Author Topic: What's wrong with this thinking?  (Read 3936 times)

saveriam

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What's wrong with this thinking?
« on: March 16, 2014, 11:03:58 AM »
I Would like to get some feedback or comments.

My wife and I are both in our mid 30s and have always been a heavy saver since college and never really read any saving books/websites until I came across MMM.  My believe is 'work hard, save hard, and play hard'. 

The stats

- Dual income with two kids (8,10) - base income of ~200k/year
- Annual Retirement Savings       - ~50k/year in 401k/Roth
- Retirement Account(s)             - ~650k + State Pension ~ 1k/month
- Investment Account(s)             - ~100k stocks + 2 rental properties (~100k total - all paid)
- Liabilities                 - ~120k mortgage (250k value)

I have no debt except a mortgate.

Our take home (paycheck + rental) after all deduction for retirement, HSA, etc... is ~9500/month
Our total monthly expense including a $1700 mortgage + 1300 additional princ payment is ~5500/month

So I figure I have $4000 a month to 'play hard'.  From the $4000, I allocated $2500/month for family vacation.  The entire family enjoys traveling to different location and we are very adventurous.  So that leaves $1500 for us just to enjoy whatever we want a month - any leftover we put into our emergency fund which is at $20k.

I feel, with my current financial situation, if both of us working for another 10 years, and continue to follow this saving pattern and with a modest return of just 5%, we would easily have over $2M in our retirement account by 60.  I do enjoy my job so I don't plan to retire until I'm 60. My wife does want to quit her teaching job.  My job  is work at home and does allow for flexiblity as well as a ton of time to spend with the family so I have no plans to leave the job.

I would appreciate any comments/feedback/thoughts?

Cheddar Stacker

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Re: What's wrong with this thinking?
« Reply #1 on: March 16, 2014, 11:18:46 AM »
Financially you are doing quite well for yourself and I don't think $2M in your retirement accounts will be hard to accomplish, so good job there. I would encourage you to discuss your wife's job with her right away to see how long she really wants to work, because it doesn't seem like you need the money.

In keeping with the theme of this website and forum I have some questions for you to consider, not necessarily to answer:

1) Are you happy with your current lifestyle?
2) How big is your carbon footprint?
3) Are you teaching your children to be savers, to keep an open mind, to respect the earth, and its inhabitants?

I understand the work hard/play hard mentality since I spent my 20's that way. I've found greater happiness/peace lately with a less consumptive, less stressful, less busy lifestyle.

I'm not trying to infer anything about your lifestyle, simply wondering what brought you to the forum and led you to post this data. Welcome to the forum, and good luck finding what you're looking for.

saveriam

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Re: What's wrong with this thinking?
« Reply #2 on: March 16, 2014, 11:29:02 AM »
Cheddar Stacker, thanks for the reply and some really good questions for me to think about, this is why I post here to get some different perspective from like minded people.

Metta

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Re: What's wrong with this thinking?
« Reply #3 on: March 16, 2014, 11:51:04 AM »

I feel, with my current financial situation, if both of us working for another 10 years, and continue to follow this saving pattern and with a modest return of just 5%, we would easily have over $2M in our retirement account by 60.  I do enjoy my job so I don't plan to retire until I'm 60. My wife does want to quit her teaching job.  My job  is work at home and does allow for flexiblity as well as a ton of time to spend with the family so I have no plans to leave the job.

I would appreciate any comments/feedback/thoughts?

The one caution I would make is to realize that you may or may not have a choice of when you leave your current job or the workforce at all. You might want to plan for enough to have FI by your early 50s, which is when things often go seriously pear-shaped for people who planned otherwise.

mm1970

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Re: What's wrong with this thinking?
« Reply #4 on: March 16, 2014, 12:01:12 PM »

I feel, with my current financial situation, if both of us working for another 10 years, and continue to follow this saving pattern and with a modest return of just 5%, we would easily have over $2M in our retirement account by 60.  I do enjoy my job so I don't plan to retire until I'm 60. My wife does want to quit her teaching job.  My job  is work at home and does allow for flexiblity as well as a ton of time to spend with the family so I have no plans to leave the job.

I would appreciate any comments/feedback/thoughts?

The one caution I would make is to realize that you may or may not have a choice of when you leave your current job or the workforce at all. You might want to plan for enough to have FI by your early 50s, which is when things often go seriously pear-shaped for people who planned otherwise.
I totally agree with this.  I see a lot of people in their 50's having a hard time finding work.  They assumed a job and a certain income would be available until 65.

brandino29

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Re: What's wrong with this thinking?
« Reply #5 on: March 16, 2014, 12:06:11 PM »
Major props for the savings to date.  Obviously you're getting that done.  I question $2,500 a month (!) for vacations?  Where in the world (literally) are you going that you need/want to spend $30k a year on vacation?  We go abroad twice a year to visit family and we 'only' spend about $4k/year.  Granted we don't pay for hotel since we're staying with family but that's round trip airfare (twice), car rental, dining out, etc for 7-14 days each trip.

ShortInSeattle

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Re: What's wrong with this thinking?
« Reply #6 on: March 16, 2014, 12:08:01 PM »
I don't think there is anything wrong with your thinking, but I do wonder about a few things....

1. You like your job today, but can you be sure you'll feel that way later?
2. Could FI be a goal worth pursuing at a faster clip, even if you don't want to ER?
3. Could you have an awesome year of travel adventures on 2/3 or 1/2 that travel budget?
4. Are you certain you'll both be healthy enough to work until 60?

I'm have a level of spending that will require we work until 45, when spending like MMM could get us there sooner. So I get that there are tradeoffs. 60 just sounds like a LONG time to postpone your freedom.

Kudos for taking the time to challenge your assumptions!


Jamesqf

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Re: What's wrong with this thinking?
« Reply #7 on: March 16, 2014, 12:11:30 PM »
I agree with the two cautions/questions so far.  You need to think about a fallback plan if job income takes a serious dive.  And I'm guessing that you are not so much playing hard as playing expensive.  Of course I don't know what you are playing at, but it does seem possible that there could be ways to get just as much (or more!) fun for less money.