Author Topic: I need a million dollars, please (calculating FIRE)  (Read 6632 times)

SingleMomDebt

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I need a million dollars, please (calculating FIRE)
« on: June 21, 2014, 01:58:53 PM »
Used Vanguard's Retirement Calculator https://personal.vanguard.com/us/insights/retirement/withdrawal-in-retirement-tool

Thinking: $27,000/yr to live on or $2,270

How Long: 40 years in retirement

Current Net Worth: $27K

The Thinking is just a guesstimate based on current living expenses at a reduced rate. It could very well be much lower by the time of retirement after I earn my Mustachian Badge (calculation based on achieving FIRE in 9 years) .

Women - according to many - live longer. So I calculated 40 years in retirement. That will give me until I am 90. Plus, even at FIRE, I would still be working on setting up passive income streams, but at my own luxury. Which would cushion me if I lived longer or endured increases health expenses in my elder age.

In 9 years I will be 50. That would be a grand 50th birthday present, right? "See ya, I'm retiring".

I need a million dollars, I need a PLAN.... hmmmm... Advice?

Buy land, buy a house, keep saving, keep investing? is there a magic investment package I should be diversify in?

Years:

1-3: eradicate the debt of $60K (writing this post, I now see why I really need to eradicate this quickly)
3-9: ???

Am I thinking to fiercely? Nah!
« Last Edit: June 21, 2014, 02:10:15 PM by singlemomdebt »

Jennifer in Ottawa

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Re: I need a million dollars, please (calculating FIRE)
« Reply #1 on: June 21, 2014, 02:10:57 PM »
You don't need a million dollars.

If you want 27k per year to live off of, you need income producing assets of 675k, earning 4% per year.  It will last you the rest of your life, even should you live to 130.

Thedudeabides

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Re: I need a million dollars, please (calculating FIRE)
« Reply #2 on: June 21, 2014, 02:10:59 PM »
Woot! Congrats! First, anything is possible. Now that you have a goal, just need to figure out how to get there.

It's difficult to provide detailed advice without knowing more details such as income, debt, expenses, etc.

Could you provide some additional details?

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #3 on: June 21, 2014, 02:19:41 PM »
You don't need a million dollars.

If you want 27k per year to live off of, you need income producing assets of 675k, earning 4% per year.  It will last you the rest of your life, even should you live to 130.

I did that calculation, too. 27000/0.04 = 675000 
Wonder why Vanguards Calc put me at 1,000,000. Prob because I chose 'conservative' rate of return. What about inflation rates?
625K does sound more achievable at this time, given the time i have to reach the goal.
« Last Edit: June 21, 2014, 02:35:39 PM by singlemomdebt »

Jennifer in Ottawa

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Re: I need a million dollars, please (calculating FIRE)
« Reply #4 on: June 21, 2014, 02:27:49 PM »
You don't need a million dollars.

If you want 27k per year to live off of, you need income producing assets of 675k, earning 4% per year.  It will last you the rest of your life, even should you live to 130.

I did that calculation, too. 27000/0.04 = 625000 
Wonder why Vanguards Calc put me at 1,000,000. Prob because I chose 'conservative' rate of return. What about inflation rates?
625K does sound more achievable at this time, given the time i have to reach the goal.

They may be factoring in dividend taxes and a higher possible rate of inflation.  Thing is though, as you near the end of your expected range you can draw down your principal unless you are planning to bequeath your 625k to someone.  Also, you may very well experience higher rates of return in the future, thus giving you more than your projected requirement of 27k.
« Last Edit: June 21, 2014, 02:39:59 PM by Jennifer in Ottawa »

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #5 on: June 21, 2014, 02:29:47 PM »
Woot! Congrats! First, anything is possible. Now that you have a goal, just need to figure out how to get there.

It's difficult to provide detailed advice without knowing more details such as income, debt, expenses, etc.

Could you provide some additional details?

Thank you. I think the best part is having a goal. And hoping my kids will learn from my experiences, too.

Income: $72K
Retirement: $86K
Debt: $61K
Expenses:
you can find out more here
But after the debt is paid, I will have $800/mth to allot towards something good.
« Last Edit: December 02, 2017, 10:40:17 PM by Moonrise »

MrsPete

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Re: I need a million dollars, please (calculating FIRE)
« Reply #6 on: June 21, 2014, 10:15:11 PM »
Okay, so you have a net worth of 27K plus 86K in a retirement account . . . but 61K of debt and no real estate investment as of yet, your expenses are pretty high (though LOTS of fat you can cut), and your kids are reaching an expensive age. 

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change.  How are you planning to make this happen?   

Looking at your other thread, where you mention expenses, I suggest you start with these ideas:

- Look for a rental that's cheaper than 1600/month.
- Slash your grocery bill by half.  It's possible. 
- Your gas bill is high.  I'm assuming that's gasoline for the car, not heating oil.  What options do you have for transportation?
- Your car expenses confuse me:  If you're paying 334/month for a car, it should be fairly new -- but you're paying 125 in maintenance each month?  What's up with the car? 
- You're bleeding money as high as 20% . . . but you're tucking away money into savings?  While I'm strongly pro-saving, I'd vote for digging yourself out of debt as fast as possible.  You can never get ahead while you're paying all this interest.

In the whole, entire world, only two ways exist to escape this situation:  1) Earn more money.  2) Spend less money. 
You need to incorporate both methods. 

- Are you receiving any child support?  If not, is this a possibility?  No matter how distasteful it might be, you should pursue it. 
- What options do you have for bringing home more money?  This is tough when you're the only parent at home, but think creatively -- what options do you have?
- Spending less may be easier for you than earning more.  You can find loads of ways to cut your grocery bill, reduce gift-giving, reduce meals out, reduce luxuries of all types. 



johnintaiwan

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Re: I need a million dollars, please (calculating FIRE)
« Reply #7 on: June 22, 2014, 04:33:01 AM »

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change. 


I was thinking the same thing

warfreak2

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Re: I need a million dollars, please (calculating FIRE)
« Reply #8 on: June 22, 2014, 04:59:07 AM »

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change. 


I was thinking the same thing
This appears to have been calculated assuming a current net worth of $52, rather than $52K! Also, as others mentioned, $1MM is considerably more than enough.

If you want to retire in 9 years, then according to the Shockingly Simple Math you need a savings rate of about 65%-70%. Therefore, you need an income of about $80k if your expenses are $27k/year. (Closer to 65% than 70% because you already have about one year's savings.) So, if your income is $80k then this is a reasonable goal, but of course it's not going to be easy.

arebelspy

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Re: I need a million dollars, please (calculating FIRE)
« Reply #9 on: June 22, 2014, 11:34:53 AM »

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 948,000 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change. 

(Math tweaked.)

100% agree.  It's nice that you say you want to reach this number, but the reality of the situation is you don't have a goal.  You have a dream.

You need a plan to actually get there, or it will stay that way.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #10 on: June 22, 2014, 12:20:26 PM »
Okay, so you have a net worth of 27K plus 86K in a retirement account . . . but 61K of debt and no real estate investment as of yet, your expenses are pretty high (though LOTS of fat you can cut), and your kids are reaching an expensive age. 

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change.  How are you planning to make this happen?   

Looking at your other thread, where you mention expenses, I suggest you start with these ideas:

Thank you MrsPete. Just the kind of response I was hoping for. Expensive ages you are not kidding.

- Finding anything cheaper regarding rent is slim
- Grocery bill is definitely a possibility at slashing. That is one I can definitely do, while still eating hearty.
- Yes, this is auto gas. I thought about ways to cut this. Hypermiling, maybe. But I started thinking that its feasible to walk and bike to the areas that are local. Not to mention it would slow life down to savor and help me build healthy habits.
- $125/mth auto includes: $900/annual insurance; $200 registration costs; and oil changes, tire rotation and any other minor services.


Child support is not a option.

Thank you for your feedback. Very valuable to me.
« Last Edit: December 02, 2017, 10:41:01 PM by Moonrise »

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #11 on: June 22, 2014, 12:28:55 PM »

I'm going to ask a tough question:  In your first 41 years of life, you've accumulated roughly 52K.  That's your assets minus your debt.  And you're hoping to accumulate 999,948 in 9 more years.  This is a steep challenge for anyone, and it will require a lot of change. 


I was thinking the same thing

Another option: Its also possible I could leave at 50 with a savings of 675K (27K/0.04). While reaching FI @ that point and calling it quits to my current place of employment, its my intention to work as a luxury building passive income streams, side incomes, etc...

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #12 on: June 22, 2014, 12:34:22 PM »
If you want to retire in 9 years, then according to the Shockingly Simple Math you need a savings rate of about 65%-70%. Therefore, you need an income of about $80k if your expenses are $27k/year. (Closer to 65% than 70% because you already have about one year's savings.) So, if your income is $80k then this is a reasonable goal, but of course it's not going to be easy.

Thank you for the info, warfreak2. Its that damn debt of mine. Will eradicate with brute force.
This gives me of an idea of what needs to be done.  again, thank you. The income portion not an issue and I know how to be frugal. you help me realize this goal of mine is a possibility beyond what i can see. I love the invaluable resources available in this forum.

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #13 on: June 22, 2014, 12:38:00 PM »
100% agree.  It's nice that you say you want to reach this number, but the reality of the situation is you don't have a goal.  You have a dream.

You need a plan to actually get there, or it will stay that way.

And a plan is what I'm divising - hence putting my question out here on the forum. i need the to soak up the knowledge of those ahead of me. ;)

arebelspy

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Re: I need a million dollars, please (calculating FIRE)
« Reply #14 on: June 22, 2014, 12:46:44 PM »
100% agree.  It's nice that you say you want to reach this number, but the reality of the situation is you don't have a goal.  You have a dream.

You need a plan to actually get there, or it will stay that way.

And a plan is what I'm divising - hence putting my question out here on the forum. i need the to soak up the knowledge of those ahead of me. ;)

I suppose.  I don't see it.   I guess at most you're making one in a backwards way.  Saying "I need a million please" isn't a plan.  And saying:
Quote
1-3: eradicate the debt of $60K (writing this post, I now see why I really need to eradicate this quickly)
3-9: ???

Won't get you there.  If it takes two of your 9 years to eradicate 60k of debt, Then you can reasonably expect to save 60k every 2 years, or 210k in the 7 years following that (ignoring compound interest, just simple savings).  Maybe slightly more due to not paying interest anymore.  That will leave you with a net worth of ~297k (27k current according to OP + 60k in debt reduction that is dragging down that 52k current + 210k savings years 3-9).  That would support a FIRE income of just under $12,000 annually at a 4% SWR.

So like I said, I'm not seeing it.  Either way though, okay, if you're ready to come up with a plan, let's work through it.  :)

Step 1: Figuring out expenses in FIRE.

How did you come up with the 27k income needed in FIRE mentioned in the OP?  Is that what you're spending now?

If yes, we'll proceed to the next step. If no, how did you come up with that number?
« Last Edit: June 22, 2014, 12:50:46 PM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #15 on: June 22, 2014, 01:20:40 PM »
I suppose.  I don't see it.   I guess at most you're making one in a backwards way.  Saying "I need a million please" isn't a plan.  And saying:
Quote
1-3: eradicate the debt of $60K (writing this post, I now see why I really need to eradicate this quickly)
3-9: ???

Won't get you there.  If it takes two of your 9 years to eradicate 60k of debt, Then you can reasonably expect to save 60k every 2 years, or 210k in the 7 years following that (ignoring compound interest, just simple savings).  Maybe slightly more due to not paying interest anymore.  That will leave you with a net worth of ~297k (27k current according to OP + 60k in debt reduction that is dragging down that 52k current + 210k savings years 3-9).  That would support a FIRE income of just under $12,000 annually at a 4% SWR.

So like I said, I'm not seeing it.  Either way though, okay, if you're ready to come up with a plan, let's work through it.  :)

Step 1: Figuring out expenses in FIRE.

How did you come up with the 27k income needed in FIRE mentioned in the OP?  Is that what you're spending now?

If yes, we'll proceed to the next step. If no, how did you come up with that number?

That's a far cry from the $999K I need. I see where you are coming from.

The 27K was just a guesstimate based on expenses already accrued this year x 2 minus approx 7K. 7K is just again a guesstimate on reduced expenses. I probably could live on much lower expenses considering I just want a simply mountain home. but have not gone as far figuring out real expenses.

So I will need to considerably raise my income streams. Be blessed with good investment returns, increase entrepreneurship opportunities, etc... This is what I was hoping to find out more about - what people are doing to raise their assets.

There is also the possibility of obtaining FI with a savings of $675K, assuming 27K annual living expenses. Then building income streams, on my own time, that would help bring in the remainder of desired income. Which would lengthen the goal. But make it more reachable.

Thank you, arebelspy. I appreciate the feedback.

Jags4186

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Re: I need a million dollars, please (calculating FIRE)
« Reply #16 on: June 22, 2014, 01:42:20 PM »
SMG,

I hate to be a Debbie Downer but from everything I've read in this thread and your journal, FI at 50 seems impossible. You don't want to cut many of your expenses, you have a children who are going to become more expensive, and you carry large debt. If you take hold of things now you can have a great retirement, but early retirement just doesn't seem very possible unless you drastically increased your income and save your butt off.

Best of luck.

arebelspy

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Re: I need a million dollars, please (calculating FIRE)
« Reply #17 on: June 22, 2014, 01:47:08 PM »
The 27K was just a guesstimate based on expenses already accrued this year x 2 minus approx 7K. 7K is just again a guesstimate on reduced expenses. I probably could live on much lower expenses considering I just want a simply mountain home. but have not gone as far figuring out real expenses.

Okay.  So that's step one.  Talk (type) out loud and walk us through your FIRE expenses as close as you can figure (rather than a random guesstimate, but something like "I spend X on gas commuting, so that will be gone, clothes budget will be reduced in half due to not needing more professional expensive clothes, travel budget will go up from Y to Z, because I want to travel more than my one vacation/year, kids expenses will do this... etc. etc."), and hopefully we can help you with anything you may have forgotten, etc.

Everything in a plan like this starts with FIRE expenses.  Try to figure them as best as possible.  Otherwise you're starting with a wild guess, then picking a dream number from there, and have no hope of actually coming up with a solid plan and feasible steps to get there. 

So.. step one.  FIRE budget.

:)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

SingleMomDebt

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Re: I need a million dollars, please (calculating FIRE)
« Reply #18 on: June 22, 2014, 01:54:32 PM »
SMG,

I hate to be a Debbie Downer but from everything I've read in this thread and your journal, FI at 50 seems impossible. You don't want to cut many of your expenses, you have a children who are going to become more expensive, and you carry large debt. If you take hold of things now you can have a great retirement, but early retirement just doesn't seem very possible unless you drastically increased your income and save your butt off.

Best of luck.

Jags4186, not a debbie downer at all. It is a lofty goal. but its been done before by others. the reality is it's possible. I just need to find out and execute the answer. which in itself will mean bringing in more income and if I keep moving forward with my intentions, let go of the outcome, and keep the strong faith... who knows. I might just get there. ;)

forward

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Re: I need a million dollars, please (calculating FIRE)
« Reply #19 on: June 22, 2014, 05:48:06 PM »

I for one want to congratulate you SMD, in the span of a handful of posts it appears you are learning a lot.  You have a long way to go but you are right that you have a great income and you are starting down the right path.  I like your attitude, keep it up.

Thedudeabides

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Re: I need a million dollars, please (calculating FIRE)
« Reply #20 on: June 22, 2014, 06:27:43 PM »


I for one want to congratulate you SMD, in the span of a handful of posts it appears you are learning a lot.  You have a long way to go but you are right that you have a great income and you are starting down the right path.  I like your attitude, keep it up.

Couldn't agree more. Love the attitude. Don't get discouraged.