New to the Stache- not far from FI?

[MoneyManJack]

Hi All- thanks in advance for any time and attention paid to this post. I just finished reading all of MMM in the past 2 months and am obsessed and excited about the concepts. I think I've unknowingly been on the right track because I've always been a somewhat resourceful person.

Life Overview: 34M and 29F. Park City, UT. Married last year woo, filing jointly. I am a Software Engineer and Wife is a Soft-goods Designer and Sewing Teacher. I started my own S-Corp in 2023 and I am a single-owner-employee, which is how I make a hilarious amount of money. The catch is that I hate what I do. It's not stressful, but it's life-sucking. I don't even work that much, but the little that I do does not bring me joy. My wife on the other hand loves her job! She just got her Bachelor's at the older age of 28 and pretty much obtained her dream job immediately, although it doesn't pay much so far. She also teaches sewing lessons to little kids at our house!

We live in what has become (since Covid) an extremely expensive, bougie ski town. I own our townhouse that was purchased for 660k in 2020 and now is valued at $950k. We also rent out our basement unit to a friend for $1200/mo. We have a great group of friends and ski or bike almost every day of the year. We want to have 1 or 2 kids, but sometimes I struggle envisioning raising them in our rich-person, car-clown town.

I'd say we spend the most money on travel, skiing, and biking, two hobbies that can be very expensive. I race mountain and road bikes so I'm always trying to optimize equipment, training, and pay for races. You could say I'm a bike-clown but I really like it. Skiing costs are relatively low since we have all the gear and just buy a season pass every year and live 10 minutes from the resort and sometimes bike or bus to the resort.

For travel, I'd say we've been relatively mustachian. We like to either Bikepack or HomeExchange for our vacations. (Find us on both warmshowers.org and homeexchange.com). Even our honeymoon was an incredible bikepacking trip around Vermont, camping and hitting breweries. However, some vacations are still far flights to Europe and we spend a shit ton on restaurants and bars while traveling!

2023 was kind of a spending anomaly because we paid for a wedding (could write a whole post on the money we saved diying that), a 2008 Honda Element camper, trips to France, Vancouver Island, and Vermont, some DIY house projects and overall I lost my mind a little bit because my salary doubled due to starting my own company. Since reading MMM, I'm back on the path and have only spent 5k on the CC in 2024.

I max my 401k (including company match for 66k total), backdoor Roth IRA, and HSA every year and then put the rest into my Wealthfront Investment Fund (98% stocks).

Specific questions:

• Based on this, anything I'm missing that would speed up or slow down the projection to FI (obviously if I drop our spending we can speed it up)?
• What's a good way to project the cost of 1-2 kids?
• Was anyone in a similiar position to me and have any words of advice?
• Now that I finished reading MMM, what's a good next blog/book to read?

Assets   Value
House     $950,000
401K             $200,000
Wealthfront $134,000
Roth IRA     $19,000
my529     $19,000
HSA             $11,000
Total             $1,333,000
   
Liabilities   
Mortgage     $474,376 (orig 510k @3% for 30)
   
NET:           $858,624

Income Summary:
"Gross" income	$23,000		$275,996
Income taxes	$3,861		$46,333
After-tax income	$19,139		$229,663
IRA+401k/403b/TSP/457	$6,291	$542	$81,994
HSA	$692	$0	$8,300
529/other	$317		$3,804

Monthly Average Expenses		Comments
Mortgage	$2,150	Input to Item. Ded.	$25,802
HOA	$383		$4,600
Property Tax	$184	Input to Item. Ded.	$2,208
Home/Rent Insurance	$40		$480
Cable TV	$10		$120
Car Insurance	$114		$1,368
Car Maintenance, Registration, etc.	$5		$60
Christmas/Holidays	$50		$600
Clothing/Shoes	$50		$600
Computer (paper/software/etc.)	$10		$120
Credit card fees	$40		$480
Dentist	$10	Input to Item. Ded.	$120
Dining (Lunch/Dinner/Etc.)	$200		$2,400
Electricity	$85		$1,020
Entertainment	$20		$240
Fuel/Public Transport	$60		$720
Gas/Oil for heating	$50		$600
Groceries	$600		$7,200
Hair Care	$10		$120
Household; Maintenance	$5		$60
Internet	$90		$1,080
Medical Insurance (Enrollment Premium if ACA)	$813	Input to Item. Ded./PTC	$9,756
Pets	$20		$240
Phone (cell)	$80		$960
Sports/Recreation	$300		$3,600
Travel/Vacation	$400		$4,800
Water/Sewer	$80		$960
Wine/Beer/Tobacco	$30		$360
Non-mortgage total	$3,739		$44,872

You can retire in 4 years
with a savings rate of 70%
annual expenses 70,000
annual savings 160,000
monthly expenses 5,833
monthly savings 13,333

Thanks AGAIN if you got this far!

[Laura33]

Is the budget your actual 2024 spending, or a hypothetical future budget?

First, congrats on setting yourselves up very well.  You are way, way ahead of most people your age before even jumping on the MMM bandwagon, so congrats!

Second, you have already identified the biggest risk to your success:  getting super-excited about how flush you feel and increasing your lifestyle.  Since you're only just married, and both of your employment is fairly new, this is the time to settle in and track things closely to feel out what your "normal" lifestyle costs, how the jobs are working, and what things make you happy.

Your job right now is really to figure out what you want your life to be.  Your baseline is where you are now:  that current budget, based on your current jobs and current hobbies.  Live that for a bit, figure out what is working, what is miserable, what is missing.  You financial needs are going to be very different if you continue to bring in your big income than if you decide you can't take it anymore, or if you move, or if you have kids, etc. etc. etc.  So talk to your DW and develop the plan for the future that addresses all these big things.  Tracking your current expenses gives you the baseline to figure out your path to FIRE if you don't change anything.  Once you figure out what changes you want, you can then adapt that to address those things.   

I know, I know, you've just read All The Stuff, and you're so excited and amped to jump in!  But you are the rare new guy here who is already on a good financial track.  So for you, you will get more value from putting the effort into figuring out what you want your life to be than from optimizing $100 here or there.

[MoneyManJack]

Thanks Magnum Stache! I totally agree with you. Last year got out of hand because I was excited about how flush I was and knew I could cover everything. Now that I know I could never attend a conference call ever again if I go back to second guessing all purchases, I’m back to my frugal self and it feels good!
Lucky for me, Wife is mostly on board. Even luckier, she actually likes her job so I honestly think we’d be fine if I quit tomorrow. Sounds similar to what people are calling CoastFIRE I think.
But I’m going to soak up some more savings and like you said get a real handle on my expenses. As you’ve guessed, some of that budget is real and some is an estimate. I don’t have Mint and now it’s dead so I don’t have a great expense tracker besides Amex categories.  I also charge a bunch o shit to my business for home office expenses, so need to get a better handle on that.
Overall I’m excited to see how little I can spend this year with my newfound dedication to the goal of retiring and how much I can learn in the process. Just today I stopped computer working at noon and built planter boxes in the garage instead!

[LD_TAndK]

1. Based on this, anything I'm missing that would speed up or slow down the projection to FI (obviously if I drop our spending we can speed it up)?
 - Your earning and spending are great. I'd say your budget is reasonable and you don't have much meaningful fat to trim.
 - I'm sure you're checking to make sure your 401k, wealthfront, etc. are low-fee
 - I see your wealthfront is 98% stock, I assume your 401k, HSA, etc are in aggressive allocations
 - Now you've just got to keep patient and put in the working years.
 - I would heavily discount home equity in your net worth calculation, selling and moving to a new house is expensive, realtors and the tax man take their cut, the market fluctuates, etc.

2. What's a good way to project the cost of 1-2 kids?
 - Personally I estimate an additional $1,500 a month for our soon-to-arrive kid. I couldn't tell you why but for some reason I settled on that amount. $50 a day sounds reasonable right? *shrug*

3. Was anyone in a similiar position to me and have any words of advice?
 - When I first discovered MMM like you I was super motivated to retire as soon as possible. We still had about 6 years of working till we became Financially Independent. After the initial learning period, I should have relaxed and thought about it less until closer to FI. Instead I tortured myself with spreadsheets, projections, and optimizations for years, that ended up not really mattering to our real life results.

4. Now that I finished reading MMM, what's a good next blog/book to read?
 - I enjoyed Your Money or Your Life, and Early Retirement Extreme

[Laura33]

2. What's a good way to project the cost of 1-2 kids?
 - Personally I estimate an additional $1,500 a month for our soon-to-arrive kid. I couldn't tell you why but for some reason I settled on that amount. $50 a day sounds reasonable right? *shrug*

Forgot, I meant to address this.  Some of the decisions you make will significantly change your projections -- e.g., if you quit your job.  Children don't have to be one of them.  Sure, for most people they are, because we add priorities like daycare, saving for college, activities, new clothes, disposable diapers, etc.  But the key is recognizing that those things are all optional.  The reality is that kids will require additional clothes and food and medical care, but you can really, really minimize those extra costs if you choose to.  For example, if you're FIRE'd, you don't need daycare, do you?

Not that you have to cut kid costs to the bone; the point is to identify those things that you care about and prepare for those, and opt out of the stuff you don't care about, vs. just automatically jumping on the travel sports bandwagon (or whatever).  Like, for example, DH and I both wanted to work, and I'd have to be really, really desperate to wash cloth diapers on a regular basis.  So for us, daycare and disposable diapers were no-brainers.  Other people adore being with small children and like reusable diapers and so make the opposite decisions, saving themselves a shit-ton of money along the way. 

That's why I started off with "figure out what you want your life to be."  Part of that is figuring out your priorities with potential children, because those priorities will absolutely affect your financial needs.  And the Mustachian way to do that is not just to assume that what "everyone says" is the truth, but to really investigate and decide for yourself which expenses are worth the money and which are not.