Author Topic: Wow, I think we're already there?  (Read 6436 times)

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Wow, I think we're already there?
« on: May 29, 2013, 09:41:42 AM »
Found this blog last week and it is such a help. It is really just what we have been looking for as far as financial advice and we are so happy to find like-minded souls. Can't say enough about MMM!!!!

I am a SAHM of two children, ages 8 and 10. My husband and I are both teachers. We're 46 years old. I worked full-time up until our children were born. I then stayed home full-time for eight years. When our youngest entered school full-time, I  began supplementing our income by doing long-term sub gigs (pay is decent for temp work, but not as much as I'd get as a contracted teacher) and part-time tutoring jobs.

I have thought about going back full-time, but my subbing gigs have made me question that for many reasons. One is that it was pretty crazy having two full-time teachers in the house. Yeah, summers off are great, but good teaching requires a 50 hour work week, more if you really want to be amazing. Plus when your own kids get sick, it means scrambling for a sub and writing plans. And....it can be very stressful, although also very rewarding.

Anyway, I've been trying to decide what to do, as I love teaching, but it is a HUGE time and energy commitment to do it full-time. And I just don't know if I have it in me to do it the way I want to with two kids of my own.

But come to find out,thanks to this blog, it seems like we might be at FI already, which gives me some flexibility as to what I'll do.  Despite the fact that we were living solely on my husband's income for 8 years, we managed to stay out of debt and continue saving and investing. We lived very frugally but enjoyed life very much in a nice home, nice town, etc.--not a McMansion, but a nice 280k home in a university town.

Currently, based on MMM's formula, my husband could retire now. When we multiple our yearly expenses by 25, we end up with less than what we currently have saved and invested!!!  Who knew? we thought, well actually we had no idea how much we really needed to retire. thought it was more like a million, at least.  AND...That doesn't even include his teacher's pension. He doesn't want to retire until at least age 55, though, so we have at least 9 more years to accumulate our retirement fund.

To top it off, my husband has inherited about 380k from his mom, who passed away last year. We are thinking of paying off our mortgage with this, which leaves another 130k cash for investing and paying for our children's college educations.

I should confess that two years ago, we purchased two brand-new Hondas (civic and crv) to replace our clunkers which were on the verge of dying and very unsafe to drive. I know...we should have bought used again, but we were 44 years old and really feeling like a new car would be nice. Well, I was, anyway. My husband would have been happy with another used car, but he enjoys the CRV now. However, after reading this blog, we may sell the crv and buy a cheaper used car. Interest on our loans is 1% but still.

So is this really possible? I mean, we have been been living frugally for so long it is now a way of life. We don't feel we have missed too much. Really, being able to stay at home with my children was priceless. The main things we think about spending money on now are home repairs and remodeling.

We never expected to get to FI this fast. And if we hadn't found this blog, I might have taken a full-time job without really needing to right now. But I keep thinking that there must be something we missed with the math. We really have no other debt, other than our cars and mortgage (mortgage is 3%). No student loans, no CC debt, nothing.

On thing...when we did the x25 thing, we weren't sure whether or not to include our mortgage payment, because for one thing, we may pay it off early with the inheritance, and we weren't counting the inheritance in our assets at that point. We were just using our retirement funds as a basis for the calculations.  And, even if we didn't pay it off, we would invest the money elsewhere and have the mortgage paid off before my husband retires from teaching.

Any thoughts? I am also curious to hear about other families with one primary wage-earner. I always thought I would go back to work full-time someday. Now I am thinking it isn't necessary. I am wondering, why lead the crazy double-income with kids life if we don't have to? I will find something to do at least part time eventually,  because I feel I need it for my own self-esteem and a feeling of contributing something to our household. Something financial, that is! I believe I contribute plenty with the housework, cooking, childcare, etc., and having me home really frees up my husband to focus on his work, and makes life easier for us all. Not to mention that I really like not having to rely on babysitters and after school care.

Any thoughts most welcome!
« Last Edit: May 29, 2013, 09:46:40 AM by AmyGarfield »

Spork

  • Walrus Stache
  • *******
  • Posts: 5753
    • Spork In The Eye
Re: Wow, I think we're already there?
« Reply #1 on: May 29, 2013, 09:50:08 AM »

a few random thoughts:

1. congrats! 
2. on the "x25 thing" ...  I'd compute it both ways.  You might be surprised to find that both of them land you in ER.  I.e., compute your expenses with paying a mortgage and not spending the lump sum -- AND compute your expenses with 0 mortgage and less of a stashe.
3. don't downplay your contribution to your household!  My wife is no longer working -- and she contributes a ton.  I certainly don't do nearly as many chores as she does.  And she has a seriously firm grasp on the finances (and is better at investing than I am).  I suspect your contributions are significant.

jat9449

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Wow, I think we're already there?
« Reply #2 on: May 29, 2013, 09:52:01 AM »
Congratulations! This sounds like a great situation to be in! I just read this post yesterday (from another mustachian) and it seems like something that would pertain to your current situation:

http://giddingsplaza.com/2013/05/13/part-2-get-rid-of-your-debt-today-and-buy-back-your-soul-except-for-your-mortgage/

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #3 on: May 29, 2013, 10:07:43 AM »
Congratulations! This sounds like a great situation to be in! I just read this post yesterday (from another mustachian) and it seems like something that would pertain to your current situation:

http://giddingsplaza.com/2013/05/13/part-2-get-rid-of-your-debt-today-and-buy-back-your-soul-except-for-your-mortgage/

Thank you. We have gone back and forth with the mortgage thing. I actually found that same article.  I think the peace of mind is worth it to my DH if we pay it off early. Plus even if we pay off early and therefore can't invest all the money, we are still projected to have 1.26 mil in assets in 10 years.

So it's hard to know what to do! But we're leaning toward paying it off.  Thanks again for the response. It all helps.

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #4 on: May 29, 2013, 10:14:12 AM »

a few random thoughts:

1. congrats! 
2. on the "x25 thing" ...  I'd compute it both ways.  You might be surprised to find that both of them land you in ER.  I.e., compute your expenses with paying a mortgage and not spending the lump sum -- AND compute your expenses with 0 mortgage and less of a stashe.
3. don't downplay your contribution to your household!  My wife is no longer working -- and she contributes a ton.  I certainly don't do nearly as many chores as she does.  And she has a seriously firm grasp on the finances (and is better at investing than I am).  I suspect your contributions are significant.

Thank you for saying that.  I am great on the homefront. I'm all over the cooking, cleaning, gardening, childcare. I have to admit DH is the financial whiz, though. He is a big lover of spreadsheets. :)

I will run the numbers again.
« Last Edit: May 29, 2013, 10:55:18 AM by AmyGarfield »

orcas50

  • 5 O'Clock Shadow
  • *
  • Posts: 53
Re: Wow, I think we're already there?
« Reply #5 on: May 29, 2013, 11:05:10 AM »
Another former teacher with two kids here. I am 45 and my DH is 43, our kids are 10 and 7. I taught full time until my older one was born, then went down to part time (I job shared, perfect situation, but hard to find). I quit my job 7 years ago when I had my younger child. We live in a high COL area and had a large mortgage, so living on one income was tight when the kids were younger, and then made it worse after the 2008 downturn when my DH got his salary reduced by 20%. Luckily, we had quite a lot in investments, so sold some to pay down a chunk of our mortgage and re-amortize so our monthly payments were lower. Our portfolio took a hit, but it allowed us to have more breathing room in our monthly cash flow.

I always thought I would go back to teaching, it was a huge part of my identity. I have a masters degree, years of experience and I loved the school I taught at. However, I realized how much time and energy it takes to be a good teacher, and was not confident I could do it and have anything left for my family. Well, then about 18 months ago, my DH got a new job, salary more than double what his old salary was. Incredible. We are now able to save 50% of his income. We, too, are very close to FI, (would be FI now if we would lower our monthly expenses, we are frugal in many areas but we have a few unmustachian hobbies that we value greatly, and fortunately my husband enjoys his job right now).

I have been tutoring a bit here and there for over a year. I would highly recommend it -  it's a great way to keep teaching, but the hours are flexible and the compensation is quite good (I charge $60 per hour but I know of other tutors who get $70/hour). As my own kids become more independent, I plan to tutor in my home after school, so childcare won't be an issue. Now that I realize I do not need to work full time, I will probably continue tutoring on a very part time basis in the years to come. I know I also contribute in so many other ways to the positive, healthy life of our family, (on the home front, as you said) with everything that needs to be done at home and for our family. I know millions of families do it, but it would be a real strain to have two parents working full time, and I feel lucky to be in the position I am in. (and i know what you mean about finding a sub and writing lesson plans for days when one of your own kids is sick - very stressful)

Sorry for the long-winded response! I hope my perspective on part time tutoring has been helpful.

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #6 on: May 29, 2013, 11:39:27 AM »

Sorry for the long-winded response! I hope my perspective on part time tutoring has been helpful.

That's okay! My story was rather long...I should probably edit it to get more responses.

Anyway, it is encouraging to hear your story of tutoring. Did you actually start a business or just do it here and there via word of mouth? The tutoring I did was at a college, but it would be nice to do it at my own home.

Like you,  teaching is part of my identity. I wish I could somehow do it but I just can't  and be happy at the same time with my juggling act. Too hard!  There are 0 job sharing options in my area. What a great thing for working moms, but it doesn't seem to happen much.

 Nice to hear from a kindred spirit!  And congrats on your near FI.

Villanelle

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Wow, I think we're already there?
« Reply #7 on: May 30, 2013, 06:58:21 AM »
The fact that you have such a scalable work situation seems incredibly ideal!  Both the tutoring and subbing, especially the later can easily be ramped up or down depending on market returns, desire for large expenses ("Let's go to Hawaii in 3 months" "Okay, I'll ramp up my subbing until then."), inflation, and anything else that comes up. 

I am far less confident about my ER numbers than many, no matter what FIRE calc says.  So in your shoes, I'd keep my foot in the subbing door and try to have at least one tutoring student most of the time, just so that it would be easier to ramp up if necessary.  My mom was a sub for many years and it was clear that there was huge demand for competent subs, so once she was established, she could work every day if she wanted.  Starting out, however, that wasn't the case, which is why I'd try to sub once a week or so. Also, doing a little teaching would give you a small taste of what it is you love, and also allow you to contribute financially, which it seems is important to you. 

And then allow yourself to enjoy what you and your husband have worked for, with the confidence that while the numbers look good now, you have a solid plan in place for unforseen circumstances.

nktokyo

  • Bristles
  • ***
  • Posts: 370
Re: Wow, I think we're already there?
« Reply #8 on: May 30, 2013, 07:21:56 AM »
Yup you made it.

Also if you're financially free, whether or not to pay back your mortgage is a first world problem. Take it from me, having your living costs drop through the floor is a REALLY GOOD FEELING. From that point you can work part time for a few months and travel Bolivia if you want to, have fun!

pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8332
  • Age: 63
  • Location: The Villages, Florida
Re: Wow, I think we're already there?
« Reply #9 on: May 30, 2013, 07:44:45 AM »
Read the article about not paying off your mortgage early. Many people feel this way. The thing is, people who have most of their assets in tax deferred savings DO want to have their mortgage paid off by the time they retire. The reason is taxes. Withdrawing from your IRA (or 401(k) or whatever) to pay your mortgage creates taxable income.

oldtoyota

  • Magnum Stache
  • ******
  • Posts: 3143
Re: Wow, I think we're already there?
« Reply #10 on: May 30, 2013, 08:39:15 AM »
On paying off the mortgage, I'd google around and read a lot of articles. Warren Buffet was quoted as saying these cheap mortgages are one of the best inflation hedges around.

I was going to pay off my mortgage even earlier than I'd planned, but now I'm going to invest that money instead. Your situation is different from mine, though, so I'd read the article below and see what makes sense for you.

I found this article helpful in making my decision:

http://financialmentor.com/financial-advice/pay-off-mortgage-early-or-invest/7478


AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #11 on: May 30, 2013, 10:54:25 AM »
That's a great article. Thank you. We keep going back and forth. I know it's a good problem to have, though!

On paying off the mortgage, I'd google around and read a lot of articles. Warren Buffet was quoted as saying these cheap mortgages are one of the best inflation hedges around.

I was going to pay off my mortgage even earlier than I'd planned, but now I'm going to invest that money instead. Your situation is different from mine, though, so I'd read the article below and see what makes sense for you.

I found this article helpful in making my decision:

http://financialmentor.com/financial-advice/pay-off-mortgage-early-or-invest/7478

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #12 on: May 30, 2013, 11:05:21 AM »
Thanks, that is what I was thinking, too. While the teaching job market is incredibly tight here (most districts are hiring fresh young grads at starting salary--not experienced people like me!) -as a long-term sub I am highly desirable and can find a job easily. This is because I have years of experience, but per contract districts do not have to pay long-term subs their rightful step. It is decent pay, though. (I got $200 a day pre-tax at my last gig).  So it is good to have that to fall back on.

The fact that you have such a scalable work situation seems incredibly ideal!  Both the tutoring and subbing, especially the later can easily be ramped up or down depending on market returns, desire for large expenses ("Let's go to Hawaii in 3 months" "Okay, I'll ramp up my subbing until then."), inflation, and anything else that comes up. 

I am far less confident about my ER numbers than many, no matter what FIRE calc says.  So in your shoes, I'd keep my foot in the subbing door and try to have at least one tutoring student most of the time, just so that it would be easier to ramp up if necessary.  My mom was a sub for many years and it was clear that there was huge demand for competent subs, so once she was established, she could work every day if she wanted.  Starting out, however, that wasn't the case, which is why I'd try to sub once a week or so. Also, doing a little teaching would give you a small taste of what it is you love, and also allow you to contribute financially, which it seems is important to you. 

And then allow yourself to enjoy what you and your husband have worked for, with the confidence that while the numbers look good now, you have a solid plan in place for unforseen circumstances.

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #13 on: May 30, 2013, 11:09:13 AM »
Yup you made it.

Also if you're financially free, whether or not to pay back your mortgage is a first world problem. Take it from me, having your living costs drop through the floor is a REALLY GOOD FEELING. From that point you can work part time for a few months and travel Bolivia if you want to, have fun!

Thank you. We didn't know this til just this week when we found MMM. I feel like we just won the lottery or something. We have been over and over the numbers. It's just crazy. I wonder how many other people are out there with no idea that they have reached FI?

Tyler

  • Handlebar Stache
  • *****
  • Posts: 1141
Re: Wow, I think we're already there?
« Reply #14 on: May 30, 2013, 11:39:47 AM »
I had no idea I was near FI until I really started studying it and monitoring my spending. Focus is everything.

Congrats!

Regarding keeping or dropping the mortgage, with low interest rates it's hard to go wrong either way. A lot depends on your personality and plan. Just don't forget to account for things like income taxes and Obamacare subsidies that may be affected by the additional income required to pay a mortgage. But depending on your plan it may just come down to personal choice - a great choice to have!

If you do keep the mortgage, my only suggestion is to treat the money it would take to pay it off as a separate "account" from your retirement stache for SWR purposes. Think of the investment returns above the mortgage interest rate as safety margin and not required income. Remember, the mortgage will eventually disappear and the investment gains will taper off along the way, so it doesn't really make sense to include it in "permanent" SWR calculations.

AmyGarfield

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Wow, I think we're already there?
« Reply #15 on: June 01, 2013, 05:14:13 PM »
I had no idea I was near FI until I really started studying it and monitoring my spending. Focus is everything.

Congrats!

Regarding keeping or dropping the mortgage, with low interest rates it's hard to go wrong either way. A lot depends on your personality and plan. Just don't forget to account for things like income taxes and Obamacare subsidies that may be affected by the additional income required to pay a mortgage. But depending on your plan it may just come down to personal choice - a great choice to have!

If you do keep the mortgage, my only suggestion is to treat the money it would take to pay it off as a separate "account" from your retirement stache for SWR purposes. Think of the investment returns above the mortgage interest rate as safety margin and not required income. Remember, the mortgage will eventually disappear and the investment gains will taper off along the way, so it doesn't really make sense to include it in "permanent" SWR calculations.

Thank you for the advice. All good points!

lhamo

  • Walrus Stache
  • *******
  • Posts: 9643
  • Location: Seattle
Re: Wow, I think we're already there?
« Reply #16 on: June 01, 2013, 05:39:28 PM »
Another alternative for extra income that I think would be a great option for a teacher would be providing after-school and holiday period care for kids with working parents.  If you structure it as a semi-academic program (doing fun educational projects rather than just being a holding pen for kids) I think you would have a HUGE market.  You could start with marketing it to the parents of your kids friends.  Kids hang out with their friends doing fun stuff and you get paid.  Win win win. 

Summer camp type stuff with a particular focus would also have a huge market in many places.  You could do themes by week -- art one week, science one week, environmental/nature stuff one week, etc.  Even if you just do a month of this out of your summer, you could make a decent amount and still have time for your own family vacations/family fun.

Congrats on making it to where you are.  Great position to be in. 

happy

  • Walrus Stache
  • *******
  • Posts: 5124
  • Location: NSW Australia
Re: Wow, I think we're already there?
« Reply #17 on: June 01, 2013, 06:34:38 PM »
Just wanted to add my congratulations. Knowing how to live happily on a low budget is priceless.  You guys have learnt how to do that and now can reap the rewards.  :)