Leaf doesn;t impress me relative to all the other waste in your lifestyle.
Thanks for the reply MayDay
The utilities are actually roughly $300 for electricity, $250 for Nat Gas heat and $150 for water each month. There is room for improvement (and those numbers should come down going forward as they are the last 12m before LED bulbs and reduced water use heads and a new toilet which was leaking was replaced)
all this about recycling / Leaf / low LED bulbs etc sounds great and can make a notable difference if you are keeping your outgoings low but with what you're spending these are hardly a drop in the ocean.
if you want to save money and retire, your lifestyle will have to change. not for the worse or even necessarily for the better but it will.
i'd start by trying to find cheap/free activities to do with the kids where you might meet other people with lower outgoings. find some jones that are easier to keep up with and introducing other changes may become easier.
are you afraid you'll lose your ivy league friends if you don't spend all that money on cars / clubs / schools?
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I think almost everybody here is shaking their head in disbelief at this case.
In fact you have so much income that I am surpised you even took the time to find out what you spend your money on. So let me start by being somewhat offensive and then maybe I can get to be being more constructive, after all just about every body here really wants to help folk make smart choices so eventually they can become FI.
First off here is where I think you are.. You have no idea what living in the real world is about... Period!
Secondly... congratulations.. you are rich beyond belief now go do whatever you want... it doesn't matter!
BUT... One day.. it could all come crashing down around your ears like it has for so many over privilaged folks who suddenly realise that they are completely dependent on their incomes.
What if one or both of your incomes dissappeared tomorrow?... it could happen.
How will your hampton neighbours view you as you try to load your TONS of stuff by yourselves into a self rented U-haul?
If your serious (I'm still not convinced your not having fun at the "little people" expense by posting here).. Do what others have posted.. Have fun thumbing your noses at you idiot neighbours while you all ride past on your bikes.. tell the Country club what they can do with their membership.
Then work one more year and quit and take up fly fishing in Montana.
You can make some simple changes and be wealthy for the rest of your lives.. or you can keep rolling the dice that these fabulous incomes will keep rolling in and neither of you will heave a heart attack from the stress of doing what your doing.
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I'm sorry but you speak a different language to pretty much everybody here.
I just hope you can keep all those plates spinning. Odds are you'll be just fine... but I'm sure there are a few folk here who hope it does all come crashing down you so get a dose of reality.
Personally I'd be delighted if you figured out that 90% of your life is complete money fueled BS and that you sold everything and then did something useful like start a foundation that gave malaria shots to everyone in the third world and helped remove one of the worlds biggest killers of young children.
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To get back to the original question, the answer is no, if you define "having it all" as continuing to live your current lifestyle on your current incomes. It's simple math: you have a net worth of $442K, right? Invest that, and at a 4% SWR you will have a bit under $18K per year, which is not enough to maintain your lifestyle.
Or from the other direction, you probably need an annual income in the neighborhood of $300K to maintain your lifestyle, which means you need $7.5 million in investments to produce it. So if you just save another $7 million and change, you can retire :-)
I could go into great detail about why I think this is the case - the standard answers are pretty obvious: smaller class sizes, tailored curriculum, high matriculation rates to desired schools, abundance of extra curricular opportunities (what are the chances your kid will play varsity anything in a high school with 3000 students?).
This really deserves a little thought. First, what are the chances your kids will even WANT to play varsity anything? Second, if they do want to, are you really doing them a favor by having them do it in an environment in which their competition is selected from a small pool? Or will you just be making them big frogs in a small pond: giving them a highly-inflated idea of their own abilities, and setting them up for eventual severe disillusionment when they need to compete in the larger world?
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. . . .
The reality is we have funds in excess of what we need to subsist (like anyone who earns more than they spend), so the allocation of excess resources should reflect the priorities we have. We value education above and beyond everything else, and would gladly trade all of our material possessions and status symbols (incl club membership) to get the absolute best education possible for our children.
When we initially thought about making the decision between public and private, we asked ourselves two questions:
1) is private education really superior to public?
2) can we afford it and would we have better use of the proceeds if we didn't spend it?
We did more exhaustive research on this topic than probably anything else outside of studying in college, and came to the conclusion that for our situation and what we want for our family that private was superior to public. I could go into great detail about why I think this is the case - the standard answers are pretty obvious: smaller class sizes, tailored curriculum, high matriculation rates to desired schools, abundance of extra curricular opportunities (what are the chances your kid will play varsity anything in a high school with 3000 students?). Other aspects were not as clear, but very important as well: what will be the effect of much tighter state and local budgets on education? How easy is it to gain entry to the most selective private schools if you start your child in public and it doesn't work out? What is the real value of rubbing elbows with the kids of other parents with similar values, educational backgrounds and socioeconomic status? Not to mention the benefit of having access to opportunities and people simply based on the fact of where one went to school. To us everything pointed to an easy decision, and we could hardly think of any drawbacks.
. . .
The flaw I find in this analysis is you assume those opportunities are what is best for your kids, but you yourself question your own lifestyle and why you do things and yet you set your kids to end up in exactly the same spot. Once again, I think you are caught up with what the Joneses see as the best (ivy league, Finance Job in NY) versus what is really the best for your happiness.
Look if you weren't questioning your own lifestyle on here, I could see why you would want that lifestyle for the kids because that is what you chose. But you are on here trying to make changes because you don't like something. That makes your analysis seem like you once again are just keeping up with your rich neighbors doing what they think is "best."
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I think the real question you should ask yourself (besides why you are here), or rather a thought experiment.
If you both lost your jobs today. What would you do? What if it took you a year or more to find another job?
Right now with your stated net worth (assuming its liquid) you could continue living as you do for 7.5 months (obviously a very simplified calculation).
I've done this experiment personally, line by line, looking at items I could immediately take away vs the things I need. I'm usually most interested in the amount of time it would take before I would consider selling my house.
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Ignoring the kids/private education/etc., you still haven't answered the question "what do you hope to gain by posting?" You've deflected that question at least twice.
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I used to work for Wall Street firms before I was laid off/gave it up right before our son arrived. The amount of money spent by my peers was insane (buying city blocks in NY insane) BUT it was totally normal for them. Bonuses were paid in the millions to tens of millions - my group made billions for the firm. My colleagues had been raised to be this successful (wealth-wise). Private boarding schools, the right colleges, knowing to make friends with the 'right' people, etc. groomed from young ages. The one-upmanship that went on in that group was....I use the word insane and it was. If one person had their yard redone, everyone wanted their yard redone. And fancier! More expensive! If someone got a new car, the next guy had to get a better one. It was just the way things were done and if you didn't buy into that game then you were definitely viewed as odd and it was detrimental to your career. I was made fun of by my boss for bringing my lunch everyday.
Leaving that world was literally one of the best things to ever happen to me. Yes I was laid off (knew it was coming) BUT I had planned on quitting anyways to be a SAHM. It took me years to get the desire to always have more/better/fancier out of my system. It's not such an easy thing to just quit because it gets so ingrained in you. There's a desire to fit in and get along that exists in these groups and neighborhoods.
I have no financial advice other than lay offs can and do happen regularly. I was lucky in that I knew mine was coming 6 months out so I had time to prepare. If it all goes to hell can you live on one salary and sustain this lifestyle? My boss (he of the mocking my lunch fame) was laid off from an IB several months after I left to go to another firm. It took him YEARS to find something else. And nothing that paid as well as what he had been making (and spending). He even went 'consultant' for a while which is code for 'can't find a job'. Be prepared.
Lastly, my son will also be going to private school (to the tune of 25k a year which is crazy) but the public schools where we are are atrocious. Also my inlaws are covering the bill but even if they weren't we would pay because it's worth it. There are just some places where sending your kids to a private school makes a ton of sense. My husband attended an excellent one and received a MUCH better education than my public school one. Also, we joined a country club close to us last fall and it's a worthwhile expense for us for a variety of reasons. We all have the things in our lives that are important to us and just because they don't make sense to one person doesn't mean they aren't important to someone else. I'd totally ditch the $85k car though ;)
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So, you're living the life you want? What is your motivation for being here? Is there anything "worth" giving up for the life that you want? (Which it appears you already have?...continue circle...)
Sorry. I don't understand your motivation for being here at all. I don't find your post incredibly "brave", either. No more brave than anyone else who bares their financial soul. You have money, you're choosing how to spend it...you can choose to retire early or not. Up to you.
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So once again what do you expect to get out of the MMM Forums?
OP - so far, you have responded several times defending and justifying your lifestyle but you still have not answered this question.
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First, I think it's rad you're posting here and that you've read all the posts. Looking at you on the Wheaton/MMM Scale (http://www.permies.com/t/3069/toxin-ectomy/Wheaton-Eco-Scale), you've looked at all these people 8 levels above you and given it enough time to post here and think about instead of just brushing them off. That's awesome and super fucking difficult. Congrats!
No seriously, that's really impressive. (I don't quite get the posters throwing digital rocks at you until you say "I just really want to wash my ziplock bags!")
And second, I don't think private school should be the first thing you attack. If you want to live more simply, don't make the first thing you do something that really only affects your children. I don't know if the kids will exactly appreciate the reasoning. The car or the club or switching to simpler vacations--those seem like better first targets to me.
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Thanks for the replies so far
For clarification and in answer to some of the comments so far, we both came from modest earning families but were surrounded by wealthy peers (private schools) growing up, and were probably indoctrinated into a false perception of what the 'good life' is. So naturally when we started working and earning high incomes we began to accumulate many worldly possessions (along with the shackles they bring with them) and as one by one they were ticked off the list we looked to acquire 'status' by joining clubs and sending our kids to certain schools, things that are not just available by writing a check or swiping a card. As unhealthy as it all is, I think this is the reality for many people in the northeast who get sucked into the deceptiveness of its call.
I don't think there are necessarily negative career implications from getting off the current track we are on, but perhaps it does lop off some of the potential upside from meeting certain types of 'successful' and interesting people, be it from a networking (business) perspective or just standard human relations. Some of our closest friends were made in this context and many are individuals who, while extremely rich, are very intelligent, thoughtful and do a lot of good for society. This is of course in addition to opening opportunities and doors that would not normally be available to us alone (oftentimes it's not what you know, but who). A lot of the stereotypes of members of country clubs and the wealthy being snobs are unwarranted - there are a**holes everywhere (even among the non-rich) but they are typically a small minority and can be easily avoided (and can oftentimes themselves be very useful from a completely utilitarian perspective as long as one realizes that is the relationship one is signing up for).
As for moving to a lower cost of living area, that is definitely a strong possibility upon retirement (after maximizing income potential during our peak earnings years), if for no other reason that we both think the winters here are bad (this past one has been punishing and is not over yet with more snow coming Thursday). Considerations include moving somewhere like the west coast upon retirement or, if we do decide to stay in the area, at least being a snowbird (Florida is the typical haven for those in the northeast). We are leaning towards the former due to efficiency and lower cost, but the thought of going to a new place and starting over completely is daunting. We also would want to be near our children and wherever their work/life takes them, and the reality is they are probably on track to go to a certain type of college with a limited number of career paths they would ultimately seriously consider (of course we would leave it for them to choose, but I am just commenting on what the typical outcome is, ignoring the outliers, for a lot of kids with their profile: they gravitate to finance, law, medicine, politics, academia, tech). A lot of the best opportunities for young people in those fields are in this northeast corridor, the one exception being tech. In any event, for now we are pretty established/settled in the area with jobs, kids' schools, friends/community, etc. and we appreciate the rich culture and opportunities of the northeast.
The spending amounts shown were for the last 12 months (before we discovered MMM and came to be open to changing things). There are also a lot of sunk costs involved with some of them: the six-figure initiation (non-refundable) for the country club, the activities/sports/music our kids enjoy and are now proficient in, etc. With respect to the landscaping, the honest answer is in the neighborhood we live in you get funny looks if you cut your own grass and do your own yard maintenance. But the practical reality is I don't have time to cut and maintain 6.4 acres nor the expertise to keep it lush and green (which, again being brutally honest, is kind of the expectation of the area). Again, sunk costs as we bought the house and are very settled in what for us is really an ideal location. There are very significant switching costs, besides transactions and broker fees, moving expenses, new furniture (this matches that, which goes with the house, etc - yes it's absurd but this is what we have *already* signed up for).
In reality we are looking for constructive ways we can make the best of our current situation and improve it, and the occasional face punch is a good wake up call as well (love the reference to Lehman).
OK, thanks for blowing my mind WF :). First, if you are in finance you might have come across behavioral economics, and if you've come across behavioral economics, you might have met the "sunk costs fallacy". This the idea that because you have put money into something, you act as if it is more important to protect the money you have already paid by continuing to pay more than to maximize your long term financial outcome. This is the wrong way to think about the problem. If you don't want to keep the country club membership, don't keep paying more money to keep it going just because you've already paid money to start it. If you don't want the big house and expensive lawn, don't keep paying the enormous mortgage to keep it going just because you have already paid so much into it. The money you have paid is gone.
Instead, you need to see it this way: if I give up the country club membership, I won't have to pay X dollars per month/per year. I will end up with Y amount more in my retirement accounts than if I had kept it.
If I sell the house, I will have to pay X less dollars per month for the next Y years, minus Z dollars in brokers/agent fees, etc; this will mean I have (running out of letters...erm...) N dollars more in my retirement accounts than if I had continued to pay the current mortgage.
Once you recognize this, it is simply a values question: which of my expenditures are in line with my values? How important is status seeking in my profession? Which expenses are vital to this and which are not? We can't tell you the answer to these questions. Most folks here have a common set of values, which include genuine frugality. The truth is, from a purely Mustachian perspective, your house, landscaping, food budget, clothes budget, live in help (I presume this is a person) - indeed the whole bloody lot - are all completely insane and could easily be dropped or reduced by 95%. Anyone with two neurons to rub together could reduce these costs. Just saying, :)~
Sell the house, move to cheap suburb, live in 2000sqft house; 300 dollar a month food budget; 2 cheap cars; 1/2 acre lot; cut grass yourself....blah blah blah...you could have retired completely several years ago. This is the sort of stuff mustachians do. We probably can't help you with questions about whether to reduce the home help's hours or shop at merely expensive department stores vs. insanely expensive ones. We can't tell you whether to go with private school or public. This is the wrong crowd for the questions you are asking.
BTW, I also agree with the posters above about the values you are transmitting to your children. You show an admirable motivation to protect and invest in them, even at your own expense. However, there is research that suggests that raising children in a very affluent environment reduces their motivation and desire to succeed and inhibits their future income earning potential (it is unlikely, for example, that your kids will be able to earn as much or more than you do, but they are "baselined" at the level at which you have been living). Surrounding them at school with extremely wealthy children, with intensely consumerist values, rather than children who are merely upper middle class is also likely not good for them. I'm with you on the value of education, but the education you receive at school is not just in English, Maths and Science: it is also and education in social relationships and social values. This would concern me greatly.
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I understand what sunk costs are - and if you read carefully each of the examples are actually in fact consistent with the definition
Yet you wrote in the OP,
but at this point we are pretty well committed (with tons of sunk costs)
Being "well committed" due to sunk costs is exactly the fallacy. Changing requires ignoring the sunk costs. Maybe you aren't ready to change yet?
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Well even the myth of "Ivy league".. Worse engineering graduate I ever had working for me had a master from an Ivy league school... Completely incompetent.
Doesn't matter though, her connections will probably mean she earn more money than I ever will.
Personally I find more reward mentoring kids who have NOTHING, sometimes not even enough food to eat. (I grew up in the poor East End of London, first of 3 kids to EVER go to University from the school).. yes I started at the bottom and just retired at 52 by scrimping and saving ended up with a fraction of what these people have!
I have multi millionair friends who drive around in Mercedes SUV's, I love making a point that I love being frugal and I don't give a rats ass about their millions.. And guess what.. they find ME valuable as THEIR friend... Clearly I must be worth more than the money I make... I wonder if the OP can say the same?
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@WF Do you feel like there are changes you're going to make based off of some of the comments that have already been made? It's hard to make more suggestions at this point because some of your replies have made it seem like certain categories are off limits for cutting. And other things seem almost pointless at your level, ie. reducing your food spending by $200/month isn't going to make much of a difference one way or the other.
Perhaps you could post your net worth in the traditional sense of the word, as that bit was a little unclear in your initial post.
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We have,... You spend too much and if you lose an income or two your screwed!
The good thing is you can cull 95% of your spending (for Gods sake, sell that stupid house!) but you have to be prepared to give your neighbours the middle finger.
unless your prepared to do that and be derided for doing so your kinda stuck in this hi earn/hi spend world.
Personally it doesn't matter to me how much you earn.. good for you, but I think your sitting at the top of a house of cards potentially.. Lots of people have fallen hard from where you are.
You have to decide what do YOU want?.. Buying a Leaf won't make the slightest in your situation
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So, obviously you are still in the process of figuring out what you want from life. Which is fine. However, as someone who's moved in and out of similar circles over the course of my life, I have some thoughts.
First, it's not about the Ivy League degrees. I have three, many of my friends are people I met at one of those institutions, none of them live like you. It's about working in finance in New York City. You say you love your jobs, but maybe there are other industries that you could use your skills in, that wouldn't immerse you in a culture of insane spending? I've spend time in the bay area tech world, and while there are lots of rich people spending lots of money there, I think there is less pressure to keep up and more diversity of interests. Also, I second the thought on moving to a different city even if you stay in finance.
Second, on the private schools. My parents sent me to a fancy private school growing up because I was 'gifted' (or tested well, at least) and the local system was not equipped to handle that. It was very much a mixed blessing. Despite being from an upper-middle-class family, I constantly felt poor because all of my classmates were significantly wealthier. Yes, I did end up at an Ivy League school. I don't know if I would have made it there if I had not had a private education. But I was kind of miserable for much of high school, and I am not convinced that was a worthwhile tradeoff. Plus, as others have mentioned, you are setting your kids up to have a very narrow idea of what "success" looks like, and they may not be naturally drawn to high-paying professions. Personally, I want my daughter to have the life skills necessary to live off of a middle-class salary, or even less, so that she can have more freedom choosing a profession that appeals to her rather than feeling like she has to make lots of money. And note that of the professions you list that your children might consider, several of them (politics, academia) do NOT earn you the kind of cash necessary to maintain your current lifestyle.
Finally, a lot of what you spend seems to be motivating by looking good in your peer circle. That really makes me wonder how satisfying those relationships are. Are these friends of yours people who would still want to know you if you somehow went bankrupt? Are they people who you can talk to about your problems as well as your fancy car? Are they people who would bring you food and sit with you if a family member got ill? Maybe you just aren't talking about the more personal aspects of these relationships, but your posts don't make it sound like you actually have meaningful friendships with these people. Networking is all well and good, and I believe you that many of these people are interesting to have conversations with, but are they really your friends? If so, they should understand if you downsize your house, etc.
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You seem to defend every decision you've made and every dollar you spend. You have the right to do so since it's your money and it's your life. I think you are either 1) having some fun (as frankh said) or 2) are so far removed from the MMM mindset that you can't see past your own logic.
If you were hoping for a response like, " I was in your shoes until I switched country clubs" or "try cutting your spending on vacations by only going to Paris in May" you've misunderstood this place (IMHO). To 'get it' you must differentiate between what you WANT and what you NEED. You (and your kids) don't NEED private school, lawn care, a country club, 3 cars or many many other things you consume. If you WANT them, that's fine but I'm not sure you will get any good advice here because most people here are focused on what they NEED to be happy (and retired).
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Are you able to "sell" your country club membership? Not sure which club you belong to, but some are structured with equity and non-equity memberships that you could sell. There are plenty of other camps your kids could go to in the area that are still upscale. It might also give you a chance to meet new friends.
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Are you just trolling? You've shot down every suggestion posters have made, with the exception of cutting back on landscaping. If you're happy with all of your choices, why are you here? You make plenty of money and have a surplus every month, so if you're happy with all of your choices, keep doing what you're doing and enjoy.
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What about cash flow? Are you cash flow positive on your base income? Inclusive of the rental property?
Btw, the comments about sunk costs, as I read them, are primarily about the rental property. Regarding the rental, you keep make vague references to "sunk costs" and the value "not being there" the last time that you placed it on the market. Have you done the analysis of your holding costs versus the anticipated market gains? It might make more sense to sell now at a lower price than you'd like.
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ok here's a few questions, i apologize if this has been previously answered, just wanting to help:
the taxes for $24k - are you setting this aside to pay it by end of the year? or is it a monthly amount taken out of your paycheck?
looks like this is your biggest expense.
are you interested in moving back to your old home? there's no point in keeping it when its not giving you a positive cashflow.
maybe if you can sell your old home and use the proceeds to set aside for your year end tax that will free up about $25k per month and you can put it towards your retirement or pay off your home, either way it will save you from $18k - $25k per month. That's about $300,000/year towards your retirement.
do you own a bike? its a good exercise and can save your gas expense since you moved closer to work right?
food looks good!
charity giving helps with your excess funds too, you might want to check charities close to your heart.
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Yeah I'm done here.. Now I'm late for my shift in serving at our local soup kitchen!
Wonder if my clients will want to talk about the 6 figures they sunk in their country club memberships?
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The kids don't pay the bills - we actually don't 'spend' that much in things that they would see in terms of physical consumption and material possessions.
Between the property maintenance, landscaping, live in help, country club, groceries, vacation, utilities, kids activities, shopping, cars, restaurants and entertainment, you are spending $14k per month, without even including the mortgage. What makes you think your kids don't see any of this consumption? Just because you have friends that spend much more than you do, doesn't make your level of consumption normal.
You can tell them you cook your own meals and drive an electric car, but you are putting in a lot of effort to make sure the grass looks green and the furniture matches the drapes to impress the neighbors. This effort will also have an impression on the children.
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Btw, the comments about sunk costs, as I read them, are primarily about the rental property.
Nah, it's also about the country club fee, among others.
From the OP,
There are also a lot of sunk costs involved with some of them: the six-figure initiation (non-refundable) for the country club
This is textbook fallacy. :)
I hope the other person who commented about 'sunk costs' also reads this (or that you yourself do) before asking about it again in another reply
Yep, I read it. Sorry I wasn't clear but the financial fallacies at least should be obvious, unlike the other more squishy sunk costs, such as education. You probably know that though.
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Ah thanks for clarifying and for the education on 'textbook fallacies'
NP. Likewise, thanks for the instruction about NPV projects and externalities.
Good luck with your well committed sunk costs. I hope you find what you really need.
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See below for tips!
Expenses:
Property Maintenance: $2,300 (for both properties combined: snowplowing, budget for anticipated repairs over time, etc.)
Landscaping: $2,000 (both properties, grass cutting, hedges, spring/fall cleanup, 6.4 acres total)
$800 You might incur some upfront costs, but you replace everything with low maintenance native plants that are drought resistant! Still might need seasonal touch up
Live-In Help: $1,800 (this is salary in addition to room/board)
Country Club: $1,770 (includes all meals, drinks, fees, summer camp)
Groceries/Household Items: $1,640 (this is for 4 adults and 2 children)
Vacations: $1,250 (flights and some hotels are paid via miles/points from credit cards and flights/stays for work travel)
$833 Only two vacations a year!
Utilities: $1,120 (primary residence only: cable/internet/phone/wireless, electricity, natural gas heat, water – quite high due to sprinklers in summer to maintain that nice lush lawn we pay so much for)
$550 You cut the cable, you rip out the lawn and replace it with an drought resistant plants! No more watering! Also, check out IP Daley’s Superguide for cell and internet use!
Kids’ Activities: $685 (all lessons, fees, activities, tutoring)
$200 They go to private school no more tutors needed!
Shopping: $500 (gifts, personal items, miscellaneous – plug account)
$250 Halved! just because your trying to cut back!
Auto Insurance/Maintenance: $480 (3 cars, all 2007 model or newer: 2 for commuting – the above mentioned Leaf and showoff machine, 1 small SUV for the grandparent/nanny to take kids to schools and activities)
Public Transportation: $330 (train tickets, subways)
Gasoline: $230
60$ Guffaw! You take the train, stop driving!
Restaurants/Eating Out: $200
You don’t eat out anymore, you go to the country club!
Entertainment: $80 (Netflix, iTunes, Movies, etc)
$8 Netflix Streaming only, OTA, and the Library
Total Expenses: $59,795 $56,451.33
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I too went to Ivy's and have a salary similar to your household. My living expenses are substntially lower. This was a consious choice. I want to retire at a comfotable level, and I would rather delay the fancy clubs and trips and oversave now. So rather than three big trips a year, I do one. No country club with a six figure entrance fee, a great gym and lots of groups that do things I enjoy.
I would encourage you to think about one thing. Given the reluctance you have shown to the suggestions that you downsize the lifestyle so far in this thread, are you really going to be able to live on $84,000 per year? Your current spending is more than $700,000 per year. Talk about big change.
A recast of your expenses is below - compare to 84 K per year that you say you will spend in retirement.
Taxes $295,200 (31.95%) This will be much lower (maybe zero) in retirement
Mortgages 218,400 (23.6%) You will still have taxes and insurance on a $1M place. Guess $20-$30K
Maint& Land 51600 (5.6%) Will be much lower - $8K?
Charity 30,000 (3.25%) You may still want to give substantially. Guess $5-10K
CClub/Ent/Rest 24,600 Are you really giving up the club? At least 10K, maybe more.
Nanny 21600 Goes Away
Groc/ HHold 19680 Guess at least 7500 after kids are gone
Utilities 13440 $5K in a lower maintence place
Travel/Vaca 15000 Likely stay the same
Auto Related 12480 No idea how many autos you want to keep. Guess $7.5K
Kid Stuff 8220 Ideally, once they leave the nest they are self supporting
Shopping 6000 Assume this include clothing, gifts. Likely to stay the same
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Not sure whether it is worth jumping into the fray. But here I go, dipping my toe in.
I wanted to see what your data looked like with the Millionaire Next Door formula that determines whether you are an average accumulator of wealth, under accumulator, or prodigious accumulator of wealth.
Assuming an age of 35, and the 77,000 monthly salary, an average accumulator of wealth would have a $3,234,000 net worth. (The same formula would give an average accumulator of wealth a net worth of $3,234,000 if you took the rental income out of the equation and used the $71,000 monthly figure). That's quite close to your stated "more traditional net worth" of $3.117 million. So if I used the right data, you are an average accumulator of wealth. Me too. But I'm working super hard to become a prodigious accumulator of wealth. Because us MMM'ers shoot for above average. Obviously, up to you if you decide to do the same!
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I understand what sunk costs are - and if you read carefully each of the examples are actually in fact consistent with the definition
Yet you wrote in the OP,
but at this point we are pretty well committed (with tons of sunk costs)
Being "well committed" due to sunk costs is exactly the fallacy. Changing requires ignoring the sunk costs. Maybe you aren't ready to change yet?
Unlike money, the time/emotions/experiences you have invested with friends/associates/colleagues can't be flipped around without consequence. If a project is NPV negative due to some externality you can make the case to turn off the lights immediately no matter how much money you have already thrown at it.
Are personal relationships the same? How about a career? What about education (and the value in continuity)? At best, you might be able to make a case that they are still 'sunk' but it's really not as simple as the 'sunk cost' from a purely economic sense.
I hope the other person who commented about 'sunk costs' also reads this (or that you yourself do) before asking about it again in another reply
OK, so the "sunk costs" are not economic, but rather about what happens to relationships if you end the country club membership, the house and so on. I presumed they were economic because you described the issues with having to pay broker's fees, etc. Obviously the same does not apply to relationships, since one can't simply replace one relationship with another cheaper one.
You've mentioned in the thread that you use the house to entertain; presumably the club is used to meet people, and that is the value in not cutting it. OK, then my question is about the relationships - if you need the house and the club to continue these relationships, just how real are they? Is it just a matter of location - you wouldn't meet up with these folks in a casual way? If you live in a merely upper middle class neighborhood, would these friends still want to come to dinner? Are these colleagues you really feel the need to impress by inviting them to a huge house, and you might lose out on future prospects or promotions if this stuff wasn't there? Do you care all that much about such prospects if you are interested in retiring early?
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Expenses:
Taxes (Fed, State, City, SS, Medicare): $24,600
2 Mortgages (PITI): $18,200 (Have you done the math on paying these off? You mentioned that you don't have much in equities due to your jobs and the tax savings don't exist at your income level.)
Charitable Giving: $2,500
Property Maintenance: $2,300
Landscaping: $2,000 (both properties, grass cutting, hedges, spring/fall cleanup, 6.4 acres total) (Can you look into less time/money intensive landscaping? Natural forest, rockscape, etc. etc. Alternatively, you could do you own yard work . . . or have the kids do it. You're great at spin - sell it as the "next new thing" among your peers). Is the rental also in the swanky location (sorry - got tired of trying to go through the OP for the tenth time to find it) or can it's landscaping be seriously curtailed?
Live-In Help: $1,800 (this is salary in addition to room/board) Your live-in help only gets $21,600/year after room and board with what you make and they do for you? I would actually be in favor of increasing this expense, but that's just my non-1%er bias coming out. Take it or leave it
Country Club: $1,770 (includes all meals, drinks, fees, summer camp)
Groceries/Household Items: $1,640 (this is for 4 adults and 2 children) How much are you eating at the country club? Do you track this category any tighter (what is groceries, what's toilet paper, and what's "misc" but at the same store)? Definitely some low hanging fruit but we don't have enough detail and it wouldn't make a dent in your spending, so up to you to look into it some more.
Vacations: $1,250 (flights and some hotels are paid via miles/points from credit cards and flights/stays for work travel) Is this five star hotels and luxury spas or is this the average person's vacation only to more expensive locations?
Utilities: $1,120 (primary residence only: cable/internet/phone/wireless, electricity, natural gas heat, water – quite high due to sprinklers in summer to maintain that nice lush lawn we pay so much for) Split this out - I would be willing to bet 10% of our respective monthly salaries that you are not on the most economical for your actual usage phone/cable/internet/wireless packages. Note that I didn't even say the most economical!
Kids’ Activities: $685 (all lessons, fees, activities, tutoring) It's important, keep it.
Shopping: $500 (gifts, personal items, miscellaneous – plug account) I am assuming this is you and the missus as I would categorize all kid spending in the above category. How is this "never spending money on ourselves?
Auto Insurance/Maintenance: $480 (3 cars, all 2007 model or newer: 2 for commuting – the above mentioned Leaf and showoff machine, 1 small SUV for the grandparent/nanny to take kids to schools and activities)
Public Transportation: $330 (train tickets, subways)
Gasoline: $230
Restaurants/Eating Out $200
Entertainment: $80 (Netflix, iTunes, Movies, etc)
Total Expenses: $59,795
I don't see the point in nickel and diming at your income, but if you have to start somewhere . . . . .
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....(Quote) children and wherever their work/life takes them, and the reality is they are probably on track to go to a certain type of college with a limited number of career paths they would ultimately seriously consider
That sentence made me feel so sad. Isn't the point to open up opportunities for the kids instead of limiting them?
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Yeah I'm done here.. Now I'm late for my shift in serving at our local soup kitchen!
Wonder if my clients will want to talk about the 6 figures they sunk in their country club memberships?
We can only hope you treat your 'clients' with more dignity and respect (and less anti-pedantic sarcasm) face to face than you do your fellow forum members posting anonymously on the internet.
Oh if you asked me face to face I'd give you the same response.
My point is not to be-little you, just that hopefully one day you'll wake up and realise how crazy this lifestyle of yours actually is. You have a fabulous income but it is hard for me to take seriously your plight when you simply push back and tell us how you can't make real changes.
You can make any change you want, including selling the house and subsequently drastically cut back on your expenses. Do you really care what the Joneses think?.. If so keep doing what your doing.. if not screw them and spend like these guys. https://forum.mrmoneymustache.com/share-your-badassity/free-at-last!/
You could do this if you wanted to!.. Whats more believe it or not its fun and you could get your kids in on the fun too.
I would sincerely hate for you to come back in a year from now having lost a job with a very different story... In SoCal there were Ferrarri's showing up at food banks during the great recession.. I kid you not.
I had friends who bought Multi million dollar houses in LA and two SUVs on credit.. doing the same thing you are now.. they lost the lot!
I appologise to being sarcastic I really shouldn't do that.. (I'm English we all do this).. but if tomorrow morning you said... "Holy F.. No wonder that guy was being such a Jerk".. and you went out and made real changes.. even if it does limit your careers so what?.. then it was worth it.
If all you are looking at doing is trimming round the edges then you have plenty of ideas already.
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This is a really tender subject for me right now since last night I watched "Top Gear" go to Myanmar and I got the tiniest glimpse of what 99% of humans on this earth live like and just how privileged I am as a white American even though last year my husband and I made TWO WEEKS of the OPs salary. I mean, my mattress isn't flea-infested and covered in excrement. I hit a switch on the wall and lights come on. Clean, potable water comes out of every faucet. The grocery store has an abundance of food all in one place. I can be an atheist and I won't be killed or arrested for it (touch and go in certain places in Texas, but still), etc.
"Sustainability" comes in many forms, not just monetary. Just for starters: a Nissan Leaf, LEDs, and recycling are never going to offset one month of the OPs sprinkler use. And I'm only picking on that because OP brought it up. (FWIW, I don't find your house size unreasonable at all for 4 adults and 2 kids).
I've been making my life choices recently like this: if every human being on the planet lived like I do, could all 7 billion of us survive? I'm not perfect at all (I drive everywhere and I'm not quite ready to stop flying though we've cut back substantially), but I'm working on it diligently. That, to me, is sustainability. Living simply so others may simply live (Gandhi? not sure).
To the OP: Are you seriously trolling all of us? This thread is insane. I started the day thinking "interesting enough topic" and now I'm telling myself that none of this is real because that's what's going to get me to sleep tonight. To my fellow MMM'ers: roll on with your badass selves.
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I understand what sunk costs are - and if you read carefully each of the examples are actually in fact consistent with the definition
Yet you wrote in the OP,
but at this point we are pretty well committed (with tons of sunk costs)
Being "well committed" due to sunk costs is exactly the fallacy. Changing requires ignoring the sunk costs. Maybe you aren't ready to change yet?
Unlike money, the time/emotions/experiences you have invested with friends/associates/colleagues can't be flipped around without consequence. If a project is NPV negative due to some externality you can make the case to turn off the lights immediately no matter how much money you have already thrown at it.
Are personal relationships the same? How about a career? What about education (and the value in continuity)? At best, you might be able to make a case that they are still 'sunk' but it's really not as simple as the 'sunk cost' from a purely economic sense.
I hope the other person who commented about 'sunk costs' also reads this (or that you yourself do) before asking about it again in another reply
OK, so the "sunk costs" are not economic, but rather about what happens to relationships if you end the country club membership, the house and so on. I presumed they were economic because you described the issues with having to pay broker's fees, etc. Obviously the same does not apply to relationships, since one can't simply replace one relationship with another cheaper one.
You've mentioned in the thread that you use the house to entertain; presumably the club is used to meet people, and that is the value in not cutting it. OK, then my question is about the relationships - if you need the house and the club to continue these relationships, just how real are they? Is it just a matter of location - you wouldn't meet up with these folks in a casual way? If you live in a merely upper middle class neighborhood, would these friends still want to come to dinner? Are these colleagues you really feel the need to impress by inviting them to a huge house, and you might lose out on future prospects or promotions if this stuff wasn't there? Do you care all that much about such prospects if you are interested in retiring early?
The club is used for social events, and it's great to see friends and familiar faces, but we utilize it the most playing competitive tennis, paddle tennis and golf, as well as using the pool in the summers.
The people we host in our home are close friends we know from various ways: school, hometowns, work, friends from town, kids' friends parents, etc.
We actually don't have a 'huge' house that is impressive with outstanding curb appeal. At 4000sqft (including finished basement) it is large enough so that the 6 of us can live comfortably and entertain from time to time, but there isn't a single room that isn't utilized often.
Quotes like this are exactly what everyone is commenting on. 4000 square feet is HUGE and unnecessary for 6 people. I'm sure it's very nice to have, but not necessary. And your income is huge, too, regardless of whether or not your peers make more. If you're fine with all of your choices, this is pointless. If you're not okay with it and want to change, make big changes. Basically, the answer is you can't have it all, if all is retiring early and continuing at your level of spending.
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There are a lot of people who are going to make harsh comments. You've done a good job of not getting frustrated by the comments, I'm sure you anticipated they would come. There have been a lot of useful comments as well. If you focus and respond to those, I'm sure there is a lot of good discussion that can occur and everyone can learn from.
[Do you (or have you considered) participating in any eye opening service/volunteer events? Something that puts them face to face with the poverty that they are spared from. I would even recommend swapping out a fancy vacation with one of service. I'm not sure how old your children are, but building houses in a developing country would probably make them feel more fortunate than any sort of lip service on the topic.
I read through (almost) all of the comments, and I think this was probably the best one of all. You have talked about how important experiences are, and this could be at the top of the list for your family. The trip wouldn't be that expensive and be highly educational. But don't go with a charity that has high-income donors. Find smaller charities that don't have connections.
I also like the idea of cutting the yard maintenance down. How old are your kids? I spent my whole life cutting the grass (7 acres, though not manicured at all) with my dad. It could be a good experience for your family. Maybe start with just doing an acre or two.
I also really liked the idea of spending some time living in a less effluent area of NYC. A year is likely more than you would do, but what about a month or two during the summer when your kids aren't in school? You could rent out your house and put that money towards retirement while getting a different experience. I think there are a number of these creative types of things you could do if you think outside the box a little.
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Is anyone else starting to get joet flashbacks?
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I think the budget/plan is very realistic when one has already bought all of the main things needed (including primary residence) with no debt at a 3% withdrawal rate.
Case study solved.
Good job everyone.
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I actually serve on the board of a non-profit organization focused specifically on helping the needy in our community.
That's great and is good exposure. I still think it's a great idea to go to a third-world country and serve there as well. That provides a whole different experience. It's also very different to spend days or weeks serving in a needy area than it is to spend one day there. And charities that don't have big donations and budgets attack their goals in different ways, which is great to experience.
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btw, what is the appropriate size house (incl basement) for 6 people?
Well I don't make anywhere near what you do, but I am in the 6-figure range and we live at 233sqft/person. That is my wife, my daughter, and I in 700sqft, and I find it accommodates us quite well. I am hoping we can shrink this some actually to help us ignore the urge to acquire more things. YMMV
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Based on your current expenses, you need investable assets of $17.9 million to retire early. So no, you cannot retire early and have it all. Your Property Maintenance, Landscaping, Country Club, Utilities, and showoff machine are excessive waste. Almost everything else is "fine" but could be improved upon. Your eating out expense is actually impressive.
Thanks for the comment minimalist.
Retiring early doesn't mean *now*.
There is a 10yr plan that was mentioned in the original post. Costs go way down when the nest is empty.
Sorry, my head exploded from reading your expenses so I wasn't able to thoroughly read all the details of your post. I think it will be difficult to go from a ~$30k a month lifestyle (which excludes taxes, rental, and education costs) to $7k a month lifestyle, but you can probably work your way there over time if you start caring less about what other people think.
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I think this poster wasted a lot of people's time because she is not interested in changing, etc. I have read stories of people making lots of $ that had a "lightbulb" moment and did make huge changes but sorry to say at the present time she will not be one of them. I don't think anyone else should waste their life energy on this person.
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the main point we are trying to convey and the question we are trying to ask is what about someone who has already invested a huge amount of time and money building up a certain lifestyle (sunk costs) but then starts to see the light
Get over the whole sunk costs thing; I believe you are using them as a proxy for not wanting to give up the swanky lifestyle. Yes, at some point, you do just have to walk away, like a child giving up his security blanket or pacifier. For the child, those things represent a "previous version" of himself, a prior life that he has grown beyond; they are meaningless to him now. Same for you, if you really want to change your life, then all those sunk costs should look to you like expensive photographs.
Yes, they are sunk costs, but they are sunk like an anchor: there is still a rope to them which continues to drag you down. So much maintenance to, as you've literally said yourself, keep up appearances.
Correct me if I'm wrong, but what I distilled down from your original post is that expenses are about $60k/month and net savings is about $20k/month. That's a 25% savings rate. You're doing better than the average American, for sure, but a more significant savings rate is required to get some traction with this crowd. And, by my math, you're looking at 14 or 15 years of savings before your portfolio will cover your expenses, and that's assuming a fairly generous 5% real return.
Just like there are assholes at every demographic, there are also wonderful people at every demographic. You say you want to continue to hang with the wonderful people you've met, and continue to foster those relationships. I think it's a real test of these peoples' character though, if they continue to desire to be friends with you if you give up all the trappings of conspicuous wealth. Worst-case, you're forced to seek out new wonderful people at a lower income bracket. What do you want your kids to see as they grow up? Their parents living in a "bubble" of other similarly---and blatantly---wealthy people? Or their parents interacting with lots of different people across all income ranges?
I have friends who I think are also wonderful people. And I don't think anyone would disagree with my characterization of them being wonderful. But they are wealthy (not quite at your level, but high) and I already feel some friction as I try to save money while they increasingly flaunt their success. It's frustrating. I wouldn't say they are bad people or that they are "wrong", or even that they have poor character; I know they still want to be friends. But I think a big part of friendship is shared values, and what is your lifestyle, but an expression of your values? So while I'm sure we will remain friends, it's hard to stay "tight"; and, frankly, there are some subjects where we just can't relate.
I've been having this discussion with my wife: she's on board with the idea of MMM, so long as we can still be "normal". Normal is living roughly the same way as our friends---our middle class friends, mind you, not our wealthy friends (she already agrees the rich ones aren't "normal"). And I said to her, just look at the stats on how the typical American spends their money (MMM's old colleagues (http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/) are probably a representative sample). So I told her, based on the numbers, chances are, middle class people---our friends---spend virtually all their money on "stuff" in one way or another. McMansions, financed cars, electronic gadgets, regular dining out, big cable plans, long commutes, whatever. If you're willing to take it to the level MMM has, you're not going to be "normal". And I'd say that the difference between where you starting from and where you end up is roughly proportional to the amount of growing apart you'll do with your friends.
As I composed this, 40 (!) posts were added, and I see a lot of comments from you along the line of "didn't you read the original post?" I.e., a lot of people mis-reading (or not reading) the details of your original post. Maybe give this readership the benefit of the doubt that your original post wasn't clear or, at least, wasn't representative of the typical way such numbers are presented. At least some of the folks here are making an honest effort to help; why not make their job a little easier and clarify those aspects which are causing a lot of confusion---even if it means repeating yourself---rather than being the disgruntled sysadmin who just says "RTFM".
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WF listed as one of his reasons for posting was that others may benefit from reading his story. Well, I don't earn anywhere near that kind of income, but I do share some similar traits:
1. I recently bought an absurdly large and expensive (for one person) house. Much more than I currently or will ever need. But I love it and it has made my life so much better in a number of ways. I fear every day what would happen if I lost my job and I think of different scenarios to help me keep this house. I'm not selling it voluntarily. So wanting to cut costs in other areas so I can keep (and pay off) my offensively expensive (to me) house is just a different priority than most people have.
2. I am still spending obscene (to me) amounts of money to furnish this house with all new furniture and fancy stuff that I usually have little desire for. But I want a decorated house that is a joy to come home to. And then I don't plan on buying any more "house stuff" for 10-15 years. Really.
3. I choose some things that are completely anti-mustachian on a pretty regular basis, but I can afford them because I am somewhat frugal in other areas. Yes, it will take me longer to get to FI, but in the meantime, my bills are paid and I'm still saving a decent percentage of my income each month. In order to retire though, I need to have one or both houses paid off. That's my goal right now.
4. I am new here, so while I thought I was frugal all of these years, I am just now beginning to understand how unfrugal I am. This really is a lesson to me and all the facepunches I've seen could easily be aimed at me.
5. I also have my previous home (condo) that is losing $300/month. I rent it out because it is worth less than what I paid for it, and a metro (train) station will be built 3 blocks from it by 2018 -- so I fully expect that the money I lose each month can be offset by an increased value in a few years (at least back to what I paid for it). Isn't this what an investment is? and isn't that the situation that WF has with his second home?
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On the house size thing... isn't MMM's new house around 1500 ft^2 (am I remembering right)? For a family of three, that's 500 ft^2/per person. Using that as the "rule" for a "right-sized" house, you're allowed 3000 ft^2 for six people. :) Although if you drop the live-in help, you can further downsize. ;)
And I read 6.4 acres? I grew up in a rural area, so I'm used to large yards, although, in the rural midwest, "lawn care" is a synonym for "mowing". Our first house was on about three acres, although we only mowed about two, and that alone took about three hours. I can't imagine how much time goes into professional landscaping of over six acres! (And now I can't stop thinking about Willy from The Simpsons.)
Anyway, if I understand you right, you're saying, "We have this big outrageous lifestyle now, but we intend to scale back dramatically when we do the early retirement thing". I think that's a dangerous proposition. It's one thing to say, "I'll give up cable to save $50/month when I retire." But you're looking at making huge changes on the order of 10s of thousands of dollars per month. I can't help but feel that's a recipe for disappointment.
I'm going to go so far as to suggest the hard rule of this lifestyle is live the life now that you want in retirement. Certainly you're life will be different after retirement, and you won't be able to predict your post-retirement finances with 100% accuracy---but you gotta be in the right ballpark!
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Income:
Gross Income (pre-tax/401k): $71,000 (base salaries of $34,170, the rest is annual bonus with varying payment/vesting schedules throughout the year; I took the combined average over the last 5 years – our incomes have generally been increasing but obviously fluctuates a bit given one of our jobs is in finance and the wild swings in the market over the last 5 years)
Rental Income: $6,000 (this just covers our total costs for the rental property before depreciation so net cash flow is $0)
Total Income: $77,000
my first reaction was 77k counts as high income???? Then I clued in: "oh, thats per month"
congratz! you guys beat us, hoping to be where you are in 10-15 years.
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lagniappe - I actually created a separate spreadsheet of anticipated 'post-retirement' expenses (with the main assumption that the kids would no longer be living at home and on their own) to come to the $7k/month total. I felt it would be too much to put all in one post. We calculated that every cost would go down significantly (and some, like kids' activities, would be totally eliminated). Even vacations would be reduced substantially, with trips for 2 instead of 4 (or more) allowing for more travel with dramatically less cost. And we are considering living in a condo, which would drastically reduce maintenance and landscaping costs.
What's stopping you from moving in the direction of this lifestyle right now? You could trade in your landscaped, six-acre property for a family-sized condo or a city home on a much smaller lot right now. You could take fewer vacations right now. You could sell two of your cars and use public transit more right now (perhaps in conjunction with a move to a home that offers walkable access to transit).
If you plan to live more simply in retirement, why aren't you willing to live like that right now? It's an honest question. My opinion is that you may have a hard time downsizing that much in the future, unless you can clearly articulate the reasons for your current choices and explain why those reasons will no longer apply after you retire.
I think a lot of us may be skeptical of your plans to downsize after retiring, in part because it's the opposite approach many of us are taking. We're skipping out on expensive week-long vacations now so that we can afford to retire early and travel to other places for months at a time, living like a local when we do instead of paying through the nose for five-star service. We're doing our own yard work now because a $2k/month landscaping bill means we need to stash away $600,000 to maintain that part of our lifestyle in retirement, and mowing the lawn is good exercise anyway. The bottom line is that we try to get our base level of spending down to the minimum needed to guarantee a happy life. Why would we be willing to go much lower than that in retirement? Doing so would imply that we either don't actually have enough to happily retire after all, or much of our pre-retirement spending wasn't actually doing anything to make us happier.
Through it all we're paying approximately zero attention to what our neighbors think of our activities. Their opinions don't bring us any closer to meeting our life goals. How much of our time and money should we be willing to spend to make them happy?
If I were in your shoes I would be scared to death of being laid off. Your family's spending is too high to cope with losing a big chunk of your income for an extended period of time. There's no reason to expect there won't be another downturn or some other event between now and your planned retirement age that could permanently affect your ability to earn as much as you currently do. If that happens, what would go first? Would it be the lawn service? The country club? The live-in help? The private schooling? The organic groceries? Why wait for an emergency to make these changes? I think that's another key point of Mustachianism: if you limit your spending to a more baseline level of luxury now, an unexpected job loss no longer needs to be an emergency at all. You'll have enough savings to get by for years without a job if need be, so you can focus your job search on finding something you'll truly enjoy, instead of needing to settle for the highest-paying job you can find before your money runs out.
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Some thoughts:
Ignoring taxes, you’re spending about $18K on the mortgages and $17K on other discretionary stuff every month, which is more than your base pay of $34K. That might be a place to start: let’s live off our base pay, and bank all our bonuses. That could help to focus your frugalization efforts, by giving yourselves a ceiling on spending, and then making prioritized choices within that. You’ve said that you value education first and friends second, so evaluate each line item relative to those, and slice/pare however it makes sense. Once prioritization method I like is to write each item on an index card, then compare 2 and pick the most important (“if I could only have one of these, which would it be?”). Put the one above the other, then take a 3rd card, compare it to #2, if it’s lower, put it 3rd, if it’s higher, then compare it to #1, etc.
BTW, I don’t see the private school tuition listed anywhere. Unless your way of dealing with that is to call it a liability. I think there’s merit in listing it as an expense, even if you’re committed to it, as it shows the share of your income relative to your other expenses.
There’s been (too) much discussion of sunk cost, but I think it’s valuable to view your spending in terms of opportunity cost. 15 years ago, I was anticipating a $40K bonus, and planned to spend it on a new BMW Z-4. While I was waiting for the cars to come out, I realized that what I planned to spend on the car would buy an entire Habitat for Humanity house. That opportunity cost was too big for me, and I couldn't bring myself to buy the car. Now, I didn’t donate the money to HFH, I saved it, but that probably grew to 6 figures over time, and enabled me to buy a business down the road.
Consider the opportunity cost of some of your spending. I know private school tuition is a sacred cow. But let’s say the $1m you’re planning to spend raises your kids' quality of life by 10% (you know it’s marginal, since they could have an excellent life in your great public schools). But what if it could also raise the quality of life of 20 inner-city kids by 200% by paying their way through college that they otherwise couldn’t afford. Pick another line item if that one’s too sore.
You’re obviously doing great good for your family, and it sounds like you’re working hard to ensure your kids are well grounded. But you could be doing even more good by looking more extensively outside your family and social circles. I like your volunteer work, and challenge you to do even more and give even more. You’re at a paltry 3%. I’d target raising that to 10%.
Finally, I’d use your vacations, which shouldn’t be tied to your friends/social status, as family adventures to live differently. With the amounts you’re spending, I’m assuming you’re staying in high-end hotels and being pampered. On your next vacation, give yourselves a budget like $1000 for the week, and involve the kids in the challenge of vacationing on that budget. Stay in a Holiday Inn Express (not slumming it by any means), eat from a grocery store instead of restaurants, take local buses around town instead of renting a car, find the free activities to do, etc. There’s incredible satisfaction and sense of accomplishment—not to mention life skills--from figuring out how to maximize the utility of a dollar. It also helps you live the point to your kids that happiness isn’t dependent on money. They can choose to live otherwise later in their lives, but they’ll remember that they know how to do it cheaply and could always go back to that if needed or wanted.
When I first traveled, in college, I backpacked through 3rd world countries and lived on about $20/day because that's all I had. I continued to take similar trips into my working life, and even when I had much more money, I enjoyed the challenge of doing it on the cheap. It’s kind of fun (“this taxi driver that I’m negotiating hard with over 50 cents has no idea I’m a millionaire”). And it makes living the good life very evident as a conscious choice instead of unavoidable.
Good luck.
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I really do commend your posting on this board and sparking so much discussion. If nothing else, I think it stretches -- for some maybe the right word is "blows" -- people's minds and lets us view things from a different vantage point. I also appreciate your commitment to charity, both your monetary giving and your time on the board.
It seems you have given a great deal of thought to your children. Don't you ever worry about what the effect of all this wealth will be on them? My wife and I make a fraction of your income but we are continually concerned about the impact that living in nicer accommodations and getting more things will have on her. We also have reservations about whether getting certain opportunities will make our child think that they are somehow better than those around them.
As an aside, I don't begrudge the income you and your husband make, but there is a problem in this country (or maybe just a by-product of extreme capitalism) when the world of finance pays so much money. I'm not really sure why finance deserves such high paying salaries, but then again I always am baffled that people make what they make (on all parts of the spectrum). Again, nothing against you -- it is a game and if the objective is to generate great wealth, you're doing exceedingly well and are on the road to do even better.
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btw, what is the appropriate size house (incl basement) for 6 people?
Well I don't make anywhere near what you do, but I am in the 6-figure range and we live at 233sqft/person. That is my wife, my daughter, and I in 700sqft, and I find it accommodates us quite well. I am hoping we can shrink this some actually to help us ignore the urge to acquire more things. YMMV
We have five people plus a full time home office (my husband works remotely) in just under 2,000. And it feels very spacious - we could easily downsize, but we live in a very low COL location so the financial gains would be minimal.
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Hi WF,
You are choosing to take on unnecessary risk and expense temporarily to provide a set of circumstances / experiences to your kids. Nothing wrong with that. Seems a majority of the fluff --- country club, landscaping to "fit the neighborhood," etc. --- ties back into maintaining that set. You wrote that you recognize that your retirement timeline could be negatively affected by this choice, if your income dips. That is what it is.
The retirement plans seem a bit less decisive. I know you've provided math, but I inferred (from an admittedly quick read-through) that your expectation is that the changes required to retire early are going to happen more or less organically when the kids leave. You admit you kinda like the "all" in having it all. Do you like the "early" in retiring early as much? You obviously have the resources to go whichever way you choose, whenever you choose. So... you just gotta choose, right?
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Just to clarify, when you say you want it all you don't really mean EVERYTHING, right? Just kidding. I think you may have stumbled into the wrong blog. The "frugal" rich finance guy blog is here: http://www.financialsamurai.com/ Note that he's loaded, but drives an old POS.
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btw, what is the appropriate size house (incl basement) for 6 people?
Personally, the size of the actual house sounds about right, if you are providing housing for not just your family but two additional adults who need their own space.
One way to cut the house expense, though, would be to address the 6.5 acres bit. If you're using the country club for tennis and swimming, then clearly you don't have tennis courts or a pool (and if you do, they are optional extras). Unless you have a stable with thoroughbred horses on site then your acreage is superfluous.
Can you switch to a mansion with smaller grounds? Even if the list price is higher than your current home, the grounds maintenance costs would be worth saving. An entire apartment building? I have no idea - I'm in another country and a whole different fiscal universe, but it doesn't seem outside the bounds of possibility that you could buy or renovate yourself an urban home with all the space and accessibility you need with no grounds at all.
The only other thing to seriously hit would be travel (as a couple of others have already said). How you want to change this is up to you, but traveling twice per year, once to a domestic location and once to a non-European location would make savings. Or even dropping it to once per year for a few years.
My reasoning is this: In my own life I decided that there was no point making my own laundry powder or using a rubber scraper to get the last of the mayo out of the jar, if we were paying too much for housing and cars. Looking at your numbers, the equivalent spends (IMO) are acreage and vacations.
Not going to touch your schooling decisions - you've made it clear it is non-negotiable, but aside from that, shifting a kid's school without their buy-in is fraught with pitfalls.
Don't be too upset by the push-back you're getting here. Most of us can't even imagine that sort of expenditure without thinking EXPLODING VOLCANO OF WASTEFULNESS :~) It's just how we roll.
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Most of us can't even imagine that sort of expenditure without thinking EXPLODING VOLCANO OF WASTEFULNESS :~) It's just how we roll.
+1!!!
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btw, what is the appropriate size house (incl basement) for 6 people?
Don't be too upset by the push-back you're getting here. Most of us can't even imagine that sort of expenditure without thinking EXPLODING VOLCANO OF WASTEFULNESS :~) It's just how we roll.
In fact, given that most mustachians say this about anyone spending more than a few thousand dollars a month, to us it looks more like a whole Himalayan mountain range of exploding super sized volcanoes of wastefulness.
Indeed, it goes so far beyond what we are used to that I feel we have to step back in awe and congratulate you on managing to spend all that money in one month. As Eddie Izzard once said, "you must get up very early in the morning"1.
But...that's just us.
1 See http://www.youtube.com/watch?v=BFtkJd8w5UQ (http://www.youtube.com/watch?v=BFtkJd8w5UQ)
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I'm far less than an authority on the topic, as a relatively new reader myself, but for what it's worth I can sympathise with your situation - coming from a life where I have been surrounded by the trappings of wealth for a long time.
Most of the posters here seem to be either staggered at the figures involved, or working under the assumption that with such large numbers, the only changes that are worthwhile are the drastic ones, such as:
- Moving House
- Changing Schools
- Selling the Car
- Leave the Country Club
Undoubtedly these would all save tens of thousands of dollars of expenditure a year, and are a nice way to solve the financial equation of saving more. But ultimately it's a jarring and drastic change from a lifestyle you love and enjoy, and - unless you're in the head-space to do so - largely unpalatable.
My thoughts are that you start with the small things first, a previous poster has already outlined ~$3,000 / month in saving opportunities that would have very little noticeable effect on your every-day life, and that as you begin to scrimp and save and optimise the little things, the larger expenses may begin to seem more realistic and achievable.
To me it seems clear that there is very little anyone here could teach you about earning or investing your money, and that you really aren't living beyond your means in the traditional sense. It's more about starting to change your lifestyle away from the mindset of purely affording these things 'because you can', and starting to use the fundamental ideas in the articles here - optimising every transaction.
Trying to investigate more affordable travel options, more affordable (and IMO rewarding) hobbies and activites - I love running for example, it also happens to be extremely inexpensive, and making a large portion of your high-end expenses something that is flexible and adaptable to your lifestyle. Being able to instill solid traditional values such as hard-work, respect and a love for finding their own entertainment (without money) in children is something that will serve them well.
There's nothing inherently wrong with living a life full of luxury items when you do have the means to afford them, it's just a matter of aligning your goals alongside that. If you want to live a simpler like in retirement then start moving towards it now, the goal should be - I believe - to find your own life, not one dictated by the people around you. The lower a % of your income you can live on, the sooner you're able to have a life where work is optional, how soon and what kind of life follows is entirely your own decision.
In this case I don't believe it's a question of numbers in-so-much as a question of Psychology. You could retire tomorrow if you were willing to live a frugal lifestyle, the key is to be able to put yourself in a position whereby you can retire whenever you like and still maintain a lifestyle you desire. For some people that will mean the expectation of being able to fund private school for their children, because their earning potential allows this to be a possibility, the end-goal isn't necessarily to live the cheapest and most frugal life on the planet, it's to live a life where you have freedom to pursue what makes you happy and value most.
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At this point, what can I contribute to this thread? You are living proof that it is always possible to expand your lifestyle to meet (or exceed) your income. If you have not read "Bonfire of the Vanities" please do, and take note of Sherman McCoy.
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Westchester, in all seriousness I think that if you're looking for actionable retirement advice, Financial Samurai might be more helpful. I do think that it took some guts to post here, and hopefully you're not taking any of this personally. It seems like you love your job, are in no hurry to retire and probably have a network that would land you a new gig in a pinch that most of us could spend our entire lives aspiring to and never quite reach. I'm guessing you have much more to offer us than we have to offer you, in that you've definitely nailed the income side of things.
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I think our problems lie in trying to ‘fit in’ with our peer group. We both went to top tier universities and graduate schools, and the reality is none of our friends from school are into living drastically below ones means, or if they are they are embarrassed to show it. It isn’t fashionable for an Ivy League grad on the fast track to talk about pinching pennies and how to stretch a dollar in a budget. So we play along, sending our kids to private schools (the ‘best/most selective/established’ in the area) are members of a ‘selective’ country club that is hard to get into (took years to get 2 sponsors, 10 letters of recommendation, attend half a dozen cocktail parties with current members while being scrutinized, kissing up etc.), have an $85k luxury sedan (to drive to the club and other social events to fit in, of course) and take expensive vacations requiring lots of flying (sometimes international) every year. We both come from semi-humble backgrounds, what I would characterize as middle-ish class, where education was highly valued and material possessions beyond basic needs were desired but a practical impossibility.
Grad of two Ivies here. There are plenty of us who are thrifty. You are hanging with the wrong crowd.
This is what I was thinking. I don't think you can blame the Ivies. You need to blame the private schools, and the proximity to NYC, and perhaps your industries. My husband went to an Ivy and I went to a top-10 school, and we just don't run in that crowd. I had to read your income a few times before I realized that it was per month.
I just cannot see where the private school, country club, expensive vacations are all that necessary.
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what about someone who has already invested a huge amount of time and money building up a certain lifestyle (sunk costs) but then starts to see the light, analogous to religious conversion - do you just walk away from it all?
Yes. A little bit at a time, but once the cost is sunk, it's sunk.
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Maybe I'm missing something, but why don't you sell your other house? It has 0 net income...right? If not only to simplify things!
A lot of your expenses relate to your image, as others have pointed out. Does it really matter in the end? Are your friends going to care? If they do care, does that say anything about your friendships? I'm not sure, just wondering. I live in one of the nicer areas of my city, and my neighbor literally gave me a lawnmower when they saw me using a push reel. They probably think we're poorer than shit (for some reason), and I could care less.
Honestly, one of my biggest worries about your lifestyle would be your kids. You say you both came from humble-ish backgrounds...what would your kids say about you and how they grew up when they're adults? What kind of lifestyle expectations are they going to have? In the book "millionaire next door" (which you should read, I think there will be a lot of eye openers as to why a lot of us on the forum can't even begin to relate to your situation), one of the biggest concerns high-spending millionaires have is that they're kids are going to be dependent on them forever--ESPECIALLY if they don't end up with high-earning careers like you and your husband have. Just some food for thought.
Thanks for the comment zarfus
As mentioned in the case study, we actually did try to sell our house, but the demand just wasn't there for our property in a weakening environment at that time. We will list it again next year when the current lease ends.
I have read the "Millionaire Next Door". Great book. The funny thing is, our kids actually don't think we make that much money (their friends are much wealthier with 'nicer stuff') - and are intimately aware of what the 'richer' parents do for a living and kind of want to emulate them. I don't think they are going to be dependent on us, and even if they weren't in a position to make oodles of cash we wouldn't indulge them - we owe them opportunities pre-18yo and education (maybe even some college), and not much else.
My kid is the same way. We make 2x what some of his friends' parents make. But he thinks they are rich because they have a Wii and an Xbox and we have neither. And they drive a Porsche CAyenne and we drive a Civic.
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Is anyone else starting to get joet flashbacks?
O yes, o my yes. I was just wondering where the line in the expenditure for the dog walker was.
OP, I have read your opening post, several times in fact. Most of the comments I formulated have already been raised by others. So I will be brief.
1. Arebelspy said this You choose what you want to buy into.
He's a really wise person. Its a deceptively simple comment. Really think about it. If you haven't already done it you could look into blogs about lifestyle design. Afford Anything is interesting, although you may not find anything there you necessarily wish to copy.
2. Learning to live happily on very little is a fundamental life skill. It will free you from having to worry about financial security, which if I recall was one of your reasons for looking at all this. If you choose you can decide to learn this skill.
3. Paradoxically coming from a high income lifestyle is a handicap in learning this. Some of us here have done it. Start with all the low lying fruit. If you can't bear to get rid of some creature comfort, spend half on it, or do it half the time. Do some "no spend" challenges for fun. As far as keeping up with the Joneses, it sounds like its too hard for you to go cold turkey and do a Mustachian 180. Keep trying to spend/do the minimum you think you can get away with without it being noticeable. Gradually go one step further. Look at the big picture as well as the nickel an dime. Biggest areas of expenditure for most are house, transport, food. In your case add school fees, and country club. Ultimately if you want a different lifestyle you should try to face up to the issue of your excessive houses, which are keeping you where you are. If you want a different lifestyle that is, I'm not clear about that.
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I am going to try a different approach/perspective:
let's assume you don't change anything, start with current post tax net worth of 1.64mm as mentioned in the post, keep all income and expenses the same. Given a 4% real return, this 1.64mm goes to 3mm in 10 years. With 20k deposit a month, 10 years bring that to 2.4mm on the principle alone, so roughly another 3mm with 4% return over 10 years.
This brings you to 6mm in 10 years, which is about 20k/month expense if we use the 4% rule. While it's not 60k/month I think you might be able to take an early-ish retirement in 20 to 25 years if you change nothing. It's still early retirement though by most standards, you will be 55 to 60. And let's not forget, we didn't even count the 4 mm houses. :)
We are in Oil and have a rough an idea of how co-workers all go nuts and spend most of their money on stuffs, and yes, sometimes it's hard to not buy a luxury car when practically everyone, even HR admin, drives a flashy bmw to work (and pay 500 a month on parking lol). You mentioned you really enjoy your jobs, maybe you would be happier working for a few extra years while enjoying the "finer" things in life.
I love the market (even though today I got my face punched hard, thanks to fmcc/fnma). Not sure if you guys are analysts, traders, or fund managers, but if you are in this for the thrill/money maybe calling it quit in 10 years is too soon. Sharks are born to swin :)
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Well if we're going to get competitive about things.... ;)
btw, what is the appropriate size house (incl basement) for 6 people?
Well I don't make anywhere near what you do, but I am in the 6-figure range and we live at 233sqft/person. That is my wife, my daughter, and I in 700sqft, and I find it accommodates us quite well. I am hoping we can shrink this some actually to help us ignore the urge to acquire more things. YMMV
alm0stk00l - thanks for the response
interestingly enough we lived in a 600sqft 1br in Manhattan when we had our first child (3 of us) when we were your age - so I guess we were even more Mustachian than you at the time on a sqft/person basis
DH and I live in a two-level flat which is, max, 300sqf, near the Forbidden City. But the nice view makes up for it: http://www.flickr.com/photos/ebriel/10593351913/
Most of our neighbors don't have toilets. Whenever we sit on the balcony, we're grateful for the one we have -- even if it does stink up the house!
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Thanks Jamesqf, although you have unfortunately shown yourself to be one of the many who are commenting without understanding what you read (specifically regarding the 442k net worth)
Sorry, but I think the problem there is more your lack of writing clarity, at least previous to my post, since you quite clearly stated in your initial post that you have a net worth of $442K.
Be that as it may, though, what you need to do for your own benefit is to forget the financial industry chicanery for a minute, add up your real, income-producing assets, and take 4% of that number. If you can live on that amount per year, you can retire now; if not, you have to either increase the assets or decrease your spending (or both, of course).
Read Malcolm Gladwell's latest book.
Why?
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A lot of budgets that we see are math based. How to cut out to optimize. I believe yours is based on fullfillment, happiness, and meaning even though you don't say what you are trying to accomplish.
I relate to your situation based on income, but not on expenses. A number of years ago, I woke up and decided that I did not want my children to grow up with a silver spoon. That I wanted to structure my life around the areas that were important to me vs. the quest for materialistic trinkets and status. I believe that at some point you will determine that you are hurting your children by exposing them to the environment that you created. This is an eye opening experience and it takes awhile to unravel.
I am not even close to MMM, but our kids now are some of the best dressed kids in the school and are excited to get 90% of their clothes from Thrift Shops. We cancelled cable for a time, we started cooking more meals, we stopped buying the latest electronics, when the wife retired we bought her a 2002 Honda CRV, I drive a 6 year old SUV that needs to be replaced with something more practical.
At a sleepover my daughter came home with clothes from a very wealthy family. We probably make more and most likely have a higher networth than the family hooking up our kids with once worn clothes. You can feel embarrassed or you can be Mustachian.
If my kids pursue their passion and pick a career that doesn't pay a six figure salary, I am hopeful that we didn't ruin their concept of "Enough", that we are teaching them that it is stupid to have a brand new car, brand new Iphone, brand new clothes, etc. That they can value people based on who they are vs. what they own, where they go to school, or one much they make.
Give up on the sunk costs and unravel the areas that are not in alignment with your values and the values that you want to pass down to your kids.
Good luck.
Tom
P.s. are you going to take the blue pill or the red pill? I have a post on that Matrix reference
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...
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{Also, I'm such a dullard that I read your $71k salary and at first thought that was annual and was really, really confused for a minute. Hahaha!}
Me too! I couldn't fathom how they could afford all that they have on so little money each year. It took me a while because this public school teacher has never made $71,000 in a year! My brain didn't even consider that that income was for one month. How could two people make that much money in one month? I still don't even understand it. Also, I'm so in the wrong field.
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West, thanks for the clarification. Just wanted to add that while we nowhere approached your level of earning, one thing that helped us to figure out our path was to find our true hourly wage. I worked as a nurse, and when the kids were young we paid child care. So say I could make $30 per hour. If I subtracted the fed and ny state taxes, the social security and medicare contributions, and what I was paying for child care, the cost of commuting the twelve miles, keeping up nursing license and the lack,of time to cook etc and my real hourly wage was quite low. Our solution was for me to work part time so I would not lose my employability and I would be able to step in if DH lost his job.
There are many solutions, but cutting landscape services for instance may take a huge chunk out of your valuable at home time. Your choice might be to make x amount of dollars per hour if even after taxes and expenses landscapers cost you 1/2 x per hour.
You have to figure out what makes sense for you and your family. Since I grew up in foster care and had nothing, my perspective was very different than yours. Obviously there was no Ivy League for me, I really didn't know anything about social status. What is important to me is much different than what is important to you, but both of us could be right.
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(the marginal 39.6% federal + 8.82% state + 3.876% city)
You forgot to include the nanny tax - or are you not paying any?
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You should be paying the live-in on the books, which means a W-2 with FICA, unemployment, etc. taken out. The nanny tax is reported on schedule H of your 1040.
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You were complaining about taxes being your biggest expense, so I think the comment is quite pertinent.
In any event, I just want to point out that taxes are my biggest expenses by far as well (also live in CT and pay close to your marginal tax rates) but I live on half of my regular salary and bank the other half plus my cash bonus and stock options. You appear to spend more than your regular net salary every month.
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The nanny tax (if you are paying it) decreases your after-tax income, even if it is not part of your 'regular' marginal rate. How is it not pertinent?
In any case, I would encourage you to pay it - if you aren't, it's illegal, and your nanny could sue you for all the back amounts due, etc.
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I guarantee that plenty of your Ivy Leaguer classmates are not in finance (I know that, because I know a lot of them). I'd start by going to some college alumni functions (every Ivy holds them in the city) and seeing what your smart, motivated peers who aren't in finance are doing with themselves.
+1. And if one of the ones you mentioned we share is Dartmouth, PM me, particularly if it's undergrad. (Based on the similarity in age, you might even be in my or my husband's class.) As you probably well know, Dartmouth has probably one of the strongest alumni networks in the US.
Cynthia, you are both correct. Yes, he should pay taxes for the nanny and not pay under the table - but nothing he wrote suggests he is doing that. He is correct that the figures he posted on taxes are for his income, and not taxes he pays on outflow. He also didn't post sales tax. Can we drop this and move on to more productive suggestions?
OP, if you still want (constructive) suggestions, perhaps you would consider rewriting an initial post that lays out the finances more clearly, or creating a new post in this thread clarifying those details (laid out in the same format as before with assets/liabilities etc listed rather than paragraph format) along with post-retirement spending plans. I appreciate the clarification you gave to me regarding the $442k confusion, but it's probably buried in the thread now for a lot of folks. Also, if you want more suggestions, perhaps answer some of the questions from folks here regarding what you're seeking - in life, and in terms of feedback from posters.
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OP - have you considered converting part of your 6 acres into a food forest (http://en.wikipedia.org/wiki/Forest_gardening)? That would solve some of the lawn-watering and the grocery bill at the same time.
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or Buying your sons landscaping equipment. For a month's bill they would be well equipped; Perhaps make real money doing the neighbor's yards.
I hope the nice elderly nanny has a nice retirement account. That's who I think the most.
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OP - have you considered converting part of your 6 acres into a food forest (http://en.wikipedia.org/wiki/Forest_gardening)? That would solve some of the lawn-watering and the grocery bill at the same time.
Thanks for the (sarcastic) post jpo
We actually have a small garden in a corner of our backyard where we plant produce and some herbs. I estimate that the costs of maintaining the garden are higher than the savings from not having to buy at the grocery.
It wasn't sarcastic. One of the main tenets of permaculture is that the garden essentially takes care of itself... check out Gaia's Garden (http://books.google.com/books/about/Gaia_s_Garden.html?id=gxW0MGXha6cC), your local library may have a copy.
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My spouse and I are in our mid and late 30s, living in an expensive suburb of NYC. We are already pretty entrenched into a very expensive lifestyle that has been sustainable thus far due to high incomes, but if something unexpected were to occur we would be in financial danger.
Here is your real concern and what you are really asking for help with, how to deal with the unexpected and this is the right place for that as pretty much the goal of Mustachianism to set your life up financially so no matter what unexpected situations occur there is no danger.
First off, it is important to note that both my spouse and I are of like mind in our desire to change our situation. We both like our jobs (one is very stable, the other is driven by the financial markets), and find fulfillment, intellectual challenge and social benefits from our careers. So you could say that our primary objective is to make sure we are financially stable in the event of the unexpected, with a very close second being retiring as early as possible.
Here is the first unexpected situation that can come up; one of your jobs is driven by the financial markets. Clearly your lifestyle is driven by your high dual income, if you suddenly lost the financial driven job and couldn't replace it could you sustain your lifestyle what would you cut first, would the stresses on you marriage and home life be too much for family even if you could get by financially. I will discuss some more about both the stress and the financials below as you have other details where they make more sense to comment.
I think our problems lie in trying to ‘fit in’ with our peer group. We both went to top tier universities and graduate schools, and the reality is none of our friends from school are into living drastically below ones means, or if they are they are embarrassed to show it. It isn’t fashionable for an Ivy League grad on the fast track to talk about pinching pennies and how to stretch a dollar in a budget. So we play along..
You have heard the replies of many Ivy League grads on here already that this is simply not the case. If anything most people are associating this more with Wall Street excess then the Ivy League which is far closer to the truth and the combination of Wall Street and the Ivy League which is a very small subset of the population and also in a very small geography the metro NY area. You have also heard many comments from people who are ex-Wall Streeters who have left your lifestyle. I work with the traders who worked their way up from the pits as well as the Wharton and Harvard grads who were recruited, in both groups there are those who fit into your demographic and those who don't. These are your choices and you have made them. I had the choice to be a trader, I choose to write the software instead as I love technology I work less hours have less stress and spend more time with my family. I am fine with a much smaller pay check and bonus. I still have all my Ivy League friends though and those from the state schools all are really cool.
While we could live a much simpler life, the reality is we enjoy a lot of the trappings that money can buy and, to be honest, I think we trick ourselves into feeling that we are ‘socially accepted’ and that we’ve ‘made it’. The area we live in is plagued with this disease of showing how well you are doing (even if you’re not) and keeping for the sake of assimilation. It’s an expensive habit and obviously shows some of our insecurities – but at this point we are pretty well committed (with tons of sunk costs) so are just trying to make the best of the situation and hoping to make it to retirement, early or not, while still providing for our children’s experiences (trying very hard to give them all of the things that we did not have growing up).
Your choice, you like the lifestyle... No problem with that if you are happy with the choice then keep it up. But you clearly state it shows insecurities, it’s an expensive habit, you probably regret the sunk costs, regardless of the fact that they are sunk or not. You are just hoping to make it to retirement, after giving your children what you have decided is what you think is best (I'm not judging you decisions on what is best by the way, that is completely up to you, just make sure you understand the choices you make).
Our incomes come from large, stable institutions that have both been around for over 100 years. We are both doing well in our careers with expected promotions and pay rises over time, but the landscape for financial institutions in particular is changing pretty dramatically, so we are not counting on necessarily making the incomes of people above us, but instead budgeting on total compensation to keep up with inflation over time.
I told you I would come back to the loss of the financial market driven job, I worked for Lehman Brothers up until the end, and it was a stable 150 year old institution. I remember the very calm voices mails we got from Dick Fuld (CEO for those who don't know) about the company’s future; the early RSU's to take advantage of the stock's upside 4 months before the bankruptcy. The funny thing is a few years later I heard weekly voice mails from Lloyd Blankfein and they sounded almost identical to those of Dick Fulds. So my only advice to you is don’t bank on the stability of a job from a 100 year old company, you never know when the next financial crisis will hit and there will be another financial crisis, Fannie and Freddie and going to be wound down, the Fed balance sheet needs to be deleveraged, Russia is on a land grab and who knows people are still unemployed in droves in the real world.
In terms of investments, since a lot of our income as well as job security is dependent on financial market stability over time, we have taken the conservative route of using the stock market rally over the last 2 years to get completely out of stocks altogether (which still leaves a significant passive exposure due to deferred compensation allocation – see below), allocating the funds towards debt repayment (highest rate on any loan is 4.625%) and investing in private real estate deals (LLCs managed by professional investors, targeting high single to low teens returns in non-speculative transactions). We have a lot of exposure to NYC metro area real estate already given our two properties, but the deals we invest in are in other parts of the US and our view is that with historically low interest rates and inflation that will probably increase over time we would prefer to keep our investments in assets that should not only give solid real returns but also do well in inflationary environments and provide a bit of a hedge. Our 401k’s are in cash and short-term bond funds, and our self-directed IRAs are invested in the real estate deals and other business ventures via trust companies.
That is still a fairly high risk portfolio, you are highly concentrated with restricted stock and/or employee stock options in one or two financial firms, you have equity in two properties in the NYC metro areas, and the remaining assets are then in other privately managed real estate transactions throughout the country and short term bonds and cash. The correlation between your asset classes is way too high and you do not have enough diversity. If either of the companies goes under your stock is gone, if interest rates go on a tear the principal in your bond funds can lose a lot of value more then you will make in interest and dividends. Real estate is up in the air and you are in private deals so they are a crap shoot, some are awesome others are mine fields. I would think considering your professions you would have a more diverse investment portfolio.
Here are the stats (income/expense/saving totals are monthly):
Assets:
2 homes: $4,100,000 total value (Zillow)
Deferred Compensation (pre-tax): $2,100,000 (half of which has vested; fully vests over the next 4 years, and keep getting more each year as part of annual compensation “bonus”; closely tied to financial market returns as a lot of it is in company stock and equity-like instruments; if made redundant everything would vest immediately unless were terminated for ‘cause’ for doing something unethical)
Retirement Accounts (401k, IRA): $825,000
Taxable Investments: $250,000
Cash and Equivalents: $5,000 (to pay bills; cover spending, bank account minimums)
Total Assets: $7,280,000 (not including “stuff” like cars, jewelry, etc.)
Liabilities:
Combined Mortgages: $2,600,000 (4% and 4.625% fixed rate fully amortizing 30yr mortgages, which mature in 20-25yrs)
Home Equity Line of Credit: $370,000 (4% rate until 2017 at which point will have to renew; we sweep all excess funds into this account to pay down balance; available credit of $130,000)
Credit Cards: $23,000 (we pay these off every month; $15,000 on cards with 0% intro offers on purchases to a certain date, at which point we would pay down to $0 balance)
Private School Tuition for 2 kids: $1,025,000 (this is the total cost in today’s dollars, which in my mind is a rough inflation adjusted estimated total until they graduate high school, assuming the cost doesn’t grow faster than our 4% marginal cost of borrowing; {Edit to save space}
College Education: $450,000 (2 x 4yrs at $56k/year, inflation adjusted estimate; we actually are of the mind that the kids should contribute to their college costs via scholarships, internships, grants and loans if needed, so this is a bit conservative)
Total Liabilities: $4,468,000 (including private school tuition and college costs)
I don't really agree with your math, you are putting future liabilities against current assets. You save for college and pay as you got for private school, those liabilities don't count against your current assets. Unless you are pre-paying for the tuition for all 12/13 years then you only need to account for the amount you pay now.
I also wouldn't count non-vested RSU or stock options as assets, only vested assets, they are only yours when they vest, they are contingent on your employment and you assume that is going to continue as such, what if you get another job offer and it is too good to turn down, they may not buy you out, but that leaves a million bucks on the table. It’s not yours until it’s yours.
So you have:
Assets:
2 homes: $4,100,000 total value (Zillow)
Deferred Compensation (pre-tax): $1,050,000 (half of which has vested;
Retirement Accounts (401k, IRA): $825,000
Taxable Investments: $250,000
Cash and Equivalents: $5,000 (to pay bills; cover spending, bank account minimums)
Total Assets: $6,230,000
Liabilities:
Combined Mortgages: $2,600,000 (4% and 4.625% fixed rate fully amortizing 30yr mortgages, which mature in 20-25yrs)
Home Equity Line of Credit: $370,000 (4% rate until 2017 at which point will have to renew; we sweep all excess funds into this account to pay down balance; available credit of $130,000)
Credit Cards: $23,000 (we pay these off every month; $15,000 on cards with 0% intro offers on purchases to a certain date, at which point we would pay down to $0 balance)
Total Liabilities: $2,855,000
Net Worth: $3,375,000
Now you haven't indicated you children’s ages so you have roughly a $1.45 million education savings goal over I will guess a 10 to 15 year period not counting investment returns on those savings. And each year that goes down as you will pay current tuition on private school out of current income and/or savings. So hard to calculate the moving target based on the information you provided.
Also as side note not sure if you have HELOC on both properties but if not see if you can get one on the 2nd property at a lower interest rate and see if you can shift some of the mortgage to the HELOC to reduce the monthly payment.
You are already using you first HELOC as a sweep account to mortgage accelerate as that saves on interest until your bills come due, good call :)
Income:
Gross Income (pre-tax/401k): $71,000 (base salaries of $34,170, the rest is annual bonus with varying payment/vesting schedules throughout the year; I took the combined average over the last 5 years – our incomes have generally been increasing but obviously fluctuates a bit given one of our jobs is in finance and the wild swings in the market over the last 5 years)
Rental Income: $6,000 (this just covers our total costs for the rental property before depreciation so net cash flow is $0)
Total Income: $77,000
Expenses:
Taxes (Fed, State, City, SS, Medicare): $24,600
2 Mortgages (PITI): $18,200
Charitable Giving: $2,500
Property Maintenance: $2,300 (for both properties combined: snowplowing, budget for anticipated repairs over time, etc.)
Landscaping: $2,000 (both properties, grass cutting, hedges, spring/fall cleanup, 6.4 acres total)
Live-In Help: $1,800 (this is salary in addition to room/board)
Country Club: $1,770 (includes all meals, drinks, fees, summer camp)
Groceries/Household Items: $1,640 (this is for 4 adults and 2 children)
Vacations: $1,250 (flights and some hotels are paid via miles/points from credit cards and flights/stays for work travel)
Utilities: $1,120 (primary residence only: cable/internet/phone/wireless, electricity, natural gas heat, water – quite high due to sprinklers in summer to maintain that nice lush lawn we pay so much for)
Kids’ Activities: $685 (all lessons, fees, activities, tutoring)
Shopping: $500 (gifts, personal items, miscellaneous – plug account)
Auto Insurance/Maintenance: $480 (3 cars, all 2007 model or newer: 2 for commuting – the above mentioned Leaf and showoff machine, 1 small SUV for the grandparent/nanny to take kids to schools and activities)
Public Transportation: $330 (train tickets, subways)
Gasoline: $230
Restaurants/Eating Out $200
Entertainment: $80 (Netflix, iTunes, Movies, etc)
Total Expenses: $59,795
Savings:
401k: $4,600 (including employer matches)
Mortgage Principal Payments: $4,170 (included in mortgage payments in expense above)
Income less Expenses above: $11,205
Total Savings: $19,975
This is also a little cryptic... You should relist this with just your base pay (net after taxes) not counting any deferred (stock compensation) and then list any one time annual cash payment you get as part of your bonus. Then list all of your expenses that you pay monthly but not redundantly mortgage is part of expenses and savings etc... This becomes too confusing for people to follow.
So make 3 simple sections
Net income (actual money you have to spend every month)
Actual monthly expenses
Savings
Nothing should be in more than one section, people here are smart enough to know mortgage principal is considered savings, feel free to break you mortgage payment out and include the interest in expenses and principal in savings.
Retirement scenarios:
If I take the after-tax (40% marginal rate to make things simple even though our effective tax rate is much less) values of the deferred compensation and retirement accounts in the ‘Assets’ and subtract out the ‘Liabilities’, I get to a net worth of $1.642mm. However this does not take into account owning a house outright, which I would estimate we should conservatively budget for $1.2mm for the areas we are considering living, bringing us to $442k net worth.
On the expense side, once the nest is empty and the house is paid for (downsizing eventually to the $1mm house mentioned directly above) as well as the rental house is sold, I think we can very comfortably get monthly expenses to $7,000/month or $84,000/year. Note that this includes having to pay for a live-in to help with care of an elderly parent.
Assuming we can continue to save roughly $20k/month, the stock market doesn’t crash (which would decrease the value of the deferred comp and make a finance job’s income and outlook less rosy) and a 3% withdrawal rate (we’d like to leave behind some money for kids and charitable orgs that we support, without paying Uncle Sam any death taxes), we estimate our retirement date to be 9-10yrs from now [$84k/0.03 = $2.8mm; $2.8mm - $442k = $2.358mm; $2.358mm/$20k/month = 118 months = 9.8 years].
Of course this 10year plan assumes everything goes smoothly and unexpected cost increases and expenses and income decreases don’t occur. We are hoping for the best and planning for the worst.
Thanks for reading.
I have already gone over where I disagree with your math on your net worth, I don't agree with how you project out your net worth into the future to determine when you will have the assets you need to retire based on you current or project spending.
So instead I will discuss your current not quiet worst case scenario… Losing a single job, worst case would be losing both.
Right now you have $250k in taxable investments locked up in private real estate deals, so I am assuming those are not that liquid (could be wrong). You have $1.05 million in vested RSU's or stock options that you have access to if you needed in an emergency. Not sure what your selling restrictions are and if you have any unrealized gains built in if they are short or long term etc., but you would not have access to the full amount of taxable investments if you needed them in an emergency. Based on your tax bracket you would pay 20% federal capital gains tax, 8.82% NYS capital gains, 3.8% payroll tax (go Obamacare for high income earners). So let’s ballbark it’s and say you can walk away with $900k after taxes if you liquated everything (that assumes the deferred comp was intact post job loss).
So in the end if you lost a job you have $130k of liquidity in a HELOC available to fund your lifestyle. Now your taxes would drop with the income drop so the $24k in taxes would drop as well proportionally. The $6k on the rental would cover the $6k in PITI expenses, but the remainder of your $59k of monthly expenses still needs to be covered with only $130k so you have maybe 4 months to replace that income before you have to sell assets. At this point the sold assets can last about 3 years, if you get that far along new net worth is only going to be house assets plus retirement accounts – liabilities.
So if you think you are living a sustainable lifestyle based on your income and can retire and meet your savings goals without some rethinking then keep on chugging (once again not making any judgments that is your decision to make based on the math you decide if the risks/outcomes are likely or worth it etc…).
I said earlier I was at Lehman at the end, I know lots of people (some friend) who lost everything because they didn't think it could happen to them. And when I say lost everything sometimes I mean more than their house unfortunately. Then again I know others who got multiyear severance packages landed other jobs and tripled up, so it can go either way.
-Mister FancyPants
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@WesterchesterFrugal - You sound like you have your shit together but need to prioritize what makes you happy. Decisions from soul searching don't happen overnight but you'll probably get there since you are exploring multiple scenarios. One day you'll have to get off the treadmill and change your lifestyle before you get too entrenched.
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jpo - sorry for the false accusation!
Will have a look
Most of the acreage (and a lot of the of the landscaping costs) are for a rental property in another state, and I'm not sure the tenants would want us to plant a garden in their yard.
No problem.
At your financial scale anything you gain from changing the landscaping is small potatoes but it seemed like something that might interest you. After all, MMM himself has said that this is really an environmental blog (http://www.mrmoneymustache.com/tag/environment/) masquerading as a financial blog.
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Hi again,
I don't have any advice, but wanted you to know your thread has made me reconsider some things about my own situation. For instance, I called your country club bill "fluff" (not meanly!) in my first reply. Then I worked my numbers a little and noticed my "work-related socializing" type expenses are, adjusted for relative income, slightly higher than yours. So, I need to consider if I have fluff or if I just reacted in a knee-jerk way to the actual numbers in your list.
Also, your OP shows that you are taking a conservative approach when assessing your present position financially. When I assess mine, I don't project the numbers quite as aggressively/conservatively... which means my plan probably isn't as conservative or safe as I have convinced myself it is. All good stuff to have to mull over.
Anyway, I noticed you identified a couple expenses to hit the chopping block. That's awesome! Good luck and thanks for posting.
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btw, what is the appropriate size house (incl basement) for 6 people?
Well I don't make anywhere near what you do, but I am in the 6-figure range and we live at 233sqft/person. That is my wife, my daughter, and I in 700sqft, and I find it accommodates us quite well. I am hoping we can shrink this some actually to help us ignore the urge to acquire more things. YMMV
Five of us live in 2200sq ft and I'm looking to downsize.
I have to say i wasn't going to touch this thread with a twenty foot pole because A) I don't think I can offer anything constructive B) the elders have it covered, but since I had to chime in with that tidbit I will to a psuedo related extent.
My MMM aha moment was when I realized that we were paying more in taxes in a year than my sister was making as a teacher and weren't maximizing it or really making it do any sort of work for us at all. You pay close to that in a month in taxes, or even more shockingly just in "life style maintenance". It's your money so take that as you will. Good luck to you.
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OP - have you considered converting part of your 6 acres into a food forest (http://en.wikipedia.org/wiki/Forest_gardening)? That would solve some of the lawn-watering and the grocery bill at the same time.
Thanks for the (sarcastic) post jpo
We actually have a small garden in a corner of our backyard where we plant produce and some herbs. I estimate that the costs of maintaining the garden are higher than the savings from not having to buy at the grocery.
Possibly because you are paying someone to do the maintenance? Whch means that, quite aside from the expense, you (and your kids) are missing out on the pleasures of cultivating your own garden.
I think you might benefit from examining your whole lifestyle from this perspective. You obviously don't have to worry about pinching pennies to survive*: you need to think more about time. Are you getting the most benefit from the time & money you are spending on any particular activity? For instance those expensive vacations: do you really enjoy them, or would you perhaps prefer to say hike a section of the Appalacian Trail? Or the fancy car: might you not get just as much pleasure, plus inverse green status, from a Prius? Do you really enjoy what you do at your country club? (Golf, I suppose, which to me is the last step before the care home :-))
I suppose it comes down to personal taste, but to me it seems that the money you have left over after supporting your lifestyle just isn't adequate compensation for having to live like that.
*Though I learned much that useful from having had that experience, personally I'm glad it's in my past, and I hope it stays there :-)
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I don't particularly think I make a lot of money (compared to my peers, both at work and play) . . .
oof. I thought you were a pretty self-aware guy until you said this. Dude, seriously?
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I know where you're coming from. Similar education and background, different field and city, until I happily moved away from all that to a much slower pace. My kids will also go to private schools for 13+ years each, still a country club member (although both of these things are much less expensive where I live).
I'd look at it this way:
1. Prioritize the things that are most important to you. It sounds like kids' education is #1 with a bullet, and everything else is behind that to a meaningful degree. Fine.
2. Adjust your spending for your priorities.
3. Really, truly recognize that bad things can happen with your careers. Seriously plan for that. Namely, by upping your liquidity and diversifying your holdings more. I wouldn't have as much tied up in the private NY real estate stuff -- you're really overweight there, plain and simple. A good book to read on this is "Are you a stock or a bond?" By Moshe Milevsky (sp?). The Affluent Investor touches on this (adjusting your investments to compensate for the type of human capital you have invested). You've already instituted some of this, but you can do better.
Seems like this statement from you is on the right track:
"Some immediately actionable items will include cutting the landscape bill, ditching the expensive car, scrutinizing grocery/utility/shopping expenses and cutting as appropriate, taking fewer/shorter/less-expensive vacations and cutting some insurance (self-insuring). Kids' activities could also be trimmed quite a bit."
Not much more to do than this and my #3, it seems. Nobody at the club is going to care if you don't drive a 7 series / S Class or win lawn of the month. If they do, screw 'em.
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I came across the MMM blog about 4 months ago and have read every post and comment, and am now going through the forums.
If that is true, then surely you should have a "feel" for the overall tone and character of this blog and the forums, no? You get the gist of what MMM's message is, right? Yet...
I do wish to thank everyone who replied with a comment (even the snarky ones, a high % of which were not only unhelpful but demonstrated a lack of attention to detail and poor reading comprehension)
Emphasis mine. Couldn't we argue that you are demonstrating a lack of attention to detail and/or poor reading comprehension? In other words, if indeed you've read all the blog posts, you'd know that MMM's annual spend is less than half your monthly spend. So I'd say the expectation is that, anyone who has basic reading comprehension skills and is minimally detail-oriented would know that your situation is dramatically different than the overwhelming majority here. And to be clear, I'm not implying you're not welcome, not at all. I'm saying, please give everyone the benefit of the doubt that this is a bit much to wrap their heads around because it's unusual grounds for the site.
Furthermore, if you'd read even a handful of forum posts, you'd know there's a certain "style" or "idiom" that most people use when exposing their numbers. You did not follow convention. There is of course no right or wrong way to do this, and no formal forum rules about how to do it. But why not make it easy on everyone and follow suit?
I think a little bit of humility would go along way towards furthering your cause---I'd argue that too is the appropriate tone for this site. Consider MMM's numerous self-deprecating jabs about how he still "sucks" and lives an overly luxurious life. If someone mis- or under-reads your posts, you could reply (as you have), and say, "Go back and re-read my post"... or you could recognize that at least some of these people are making an honest effort to help, and return the courtesy with a reply along the lines of, "I understand my original post may have been unclear; let me try to convey it in another way to help..."
So why am I here? Well I was looking for some helpful advice on things to consider/improve, I was looking for a bit criticism as that's how you really learn about yourself, I was looking for some motivation and inspiration.
I did say clearly in the second paragraph of my original post: "But I came to the conclusion that there may be others like us who would benefit from this process and I really would like an objective opinion from the MMM community on what we could improve on."
Edited for brevity, including removing yet another jab at the community's reading comprehension.
That first paragraph is a non-answer, in my opinion. That's the kind of fluff I used to write on my essay questions back in school when I knew I could get away with it. Who here in these forums isn't looking for "things to consider/improve, a bit of criticism, and some motivation and inspiration"? I think the only thing you left out was entertainment, which is certainly a motivator for some here.
The second paragraph I suspect gets closer to the truth, in particular, "there may be others like us who would benefit from this process". Note that "the process" is to continually strive for increased happiness while continually decreasing consumption. Do I have a unique interpretation of this blog's message? I doubt it. Or can I again question your attention to detail and reading comprehension, as in, maybe you're missing the point?
My cynical opinion is that the true reason you're here is that you're fishing for acceptance, as in, "Hey guys, my consumption is through the roof, my environmental footprint is outrageous, I only save 25% of my income (which happens to be top 3% or better in the richest country in the world), I drive an $85k car to my ultra-exclusive country club... but I drive a Nissan Leaf to the train, so it's OK right?"
I'm personally far from the ideal represented by the MMM superhero persona... my consumption is high (though you still best my annual spend in two months), and I've given to the temptation of complainypants syndrome more times that I'd like to admit. Heck, I've even gone "fishing" on these forums myself, looking for people to say, "You're saving 80% of your pay, good enough!" But at the end of the day, I realize it's kind of an exercise in "Internet forum masturbation" or whatever you want to call it. That is, I already know my spending/consumption is higher than a lot of people on this forum, and I know it's due to falling to the temptation of convenience and chasing the dragon of hedonistic adaptation.
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Lastly, if I just wanted acceptance I would get a dog or just continue to hang out with sycophants who agree with my point of view.
No, typically a person who exhibits behavior similar to what you have shown needs the validation of changing someone's point of view - i.e. if you can get Mustachians to admit what you're doing is okay, then it's fine. As long as you get a few, you can feel justified and you can dismiss the rest who "just don't get it."
We get it.
Spend what you'd like.
I hope you find happiness.
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I think a little bit of humility would go along way towards furthering your cause---I'd argue that too is the appropriate tone for this site. Consider MMM's numerous self-deprecating jabs about how he still "sucks" and lives an overly luxurious life. ....Note that "the process" is to continually strive for increased happiness while continually decreasing consumption.
I absolutely agree that this is the message of the site and the values that the forum members generally hold. The issue here is that the OP is not looking to "continuously decrease consumption" or recognize where his/her consumption is outrageous. He/she just wants to tweak a few things around the edges of their budget and leave most of the ridiculousness intact, with a view to retiring "a bit" early. But that's not we do here. It's not what people come here for. I'd love to help, but I don't see how I can help someone who wants to do minor tweaking of a monthly budget that is approximately twice my annual spending. If the message was, "I know in the long term 95% of this needs to be eliminated, but where are some easy places to start?" I think people might have responded better. As it is, the values many of us hold mean that we can't possibly approve of this level of consumption or attempts to maintain it and will say so if our opinion is solicited.
WF solicited our opinions. We did not force those opinions on him/her.
My cynical opinion is that the true reason you're here is that you're fishing for acceptance, as in, "Hey guys, my consumption is through the roof, my environmental footprint is outrageous, I only save 25% of my income (which happens to be top 3% or better in the richest country in the world), I drive an $85k car to my ultra-exclusive country club... but I drive a Nissan Leaf to the train, so it's OK right?"
Another unwritten community rule is the "facepunch" - that is, you frankly tell people when their spending is out of whack or they are not living up to the values the community generally holds to. Furthermore, it is considered a kindness and proper behavior because it helps people modify habits that are harming themselves, their society and their environment. WF has got a number of fairly hefty facepunches, as should have been expected.
So, fine. You're benchmarking yourself against your HBS or Wharton peers and your country club buddies. Why have you decided this is your peer group, as opposed to your undergraduate classmates, or the people from your hometown? You've chosen the ruler you're measuring yourself against. So the question becomes: why this ruler? Why are these people your baseline for normal?
Bingo. WF is right that, by Westchester standards, he/she is quite frugal.
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I don't think any of us think you are a lost cause.. but on the flip side we'd hate to see you waste this fabulous opportunity and go the way so many of the ultra high earners did during the financial crisis.
We really do wish you the best even if you assume that we can't "comprehend" your situation.. I can assure you there are many Bsc's, Msc's and Phd's on the forum who comprehend your situation very well. You are voluntarily "stuck" in a caviar lifestyle and love everything about it and want to maybe do a bit of trimming.
Needless to say this is a forum where we encourage people to turn their spending lives around and get off the corporate treadmill and say goodbye to abusive bosses and 60 hour workweeks... Thats not where your at so you really shouldn't be surprised at responses that rub you the wrong way.
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Lastly, if I just wanted acceptance I would get a dog or just continue to hang out with sycophants who agree with my point of view.
No, typically a person who exhibits behavior similar to what you have shown needs the validation of changing someone's point of view - i.e. if you can get Mustachians to admit what you're doing is okay, then it's fine. As long as you get a few, you can feel justified and you can dismiss the rest who "just don't get it."
We get it.
Spend what you'd like.
I hope you find happiness.
arebelspy - thanks for the comment
What 'behavior' have I shown? Is it inflexible?
Did you read the other comments and replies? Did you see the list of actionable items that would be addressed? Do you already have an instinctual predilection to how you will respond to this comment?
You don't need to respond - I think it's interesting that you felt the compulsion to do so to my reply to someone else though.
Heh. Best of luck. :)
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Pre-bonus season, it was really eye opening to see how many of my husband's coworkers were FREAKING OUT about their bonuses. It turns out they weren't living on their base pay and saving/investing/splurging their bonuses. Instead, like you, they'd built a lifestyle that necessitated a certain level of bonus income to keep the wheels on their life. On the other hand, when my husband's bonus was announced, I basically said, "oh, that's nice," paid off our student loans, and invested the difference. Our anxiety level is a lot lower. Finance is a very demanding career track, and your financial situation is almost certainly ramping up your stress level
I don't live in Fairfield County any more, and I don't play the NYC WASP status game. There's a reason for that. By the time I finished college, I found that more and more the aim was to continue achieving higher, higher, higher for no apparent reason. Get a promotion at work! Why? Not because you want more responsibility or more interesting/different work, but because then you show up your cohort! Get a high status hobby! Why? Not necessarily because you love playing squash, but because that's what you do. Acquire some really obvious status markers! Why? So everyone knows you're successful! It's very, very hard to break that emotional cycle, especially because, if you grow up in that world, all your friends are there too. It is incredibly difficult to leave that world, and the transition is going to be traumatic, whether you do it now, or when you FIRE in a decade on your current timeline. Leaving your spending and priorities aside, I'd start planning the transition now. I guarantee that plenty of your Ivy Leaguer classmates are not in finance (I know that, because I know a lot of them). I'd start by going to some college alumni functions (every Ivy holds them in the city) and seeing what your smart, motivated peers who aren't in finance are doing with themselves.
OMG - THIS!! Yes! I still can't believe that was my life for 10 years. Never been saner or happier since I left.
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+1
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Thanks for posting, WestchesterFrugal, and its wonderful that you are looking to reduce your living expenses in order to achieve FIRE. I have to start off saying that I am a newer member myself and probably do not have the expertise for minimizing expenses like others here do. I am also here in order to see how my family can further cut our expenses and maximizing our savings.
I have to say that I was confused after taking a look at your financial assets/expenses initially. Please correct me if I am wrong, but you pretty much have $1.1 M in home equity and $3.18M in other (mainly retirement) assets, assuming you'll be fully vested in the deferred compensation. What got me confused was lumping the school and college expenses with your liabilities. Most people will probably include that as part of their money/annual expenses since it doesn't make sense to me to include it the way you did since you can't withdraw from your retirement to pay for the educational expenses now. So in reality, you are spending about $12k more than your stated budget per month, which would make sure monthly savings, outside of mortgage prepayment and 401k, close to zero.
Even then, your future nest egg and current net worth is still substantial and will be enough, for an average family. However, with your expenses, it will be difficult. I think the main thing for you to overcome is the "keeping up with the Jones" mentality. I think it is unrealistic to think that once the kids leave the house you'll be able to drop that mentality just like that. I won't pretend that I know what people spend on where you live, but I understand wanting to keep up with others. My DH and I made a combined $507k last year. Not as much as you, but not too shabby. We are also in peer groups where there is an emphasis on driving nice cars, private schools, sometimes country club. We live in a middle COL area, but a very nice gated neighborhood where home values are twice those that are outside the gate. We have people living there who have more money than we do (partially because we are younger). We have professional baseball/football players, execs of big companies, etc. They all drive nice cars and have nice toys. Believe me, it is hard to not buy into all of that. Lucky for us, I could care less about what people think of us and our material possessions. We belong to a country club (also full of people with money, but dues are about 1/8 of yours for our basic membership) and we love to travel. However, our living expenses is at about $12k a month (about 60% is childcare costs, mortgages, and student loan, but i know, face punch) and we save about 60% of our net salary, not including $3k for mortgage prepayment monthly. I have also started to watch our budget more and am thinking that I can save an additional $2-3k a month by being more careful with our spending. Even with our kids leaving the nest, I can probably only drop to about $5k a month since I would still like to be able to travel. It just seems amazing to me that you will be able to drop to 1/5 of your current spending in retirement. If you would like to post your retirement expenses, I can compare to ours to see if there is something that you have forgotten ( our biggest expenses will be property taxes and healthcare costs).
As far as what your children learn regarding money, I think it is too easy to say they understand the value of money when their normal is so abnormal to so many people. I can say this because I worry about my own as well. We hardly get them toys, they go/will go to public charter school, etc. however, their normal is living in a 4200 sq foot home in a gated community and going swimming in a country club pool. Not very normal at all. We tell them all the time how blessed they are because mommy and daddy and others do not grow up this way. Hopefully, it will sink in. When they get older, we hope to start volunteering with them. I hope they won't grow up feeling entitled to these things.
My biggest concern for you would be possible job loss or decrease in bonuses since you are relying on both your incomes and bonuses to sustain your lifestyle. So, to answer your question, I don't think you can have it all and achieve early retirement goals, if having it all means your current lifestyle. I hope you are able to find major places to cut spending (ie home maintenance costs, utilities, lawn maintenance, country club dues, grocery) and I look forward to seeing constructive comments here so that I can take the advice to apply to my own expenses as well.
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As far as what your children learn regarding money, I think it is too easy to say they understand the value of money when their normal is so abnormal to so many people. I can say this because I worry about my own as well. We hardly get them toys, they go/will go to public charter school, etc. however, their normal is living in a 4200 sq foot home in a gated community and going swimming in a country club pool. Not very normal at all. We tell them all the time how blessed they are because mommy and daddy and others do not grow up this way. Hopefully, it will sink in. When they get older, we hope to start volunteering with them. I hope they won't grow up feeling entitled to these things.
My biggest concern for you would be possible job loss or decrease in bonuses since you are relying on both your incomes and bonuses to sustain your lifestyle. So, to answer your question, I don't think you can have it all and achieve early retirement goals, if having it all means your current lifestyle.
I agree strongly with your assessment, HopeToFIRE. I grew up in that lifestyle, as did generations of my family. I have come to enjoy being more frugal as an adult compared to how I grew up, partially through my parents' emphasis that the luxury we have can be fleeting. Though I'm sure my parents meant the best, it was confusing to have my parents telling me to do as they say, not as they act. Only after going to boarding school did I undergo the lifestyle "deflation" necessary to "have it all" but be on track to retire early. Though my wife and my income (plus income from my parents' generous gifts) is significantly more than my parents', we have seen enough suffering amongst friends who chose high-risk/high-reward professions to value contingency planning.
Our strategy is to live a lifestyle that can be supported if one of us were indefinitely out of work (this is not hard, as others have pointed out on this forum!). Though both of our jobs are very secure, we don't even use her income in our budget planning. If your baseline spending becomes such a small fraction of income, you can occasionally buy expensive things or do some expensive activity. The key point I want to make is certain things aren't "normal", but they can be fun if done in moderation.
For more concrete examples, we spend money if it will allow us more time with family and friends. Paying people to do laundry and clean the house, for example. We structured our lives to have the niceties we value, and eliminate those typically associated with families at our income level but we don't value. For this reason, we purposefully chose not to live in the fanciest part of town or go to country clubs. We can visit our friends over there, but that level of upkeep has too low a reward for us to value.
Examples-
Utilities: keep the heat on (being cold is not fun), but cut out cable tv (boring).
Lawncare: bought a house with very nice interior but a small lawn, replaced grass with a few nice trees and bushes.
Cars: drive a Honda because it drives just as well as my Lexus did. This may vary for you. As long as our patients do well, no one cares what we drive but it seems in business there's more expected?
Food: eat the same cheap but healthy food our ancestors ate for millennia. Go to restaurants if we feel like it, but not too fancy.
Entertainment: friends can be entertained at home, and for a lot less expensive than taking them out.
In the end, you must decide what the "all" that you want to have is. Planning for the future, see what you experiences and comforts are important to you, and what are extraneous. Some things we just had because that's how I grew up. Only after careful introspection did we realize they weren't worth the expense. It is your life to live, and not for neighbors, friends or co-workers to judge.
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So, to answer your question, I don't think you can have it all and achieve early retirement goals, if having it all means your current lifestyle.
Yes, this has been what has been rolling in the back of my mind all day.
If how you live now is defined as "having it all", then no. But if you are able to re-define "having it all" then perhaps yes.
The other comment I've come back to this thread to make is this. If I were to summarise your initial post, the way I read it was "These are our major expenses (big houses, one of which we have tried and failed to sell, private schools, country club, au pair, overseas travel). Can we retire early?".
Our situation:
- Dual income professionals with undergraduate and graduate degrees from "prestigious" universities (part of what is keeping us from becoming true Mustachians imo – see below)
- 2 young children, both in private school
- 2 homes, a primary residence and our former primary residence (in another town 50 mins away we moved from due to work related commutes) that we are currently renting out
- 2 additional members of our household: live-in help and an elderly (sick) parent
- lots of expensive hobbies/toys/activities: country club membership, 3 cars, 2-3 vacations a year
So, when people replied, they were hitting your big expenses. There is no sense dicking around with switching internet providers (for example) if you're spending 100k flying to the Alps to ski. But every time someone makes a suggestion about those big ticket items, you simply state that they are off the table: (again paraphrasing, forgive me if I have misunderstood. The internet is a bugger for people reading exactly what you wrote, not what you mean to say :) )
"The landscaping is mostly the house we can't sell", "Private schools are absolutely the best choice for us. Not negotiable." "Already paid for country club, and we use it to play tennis and swim". "Our au pair is part of the family". "Can't move to a smaller house because we have an au pair."
You have two choices - dick around the edges and save a still impressive amount; skip travelling for a year or two, and give up one or other of your expensive hobbies and you'll save more than many of us will retire on.
Or make some massive lifestyle shifts, and actually retire early - move south, switch industries, nerf the private school track, or similar adjustments.
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This thread inspired me to try to find out what a "country club" is/does/what you do there. Wikipedia is not very flattering….
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I think this post hit a chord with people here because the ideal of MMM is freedom (from soul-draining work, debt, lifestyle, fashion, etc) and responsibility (to your own financial security, the environment, higher ideals, and your core values).
I personally don't feel like the OP has freedom, rather he is a slave to the obligations and expectations of his peer group. I get the feeling that he puts value in the environment(owns a leaf and a LED collection), charitable work and donations (board of something and donations of 3% of his total salary). That shows some seed of responsibility. But much is left to do. And earning a high salary puts you under the microscope because of how much bigger your impact is for good or bad.
I hope you will spend more time here. I think you may find it liberating to find a community who celebrates frugality, non-consumerism and green living.
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Hmmm . . . quite a lot of information. As I see it, these are the real issues:
Big Problem #1: You are earning a whale of a lot of money, but it's just passing through your hands -- you're not accumulating wealth. You are the working rich. You're rich, but if you stop working, in short order, you won't be rich any longer. This is rather amazing to me because my husband and I earn a fraction of what you do, yet (excluding real estate) our net worth is more than twice yours -- almost three times. Admittedly, we're about five years older, but that shouldn't be a significant factor.
Big Problem #2: You are letting other people dictate how you "should" spend your money. The car is a good example. I know people who have a car they adore -- in this area, it might be a '65 Mustang -- a car that they've worked on, that they love to show off, that they take to car shows. Those cars are huge priorities in their lives, and the people garner a great deal of enjoyment from driving them. While I don't share that value, I can understand spending on a hobby. In contrast, I hear you saying, "I drive an 85K car because it's what a person of my status is supposed to drive to the country club." I don't hear you saying that you're getting joy from the car, the two houses, etc., etc., etc.
Big Problem #3: You've built a house of cards. Because you're spending essentially all you're earning, it'd only take one big problem to ruin all you've built. One job loss, one illness, and your savings won't sustain this lifestyle all that long. And your jobs aren't the type that're easy to replace. It's easy to say, "Oh, that'll never happen to me", but you can find examples all over the news about people who thought the same thing.
Big Problem #4: You're raising your kids to expect this type of lifestyle, something that they may or may not be able to sustain in the future. I know, you said you expect them to pitch in and help with college, but what are they doing NOW? You can't wait 'til they're young adults and expect them to suddenly start taking on responsibilities. You start when they're little with taking out the garbage, then helping with the yardwork, then managing their own money in small ways. I also think you're stretching the truth about teaching your kids: I agree that a five-year old can understand that it's important to save, but I have trouble believing that your kids understood compound interest at five. And unless they're idiots (very unlikely), they realize that they're not middle-class kids; they realize that most people don't have two houses and live-in help.
My kids are 17 and 20, and, looking back, I am very glad that we purposefully chose to give them significantly less than we could have afforded. When they want something, they either figure out how to earn the money, or they ask for it for their birthday /Christmas. They share an old car. They still don't have smart phones. My girls are thrifty and resourceful, and they know how to fit into a variety of social situations. They're comfortable at a 5-star oceanfront resort, and they're comfortable at a campground. They know that we've saved money for them to attend college without debt, and they know that we own significant real estate, but they do not know just how much we have in investments. They see themselves as middle class kids -- they have no clue that they have rich parents (not your kind of rich, but still rich . . . and sustainable).
If I were in your shoes, I think I'd take these steps:
- Sell the second house, even if it's a break-even venture. Get it off your plate. Invest the money.
- Downsize the extravagant choices. The car, the extra help, the country club. Would your dinner invitations really stop if you drove up to the country club in a Camry? If so, do you really want those people for friends? Invest the money. You'll be amazed at how fast the money will accumulate if you're not spending so lavishly.
- Pick a lower-cost-of-living place to live. You're highly influenced by your surroundings, and if you stay where you are, you're going to feel pressured to continue this lifestyle . . . and if you weren't averse to that, you wouldn't be posting. So pick a spot where you can spend in a more healthy way.
- While I didn't read every word of the posts, I have the impression your kids are probably in the 9-14 age range? Pick a time when they'd be a reasonable age to make a move. When will your oldest start high school? That might be a good time to move. Let him or her launch into a new school while everyone else is new too. Or whatever works well for your family.
- Balance your ideal spot and your ideal get-away timeslot with how much money you can accumulate between now and then, and be honest with yourself about how you'll spend.
- As you're picking "the number" for how much you need to retire, do not neglect your children's educational costs. Private school is not a need, but it may be a priority that you continue to fund. Make some decisions on how much you need for each child.
- I also wouldn't cut the vacations, though I would cut down on how much you're spending on them. In your "retirement budget", plan for X number of trips each year, but make 50% of them budget vacations: Rent a house at the beach. Spend your days reading in the sun and playing board games with the family in the evenings.
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If your kids are as bright and talented as you think they are, you could also "downsize" by getting a nice 3BR apartment in one of the non-trendy parts of Brooklyn or Queens with good public schools (Kew Gardens and Forest Hills come to mind) and making all your kids sit the entrance exams for Stuyvesant/Bronx Science, etc. when they're in 8th grade. At the worst case scenario, you can send them to the local very good public school. Remember that urban districts can often leverage their large size to allow resources suburban schools and most privates just can't.
At a minimum, moving into the city will let you ditch the country club, one car, many of the commuting costs, and landscaping. Sell the other house too. I'd find a building where you could buy a 3BR family apartment and rent something on the same street or even in the same building for the live-in and your elderly parent. You can tell all your Westchester friends that you just are bored with the slow paced suburban life and want the excitement of the city. Your commute should stay about the same. Then, when you're ready to FIRE, you have an apartment with reasonable carrying costs (your common charges will be less than your current property tax and that will include utilities and building staff), in one of the most exciting cities in the world, in the same region as your family and friends.
I really like this suggestion. But, then again, it's not my life. And I'm a city person at heart.
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Mister FancyPants - that was quite a reply, both in detail and length!
I actually had to edit it down; I hit the 20,000 character limit of a post, never happened to me before.
Re Deferred compensation: the vesting is only relevant if one were to go to a competitor - in almost every other instance it would be delivered (other than termination for cause due to ethics). You bring up an interesting point about solvency, however. The financial institution is not a bank, we didn't receive government bailout funds during the crisis (in fact could argue our firm benefited from it), and, while I am not my employer's CFO, we estimate the risk of insolvency at close to 0% unless there were a Madoff-like fraud occurring. Whether the co stock price holds up well in a market crash is another issue. I can't cash it in or borrow from it, but it vests 25% each year so getting a large chunk next January, January 2016, January 2017, etc.
Regardless my only point is not count the chips until they are cashed, if 25% vests each year just count the amount that is vested, the companies keep throwing the RSU's at you to keep you from jumping ship, every year you get more so until you reach an action that gets you fully vested you leave something on the table.
One other note (which someone pointed out in a PM) that I should have mentioned: the income numbers are actually the average of the last 5yrs of our W-2s, so the actual earnings going forward will be higher since our combined base of $410k + [25% of existing deferred comp ($2.1mm)] + cash portion of future bonuses (from both jobs) will be > $850k listed as income.
This probably goes to the point that the way you listed your numbers was to cryptic, I kinda was able to read between the lines just from having the same type of pay structures that your actual income was probably higher but it was hard to discern.
Re Portfolio: Would agree that we are levered to financial markets due to deferred compensation structure as well as income and job security correlation to financial market performance. The real estate exposure to NYC metro is also exposed to the market imo. This is why we own no equities in other accounts! These are risks that are very difficult to hedge (other than perhaps buying some put protection on a basket of competitors' stocks). We don't have a problem being massively overweight real estate based on our view of the world. Additionally, the bond fund we own has a duration of 2.6yrs. Tons of dry powder in the event of a major correction in any asset class. And I (conservatively) didn't include the 5% annual coupon from the $250k taxable account (preferred class of a real estate LLC) so that's another $12,500 annually one could theoretically add to 'Income'
Fair enough, the protective puts on a competitor as the deferred comp vest sounds like a smart hedge especially as you gain more deferred comp year by year, usually more comes in than vests unless they are switching to a higher cash component of bonuses firm wide.
Re Private school and college liabilities: Our children will both have graduated from high school by summer 2024. I calculated the present value of the private school 'liability' by including all costs associated with the education (including a generous annual gift each year, which in an emergency would obviously go to $0) so the number is conservative. As mentioned we expect our kids to meaningfully contribute to college costs so that figure is conservative as well. I've already mentioned why we see the costs almost as 'debt', and we wanted to budget for it as a liability instead of a current expense that recurs annually because it would help us in our understanding of our true 'Net Worth' and the progress we are making toward FI. It is much easier for us to say our 'adjusted, conservative' estimate of Net Worth is $442k, our number $X so we only have $X - $442k on an after-tax basis to go. In a real pinch the college 'liability' approaches $0 as well.
Your $442k is still outlandishly low by any calculation considering your asset base and income, I would think you would make major adjustments before you actually wound up with a number that low, so as it might seem conservative to use that figure, it is not realistic in planning. I am constantly adjusting projections and recalculating things to adjust for changes in my situation, I think you need to reel in your projections to what you would do in more short term situations and how things would project outward from there based on those changes which would give you a more realistic outlook of the further out future in a whatif scenario.
Like you said if things keep on going you really have no problems, you are only planning for the whatif's.
Re Cash management and other liabilities: as mentioned before the retirement accounts are split between cash/equivalents and private real estate deals. The accounts with cash used to be 100% in stocks, and we've been selling on the way up and are now completely out of stocks (as of end of last year). In the disaster scenario we could either borrow (from 401k) if liquidity is needed. The finance job base salary is actually a little lower than the other job (but with a bigger bonus), so if that were to go away (and never come back ever, although this seems highly unlikely) the hit would not be as dire from a monthly liquidity perspective as mentioned. We both have disability and term life via our employers which would pay 60% of base salaries (indefinitely) in the event of disability and multi millions in the event of death. In the crisis scenario we would also envision cutting expenses that weren't true *needs*, and the club we are members of actually allowed special dispensation for members to take leaves of absence without any penalty (other than embarassment?) during the last crisis and the policy remains. The HELOC is on the rental property (we don't owe much on the mortgage for it) and theoretically we could open another for the primary residence as a backup (should probably do that now while times are good rather than after it's too late).
Verify the disability policies fine print are really for life (65) and not just not able to do your own job. Most employers only pay for disability insurance that covers employees being disabled from performing their current job not any gainful employment. What this means is for the first 2 years you get 60%, afterwards it is at the insurance companies doctors determination if you can have any gainful employment they can stop paying. When you buy personal disability insurance you will usually buy it to cover any employment until 65, it cost more, most employers don't do this as they don't want the liability. Ask HR or the carrier they can provide you with the policy details.
I would absolutely do the HELOC on the primary residence if you mortgage rate is 4.65%, you can probably shave at least half a point off of that on a few hundred grand and get another few hundred grand liquidity. That will save you a few grand a month in interest which can be put towards the education expenses. That’s a homerun and probably the most Mustachain thing you can do, (except maybe mow your own lawn said tongue and check). If you are interested in the HELOC I know and excellent local broker PM for the details, if you don;t already have someone
I'm sorry to hear about your experience at LEH - it was really a horrible time for so many people, especially the ones who were over leveraged (I know quite a few with a couple of really bad stories of overextended acquaintances at the club). I do think that the likelihood of such a collapse happening again is slim, given increased regulations and capital requirements and human nature learning from the past (and perhaps overcompensating). Hopefully this clarifies our financial situation - appreciate you digging into the details and the advice.
I loved LEH, it was a great company whose executives waited too long to see it was in trouble, I unloaded all of my stock as it was going to down, I took losses, but it could have been worse. I did have RSU's but like I said I never counted un-vested RSU's so that didn't really impact me, it sucked, but it happens.
So my experience personally was of great memories and sadness to see it go down, I have friends who were buying the stock all the way down and didn't see the writing on the wall. Others who had all their equity in the firm, things haven’t so good for them, some have rebounded others have not.
I disagree with you on it being a slim chance of something bad happening again, as everyone missed the mark on the underlying causes. Too big to fail has just gotten bigger and the new regulations and capital requirements haven't really done anything to reel the greed on the street or in Washington. I for one will also blame Main Street but no one wants to say that. This conversation is way off topic and we could discuss in great lengths in another thread or PM if you are interested.
That being said, I do agree that in all likelihood I don't imagine the financial system being on the brink again in the next 6 to 30 months... Beyond that is probably too far out to forecast.
As far as the details and advice, you are quiet welcome I have enjoyed this thread very much. I actually find it somewhat ironic, I don't quite fit into this Mustachian world as I am by no means the epitome of frugality, I'm green when it’s convenient, I don't ride a bike and I am very much a consumer and do the expensive vacations etc. etc... On the other hand I don't live in your world either, my income is a little under half of yours but my net worth is within a million bucks, my assets and net worth are only off by my mortgage. I'm a public school type of guy and I very rarely go with friends to their country clubs even though I live right next to one. But I fit into your world a lot more than I fit into Mustachianism, but also not quite...
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You are correct that a lot of it is passing through our hands. Some of it our own fault (luxuries that we can address and cut), a lot of it not (taxes).
Taxes -- if only we had the answer to that one.
I am amazed if you have amassed >$6mm in your early 40s with a fraction of our income. How did you do it?
I'm looking at the 4xxK number you used early on. As I said, I'm excluding real estate -- I'd bet I own exponentially more acres, but yours is worth more dollars.
I don't agree with your comment that one big problem will ruin it all. You are assuming that there would be no response to a significant life event, which is madness. Some examples: the elderly grandparent could be sent to live with her other child 30 miles away; the live-in is no longer needed; club membership goes on hold; material possessions (there are quite a few and worth quite a bit) are sold.
Thing is, we've all heard multiple stories of people who "had it all", experienced a downturn, but didn't adjust their lifestyle. I agree it's madness, but it seems to be pretty common.
I can definitely relate to the elderly grandparent. We were in such a situation until last July, and I don't regret a single penny we spent caring for her. We had lunch delivered every day, and she had a home health nurse who came in twice a week . . . but we did an awful lot of work caring for her. It was both a pleasure and an obligation, and I miss her terribly.
Our kids do chores, and they get a small allowance of which they save half (long-term), give away a tenth, and budget the rest for things that they really want.
Good! I hadn't picked up on that from the posts, but it is tremendously important.
And you are wrong - both of our children knew about compound interest by their sixth birthday (as an outside date). You would also probably be surprised that, while only in elementary school, they can already read simple corporate balance sheets and income statements - kids are pretty interested in what their parents do for a living.
I agree that they'd grasp that the bank pays you interest for keeping your money, but compound interest is pretty complicated for a kid whose brain would still be in the stage of concrete operations and who, in school, is still learning addition and subtraction. Perhaps you mean "are aware of this", while I mean "understand it and can calculate it and make educated decisions about it".
onsideration is also whether we really want to stop working before our kids leave for college. We can't quit tomorrow or even the next few years, but theoretically if we made major changes would could while they are in high school. But would we want to, and if so how would it affect them to see their parents living the early retirement lifestyle at a time when they will be extremely busy and probably stressed out (the typical life of a high school student these days)?
I wouldn't make your decision based upon this idea. I have a college student and a high school student, and they're not particularly stressed, even for tests, the SAT, etc. My oldest chose her career when she was a toddler and hasn't waivered, whereas my youngest has worried about how to best use her talents, but she and I are working on finding volunteer experiences and shadowing opportunities to let her see her options for herself.
Of course, I might not have the best handle on that topic. I don't "do stress", and my kids are like me. We believe in advanced preparation and hard work, which reduces stress. The only stressful event I can think of from the last year is my grandmother's death. She was very, very sick for three weeks, and we moved heaven and earth to get her to doctor appointments and make her comfortable -- even though we all knew exactly what was going to happen. She was 100 years old, after all.
Finally, city person vs. non-city person at heart . . . you are what you are. You're looking for a lifestyle change, a money make-over, but be honest with yourself about where you really want to live and what you can/can't do without. The city /non-city thing is one example. If you try to fit yourself into a mold that "isn't you", it isn't going to work. So I'll end with good advice from Shakespeare: To thine own self be true.
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The reality is I'm not concerned about their financial future or how they value 'things or experiences' - I am actually hoping that by the time they are adults a lot of the things we read on this blog will become second nature to them, and they will be able to choose how they want to live by the time they are our age via financial independence.
So, you're shooting to give them a very different life lesson than they would get if you continue in your current trajectory. IOW nothing about how you've been living up to now is likely to teach them what you want to teach them. Which, I guess, is why you want to change. Overall it sounds to me like your personal values are not reflected in your life. It feels like for a while your personal cruise control was set to "doing what we do because it's what people [in my social group] do," as opposed to "because it means something to me." And now you want to turn off the cruise control... for which I salute you.
My first question about expenses is why you're bothering to rent out a house that brings you approximately $0 after expenses. Shouldn't you aim to sell that, ideally soon, before interest rates start creeping back up? What's the point of keeping it?
My second question is why you would want to keep living more or less as you are until the kids are in college. While they're at home is the one time in your lives that you can really shape their characters and destinies. As food for thought, I offer you a few links about this family:
http://www.bainbridgereview.com/news/27542469.html
"On Thursday, islanders Behan and Jamie Gifford sailed their 47-foot sloop Totem out of Eagle Harbor with no clear notion of when they will return.
Soon to be joined with their children – Niall, 9, Mairen, 6, and Siobhan, 4 – the Giffords will spend the next several years sailing the Pacific. Their itinerary is purposefully vague.
“As long as we’re all having a really good time, and we can afford it, we’ll keep going,” Behan said."
FYI, that was in 2008, and they're still doing it. Their kids have spent the last half-decade living at sea and in several foreign countries, first world and otherwise. Here's their blog:
http://sv-totem.blogspot.com/
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Long time lurker here; registered to reply since I found this very interesting. We are no way in the same income & net worth league as you West (~200K annual income); we both have higher ed & professional degrees. I am curious though what you want to change anything for? You are doing really well and are in a position that many would love to be. There is not one right way to live life, is there? If the jobs are great, friends are great, kids are doing great, then what problem are you trying to solve? You are in finance, so you already know assets and investments and can run the numbers. I also disagree with changing the kids school. While I am personally not in favor of private schooling, the fact is your kids like their's and have established friends there. A little harsh to change it all up now, so you can retire early from jobs that you find fulfilling.
Also, can't help myself here =) taxes: how can america be the great place it is w/o all of us higher earners chipping in? Since I grew up in a third world country, I know what happens when a nation can't pay its bills. Barely any law and order, dirty air, potholed roads, denuded mountains, polluted rivers and beaches, corruption, no reliable emergency services - medical/fire/coast guard - I could go on and on. Really, all that stuff takes money. Yes it hurts to pay so much, yes there is waste. There were a few fabulous rich around when I grew up, and they lived in their giant mansions in a bubble as much as they could. They could buy the best education, security for themselves, even medical care, but air & water and natural beauty can't really be bought with private money.
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Re poor reading comprehension: can you really scrutinize my total spending over the last 12m if I started reading the blog 4m ago? Doesn't seem like a fair comparison. I am simply pointing out that a significant % of the comments either didn't read the original post thoroughly or didn't read any of the comments. Is it too much to ask for people who comment(multiple times) to do so?
I wasn't scrutinizing your spending, I was scrutinizing the approach you took in your original post, and the attitude that persists in all the follow-ups. I'm saying (1) your case is wildly atypical, and (2) your presentation doesn't follow established norms. And despite these facts (which should be glaringly obvious to anyone who's "read all the articles") you're insulting the reading comprehension skills of a community that is trying to help you.
You admit yourself that there is no right or wrong way to expose numbers so I will leave it at that.
There is no right or wrong, but again, why not throw everyone a bone and follow established conventions?
You're taking your broken Chevy to the Ford mechanic, and stamping your feet in frustration when he doesn't magically have all the answers right off the top of his head or repeats some of his questions, all the while neglecting the fact that he's never even seen your model before, let alone the problem.
I agree with you wrt humility - we could all use more. I do get a little annoyed by haters (complainypants?) who scrutinize the most minute things that are different from their own specific view of the world.
Well, I guess we'll have to agree to disagree that driving an $85k car to an ultra-exclusive country club, top 3% or better income, a professionally managed six acre yard, and crazy-expensive private schools and an au pair are minute details.
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Look, you'll get no argument from me on the value of colleges as a place to meet potential marriage partners, gain admission to certain fields or go to certain graduate schools. I met my husband in college and other men who were there and interested in me are all high achieving and well earning 5 years out from graduation. (All engineers, though. I seem to have a type. =D) But you're paying a hell of a lot for a few extra percentage points of "weeding." How much more bonus additional networking are you kids going to get from an elite school that they aren't going to get from living in Rye, having two parents in finance, having two parents with Ivy League networks and being members of a selective country club? For kids as well connected as yours, they're going to gain a lot less from the elite education, in terms of those intangibles, than someone from a less rareified background. How much money are a couple of percentage points in additional networking value worth? Your kids aren't brilliant children from rural Iowa or the South Bronx who have no connections in the professions. They're already incredibly well enmeshed in your world, and that isn't going to change if, god forbid, they go to SUNY.
I love my SUNY education :) Actually for undergrad I think it is far more practical to save the cash and go to a SUNY school, then pony up for grad school, Harvard Law or an MBA from Wharton or MIT give you the same networking and bragging rights and opportunities without the $300 to $450k undergrad price tag, might even get an employer to pay for it. Not to mention UMich or SUNY or UMass UConn etc. all have a much better party reputation and let’s face it college is not all just about the education in the classroom, I'm a huge advocate of real world experience and that is what I dislike private schools personally I think the mix of people you interact with in the public school system and on the subway for that matter is important for a proper upbringing. Ex-mayor Bloomberg richest man in NY travels via subway, that says something now doesn't it.
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Of course happiness isn't the only purpose in life - and in reality everyone seems to have a slightly different interpretation and opinion of what the meaning of life is.
Additionally everyone has her own core competencies and strengths which allow her to contribute to society. It would be a shame if Einstein or Steve Jobs had taken the same route just sailing around the world instead of changing it for the better. Of course not everyone is at that level, but perhaps finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'.
The goal or purpose FIRE isn't to earn your money then sit on your porch drinking sweet tea. The whole idea is that when you are not reliant upon your wage income you can do whatever the hell you want, maybe even sail around the world, or think about quantum physics...whatever blows your skirt up.
You're right, you probably won't invent the next iphone by sailing around the world, but neither of your examples went to an ivy league school.....or even completed school in regards to Jobs. But do you believe people who are driven and passionate about what they do are just going to up and stop if they become FI? Why is your path any better than the person who chose to sail around the world with their family?
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but perhaps finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'.
Eh? Are you 'sure' you've read the MMM articles? If so, there appears to be a 'reading comprehension' problem.
My troll-meter is pegging pretty hard.
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It would be a shame if Einstein or Steve Jobs had taken the same route just sailing around the world instead of changing it for the better...finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'.
By sailing around the world - with goals and plenty of curiosity - kids can see and experience first-hand changes which need to be made. Their discipline and studies and routine will be different but no less important than if they stayed at home (regardless of 'WWGS' - what would Gladwell say). They will encounter people and ideas and materials and ingenuity and inspirations they would never encounter in the US. Reading the NYT/Nat'l Geographic/travel or volunteering during holidays doesn't come close.
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[3][4] or with the deliberate intent of provoking readers into an emotional response[5] or of otherwise disrupting normal on-topic discussion.
Let's see...
You claim to have read all of the articles yet completely miss the point of them.
You wrote "if something unexpected were to occur we would be in financial danger" but whenever someone suggests substantial changes, you equivocate and rationalize. As someone wrote, bringing lunches to work isn't going to save you. Further, you later deny that anything unexpected could happen and/or you would be well prepared to handle it.
You wrote "I think our problems lie in trying to ‘fit in’ with our peer group" but then deny that you're doing it or again rationalize the expenses as necessary "for the kids."
Etc., etc.
If you're not trolling, then you're easily the most defensive case study poster on this forum. That indicates a lack of willingness to actually change.
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It would be a shame if Einstein or Steve Jobs had taken the same route just sailing around the world instead of changing it for the better...finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'.
By sailing around the world - with goals and plenty of curiosity - kids can see and experience first-hand changes which need to be made. Their discipline and studies and routine will be different but no less important than if they stayed at home (regardless of 'WWGS' - what would Gladwell say). They will encounter people and ideas and materials and ingenuity and inspirations they would never encounter in the US. Reading the NYT/Nat'l Geographic/travel or volunteering during holidays doesn't come close.
Exactly. I have little doubt that these kids will do really cool things with their lives. The chances of them making life decisions based on what their peer group expects of them instead of based on what their true nature and purpose in life is, a la "I'm 27 and in a stable relationship, I guess it's time to get married" or "I guess I need to buy a really expensive car, since everybody else has one," are slim to none.
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WF, it really seems like your interest is in trimming some of the fat but not making any drastic changes. It's hard for many on this forum to understand and I hope that after your extensive reading of the forum and MMM posts, you can understand exactly why that is. We are all about trimming way more than the fat. We're about getting down to the bare bones of what life is and choosing deliberately how we want to be a part of this world.
In regards to your situation: on one hand, you are very happy with the experiences that your family is having in the community where you have chosen to live, while on the other hand you recognize that volunteerism, perspective, and non-material experiences are important parts of the upbringing you want to give to your children. You want them to be well-rounded and not reliant upon a huge income to find happiness. It is very unlikely that you will cultivate the aforementioned attitudes and values in your children whilst living such a decadent lifestyle, as many posters before me have pointed out. But, perhaps, you don't actually value those things as much as you say. I'm not saying that's a bad thing. I'm just saying that the desires and hopes you've stated throughout this thread seem contradictory with your lifestyle choices, which makes me suspect that they're not equally balanced desires. It seems like you value the lifestyle more and the values/experiences/lessons less. And if that's your choice, that's fine.
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The right answer here is BALANCE.
Every time you say yes to something (like sailing around the world), you're saying no to something else (like being part of an academically challenging school or taking part in team sports).
Each of us must choose for our children where that line should be drawn -- how many activities are "too many"? How much relaxed, unstructured family time is appropriate? How many chores are appropriate for a certain age? How much stuff should we buy?
We won't all agree upon the line in the sand -- and, in fact, multiple lines exist. Y'all are arguing over those lines. Clearly the OP is unhappy with his current balance; if not, he wouldn't have posted.
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Perhaps it would be helpful, for others but particularly for yourself, to provide specific examples, as you seem to exaggerate a lot of the points you are attempting to make.
As I'm not the only one who has mentioned this, perhaps you should look into it since it is, after all, your case study?
You have a talent for sarcasm. That would also be part of the "defensive" attitude that I mentioned.
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By sailing around the world - with goals and plenty of curiosity - kids can see and experience first-hand changes which need to be made. Their discipline and studies and routine will be different but no less important than if they stayed at home (regardless of 'WWGS' - what would Gladwell say). They will encounter people and ideas and materials and ingenuity and inspirations they would never encounter in the US. Reading the NYT/Nat'l Geographic/travel or volunteering during holidays doesn't come close.
Exactly. I have little doubt that these kids will do really cool things with their lives. The chances of them making life decisions based on what their peer group expects of them instead of based on what their true nature and purpose in life is, a la "I'm 27 and in a stable relationship, I guess it's time to get married" or "I guess I need to buy a really expensive car, since everybody else has one," are slim to none.
Daleth, your points are quite valid and well taken, if in reality doing cool things with their lives and not following conventional norms is what would help them realize and fulfill what their purpose in life is (which is really what makes people happy)
My guess is you do assume that to be the case
This is a subtle distinction, but it looks like you're missing it, perhaps because I haven't explained it in so many words until now. But here goes: I'm not saying or assuming that there is anything intrinsically wrong with going to an Ivy League, getting married at 27 or whatever the average is, and working a conventional job. It wouldn't work for me, but I'm sure there are people for whom that's truly fulfilling and meaningful.
What I'm saying is that far too many people follow the conventional path NOT because it's what's truly fulfilling and meaningful to them, but because it is "just what people do," it's "what all my friends are doing," it's what they're told all their lives (if they had a conventional or aspiring-conventional upbringing) will make them happy, and it's the easiest path to follow in this society.
And by easiest I mean not only that most people support and approve of conventional choices like going to the best/most expensive college you can get into, so the kid feels very socially supported in making that choice, but literally, 18-year-olds wanting to follow that path can get student loans for $100k+ to help them do it--whereas they can't, for instance, get a loan to buy a sailboat, film a movie, or start an organic farm or a weird little company like Apple Computer was in the 70s.
People who make life decisions because it's what their peers and family expect of them, rather than because it's what they really want and are "designed for" (i.e. it fits their character, goals, etc.), are not going to be happy. That is just as true for people raised by hippies or adventurers who make hippie-ish or adventurous life choices that are not actually in tune with their own natures, as it is for people with conventional upbringings who make conventional choices.
That being said, in my experience it is more unusual for people raised by hippies or adventurers to blindly/semi-helplessly follow the path set by their parents and peers than it is for people raised conventionally, for one big reason: because following your own path rather than conforming is a huge value for most hippie or adventurer parents (and thus they encourage it in their kids, whatever that kid's right path may be), whereas it's typically not a huge value for conventional parents (thus they are less likely to encourage their kids to make unconventional choices even when the kid deeply believes such choices are best for him or her).
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Also, can't help myself here =) taxes: how can america be the great place it is w/o all of us higher earners chipping in? Since I grew up in a third world country, I know what happens when a nation can't pay its bills. Barely any law and order, dirty air, potholed roads, denuded mountains, polluted rivers and beaches, corruption, no reliable emergency services - medical/fire/coast guard - I could go on and on. Really, all that stuff takes money. Yes it hurts to pay so much, yes there is waste. There were a few fabulous rich around when I grew up, and they lived in their giant mansions in a bubble as much as they could. They could buy the best education, security for themselves, even medical care, but air & water and natural beauty can't really be bought with private money.
Well I would say I pay at least my fair share of taxes considering the benefits I receive. People say it's about fairness and I completely agree: it seems unfair that a small % of people pay such a high % of taxes with about half of people paying no federal income tax.
Redistribution can cut both ways, here's an interesting mental exercise: What if the energy that is saved by turning down the thermostat by MMM is simply spent by his wasteful neighbor who wants to keep the temperature 74 during the winter, and to make things more 'fair' an arbitrary amount is transferred by the utility company so that MMM pays more than his actual usage and his neighbor pays less? Isn't that what our extremely progressive income tax system is doing as well but in reverse?
And why is income taxed - why not wealth? Well that is of course a completely different topic.
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I agree that wealth should be taxed, with corresponding decrease in income tax - no argument from me there. Regarding the oft-repeated "fairness" issue and "1/2 the country does not pay taxes" - this includes the demographic of low income people - who work full time and make too little to live on. How can we realistically expect them to chip in much, if anything? Of course this also includes rich people who pay zero federal taxes because of tax code loopholes (this is not second-hand info - I see their tax return). But this is not the demographic being usually discussed, because they are "job-creators". And it is true, they are. BTW, I am not saying you are not paying your fair share. But please think about your luxurious life and the equally great life your children are going to have. Now think about a single mom, working full time, making maybe 30K and her life and the life of her child(ren). Even if she pays no taxes and you pay a lot, she will not come to within a mile of your life in 7 generations. We are completely off-topic now, sorry! And clearly I am a bleeding heart liberal...
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There was obviously some misunderstanding, but even so I'm not sure exactly how many posts on the blog you listed that I needed to read, in addition to the newspaper article, in order to get all of the information that you clearly already have knowing them personally.
I'm not at all saying you should've known, for instance, that the mom was a private-school blue blood and not a hippie. (Although honestly, you're in finance and this is a financial forum--I think anyone here would have realized that a family capable of taking off around the world in their own sailboat for 6 years, with 3 kids and no jobs, must be at least reasonably well off. And frankly, most hippies--and I know plenty--are not.)
What I was critiquing wasn't the fact you didn't know what kind of people these were or what their goals were, but the fact you posted statements that indicated that you were ASSUMING what kind of people they were and what their goals were. Did you ask or speculate about what their goals might have been in an open minded way? No, you made that knee-jerk comment about (air-quotes) "freedom" and getting away from "the Man."
By way of contrast, I hope you noticed in my previous post that I'm NOT assuming that anyone whose life path is conventional is following that path because they want to conform with their peers. Some people, including at least one very independent-minded person I am related to, have made choices totally consistent with the conventional path because that was actually right for them personally, it was what they really wanted, etc.
But in your posts on this thread, you sound like you made a lot of lifestyle choices (country club, $85k car, massively expensive lawn care, etc.) because it's what your peers expect of you; it's what one does in your social group, IF one does not want to stand out. I don't care what your specific choices are (except to the extent they're financially foolish), I care whether you made them genuinely or merely out of a desire to fit in, to not look different, to fulfill other people's expectations... If the latter, you are not going to be happy. That's just how it works. It's the reasons for the choices that determines whether you're happy or not.
I wasn't referring to them specifically with my 'freedom' and 'not having to answer to the man' comment.
How else could I have interpreted your statement, in response to my post about this family sailing around the world, that "it would be a shame if Einstein or Steve Jobs had taken the same route just sailing around the world instead of changing it for the better. Of course not everyone is at that level, but perhaps finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'"?
You're contrasting Einstein, Jobs and others who "find what [their] purpose in this world is and fulfill it" with people who "just sail around the world instead of changing it for the better," and you conclude that Einstein, Jobs et al. are likely superior because "perhaps" what they did is more meaningful than having freedom and not having to answer to the Man. From a point of view of logic, reading comprehension etc., I'm not sure there is any coherent argument that you were NOT referring to the sailing family, or at least to them and hypothetical others like them--who else could you have been referring to, in your Einstein/Jobs vs. those who sail around the world comparison?
But, hopefully that fulfills my quota for exactitude (aka pedantry) for the day. I was just struck by all the assumptions you had--that sailing around the world was not finding one's purpose and fulfilling it, that people who did that instead of being more like Einstein/Jobs were just seeking "freedom" (which you put in air quotes, as if it is a false or inferior value) and trying to escape the Man, etc.
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WestchesterFrugal, it is obvious that you and your spouse are very smart and successful. You simply have a lot of money leaks. I would suggest that you start scaling down your lifestyle in the immediate future, rather than 10 years from now. Some ways to do that:
-Downsize to ~$1 million house without acreage
-Replace one Leaf and "showoff machine" with a Tesla (best of both worlds)
-Leave country club and host more parties/dine out more
I'm going to exclude taxes since they cannot be controlled and rental expenses because they net out to zero, but what do you think of these proposed expenses?
PITI $5,137 (Assumes 20% down, 4.5% APR, 1.5% property tax, $1k a year insurance)
Charity $2,500
Property Maintenance $833 (assumes 1% per year)
Gardner $200
Live-In Help $1,800
Country Club $0
Groceries $1,800 (additional expenses for hosting parties)
Vacations $833 (vacations 2x a year or go on more frugal vacations 3x a year)
Utilities $500 (lower due to smaller house, less acreage, etc)
Kids' Activities $685
Shopping $500 (this can probably be cut, but I don't know the details)
Auto Insurance/Maintenance $320 (2 cars instead of 3)
Public Transportation $330
Gasoline $0
Restaurants/Eating Out $400 (some of this is currently done at the country club)
Entertainment $80
Total $15,918
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What is your definition of 'substantial changes'? Moving across the country? Pulling kids out of school without regard to circumstance and values/priorities? Downsizing a house and kicking a grandparent out to live in a crowded apartment in Manhattan?
How much change are you seeking?
You began by asking if you can "have it all" and retire early, which would seem to indicate you're looking to retain your current lifestyle yet also retire early. That probably isn't possible. Yet some posts indicate that you're willing to embrace change, while others seem just the opposite. You're a bit contradictory, and I think it's because the ideas are still new to you. You haven't yet settled your mind on what you'll accept and what you'll reject.
As for "doing a 180", I don't know how much change that means to you. You mention not being willing to move away from the Northeast. I don't understand why anyone would want to live there, but you probably wouldn't care for the South where I live. I'd point out that you could leave your immediate area, which seems to have a negative effect on you, without leaving the Northeast.
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I agree that wealth should be taxed, with corresponding decrease in income tax - no argument from me there. Regarding the oft-repeated "fairness" issue and "1/2 the country does not pay taxes" - this includes the demographic of low income people - who work full time and make too little to live on. How can we realistically expect them to chip in much, if anything? Of course this also includes rich people who pay zero federal taxes because of tax code loopholes (this is not second-hand info - I see their tax return). But this is not the demographic being usually discussed, because they are "job-creators". And it is true, they are. BTW, I am not saying you are not paying your fair share. But please think about your luxurious life and the equally great life your children are going to have. Now think about a single mom, working full time, making maybe 30K and her life and the life of her child(ren). Even if she pays no taxes and you pay a lot, she will not come to within a mile of your life in 7 generations. We are completely off-topic now, sorry! And clearly I am a bleeding heart liberal...
Everyone needs skin in the game, even if it's 1%.
Additionally the goal should be to optimize and make equal opportunities to succeed, not equalize outcomes.
The US tax system is one of the most progressive in the world, due to lack of VAT (consumption) tax. I actually would welcome a consumption tax - it is certainly Mustachian in forcing those who overspend to foot the bill for those who don't. But taxing income at higher and higher marginal rates makes no sense.
That’s an argument that is always taken in perspective, people with high income always say higher marginal tax rates make no sense and a consumption tax makes more sense. And those who make very low incomes feel very justified in paying no income tax as they can barely survive.
The truth is somewhere in the middle, there is no system that will make everyone happy, it is unfair to tax the impoverished and at the same time no one should get a completely free ride. On the other side of that coin is the fact that the wealthy can afford to pay more so make them for the benefit of those who are less fortunate. Neither side is truly right, somewhere in the middle you get a good solution but it has yet to be presented in a workable form, especially since it needs to come from Washington so we know it will never happen. So in the end someone will get screwed and it is generally the poor but not quite poor enough to be completely state supported and the wealthy but the not quite wealthy enough to really not give a damn.
There is a sweat spot in the middle and people following Mustachian tenets tend to fall into it as they have enough accrued substantial enough assets to cover their low level of spending so they can avoid taxes almost entirely or at least pay a minimal amount while having a much more enjoyable lifestyle then the average 9-5 in debt working middle class family.
-Mister FancyPants
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Unfortunately $1mm is going to be tough for this area with enough square footage and distinct living spaces (separate bedrooms) for 6 people. We don't need a mansion (we don't currently live in one anyway) - our current house is roughly 3000 sqft above ground and 1000 sqft below (play area, workout room, laundry, small home office). We need at least 5 bedrooms (granny, live-in, master, each child boy/girl), not to mention we sometimes work from home (office space). I am guessing that is still at least 3000 sqft in this area. Also, if you want us to entertain more we would need some decent common areas + dining space. $1.5 might be possible (although it would probably be older and need work and probably wouldn't have much curb appeal - the former are more concerns in terms of cost of repair and maintenance, we aren't terribly concerned about the latter, as our current house is from the 1930s traditional colonial anyway).
But have you actually looked? I just ran a search at this realtor: http://www.houlihanlawrence.com
...and found 7 homes currently for sale in Rye, NY that have at least 5 bedrooms and cost between $500k and $1 million.
Here's the most expensive one ($965k, 5BR, 2.1ba--I'm sure for the savings in house payment you'll have, you can afford to add another bathroom or two if you want):
http://www.houlihanlawrence.com/property-detail/3401303/56-Clinton-AV-Ryecity-NY-10580
There are also 4 currently for sale between $1m and $1.5m, of which the most expensive--asking $1.475m--has 5BR and 4.1 baths, more than 3200sq ft above ground (no idea what if anything is below ground) and sits on just under 2 acres:
http://www.houlihanlawrence.com/property-detail/3400015/20-Hillandale-RD-Ryetown-NY-10573
Here's how the realtor describes it: "a spectacular country property in the Hillandale estate area. The private 300' driveway leads to the secluded two acre retreat that has it all; pool, pond, stream , gazebo, playhouse and beautiful foliage." If you get a 30-yr fixed loan with 20% down at, say, 4.5%--the rates are always a smidge higher for jumbo loans like this--you're looking at a monthly mortgage payment of $5979... but the taxes there are almost $3000/mo.
But personally I think the best deal may be this 7BR/7ba on just under 1 acre in Rye Town for $1.115M--that would get you a mortgage payment of $4520/mo plus taxes (which are a little over $2000/mo) and insurance. It's huge, but it has solar panels with a 3-day battery, and that apparently is but one of the ways in which the current owners have done work to make it energy efficient.
http://www.houlihanlawrence.com/property-detail/3403794/94-Betsy-Brown-CR-Ryetown-NY-10573
So there ya go: a big enough home for all 6 of you, in your area, with nice grounds but not ridiculous acreage to keep up, Miele, SubZero, Viking and Bosch appliances--for just a smidge over $1 million.
I have no clue what school districts are like there, but I doubt there are bad ones and in any case you don't care since you're planning to put your kids through private school.
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As I've let go of stuff and other financial commitments, a far greater sense of peace and freedom has come over my life. It's so easy to get caught up in maintaining an expensive lifestyle, where you are working mostly to maintain that lifestyle and the stuff, rather than the other way around.
@WF, you've said you've read all the MMM articles -- one thing MMM mentions is how he was just as happy as a poor college student as he was as a relatively high earning engineer. The same has been true for me; having stuff and unnecessary financial obligations were more of an anchor than any of the usual trappings that would tell the world that I had "made it." I've been a relatively high earner with some stuff, and giving up that lifestyle has been heaven on earth to me. Now I'm FI, and the financial security is gold, worth so much more than country clubs, gyms, private educations, expensive cars, etc. We live a middle class lifestyle in a somewhat snooty upper middle class area. Not having to work every day is a godsend, as is knowing we've accumulated enough to live forever at our very comfortable lifestyle.
I'm both impressed by your earnings, but simultaneously dismayed at the thought of having so much baggage holding you back if I was in your shoes. I would feel terribly insecure with such high expenses and relatively lower net worth given your extremely high earnings. I don't know what your actual net worth is, but if it's in the $2-3 million range, that would put you at $80,000 - $120,000 annual income with a 4% SWR if you gave it all up and retired today. By most of humanity's standards, that is such a lavish retirement income, it would appear (to me at least) ungracious to suggest otherwise.
As others have said, you choose the life you want. I'll vote for trading in the high expense lifestyle, it sounds like it's holding you back.
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56 Clinton's backyard is I-95, the major interstate/artery for the entire northeast, that's why it's so cheap
20 Hillandale is actually a very nice house and being a 1938 Colonial similar to ours, but it is in Rye Brook (different town); it's almost more of a back country property, being close to the Merritt and a bit of a trek from town and not as commuter friendly - but still not a horrible consideration if you don't mind driving a lot and not being close to everyday stuff
94 Betsy Brown is in Portchester; this is not a good deal at all
Hillandale would be considered a secondary location in desirability, which in real estate is pretty important. I don't think the maintenance/upkeep costs for that house would be any different (it's actually more acreage than our current primary residence). Clinton and Betsy Brown will be extremely difficult to unload when the time comes to sell
We looked a few years ago before we started doing all the renovations to our home, and the market in this area is pretty efficient. I think we might be able to squeeze $200-400k in savings if we downsized in our general area, but we would not recoup any of the improvements we made to our home (which would delay and reduce ongoing maintenance) and would most likely need to sink a bunch of money in renovations into wherever we moved to.
What's wrong with Portchester? It's not like you're using the public schools...
The desirability is all relative - it's a fantastic location compared to the Bronx, a horrible one compared to the surrounding neighborhoods.
I simply commented that it was not a 'bargain' and would be very difficult to sell eventually.
I'm sorry, I'll bow out now. You are still too caught up in measuring your life according to the lives of your peers--god forbid you should live in 7BR/7ba $1.1 million Westchester mansion with a pool and high-end appliances in a particular neighborhood (of million-and-up Westchester homes) that one's peers consider to be below the fold. Gosh, would people not come to your dinner parties if you had them there? Um... are those really people you want to be "friends" with?
I used air-quotes there because people who value you as human beings, and not as trophies attesting to their own personal success, will come to your dinner parties even if you live in a mere $1.1 million mansion in Portchester, or a mere (snif, well-coiffed hair toss) "secondary location" in Hillandale.
By the way, keep your eye on those listings--I think you will be surprised how quickly they sell. (And if it's genuinely not a bargain at its asking price, some lucky family will get it for less--sparing themselves more unnecessary expense). Why will they sell quickly? Because they're not selling to your "friends," they're selling to slightly less snobbish and less wealthy people--of whom there are far more than there are people like your "friends."
It's funny, because you're clearly conflicted--there are genuine personal values of your own in there struggling to get out (that's why you even came to this forum), but they're drowned out by the snobbish, artificial values you learned and are still parroting.
The simple answer to your question is, no, one cannot "have it all"--since by "have it all" you clearly mean continue living up to the expectations of your peers, which you learned from them and are parroting--and also retire early. The only way you could get the answer to "yes" is by sloughing off all this artificial crap and reconnecting with the genuine personal values that brought you to MMM in the first place.
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Westchester Frugal, thank you for posting. Your case study and the comments have given us a lot to think about (two working parents, intense jobs, young kids, living in an expensive area), so I think that your post does achieve at least one of your goals. I am far from Mustachian but am actively trying to move toward a less expensive, simpler life. I have found that it is much easier not to take on a new expense than to cut an existing expense. It sounds like you have already come around to cutting/minimizing some of your smaller but still significant expenses, like the car. If you can keep that mindset, it should help you from taking on new expenses in the future, and, perhaps it will lead you to making some more drastic changes.
This comment is intended to be 100% constructive, not negative or judgmental in any way. I have read your postings and all of the comments. Please forgive me if I repeat or misunderstand anything.
So, starting with the little changes, first I'd cut the country club and trim the vacation budget. It is unfortunate that you spent so much time and energy getting into the club, but that is not a reason to continue spending so much money on it. Find the public tennis courts, pools, golf courses, and parks in your area. I'll bet they are nice. Host BBQ's at your home, the park, or the beach instead of socializing at the club. Perhaps try out not using the club for a month or two this summer to see how it goes before you drop your membership. On the vacation side, I'm not clear on whether your figure includes the cost of the hotels/flights that are paid by miles or not. Regardless, you can really trim this and still have a great time with your family. It will probably be less stressful to drive to the shore instead of flying to the Caribbean, too. I think you said you're already planning to do this, which is great.
Fully commit :) to getting rid of the fancy car, and buy something fuel efficient instead. As a side note - take a look at your gas spending - you're spending quite a bit for a family that lives 2 miles from groceries, 6-8 miles from school, commutes by train, and has one electric car. Where is the gas money going? We spend about half of that in CA and both commute by car (one of us 70 miles per day - so unmustachian!), but fuel efficient cars, so perhaps that explains it.
One poster mentioned that switching internet providers at this level is not useful. I humbly disagree. I think that scrutinizing all of your spending and making the small changes prepares you for making big changes and makes you think about big changes. You do want to make big changes at some point, even if it is 10 years from now, so it's a good idea to establish these habits now. So look at your utility bills. Can you cut your cell phone bills down, why are your gas/electric bills so high, does the lawn really need to be watered so often, etc? It won't save you tons of money in comparison to your income, but it is a good and pretty painless way to start building your frugal muscles.
Doing all that landscaping/maintenance yourself sounds exhausting and time consuming, but replacing a lot of the lawn with something low-maintenance is a great idea (at least for the house you're not planning to sell). It should cut your utility and maintenance bills, too. Perhaps you can cut down to a small lawn that you can mow yourself once a week (or your kids can do it) and native plants that need maintenance once a month for the rest of the area. I'd think this would even add value to your home, at least it would in CA.
Now, this is where we get into areas that are more difficult.
As far as live-in help, we have an au pair, which is actually a relatively inexpensive childcare option with two kids under the age of three in our particular situation/expensive area, so I'm not going to say live-in help is not wonderful, and it is worth the cost to us. I wonder if it's the best option for you, though. If your live-in help is an au pair, I'd consider moving to a babysitter for a few hours a day who can help drive the kids to activities if that is your primary childcare need now that your kids are older. Alternately, can you find a carpool for at least some of your needs? If your help is a live-in nanny who has been with your family forever and also helps with the elderly grandparent, that's a different story. In that case, I'd explore whether it would be possible for her to share time with another family while your kids are in school. You might find someone who is willing to drop their kids off at your house for her to care for so that she'd still be at home with the grandparent in case of emergency. That arrangement is very common where we live and would cut down on your expenses.
Next, your housing costs are a huge portion of your spending (even when I subtract out what I think are the costs associated with the rental property). Your landscaping, maintenance, and utilities are more than we pay on our mortgage, and we have a very unmustachian 4br single family home in a very expensive city with a very high mortgage. Purchased before I started reading this blog. :) I would seriously consider moving if I were you. I am. I know it sounds like a drastic step that is unnecessary when you can pay your mortgage every month and still save a lot of money, but when you sit down and do the math on how much money you can save by moving, it is eye-opening. There are tons of little costs that add up when you have such a big house - even down to replacing the batteries in the many, many smoke detectors that such a big house has, so include all the little stuff in your calculations. Start out by going to open houses just to look. Are there nearby suburbs on the same train line where the schools are not as good? You don't need excellent public schools if your kids are in private, and houses tend to be cheaper in areas where the schools are not as good. Do you find yourself thinking about how nice it would be not to worry about having huge grounds to keep up when you're looking at houses on the market? As you go to open houses, think about how your family would fit into them. Maybe you can find something with an in-law apartment above the garage or something similar that would allow your nanny and/or grandparent her/their own space but cut down on the size of your home. You could even rent it out once your kids leave home, so you don't have to move again when you retire.
I understand your reluctance to cut private school for your kids. It's difficult to justify doing something that is not strictly necessary and that you think could negatively impact them when you are making plenty of money. I do not come to the same conclusion that you do about the benefits of various schools and the impact on your kids of going to an excellent public school, but I understand you're not going to change your mind and won't push the issue. Could you cut down on the yearly gift to the school? My kids are young and will (hopefully) attend public school, so I do not understand the expectations or politics of these things, but perhaps there is some flexibility there.
Finally, I'd explore some of your assumptions in your retirement budget. I have not seen it, so these are just questions that came to mind in reading your post. Do you want to plan to stay in a house where your kids will have their own bedrooms to return to while they are in college and possibly a year or two after if they don't get a job or at least one that can pay for an apartment in Manhattan right away? Then you'll need at least 4 br's (assuming the grandparent continues to stay with you). Are you going to find a 4br house for $1M in Westchester? If you want to downsize and move to Florida, do you really want 4 br's or do you want something smaller? Will your time in your current house will be more like 15 years, not 10? If so, that puts transaction costs of moving in a different perspective. Do you want to continue to fund the same types of vacations for your kids - they probably won't be able to pay their own way starting out, and you'd probably like them to be able to come with you? For how long are you going to pay for them to come? Will you run out of miles to pay for flights/hotels on vacation if you're not working? What is the real cost of your vacations now (i.e., not using miles) and what do you expect it to be when you retire? For groceries and entertainment, how are you calculating those? I don't think you can just lop off half the budget because you'll have half as many people (or a third, depending on whether you keep live-in help).
I hope you find a path that works for you and your family. Best of luck!
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We don't need 7br/7ba and 7000 sqft - we need 5br and 3000 sqft (above ground) which is more than enough and incidentally what we currently have
You have it for $2 million. It's available for $965k-$1.425 million. Having less space but paying twice as much money for it is not frugal or an accomplishment to flaunt.
Keeping up with the Joneses will cost you millions of dollars and years of your lives (i.e. years spent working--in a cold climate you dislike--instead of retiring early to a climate you enjoy). You can't "have it all" (= keep up with the Joneses) and retire early. As you may have noticed, the Joneses don't retire early.
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Just wanted to add a couple of thoughts.
I work in a field with a lot of high-income folks, and I have to disagree that some of the things you think are necessary to socialize and network with wealthy individuals are necessary. For example, while I myself am not a country club member, I often attend events at country clubs and socialize with people who are members, based on my work on boards and in groups that have very wealthy members. It just isn't that hard to become friends with very wealthy people if you are very engaged in an industry that produces them, or in certain philanthropic organizations. Surprisingly, they don't seem to care that I drive a 5 year old car worth only $10k or that my purse is from Target. They somehow still invite me to events and are interested in my work and my life. The material stuff is just not necessary to be friends with the wealthy who have good values- it's only the shallow ones who care, and who wants to be friends with them anyway. It sounds like you are thinking you might downgrade the car, so kudos to you- I hope you do it.
Another thing you may want to think about is having your children take over the landscaping work and/or other chores you may outsource now. Instant cost savings that could be applied towards your very generous college fund for them. Not to mention instilling a good work ethic.
Also, letting them have ownership of some of their own college costs can be a great education as well. I know that the awareness that I was incurring debt while I was in school was a motivating factor for me to graduate on time, and to work while attending school. It forced me to feel what a tight budget felt like, and to understand the value of time and money. Not to mention the fact that the debt I had at graduation made me live frugally after graduation, and led me to invest a substantial amount of time in self-education about finances.
It is also very possible to get amazing credentials for a career by attending a state school and then going to a very prestigious graduate school. This offers a lot of cost savings. This could reduce your future education liabilities.
You also mentioned being a big fish in a small pond, but is that really what the private school is offering your children? If the school is highly competitive and prestigious, it may be more of a small/mediocre fish in a small pond situation.
I'm also surprised that your children's monthly activities expenses are so high, given that you said that the school's extracurricular programs are so strong. You should be able to afford even private lessons in sports and music and still be able to save a ton on this line item- just find some local college kids who need extra cash. Also, remember that sleep and unstructured play time is also very important for a child's developing brain. And that being in a very competitive environment can cause burnout at a young age (believe me, I know- that is why I read early retirement blogs!).
You also mentioned that you wouldn't have much more time with your children if one or both of you didn't work. If this is really true, then why do you need the nanny? Even part-time help to pick up and shuttle the children would save lots of costs. I understand that your children are attached, but if the nanny is only around for the money, and is not willing to maintain a relationship with them without getting paid for it, then your children are going to suffer those consequences at some point, either now or in the future. You also should be able to cut the phone line and home office if quitting wouldn't increase your time with your children, since you could just do your work in your office. If you really want home office space, no need to get a whole extra bedroom for it. Just use a dining room, extra family room, part of the living room, etc. With homes like the ones that have been linked in this post, even a walk-in closet would work just fine.
One thing that I like to think about as well is the actual value I am getting from expenses. Not in relation to my income (because that skews things since I earn a decent salary), but to actual, real-world value. A Louis Vuitton purse can easily pay for things like a cow or goat for a poverty-stricken family, which can drastically change the quality of life for an entire family for many years. Thoughts like this keep me back in the real world when I am surrounded by wealthy people who spend a lot of money.
It is much more important for me to have more time to volunteer and enjoy life and to accumulate wealth to give away than for me to have the latest and greatest items in order to keep up with the lifestyle of the rich. Even if you don't want to retire early, think of the absolutely amazing and wonderful things you could do with the extra cuts you can make to your expenses that could literally change the world. And think about what an amazing lesson to teach your children about the value of humanity and community vs. material possessions.
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We don't need 7br/7ba and 7000 sqft - we need 5br and 3000 sqft (above ground) which is more than enough and incidentally what we currently have
You have it for $2 million. It's available for $965k-$1.425 million. Having less space but paying twice as much money for it is not frugal or an accomplishment to flaunt.
Keeping up with the Joneses will cost you millions of dollars and years of your lives (i.e. years spent working--in a cold climate you dislike--instead of retiring early to a climate you enjoy). You can't "have it all" (= keep up with the Joneses) and retire early. As you may have noticed, the Joneses don't retire early.
This!
If you want to retire early you have to not give a shit about what anyone thinks of your lifestyle. I don't own a car, rarely eat out, and I have a really dumb phone. This prompts some people to snicker and make weird faces, but I honestly couldn't care. My friends are the ones that accept who I am regardless of how much money I'm spending.
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We don't need 7br/7ba and 7000 sqft - we need 5br and 3000 sqft (above ground) which is more than enough and incidentally what we currently have
You have it for $2 million. It's available for $965k-$1.425 million. Having less space but paying twice as much money for it is not frugal or an accomplishment to flaunt.
Keeping up with the Joneses will cost you millions of dollars and years of your lives (i.e. years spent working--in a cold climate you dislike--instead of retiring early to a climate you enjoy). You can't "have it all" (= keep up with the Joneses) and retire early. As you may have noticed, the Joneses don't retire early.
I also don't see any necessary renovations in many of those links. And don't see the problem with living near a highway. Or with living in the second most desirable area in the city. I assume you probably didn't live in the world's most desirable area growing up, and yet you likely had a wonderful and happy childhood. Your children can have the same.
In fact, if I were you, I might even consider getting two condos right next to each other. I bet that would save even more money and get you the space you need. Not to mention save you in landscaping and other maintenance costs :).
I think this is an easy next step, and would give you lots of money. Think of the amazing things you could do (either with extra time, or with extra philanthropy) with that money. Makes me salivate just thinking about it...
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I often find a bit of extremism from this blog, which can be great if one needs to jump start a change in lifestyle that is on an unsustainable path due to the nature of actions that were not well thought out prior. I own up to a fair number of my own past mistakes, but in reality I don't think my situation is really that unsustainable or uncommon in my corner of the world. I am looking to make changes to work towards becoming better, and as Voltaire famously stated "Le mieux est l'ennemi du bien." (google translate for those who don't speak french)
"The kittens are in the bushes"?? I think the smugness broke Google Translate!
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I am more likely to get to that place by maximizing my income than cutting $20k or $40k a year from my budget.
And I am starting to think that I am getting to the point where making an extra 5% in our jobs is actually easier than cutting $50k from our expenses based on some of the less realistic options that are starting to be thrown out there.
Why are you here? You really come across as a troll. I think Joet has resurfaced. You sound really bitter. I hope you find happiness.
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I'll preface my comment by the fact this is a very active thread and I have skipped some of the latest back and forth, but I've done my best. Because of this, I am somewhat hesitant to join in, but like a moth....
I would like to know, WF, if you grew up the way that your children are being brought up? You mentioned being from the South, but that could mean anything (lots of old money in the South).
If you want to know more about my feelings on your situation, I am contemplating early retirement and blogging about why I would be willing to pay the opportunity cost of ER in my latest post, Time and Money, it or Retirement Fragility would be of interest to you, to at least get you thinking. One small, specific criticism of your financial situation, and also your ER plan - I think that too much of your net worth will be tied up in real estate which is generally an under-performing, non-liquid asset. You are planning for the necessary liquidity to have 80k passive, but with a million dollar house and your current lifestyle, 80k might go as far as you're thinking - only you can really judge that one. But that's my personal worry about getting used to 'the good life' then retiring early (40 - 45y.o.) to much less than the pre-retirement income, and what that income could have been in our 50's... Also, needing a large portfolio to meet your passive income needs increases risk: tax drag goes up, market volatility means income instability, and now ACA is like a means test on health insurance.
Thanks for baring your financial underpants, it's gutsy and I'm impressed that you have the wherewithal to come back and continue to respond fairly. I have made the mistake of commenting after a beer or two, and find that the 'modify' button is worth its weight in bitcoin, just FYI :)
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And I am starting to think that I am getting to the point where making an extra 5% in our jobs is actually easier than cutting $50k from our expenses based on some of the less realistic options that are starting to be thrown out there.
The problem with that mindset is that you are setting yourself up to remain in the cycle of making more money to buy more stuff. Why cut any expenses? Why not keep buying stuff if all you need to do is make some more money to pay for it? You might have a big year next year and bring home $20mm. Why retire at all when you can keep on making big money?
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This was an awesome 10 minutes of hilarity, thanks to the OP and everyone else for putting a smile on my face. The Voltaire name-drop was the icing on the cake.
OP: If you want to change your lifestyle, change your damn lifestyle. If you don't, don't. Who comes on a forum for thrifty people to look for validation of their country-club life? I can only assume that's what you want, since even a quick skim of the blog would have yielded ample ideas to cut spending or invest your piles of spare cash. You don't need advice from anyone here on how much you can water down Natural Ice before it loses it's refreshing crisp taste, or how to replace your alternator cap with legos and gum, or whatever.
So either you're here to brag or you just don't get it. Actually, if you ARE here to brag, it ALSO means you don't get it, since nobody here is particularly impressed by people who have lots of money. We're impressed by people who overcame obstacles to achieve what they wanted to achieve and improved their lives/health/happiness. You have accumulated a lot of crap. I hope it makes you very happy.
-W
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And my comment wasn't that Rye Brook was the second most desirable area, it was that it is considered a 'secondary' area in terms of desirability of location - meaning second tier. This of course is nuance and the people who are just looking to live as cheaply as possible won't care, but it matters for resale, taxes (higher relative tax burden for towns that are not as strong financially), schools and services, and amenities - in other words any buyer with discretionary income will (and does) care when choosing a place to live.
I think you have a bit of a logic failure there. Though I'm not really familiar with the area, I seriously doubt that everyone is leaving Rye Brook because it is a 'secondary' area. Indeed, I would suspect that it is easier to sell ~$1 million houses there than a ~$2 million house where you live, simply because there are more people willing to pay the lower price. So you (simplistically) sell $2 million house, buy $1 million house, and invest the extra million.
But I think you are still stuck on the notion of 'desireability' as defined not in terms of having a comfortable place to live, but in your perception that it is a status symbol. If you'll forgive a little personal philosophy, that seeking after status symbols is going to forever doom you to second or third rank status. The truely successful don't need symbols.
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Though I'm not really familiar with the area, I seriously doubt that everyone is leaving Rye Brook .
Boy Howdy Jamesqf, I can't believe I'm one step ahead of you, even this little Aussie has been to the Westchester Hilton in Rye Brook. But not the country club.
Actually Jamesqf, it was a bit like this when I was there:
http://www.youtube.com/watch?v=01NHcTM5IA4 (http://www.youtube.com/watch?v=01NHcTM5IA4)
Probably don't get that sort of knife in the country club.
Sorry OP, but this thread needs some silliness…or perhaps, an argument, or not as the case may be.
http://www.youtube.com/watch?v=kQFKtI6gn9Y (http://www.youtube.com/watch?v=kQFKtI6gn9Y)
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This thread is very nearly perfect. I commend all involved. Or as Montesquieu would say "Bonnet de douche!".
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Gorro de ducha!
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Groceries: $1200 vs 1640
$50/plow everytime it snows > 3".
Two ways you can save money:
You can definitely cut this grocery bill.
You're paying someone to plow your driveway? Tell your kids that you're paying this amount every time it snows . . . offer it to them. They clear the driveway, they get the money. No, it doesn't save you a penny, but it provides them with a way to earn some extra money. Do insist that it's done up to your standards, and be specific about when it's to be done.
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Edit: I deleted this post, because this morning it really seemed to be too silly and off topic.
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Question to the posters in this thread:
It seems like this forum has a lot of mixed feelings on wealth at the level of the OP. Do you all think that the kind of wealth described in this thread is a bad thing in and of itself? If you have enough money to afford to be wasteful are you still ok with it because you are still living within your means (even if those means are unlike 99.5% of the global population)?
What do you guys think the mustachian ideal should be for people at this income level? Should they be downsizing and saving money like mad so they can donate a large portion of their assets to some research facility to cure horrible diseases, create a non-profit to support the arts, creating their own business or investing in businesses to support mustachian ideals like bike infrastructure, renewable energy, etc? What if your dream is to become rich and spend your days at a country club? Is that evil?
Lastly, I'm not sure why the OP would be coming here for advice. The usual expenses of middle class life are a drop in the bucket for you (ie cooking food at home, cell phones, etc). At that income level, you need to talk to some bad ass accountants who will know how to hide your money in Switzerland or create some shadow corporations to reduce your tax burden (a joke, sort of :-)).
I'm sort of dumping a lot of thoughts into 1 post, but this thread has shown a different side of this forum and I'm curious as to why?
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This thread is fascinating. Commenting so that I can follow it. Good luck, OP! You brought a lot of interesting issues to this board with your post.
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Hello there. This is a very interesting thread. One thought on a comment you made about increasing your income rather than cutting your exepnses. At the end of the day it really does come down to what life style you want to be able to attain/ maintain and then determining how much money you need to sustain it indefinitely. So in my mind your first step is aligning your lifestyle with your values without feeling like you are suffering. Then determine what that is costing you. Then determine your income potential especially if you can increase it and figure out how much you need to save to amass a stache large enough to support your choices. Maybe that bogie is $10M maybe $20M. Then set out to earn as much as you can while maintaining the lifestyle you agreed to. Presto in a certain number of years you will have attained it all! Good luck!
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I'm not fazed by his stratospheric level of wealth, because I've known a lot of people with his means or more, including my aforementioned best friend. That being said, I place a high value on humility and simplicity, which he lacks. I'm also generally disgusted by his desire to pigeonhole his kids into the same way of life he has and his obsession with keeping up with his neighbors. He seems pretty shallow.
Based on your friend's experience, is raising kids in this environment detrimental? Is there a lot of drug abuse, pressure to keep up, failure to live up to set standards which causes depression, mental issues? I'm so far outside of this world I have no idea if these are just things I see in movies or if they are real problems.
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I find this thread fascinating as well. I have much too little experience to give any advice but, I'm interested in reading along.
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Folks, this person is clearly a troll. Next they'll be telling us they keep their dog on top of the car when travelling to save space, a la Mitt Romney.
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Have you read much about personality types? They're not scientific, but they can be useful for providing insight into personal situations. Your personality type is almost certainly XSXX. This forum is overwhelmingly N-types, with 50% or so of people here being INTJs. 2% of the general population is INTJ.
https://forum.mrmoneymustache.com/welcome-to-the-forum/myers-briggs-type-indicator/?topicseen
So, with that in mind. S-types tend to me much more sensitive to their peer group.
Sensing (S)
Paying attention to physical reality, what I see, hear, touch, taste, and smell. I’m concerned with what is actual, present, current, and real. I notice facts and I remember details that are important to me. I like to see the practical use of things and learn best when I see how to use what I’m learning. Experience speaks to me louder than words.
The following statements generally apply to me:
I remember events as snapshots of what actually happened.
I solve problems by working through facts until I understand the problem.
I am pragmatic and look to the “bottom line.”
I start with facts and then form a big picture.
I trust experience first and trust words and symbols less.
Sometimes I pay so much attention to facts, either present or past, that I miss new possibilities.
Intuition (N)
Paying the most attention to impressions or the meaning and patterns of the information I get. I would rather learn by thinking a problem through than by hands-on experience. I’m interested in new things and what might be possible, so that I think more about the future than the past. I like to work with symbols or abstract theories, even if I don’t know how I will use them. I remember events more as an impression of what it was like than as actual facts or details of what happened.
The following statements generally apply to me:
I remember events by what I read “between the lines” about their meaning.
I solve problems by leaping between different ideas and possibilities.
I am interested in doing things that are new and different.
I like to see the big picture, then to find out the facts.
I trust impressions, symbols, and metaphors more than what I actually experienced
Sometimes I think so much about new possibilities that I never look at how to make them a reality.
You've managed to stumble onto a group of people who, by inclination, care a lot less about what other people think. As a group, we've decided to ditch what the dominant culture thinks of as the American Dream and follow our own intuitions. So you're unlikely to get much sympathy here for your obvious desire to play keeping up with the Joneses, because we've all decided to not play that game. Your personality isn't oriented the same way, which is fine. You clearly care what other people think, because if someone told me I had to apply for a club in which to recreate, I would just say, "oh, fuck it" and think of it no more. You don't operate that way. But with that in mind, the most important factor in determining your lifestyle is going to be your peer group, because your spending will match them. So, find a new peer group of people you can respect (hence trying the college alumni networks) but who made different life choices.
I'm glad to hear your day to day will soon be covered by your base pay. Does that include your tax commitments as well? The reality is, you aren't on the verge of a massive financial crisis, but, by a percentage of your income, you are way outspending the average mustachian here. The average savings rate here is 40%, and most of us are aspiring for higher. You did ok, by the standards of the average American. The question is, do you want to be mustachian or not? You must want something different, or you wouldn't be posting here.
this was a very smart post. One of the best ones on this thread.
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Folks, this person is clearly a troll. Next they'll be telling us they keep their dog on top of the car when travelling to save space, a la Mitt Romney.
I have been following this thread for a few days, and I have to agree.
"Hey guys... I was wondering, I make a million dollars a year, is there any way I can save $50 per month? I don't want to change anything though. Also, my entire identity is wrapped up in being rich and comparing myself to my friends, but I like that about myself. So, what do you think? I can't mow my own grass because, you know...how it would look. Is there ANYWHERE, ANYWHERE at all I could save a few bucks?"
Cmon MMM forum. It can't possibly be real.
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It's pretty easy to be obnoxious on an anonymous internet blog
If nothing else, you have proved that.
Of course anyone who lives in Westchester knows it is an extremely small community and even just a few truths accidentally revealed would give away an identity, to much shame and embarassment, if for no other reason than people with money don't talk about money (as well as a few other topics)
I just want to know what would happen if Mr. and Mrs. Bottomtooth discover that you posted something on the internet pleb board, and with your own hand no less. The shame, it would be unbearable.
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I have been following this thread for a few days, and I have to agree.
"Hey guys... I was wondering, I make a million dollars a year, is there any way I can save $50 per month? I don't want to change anything though. Also, my entire identity is wrapped up in being rich and comparing myself to my friends, but I like that about myself. So, what do you think? I can't mow my own grass because, you know...how it would look. Is there ANYWHERE, ANYWHERE at all I could save a few bucks?"
Cmon MMM forum. It can't possibly be real.
Agreed. This post especially got my goat:
There will always be richer and poorer people than me - I am totally comfortable with that
When you are in a position of strength (rich) you can do whatever you want I agree
I am more likely to get to that place by maximizing my income than cutting $20k or $40k a year from my budget.
And I am starting to think that I am getting to the point where making an extra 5% in our jobs is actually easier than cutting $50k from our expenses based on some of the less realistic options that are starting to be thrown out there.
"Waaah, it's too hard to cut $50k from my yearly expenses of $700k, we better just work some more because an extra 5% of our income is more than you sukkas make in a year!"
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I'm not fazed by his stratospheric level of wealth, because I've known a lot of people with his means or more, including my aforementioned best friend. That being said, I place a high value on humility and simplicity, which he lacks. I'm also generally disgusted by his desire to pigeonhole his kids into the same way of life he has and his obsession with keeping up with his neighbors. He seems pretty shallow.
Based on your friend's experience, is raising kids in this environment detrimental? Is there a lot of drug abuse, pressure to keep up, failure to live up to set standards which causes depression, mental issues? I'm so far outside of this world I have no idea if these are just things I see in movies or if they are real problems.
I should mention the OP's world is my old world. I'm a New England blueblood who went to an elite boarding school. My best friend probably isn't the best example. The entire family are part of an insular religious community, so things like drug abuse tend to be much less of a problem than the secular world. If you met her on the street, you'd think she's just another woman in religious garb with a bunch of children. Yes, they're major donors to the house of worship and local religious school, but you'd never know that except that her husband is on the board of a lot of community organizations and her FIL has a bunch of stuff in their city named after him. Our lives are very similar, which is why we've been close friends for the better part of a decade.
But, speaking to the OP's world. Most of the people I know are pretty functional. It is a culture that prizes achievement, so most people are pretty together. The big problems were as follows:
1. Not everyone has the cognitive ability, temperament or inclination to excel in the very narrow set of fields the OP finds acceptable for his kids. Intelligence has a strong genetic component, and many, many parents are unwilling to acknowledge that their kids may not be bright enough to be Ivy League material. This isn't a huge problem if you've set your kids up with skills and expectations so they can live another lifestyle, but if you haven't it can get ugly. My brother is less bright than I am, but it's fine. He's a qualified EMT and will be a firefighter paramedic soon. He's happy as a clam, but he'd have been miserable if my parents had pushed him hard on the achievement track and he'd washed out. Even assuming the ability is there, not everyone has a personality cut out for finance/major prestige corporations/BigLaw. I'm very shy and reserved by nature, and I wouldn't be able to survive in that environment, even though I have the brains to do it. That's also been my personality since earliest childhood, and I'm not sure how much parenting or schooling would shift it. The OP's field has an extraordinary burnout rate, and you're doing your kids a disservice if you don't set them up for that reality.
2. The culture is a very tiring treadmill. It's The Protestant Ethic on steroids, in some ways. You're always striving for the next promotion, next nicer thing, etc. Some people really thrive on this, but not everyone does. When you're not working, you're devoting all your time and energy to ensuring your kids will be able to get into the schools that let them be just like you. Actually, most women in that set who are in their mid-upper thirties have some sort of...not entirely empirical medical problem, like depression or fibromyalgia or whatnot. I'm sure they're suffering, but I think a lot of the time they're getting the diagnosis due to burnout, because it's incredibly difficult to work and engage in the kind of labor-intensive, achievement oriented childrearing normal in that class. Heck, just doing the childrearing is a massive amount of effort. I think this is one of those things noone is supposed to notice, but then the diagnosis means they can be a SAHM, which is otherwise sort of seen as laziness.
Great reply, thanks for taking the time to explain. All of that sounds exhausting to me just reading it, it almost seems like training for elite athletes.
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I think I'm just going to sit back and spectate on this thread...
(http://i1.kym-cdn.com/photos/images/original/000/293/590/6f6.gif)
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Question to the posters in this thread:
It seems like this forum has a lot of mixed feelings on wealth at the level of the OP. Do you all think that the kind of wealth described in this thread is a bad thing in and of itself? If you have enough money to afford to be wasteful are you still ok with it because you are still living within your means (even if those means are unlike 99.5% of the global population)?
What do you guys think the mustachian ideal should be for people at this income level? Should they be downsizing and saving money like mad so they can donate a large portion of their assets to some research facility to cure horrible diseases, create a non-profit to support the arts, creating their own business or investing in businesses to support mustachian ideals like bike infrastructure, renewable energy, etc? What if your dream is to become rich and spend your days at a country club? Is that evil?
Lastly, I'm not sure why the OP would be coming here for advice. The usual expenses of middle class life are a drop in the bucket for you (ie cooking food at home, cell phones, etc). At that income level, you need to talk to some bad ass accountants who will know how to hide your money in Switzerland or create some shadow corporations to reduce your tax burden (a joke, sort of :-)).
I'm sort of dumping a lot of thoughts into 1 post, but this thread has shown a different side of this forum and I'm curious as to why?
I'm not fazed by his stratospheric level of wealth, because I've known a lot of people with his means or more, including my aforementioned best friend. That being said, I place a high value on humility and simplicity, which he lacks. I'm also generally disgusted by his desire to pigeonhole his kids into the same way of life he has and his obsession with keeping up with his neighbors. He seems pretty shallow.
It's pretty easy to be obnoxious on an anonymous internet blog - I wouldn't be so quick to judge without really knowing anything about anyone else here besides the image/profile they have carefully crafted for all to see
I'm glad I could entertain and indulge
Of course anyone who lives in Westchester knows it is an extremely small community and even just a few truths accidentally revealed would give away an identity, to much shame and embarassment, if for no other reason than people with money don't talk about money (as well as a few other topics)
I sometimes worry about shame and embarrassment. It's usually if I fart while working out.
Must be a rough life having to be so guarded all the time.
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What a fascinating thread. Kudos to the original poster for being brave enough to post a reader case study that is definitely outside the norm. I also have to give kudos to everyone else in the forum for being polite, insightful, and not just devolving into throwing a bunch of insults.
So many great points have already been brought up, I won't harp on them much. I think the big things to take away are that you need to spend some serious time thinking about your goals and values, and then consider the impact this lifestyle is having on your very impressionable kids. I don't have an answer, but it is something i have thought about considering my husband and I are definitely better off at this stage in our lives than our parents were.
My real observation however is that I find it fascinating the cultural differences you describe between your lifestyle and ours. I wonder if part of it is a East Coast/West Coast thing going on? My husband and I went to an average public school and then went to UC Berkeley and Stanford for undergrad and grad respectively. Most of our colleagues here went to top schools (Stanford, Berkeley, the occasional Harvard/MIT/Purdue, etc.). While we are in tech and not finance and so don't bring in the kind of incomes you do, I really don't feel there is the pressure to "keep up with the Jones'" the way you describe in your post here! Our household income recently passed the $250K/year mark and the only person who has ever wondered out loud why we don't decorate our house with "real" furniture or rent a place with no insulation, single-pane windows, and no central heat is my mother. :) Some of my work friends travel the world yearly on exotic vacations and some talk about finances being tight and cutting back. Either way is fine; I think there is a curious freedom in surrounding yourself with that kind of social group.
Like anything in life, real change is hard and it would take you a while to adjust. That doesn't mean it isn't possible though. To illustrate a point ( not to draw a parallel!) I was in an Al Anon-type meeting several years back and one lady was talking about how their whole social life was constructed around wine tasting, the wine industry, and she couldn't imagine their social life not revolving around alcohol even though her husband was in rehab for alcoholism. The counselor leading the discussion pointed out that while in her dark moment she couldn't imagine anything else, her life would change, they would make new friends, find new hobbies, and be better for it in the end.
One other side point: I did my grad degree at Stanford with a friend. She did the East Coast private prep school route with lots of stress, high achievement, competitions, etc. I went to above-mentioned average public high school, spent a ton of time hanging out with friends, took a year off to be an exchange student, and went to junior college before transferring to a 4-year school. In the end, we have the same grad degree from Stanford, work at the same company, make similar salaries, and live very comparable lives. You don't HAVE to send your kids to private school in order for them to be successful later on in life. Drive comes from within and is instilled by good parents.
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I am not sure what type of work you do, but our jobs are pretty serious business and if I am on a conference call with executives (which granted does not happen more than a couple times a month) my reputation is at stake if there are kids running around, people chatting in the background, bad connection, etc. This is the ultimate in what I would refer to as penny-wise, pound foolish - in our industry your reputation is actually more important than your actual results.
This comment screams to me that a) your identity is primarily defined by your employment b) you take great pride in your work and c) you wouldn't have it any other way (i.e. you love your job.). That's terrific, actually, most people would kill to love what they do but they don't.
Just wanted to say that I wouldn't recommend RE unless you are very certain you have other ways to engage and occupy your time that will make you feel engaged and important. Otherwise I think there's a very good chance you'll be unhappy without work. Don't do that to yourself, you'd be better off working as long as you are able.
In other words, I don't think you should make any changes at all to your life. You're happy and you have it pretty good, according to your perceived needs.
Cheers.
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I am not sure what type of work you do, but our jobs are pretty serious business and if I am on a conference call with executives (which granted does not happen more than a couple times a month) my reputation is at stake if there are kids running around, people chatting in the background, bad connection, etc. This is the ultimate in what I would refer to as penny-wise, pound foolish - in our industry your reputation is actually more important than your actual results.
This comment screams to me that a) your identity is primarily defined by your employment b) you take great pride in your work and c) you wouldn't have it any other way (i.e. you love your job.). That's terrific, actually, most people would kill to love what they do but they don't.
Just wanted to say that I wouldn't recommend RE unless you are very certain you have other ways to engage and occupy your time that will make you feel engaged and important. Otherwise I think there's a very good chance you'll be unhappy without work. Don't do that to yourself, you'd be better off working as long as you are able.
In other words, I don't think you should make any changes at all to your life. You're happy and you have it pretty good, according to your perceived needs.
Cheers.
Not just that, he's planning on FIREing in a decade when his youngest hits college. That means his youngest is at least 7. You're telling me you can't keep a 7 year old from making a lot of disruptive background noise for the duration of a conference call? That points to larger problems than spending.
This is reasonable to me. Someone once told me you can mentally determine relative levels of risk by calculating: probability of something happening (1-5), against how catastrophic it would be if it did happen (1-5) against [ETA: exposure (1-4) to get it on a scale of 100.
Clearly he thinks it'd be catastrophic (5) if it did happen.
(This calibrates your internal risk. For the record, the person telling me this was a CG Captain, who generally only placed "people dying" in the number 5 category. He also said never accept an unacceptable or unnecessary risk. This would likely qualify as that.)
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The advice you are giving is terrible from a real estate investing perspective: big (much more than needed) house, nicest on the block, in a (relative to surrounding) undesireable area with high carrying costs and horrible reputation for schools, which will be very difficult to sell eventually - who do you think would buy a huge 7br home with the worst schools in the general vicinity?
Maybe I should have mentioned that residential real estate provides almost 30% of my household income (which is in the top 2% nationwide). Or do I have to buy a $4000 purse and the "right" shoes before you'll listen to anything I say?
Since you bought a new $2 million house despite not being able to sell your other $2 million house, and have since been renting out the original $2 million house for no profit while shelling out thousands of bucks to have someone mow your tenants' lawn--not to mention, you don't even seem to realize that it's much easier to sell a $1 million home in a nice or great area than a $2 million home in a fabulous area, simply because there are far more potential buyers and most of them are less snobbish than you and your business acquaintances--I am not sure on what basis you feel like a more competent real estate investor than me or the other real estate investors here.
Here's how we got to this point in the conversation: You claimed that reducing your housing expenses was not in the cards so long as you stayed in the Northeast because according to you, in your area, there was probably no such thing as an adequately large house[/i] (i.e., as defined by you, at least 5BR and 4000-ish square feet--your current house has 3k above ground and 1k below) for much less than your current $2 million house--certainly not for anything close to just $1 million.
So I provided you with links to several such houses that are for sale in your area right now, at prices from $965k to $1.4m. And hey, my apologies if one of them had two more bedrooms than your stated minimum--I guess I erroneously thought you might be able to use them as, for instance, a home office, a guest room, a gym, a library (do you guys read?), etc. Having more space than you need is a problem only to the extent that it costs more;[/i] the 7BR house is half the price of yours and has solar panels to keep utility costs down, so I thought as a finance person you should be able to perceive that the problem normally posed by excess space did not exist in that particular case.
But instead of interpreting these listings as EXAMPLES proving that you were quite possibly incorrect[/i] in assuming that you couldn't get 5BR for significantly less than what you're paying now--that is, instead of thinking, "Hmm, maybe I *could* get the large house I need for much less money--perhaps I should keep an eye on local real estate listings"--you deployed your vast real estate wisdom to sniffily dismiss a couple of those houses as being in "secondary" areas with "the worst" schools in town. That, to you, apparently proves that your assumption was correct and thus no further discussion need be had about reducing your housing expenses.[/i] If you were looking for information instead of looking for ways to justify decisions you've already made, you would not have responded that way.
By the way, even setting aside the fact that school districts for $1m+ homes in your area are quasi-irrelevant because most people at these income levels send their kids to private school, "worst" means little or nothing in this context. You might as well dismiss as "the worst" the person who came in last in figure skating at the Sochi Olympics; that person is still one of the best figure skaters in the world.
Oh, and FYI, my two fastest-renting and most lucrative rentals (in terms of what they bring in vs. what they cost) are in not even secondary--heck, not even tertiary areas in my city. Because guess what? People who rent (or in your case buy) at lower prices have lower expectations in terms of snob appeal.[/i] I'm telling you this because you seem to have completely forgotten how people with less money than you think and what criteria they base their major financial decisions on. Every time I put these places on the market they rent immediately--the last changeover had 12 days between tenant A moving out and tenant B moving in, and the one before that had 0 days. And that's not because I have low standards for tenants; apart from the rich Asian grad students I sometimes rent to, who have no US credit and thus no credit scores, I've never rented to someone with a credit score below 700.
But all you seem interested in doing here is rationalizing decisions you have already made.[/i] You have decided that there is no point reducing your housing expenses; you dismiss all evidence to the contrary. You have decided that continuing to buy expensive crap can be rationalized as a business decision, based on your sad assumption that people won't like you as much if you don't buy the same crap as them[/i], and thus will choose not to do business with you. Then you dismiss evidence to the contrary, even when it comes from other rich people or from a self-described New England blueblood who travels in much richer circles than yours.
It is interesting you are able to make such blanket assumptions when you have no idea how much my current house is worth or what the size of the yard is
You told us on this thread that it was a $2 million house and that one of the listings I linked to, which had 1.9 acres, had more acreage than you. If that's not true then I am indeed talking based on false information, but that's because of what you posted, not because of any assumptions I made.
In the world I work in, people want to do business with people they like, and 90% of people like others who are like themselves.
So you could say that assimilation is a business decision to some degree.
Notice how your business associates--I'm not going to call them friends, since by your description that's not what they are--don't retire early? You cannot BOTH keep designing your life to match other people's lives AND retire early, unless the people whose lives you're aping themselves retire early.
And given your sniffy dismissal of million-buck homes with insufficient snob appeal (and that is your complaint, much as you try to dress it up as an investment decision: you can't accurately judge the investment value of a $1m home based on the expectations of people who buy $2m homes)...anyway, given that, I doubt that you will be able to bear living in a "secondary" area (or belonging to a secondary country club, etc.) when you retire, because you have conditioned yourself to experience that as a loss of status, and status (a.k.a. the opinions of people who aren't even your friends) is something you value way too highly. That means you will feel obligated to spend massive amounts of money in retirement, just as you are spending massive amounts of money now.
So again, because you define "having it all" as keeping up with the Joneses (aka buying whatever expensive crap you have to buy to ensure that superficial people you're not even friends with continue to think you're worthwhile), the answer is NO: You cannot "have it all" and retire early. To retire early, you'll need to change your definition of "having it all."
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We have a winner!
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This is probably the future of children raised in the OP's circle: http://www.georgetownheckler.com/collar.html
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Whew! After spending a couple hours reading through all the responses, this is still the part that stuck out to me the most:
I totally understand the comments and criticisms about choosing the crowd you hang with and the lifestyle you sign up for, but the main point we are trying to convey and the question we are trying to ask is what about someone who has already invested a huge amount of time and money building up a certain lifestyle (sunk costs) but then starts to see the light, analogous to religious conversion - do you just walk away from it all? The rich young ruler couldn't when Jesus asked him to give all he had to the poor and come follow Him, when asked what was needed in order to have eternal life.
Yes we know that bad decisions were made in the past, but if we can afford the ongoing upkeep and maintenance do we stick with the things that are irreversible (or at least hard to get out of)? Are there MMM lifestyle changes we can make without having to go whole hog?
Because the nitty-gritty of how you spend your money isn't really the issue, is it? At the end of the day, we all spend what money we have in accordance with our values. Show me a man's checkbook and his calendar and I'll show you the man, right? What it sounds like to me, and I could be totally wrong, is that after reading MMM and the comments and community, what you value is shifting a bit. Not that you want to chuck it all and move to a tiny house commune in Colorado, but more the inkling that all the full-price trappings might not be passing your cost-benefit analysis anymore. But, without peers who understand both your level of wealth and your desire to be more "mustachian", it's hard to know which trappings are worth keeping, which can be had more frugally, and which can be dispensed with altogether.
You clearly have a thick skin to have stuck it out in this thread for so long. I don't think it will be as hard as you imagine to turn that thick skin toward your peer group. You can't just fire all the help and move to the bronx overnight. But if you can turn some of your inner strength toward caring less about what others think, then your spending will naturally change as your values change. So, right now you take expensive vacations and drive a luxury car to the country club. Could you instead plan a long (several weeks) vacation and take the kids in an RV to see some of the natural wonders in our country? Using mustachian principles you should be able to get several weeks of enjoyment out of the same money you would previously have spent on one week overseas. That could still feel like a splurge because of the time you're taking (as opposed to the money you're spending). And if you're taking a long vacation, could you put your country club membership on hold? And maybe if you do that a few years in a row, then maybe you "forget" to re-start the membership one year? And then if you aren't a member of the country club anymore, will anyone care of you ditch the luxury car? I obviously don't live up at your level, so I don't know the specifics of what is doable and not, but it seems like there must be a way to baby-step your life into something designed more around your values and less around pleasing peers.
I will also say this in terms of status: We caught a lot of flack from peers about our frugal ways...at first. Much like your colleagues who don't understand why you bring your own lunch, no one understood why we didn't buy a bigger TV, a nicer car, and why we lived with roommates. It was a joke for a while...until they started to realize where all our money was going. I think it was when we bought our second rental house (which, for my socio-economic class and age, is totally unheard of) that the jeers turned into curiosity. We started getting requests for financial advice on a wide variety of subjects. It took a few years of thick skin, but we no longer get made fun of for being frugal. We're now well regarded as the financially savvy ones, and the people who once had a laugh at our expense now privately ask us to review their spending and give counsel.
tl;dr - If you can figure out how to care less about opinions of others, spending will fall in line with values on it's own. Also, please document how you accomplish this, because I think many people want to know how to escape peer pressure.
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Things are getting a bit heated here, but I think we need to remember the forum rules:
That includes, but is not limited to:
1. Don't be a jerk.
2. Attack an argument, not a person.
3. Your posts must not break any laws.
4. Be respectful of the site and other members.
5. No spam.
If he is looking for advice and help, we shouldn't attack him. We need to make sure anyone feels welcome here.
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Wow. What a thread! Thanks for posting this. It was interesting and entirely convinced me to never, ever post my financial details on the MMM forums. :) I'm with you in the sense of having "made it" and starting to look around and wonder what's next… what is meaningful spending versus mindless spending? How do we raise children in relative wealth, with the goal of giving them opportunities without raising entitled little shits? What does retirement mean? I don't have answers, but I'm thinking a lot about the questions lately.
I would like to hear updates down the road, if you feel like providing them. I'd also like to hear more about what your vision for retirement is.
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1. Not everyone has the cognitive ability, temperament or inclination to excel in the very narrow set of fields the OP finds acceptable for his kids. Intelligence has a strong genetic component, and many, many parents are unwilling to acknowledge that their kids may not be bright enough to be Ivy League material.
Or indeed, that they may be too bright to be Ivy League material. (Not to inject politics, but remember that GW Bush was an Ivy League graduate :-)) This is a world where absolute intelligence is not a prerequisite for success. Quantum physics it ain't :-)
Though I think it's perfectly true about temperament & inclination. As I think I said earlier, I just can't see the attraction of the OP's lifestyle.
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See below for tips!
Expenses:
Property Maintenance: $2,300 (for both properties combined: snowplowing, budget for anticipated repairs over time, etc.)
Landscaping: $2,000 (both properties, grass cutting, hedges, spring/fall cleanup, 6.4 acres total)
$800 You might incur some upfront costs, but you replace everything with low maintenance native plants that are drought resistant! Still might need seasonal touch up
Live-In Help: $1,800 (this is salary in addition to room/board)
Country Club: $1,770 (includes all meals, drinks, fees, summer camp)
Groceries/Household Items: $1,640 (this is for 4 adults and 2 children)
Vacations: $1,250 (flights and some hotels are paid via miles/points from credit cards and flights/stays for work travel)
$833 Only two vacations a year!
Utilities: $1,120 (primary residence only: cable/internet/phone/wireless, electricity, natural gas heat, water – quite high due to sprinklers in summer to maintain that nice lush lawn we pay so much for)
$550 You cut the cable, you rip out the lawn and replace it with an drought resistant plants! No more watering! Also, check out IP Daley’s Superguide for cell and internet use!
Kids’ Activities: $685 (all lessons, fees, activities, tutoring)
$200 They go to private school no more tutors needed!
Shopping: $500 (gifts, personal items, miscellaneous – plug account)
$250 Halved! just because your trying to cut back!
Auto Insurance/Maintenance: $480 (3 cars, all 2007 model or newer: 2 for commuting – the above mentioned Leaf and showoff machine, 1 small SUV for the grandparent/nanny to take kids to schools and activities)
Public Transportation: $330 (train tickets, subways)
Gasoline: $230
60$ Guffaw! You take the train, stop driving!
Restaurants/Eating Out: $200
You don’t eat out anymore, you go to the country club!
Entertainment: $80 (Netflix, iTunes, Movies, etc)
$8 Netflix Streaming only, OTA, and the Library
Total Expenses: $59,795 $56,451.33
You are excellent. I am laughing my ass off right now!
Seriously. You funny. Kudos.
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@WestchesterFrugal, have you seen these two stories? They may be a little trite, but they convey a different perspective on values some of us are trying to convey (taken from Jim Collins' blog):
"The Monk and the Minister"
Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king. Years later they meet. As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk. Seeking to help, he says: “You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.” To which the monk replies: “If you could learn to live on rice and beans you wouldn’t have to cater to the king.”
"The Fisherman"
An American tourist was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The tourist complimented the Mexican on the quality of his fish and asked how long it took to catch them. The Mexican replied, “Only a little while.”
The tourist then asked, “Why didn’t you stay out longer and catch more fish?” The Mexican said, “With this I have more than enough to support my family’s needs.”
The tourist then asked, “But what do you do with the rest of your time?” The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life.”
The tourist scoffed, ” I can help you. You should spend more time fishing; and with the proceeds, buy a bigger boat: With the proceeds from the bigger boat you could buy several boats. Eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor; eventually opening your own cannery. You would control the product, processing and distribution. You could leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York where you could run your ever-expanding enterprise.”
The Mexican fisherman asked, “But, how long will this all take?” The tourist replied, “15 to 20 years.”
“But what then?” asked the Mexican. The tourist laughed and said, “That’s the best part. When the time is right you would sell your company stock to the public and become very rich, you would make millions.”
“Millions?…Then what?” The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
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We don' t typically work more than 50-60 hours a week (including commuting time) and spend plenty of time with the kids.
How much of that time is for the commute? I work in the megabuck world of finance in Chicago, and 60 hour weeks are the norm, excluding commute time. And based solely on hearsay, the hours are even longer in NYC.
In our industry your reputation is actually more important than your actual results.
How do you establish the reputation in the first place?
If you have enough money to afford to be wasteful are you still ok with it because you are still living within your means (even if those means are unlike 99.5% of the global population)? ... What do you guys think the mustachian ideal should be for people at this income level?
Of course we're all free to interpret as we wish. If you look at it strictly from an early retirement perspective, then I guess you're free to do whatever you want as long as you can save enough to retire early. The site's slogan is "financial freedom through badassity", and I think you could argue that making megabucks is badass.
But, personally, I think focusing strictly on the savings/FIRE aspect is incomplete. There are multiple ways to be "badass" aside from making big bucks; big earnings is the obvious way to FIRE. But MMM's focus on badassity is about being creative and clever, and applying a optimization/problem-solving approach to life and happiness. And a huge nod to self-reliance, learning and a DIY ethic.
Not to mention, MMM obviously has a strong desire to continually decrease his environmental footprint. As I said before, I think the "theme" of this blog is to continually increase happiness while decreasing consumption. MMM himself has said explicitly that he could magically receive a boatload of money and it wouldn't make him any happier or change his life in any way.
Once your basic needs are met (generally pretty easy in rich countries like the USA), I think happiness is largely a choice. You can choose to be happy without "having it all". MMM chooses to enjoy and derive happiness from riding his bike, rather than looking at it as an act of deprivation. I think it can be as simple as a matter of attitude, "Ride my bike to the grocery store? Awesome, another opportunity to improve my health, avoid pollution, save money, and enjoy the weather" versus, "Waah, it's too cold, I'm tired, and biking takes too long."
how much you can water down Natural Ice before it loses it's refreshing crisp taste
I would work my entire life to avoid drinking Natural Ice! :)
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Just musing, but I've never understood why GWB was considered dumb.
'Cause he ACTS dumb? Any lengthy reply would get us way off track into politics. I'll grant that he may possibly have been smart, but devious/amoral enough to play up to the essential stupidity/ignorance/bigotry of the least common denominator. Still, I find it hard to think that an actual intelligent person, once elected (and especially in a second term) would have done so many abysmally stupid things. Which - just to maintain neutrality here - is why I'm not convinced that Obama is anywhere near as intelligent as his fan club makes him out to be.
But back on track. If you look at rankings of science programs, most of the top spots are not filled by Ivy League schools. Harvard & Princeton, maybe Stanford (but are they really Ivy League?). The rest are places like MIT, Cal Tech, UC Berkeley, UIUC, &c.
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You are so right that MMM values leaving less of a footprint on this earth. I think it would be wonderful if more people felt this way.
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OK – I’ll kick the hornet’s nest a bit. This has certainly been an interesting, entertaining and thought provoking thread. It’s fascinating how much emotion is tied up with money. Money is a tool – a means to an end – once that is understood and the emotional and ego attachments are eliminated we might all be better humans and try to leave the planet better than we found it.
To the OP -- I wouldn’t change anything. You already seem disinclined to change any of the big things and I agree that most of it doesn’t make a lot of sense financially, but possibly more so emotionally. Some people are very attached to their houses – so be it – I get it that it would be more stable for the kids to stay in the same house growing up – to them a house is memories they don’t care a fig about the costs. (I’ve never understood the American habit of ‘trading up’ houses to keep pace with increases in income – but it seems that you are not doing that considering that your income will continue to rise and the house will remain the same – although perhaps valued more and taxed more depending on the natural rise and fall of those things). The same goes for school and friend continuity; possibly it even holds true for the country club – providing stability, friends, safe place to socialize in the summer and memories. And you can afford it – you aren’t going into debt to subsidize this part of your life. Also as you said there will be a 150k increase in income this year and it’s easier to just make more than to cut back. You also seem to enjoy the status markers – that goes against the values of most of the people on this forum, but again, it’s up to you to decide what you are willing to live with and pay for – that is a choice and you claim to be happy – be careful about equating ‘arriving’ with perceived happiness.
As for the rest – as someone said previously – nibbling around the edges to reduce your expenses by a few percent seems silly in the scheme of things – especially as the money itself does not seem to be the issue assuming it continues to materialize. You seem confident that you have stable jobs and investments – nothing anyone has said so far seems to persuade you otherwise. The problem with living in a bubble is that you don’t see it while you’re in it – only in hindsight – (been there, done that) so you might want to have more of a cushion.
You seem to like your jobs, they satisfy the ego, you’re well compensated and you enjoy the life you have. It takes a very strong person to buck the status quo and it doesn’t appear that is what you want to do anyway. What is confusing is why you would want to retire in 10 years? It’s unlikely that the enormous down-sizing of house and lifestyle would happen – 10 more years of entrenchment is not so easily let go, but not impossible. And what will you do with the 50-60 hours per week that is currently filled with work?
Perhaps a challenge is in order: when all is said and done what do you want your legacy to be? If you were to write your own eulogy what would you say or what would you want people to know about you? Once that is established all the perceived problems will go away and everything else will fall into place aligning with the legacy (values) that you have chosen. Currently you seem to be on the fence about what those values might be – figuring out those should probably be your first priority.
Just one more thing – I went to a public high school with a large graduating class in the mid-west. Of the people in my crowd there are quite a few doctors and nurses, dentists, lawyers, engineers, architects, CPA’s, entrepreneurs and corporate managers. I can’t think of one that went to an ivy league school, nor did any of us rub elbows at a country club – and yet we’re all successful and have a bunch of letters after our names. This was before you were born, so pre-tech days and pre-Wall Street / Madison Avenue glamour days. So please be careful about the narrow path that you seem to be laying out for your children. Hopefully you’ll have the flexibility to accept whatever path they choose to take – lest you all be disappointed.
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This thread is very suspect for numerous reasons (the "I don't particularly think I make a lot of money" quote and the idea that children watching their parents drive $80K cars, have a live in nanny, travel internationally regularly, attend prestigious private schools and enjoy exclusive country club memberships won't warp their sense of "normal" because you've told them how lucky they are being chief among them).
You're obviously doing very well, but if everything you've mentioned as being truly necessary is truly necessary, you're probably going to have to work a while. It's not that you can't mathematically get there, in my opinion, as much as the fact that you seem very caught up in justifying all of the expenses you make to keep up with those around you and I don't see that being something you can just "turn off" when the money stops coming in.
It's seems like you are more interested in approval, pats on the back or validation than anything related to changing your current lifestyle -- again, assuming this post is on the level. You mention it being a "case study" for others, but it is basically somebody making a very unique salary and defending every expense on a monthly budget that rivals some folks annual budget. It's like doing a case study on how to play basketball by watching Lebron James - it just doesn't apply to almost anyone else and the few that can relate are unlikely to be able to pick much up from watching it.
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This has been an interesting thread, and it's too bad that some people have resorted to personal attacks. The OP is genuinely wrestling with decisions about her spending, and it would behoove us all, regardless of whether we can relate to the precise circumstances, to show a little mustachian love and support.
That said, here's what I predict: you will trim around the edges, as you've outlined. As you do, you'll find it really doesn't affect your happiness all that much, and you'll find a few more things to trim. As you get raises, you'll put them all into savings, so that your savings percentage increases. You'll avoid taking on any "new" financial commitments, like vacation homes or new cars or expensive hobbies or more household help (because it is easier to not add than to subtract).
As you resist the urge to add new stuff as others around you do, you'll realize you don't lose anything by not keeping up with that particular Jones. You'll continue to spend on things you value, but you'll be a lot more comfortable explaining why you don't spend on other stuff to your peer group (should they actually ask). And you might actually drop or reduce some of the things that you feel today are sacred cows.
And a few years down the road you'll find that your financial situation looks markedly different, and BETTER, and you'll feel more peace because your nest egg is significantly bigger relative to your expenses than it is now.
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You can have it all and retire early but the key is to know is important and trim what isn't necessary.
1. Will private school provide the best return on investment for your children's education?
2. Will the car that you drive and house you live in provide the best investment? If you buy a $2M house, would it appreciate faster than a $1M house? Cars are deprecating assets so it doesn't count unless you are collecting classics.
To quote Jim Carrey:
"I hope everybody could get rich and famous and will have everything they ever dreamed of, so they will know that its not the answer"
I think you've reached the point where you know it isn't the answer so you are on the right track. =)
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I think this post hit a chord with people here because the ideal of MMM is freedom (from soul-draining work, debt, lifestyle, fashion, etc) and responsibility (to your own financial security, the environment, higher ideals, and your core values).
I personally don't feel like the OP has freedom, rather he is a slave to the obligations and expectations of his peer group. I get the feeling that he puts value in the environment(owns a leaf and a LED collection), charitable work and donations (board of something and donations of 3% of his total salary). That shows some seed of responsibility. But much is left to do. And earning a high salary puts you under the microscope because of how much bigger your impact is for good or bad.
I hope you will spend more time here. I think you may find it liberating to find a community who celebrates frugality, non-consumerism and green living.
Mrs. Green'stache - philosophically we are all slaves to something, even if it is our own desires to escape the shackles of conventional society by placing 'freedom' and 'early retirement' above everything else - so I don't think that is necessarily correct
I do agree with you though that "much is left to do", and progress is being made.
One thing to also remember is, high salaries do indeed get scrutinized more (and they should) but they are also disproportionately responsible for paying for many of the privileges that early retirees have to enjoy their 'freedom' and 'lack of responsibility'. By far our biggest expense is taxes. So I think maybe that should be also included in your assessment of how responsible we are in our footprint on society.
By slavery, I mean that you are just as tethered to your desk as someone who makes far less than you, but has overspent their way into debt. You just have different masters. Many people could take what you've accumulated right now an live a great life for the next 70 years. You can't.
I also feel that you missed the point of ER, for a lot of us. Its not about "freedom" and "lack of responsibility" as i believe you see it. (Probably involving a yacht?) or "sticking it to the man" (living in a van?).
I am about to embark on a completely different degree/career that I feel called to do. For me, financial freedom allows me to work- doing something that makes the world a better place. That kind of freedom is exciting and intellectually stimulating. To be able to answer a call to your higher purpose because money doesn't stand in your way. Someone who makes the kind of money you do could really do some good. If you wanted to.
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As I said, there's a reason I am glad I left that world. It's an incredibly draining way to live. Actually, out and out old money is much more mellow and pleasant. (I'm old New England WASP without the money, so I've run in those circles my whole life.) They tend to be in preservation, not accumulation mode, so the lifestyles are a lot more chill. They also don't let their kids have their trust funds until they're 30 or so, which means the kids have to do something to make money in the mean time. Lots of artists, actually. They're also comfortable with being quirky, because when you're crashingly wealthy and established, being odd is charmingly eccentric, rather than creepy.
I'm going to tell you something, I feel a real kinship with New Englanders of old money. It's because they are not striving, as are we.
Midwesterners (like DH and myself, Midwestern to the core) do not give a flip about status markers. We value some of the same things that monied or formerly monied WASPS value: old stuff of quality, conservation, country pursuits such as dogs & gardens and historic houses. If I didn't live in the Midwest I'd move to New England.
I've known a couple of old monied people over the years and they are so gracious as well as being in sync with my practical nature, I love them.
I cannot relate to the OP who is striving striving striving for peer acceptance by participating in conspicuous consumption. His dismissal of that real estate as being in a second rate place is just--god. Thank you for not plopping me into that cultural mileau.
100 years ago DH and I would have been living on the estate or aristocrats, taking care of their stuff. We would have been gardeners and housekeepers and etc. I guess we would always have sided with the Aristocracy and eschewed the nouveau riche.
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Well OP, hopefully you have had some food for thought. You have provided me with some interesting insight and perspective. The only 'problem' I think you have is if your children are being given a better life than you had growing up, which is a great feeling as parents but subjects them to some entitlement craziness if you are not handling expectations appropriately. I understand that you are probably not a troll, or a very patient one if you are misrepresenting your responses. But this is a site extolling the virtue of badassity, living below your means (making 100k and riding a bike to work, so as to save 50% or greater of your gross income). At the end of the day, it's all about being happy with less expenditure, and teaching our children that it's more fun to have a parent push them on a public swing than seeing a glow-pet on their Saturday morning cartoon and running out and buying it. Making things or pursuing long term goals will always be seen as better than the instant gratification of buying crap or paying others to do things for you, so by justifying your own lifestyle over and again (with a little pretentious French thrown in, merci beacoup) will obviously not go well, but you have done a good thing to help reinforce why Mustachianism still sounds like a better path to walk, even if you have piles of income, so for that I do sincerely thank you.
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It sounds like a pretty rough life. I hope it is fulfilling for you!
I enjoy my quiet time, reading a book in my hammock for a few hours, strolling around the neighborhood, and generally taking it easy. Your monthly budget is larger than my annual budget (although adjusting for taxes, we're about the same). I don't have any specific advice other than to say we all get to choose where we live and what we spend our money on.
As for the country club, the $100k+ initiation fee is a sunk cost. Evaluate going forward - does the ongoing outlay bring value? Finance 101 - ignore sunk costs.
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After reading through all this, I still cannot fathom your income. You are BIBS - big income big spenders. You either have to drastically(I mean crazy drastic) change your lifestyle or keep on keep on with your spending. It does appear like you try to keep up with the Jones. Could not begin to imagine dropping six figures on a CC initiation fee. Yikes.
Have been on this website for a short time but I have learned that it is ok to not keep up with the Jones and be so consumer driven. So refreshing to me to say - no to buying stuff and living a simpler life. Last month saved 40% of income. And it was pretty darn easy with a different perspective on life. This coming from a midwest, middle aged gal with a strong faith.I've learned more from reading this website in such a short time and I truly appreciate what I am learning. Got caught up in keeping up( it's so easy to do). No more.
I also really like the MMM low information diet. That has changed my life also. Thanks to all who share on this site. Much appreciated.
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You know, I don't think I have a lot to say about the potential ontological shift you are contemplating.
Your comments about retirement age and your children being in high school, and would that be a good time or not to retire (forgive me, I don't have fortitude to reread all the previous pages), did make me want to respond.
One of the things I have seen in families in my (affluent) community is at least one parent deliberately ratcheting back their commitments and career when their oldest kid entered 8th grade. I was curious about that and inquired why do so, when it seemed like they were entering into a much less labor intensive time of parenting. They all responded that their kids' emotional needs were more important than previously, and they felt they need to be present to monitor, support, and help their children navigate the highschool years and teenage flux.
My step-mother comes from a monied family and went the private school route. I have heard a lot of stories about the things she and her equally unsupervised friends got up to (alcohol, drugs, risky stuff). She made it through, but knows a lot of folks who didn't. Mind you, this was Northern California in the 70s, definitely a pretty high level of hedonism in general.
So, maybe it is worth seriously considering getting to a place in a few years where at least one of you could be home every afternoon, do all the driving/carpooling, help with homework, and be very present in a time quantity way (retired in other words). I have always loathed the idea of driving children around from activity to activity, but every more experienced parent I mention that to, says that afternoon time in the car is when you really get to know what is up with your children and their friends.
Anyway, just one more thing to contemplate, as you make decisions.
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I just want to tell the OP that it sounds like his life is very stressful. I couldn't handle the scrutiny of wearing this or that, or driving this or that. On a good day, I remember pants.
If the life you're living, OP, ever starts to feel wrong, it's okay to make a change. Big or small. You jumped into a nest of Mustachians and we didn't do a good job of embracing you. Don't let that dissuade you from shedding old skin if it no longer fits. All creatures evolve.
I work every day to embrace concepts like gratitude, positivity, basic kindness and compassion. I am far from Buddha status, but the path is wonderful if you see value in walking it too.
I'm sorry you were handed all this responsibility and expectation. It's a heavy burden.
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Our situation:
- 2 young children, both in private school
- 2 additional members of our household: live-in help and an elderly (sick) parent
Note that this includes having to pay for a live-in to help with care of an elderly parent.
Thanks for reading.
I edited the quote for length. I am still reading this thread so others may have already commented on it: but Kudos for you'll. I know many people who lacked the resources or the will to bring an elder parent into their house and provide care. We have different experiences, social circles, etc. but that care is the type of person that makes a good neighbor.
Money does not make some bad or evil. I'm sure several of your friends are good people just as a few are examples for your kids, "if you ever grow up like that I will disown you." Once you are sure of what you desire then become a leader among your friends. They may want similar things waiting only for someone to show them it is possible.
"In every revolution, there's one man with a vision." James T. Kirk to mirror Spock. "Be that man."
Sorry could not keep my geek side repressed.
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What Daleth said:
But instead of interpreting these listings as EXAMPLES proving that you were quite possibly incorrect[/i] in assuming that you couldn't get 5BR for significantly less than what you're paying now--that is, instead of thinking, "Hmm, maybe I *could* get the large house I need for much less money--perhaps I should keep an eye on local real estate listings"--you deployed your vast real estate wisdom to sniffily dismiss a couple of those houses as being in "secondary" areas with "the worst" schools in town. That, to you, apparently proves that your assumption was correct and thus no further discussion need be had about reducing your housing expenses.[/i] If you were looking for information instead of looking for ways to justify decisions you've already made, you would not have responded that way.
This points to an amazing amount of arrogance in the OP. This is, of course, assuming the OP is not a troll and is a real honest person. I don't know if the arrogance bothers people worse because of the amount of wealth? Possibly, because of how people perceive the wealthy.
However, I think this is a normal reaction to MMM and/ or frugality in general. People WANT to think that they are right and that they have made the right decisions. It doesn't matter if you are this person or someone making $20k per year. Nobody likes to be told that they are stupid.
When it comes to making changes, some like to go all MMM "hair on fire", and some dip a toe in. This person has enough money right now to "dip a toe in". When I started years ago (pre-MMM), I went all-in. Of course that was pre-kid and our expenses have gone up. Nowadays we are more "dip a toe in". So it took a couple of years to actually get around to canceling cable. Our last two cars were (gasp! bought new!). So yeah, it seems a bit ridiculous to try and cut $50 off this budget, but maybe it works up to more and more - eventually doing your own cleaning and yardwork, getting rid of the extras, choosing less expensive (or less frequent) vacations. It doesn't have to be done overnight. We canceled cable, then cut our child care costs, then replaced some of our lights with LEDs, then cut our vacations down (do a lot more staycations - that maybe has more to do with the 20 month old being a pain). There is hope - but it's hard when you are SO enmeshed in a lifestyle where you actually care what other people think.
As a comparison - I'd say that the OP makes about 3.5x what we do, his house is 3.5x bigger - with WAY more land (and costs about 3.5x more). But even though we are of similar age (we are in our mid-40s), we have much more in cash/ savings (not counting real estate values). We also bought near the peak, so we pretty much have kissed $200k goodbye in the last 10 years due to the house values dropping. The OP's lifestyle choices are definitely WAY more than 3.5x ours. Here we join the YMCA, not the country club.
I really don't want that kind of life for my kids that he has - that life of privilege. I am where I am because I worked darn hard for it. We have chosen public school for our children (well, only the first is in school), and while we could have transferred to one of the "best" schools, those schools are full of kids who live in the multi million dollar estates in Hope Ranch, the Mesa, or Montecito. I really don't want his friends to be "those kids".
Finally, there's a lot of acrimony out there right now between the rich and poor. The "rich" constantly saying that it only requires hard work to make money and the poor are poor because it's their own fault. We don't need a living wage, the market takes care of it, should you really get $20/hour to clean toilets, etc. The poor blaming the rich for all of the world's ills and for being cheats. Which is true? Well, both, and neither. Some rich just worked for it. Some inherited it. Some make it like this guy, because they "know the game" - they make obscene amounts of money doing...what, exactly? Some are CEO's who send jobs offshore and cut benefits in order to make more money for their companies. These are the people most people object to when they complain about "the rich", because these people show that the game is rigged. Not everyone can succeed when a small few make the rules.
In addition, some of the poor ARE lazy. Some are welfare cheats. But some just work hard at low wage jobs and / or have bad luck. I don't know when it became "shameful" to work a manual labor job - but all of a sudden, certain jobs are "unworthy" of a living wage or health insurance and "are only intended for teenagers". When I was growing up, there wasn't such a thing. Anyone willing to work hard could make a living. The jobs that weren't "worthy" of a living wage were few. Certainly you wouldn't be rolling in dough, but you could afford rent, food, and clothing.
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bringing us to $442k net worth.
First I'm confused by the math, because shouldn't your net worth be $2.812m? In the example above I think you subtracted a house value of $1.2, but that should still leave you $1.612.
Are those income figures monthly? You make almost $1 million a year and have a net worth of $442k. My husband and I are in our mid to late 30s, make less than you save annually ($200k now) and we have including house just over a million in assets. Excluding the house, it's still well over $442k.
Is this the lesson you want to leave your kids regarding finances?
Hell, last year was my first $65K year (rise from $50k to $60k in 8 years before that) - and our net worth is around $300k retirement/efund/etc plus around $75k equity in the house and another $10k in "stuff" we could sell off.
I don't even consider us particularly mustachian - with one kid, we're spending ~$450/month on sports memberships for the 3 of us (which will drop to $100/month in 2.5 years if we continue what we are doing.) Admittedly, that's our one big "frivolous" thing - but it's exercise that I have been able to stick with. Blood pressure's down to normal (from borderline hypertensive) and it helped my wife drop pregnancy weight fast. Our health overall is better.
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There is hope - but it's hard when you are SO enmeshed in a lifestyle where you actually care what other people think.
The irony here is that most of those people aren't actually thinking about you at all. See e.g. http://en.wikipedia.org/wiki/Spotlight_effect
Many critics who have either missed these facts or, worse, misinterpreted them to imply shirking the responsibility of raising our children ('get rid of the nanny') in order to merely have a big income and spend to feed our egos should take note.
I think there was a lack of clarity in your initial description. My impression was that the older parent was essentially independent, and the live-in help was just a nanny for the kids.
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I would like to thank WestchesterFrugal for helping me truly understand a sunk cost. Over the last couple of days I've spent 2-3 hours just trying to read all of the posts from the beginning (lest I be accused of poor reading comprehension and mocked if I decided to chime in) and still had multiple pages of posts to read before I realized I was just wasting time. I considered finishing reading all of the posts since I had already invested so much time anyhow when the lightbulb went off that my time was sunk and I needed to move on with my life.
I do need to mention that it's infuriating to hear someone of her financial status complain about taxes and in the same breath mention their "footprint on society." Yes, woe is you who must pay hundreds of thousands of dollars a year in taxes but thank you for being so generous. My cousin is a single mother in her early 30s who put herself through college with two young children to become a social worker, the glorious and high earning field that that is. It's funny--here's a woman who grew up poor, and chose a career earning less than $30k per year to work with disadvantaged adolescents who have been abused and/or abandoned by their parents. She is also paying no federal income tax, but to hear Ms. WestchesterFrugal tell it, my cousin is not making her "contribution" to society because it doesn't come in the form of big (involuntary) withholdings in her paycheck.
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Sorry to hear you misread the OP - it is there for all who want to read in an unbiased way to see
Pity you won't realize since you stopped reading.
It's side comments like these that make you come off like a *. It has nothing do with your income, but your personality.
Those are just examples from your latest 2 posts. There are literally dozens more.
Maybe approach a forum from which you are asking for help with a little more humility?
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The US tax system is one of the most progressive in the world, due to lack of VAT (consumption) tax. I actually would welcome a consumption tax - it is certainly Mustachian in forcing those who overspend to foot the bill for those who don't. But taxing income at higher and higher marginal rates makes no sense.
Including paying VAT on your country club and private school expenses?
...and even those "50%" who pay no federal income tax are typically still paying FICA taxes, sales taxes (WHAT!? A consumption tax?) et cetera. They DO have "skin in the game" - except for the rich fatcats exploiting tax loopholes, of course.
BTW - FICA taxes are quite regressive. You pay FAR less (as a percentage) than the average American.
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Hey Brandino,
I'm not interested in OP's situation so I won't address it, but your mention of tax complaints struck a chord. It's certainly the time of year to hear plenty of that type of thing. Benjamin Franklin's "Way to Wealth" offers my favorite comment on that.
"Friends, says he, and neighbors, the taxes are indeed very heavy, and if those laid on by the government were the only ones we had to pay, we might more easily discharge them; but we have many others, and much more grievous to some of us. We are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly, and from these taxes the commissioners cannot ease or deliver us by allowing an abatement. However let us hearken to good advice, and something may be done for us; God helps them that help themselves, as Poor Richard says, in his almanac of 1733.
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- 2 young children, both in private school
In your entire case this is the sentence that struck me the hardest ... which you may think is strange ... All of the money in the world does not make up for the memories you have with parents when you are growing up ... so here are my questions for you
1) How often do you see your children?
2) How does the life you are leading (keeping up with the Jonses) reflect the values you want to instill in your children.
3) What "family" memories will your children have as they grow ...
4) Are you enjoying your life? Are you enjoying your family?
I am quite new to this forum (and quite new to the idea of soon becoming a very late in life parent) and am rushing to get out of the little debt I am in so that I can enjoy my life with this wonderful little family I have ...
From the little I understood of your financial situation (trying to wrap my head around the numbers) it appears you can retire YESTERDAY ... sell/get rid of the items you already appear to realize are giving you no "benefit/joy" and move to a lovely little area (with the whole household) and do whatever you want to do ... dabble in things if you like.
I can only stress one thing to you that I stress to my friends ... life is MUCH too short you never know what will happen to your health or circumstances ... enjoy what you have now in your case a lovely family ... You have a bunch of "wiggle room" to do this now.
I was lucky to find a husband who, like me, is more interested in "family" and friends than the "jonses" lol... Take care!
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I started reading this the first day and at first thought it was serious but now realize it is really only for entertainment purposes. I have read it everyday because it is just too funny/ridiculous!!!
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Here's a question: does it change your (or anyone's) mind or feelings at all, or will you cling to your initial thoughts and ideas? Does it move the needle?
I can't say that it changes my mind, as my opinions on what are reasonable/unreasonable expenses haven't changed. But I think paying for live-in care for an elderly parent is probably a more frugal choice than e.g. a nursing home. Indeed, I wouldn't necessarily think of live-in help as a wild extravagance for someone in your position. Perhaps the problem is that somewhere in the thread 'live-in help' (your description in the original post) got changed to 'nanny', which IMHO is neither necessary nor desirable for school-age kids.
I think the real problem here is one of conflicting goals. You say you want to 'have it all' but retire early, yet you can't retire early unless you have enough savings/investment income to support your desired retirement lifestyle. There's also the problem that you say you enjoy your work (something I share), so why the heck do you want to retire? Financial independence, yes: barring financial disaster on a scale that'd make '08 look like a minor correction, I could survive in moderately comfort without working another day. You could get to a similar position by applying some of the adjustments people have suggested.
To keep re-stating the obvious, your fundamental problem is reflected here:
This is because in a downturn, the people who want to live in the best areas now can do so - they don't have to 'settle' for 2nd and 3rd rate locations. Anyone familiar with the NYC metro real estate market can attest to this.
You're still seeing the world through a set of glasses, in which there are 'best' areas, and places with mere $1 million houses are 2nd and 3rd rate. (By comparison to some near my area, your $2 million house is a mere shack: http://www.zillow.com/homes/for_sale/Incline-Village-NV/5266_rid/pricea_sort/39.351821,-119.860668,39.132457,-120.041943_rect/11_zm/ ) Looking at liveability rather than status could save you a heck of a lot of money, and increase your family's quality of life.
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Here's a question: does it change your (or anyone's) mind or feelings at all, or will you cling to your initial thoughts and ideas? Does it move the needle?
Funny, I was going to ask you the same thing. Your response to my March 14, 10:05AM post (p.7) was priceless. Allow me to quote your entire response to my long and detailed post:
You think we are renting a $2.1mm house for $6k/month? The taxes in this area on a house that value would be almost $5k a month
Think again
Your response changes absolutely nothing about the analysis set forth in my post; in fact, you've focused on just about the least relevant detail imaginable (perhaps in order to avoid thinking about the rest of it). You said in your first post that you were charging a below-market $6000/mo in rent and earning a, quote, "net cash flow of $0." You also said your two houses are worth a combined $4.1 million and you bought the second one despite not having sold the first one. Since that was my point--that you had made decisions about house purchases and rentals that no competent real estate investor would make, and yet you were lecturing actual real estate investors about the supposedly bad real estate investment advice we were giving--does it make any difference whether your first house is worth $2M or $1.5M or $1.3M or (insert figure here)? No.
The fact that you ignored my entire post except to fixate on that irrelevant detail tells me that you're still, at least as of today, more interested in defending your choices from criticism than examining your choices with a view towards future improvements. When anyone suggests any of the following (which have been mentioned several times):
- that your actions are inconsistent with your stated values
- or that your rationalizations don't really make sense
- or that your fetishistic attachment to "status" (i.e. buying whatever you think you have to buy in order to make people who are not your friends think that you are worthwhile) will cost you millions of dollars and years of your life, and will prevent you from retiring early to a climate you enjoy...
...you retreat into either quibbling about irrelevant details (e.g., exact value of your rental; whether one particular house I linked to is a good buy--missing the basic point that there are houses that meet your needs available for less than the house you own), or getting sarcastic and defensive (I second ARebelSpy's post on that).
Now, sarcasm and defensiveness are understandable initial reactions to having a group of people point out that what you're saying doesn't stand up to analysis, but if you want to be wise, if you want to learn anything, if you have any interest in changing your habits, if you want to be able to move to a nice warm climate before you're almost too old to enjoy it, then surely it makes more sense to ditch the defensiveness and think about what people said to you (or at least about the things that more than one person said to you--see bullet list above--because if several different competent adults all see something you've said or done in the same way, perhaps it's worth considering their perspective?).
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Sorry to hear you misread the OP - it is there for all who want to read in an unbiased way to see
Pity you won't realize since you stopped reading.
It's side comments like these that make you come off like a *. It has nothing do with your income, but your personality.
Those are just examples from your latest 2 posts. There are literally dozens more.
Maybe approach a forum from which you are asking for help with a little more humility?
Well it is a bit of a vicious cycle
I started out thanking people for their comments (both helpful and otherwise) without the snark, but have realized it doesn't change anyone's criticism so now I will just respond like for like.
how productive
love the poll, by the way. can we add a "don't care" option like that IQ poll we just had? ;-)
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love the poll, by the way. can we add a "don't care" option like that IQ poll we just had? ;-)
Russ is clearly a member of this voting party:
(http://img1.wikia.nocookie.net/__cb20090602211509/en.futurama/images/f/f3/Voter_Apathy_Party.JPG)
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ok actual advice time
"you can have anything you want, but you can't have everything"
-arbitrary smart person
so no, you can't "have it all" and retire early, if having it all is directly contrary to saving any of your dollars. sorry to break it to you this way; I normally do this in person. It's not you it's me?
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love the poll, by the way. can we add a "don't care" option like that IQ poll we just had? ;-)
Russ is clearly a member of this voting party:
(http://img1.wikia.nocookie.net/__cb20090602211509/en.futurama/images/f/f3/Voter_Apathy_Party.JPG)
only if they can protect my constitutional right to bear doomsday devices.
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So ... I am now finished my overtime shift of 7.5 hours (at time and a half) and spent most of it reading all the comments on this forum ... it was ... interesting.
Viva Mustachians! :) (Even those who are just starting out)
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(By comparison to some near my area, your $2 million house is a mere shack: http://www.zillow.com/homes/for_sale/Incline-Village-NV/5266_rid/pricea_sort/39.351821,-119.860668,39.132457,-120.041943_rect/11_zm/ )
I just wasted a lot of time stalking these houses, some are sooo gorgeous, thanks for posting so I can see what houses the obscenely rich live in around Lake Tahoe. Some of them are the modern day equivalent to the mansions in Newport RI.
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If I had that kind of money I'd put it in a bank vault and roll around in it Scrooge McDuck-style!! Go out and spend more money!! Why are you eating at home so much? Why don't you have in-home massages on a regular basis? Where's the line item for hookers and blow? C'mon, live a little!! Why did you come here asking these wonks what we think??
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Of course happiness isn't the only purpose in life - and in reality everyone seems to have a slightly different interpretation and opinion of what the meaning of life is.
Additionally everyone has her own core competencies and strengths which allow her to contribute to society. It would be a shame if Einstein or Steve Jobs had taken the same route just sailing around the world instead of changing it for the better. Of course not everyone is at that level, but perhaps finding what one's purpose in this world is and fulfilling it is actually more meaningful than having 'freedom' and 'not having to answer to the man'.
The goal or purpose FIRE isn't to earn your money then sit on your porch drinking sweet tea. The whole idea is that when you are not reliant upon your wage income you can do whatever the hell you want, maybe even sail around the world, or think about quantum physics...whatever blows your skirt up.
You're right, you probably won't invent the next iphone by sailing around the world, but neither of your examples went to an ivy league school.....or even completed school in regards to Jobs. But do you believe people who are driven and passionate about what they do are just going to up and stop if they become FI? Why is your path any better than the person who chose to sail around the world with their family?
I've spent a couple hours on this thread (!) and still haven't gotten through, but had to respond to this.
It speaks very well to the privilege vs. experience quandary. My parents pulled my brother and I out of school and spent about 2 years out sailing on our funky homemade sailboat. That was invaluable experience, and I daresay it had a lot to do with where both of us are now. They didn't have the financial means, so it wasn't a question of that vs. private school and fancy activities. BUT, my brother, who I'm sure would qualify as genius if tested, spent lots of time reading, designing and building toy boats. I was younger and spent lots of time examining tidal pools and fishing (and reading). These days, my brother is an engineer and a millionaire despite his lack of formal education, and I am an ecologist, with a very interesting and fulfilling career. Sailing, or camping, or whatever else that might pass as empty leisure can actually be much more educational and profoundly life-changing than some fancy-pants private education. Not to mention that I had a first-hand look at age six at how fancy my poverty-level US upbringing was compared to most Mexican children.
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...thanks for posting so I can see what houses the obscenely rich live in around Lake Tahoe.
You also need to remember that those are just the ones listed for sale. The really rich are keeping theirs :-)
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I do not like this thread or you ambiguity towards the principals that many of us on this forum try to follow. You're obviously welcome to post here, but quite frankly I find this post (MOD EDIT: personal attack removed) obscenely obnoxious.
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This case study is fascinating. I figured I would point out a few things:
1) This blog, along with its followers, is a counter cultural institution. The demographic here consists of generally high earners - whether engineers, consultants, creatives, or mostly software developers - who take pleasure in going against the grain of conspicuous consumption. The OP appears to have little to no interest in this way of being, but perhaps may want to fancy herself as frugal, green, etc for vanity purposes. The epicurean philosophy behind the MMM ideology is largely about gaining freedom and autonomy from the paid-labor lifestyle in order to craft one's own creative version of a meaningful life independent from mainstream (and certainly elite) expectations. Clearly, the OP doesn't really understand or value this worldview given how myopically she views her children's future ("these kids tend to choose certain economically profitable careers - medicine, law, finance, etc.").
2) Many of my professional cohort grew up in similar situations where they were groomed for specific paths. In general, I've observed this upbringing to be limiting in worldview and career path. One friend told me that she, "wanted to be an attorney since I was 5." Did she really come up with this on her own? I wanted to be a fireman at 5; most of the girls I know wanted to be cowgirls or marine biologists. She's now a fairly miserable attorney last I heard.
While I grew up comfortably middle class, I was also exposed to many ways of being and doing. I can make friends with the public housing inhabitants down the street, and I'm equally comfortable when I have to go to a private club setting for professional or social reasons. My friends who grew up in a class bubble aren't so socially malleable (think of the sitcom "Fraiser"). Further, many friends look back on private school, summer camp, etc with really bad memories. I think a lot of people I know feel like their parents either a) sent them to status schools for their parents' own status benefit or b) sent them to boarding school or summer camp because they didn't want to be hands on parents. Just beware that private schools may actually disadvantage kids socially and make them resentful.
3) From a mustachian perspective, I think this thread is extremely worthwhile in that it is a cautionary tale for those of in high income/high status professions. The OP hoped that maybe someone would learn from her situation. Well, yes, don't follow this path if you want to live an original, meaningful life full of autonomy and creativity. If you get a high-paying, high-status job, don't fall into the high-status trappings of neighborhood, house size, lawn size, car, schools, clubs, vacations, etc.)
4) As has already been pointed out, the OP wants to be viewed as "green" or a "philanthropist" or otherwise believe that she is contributing in a positive way. Let's be clear, though, the leaf and LED bulbs are doing nothing against a family carbon footprint that is 10-20x the typical middle-class US family and likely 100x the typical world average family. Also, the philanthropy helps to assuage some of the guilt that is brought on from working a job that most people in the US now view as extracting value from the economy rather than creating value. In my circles, green-washing is a dirty word, but it isn't to those who willfully wanted to be washed over with fuzzy green feelings that make them feel like they aren't setting the stage for the displacement of millions of climate refugees.
5) I have no idea why the OP would even be interested in the ideas of MMM. While not as extreme as ERE, MMM is radically counter-culturalist and the OP is a mainstream elitist. Clearly the OP has no intent of "defecting" from the elite sphere, so I don't understand the significant time investment in this thread. As others have pointed out, this blog and forum isn't really the best venue for this discussion. I would recommend http://www.jamesaltucher.com/. He's a failed tech executive who blogs about his falling from grace and how he's begun to craft a meaningful life from the wreckage. His musings might be more in line with the OP's current situation. He's no Mustachian, but he's somewhat introspective and calls out his own past mistakes relating to excessive consumption and hubris.
6) I've been pretty critical of the situation, but that doesn't mean that it's stark. If the OP is happy with her life, then she should just live her life and stop worrying about posting in forums. If she's not entirely happy, as might be indicated by the posting and excessive defending in this thread, she has all the tools she needs to step off the treadmill now. She can walk into the sunset and leave the club, the private school, the house, the status neighborhood, the nonprofit board, etc behind. She can liquidate her assets and live the rest of her life with her family in a more sustainable way that is based on self-expression and vitality. She just has to stop giving a fuck what other people think, which is how most of us here live our lives.
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Not part of your world, but would still like to comment please.
An uncle, worth ~$50-100MM took my frugal dad to Vegas. Ever been to Mirage Casino and seen the $500/coin slot machines? He said to my Dad, "Geez, $5 just to play one time". Dad told him "No, that's $500 to play that machine.
Later his wife learned to like slots and would play the $25 slot machines. I said, "Wow, you must get some good comps". Immediately I felt embarrasssed after I said it because I don't think he knew what comps were, or wanted to be bothered with them. (I've played $1 Blackjack for the purpose of getting free beer.)
I'm curious what you think when you read MMM lives on $25K/year. My dad retired at 47, lived on about the same amount, (I remember him bringing a sandwich maker in hotel room on trips), would visit him and go golfing. Even way back then, I realized he lived the life most millionaires could only dream of.
Kudos to you posting. If you want to see someone that makes MMM look like a spendthrift, you should check out Early Retirement Extreme.
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This case study is fascinating. I figured I would point out a few things:
1) This blog, along with its followers, is a counter cultural institution. The demographic here consists of generally high earners - whether engineers, consultants, creatives, or mostly software developers - who take pleasure in going against the grain of conspicuous consumption. The OP appears to have little to no interest in this way of being, but perhaps may want to fancy herself as frugal, green, etc for vanity purposes. The epicurean philosophy behind the MMM ideology is largely about gaining freedom and autonomy from the paid-labor lifestyle in order to craft one's own creative version of a meaningful life independent from mainstream (and certainly elite) expectations. Clearly, the OP doesn't really understand or value this worldview given how myopically she views her children's future ("these kids tend to choose certain economically profitable careers - medicine, law, finance, etc.").
2) Many of my professional cohort grew up in similar situations where they were groomed for specific paths. In general, I've observed this upbringing to be limiting in worldview and career path. One friend told me that she, "wanted to be an attorney since I was 5." Did she really come up with this on her own? I wanted to be a fireman at 5; most of the girls I know wanted to be cowgirls or marine biologists. She's now a fairly miserable attorney last I heard.
While I grew up comfortably middle class, I was also exposed to many ways of being and doing. I can make friends with the public housing inhabitants down the street, and I'm equally comfortable when I have to go to a private club setting for professional or social reasons. My friends who grew up in a class bubble aren't so socially malleable (think of the sitcom "Fraiser"). Further, many friends look back on private school, summer camp, etc with really bad memories. I think a lot of people I know feel like their parents either a) sent them to status schools for their parents' own status benefit or b) sent them to boarding school or summer camp because they didn't want to be hands on parents. Just beware that private schools may actually disadvantage kids socially and make them resentful.
3) From a mustachian perspective, I think this thread is extremely worthwhile in that it is a cautionary tale for those of in high income/high status professions. The OP hoped that maybe someone would learn from her situation. Well, yes, don't follow this path if you want to live an original, meaningful life full of autonomy and creativity. If you get a high-paying, high-status job, don't fall into the high-status trappings of neighborhood, house size, lawn size, car, schools, clubs, vacations, etc.)
4) As has already been pointed out, the OP wants to be viewed as "green" or a "philanthropist" or otherwise believe that she is contributing in a positive way. Let's be clear, though, the leaf and LED bulbs are doing nothing against a family carbon footprint that is 10-20x the typical middle-class US family and likely 100x the typical world average family. Also, the philanthropy helps to assuage some of the guilt that is brought on from working a job that most people in the US now view as extracting value from the economy rather than creating value. In my circles, green-washing is a dirty word, but it isn't to those who willfully wanted to be washed over with fuzzy green feelings that make them feel like they aren't setting the stage for the displacement of millions of climate refugees.
5) I have no idea why the OP would even be interested in the ideas of MMM. While not as extreme as ERE, MMM is radically counter-culturalist and the OP is a mainstream elitist. Clearly the OP has no intent of "defecting" from the elite sphere, so I don't understand the significant time investment in this thread. As others have pointed out, this blog and forum isn't really the best venue for this discussion. I would recommend http://www.jamesaltucher.com/. He's a failed tech executive who blogs about his falling from grace and how he's begun to craft a meaningful life from the wreckage. His musings might be more in line with the OP's current situation. He's no Mustachian, but he's somewhat introspective and calls out his own past mistakes relating to excessive consumption and hubris.
6) I've been pretty critical of the situation, but that doesn't mean that it's stark. If the OP is happy with her life, then she should just live her life and stop worrying about posting in forums. If she's not entirely happy, as might be indicated by the posting and excessive defending in this thread, she has all the tools she needs to step off the treadmill now. She can walk into the sunset and leave the club, the private school, the house, the status neighborhood, the nonprofit board, etc behind. She can liquidate her assets and live the rest of her life with her family in a more sustainable way that is based on self-expression and vitality. She just has to stop giving a fuck what other people think, which is how most of us here live our lives.
I +1 this, and you said it much more eloquently than I did! Help and input was asked for, received and discarded. But you have all the tools and info to make a more Mustachian life or just say to heck with it and bask in the glow of your current $$$ filled life.
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I wanted to be a fireman at 5
+1!
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Hi Westchester. Not sure you read my last post but my opinion is you are seeking answers that are relative to your lifestyle which not many on this board, including me, can truly relate to. I am FI but it took me many years and a willingness to enjoy the simple things in life. You have the ability to get there very quickly if you so desired and were willing to reevaluate what is important in your life and dare I say sacrifice some of your current standards. If not I am certain you can come up with a formula as I outlined on my last post to figure out when you will reach FI and be able to do whatever it is you want to in life. Good luck!
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Great, then you are set! FWIW one other fantastic benefit I found with this forum are some great tips on how to do things that not only save money but also are much healthier for you and the environment. It never hurts to know how to do things simpler and less costlier especially in a pinch!
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Here's a question: does it change your (or anyone's) mind or feelings at all, or will you cling to your initial thoughts and ideas? Does it move the needle?
I can't say that it changes my mind, as my opinions on what are reasonable/unreasonable expenses haven't changed. But I think paying for live-in care for an elderly parent is probably a more frugal choice than e.g. a nursing home. Indeed, I wouldn't necessarily think of live-in help as a wild extravagance for someone in your position. Perhaps the problem is that somewhere in the thread 'live-in help' (your description in the original post) got changed to 'nanny', which IMHO is neither necessary nor desirable for school-age kids.
I think the real problem here is one of conflicting goals. You say you want to 'have it all' but retire early, yet you can't retire early unless you have enough savings/investment income to support your desired retirement lifestyle. There's also the problem that you say you enjoy your work (something I share), so why the heck do you want to retire? Financial independence, yes: barring financial disaster on a scale that'd make '08 look like a minor correction, I could survive in moderately comfort without working another day. You could get to a similar position by applying some of the adjustments people have suggested.
To keep re-stating the obvious, your fundamental problem is reflected here:
This is because in a downturn, the people who want to live in the best areas now can do so - they don't have to 'settle' for 2nd and 3rd rate locations. Anyone familiar with the NYC metro real estate market can attest to this.
You're still seeing the world through a set of glasses, in which there are 'best' areas, and places with mere $1 million houses are 2nd and 3rd rate. (By comparison to some near my area, your $2 million house is a mere shack: http://www.zillow.com/homes/for_sale/Incline-Village-NV/5266_rid/pricea_sort/39.351821,-119.860668,39.132457,-120.041943_rect/11_zm/ ) Looking at liveability rather than status could save you a heck of a lot of money, and increase your family's quality of life.
Plus in non-downturn times, more people can buy that "second-rate house".
Around here, when we bought, the "bottom" of the single family market (2BR, 1BA, 1000 sf, not a good school district) was $700-800k. These houses were HOT. Because more people could afford them compared to a $950k house, which was much bigger, nicer, in a better school district.
There is ALWAYS more demand for the lower-end houses here simply because of the math.
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Here's a question: does it change your (or anyone's) mind or feelings at all, or will you cling to your initial thoughts and ideas? Does it move the needle?
I can't say that it changes my mind, as my opinions on what are reasonable/unreasonable expenses haven't changed. But I think paying for live-in care for an elderly parent is probably a more frugal choice than e.g. a nursing home. Indeed, I wouldn't necessarily think of live-in help as a wild extravagance for someone in your position. Perhaps the problem is that somewhere in the thread 'live-in help' (your description in the original post) got changed to 'nanny', which IMHO is neither necessary nor desirable for school-age kids.
I think the real problem here is one of conflicting goals. You say you want to 'have it all' but retire early, yet you can't retire early unless you have enough savings/investment income to support your desired retirement lifestyle. There's also the problem that you say you enjoy your work (something I share), so why the heck do you want to retire? Financial independence, yes: barring financial disaster on a scale that'd make '08 look like a minor correction, I could survive in moderately comfort without working another day. You could get to a similar position by applying some of the adjustments people have suggested.
To keep re-stating the obvious, your fundamental problem is reflected here:
This is because in a downturn, the people who want to live in the best areas now can do so - they don't have to 'settle' for 2nd and 3rd rate locations. Anyone familiar with the NYC metro real estate market can attest to this.
You're still seeing the world through a set of glasses, in which there are 'best' areas, and places with mere $1 million houses are 2nd and 3rd rate. (By comparison to some near my area, your $2 million house is a mere shack: http://www.zillow.com/homes/for_sale/Incline-Village-NV/5266_rid/pricea_sort/39.351821,-119.860668,39.132457,-120.041943_rect/11_zm/ ) Looking at liveability rather than status could save you a heck of a lot of money, and increase your family's quality of life.
Plus in non-downturn times, more people can buy that "second-rate house".
Around here, when we bought, the "bottom" of the single family market (2BR, 1BA, 1000 sf, not a good school district) was $700-800k. These houses were HOT. Because more people could afford them compared to a $950k house, which was much bigger, nicer, in a better school district.
There is ALWAYS more demand for the lower-end houses here simply because of the math.
mm1970 - I am not debating that cheaper houses sell quicker than more expensive ones since more people can afford them if they are in the same town
But our own experience (with our rental property) is that houses in second and third tier markets/towns are much harder to sell even at the lower price points than higher priced ones in more established and the most desirable areas - hence how we became landlords by necessity instead of choice
I guess it depends on location. Here (Santa Barbara), the low-end houses ($650-850k) are always hot, and $2m+ are usually good sellers. But those are 2 different demographics shopping. The tricky part is the $850k to $2m. Those are harder to sell here, depending on the market.
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But our own experience (with our rental property) is that houses in second and third tier markets/towns are much harder to sell even at the lower price points than higher priced ones in more established and the most desirable areas - hence how we became landlords by necessity instead of choice
But you are a buyer, not a seller. If you buy an affordable house with the attitude that you are going to be living there for the foreseeable future, resale value is pretty much irrelevant. Worst case, someday you either rent it for enough to cover expenses (as you are doing with your previous house), or let the mortgage lender foreclose 'cause you're living on a tropical beach somewhere. The point here is that you are reducing your ongoing housing costs by about half, or (off the top of my head) something upwards of $5-6K/month. Put that in a good investment account, and watch it grow.
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This has been a really fascinating and enlightening thread. WestChesterFrugal, may I ask what decisions you have made and what direction you are heading?
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Hi OP,
I doubt I have any advice really useful to you financially...other than the little things you maybe will pare down?? What do you think you will do?? I liked someone's post about changing your landscaping with a little investment to use less water and require less mowing...I have almost as much land as you but 3/4 is woods..you can't plant woods overnight but there might be other options...large low maintanace ground cover plantings.
Um, and if you possibly can do some reading, thinking and reflecting....do yourself a favor and loose the "skin in the game" beliefs. It is bunk...the "47%" have as much skin in the game as they can bear, and a significant quantity of dental enamel as well. Anyway, I won't go on and on but it's an ugly meme that I'm so sick of hearing. I'm sure that's not the real you...? Is it?
http://www.ctj.org/pdf/taxday2010.pdf
Edited for spelling
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This has been a fun thread to read.
WF - much has been said about how your method of calculating net worth of $442K is not the standard here. I am not doubting your math, but think that the way you are calculating it is making it harder to identify the different types of expenses you have and where you might cut. I would recommend you use the more typical net worth and include the future liabilities as part of your current expenses (i.e., private school tuition) or dedicated savings (i.e., college savings). Then I would separate your expenses into the following categories: absolute needs, wants you are committed to until retirement (sounds like the private school might be in category), wants you are not willing to give up (perhaps the country club falls in here), and wants you are willing to give up (sounds like the luxury car might be here). Then start giving up the last category and estimate when your new expenses hit 3% of the more traditional net worth figure. That's your retirement date. This estimate may seem simpler than your more complex one, but in reality there were a lot of assumptions baked into your estimate. In truth, we don't know what college expenses will be like in 10+ years--or even what school your children will want to go to. I think it is better to use simpler numbers with fewer assumptions and then reassess as time passes and more of the unknowns are known.
I would also encourage you to reassess your expenses in these categories every once in a while. You may find that as you give up some "low hanging fruit" wants in the last category, other things you considered as "high priority wants" or even "needs" become less important. That is part of the essence of mustachianism-realizing that you don't get happiness from things, and expenses you once considered priorities become less of a priority as you realize this.
Finally, a previous poster replied that your estimate of moving from $59K to 8K in monthly expenses is not realistic. That point has not gotten enough attention. Again, I am not doubting your math, but the emotional ability to scale back that dramatically. You are used to having massive amounts of money leaving your accounts every month. So when opportunities to spend large sums of money present themselves you in the future, it is going to seem normal. For example, you are assuming that child-related expenses will stop once your kids are out of college. But is that just undergrad, or have you thought about helping them through grad school as well? What about helping your children with their weddings? Are you going to be in a place to tell them to pay for it themselves or to have a "budget" wedding or will you need to pay for a wedding that you can invite your $10MM boss to? Will you help them put a down payment on their own Westchester house? What about spending on grandkids? My in-laws are prime mustachian examples-high salaries but extremely frugal. But yet they just offered to buy us an insanely expensive playset for our son because they want their grandchild to have nothing but the best. My point is not about these specific examples, but that there will always be new things for you to spend money on and if you are used to seeing $59K go out the door every month, going down so drastically will be hard.
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This has been a really fascinating and enlightening thread. WestChesterFrugal, may I ask what decisions you have made and what direction you are heading?
Things we have resolved to change immediately: sell the Mercedes (which would dramatically lower auto maintenance insurance by at least 50%), one big vacation a year (cutting vacation budget by 60%), trim landscaping by using lower cost providers and leaving things less 'manicured', cutting some of the kids' acticities and shopping (which is mainly kid related as well)
Groceries and utilities are already much lower on the current run rate vs previous 12m spending (which was listed in the OP)
Also the expenses will look much more reasonable once we sell the house when the tenants' lease ends next year (fingers crossed the housing mkt holds up until then)
Things that are under consideration in the medium to long term: country club membership (although we do get a lot of use out of it) and downsizing earlier than when the nest is empty (particularly if the grandparent no longer needs to stay with us) - I would give those areas a 30% chance of being acted on. We are unlikely to pull kids from their current school (which they love) unless we can't pay the bills.
It has been an interesting experience sharing our life with you all - mixed feelings on what I could have done differently in hindsight to make things more pleasant, but this is really a great community of people with a lot to offer.
Those are some good changes. Baby steps. Congrats. :)
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Please keep us informed going forward. This website's membership is mostly middle income to upper-middle income. Your experiences and insights round things out.
This has been a really fascinating and enlightening thread. WestChesterFrugal, may I ask what decisions you have made and what direction you are heading?
Things we have resolved to change immediately: sell the Mercedes (which would dramatically lower auto maintenance insurance by at least 50%), one big vacation a year (cutting vacation budget by 60%), trim landscaping by using lower cost providers and leaving things less 'manicured', cutting some of the kids' acticities and shopping (which is mainly kid related as well)
Groceries and utilities are already much lower on the current run rate vs previous 12m spending (which was listed in the OP)
Also the expenses will look much more reasonable once we sell the house when the tenants' lease ends next year (fingers crossed the housing mkt holds up until then)
Things that are under consideration in the medium to long term: country club membership (although we do get a lot of use out of it) and downsizing earlier than when the nest is empty (particularly if the grandparent no longer needs to stay with us) - I would give those areas a 30% chance of being acted on. We are unlikely to pull kids from their current school (which they love) unless we can't pay the bills.
It has been an interesting experience sharing our life with you all - mixed feelings on what I could have done differently in hindsight to make things more pleasant, but this is really a great community of people with a lot to offer.
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... For example, you are assuming that child-related expenses will stop once your kids are out of college. But is that just undergrad, or have you thought about helping them through grad school as well? What about helping your children with their weddings? Are you going to be in a place to tell them to pay for it themselves or to have a "budget" wedding or will you need to pay for a wedding that you can invite your $10MM boss to? Will you help them put a down payment on their own Westchester house? ...
Agreed, I thought that is was unrealistic to assume the children are out on their own. This is when offspring get REALLY expensive--weddings, non-beater cars because you want them to be safe, grad school so that they can compete in the overly educated world that they will be inheriting, and then--oh yeah, their kids.
Hey, OP, I am a former hard core simple living girl who has been spending money like crazy (well, relatively speaking) for the past ten years. I am looking at retirement and want to live on that low salary for one year before I cut the cord on employment. I am both wary of my ability to cut back and excited about it, "excited" because I feel that I'm getting back to my core values.
Frugality is a muscle that must be exercised.
You may think that because you and spouse lived a bare bones existence in NYC that you can scale back at will. And you CAN scale back because you know how! It's just that this time around you have children. They are expensive little beasts. :) And the scaling back will take more practice and will be more difficult. Don't underestimate how hard that will be to do. Good luck.
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It has been an interesting experience sharing our life with you all - mixed feelings on what I could have done differently in hindsight to make things more pleasant, but this is really a great community of people with a lot to offer.
I haven't (yet) posted an expose of my finances for mustachian review, but have read many...if you had you'd realize what the method was...a tear down of your Un-necessary expenses, which is what you got in between the jigs and the reels. You spent a lot of time saying no way and explaining why. That's why peeps started to wonder the point of the post. If you'd read some other posts like this you'd have realized that was SOP.
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Wow. This reminds me of "Wilton Knight" over on Early-Retirement.org:
http://www.early-retirement.org/forums/f28/realistic-income-question-thinking-of-retiring-59907.html
Compared to the challenge of Westchester, I guess Bob Clyatt (of "Work Less, Live More") and Brewer are feeling like they dodged an entire machine-gun belt full of bullets. Bob seems to have figured out how to live the ER life in Rye, and Brewer seems to have figured out how to escape the Wall Street finance golden cage...
The key to affording the things you value is the willingness to keep working to afford them.
I hear a lot of people saying "I want my kids to have the things that I didn't have when I was growing up." I understand the feeling, but beyond supplying Maslow's basics I suspect that it's vicariously selfish and possibly even disabling. We adults had to struggle, save, and sacrifice to get the things that we want our kids to have... yet by handing those same possessions to our kids, we might be inadvertently robbing our kids of the internal motivation to get them for themselves.
I'm pretty confident there's a line to be drawn, but I'm not sure where.
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Wow. This reminds me of "Wilton Knight" over on Early-Retirement.org:
http://www.early-retirement.org/forums/f28/realistic-income-question-thinking-of-retiring-59907.html
I hear a lot of people saying "I want my kids to have the things that I didn't have when I was growing up." I understand the feeling, but beyond supplying Maslow's basics I suspect that it's vicariously selfish and possibly even disabling. We adults had to struggle, save, and sacrifice to get the things that we want our kids to have... yet by handing those same possessions to our kids, we might be inadvertently robbing our kids of the internal motivation to get them for themselves.
I'm pretty confident there's a line to be drawn, but I'm not sure where.
Amen!! As a former very poor child of the poor I wouldn't want to have missed the experience of "making it" by myself. Of course given the opportunity I would have gladly taken Mommy and Daddy's money, but I'd be poorer as a result.
Frank
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Dear Westchester Frugal,
I have read the original post and maybe the first couple pages of replies, but not all the pages.
It sounds like your big issue is how do you deal with the social pressures of being around people who are very showy with their money? Hmm. Do you think you can be a little more individual and frugal and maybe strategic with your behavior so that you are less caught up in it? Do you care a great deal about those appearances?
That's where I feel you may want to work on the psychology of being a little different and how tough you are. Can you be appreciated for your talent, your charm, your other great qualities and not the stuff? I think so, and I agree with the person who says screw them if they don't appreciate you for who you are -- that's not a friend. It sounds like a lot of this is the "cost of entry" to circulate…. but…. are these really the people you need in your life? Why? You are doing fine for income. Do you worry about getting left behind?
Saving money is fun. I have been having a great time here and have made some small changes. Change is fun and interesting and you will have a lot of opportunities to experiment.
The other thing that may be good for you is to visualize what you want when retired. You are young. You have a great opportunity to amass wealth and then be free to do anything. anything. Practice living on less so you have security and peace of mind and tons of confidence for you and for your family for the future.
I hope that is useful. Best wishes and don't let the people who are experiencing class envy get you off track. You have a life and you can manage it so it's efficient and satisfying in your own way.
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It sounds like you can afford your home and the kids' school, so that is good. It seems OK to plan to stay put for family stability, and you both enjoy your work -- do you want to continue working while your kids are in elementary and high school?
I did not scrutinize your numbers, but are you monthly, cash flow positive? What is your monthly savings rate %?
The fun game for you may be to see how high you can get that monthly savings rate, and also -- trying to figure what you will need, monthly, in the future, when you want to retire early.
Simple living can be so fun. Shop less and save more. Enjoy your family!
I am new and have not yet figured our savings rate, but we are working at bringing down the monthly expenses. We are not big money people, but I cut our cleaning service, and we are doing OK without it. I am working on energy efficiency, and mostly on shopping less, using what we have. I also hope to cook more.
We don't know yet what we want our retirement to look like. I have 3 kids in elementary school.
It is hard to imagine the future, but what would you like to do with yourself when you are not working? What would fulfill you?
I did a life expectancy calculator the other day that said I may live to upper 80's or 90's. That made me wonder, what the heck do I want to be when I really grow up? I'm serious! I've got a lot of time left and who do I want to be? Not sure, but it's something to consider.
Best wishes to everybody.
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The last thing I want to comment on is the groceries of $1,200 a month. You can totally do better than that. I have 2 adults, 3 kids, and we eat for a lot less, but still have a pretty high grocery amount, but it's nowhere near $1,200. We eat pretty simple, and cheap though. Nothing too fancy.
When you said that it's easier to earn more a month than to cut expenses, just remember that when you want to dial down the work, then having lower expenses is going to be very helpful to you.
MMM talks about valuing efficiency and I think that can appeal to you too (really to everyone); you want to use your dollars to your greatest advantage -- knock out the waste.
I loved the suggestion from someone to take a little holiday from the country club and see if you miss it that much -- since it is on the radar for possible trimming anyway.
Have fun!
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So you live in Westchester. I got good friends living there and visit frequently. The place seems to mess with people's minds - good for you to have realized that something is not quite right.
The easiest thing would be to move somewhere else and start over, but that's probably impractical. Fortunately, the Westchester thing is all in the head. Now you only need a way to cut through the nonsense and clutter.
I recommend meditation. Thirty minutes every morning for six months. Now don't go and hire an interior designer to create the perfect meditation room. That would be the Westchester way and we don't want that. You can't buy this anyway.
You will have to give thirty minutes of your time, every day. It is actually much more difficult than it appears. But it is really essential.
You need to turn the table for half an hour out of twenty-four. You can still spend twenty-three and a half hours obsessing and dreaming about having it all but for the other thirty minutes you will watch your mind obsessing and dreaming about having it all.
I recommend a day trip to the Zen Mountain Monastery in Mt Tremper NY. On Sundays they have a service and they give you free instruction on how to meditate. You can pick up a cushion and mat at their store and you will be all set. You will also meet a bunch of people with a completely different perspective. I'm not trying to sell you religion here but it helps to know that there are people who are dead serious about the meditation thing when you try to sit on your own. And it's a nice weekend trip anyway.
I find it helpful to have good reading at hand during times of transition and here are some recommendations:
http://www.amazon.com/Mindfulness-Beginners-Reclaiming-Present-Moment--/dp/1604076585/ref=sr_1_4?ie=UTF8&qid=1395064686&sr=8-4&keywords=kabat-zinn+meditation
http://www.amazon.com/Stoicism-Art-Happiness-Relationships-Self-Help/dp/1444187104/ref=sr_1_1?ie=UTF8&qid=1395064879&sr=8-1&keywords=robertson+stoic
Cheers and good luck in taking your life back,
Peter
(Meditation is where ancient Eastern and Western philosophy most closely approach each other. Eastern philosophy has always been more closely associated with religion than Western philosophy. I do not mean to endorse any particular religion by recommending a visit to the Zen Mountain Monastery but I do think that it is appropriate to honor a tradition kept alive through the generations by honoring the living practitioners. In my particular case, I would file this under stoic gratitude. Stoicism, on the other hand, is woven into the fabric of Western culture and society and practitioners are often unaware of what influences them.)
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I often find a bit of extremism from this blog, which can be great if one needs to jump start a change in lifestyle that is on an unsustainable path due to the nature of actions that were not well thought out prior. I own up to a fair number of my own past mistakes, but in reality I don't think my situation is really that unsustainable or uncommon in my corner of the world. I am looking to make changes to work towards becoming better, and as Voltaire famously stated "Le mieux est l'ennemi du bien." (google translate for those who don't speak french)
"The kittens are in the bushes"?? I think the smugness broke Google Translate!
It took longer for him to tell us all to use Google translate than to just write "the perfect is the enemy of the good," which Mr. I've League knows full well is a common English colloquialism.
hahahaha I love you both.
Question to the posters in this thread:
It seems like this forum has a lot of mixed feelings on wealth at the level of the OP. Do you all think that the kind of wealth described in this thread is a bad thing in and of itself? If you have enough money to afford to be wasteful are you still ok with it because you are still living within your means (even if those means are unlike 99.5% of the global population)?
I'm not fazed by his stratospheric level of wealth, because I've known a lot of people with his means or more, including my aforementioned best friend. That being said, I place a high value on humility and simplicity, which he lacks. I'm also generally disgusted by his desire to pigeonhole his kids into the same way of life he has and his obsession with keeping up with his neighbors. He seems pretty shallow.
agreed. I don't give a fuck what extremely rich people do with their money, but I don't see the point in coming here to rub it in our faces and pretend like you're looking for some kind of advice.
the condescension and elitism in many of OP's posts is absolutely ridiculous. the only "interesting" people to hang out with are those who went to Ivies and send their kids to elite private schools? please. my social group includes people who work for NASA, people who do secret rocket science shit for the government, preschool teachers, people who didn't graduate college, single parents, restaurant managers, copy editors, people who run 100 mile races for fun... I love my friends and I am confident I am at least as happy with my life as you are with yours, but god I'm sure you'd find us really dull.
then again, I'm probably just too ignorant to know what I'm missing because although I got my MS at one of the best graduate programs in my field, it was... a public university. ew! good thing you can't catch my prole germs through the internet.
plus, this may be harsh but I think you might be misleading yourself about the values and expectations you're setting up for their kids. it's great that you do charity work, and thanks for your contribution (not being sarcastic, really, I think it is great... but also don't most rich people do this? I was under that impression, but my sample size of extremely rich friends and acquaintances is small). but I don't think that's the same thing as the type of "real world exposure" other posters have talked about. the fact that your kids "don't think you're rich" is extremely telling. they really might find it difficult to socialize with peers who didn't grow up extremely rich (but then, maybe you don't want them hanging out with those kids anyway considering the life path you have planned for them?! it's hard to tell).
One other side point: I did my grad degree at Stanford with a friend. She did the East Coast private prep school route with lots of stress, high achievement, competitions, etc. I went to above-mentioned average public high school, spent a ton of time hanging out with friends, took a year off to be an exchange student, and went to junior college before transferring to a 4-year school. In the end, we have the same grad degree from Stanford, work at the same company, make similar salaries, and live very comparable lives. You don't HAVE to send your kids to private school in order for them to be successful later on in life. Drive comes from within and is instilled by good parents.
this, totally!
This has been a really fascinating and enlightening thread. WestChesterFrugal, may I ask what decisions you have made and what direction you are heading?
Things we have resolved to change immediately: sell the Mercedes (which would dramatically lower auto maintenance insurance by at least 50%), one big vacation a year (cutting vacation budget by 60%), trim landscaping by using lower cost providers and leaving things less 'manicured', cutting some of the kids' acticities and shopping (which is mainly kid related as well)
Groceries and utilities are already much lower on the current run rate vs previous 12m spending (which was listed in the OP)
Also the expenses will look much more reasonable once we sell the house when the tenants' lease ends next year (fingers crossed the housing mkt holds up until then)
Things that are under consideration in the medium to long term: country club membership (although we do get a lot of use out of it) and downsizing earlier than when the nest is empty (particularly if the grandparent no longer needs to stay with us) - I would give those areas a 30% chance of being acted on. We are unlikely to pull kids from their current school (which they love) unless we can't pay the bills.
It has been an interesting experience sharing our life with you all - mixed feelings on what I could have done differently in hindsight to make things more pleasant, but this is really a great community of people with a lot to offer.
this is refreshing to hear. I'm glad you feel like you did get something out of this thread and are going to make some changes. not sure if you are really asking, but my advice for the future would be to try to keep in mind from the outset that there are intelligent, interesting people out there who do not fit into your Ivy/finance/7-figure-income-centric worldview. I think this could have prevented some of your more condescending comments (yes, they were there even before other people started getting sassy) that many, including myself, found offensive.
EDIT: fixed typo
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I hear a lot of people saying "I want my kids to have the things that I didn't have when I was growing up." I understand the feeling, but beyond supplying Maslow's basics I suspect that it's vicariously selfish and possibly even disabling. We adults had to struggle, save, and sacrifice to get the things that we want our kids to have... yet by handing those same possessions to our kids, we might be inadvertently robbing our kids of the internal motivation to get them for themselves.
The book The Millionaire Next Door spends a significant portion of the text exploring this idea.
My theory is that, in general, humans (of all ages) actually need to struggle a little bit in order to thrive. It's the concept of muscle applied to all aspects of life: that which is not regularly challenged will atrophy. It's common knowledge that if you lay around like a couch potato all day every day, you'll grow fat and weak; some basic level of physical activity will keep you from degrading; and actual training will make you stronger. Thus, everyone is encouraged to get some minimum amount of exercise. Why shouldn't the same hold true for other "strengths": intellectual, financial, emotional, spiritual, etc? The modern world is downright cushy and brief, relative to the lengthy and difficult world in which we evolved. As humans, we are "designed" to overcome adversity; I think our design is "undefined" for a non-challenging environment.
I think this problem is compounded by the emotional aspect of child-rearing. I'm halfway through Dan Ariely's Predictably Irrational. I just finished the section where he suggests that everyone is to some degree like Dr Jekyll and Mr Hyde. His research supports the idea that people turn into "Mr Hyde" under "excited" states (he tested with sexual arousal, but applies the idea to all states of increased emotion). I think this is somewhat intuitive: if we're being completely honest, who hasn't made a poor decision under circumstances that were not conducive to a cool, calm, rational mindset?
I think it's hard to keep that always-cool-headed mentality when raising kids; it's a terribly powerful emotional experience. Everybody wants the best for their kids, but what is rational and what feels right aren't always the same. Any parents here ever received parenting advice from non-parents, and walked a way a little miffed?
A simple example, I struggle with every day: my toddler keeps standing up in her high chair. This sounds terrible, but the rational part of me wants her to fall so maybe she'll actually understand how dangerous it is, and stop doing it. But the "dad" in me doesn't want her to come into any harm, so I'm constantly telling her to stop standing in her chair. Timeouts, lectures and every other toddler disciplinary tool are ineffective.
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It probably needs its own topic, but when I say I want my kids to have it better than I did, I'm talking mostly about emotional health. I was raised by a mentally ill mother, an emotionally absent (and also probably mentally ill) father, and while there were good times -- there were an awful lot of bullshit things that I had to deal with.
So for my kids, my husband and I are loving to each other (my parents despised each other, yet remained married through my youth), and we don't play mind games with our kids.
I'm not as concerned that we provide our children with every materialistic whim. As a matter of fact, we demonstrate through our own example, that we don't care what other people have or do or where they go. Our kids, so far, aren't caught up in social status and the materialistic mindset (I've seen 7 year olds who are brand conscious and REFUSE to wear certain clothes because it's not the right label!!! WHAT THE HELL IS THAT?!). Heck, our kid thinks we're rich because we bought him a $20 game he'd been wanting for Christmas. We aren't planning to provide for their every desire in high school (there will either be intense academic pursuits and/or a part time job in the mix), we won't be buying them cars or fancy clothes. College --- we'll chip in but will not be covering it 100%. Plus, we'll bless them with the knowledge that they can pursue any interest they have and we will FULLY EMOTIONALLY SUPPORT THEM. Even if that means they'd like to be hippy artists who live on less than their frugal parents. I have a feeling, though, that my oldest will be an engineer or scientist. My youngest seems to be leaning towards the culinary arts.
Sorry for the lame thread hijack.
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People make major life decisions out of necessity
Disagree. I grew up in a home that was frugal out of necessity, but my husband and I have always had more than enough. We have always saved far more than our similar-salaried friends, whereas we could have made much more spendy choices.
I'd say we've made our decisions based upon thoughtful consideration and our own priorities for the future.
Yes, some never outgrow that desire. My brother wanted to be a firefighter. At 21...he's a firefighter EMT.
It seems to me that people who enter certain professions -- or, perhaps callings -- know early what they're going to do. Teachers, preachers, nurses, soldiers seem to fall into this category. On the other hand, few kids begin by saying, "I am going to be a web web designer!"
I was a teacher when I was in elementary school. I'd line my stuffed animals up and "play school". I thought at the time that all kids did this; but, in retrospect, none of my siblings enjoyed that game. Similarly, we all knew my oldest would do something medical from a young age; sure enough, she's in college now, studying exactly what I always knew she would. Aside from a few weeks in middle school when her occupational goal was "rock star", she never waivered.
This has been a really fascinating and enlightening thread. WestChesterFrugal, may I ask what decisions you have made and what direction you are heading?
Things we have resolved to change immediately: sell the Mercedes (which would dramatically lower auto maintenance insurance by at least 50%), one big vacation a year (cutting vacation budget by 60%), trim landscaping by using lower cost providers and leaving things less 'manicured', cutting some of the kids' acticities and shopping (which is mainly kid related as well)
Groceries and utilities are already much lower on the current run rate vs previous 12m spending (which was listed in the OP)
Also the expenses will look much more reasonable once we sell the house when the tenants' lease ends next year (fingers crossed the housing mkt holds up until then)
Things that are under consideration in the medium to long term: country club membership (although we do get a lot of use out of it) and downsizing earlier than when the nest is empty (particularly if the grandparent no longer needs to stay with us) - I would give those areas a 30% chance of being acted on. We are unlikely to pull kids from their current school (which they love) unless we can't pay the bills.
It has been an interesting experience sharing our life with you all - mixed feelings on what I could have done differently in hindsight to make things more pleasant, but this is really a great community of people with a lot to offer.
Not a bad start, but you could make more serious cuts, if you chose to do so.
Agreed, I thought that is was unrealistic to assume the children are out on their own. This is when offspring get REALLY expensive--weddings, non-beater cars because you want them to be safe, grad school so that they can compete in the overly educated world that they will be inheriting, and then--oh yeah, their kids.
Yeah, I'm in that stage right now -- the "young adult children" stage, and it is expensive!
In my limited experience, it's smart to tell them ahead of time what you will /won't pay for (that could mean giving them a dollar figure, or it could mean saying you'll pay for this item but not that item), and then stick to it.
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Could we give them a low interest loan for a downpayment to buy an apartment when they first start working (assuming it made sense financially and they were committed to the area)? Would we consider paying for their children's private school tuition (if they chose to send their kids to private schools) as a method of estate planning (paying school tuition is not considered a gift or taxable event)? Yes those are considerations, but not obligations, and it would also be dependent on whether we felt like our kids were on the right path of financial independence and making wise decisions themselves (i.e. we aren't going to help them if they are frivolously spending, but if they are really trying to build wealth through hard work and savings we would be much more likely to be supportive).
this is a really good point/idea. all kids/humans are different, even those that are raised in the same family, so it's hard to know until they get there what level of help you want to provide.
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Could we give them a low interest loan for a downpayment to buy an apartment when they first start working (assuming it made sense financially and they were committed to the area)? Would we consider paying for their children's private school tuition (if they chose to send their kids to private schools) as a method of estate planning (paying school tuition is not considered a gift or taxable event)? Yes those are considerations, but not obligations, and it would also be dependent on whether we felt like our kids were on the right path of financial independence and making wise decisions themselves (i.e. we aren't going to help them if they are frivolously spending, but if they are really trying to build wealth through hard work and savings we would be much more likely to be supportive).
My parents did something along these lines for me, but it is easy to think about doing this only for responsible offspring and end up doing it regardless of the temperament and financial acuity of the children. My parents' neighbors are subsidizing housing/food for their children, my parents are getting back extra principal payments and I still save on top of that. They didn't teach me about money, I just sought never to spend as much as they did, have to work 50 hours a week, or have as extensive an effect on the environment and had to actively research where and how to live outside of their rich suburbia bubble - my learning took off from there. Be careful what you wish for ;-)
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It sounds like you are doing a good job keeping the kids' feet on earth. My parents emphasized the same things you are, and it has paid off for me. As long as they understand that the money didn't just come out of thin air, and appreciate the hard work needed to obtain it, they should be alright. The kids I grew up with who didn't care about that annoying fact performed poorly, whereas those of us who did have been mostly successful.
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I think you are going to do really well. I propose looking at expenses like this: Am I spending this because it is what I value and it is giving me something I really want? Am I spending this because it is the price of living in my social community? If so, can I cut back without anybody really noticing or caring? Do I have no idea why I am spending this, and I ought to curtail it dramatically?
You seem to be really well grounded about your kids. Personally, I have no problem with paying for their college, giving them a downpayment on a house, whatever, really, anything. They just need to understand that if they accept it from me, they are on the hook to do it for their kids.
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They will start working while in middle and high school, ranging from a manual labor (or menial labor for the daughter) jobs - to understand how hard working life can be if not well equipped/prepared- to internships in very esteemed professions sponsored by our friends (and of course we will do the same for their kids).
Here's a radical thought: let your kids figure it out. You don't even have to tell them to go get jobs... all you have to do is cut back their allowance.
And if your daughter wants to sling drywall at a construction site, then who knows-- maybe someday she'll want to study civil engineering or architecture. My daughter and her friends are quite insulted by guys (and they're almost all guys) who say things like "or menial labor for the daughter".
In the good-hearted attempt to help your kids make good choices, it's a bad idea to make good choices for them. The best way for anyone to learn how to make good choices is to have to live with a few bad choices in an environment where the bad choice won't actually kill them. Your parenting support can supply the environment so that they can learn how to make their own choices-- instead of having to live with your idea of a "very esteemed profession".
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In the good-hearted attempt to help your kids make good choices, it's a bad idea to make good choices for them. The best way for anyone to learn how to make good choices is to have to live with a few bad choices in an environment where the bad choice won't actually kill them. Your parenting support can supply the environment so that they can learn how to make their own choices-- instead of having to live with your idea of a "very esteemed profession".
Additionally, give them buy-in and let their opinion matter. If they feel valued, their values will reflect yours.
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@OP Very interesting idea - that the kids are truly on their own at 18, after 'having it all' as legal minors in your care. It really makes them responsible for their decisions leading up to university/adult years.
One caveat which you've probably already addressed in your planning: it can be difficult to get loans or income-based scholarships with parents who have high income. This is part of what delayed my education for a few years - I had to be 21 before my own (barely 5-figure income) would be counted for FAFSA etc - parents [understandably] didn't agree with my choice to study painting, so I was 100% on my own for everything during university.
Also, of course your kids will probably be fine/brilliant, but speaking as someone who works with high-income teenagers in a private school hothouse environment (ack! hormones! friends with lots of cash to throw around!) peer pressure begins to exert unpredictable influences, though it sounds like you're giving them a great foundation.
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Know I'm late to this thread but I wanted to comment.
Having roughly the same income level and net assets as the OP, but at a smaller expenditure rate and less leverage, I apparently read the original post with a sympathetic view compared to most others here. If nothing else, it's been informative and entertaining to see what this forum might do to a poster in WF's position. "Country club, nanny, landscaping, private school" reads like an an alternate-reality CPI basket, but given how our bank account just seems to refill itself so long as the spouse and I both work, they're all purchases I could see us rationalizing in the future, especially once a kid is involved. At this income level, I believe that the mustachian attitude isn't about dollar opportunity costs -- foregoing lattes amounts to nothing -- but experiential opportunity costs, and the recognition that many purchases complicate your life unnecessarily and do not provide a net gain in happiness.
So some questions for WestchesterFrugal:
(1) I'm really curious how the cost/benefit logic went to justify your original membership in the country club. I recently started playing golf, but I am accustomed so far playing at super cheap muni courses for like $1 per hole. For myself I would have found the six figure initiation plus 25K/year indefinitely balkingly expensive -- how did you figure this was a worthwhile expense? To me it just seems like a very expensive way to achieve the worthy goals of hitting balls with sticks and finding community. And are these fees at all proportional to the cost of maintaining the club and its land use, or is it profit for some owner? Hypothetically, if you could today cancel and get that money back, would you? What's the deal?
(2) Disregarding what I said in (1), can I come play on your course? :)
(3) Why do you work? Is it about the money? Would you do your current job at 1/4 the salary? Would you work double the hours for double the salary? Would you work half as many hours for half the salary? Is there a level of personal wealth at which working your job would no longer make sense? As you said earlier:
Lastly, at the end of one's life the assets accumulated over time will ultimately go to three areas: heirs, charities and the government.
This is true of one's assets but not of one's time. Notwithstanding the difficulty of knowing what one's lifetime goals are, if one already has enough assets to achieve one's lifetime goals, additional earnings are just funding one of those three buckets. From your other posts it sounds like you aren't interested in spoiling your children, nor are you interested in gifting to the government. So is your job intrinsically interesting, rewarding, and beneficial enough to continue spending your time on it, and giving your pay to charity? If your firm were a non-profit, would you volunteer there (haha)?
(4) Do you ride your bike?
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...the recognition that many purchases complicate your life unnecessarily and do not provide a net gain in happiness.
Exactly! And then there's the time thing: we alll get the same number of hours, so the choice is between spending those hours doing high-status but not really pleasurable things, or less expensive, more pleasure alternatives.
I recently started playing golf...
However, this seems to contradict the point above. Surely you can think of more cost-effective ways to have fun, even playing at the cheaper courses :-)
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We are using the template we experienced ourselves (which makes us de facto experts having lived it and survived/thrived): once the kids are 18 they are on their own.
woah. That puts a whole 'nother spin on things. Fascinating!
So let me ask you this: will you provide the middle class fall back, the parental home if they need it? I mean can they stay with you and have an expectation of something to eat? Can they stash their "stuff" somewhere your property? I think this is what separates middle class kids from their poor friends, the safety net of always being able to go "home."
In an idle moment I tallied up what my graduate degree would cost in today's dollars. I lived in a dorm and needed to crash somewhere during breaks. You would probably say that dorms are expensive, but for me, not working, living the dorm life where all is taken care of and going straight through carrying full academic loads was the best way to get the damned degree quickly.
Man, now I'm thinking that you guys are kinda severe with the kid plan. :) But that's ok, just make certain that your children understand what happens when they are 18. I can't imagine that their peers will be in that situation.
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I recently started playing golf...
However, this seems to contradict the point above. Surely you can think of more cost-effective ways to have fun, even playing at the cheaper courses :-)
I was pretty surprised how delightful it is to hit a ball repeatedly with a stick, and make it go up in the air. If I tried to do this for free, say in the park, I think I'd get ticketed. I pay $8/game for a 9-hole par three, walking distance from my house. I use clubs from the 1980's that I inherited from my grandfather (this inheritance is what caused me to start playing in the first place). Our course allows BYOB refreshment. We find enough balls on the course to keep us supplied. The money goes to the city parks department. I am debating how far I want to take this hobby; it's obvious that it gets expensive fast, and the airs of monocled elitism surrounding it are pretty off-putting to me. If I'm on a slippery slope to country club membership, I'd better stop now -- understanding which is one of the reasons I asked for the backstory behind WestchesterFrugal's membership.
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We are using the template we experienced ourselves (which makes us de facto experts having lived it and survived/thrived): once the kids are 18 they are on their own.
But didn't you say in your first post that you are planning to pay for their college education? So how will this work? And mind you, I don't think there is anything wrong with paying for your kids' college degrees. I am doing that currently because I have the means to do it (however, I would not incur debt to finance my kids college).
But I'm curious of how you think the logistics of this will work. Will you pay for tuition only and they will be responsible for room and board? What about travel expenses when they come to visit you? Will they be spending their holidays/vacations with you? Will you pay for their medical expenses?
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They will start working while in middle and high school, ranging from a manual labor (or menial labor for the daughter) jobs - to understand how hard working life can be if not well equipped/prepared- to internships in very esteemed professions sponsored by our friends (and of course we will do the same for their kids).
Here's a radical thought: let your kids figure it out. You don't even have to tell them to go get jobs... all you have to do is cut back their allowance.
And if your daughter wants to sling drywall at a construction site, then who knows-- maybe someday she'll want to study civil engineering or architecture. My daughter and her friends are quite insulted by guys (and they're almost all guys) who say things like "or menial labor for the daughter".
In the good-hearted attempt to help your kids make good choices, it's a bad idea to make good choices for them. The best way for anyone to learn how to make good choices is to have to live with a few bad choices in an environment where the bad choice won't actually kill them. Your parenting support can supply the environment so that they can learn how to make their own choices-- instead of having to live with your idea of a "very esteemed profession".
All fair comments
We simply think it is wiser for them to learn from others' mistakes instead of their own. There are plenty of opportunities for them to make bad decisions in other areas and suffer the consequences - if they can avoid simple mistakes that they don't need to make they will be way ahead.
I've presented my thoughts, but I'm done here. I'll leave you with a final question to ponder: when you were the age of your kids, how would you have responded to that "learn from others' mistakes" dictat if it was directed at you by your parents?
You have a good life now.
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I recently started playing golf...
However, this seems to contradict the point above. Surely you can think of more cost-effective ways to have fun, even playing at the cheaper courses :-)
I was pretty surprised how delightful it is to hit a ball repeatedly with a stick, and make it go up in the air. If I tried to do this for free, say in the park, I think I'd get ticketed. I pay $8/game for a 9-hole par three, walking distance from my house. I use clubs from the 1980's that I inherited from my grandfather (this inheritance is what caused me to start playing in the first place). Our course allows BYOB refreshment. We find enough balls on the course to keep us supplied. The money goes to the city parks department. I am debating how far I want to take this hobby; it's obvious that it gets expensive fast, and the airs of monocled elitism surrounding it are pretty off-putting to me. If I'm on a slippery slope to country club membership, I'd better stop now -- understanding which is one of the reasons I asked for the backstory behind WestchesterFrugal's membership.
Eh, stick to plebian settings and you will be fine.
I like my redneck hobbies of fishing and hunting. No pressure to go upscale and I can have fun by myself alone or in a group.
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If we decide to give them a backstop or safety net we won't tell them in advance.
This is a huge mistake. Your kids' first few years out on their own will be tough enough without Mom and Dad being unclear on what resources they're willing to provide vs. surprises. And if you say, "I'll pay your college tuition, but you're on your own for living expenses." and then you cave and decide that you'll pay for the dorm and a car . . . you'll leave them thinking that if they beg hard enough you might pay for a spring break trip. Or after graduation, even if you've told them that you're not paying their living expenses, if you provide that "safety net" and pay the rent one month, it'll make them think you might do it again in the future.
Instead, tell them what you are willing to pay towards college and in their first years on their own. Whether you intend it to be generous or skimpy, tell them truthfully. Make it clear that -- emergencies or illnesses aside -- this is the plan, and then stick to it. The time to start this conversation is about the time they start high school. At that point, they're ready to consider college expenses, and that's when grades start to matter.
We told our girls the following:
- We will pay for four years (8 semesters, not summer school) at a state university; by that, we mean tuition and fees, dorm and meal plan. If they choose a private school, they must pay the difference in cost. If they choose an apartment, they must pay the difference in cost.
- We expect them to pay for books and supplies, clothing, and extras.
- We will provide transportation to and from school as often as they want to come home.
- We will not pay for private school tuition, sorority expenses, meals out, or other "above and beyond" items. We will buy basic dorm supplies (i.e., sheets and a lamp), but we will not provide fancy-schmancy decorations as if it's a forever home.
- We will keep them on our cell phone plan and health insurance plan throughout college. After college, if it's in everyone's financial interest to keep them on these plans (i.e., a $10/month phone instead of a whole new plan), they can pay their portion of the bill.
- They're always welcome to come home. Forever. Doesn't mean we'll buy them a car or give them money to go out, but they will always, always have a bedroom and a meal at our house.
- They're always welcome to take part in family vacations. Forever.
When we talked about these things in high school, our oldest thought we were being stingy. She saw her friends getting their own cars, SmartPhones and so forth. Now, as a college sophomore, she gets it. She constantly thanks us for seeing "the big picture" and she fully understands that it's better to graduate debt-free than to have had a car at 16. She's very frugal with her money. If we can do as well with our youngest, I'll be thrilled.
And a large part of her success is that she knew EXACTLY where we stood on all things financial. She could "plan around us".
But didn't you say in your first post that you are planning to pay for their college education? So how will this work? And mind you, I don't think there is anything wrong with paying for your kids' college degrees. I am doing that currently because I have the means to do it (however, I would not incur debt to finance my kids college).
I did think that was a priority for you.
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@ Mrs. Pete: no kids yet but I wanted to +1 your approach to college and finances for your children. Setting expectations at the beginning prevents confusion and hurt feelings.
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Mrs. Pete, I love how you've handled this, and I can see doing something similar with my own kids.
My parents weren't clear at all -- they completely covered my older sibling's (new) car, insurance, undergrad, grad, medical insurance/expenses until marriage, etc., but told me at 18 "good luck with all that." (I had been paying my own car/car insurance since I turned 16.) Parents didn't really explain, other than a vague "you're more able to take care of that stuff than your sibling."
I moved out, got married young (which actually was a very good thing -- still going strong 19 years later), and never asked them for a dime since then. It has taken years to not be hurt over this. If I had known what to expect prior to enrolling in college, that would have been very helpful!!
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I was just about to say the same thing -- it's great to have a game plan for what you will do for your kids college education -- but, who knows what life will be like that far away? I hope to do x, y and z for my kids, if we can. If my kids need X, Q and T instead, then we'll see what we can do. It will be interesting and fun to see them grow as people and help them make their choices.
Even decisions like whether my kids will work in high school are up in the air. I think it is a great idea, but it is also possible that in a few years, I might feel like they *need* to focus on school 100%. My oldest was just diagnosed with ADHD. A job might be great for him or it might be disaster. We'll see how it goes and also see what he thinks about it too.
I expect they will be good kids, get good grades and stay away from drugs and alcohol, be active in school and church. That's the baseline at my house.
This has really morphed into a big parenting discussion. Nothing wrong with that, but I don't know if Westchester Fugal is getting anywhere on the family finances and savings rate / savings goals / retirement plans.
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Mrs. Pete, I love how you've handled this, and I can see doing something similar with my own kids.
My parents weren't clear at all -- they completely covered my older sibling's (new) car, insurance, undergrad, grad, medical insurance/expenses until marriage, etc., but told me at 18 "good luck with all that." (I had been paying my own car/car insurance since I turned 16.) Parents didn't really explain, other than a vague "you're more able to take care of that stuff than your sibling."
I moved out, got married young (which actually was a very good thing -- still going strong 19 years later), and never asked them for a dime since then. It has taken years to not be hurt over this. If I had known what to expect prior to enrolling in college, that would have been very helpful!!
Thanks for sharing that experience. I have to be careful about balancing what we do with each of 3 kids. Each kids' needs will be different. I don't know what will be "fair". But I don't want to run out of $$ either. We will probably split the pot between the 3 kids as DS#1 reaches college-age, but I might also reserve what I give to them… it all depends on what our situation is and what their goals are.
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Thanks for sharing that experience. I have to be careful about balancing what we do with each of 3 kids. Each kids' needs will be different. I don't know what will be "fair". But I don't want to run out of $$ either. We will probably split the pot between the 3 kids as DS#1 reaches college-age, but I might also reserve what I give to them… it all depends on what our situation is and what their goals are.
I was totally on my own at 18 from foster care. DH on the other hand had a sister who was always in a crisis with money. He was always very responsible. Fast forward fourty years and he is still the responsible one, she is still borrowing money from mom, borrowing the car, expecting presents etc. my favorite is hearing her present a problem like " I don't know how we are going to afford to pay our heating bill" with tears in her eyes then mom offers to pay it. In the meantime she continues to buy junk and eat out. It is very easy to create an economic parasite who feels entitled. I don't know how she will manage when mom is gone.
With our kids we did similar to the mrs Pete method of education expenses. Wanted to include when they got married we offered x dollars. They could use it towards whatever they wanted.
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Mrs. Pete. Great Post. That's how we raised our two kids. The last one is graduating college(4 years) with a great job lined up. They both really appreciated a paid for college education along the same lines you laid out for your children. And they are always welcome here anytime and I am thrilled to cook for them!
Very grateful.
As a side note - son tells me most of his HS friends are heading back to college for the fifth year - they call it the "victory lap" - kinda sad as they are racking up student loan debt.
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@Mrs. Pete - that's a very similar plan to what my parents did for me. I really appreciated how upfront they were with me about costs. They told me they'd pay for the equivalent of 4 years at our local state university. That was one of the big reasons why I decided to go there. And because I wanted to study abroad in a program that was 2x as expensive as a normal semester, I offset it by graduating a semester early. My dad put a very helpful spreadsheet together for me showing the expenses they would pay extrapolated out over the four years.
I'm so grateful to have graduated without debt. Their strategy also allowed me to make good financial choices. Some of my friends went to private colleges or lived in fancy apartments; it made me feel good to know that my choices were contributing to my financial well being.
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This discussion has been an eye-opening exercise for me. Whether the OP is a troll or not is irrelevant to me. The lifestyle he/she is articulating seems so over-the-top and it is interesting to peer into this world of the super-rich Wall Street crowd.
What I take from this example is:
1. Some people in our society make an obscene amount of money. Of course, in our market-driven economy that is all fair and good. But I do question why someone in the financial industry should make so much money. It makes me want to rethink my relationship with certain financial institutions and where I am directing my hard-earned money to if it is funding these extravagant lifestyles. I guess this is why opting for lower-cost investment vehicles makes a lot of sense. I am voting with my money on which types of institutions/philosophies I am supporting. I don't mind business owners and people actually making stuff (ala Steve Jobs) making large amounts of money because in my mind they are contributing a lot to society and have made our world a better and more interesting place.
2. Some people get too invested in apparently doing the best for their children by sending them to pricey private schools for the wrong reasons. I work in technology alongside people from all types of universities. My brother also works in this field. He is sending his children to a pricey private school which he can barely afford so that his kids can go to an Ivy League university. I brought up the issue with him on how those we work with in our fields don't necessarily have these fancy Ivy League degrees and the pricey private school may not be necessary, especially since he seems to imply they can't really afford it. It's sad to me because his kids are very talented and would thrive almost anywhere, but he is surrounding them with peers that don't live the same lifestyle they do. My nephew mentioned this to me. I know my brother is doing this out of love for his children and wanting the best for them, but I still question the choices they make.
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General responses to a number of posts:
- I'm glad several people found my discussion of managing college expenses helpful. It's working well for us, and, unlike many of the people on this thread, we're already in the college years with our kids.
- For those of you whose kids are still young, I agree that you might not know just what you'll be able /willing to pay in future years. When my kids were younger, I didn't know we'd be doing this well financially -- I didn't think we'd be able to pay as much as we are -- and I didn't know what type of students my girls would turn out to be. If they were slackers or irresponsible, I would've told them I'm very willing to pay for community college. Regardless, I strongly suggest that you determine what you're willing to do by around the time your kids start high school. By that point you'll have a good handle on your capabilities (and theirs!).
- I didn't say this in my previous post, but when we told our girls what we were willing to pay for college, we also made it very clear that we had expectations of them as well. We expected good grades in high school, and progression towards graduation in college. If they were getting into trouble, breaking rules, or getting into drugs, we would not be opening our wallets to pay for college. I'm very glad to say that they've both grown into wonderful young ladies, who have exceeded our expectations and have made us proud.
- It's tough enough for young adults to juggle all the moving parts that are college. It's a huge favor for parents to be a stable influence at that point in their lives. Even if you're not able to pay as much as you (and they) would hope, tell them straight up what you can do. Even if it's just, "We can't pay anything, but you're welcome to live here rent free as long as you're a student, and I'll keep paying your car insurance while you attend the community college", let them know what you can do.
- Justifying an expensive club membership by saying you get a discount on luxury items is just that: Justification. Or rationalization, if you prefer. The analogy about roasting your own duck is spot on.
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I think you're missing the point of mustachianism and what we're trying to accomplish here.
The goal isn't to save a bit on duck a l'orange by eating at the country club, it's to stop being so lazy and helpless and roast your own duck.
The fact that the country club pool is cheaper than having your own is irrelevant when there's a gorgeous public beach in Rye at your disposal. Ditto the golf course.
The fact that your expensive frivolities are marginally less expensive than other frivolities doesn't make them magically virtuous. They're still silly and wasteful.
Would you be interested in joining our club???
Depends. Will they let me hunt squirrels on the golf course?
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
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I think you're missing the point of mustachianism and what we're trying to accomplish here.
The goal isn't to save a bit on duck a l'orange by eating at the country club, it's to stop being so lazy and helpless and roast your own duck.
The fact that the country club pool is cheaper than having your own is irrelevant when there's a gorgeous public beach in Rye at your disposal. Ditto the golf course.
The fact that your expensive frivolities are marginally less expensive than other frivolities doesn't make them magically virtuous. They're still silly and wasteful.
Would you be interested in joining our club???
Depends. Will they let me hunt squirrels on the golf course?
"In the immortal words of Jean Paul Sartre 'Au revoir, gopher'"
We can do that. We don't even have to have a reason.
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
Thanks fuzzhead1506
So refreshing to actually get a helpful comment instead of the sanctimonious holier than thou vitriol
hey! I gave helpful comment too! I demand to be recognized and praised as well !
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
Thanks fuzzhead1506
So refreshing to actually get a helpful comment instead of the sanctimonious holier than thou vitriol
I gather a suggestion that you save by hitting up the local goodwill for clothing wasn't what you wanted to hear?
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This discussion has been an eye-opening exercise for me. Whether the OP is a troll or not is irrelevant to me. The lifestyle he/she is articulating seems so over-the-top and it is interesting to peer into this world of the super-rich Wall Street crowd.
What I take from this example is:
1. Some people in our society make an obscene amount of money. Of course, in our market-driven economy that is all fair and good. But I do question why someone in the financial industry should make so much money. It makes me want to rethink my relationship with certain financial institutions and where I am directing my hard-earned money to if it is funding these extravagant lifestyles. I guess this is why opting for lower-cost investment vehicles makes a lot of sense. I am voting with my money on which types of institutions/philosophies I am supporting. I don't mind business owners and people actually making stuff (ala Steve Jobs) making large amounts of money because in my mind they are contributing a lot to society and have made our world a better and more interesting place.
2. Some people get too invested in apparently doing the best for their children by sending them to pricey private schools for the wrong reasons. I work in technology alongside people from all types of universities. My brother also works in this field. He is sending his children to a pricey private school which he can barely afford so that his kids can go to an Ivy League university. I brought up the issue with him on how those we work with in our fields don't necessarily have these fancy Ivy League degrees and the pricey private school may not be necessary, especially since he seems to imply they can't really afford it. It's sad to me because his kids are very talented and would thrive almost anywhere, but he is surrounding them with peers that don't live the same lifestyle they do. My nephew mentioned this to me. I know my brother is doing this out of love for his children and wanting the best for them, but I still question the choices they make.
I think you will find the services of people who are making a tremendous amount of money in finance are not available to you anyway, so your exercise in trying to direct your business towards those 'most worthy' will be one of futility.
I think your brother is doing a commendable thing and, who knows, maybe all of the idiots doing the same, sacrificing to send their kids to 'pricey private schools', know something or have a different view than all of the geniuses who can decide what is best for others' kids.
I want a job where I make 7 figures, work only 50-60 hours a week including commute time, have enough time to raise (was it two or three?) kids and cook every night at home, take care of my ailing parent, spend my abundant amount of free time at a country club, and STILL have an abundant amount of time to post continously on a personal finance discussion forum.
What's your secret? No sleep?
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I think her secret is that she never spends any time with her kids. There are only so many hours in a day and many are spent here. Or perhaps she made all this BS up and is not who she pretends she is. After all it is the internet. All I know is that when I was working F.T. & raising my kids I did not have all this time to spend with strangers. It was hard enough sometimes to find the time to spend with real friends.
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Since the East Coast is ahead of the West Coast and it is 10:30pm here you are obviously not with your kids. Spend some real time with them instead of hiring the responsibility.
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Since the East Coast is ahead of the West Coast and it is 10:30pm here you are obviously not with your kids. Spend some real time with them instead of hiring the responsibility.
Shouldn't they be, like, asleep?
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Some of what has been posted on this thread is just plain absurd and uncivil.
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
Thanks fuzzhead1506
So refreshing to actually get a helpful comment instead of the sanctimonious holier than thou vitriol
WE'RE holier than thou?!?!?! seriously, your condescension in posts like these:
I think you will find the services of people who are making a tremendous amount of money in finance are not available to you anyway, so your exercise in trying to direct your business towards those 'most worthy' will be one of futility.
is fucking nauseating. and you didn't need to be so sarcastic rude to Daisy in response to her comment about her brother. I don't think she was trying to be rude. I guess it's like Jay-Z says... "you can pay for school, but you can't buy class."
But in reality I am guessing this is a bit of an initial infatuation/love-affair that won't be sustainable - some of the superfluous replies are becoming predictable and my ability to tolerate the hater's comments is quickly growing
well, my ability to tolerate your nastiness is completely gone. see ya. I'm so glad I don't know anyone like you in real life (or at least anyone I have to spend time with).
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
Thanks fuzzhead1506
So refreshing to actually get a helpful comment instead of the sanctimonious holier than thou vitriol
You only like it because it assumes there is truth to the insane notion that you can't cut your expenses enough to make a dent and are better off just chasing more money.
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A shame you don't get the reference to the classic
Oh? What did I miss? Enlighten me.
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A shame you don't get the reference to the classic
Oh? What did I miss? Enlighten me.
You missed the tete-a-tete re hunting squirrels and Carl Spackler hunting gophers, both on a golf course
What makes you think I missed that?
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My advice:
Use the country club or your 11 figure boss to your advantage these are things that, I imagine, very few people in our community have access to. Get yourself a 10% raise (in addition to the extra money that is soon coming your way - I think that is what I gathered) either by hob-nobbing with your buddies at the CC or ask for better compensation at your current gig.
THEN don't succumb to more lifestyle creep - bank every bit of the stuff that you earn on top of this. Sounds like you are currently super happy at your current level of spending. This would both be a lot easier than scaling down and would get you FIRE'd earlier. So, sure it is possible to have what you currently have and still retire early, but the efforts you have suggested are baby steps - I hate to sound like a broken record for the community, but I envision that baby steps aren't gonna get you there on your timeline.
While the spending category won't be tackled (one of the pillars of what is preached here, and probably why the OP has been attacked), savings will be tackled with this method (which is prolly the most important piece of getting to retirement) - eh? =)
Because I know *everyone* has read the Simple Math post!!
Thanks fuzzhead1506
So refreshing to actually get a helpful comment instead of the sanctimonious holier than thou vitriol
WE'RE holier than thou?!?!?! seriously, your condescension in posts like these:
I think you will find the services of people who are making a tremendous amount of money in finance are not available to you anyway, so your exercise in trying to direct your business towards those 'most worthy' will be one of futility.
is fucking nauseating. and you didn't need to be so sarcastic rude to Daisy in response to her comment about her brother. I don't think she was trying to be rude. I guess it's like Jay-Z says... "you can pay for school, but you can't buy class."
But in reality I am guessing this is a bit of an initial infatuation/love-affair that won't be sustainable - some of the superfluous replies are becoming predictable and my ability to tolerate the hater's comments is quickly growing
well, my ability to tolerate your nastiness is completely gone. see ya. I'm so glad I don't know anyone like you in real life (or at least anyone I have to spend time with).
I don't know if WF is who she says she is (this is the interwebs, I could be a 16 YO girl in my mom's basement and she could be an 80YO dude getting his kicks in the nursing home) and I don't care enough to try to find out. But if she is who she says she is then the condescension comes quite naturally and honestly. Consider: she is a member of the ruling class in 'Merica today. She went to the right schools, hobnobs with the goobersmoochers (hell, she is a goobersmoocher), belongs to the right clubs, has the right job, lives in the right place, and makes many times the income of the average 'Merkin. She is better than the hoi polloi, isn't it obvious?
What I cannot figure out is why she is here. Frugality and getting out of the rat race does not come naturally to members of the ruling class, to say the least. In the meantime, I would like to express my heartfelt appreciation that she and her confreres are carrying my share of the national debt on their backs.
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Your response which seemed to either miss the nuance or be completely irrelevant to what was being discussed and instead included some vague threat
lol. I'm not sure how it can be viewed as a "vague threat," but it sounds like you need to go rewatch Caddyshack.
https://www.youtube.com/watch?feature=player_detailpage&v=fZx4-LSG-eI#t=41
That's the line we quote all the time "We could do that. We don't even have to have a reason." as it's much more applicable to pretty much any situation.
Apparently you missed the nuance.
Thanks for the laugh though.
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Your response which seemed to either miss the nuance or be completely irrelevant to what was being discussed and instead included some vague threat
lol. I'm not sure how it can be viewed as a "vague threat," but it sounds like you need to go rewatch Caddyshack.
https://www.youtube.com/watch?feature=player_detailpage&v=fZx4-LSG-eI#t=41
That's the line we quote all the time "We could do that. We don't even have to have a reason." as it's much more applicable to pretty much any situation.
Apparently you missed the nuance.
Thanks for the laugh though.
Ah yes, but we're not all Mods (which might dictate a higher standard of response), now are we?
I'm not even sure wtf this means? Apparently it means you can berate me for missing a reference to a movie (which I didn't, I quoted the next applicable line), but I can't point out to you that it's from the same movie?
I'm a person. The moderator hat comes on when people are breaking site rules, and I clearly designate when I'm talking as a moderator.
You still didn't explain how "We can do that, we don't even have to have a reason" is a threat at all?
Seriously, I'm scratching my head on this post.. wtf does it mean?
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Wow. This thread has taken a turn. So interesting to read WF take on life. I think she was drinking a Pinot last night while posting. I do. Or maybe Merlot. Not a BotaBox(our new fav).
WF, no matter how fabulous your job is - one thing you cannot take back is spending time with your kids. Spending money on them does not replace spending time. And they grow up so darn fast. No I don't know your situation but what I wrote is true. And you have the financial resources to do that - many don't.
The thing I have learned in my short time on this forum is what matters - not stuff, not vacations, not houses,not fabulous educations, not fancy dinners - it's pretty simple - family and friends and time to really enjoy those( and in our family faith). The rat race we are on is a completely different sales job to what truly satisfies and it is so easy to buy into it all. And quite freeing to realize you don't have too and it is actually pretty simple to step off.
The people on this forum are a true wealth of knowledge if you want to learn and change. If not, then this is not a good place for you.
I still can't figure out if you are real or not? Oh well. You make for an interesting read.
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I must admit that I misread your initial response and didn't connect it to the movie until after I just sent that post and re-read what you actually wrote
My apologies
Ah, understood. Thank you, no harm done.
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I must admit that I misread your initial response and didn't connect it to the movie until after I just sent that post and re-read what you actually wrote
My apologies
Ah, understood. Thank you, no harm done.
You are gracious - and I am disappointed that I did not catch your classic reference initially (although reading and responding from iPhone is not always easy)
What we've got here is failure to communicate
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It must feel liberating to know you no longer have to use profanity and vulgar language to accuse others of nastiness and lack of class
This really isn't the right forum for getting on a high-horse about profanity.
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It must feel liberating to know you no longer have to use profanity and vulgar language to accuse others of nastiness and lack of class
This really isn't the right forum for getting on a high-horse about profanity.
I wondered if I was the only one to think this was an odd remark.
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I must admit that I misread your initial response and didn't connect it to the movie until after I just sent that post and re-read what you actually wrote
My apologies
Ah, understood. Thank you, no harm done.
You are gracious - and I am disappointed that I did not catch your classic reference initially (although reading and responding from iPhone is not always easy)
What we've got here is failure to communicate
Some [WestchesterFrugals] you just can't reach.
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well this has been an interesting read. All of it.
To the OP, I went to grad school at an Ivy, granted I work in publishing, so I'm not rolling in the $$, but I understand the seduction of prestige and interesting, influential people.
I also did a whole lot of 'fucking off' and being away from the university->professional work treadmill until I got serious at age 28.
The one thing I learned from that time away was what mattered to me.
It wasn't status, it wasn't stuff, and it sure made me realize that I'm happiest when surrounded by people I like/love and doing something interesting.
In any case, I'm obviously different than you and have made different choices and priorities in life. However, if I was to be magically transported in your shoes, I know exactly what I would do:
1. Keep the high paying jobs and continue to live in the same area.
2. Downsize the house. Is it possible to stay within the same area (for your kids sake) but live in a neighborhood where people don't give a shit about how your lawn looks? That would cut back on a lot of your costs. Maybe this doesn't make much $$ sense.
3. I'd take the kids out of private school. Again, that's just me. If there's excellent public schools in the area, then what's the point?
4. I'd ditch the country club membership. If you're going to be FE in less than a decade, do you really need the value that these connections will bring professionally? As for the other reasons - friendships and recreation - you can easily get this for a fraction of the cost elsewhere.
I can appreciate how entrenched you are in that life style, so changing things drastically is easier said that done.
Good luck.
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WF, I posed these questions earlier, but you may have missed them... Genuine curiosity here...
We don' t typically work more than 50-60 hours a week (including commuting time) and spend plenty of time with the kids.
How much of that time is for the commute? I work in the megabuck world of finance in Chicago, and 60 hour weeks are the norm, excluding commute time. And based solely on hearsay, the hours are even longer in NYC.
In our industry your reputation is actually more important than your actual results.
How do you establish the reputation in the first place?
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I nominate this thread as the #1 Sticky Thread in the "Antimustachian Wall of Shame and Comedy."
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lol this thread is heading towards a flame war. Granted WF is not "frugal" by mmm standards (might be frugal by wall-st standard, i dont know), but the odds seem pretty good that they can RE in 10 years while keeping their current life style mostly intact.
one poster mentioned about his fav whine, we had some grey monk pinot auxsomething last night, was pretty good.
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There was no attempt to humiliate, sorry if it appeared that way. I'm glad you're here and sharing your story, and I hope you'll stay despite the blowback you're getting (including from me).
I imagine calling folks here sycophants doesn't do much to change some of the prevailing opinions being formed on your situation or interactions. On the one hand, I sense a lot of confidence and accomplishment, but also a curious fragility which I think maybe brought you here. And I'm not particularly gifted at emotions. Anyway, carry on, and forgive my attempts at humor that felt like they were coming at your expense!
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but the odds seem pretty good that they can RE in 10 years while keeping their current life style mostly intact.
Wut? Their monthly outflow is north of $50,000. That requires $15MM, at minimum, and they're far from that.
Now, if they ER with lower expenses, as planned, they can do it but there's no way they can ER in 10 years and keep exactly the same lifestyle.
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I nominate this thread as the #1 Sticky Thread in the "Antimustachian Wall of Shame and Comedy."
Maybe one day I can be a sycophant who conforms to the patterns of this (MMM) world and can be sure to only post comments and replies that would allow me to 'fit in'
HA! That would be like hitting up a Honda forum and going on and on about your amazing Ferrari. You would start by saying how you love your car and how awesome it is but that, well, maybe you'd be happy with a Mercedes instead. Then they'd all tell you that Hondas are really swell and that you should consider one of those. Then you'd say that, well, you really love your Ferrari and you might keep it. After all, you have to impress your neighbors and whatnot. Then they'd keep saying how good Hondas are, and you'd get mad that they aren't listening to you about your Ferrari anymore. Then you'd get upset about how no one likes you and no one understands you and no one agrees with you and then you'd start insulting the members of the Honda forum, and one by one, you'd ostracize them to the point of not caring.
I'm not suggesting you aren't welcome here, but don't come to a forum about being frugal and then get upset when everyone on the forum suggests you try being frugal.
+1 though, because I had to look up sycophant.
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I nominate this thread as the #1 Sticky Thread in the "Antimustachian Wall of Shame and Comedy."
Maybe one day I can be a sycophant who conforms to the patterns of this (MMM) world and can be sure to only post comments and replies that would allow me to 'fit in'
HA! That would be like hitting up a Honda forum and going on and on about your amazing Ferrari. You would start by saying how you love your car and how awesome it is but that, well, maybe you'd be happy with a Mercedes instead. Then they'd all tell you that Hondas are really swell and that you should consider one of those. Then you'd say that, well, you really love your Ferrari and you might keep it. After all, you have to impress your neighbors and whatnot. Then they'd keep saying how good Hondas are, and you'd get mad that they aren't listening to you about your Ferrari anymore. Then you'd get upset about how no one likes you and no one understands you and no one agrees with you and then you'd start insulting the members of the Honda forum, and one by one, you'd ostracize them to the point of not caring.
I'm not suggesting you aren't welcome here, but don't come to a forum about being frugal and then get upset when everyone on the forum suggests you try being frugal.
+1 though, because I had to look up sycophant.
Yes, the purpose of your presence here is...unclear. This is a forum that helps people from all walks of life become more frugal to achieve their goals. You continually claim to be face blindingly happy with your current situation. So...I'm not sure what you are looking for. Some of us have indeed "conformed to the patterns of this (MMM) world", because it works for us. You make more in a month than I make in a year. So you're right, you don't have to cut your food budget, buy used cars, or worry about tracking how much you spend at the pharmacy each month. Good for you. I DO have to do those things, and frankly your flippant tone is obnoxious.
The kind advice from the people in this forum has given me the knowledge and tools to save over 50% of my income and ensure an early retirement. I have learned about investing and taxes, and I've also made some pretty cool friends. I don't begrudge you for your income level- there are many high earners on this site, the difference is that they don't seem to look down their nose at everyone the way that you do.
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I think this has been a really interesting discussion and give and take. The original poster is apparently seeking to engage in a discussion, and see what changes she can make. She has a prestigious education, high paying job, and a high net worth. She isn't entering into the discussion from a position of extreme weakness or dissatisfaction. Does anybody really expect her to receive advice and immediately say, "Yes, thank you, I'll implement everything immediately." ????
A friend of mine had a heart attack and immediately became vegan. I have some unsatisfactory health, but I'm not having a heart attack, or near one, as far as I know. My path to vegan is much more gradual.
Let's all give each other a break. People who think and live and act exactly like me are the most boring people in the world.
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It must feel liberating to know you no longer have to use profanity and vulgar language to accuse others of nastiness and lack of class
This really isn't the right forum for getting on a high-horse about profanity.
Yes! Praise Jesus. I love me a good F---U!
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I think this has been a really interesting discussion and give and take. The original poster is apparently seeking to engage in a discussion, and see what changes she can make. She has a prestigious education, high paying job, and a high net worth. She isn't entering into the discussion from a position of extreme weakness or dissatisfaction. Does anybody really expect her to receive advice and immediately say, "Yes, thank you, I'll implement everything immediately." ????
A friend of mine had a heart attack and immediately became vegan. I have some unsatisfactory health, but I'm not having a heart attack, or near one, as far as I know. My path to vegan is much more gradual.
Let's all give each other a break. People who think and live and act exactly like me are the most boring people in the world.
No. I think the objection comes more from the statements about how much more fabulously interesting and worth knowing Ivy-educated, high-earning country club members are than the unwashed middle class state-schoolers. The OP wants her children to be "rubbing shoulders" with other connected children at elite schools, and the elitist attitude tends to set people's teeth on edge. This has been an interesting thread, and I've come away feeling glad that I don't need to maintain any particular membership or image to meet interesting people or do things I enjoy.
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This guy is a real piece of work. His condescension and aggressiveness is so exhausting to read that I gave up after two pages. He's just here to brag about his lifestyle. I'm an Ivy grad and very few people behave like this.
Edit: appears OP is a woman. adjust gender pronouns above
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What would happen if one or both of you had to stop working?
My observation is that you are very enmeshed in the lifestyle and it would take something extreme to make a real change.
I wish for you and your family to have the peace of mind of not always having to do more or keep up. You are used to that pressure, but it's there nonetheless and will always be for your kids.
Maybe think more about the WHY before figuring out the HOW details.
Good luck!
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I don't have time to read all these posts, but as far as I can see you haven't been saving at all. You have a grand total of $250K invested, which is a quarter of your annual salary and not even enough for a six month emergency fund at your current spending level. (401Ks are automatic and subject to withdrawal rules. I don't count deferred compensation or home equity until it is monetized and invested.) I suggest you cut your spending and get saving. If you want to retire at your current spending rate of $1MM/yr, you will need $25MM. I think you are going to be working a long time!
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Right now you seem to value cultivating fake friendships, keeping up appearances to those fake friends (and yes they're fake because you said yourself they would leave as soon as you stop spending) and that is pretty much your life. You mention very little about your spouse/family in your posts so I assume your family life isn't that great.
It's compensatory narcissism at work here. Status anxiety is at the root of it.
It is not something that people from a group that values badassity and bestows status based upon it will relate to very well.
Then add to that the upper class attitude to money prevalent in this community and you get this monster of a thread when a high income wage slave with a lower class attitude shows up.
Peter
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Looks like the OP disappeared (all the text from the original post is removed, and there are no responses from that user. Now like JoeT, we'll be left to speculate why!
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Well, I for one get some sick pleasure from the shitshow that ensues from time to time when one of these unrepentant big spenders shows up here. I will miss WesterchesterFrugal.
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Looks like the OP disappeared (all the text from the original post is removed, and there are no responses from that user. Now like JoeT, we'll be left to speculate why!
Looks like they just deleted most of their posts (went from 200+ to 10), but the account remains active...
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That's okay. WF's posts in Investor Alley are reasonably productive (even if I don't totally agree with them). Here's hoping they stick around...
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Looks like the OP disappeared (all the text from the original post is removed, and there are no responses from that user. Now like JoeT, we'll be left to speculate why!
Looks like they just deleted most of their posts (went from 200+ to 10), but the account remains active...
Man, I kinda saw that coming and considered archiving the thread for posterity, but never pulled the trigger.
Right now you seem to value cultivating fake friendships, keeping up appearances to those fake friends (and yes they're fake because you said yourself they would leave as soon as you stop spending) and that is pretty much your life. You mention very little about your spouse/family in your posts so I assume your family life isn't that great.
It's compensatory narcissism at work here. Status anxiety is at the root of it.
It is not something that people from a group that values badassity and bestows status based upon it will relate to very well.
Then add to that the upper class attitude to money prevalent in this community and you get this monster of a thread when a high income wage slave with a lower class attitude shows up.
Peter
Super nouveau riche
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Looks like the OP disappeared (all the text from the original post is removed, and there are no responses from that user. Now like JoeT, we'll be left to speculate why!
Looks like they just deleted most of their posts (went from 200+ to 10), but the account remains active...
This used to happen a lot at Early-Retirement.org. Posters would get bashful about sharing too much on the Internet, or someone would have a hissy fit and delete their posts before flouncing off, or a troll/astroturfer would be outed and decide to push their "reset" button. It was frustrating because it'd make some threads look like Swiss cheese while other posters wouldn't be able to look up a deleted post or link.
vBulletin software comes with an adjustable "Modify" setting. Posters could edit their posts for something like an hour, but after that they couldn't modify them (let alone delete them). I don't know whether SMF comes with the same tweak.
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Looks like the OP disappeared (all the text from the original post is removed, and there are no responses from that user. Now like JoeT, we'll be left to speculate why!
Looks like they just deleted most of their posts (went from 200+ to 10), but the account remains active...
This used to happen a lot at Early-Retirement.org. Posters would get bashful about sharing too much on the Internet, or someone would have a hissy fit and delete their posts before flouncing off, or a troll/astroturfer would be outed and decide to push their "reset" button. It was frustrating because it'd make some threads look like Swiss cheese while other posters wouldn't be able to look up a deleted post or link.
vBulletin software comes with an adjustable "Modify" setting. Posters could edit their posts for something like an hour, but after that they couldn't modify them (let alone delete them). I don't know whether SMF comes with the same tweak.
I'm not a huge fan of that method, I generally like posters having control of their own content personally. It is unfortunate when a user goes nuclear.
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I only read like the first and last pages so I'm disappointed this evaporated before I got a chance to digest the whole saga. Only some of the pages are available in Google cache (attached).
For future reference, I note that archive.org has a really handy "archive this page now" feature that I intend to use more often.
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another page
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Strong indication to me the OP wasn't a troll.
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I don't think she was a troll. Honestly, it's s shame and I'm disappointed. I gave her credit for having bigger balls than that. (Apologies for the crude analogy.) I think, had all of the condescension/defensiveness from her and general vomitus/angry response from others sorted itself out, both sides could have learned a lot from each other. It's a shame.
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locking by request of OP, since this thread clearly isn't going anywhere anymore