Author Topic: Am I FIRE'd?  (Read 2843 times)

nyfireguy

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Am I FIRE'd?
« on: March 09, 2020, 01:40:58 PM »
Been a while since I've posted and was looking for some thoughts from the Mustachians

I haven't worked in 6 months (at age 47). live in a relatively HCOL and have been thinking about being FIRE'd. I guess some would say I am and I know I'd like to possibly find something to make some $$ in the future but based on numbers wondering if I need to, If I am FIRE'd etc

With current market situation numbers are in serious fluctuation but this is mine as of today (so it's obviously lost a significant amount and more by days end today).
 
Monthly Expenses  

Primary home Taxes/Insurance                          $1300 
Secondary home                                                $750
Mobile Phone/Internet/Cable/                             $230
Insurance (health & car)                                    $670
Groceries                                                          $400
Entertainment                                                   $500
Gas                                                                  $100
Misc                                                                 $100 

Monthly Expense                                              $4050
Monthly Income (Rental explained below)           $1200
Total Monthly Outlay                                         $2850 

Just for round numbers my cost of living (based on above) is about 35K or even 40K if I decided to do some extra spending etc.

Asset/Investments
IRA Traditional                                                  950K 
Investment Account                                           600K
Checking/Savings                                              40K  (33K after expenditures below)
Cash                                                                 10K

Total                                                                1.6M                                   

The breakdown below = Asset Value                 595.5K  (575K+20.5K)                         

Primary home with rental income of 14.4K annually and no mortgage value 575K (based on Zillow so not sure how accurate that is)

Secondary (50% ownership with friend) mortgage of 179K at $1500 monthly(so $750 each) which includes all costs including tax/insurance in escrow, value 220K (based on Zillow)

Other considerations - I will need to spend about 7K for some home repairs, appliances, car tires in the coming months or two which will come from savings, outside of that no other expected large expenditures. I do realize I could probably lower some of my monthly expenses like food and entertainment but can't lower cable as it's part of the rental. Looking for thoughts based on current. Thanks


ysette9

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Re: Am I FIRE'd?
« Reply #1 on: March 09, 2020, 10:14:46 PM »
Your numbers look solid provided your guesstimates of spending are correct.
Congrats on being FI!

Your rental looks to be a terrible investment. Id sell it and invest in something else Id i were you. Even a bond fund would likely be getting you better returns without any headaches or maintenance costs.

nyfireguy

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Re: Am I FIRE'd?
« Reply #2 on: March 10, 2020, 06:25:25 AM »
Your numbers look solid provided your guesstimates of spending are correct.
Congrats on being FI!

Your rental looks to be a terrible investment. Id sell it and invest in something else Id i were you. Even a bond fund would likely be getting you better returns without any headaches or maintenance costs.

Thanks for the response, I thought there would be more. As for the rental it is in my primary home so there really is no 'investment' there. The secondary home (half owned) which is not a great investment and we are looking to sell would go away within the next year (hopefully). I would rather have any amount of $k then the $750 a month outlay.

ontheway2

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Re: Am I FIRE'd?
« Reply #3 on: March 10, 2020, 07:35:56 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

nyfireguy

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Re: Am I FIRE'd?
« Reply #4 on: March 10, 2020, 08:04:13 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

ontheway2

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Re: Am I FIRE'd?
« Reply #5 on: March 10, 2020, 09:34:49 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

Ah, ignore my first comment. Sinking funds can be predicted though. Do you anticipate ever replacing your vehicle? Do you go the 3k beater route, or do you purchase for 18k and drive for 12 years (at $125/month)? Home maintenance is averaged at 1-3% of home value per year. One would obviously not spend1% every single year, but it should average around that. With your home's value, that's $480/month on the low end. Adding in the secondary home is another $92 for your share.

nyfireguy

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Re: Am I FIRE'd?
« Reply #6 on: March 11, 2020, 10:48:34 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

Ah, ignore my first comment. Sinking funds can be predicted though. Do you anticipate ever replacing your vehicle? Do you go the 3k beater route, or do you purchase for 18k and drive for 12 years (at $125/month)? Home maintenance is averaged at 1-3% of home value per year. One would obviously not spend1% every single year, but it should average around that. With your home's value, that's $480/month on the low end. Adding in the secondary home is another $92 for your share.

Thanks again

Vehicle is a 2013, fully purchased, with 45k miles. Previously vehicle was owned for 10 years and had 92K miles only sold because I felt I wanted an update.

You are correct in that i didn't average in 1-3% for home maintenance but I did buffer in extra funds since my numbers were 35K but I was using 40K which would give me over $400 a month extra.

In regards to sinking funds being predictable I think this is my biggest concern in the last two weeks and moving forward since it seems like we are moving into a bear market and recession

nyfireguy

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Re: Am I FIRE'd?
« Reply #7 on: October 06, 2020, 06:58:43 PM »
Update on the numbers since March (pre-covid)

48 live in a HCOL and unfortunately some of my numbers went up, as well as my investments, some went down but I think I am still good and there will be no more work
 
Monthly Expenses 

Primary home Taxes/Insurance                          $1500
Secondary home                                               $750
Mobile Phone/Internet/Cable/                             $300
Insurance (health & car)                                    $670
Groceries                                                          $400
Entertainment                                                   $300
Gas                                                                  $50
Misc                                                                 $50

Monthly Expense                                              $4020
Monthly Income (Rental explained below)           $1350
Total Monthly Outlay                                         $2670

Just for round numbers my cost of living (based on above) is about $32,040 but can say 35K for even numbers

Asset/Investments
IRA Traditional                                                  950K
Investment Account                                           800K
Checking/Savings                                              40K 
Cash                                                                 10K

Total                                                                1.8M                                   

The breakdown below = Asset Value                 630K  (610K+20.5K)                         

Primary home with rental income of 16.2K annually and no mortgage value 610K (based on Zillow)

Secondary (50% ownership with friend) mortgage of 179K at $1500 monthly(so $750 each) which includes all costs including tax/insurance in escrow, value 220K (based on Zillow)

Other considerations - Secondary home should be sold by January 2021, after fees, etc assumption is 10K which will go into cash reserves or investment. Need 5K from savings in coming months

***I guess my question is does anyone know a good calculator to figure out how much tax I will pay from my withdrawal when I start? Not really sure how to figure that out honestly
« Last Edit: October 06, 2020, 07:05:00 PM by nyfireguy »

terran

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Re: Am I FIRE'd?
« Reply #8 on: October 06, 2020, 09:41:18 PM »
Have you messed around at all with the Case Study Spreadsheet? That has some good tax functionality.

Are you planning to use ACA insurance? If so, you'll want to familiarize yourself with how the ACA subsidies work. Here are the current Federal Poverty Level numbers.

You'll probably want to plan to plan to live off of your taxable account for the first 5 years while you get a Roth conversion ladder going. You'll mostly likely want to at least fill the standard deduction, maybe some/all of 10% bracket, and maybe some of the 12% bracket, but also try to keep all income under the 0% long term capital gains tax bracket all while remaining cognizant of the ACA subsidy consideration. Here are the 2020 tax brackets and standard deduction. 2021 will probably be similar or you there might be somewhere that's published them already if you want to google for it.