Hi everyone! Thanks in advance for your help.
I once bought a house in 2008, and I pulled the FIRE trigger late last year. My timing is uncanny. The downturn has me feeling panicked, and I'm realizing my withdrawal plan is undisciplined. What would you do in my situation? (see below)
Life Situation: I am 37, single, with 3 kids part time (70/30). I live in a converted van, primarily in Utah. I spend a lot of time cheaply traveling and doing things outside.
Career: Contract programmer and mediocre startup guy. I told myself I would avoid profit-focused work from now on. I am happy spending most days exploring and socializing. I do want to add creative work and programming back into my life, but if I'm doing it for money I can't turn my ruthless startup brain off and it's no longer fun.
Assets
I started with about $1M. It's now down to $800k invested 90/10 with Betterment. It was originally divided like this:
$700k - Expenses = $2350/mo at 4%
$150k - House (vanlife escape hatch)
$70k - Big Spending
$80k - Child Support
Notes:
* I'm now $200k underfunded
* The idea with the house bucket is that I can spend some or all of it at any time on rent or an eventual home purchase. In the meantime, I use some of this on the kids (bikes, trips, etc)
* I came up with the Big Spending bucket to pay for travel and gear. These aren't really monthly expenses. Why save up slowly when you already have the money? Maybe this would be better as an annual budget?
Income
An old project will end up paying me a total of $316k more over the next 1-2 years. 25% taxes would mean I will have another $237k in assets eventually.
Expenses
$650 - Groceries
$325 - Gas
$235 - Bills (Insurance, Climbing Gym, Phone, coffee shop office, Spotify, etc)
$150 - Therapy
$0 - Health Insurance - Once reported income goes down this should become affordable.
$1000 - Spending - Stupidly cushy and anti-mustachian. Restaurants, drinks, generosity, concert tickets, etc.
------------
=$2360/mo
$800/mo - Child Support - This ends when the kids leave home, and I should be able to adjust it once my reported income goes down. This comes directly out of the child support bucket since it doesn't have to last forever.
Notes:
* I don't track these closely, I mix them all together in my bank.
* It's too much, so the mix accumulates. I don't have enough data to know by how much, but the surplus makes me happy.
* As mentioned above, I live in a converted van. I love it. When I have my kids I either go stay with my parents for an intergenerational family experience, take them camping, or visit other friends and relatives.
* I recognize my misc category is very large, but my life changes so much depending where I am that I like changing my spending priorities depending on the week.
Biggest Question: Which withdrawal strategy is right for me?
* I want my financial situation to improve over time. Ideally I spend less than I'm allowed, the excess increases my net worth, and my plan allows me to upgrade the amount I'm allowed to reflect this.
* I am ok reducing spending during downturns
* I am theoretically ok finding paid work if severely underfunded.
* It seems like keeping my investments aggressive makes sense long term, so long as I take out less than allotted, no?
* It seems like if I reset my track to 4% now, after the downturn, and follow the Guyton-Klinger rules that will start me on the right track (because it should grow from this point) do you agree?
* Help!
Other Questions
1. Are the buckets a good idea? Or is there a better way to accomplish the same thing?
2. Should I find some work to bring my funding level back to par? Be patient and wait for a recovery? Or restructure somehow?
3. How would you change my budgets?
4. What am I being stupid about?