Author Topic: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)  (Read 2584 times)

parkerk

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Hi everyone! Hoping to get some input on our situation here, we're a Canadian couple looking to leave our jobs and possibly make a go of FIRE, and I'm eager to get all the input, criticisms and/or face punches the forum has to offer.

Cast of Characters:
Parkerk: Age 40 F, management professional
Mr. K: Age 41 M, repair technician
Kitty K: Age 8 F, saucy little tortie who contributes nothing to the household

Assets:
Home: 1.6 million (detached single-family home in HCOL area)
RRSPs: 520,000
TFSAs: 100,000
Savings: 20,000
Rental property: 180,000 (manufactured home in rural area on 2/3 acre lot)
Total Assets: 2.42 million

Liabilities:
Rental property mortgage: 108,500

Annual Income:
Rental property: 11,000
Salaries: 200,000 (obviously these go away once we FIRE)
Post age 65 we'll have about $36,000/year in CPP, OAP and pension earnings (which will get adjusted for inflation)

Annual Expenses:
Home property taxes: 5,500
Electric: 2,150
Gas: 800
Water/Sewer/Waste: 2,100
Groceries: 3,600
Healthcare: 3,800
Home insurance: 1,500
Internet: 600
Cell phones: 600
Car insurance: 1,200
Fuel: 1,000
Car maintenance: 500
Cat: 1,500
Restaurants: 6,200**
Entertainment: 500
Sports/Gym: 1,750*
Clothing: 600
Rental property mortgage + expenses: 10,000
Total annual expenses: 43,900

*This includes a curling club membership and an annual ski pass
**Yes, I know this is WAY too high, we're currently planning on how to reduce this. At the moment we're both so busy and burnt out from work that we go out and/or buy convenience food all the damn time. Plus a significant majority of our socializing involves going out for food or drinks so I'm also brainstorming ways to draw our friends into less expensive activities.

Mr. K and I are totally burnt out at both of our jobs, and the idea of quitting and just jumping straight into something else does not feel like a good solution. We're looking to quit and if not FIRE permanently at least take a sabbatical for a year or two and figure out how to get our lives back on track. The plan is to start dipping into our retirement savings to fund this, first with savings and TFSAs and then RRSPs.

What I'm hoping to get from you fine folks is some input on our current situation, questions and criticisms about our spending, all that good stuff that everyone here is so good at getting people to consider. I know there's fat in our budget that can be trimmed but overall we're both fairly frugal by nature so I'm not super worried about making things work on a tight budget. Also, any thoughts on how to increase our income would be helpful as well - we have a high net worth on paper but a solid 2/3 of it is tied up in our principal residence so that's not super helpful in practical terms.

One item where we're looking to increase our income is by fixing up our house a bit and then renting out the main floor, and live in our basement for a while so we can travel and get some quality family time in with some people who live fairly far away from us. We should be able to get $30,000/year in rental income if we do that, which improves the picture significantly.

Selling the house and moving into an apartment in order to free up cash is also on the table, although I'd prefer to avoid that if we can as I love our house and our neighbourhood, and the yard/garage/workshop setup we have is a huge part of why we bought here in the first place. I'd be willing to look at making a change in the future but definitely don't want to do that in the short term in case we change our minds and go back to work. Once you exit the housing market here it can be extremely difficult to get back in with the way prices just keep going up and up.

Any and all input is appreciated! Thanks in advance.



index

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #1 on: November 01, 2023, 01:13:29 PM »
Assets:
Home: 1.6 million (detached single-family home in HCOL area)
RRSPs: 520,000
TFSAs: 100,000
Savings: 20,000
Rental property: 180,000 (manufactured home in rural area on 2/3 acre lot)
Total Assets: 2.42 million

640k in liquid assets with only 20k in assets not tied up in retirement accounts

Liabilities:
Rental property mortgage: 108,500

Annual Income:
Rental property: 11,000
Salaries: 200,000 (obviously these go away once we FIRE)
Post age 65 we'll have about $36,000/year in CPP, OAP and pension earnings (which will get adjusted for inflation)

Annual Expenses:
Home property taxes: 5,500
Electric: 2,150
Gas: 800
Water/Sewer/Waste: 2,100

Groceries: 3,600
Healthcare: 3,800
Home insurance: 1,500
Internet: 600
Cell phones: 600
Car insurance: 1,200
Fuel: 1,000
Car maintenance: 500
Cat: 1,500
Restaurants: 6,200**
Entertainment: 500
Sports/Gym: 1,750*
Clothing: 600
Rental property mortgage + expenses: 10,000
Total annual expenses: 43,900

What I'm hoping to get from you fine folks is some input on our current situation, questions and criticisms about our spending, all that good stuff that everyone here is so good at getting people to consider. I know there's fat in our budget that can be trimmed but overall we're both fairly frugal by nature so I'm not super worried about making things work on a tight budget. Also, any thoughts on how to increase our income would be helpful as well - we have a high net worth on paper but a solid 2/3 of it is tied up in our principal residence so that's not super helpful in practical terms.

One item where we're looking to increase our income is by fixing up our house a bit and then renting out the main floor, and live in our basement for a while so we can travel and get some quality family time in with some people who live fairly far away from us. We should be able to get $30,000/year in rental income if we do that, which improves the picture significantly.

Selling the house and moving into an apartment in order to free up cash is also on the table, although I'd prefer to avoid that if we can as I love our house and our neighbourhood, and the yard/garage/workshop setup we have is a huge part of why we bought here in the first place. I'd be willing to look at making a change in the future but definitely don't want to do that in the short term in case we change our minds and go back to work. Once you exit the housing market here it can be extremely difficult to get back in with the way prices just keep going up and up.

Any and all input is appreciated! Thanks in advance.

I think you hit the nail on the head that the majority of you net worth is locked up in real estate. Is your rental property cash flow positive? If not, I would sell it and free up the 10k in expenses and 80k in principal.

You paid off your mortgage and hit the home appreciation jackpot. Can you sell and move somewhere or into something cheaper? What does a 800k condo or home look like in a place where you want to live? 

You are spending 10.5k maintaining/paying taxes on your home now. If you cut this to 7k by moving into something smaller (say $800k) and sell the rental house you are going to have 1.5M liquid and a paid off home versus 30.5k in expenses.

You own your home, but you are still a slave to it right now.


AO1FireTo

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #2 on: November 01, 2023, 01:27:46 PM »
You live in Canada and your groceries are only $300 a month for three people?  Let me know where you shop :)



SunnyDays

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #3 on: November 01, 2023, 01:40:35 PM »
Your expenses look pretty reasonable to me for 2 people (except for restaurants, as you've noted).  I understand being wiped out from work, but maybe set aside a half day on the weekend to prep a bunch of easy meals you can put in the freezer.  Part of this can even be convenience foods from the grocery store, like pizzas, frozen dinners such as Healthy Choices etc.  No worse for you than restaurant meals and considerably cheaper.

If you're planning to travel a lot, would it be possible to rent out your basement as well as upstairs and use Air B&B when you need a place, or even find a small, cheap apartment?  Or move into the rental, possibly with a roommate, since you won't be there a lot?  Can you rent out the workshop separately from the house? I wouldn't be too quick to sell your current house if it's just what you want, since you don't know how the near future is going to play out. 

Time for kitty to get a job!  Hire her out as a mouser, lol.  (I love torties; I had one and will likely inherit another.)

Firefist

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #4 on: November 01, 2023, 02:15:23 PM »
I think you may need to look at your expenses again.  There are some items jumping out at me that you may have missed.

I dont see any expenses for a vehicle other than $500 in repairs.  $500 in repairs isnt going to go very far.  After oil changes, basic maintenance and new tires every few years, thats likely goning to eat up that $500 pretty quickly.  One moderate repair or a brake job is going to set you over on this budget.  I also dont see anything for replacing a vehicle.  If your car is paid off today and have no payment, you should still be setting aside money every month to replace it or allow for it in your SWR.

I dont see a travel budget at all and $1000 on gas isnt going to get you far.  For what we pay for fuel in Canada, this is likely going to buy you no more than 8000-10000km per year depending on your vehicle.  This might be okay, but if your travel involves some driving you may need to revisit.

$500 In entertainment is also very low, is that realistic for the year?  That is about $20 per person per month when you break it down.   You could eat this up very quickly should someone decide they would like to go see a concert or go to a theater once in a year. 

$300 in groceries also seems really low to me too.  In Canada we are eaten alive with the small things, and endless taxes.  Try to write out ever thing you could possibly need to spend money on in a 5 year period, then divide by five.  You might be forgetting some things that pop up every few years... Ie, appliances die, or your mower dies or you have to hire a plumber for an issue in the house....   Regarding the house, I am sure there are going to be expensive maintenace/reno items that go along with it over the years.  Roof every 20 years, replacement heating system, need to replace a tub etc etc.  My Point is, you should have a slush allowance to account for misc expenses and repairs that I dont see so you are not strapped the day those expenses come knocking.

What are the healthcare expenses? Are these drugs/eye & prescriptions etc?


parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #5 on: November 01, 2023, 02:21:50 PM »
You live in Canada and your groceries are only $300 a month for three people?  Let me know where you shop :)

HA see further down the list at our restaurant spend - it's significantly reduced by that.

Also it's for 2 people, Kitty K is not a people and has her own line item for expenses  :)

That said, I love cooking and like to flatter myself that I am very good at doing it from scratch with inexpensive ingredients. Lots of curries, stews, veggie bowls and cheap proteins in the K household. I'm pretty confident we can maintain that grocery budget going forward.

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #6 on: November 01, 2023, 02:25:41 PM »
Assets:
Home: 1.6 million (detached single-family home in HCOL area)
RRSPs: 520,000
TFSAs: 100,000
Savings: 20,000
Rental property: 180,000 (manufactured home in rural area on 2/3 acre lot)
Total Assets: 2.42 million

640k in liquid assets with only 20k in assets not tied up in retirement accounts

Liabilities:
Rental property mortgage: 108,500

Annual Income:
Rental property: 11,000
Salaries: 200,000 (obviously these go away once we FIRE)
Post age 65 we'll have about $36,000/year in CPP, OAP and pension earnings (which will get adjusted for inflation)

Annual Expenses:
Home property taxes: 5,500
Electric: 2,150
Gas: 800
Water/Sewer/Waste: 2,100

Groceries: 3,600
Healthcare: 3,800
Home insurance: 1,500
Internet: 600
Cell phones: 600
Car insurance: 1,200
Fuel: 1,000
Car maintenance: 500
Cat: 1,500
Restaurants: 6,200**
Entertainment: 500
Sports/Gym: 1,750*
Clothing: 600
Rental property mortgage + expenses: 10,000
Total annual expenses: 43,900

What I'm hoping to get from you fine folks is some input on our current situation, questions and criticisms about our spending, all that good stuff that everyone here is so good at getting people to consider. I know there's fat in our budget that can be trimmed but overall we're both fairly frugal by nature so I'm not super worried about making things work on a tight budget. Also, any thoughts on how to increase our income would be helpful as well - we have a high net worth on paper but a solid 2/3 of it is tied up in our principal residence so that's not super helpful in practical terms.

One item where we're looking to increase our income is by fixing up our house a bit and then renting out the main floor, and live in our basement for a while so we can travel and get some quality family time in with some people who live fairly far away from us. We should be able to get $30,000/year in rental income if we do that, which improves the picture significantly.

Selling the house and moving into an apartment in order to free up cash is also on the table, although I'd prefer to avoid that if we can as I love our house and our neighbourhood, and the yard/garage/workshop setup we have is a huge part of why we bought here in the first place. I'd be willing to look at making a change in the future but definitely don't want to do that in the short term in case we change our minds and go back to work. Once you exit the housing market here it can be extremely difficult to get back in with the way prices just keep going up and up.

Any and all input is appreciated! Thanks in advance.

I think you hit the nail on the head that the majority of you net worth is locked up in real estate. Is your rental property cash flow positive? If not, I would sell it and free up the 10k in expenses and 80k in principal.

You paid off your mortgage and hit the home appreciation jackpot. Can you sell and move somewhere or into something cheaper? What does a 800k condo or home look like in a place where you want to live? 

You are spending 10.5k maintaining/paying taxes on your home now. If you cut this to 7k by moving into something smaller (say $800k) and sell the rental house you are going to have 1.5M liquid and a paid off home versus 30.5k in expenses.

You own your home, but you are still a slave to it right now.

Yeah, this about sums it up. If I didn't love the lifestyle and neighbourhood so much I'd cash out in a heartbeat. $800,000 would buy us an insanely nice apartment in our city and $600,000 would get us something perfectly serviceable. We've seriously thought about it.

The rental is cash flow positive, just. It's actually something we share with my BIL and SIL - slightly complicated story but the gist of it is they manage it and we're more or less "silent partners." Selling that to free up the equity would be complicated and isn't in the cards right now. (Sorry, normally I hate it when people are just like "we can't do that" to perfectly good suggestions but we really can't right now without causing a family rift). 

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #7 on: November 01, 2023, 02:26:59 PM »
Your expenses look pretty reasonable to me for 2 people (except for restaurants, as you've noted).  I understand being wiped out from work, but maybe set aside a half day on the weekend to prep a bunch of easy meals you can put in the freezer.  Part of this can even be convenience foods from the grocery store, like pizzas, frozen dinners such as Healthy Choices etc.  No worse for you than restaurant meals and considerably cheaper.

If you're planning to travel a lot, would it be possible to rent out your basement as well as upstairs and use Air B&B when you need a place, or even find a small, cheap apartment?  Or move into the rental, possibly with a roommate, since you won't be there a lot?  Can you rent out the workshop separately from the house? I wouldn't be too quick to sell your current house if it's just what you want, since you don't know how the near future is going to play out. 

Time for kitty to get a job!  Hire her out as a mouser, lol.  (I love torties; I had one and will likely inherit another.)

Those are all great suggestions, thanks! I especially like the idea of Kitty K becoming an income-earner. She's got to have skills besides yelling for dinner and hitting things that she dislikes.

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #8 on: November 01, 2023, 02:34:35 PM »
I think you may need to look at your expenses again.  There are some items jumping out at me that you may have missed.

I dont see any expenses for a vehicle other than $500 in repairs.  $500 in repairs isnt going to go very far.  After oil changes, basic maintenance and new tires every few years, thats likely goning to eat up that $500 pretty quickly.  One moderate repair or a brake job is going to set you over on this budget.  I also dont see anything for replacing a vehicle.  If your car is paid off today and have no payment, you should still be setting aside money every month to replace it or allow for it in your SWR.

I dont see a travel budget at all and $1000 on gas isnt going to get you far.  For what we pay for fuel in Canada, this is likely going to buy you no more than 8000-10000km per year depending on your vehicle.  This might be okay, but if your travel involves some driving you may need to revisit.

$500 In entertainment is also very low, is that realistic for the year?  That is about $20 per person per month when you break it down.   You could eat this up very quickly should someone decide they would like to go see a concert or go to a theater once in a year. 

$300 in groceries also seems really low to me too.  In Canada we are eaten alive with the small things, and endless taxes.  Try to write out ever thing you could possibly need to spend money on in a 5 year period, then divide by five.  You might be forgetting some things that pop up every few years... Ie, appliances die, or your mower dies or you have to hire a plumber for an issue in the house....   Regarding the house, I am sure there are going to be expensive maintenace/reno items that go along with it over the years.  Roof every 20 years, replacement heating system, need to replace a tub etc etc.  My Point is, you should have a slush allowance to account for misc expenses and repairs that I dont see so you are not strapped the day those expenses come knocking.

What are the healthcare expenses? Are these drugs/eye & prescriptions etc?

The car insurance and fuel is on there. My car is older but in great shape and Mr. K does all the maintenance himself so it really is quite cheap. We live in a highly walkable neighbourhood and have no commute so the fuel is indeed what we spend.

And you're right, I didn't include travel costs, partially because I want to first see what all this looks like before we go and spend a bunch on travel. We have a small RV that we'll be going around in so of course there'll be a lot of fuel costs for that but very little for accommodation as we're used to camping rough or staying at provincial sites that aren't too expensive.

And yes, see my other response re: groceries - it's low but realistic for us, and currently partially offset by the insane restaurant spending.

But you're right that we probably need to do a better overall look at our spending, maybe go over our accounts for the year with a fine-tooth comb. Thanks for pointing that out!

Edit - oh, and yes, the healthcare expenses are prescriptions, dentist visits, eyecare and MSP premiums.
« Last Edit: November 01, 2023, 02:38:24 PM by parkerk »

Villanelle

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #9 on: November 01, 2023, 02:35:49 PM »
I agree that the expenses seem to be lacking some things. $0 for home maintenance, on 2 properties? Also, are these numbers based on past spending you've actually tracked, or are you sitting down and coming up with categories and estimating what you spend? That latter is not very reliable and trips up a lot of people.  Even if these are real, tracked expenses for a few years, you can still miss or underestimate categories.  If you haven't needed a new roof, refirgerator, or HVAC system in the last few years, your spending in the past won't accurately reflect actual costs over time.  If you haven't purchased a new (to you) car during your tracking period, that's not going to be on there, but every decade or so, you'll need to drop thousands of dollars on that. 
 

Some ideas: One of you quits and takes on the burden of more of the home stuff (like cooking and shopping so you eat out much less!).  That may help with everyone's burn out.  I'd do this with an eye toward hyper focusing on saving during that time, so the other person could quit in a year.  This only works if one of you is truly okay working a bit longer while the other quits.  And if the other is willing to take on nearly all of the non-employment burden so that the worker gets some relief as well. 

Or, You both quit and barista FIRE.  In addition to renting out your home***,  find flexible side hustles or seasonal work. 

You could also consider quitting now as just a sabbatical, but you'll most likely need to return to work at some point.  if a year off seems like it would recharge you both, that's fine, but go into it knowing that in a year, you probably need to return to work. And that you may take a paycut for having taken that year off. (Or maybe not, but it is a possibility.)

Can you keep working for another year and rent out your house so you can supercharge the savings for another year, then reassess and see what your finances look like?

Would you consider selling your home and moving to a much cheaper area?  Or even ex-pat life? 

If the rental is barely cash-flow positive, you'll likely do better over time selling and investing that money in the market. That's also less risk, less stress and work, and it diversifies so less of your net worth is tied up in real estate. 

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #10 on: November 01, 2023, 05:34:56 PM »
I agree that the expenses seem to be lacking some things. $0 for home maintenance, on 2 properties? Also, are these numbers based on past spending you've actually tracked, or are you sitting down and coming up with categories and estimating what you spend? That latter is not very reliable and trips up a lot of people.  Even if these are real, tracked expenses for a few years, you can still miss or underestimate categories.  If you haven't needed a new roof, refirgerator, or HVAC system in the last few years, your spending in the past won't accurately reflect actual costs over time.  If you haven't purchased a new (to you) car during your tracking period, that's not going to be on there, but every decade or so, you'll need to drop thousands of dollars on that. 
 

Some ideas: One of you quits and takes on the burden of more of the home stuff (like cooking and shopping so you eat out much less!).  That may help with everyone's burn out.  I'd do this with an eye toward hyper focusing on saving during that time, so the other person could quit in a year.  This only works if one of you is truly okay working a bit longer while the other quits.  And if the other is willing to take on nearly all of the non-employment burden so that the worker gets some relief as well. 

Or, You both quit and barista FIRE.  In addition to renting out your home***,  find flexible side hustles or seasonal work. 

You could also consider quitting now as just a sabbatical, but you'll most likely need to return to work at some point.  if a year off seems like it would recharge you both, that's fine, but go into it knowing that in a year, you probably need to return to work. And that you may take a paycut for having taken that year off. (Or maybe not, but it is a possibility.)

Can you keep working for another year and rent out your house so you can supercharge the savings for another year, then reassess and see what your finances look like?

Would you consider selling your home and moving to a much cheaper area?  Or even ex-pat life? 

If the rental is barely cash-flow positive, you'll likely do better over time selling and investing that money in the market. That's also less risk, less stress and work, and it diversifies so less of your net worth is tied up in real estate.

Thanks for this - you're right that it's just categories and estimates rather than actual spends. And yes, I did totally neglect to include maintenance expenses. Our house had a ton of upgrades done about 5 years ago so that's a little less concerning but there's always something, isn't there? We'll have to go back and look at all this again.

Villanelle

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #11 on: November 01, 2023, 07:13:35 PM »
I agree that the expenses seem to be lacking some things. $0 for home maintenance, on 2 properties? Also, are these numbers based on past spending you've actually tracked, or are you sitting down and coming up with categories and estimating what you spend? That latter is not very reliable and trips up a lot of people.  Even if these are real, tracked expenses for a few years, you can still miss or underestimate categories.  If you haven't needed a new roof, refirgerator, or HVAC system in the last few years, your spending in the past won't accurately reflect actual costs over time.  If you haven't purchased a new (to you) car during your tracking period, that's not going to be on there, but every decade or so, you'll need to drop thousands of dollars on that. 
 

Some ideas: One of you quits and takes on the burden of more of the home stuff (like cooking and shopping so you eat out much less!).  That may help with everyone's burn out.  I'd do this with an eye toward hyper focusing on saving during that time, so the other person could quit in a year.  This only works if one of you is truly okay working a bit longer while the other quits.  And if the other is willing to take on nearly all of the non-employment burden so that the worker gets some relief as well. 

Or, You both quit and barista FIRE.  In addition to renting out your home***,  find flexible side hustles or seasonal work. 

You could also consider quitting now as just a sabbatical, but you'll most likely need to return to work at some point.  if a year off seems like it would recharge you both, that's fine, but go into it knowing that in a year, you probably need to return to work. And that you may take a paycut for having taken that year off. (Or maybe not, but it is a possibility.)

Can you keep working for another year and rent out your house so you can supercharge the savings for another year, then reassess and see what your finances look like?

Would you consider selling your home and moving to a much cheaper area?  Or even ex-pat life? 

If the rental is barely cash-flow positive, you'll likely do better over time selling and investing that money in the market. That's also less risk, less stress and work, and it diversifies so less of your net worth is tied up in real estate.

Thanks for this - you're right that it's just categories and estimates rather than actual spends. And yes, I did totally neglect to include maintenance expenses. Our house had a ton of upgrades done about 5 years ago so that's a little less concerning but there's always something, isn't there? We'll have to go back and look at all this again.

Go back for the last 2-3 years and find your net income.  Subtract the amount you put into savings or invested.  That's how much you actually spent. If that's significantly different than your budget here, then you know you've grossly underestimated, which is often the case when people just try to retroactively list their spending.

Laura33

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #12 on: November 02, 2023, 10:57:53 AM »
You need to figure out your priorities.  Right now, you want it all -- you want to find a way to stay in the house, quit your jobs, not piss off your family by trying to sell the rental, and travel everywhere.  You can't.  That option doesn't happen with the numbers you posted (and I second what others have said about making sure you've captured everything and tracking your actual spending vs. hypothesizing).

The elephant in the room here is the house.  Even with no mortgage, it's costing you $12K/yr to live there -- that's 1/3 your listed budget in and of itself.  Not to mention it's tying up $1.6M that could be earning money to help cover those expenses. 

Assuming your budgeted categories are close to accurate, you could sell the house, live somewhere cheaper, and FIRE today.  Other than the eating out, you've done a good job of keeping your spending down, and if you both FIRE, you can fix that eating out category quickly. 

But there isn't any other option that would allow you to keep the house and still both quit.  Partly because nothing is going to bring in enough cash to cover the $35-40K/yr you'll need (net of rental income + assuming a sinking fund for longer-term repairs/replacements).  And partly because you don't have any $$ that is liquid that would give you something to live on until you can withdraw from your retirement accounts! 

The good news is that it doesn't have to be all-or-nothing.  If you keep the house, you need a job -- but you don't need two full-time, super-stressful jobs.  What about one or both of you going part-time?  Or one quitting entirely, as others have suggested?  Or finding two less-stressful jobs to cover your costs and allow yourselves to save a little while still living where you want? 

My suggestion:  give yourself a year to figure out what you want.  During that time, sock away as much as you can in accessible investments.  Track every penny so you know what you're actually working with.  Brainstorm all your different options, and do your research on the ones that are appealing (how much would it cost to convert the first floor into a rental, and how much would that bring in?  What other career options might be appealing?  Etc.).  Then, when you hit that year, pull the trigger.  At that point, you'll have at least a year's worth of costs saved up and accessible (and I would hope quite a bit more!), which gives you plenty of cushion if your first option doesn't work out like you hope -- or just to quit and decompress while you keep figuring things out.

BTW:  you've done a great job getting that house paid off and saving in your retirement accounts -- I don't want that to be lost.  You've clearly done a good job of managing your finances and not giving in to the hedonistic treadmill.  That has set you up to be in a great position by the time you hit retirement age.  You just need to tweak things around if you want to shift gears toward retiring a lot earlier than that. 

Oh:  the whole "house was remodeled 5 years ago so we're good" is a fallacy.  Many, many appliances die between 5-10 years; many more die before the 15-year mark.  In fact, I told DH when we were house-hunting that the one kind of house I didn't want was one in the 7-15-yr age range, because we'd basically be poised for all sorts of things to die over the next decade.  ;-)  So set up that sinking fund now, so you're prepared when things start to die off.

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #13 on: November 02, 2023, 12:27:55 PM »
Laura33 bringing the truth as always - thank you so much for this reply!

Personally I'd be fine with barista-FIRE, working part-time or seasonally to fund our expenses. Mr. K is a little less enthusiastic about this plan, he says he'd rather keep working until we're 100% ready to pull the plug, but then he'll also turn around and say he's totally done with his job and can't keep working there with the way things are going. That said, we chatted more last night and he's come around a bit more to the idea of maybe doing some contracting work for his current company, which he seems to find a little less intimidating that cutting the cord entirely.

A big part of the situation for me is that I'm very close to burnt out in my current position and the thought of doing a lateral move to something else doesn't help at all, so as much as I'd love to have another year of savings I'm really not willing/able to hold out for that long the way I'm going right now. My ideal scenario for the next year is to quit and spend the time getting our house in order, both literally and figuratively, then seeing where we're at and deciding how to proceed from there. I realize that will reduce our savings rather than help bolster them, of course. But my hope is that'll clarify a few things: 1) how much we actually like and need our house, 2) how we really feel about going back to work and what we'd want that to look like, and 3) what our optional income streams realistically look like once we get the house ready to rent, actually try living in the basement, etc. As you say, we can't keep everything as it is right now but I don't want to make a rash decision about the house one way or another. Still on a rollercoaster about it - one day I love it and never want to leave, the next day I'll just feel absolutely DONE.

And thanks for the additional face punch re: our budget numbers. Definitely need to review our actual spends and make sure we've covered absolutely everything.

Villanelle

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #14 on: November 02, 2023, 02:55:50 PM »
Laura33 bringing the truth as always - thank you so much for this reply!

Personally I'd be fine with barista-FIRE, working part-time or seasonally to fund our expenses. Mr. K is a little less enthusiastic about this plan, he says he'd rather keep working until we're 100% ready to pull the plug, but then he'll also turn around and say he's totally done with his job and can't keep working there with the way things are going. That said, we chatted more last night and he's come around a bit more to the idea of maybe doing some contracting work for his current company, which he seems to find a little less intimidating that cutting the cord entirely.

A big part of the situation for me is that I'm very close to burnt out in my current position and the thought of doing a lateral move to something else doesn't help at all, so as much as I'd love to have another year of savings I'm really not willing/able to hold out for that long the way I'm going right now. My ideal scenario for the next year is to quit and spend the time getting our house in order, both literally and figuratively, then seeing where we're at and deciding how to proceed from there. I realize that will reduce our savings rather than help bolster them, of course. But my hope is that'll clarify a few things: 1) how much we actually like and need our house, 2) how we really feel about going back to work and what we'd want that to look like, and 3) what our optional income streams realistically look like once we get the house ready to rent, actually try living in the basement, etc. As you say, we can't keep everything as it is right now but I don't want to make a rash decision about the house one way or another. Still on a rollercoaster about it - one day I love it and never want to leave, the next day I'll just feel absolutely DONE.

And thanks for the additional face punch re: our budget numbers. Definitely need to review our actual spends and make sure we've covered absolutely everything.

Is there a way for you to commit to working another 6 months, or even 4?  You may find that as soon as you set the date, some of the stress immediately disappears as you have a defined light at the end of the tunnel.  During that time, you could work on developing a side hustle or finding contracting work, so that when you pull the plug you have a softer landing.  If you are find with barista-FIRE, start working now to find the barista part of that, so that you have it lined up when you quit. 

You can also use that time to come up with weekly cooking plans and meal prep, and other things that will decrease expenses. 

Laura33

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #15 on: November 02, 2023, 03:06:39 PM »
Laura33 bringing the truth as always - thank you so much for this reply!

Personally I'd be fine with barista-FIRE, working part-time or seasonally to fund our expenses. Mr. K is a little less enthusiastic about this plan, he says he'd rather keep working until we're 100% ready to pull the plug, but then he'll also turn around and say he's totally done with his job and can't keep working there with the way things are going. That said, we chatted more last night and he's come around a bit more to the idea of maybe doing some contracting work for his current company, which he seems to find a little less intimidating that cutting the cord entirely.

A big part of the situation for me is that I'm very close to burnt out in my current position and the thought of doing a lateral move to something else doesn't help at all, so as much as I'd love to have another year of savings I'm really not willing/able to hold out for that long the way I'm going right now. My ideal scenario for the next year is to quit and spend the time getting our house in order, both literally and figuratively, then seeing where we're at and deciding how to proceed from there. I realize that will reduce our savings rather than help bolster them, of course. But my hope is that'll clarify a few things: 1) how much we actually like and need our house, 2) how we really feel about going back to work and what we'd want that to look like, and 3) what our optional income streams realistically look like once we get the house ready to rent, actually try living in the basement, etc. As you say, we can't keep everything as it is right now but I don't want to make a rash decision about the house one way or another. Still on a rollercoaster about it - one day I love it and never want to leave, the next day I'll just feel absolutely DONE.

And thanks for the additional face punch re: our budget numbers. Definitely need to review our actual spends and make sure we've covered absolutely everything.

Soooooo seems like the obvious solution is for you to quit and him to keep working?  As someone said above, maybe if you're not working and have the bandwidth to take charge of the house-food-chores part of life, that might take the edge off of his stress level too.

Remember, I said you both can't quit right now.  Never said that one of you couldn't.  ;-)

Freedomin5

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #16 on: November 02, 2023, 04:31:47 PM »
The only thing I have to add is to ask whether you can rent out the main floor now and save that extra $30k in expected rental income to create a cash buffer to tide you through when both of you go on sabbatical.

So basically you quit now, rent out the main floor this year, spouse keeps working one more year. The following year, both of you quit work, and either rent out both the main floor and the basement, or just rent out one of the floors depending on how much cash you need.

Other than that, 44k in annual expenses is really reasonable. I aspire to 44k when we repatriate to Canada.

Lews Therin

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #17 on: November 03, 2023, 06:27:40 AM »

Cast of Characters:
Parkerk: Age 40 F, management professional
Mr. K: Age 41 M, repair technician
Kitty K: Age 8 F, saucy little tortie who contributes nothing to the household

Assets:
Home: 1.6 million (detached single-family home in HCOL area)
RRSPs: 520,000
TFSAs: 100,000
Savings: 20,000
Rental property: 180,000 (manufactured home in rural area on 2/3 acre lot)
Total Assets: 2.42 million

Liabilities:
Rental property mortgage: 108,500

Annual Income:
Rental property: 11,000
Salaries: 200,000 (obviously these go away once we FIRE)

Post age 65 we'll have about $36,000/year in CPP, OAP and pension earnings (which will get adjusted for inflation)

Annual Expenses:
Home property taxes: 5,500
Electric: 2,150
Gas: 800
Water/Sewer/Waste: 2,100
Groceries: 3,600
Healthcare: 3,800
Home insurance: 1,500
Internet: 600
Cell phones: 600
Car insurance: 1,200
Fuel: 1,000
Car maintenance: 500
Cat: 1,500
Restaurants: 6,200**
Entertainment: 500
Sports/Gym: 1,750*
Clothing: 600
Rental property mortgage + expenses: 10,000
Total annual expenses: 43,900


So with a 44k spend yearly, and most of your income that you would withdraw would be taxable, (though not at high tax brackets) you will need to pull 16.5k each from your RRSP (33k + 11k rental income). You'll also need 3k to pay your taxes, which brings you up to 47k in expenses.

from 40 - 65 = 25 years of pulling 36k from RRSP yearly. 900k. At which point CPP will cover your lifestyle even when factoring in inflation. You will always have the option of selling your home when it becomes ''too much'' for you.

So just back of the napkin math, you are about two years away from being done and never having to worry about money, even keeping the very costly house.

If you do the 30k rental income, you can FIRE.

If you spend some of your extra free time reducing the Electric/Gas/Water/Sewer/Waste, you'd get a ton of savings. Same thing for the restaurants. If one of the two partners reduces hours, you'll end up being able to reduce your expenses at the same time. Are leave without Pays options for you?

parkerk

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #18 on: November 03, 2023, 10:45:35 AM »
Continued thanks to everyone for the input, this is exactly why I posted here.

Mr. K and I are further discussing our options around continuing to work part-time or at different jobs. I don't think staying where we're at is realistic for either of us but we're finding that the idea of downshifting is still fairly appealing. We were both so burnt out and irritated when we started the conversation about quitting that I don't think either of us were giving that proper consideration.

Freedomin5

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #19 on: November 03, 2023, 02:41:58 PM »
Anecdotally, downshifting worked out well for us. I took a 30% pay cut, but the accompanying increase in quality of life was well worth it. As a bonus, downshifting gave us the mental space to engage in some financial optimization, and our savings rate didnít go down.

Good luck to you!

Villanelle

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #20 on: November 03, 2023, 04:38:27 PM »
Anecdotally, downshifting worked out well for us. I took a 30% pay cut, but the accompanying increase in quality of life was well worth it. As a bonus, downshifting gave us the mental space to engage in some financial optimization, and our savings rate didnít go down.

Good luck to you!


When I went down to slightly fewer hours, it was a small change in work time, but a massive change in QOL. (It's been years and I can't recall if I went to Every Friday off, or every other Friday, so I was either working 32 hour weeks, or alternating 32 and 40.)  In just that one day, i could run errands to help free up weekends, and do them on days that were generally less busy.  We could take 3-day weekend trips without me needing to  taking any time off.  I could catch up on house chores when I wasn't either wasting weekend time or burned out from long days. Even just a 10-20% reduction in my work hours massively changed life, for the better.  (Note that I switched jobs to do this, so there was no issue with having the  same role and the same expectations, which I know is something that some people struggle with if they stay in the same job and decrease hours.) 

If your current jobs don't suck and it's mostly just the lack of time and decision fatigue, or similar, you might even look into downshifting in those roles, if at all possible.  (If you plan to quit anyway, it can't hurt to ask.)

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #21 on: November 08, 2023, 08:57:33 PM »
You live in Canada and your groceries are only $300 a month for three people?  Let me know where you shop :)

That would be impressive if they werenít spending so much eating out, which probably accounts for the low grocery bills. 

JAYSLOL

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Re: Fed-up Canadian DINKs looking to lean FIRE (maybe a little too soon?)
« Reply #22 on: November 08, 2023, 09:13:11 PM »
Car maintenance cost seems high, does that include a sinking fund for buying another car with cash?  Is it a couple luxury cars being maintained?  You donít spend much on fuel, so I canít imagine you are wearing out cars very fast. 

I would also consider getting out of the cheap property unless itís a positive cash flow. 

Is there a reason the TFSAís arenít maxed out?  With your ages you likely have over $100k in room between those two accounts and top priority should be taking advantage of tax free growth that wonít be locked away for traditional retirement age.  The TFSAs are a big part of your ticket to bridging FIRE and 65 imo. 

Unless you want to downsize from the house to something much smaller in cash and invest the $600-900k difference, I think you have a few more years to go. 


 

Wow, a phone plan for fifteen bucks!