Author Topic: Rounding Down  (Read 1670 times)

Motostache

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Rounding Down
« on: January 26, 2022, 12:16:25 PM »
Life Situation:
2 DINKs living in The Peoples Republic of VT
Me:40 Her:34
MFJ 22% @ $168K (Me $69K, Her $99K)
No crotch fruit aspirations.  Dog is enough of a CO2 explosion in a pit full of Benjamins.  Sheís an angel.

Individual amounts of each Pre-tax deductions:
403b: $20.5k x 2 (Big up for 2022)
HSA $4.6k (Employers contribute difference to annual max)
My Pension $3.4k
Health/Dental/Vision $3.7k

Qualified Dividends & Long Term Capital Gains:
Non-existent now, but soon to change right?  Just took on windfall from sale of commercial real estate then fattened up joint brokerage & play funds.  Taxes done.

Adjusted Gross Income: $115.3k

Taxes:
Federal: $21.8k
State: $9.2k
FICA: $12.2k
Medicare: $2.9k

Total after deductions/taxes = $69.2k

Current expenses:
We spend roughly $55k/year when averaging the last three years - which did include a car purchase. 

I canít get too granular with this, because I try not to dwell.  Admittedly, sometimes I think this is out of control.  Sheís ok with it.  Mawwiage = Regression to the mean.  Iím appalled by her $60 haircuts every 6 weeks, but she cuts mine - so fuck it.  MINT says we need to put a cork in our Amazon habit, but we live rurally and buy everything from Coffee and bolts to tires and NM green chili there.  So, fuck all the noise involved with itemizing the Ēreceipts.Ē  My brother-in-law wants me to be his YNAB buddy, but it feels like too much work.  Iím lazy and deserve face punching, but mostly I think weíre fine, sustainable, and winning at money.  Please slap me silly if Iím wrong.     

Expected ER expenses:
$50k/year for me starting at 50 (2031).  $50k/year for her starting in 2040-ish.  She loves her career, but can see going Ĺ time in her 50s.  Maybe Iíll figure out how to buy a little more adjacent land, put it into common use (ag.) thereby lowering property tax, fuck with a few sheep for a measly profit, and write off my property maintenance while eating delicious sheep babies.  Maybe Iíll just piss it all away on motorbikes.  In case you havenít figured it out yet, sugar mommas are where itís at.

Assets:
Golden Butterfly $697k - I know itís controversial, and I donít really want to debate its merits with you here.  FWIW, we were 90/10 for the last 20 years, but the recent windfall had us reassessing.   

Small Cap $136k
Total Market $137k
Long Term T $101k + $20k ibonds + $20k pension
Short Term T + cash $121k + $20k ibonds
Gold $139k

My Tax Advantaged
T-IRA: $2.4k (VBR)
Roth: $100k (VTI) 20k (VBR)
403b: $3.6k (VSIAX)
HSA: $4.4k (WGROX)
I-bonds: $20k - counting as Short Term T
VSTRS Pension: $20K - counting as Long Term T

Her Tax Advantaged
Roth: $36K VBR
403b: $28K VIIIX
I-bonds $20K - counting as Long Term T

Joint Taxable Brokerage
VTI $5.3k
VBR $71k
VGLT $101k
VGSH $120k
SGOL $139k
Settlement $1.2k

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I refuse to consider vehicles assets, but we own outright 2 cars, 3 motorcycles, a utility trailer, and a tractor worth roughly $40k if the shits hit the fans. 

E-fund: $21k Savings
Annual Mortgage Bucket $24,500 Money Market
Her HYS: $112k
My HYS: $115k
Home Equity: $68k

Net Worth: Just over a MM excluding vehicles, but about $130k of that HYS lump is going to go poof in a year of renovation splurging.  If you tell me I should DIY my total windows, siding, & insulation job then Iím going to assume youíre an idiot who has no sense of how long that would actually take.  I'll do my own bathroom renos thanks.

Liabilities:
Just took on a 30-year Mortgage @ 3.125% Probably could have shopped something less from some big bullshit bank, but we'd rather support our community because Bernie.
Originally: $260k
Owe: $256k
Payment: $1,934.60
Principal: $443.56
Interest: $672.52
Escrow: $820.82

Specific Questions:

Correct me if Iím wrong, but I think weíre on track for me to safely FIRE in 2031 - even if she decides to go Ĺ time then.  I know it could be sooner if we battened down some stack vents, but Iím holding out for the measly health insurance my pension provides after 15 years.  If I work until 50 and start cashing at 65, I get a whopping $1500/month.

Should we do anything differently with taxable things?  Donít think we can squeeze anymore into tax advantaged accounts without time.  She does have a 401a option that weíve never used.  Is that something we need/want to consider?  If so, how?

Along those lines, I think itís more advantageous to leave our VTI/VBR combo in our Rothís alone than it would be to trade it with some of the gold/bonds in our taxable.  What say ye? 
   
Dare I include our $68k of home equity in the Golden Butterfly bonds buckets?  Not sure if Iíd do this if the bond whining wasnít so audible, so it feels like timing.  Plan is for me to die in this house.  She'll likely need to sell when she breaks a hip skiing.
« Last Edit: January 28, 2022, 06:44:28 AM by Motostache »

zolotiyeruki

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Re: Rounding Down
« Reply #1 on: January 26, 2022, 01:13:59 PM »
Here are a few thoughts:

You currently have roughly $900k of savings.  A $50k/year spend would require $1.25 million.  If health insurance is on top of that, adjust accordingly. What would happen if you purchased health insurance on the exchange instead of working another ten years?

You're DINKs with a good income and lots of money in taxable accounts.  IMO, you should be plowing as much as you possibly can into tax-deferred accounts.

With the bulk of your savings in taxable accounts, you won't need to tap your tax-advantaged accounts for a good long while.  Since you don't need to worry about short-term fluctuations, I'd suggest investing all of those retirement accounts into index funds.

You have $900k, need $1.25M, and are adding over $60k/year to your accounts (between tax advantaged, pension, HSA, and the difference between take-home and spending).  You'll hit the magic number in six years if your investments are stagnant, and in significantly less if they're not.  The $1,500/mo is $18k/year, which is equivalent to $450k saved up, so it's nothing to sniff at, but is it worth working an extra 4-7 years?

Motostache

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Re: Rounding Down
« Reply #2 on: January 28, 2022, 04:27:29 AM »
Thanks zolotiyeruki!  I neglected my obligatory thanks to the forum gods.  I've been a lurker both here and bogle land for awhile and am grateful for the knowledge gleaned.

I should have mentioned that our comfortable fire number is 2MM.  Adventure land yachts are expensive, and the travel budget will balloon.  So yes, I think it's worth another 9 years of work for both pension and health insurance.  That said, maybe it is partly psychological and I just can't wrap my head around not working anymore just yet. 

Aren't we already plowing as much as possible into tax deferred, or were you implying that we need to learn what a 401a is anyway?

As for the, "invest all retirement into index funds" suggestion, do you mean something other than the current ETF dominant makeup?  Asset allocation is staying the same for awhile, so what benefit would slightly higher expense ratios get me?

jeroly

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Re: Rounding Down
« Reply #3 on: January 28, 2022, 05:45:15 AM »
You've been averaging $55k including a car purchase yet you want $100k in ER?  I understand a desire to travel more etc. in ER but I don't think you'll spend that much!

You do seem on track for what you're shooting for though. Good luck!

zolotiyeruki

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Re: Rounding Down
« Reply #4 on: January 28, 2022, 05:54:12 AM »
Aren't we already plowing as much as possible into tax deferred, or were you implying that we need to learn what a 401a is anyway?

As for the, "invest all retirement into index funds" suggestion, do you mean something other than the current ETF dominant makeup?  Asset allocation is staying the same for awhile, so what benefit would slightly higher expense ratios get me?
I don't know a whole lot about 401a's, but if they would allow the two of you to defer even more taxes, then  you should definitely go find out more about it.  Index Funds and ETFs are not mutually exclusive.  VTI, for example, is vanguard's exchange-traded index fund, and has nice, low expenses.
You've been averaging $55k including a car purchase yet you want $100k in ER?  I understand a desire to travel more etc. in ER but I don't think you'll spend that much!
Well, according to the 4% rule, $2MM would support $80k/year of spending.

Motostache

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Re: Rounding Down
« Reply #5 on: January 28, 2022, 03:53:46 PM »
You've been averaging $55k including a car purchase yet you want $100k in ER?  I understand a desire to travel more etc. in ER but I don't think you'll spend that much!

You do seem on track for what you're shooting for though. Good luck!

Thanks!  We'd rather have the problem of a little too much because we both came from not much.  She's got less faith in the market than I do.  We'll likely end up bankrolling her mom's existence for a decade or two.  I suspect one of my brothers will need help.  A house in Baja sounds nice.  And there's always donating it to the communists. 
« Last Edit: January 28, 2022, 06:48:36 PM by Motostache »

Motostache

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Re: Rounding Down
« Reply #6 on: January 28, 2022, 04:06:53 PM »
Well, according to the 4% rule, $2MM would support $80k/year of spending.

Exactamundo!  Perpetual withdrawal rate of GB claims to be 5.1%, which lands us on the goal.  We shall see.
« Last Edit: January 29, 2022, 07:39:10 AM by Motostache »