Author Topic: Reader Case Study - Do I need more goals?  (Read 3994 times)

YTProphet

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Reader Case Study - Do I need more goals?
« on: March 24, 2016, 09:20:17 AM »
**Accidentally posted to the Welcome and General Discussion page so had to delete there and move this here**
When I first got hooked on Mr. Money Mustache, I was in the throes of paying off a mountain of debt. I had drive, passion, and momentum. I was determined to pay off the debt quicker than anyone expected and worked my butt off to achieve that goal.

The debt did get paid off quicker than anyone expected, but the drive, passion, and momentum seem to have disappeared along with the Fannie Mae payments.

My next goal is obviously FIRE, but that's a long way off. I know people talk about setting small goals along the way and celebrating those, but it's hard for me to do that. I just won't be satisfied until I reach a point where my life will actually change as a result of my work. Any advice? I think I may need some other life goals in the interim.

Here are the numbers:
Annual income: $125,000 plus possible bonus of up to 10% (I expect maybe a few thousand next month as my company had some issues overseas that drove down profitability)

Assets:
-$275,000 house
-$25,000 car 1
-$25,000 spouse rIRA
-$28,000 my 401k
-$16,500 my rIRA
-$90,000 checking acct (this is abnormally high because we'll probably move soon so we need a down-payment...normally would have $10k here)
-$20,000 savings acct (emergency fund)
Total $479,500

Liabilities
-$154,500 mortgage
-$160/month lease payment on car 2 (won't count this in net worth, but it's kind of a liability)
Total $154,500

Total Net Worth $325,000

Average monthly expenses
$1,250 mortgage
$40 cable
$25 cell phone
$150 utilities
$800 groceries (multiple kids...plus we like to eat very well)
$400 blow money ($200 each and includes eating out as a family)
$500 charity (non-negotiable)
$150 miscellaneous (diapers, oil changes, toiletries, etc)
$250 insurance (life, auto, etc)
$30 gym
$3,595 (plus we usually have things like weddings or unexpected expenses of a hundred or two)

This generally means I save around $2,000/month plus max out my retirement contributions.
« Last Edit: March 24, 2016, 09:22:53 AM by YTProphet »

neo von retorch

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Re: Reader Case Study - Do I need more goals?
« Reply #1 on: March 24, 2016, 10:09:41 AM »
There's an article by MMM called Give Yourself The Gift of Not Worrying About Money.

Basically... you have other interests. You have a little more time to spend focusing on them. Passion and drive and momentum comes from finding things where you can get in the flow, where you can learn (almost) every time you apply yourself, where you make progress and grow and get better and enjoy seeing where you're going, where you can have little wins. Beyond debt repayment, what are your interests?

dinkhelpneeded

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Re: Reader Case Study - Do I need more goals?
« Reply #2 on: March 24, 2016, 11:30:47 AM »
Off the top
-Lower your grocery bill to $500 for starters
-Lower your blow money
-If the satisfaction you get from charity > time to FI, then you are totally justified.

My advice is
1. yes its depressing to count the number of years, count it once, accept it, and then decide to live your life.
2. Dont upgrade anything (home included) and calculate how long it will take you to FIRE. Then do the math with the upgrade.
3. The journey is also important since this is a long time horizon, put your savings on auto-pilot, and go do fun things, learn, try not to obsess.
4. Revisit your non-negotiables - weddings, gifts, groceries, birthdays every damn thing you thought was previously non-negotiable.
5. Try out "projects" with your family - camping, "no eat out week", "no shopping month", "no trash week", keep it interesting
6. Keep increasing your 401k contribution by 1% every 2-3 months and see how your family does with the change

gecko10x

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Re: Reader Case Study - Do I need more goals?
« Reply #3 on: March 24, 2016, 11:41:00 AM »
There's an article by MMM called Give Yourself The Gift of Not Worrying About Money.

Basically... you have other interests. You have a little more time to spend focusing on them. Passion and drive and momentum comes from finding things where you can get in the flow, where you can learn (almost) every time you apply yourself, where you make progress and grow and get better and enjoy seeing where you're going, where you can have little wins. Beyond debt repayment, what are your interests?

This. Put the habits and tools you need to get to FIRE on auto, forget about it, and live your life. Easier said than done for sure, but I think that's what it boils down to. I am working through the same thing.

YTProphet

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Re: Reader Case Study - Do I need more goals?
« Reply #4 on: March 24, 2016, 12:43:14 PM »
Off the top
-Lower your grocery bill to $500 for starters
-Lower your blow money
-If the satisfaction you get from charity > time to FI, then you are totally justified.

My advice is
1. yes its depressing to count the number of years, count it once, accept it, and then decide to live your life.
2. Dont upgrade anything (home included) and calculate how long it will take you to FIRE. Then do the math with the upgrade.
3. The journey is also important since this is a long time horizon, put your savings on auto-pilot, and go do fun things, learn, try not to obsess.
4. Revisit your non-negotiables - weddings, gifts, groceries, birthdays every damn thing you thought was previously non-negotiable.
5. Try out "projects" with your family - camping, "no eat out week", "no shopping month", "no trash week", keep it interesting
6. Keep increasing your 401k contribution by 1% every 2-3 months and see how your family does with the change
I guess it may not even be that I want to retire. I think it's just that I want to do something where I'm more in control. I'm just too much of a fraidy cat to do it.

ooeei

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Re: Reader Case Study - Do I need more goals?
« Reply #5 on: March 24, 2016, 01:16:31 PM »
Off the top
-Lower your grocery bill to $500 for starters
-Lower your blow money
-If the satisfaction you get from charity > time to FI, then you are totally justified.

My advice is
1. yes its depressing to count the number of years, count it once, accept it, and then decide to live your life.
2. Dont upgrade anything (home included) and calculate how long it will take you to FIRE. Then do the math with the upgrade.
3. The journey is also important since this is a long time horizon, put your savings on auto-pilot, and go do fun things, learn, try not to obsess.
4. Revisit your non-negotiables - weddings, gifts, groceries, birthdays every damn thing you thought was previously non-negotiable.
5. Try out "projects" with your family - camping, "no eat out week", "no shopping month", "no trash week", keep it interesting
6. Keep increasing your 401k contribution by 1% every 2-3 months and see how your family does with the change
I guess it may not even be that I want to retire. I think it's just that I want to do something where I'm more in control. I'm just too much of a fraidy cat to do it.

If you don't want to sacrifice in order to achieve financial independence, that's fine.  Plenty of smart, happy people live every day without pursuing FI.  Generally on this forum it's a high priority, but you need to decide where it sits in your list of stuff you want to do. 

YTProphet

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Re: Reader Case Study - Do I need more goals?
« Reply #6 on: March 24, 2016, 01:20:02 PM »
Off the top
-Lower your grocery bill to $500 for starters
-Lower your blow money
-If the satisfaction you get from charity > time to FI, then you are totally justified.

My advice is
1. yes its depressing to count the number of years, count it once, accept it, and then decide to live your life.
2. Dont upgrade anything (home included) and calculate how long it will take you to FIRE. Then do the math with the upgrade.
3. The journey is also important since this is a long time horizon, put your savings on auto-pilot, and go do fun things, learn, try not to obsess.
4. Revisit your non-negotiables - weddings, gifts, groceries, birthdays every damn thing you thought was previously non-negotiable.
5. Try out "projects" with your family - camping, "no eat out week", "no shopping month", "no trash week", keep it interesting
6. Keep increasing your 401k contribution by 1% every 2-3 months and see how your family does with the change
I guess it may not even be that I want to retire. I think it's just that I want to do something where I'm more in control. I'm just too much of a fraidy cat to do it.

If you don't want to sacrifice in order to achieve financial independence, that's fine.  Plenty of smart, happy people live every day without pursuing FI.  Generally on this forum it's a high priority, but you need to decide where it sits in your list of stuff you want to do.
Oh, I want financial independence. I just don't want to retire early (in the everyday sense of retirement). I realize FIRE to most people doesn't mean stopping working, it means doing what you want. And that's what I care most about. Just don't know exactly what I want to do.

ooeei

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Re: Reader Case Study - Do I need more goals?
« Reply #7 on: March 24, 2016, 01:35:57 PM »
Off the top
-Lower your grocery bill to $500 for starters
-Lower your blow money
-If the satisfaction you get from charity > time to FI, then you are totally justified.

My advice is
1. yes its depressing to count the number of years, count it once, accept it, and then decide to live your life.
2. Dont upgrade anything (home included) and calculate how long it will take you to FIRE. Then do the math with the upgrade.
3. The journey is also important since this is a long time horizon, put your savings on auto-pilot, and go do fun things, learn, try not to obsess.
4. Revisit your non-negotiables - weddings, gifts, groceries, birthdays every damn thing you thought was previously non-negotiable.
5. Try out "projects" with your family - camping, "no eat out week", "no shopping month", "no trash week", keep it interesting
6. Keep increasing your 401k contribution by 1% every 2-3 months and see how your family does with the change
I guess it may not even be that I want to retire. I think it's just that I want to do something where I'm more in control. I'm just too much of a fraidy cat to do it.

If you don't want to sacrifice in order to achieve financial independence, that's fine.  Plenty of smart, happy people live every day without pursuing FI.  Generally on this forum it's a high priority, but you need to decide where it sits in your list of stuff you want to do.
Oh, I want financial independence. I just don't want to retire early (in the everyday sense of retirement). I realize FIRE to most people doesn't mean stopping working, it means doing what you want. And that's what I care most about. Just don't know exactly what I want to do.

In that case, the obvious things to cut (or at least categorize more specifically for further review) are:

-$800 groceries (multiple kids...plus we like to eat very well)
-$400 blow money ($200 each and includes eating out as a family)
-$500 charity (non-negotiable)
-$150 miscellaneous (diapers, oil changes, toiletries, etc)
-(plus we usually have things like weddings or unexpected expenses of a hundred or two)
-$25,000 car 1
-$160/month lease payment on car 2 (won't count this in net worth, but it's kind of a liability)

Remember to look at these things long term.  For monthly expenses, multiply by ~173 for value over 10 years compounded at 7%.

If we list the cost of each of these expenses per decade, it may be easier to see the value in cutting them back. 
-$138,400 groceries (multiple kids...plus we like to eat very well)
-$69,200 blow money ($200 each and includes eating out as a family)
-$86,500 charity (non-negotiable)
-$25,950 miscellaneous (diapers, oil changes, toiletries, etc)
-$34,600 (assuming $200/month)(plus we usually have things like weddings or unexpected expenses of a hundred or two)
Grand Total:  $354,650

If you cut each of those things in half, that's an extra $177,325 after tax dollars you will have in 10 years.  At your current savings rate, that's 3-4 years of savings.   

-Cars I didn't do this calculation with, since it's a more complicated equation. I'd consider downgrading the $25,000 car though.

Food for thought.