Lucky guy looking for next chapter

[optimusprimal]

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[Sunshine007]

Your post is a tad confusing to the reader.  I recommend starting by tracking your expenses.   It seems you may be blowing threw a lot of money without realizing it.  If you could track your actual spending and post some more details on your situation, then the folks here can better assist you.  You seem to have a lot of money and could retire now IF you can manage it well.  We can't really offer a lot unless we have more details of your income and expenses as well as your family goals. 

[reeshau]

This is certainly the "short, short version" of a case study.  Understand, the quality of your answers depends on the quality of your presented case study.  I assume you have read other studies, but did you also read the sticky on the recommended format?

https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/


Now, to what you have presented...

By the 4% rule, $5M would cover $200k.  And that's not even considering your wife's ongoing income.  But.  You mention $5M in assets, and also mention a paid-off house.  Have you included your house in your assets?  If so, you are assuming you are selling it to fund retirement.  If not, what are your assets absent your house?  That's your real starting point, if relocation is not in the cards.  I would also question what your plans are for funding college:  if $5M is your total net worth, but you plan on paying for college, then you also need to net out that part of your investments.

To question #1:  The only real way to be sure, is to try it out!  That is, set that as your budget, and live on it.  Of course, as you say you have babysitting now, but if that is the only outlier you know of, it should be easy to account for.  While the extra work at home may be hard to adjust to while you are still working, living that way is the surest way to know you can do it.  Short of that, most people would start getting some real data / detailing your current expenses, and being open with your spouse and kids about the changes you see in your future budget.

#2:  This budget hardly seems like there is any hardship.  Really, time is probably the more-scarce resource at this point, anyway, and a "stay at home" plan addresses that.  I would question priorities within your budget:  do you really need to eat out weekly, when you can have more fun eating at home together?  (just an example) but there is $60k per year of pure "fun stuff" here--more than plenty of others' whole budgets.  They aren't missing out.

#3:  Same answer as #1.  What are you doing toward your passions now?  If you hope to find one after you quit, that could be a risky move.  If you simply will amp up your side hustle / favorite charity / intense hobby, etc. and can clearly see full-time roles in those, then this wouldn't really be a question.  Get involved now, and figure it out before you go through a big drama about the change.

[fell-like-rain]

The bad news is your spending is wildly out of control. When you get to the point where you’ve got nine different $10k+ budget categories, one of which is “stuff happens”, you know you have a problem.

The good news is that given the amount you have saved, you could withdraw 4% annually and be able to support this bloated budget.

To answer your actual questions:

1. A normal family should spend less once FIREd- there’s more time to cook, do their own housework and childcare, slow travel instead of brief junkets, etc. However, if you end up filling those extra 40 hrs a week with skiing and spa days and movies and expensive vacations, you’ll spend more. You really need to ask yourself how you’ll be spending your newfound free time.
2. “Never want to feel like I’m depriving the family of anything” is how you get to spending $200,000 a year. Perhaps you should start thinking about creative solutions to problems rather than just throwing money at them.
3. Again, only you can answer this. People generally have a natural drive to be productive, though paid work can really suppress this. Do you feel like you have a lot of pent-up hobbies/activities/volunteering you wish you could do more of, if only you had the time? Or to put it another way, would you be retiring from something, or retiring to something?

On the expense side, I guess I'm interested in whether folks think 25k is enough for a family of five to see the world.  Could we go do a house swap and spend a month in Tokyo, for instance?  Anything else weird coming out on the expenses.

There are families with kids who travel the world spending less than $25k total. Again, this is entirely about the level of spending and luxuries you choose.

[reeshau]

Just to challenge you on a couple of items you are passing on...

1.  Property taxes -- seems like this one is not going away since I don't want to move

Do you think the valuation this is based on is fair?  Is it high, relative to your neighbors?  Has it gone up a lot, recently?  There are a lot of stories of people taking the time to challenge their tax assessments and influencing this number.  There are also a lot more people who don't have the time to do so...

4.  Medical -- Not sure I can make this one go any lower

Medical spending is high, but do you understand it?  Do you have a "golden" plan, with great coverage that you might not use if your family is healthy?  If you have an HDHP, are you using your HSA as a tax-free investment vehicle, or just paying expenses immediately out of it?  You have the assets to address a lot of common issues with health care--or at least, to make some lemonade out of it.

In regards to the fun categories, I would think you could squeeze them by 10%, and your family wouldn't even notice.  (then, of course, squeeze 10% more)  For yourself, think about it this way:  if you cut fun by 50%, you would be spending $120k instead of $150k, and you would already have your cushion.  So, you save X years of working "just in case."

The exercise isn't to get you to a certain target weight; it's to get you to think deeply about what you really want out of life, and stop mindless spending (and the work to fund it) in lieu of spending that really makes you happy.  Whether you want to go to that length is up to you.

[ysette9]

Plenty of other people can critique your budget line items and make suggestions for improvement. A few things stand out as especially absurd, and this is coming from another high-spending, high-earning family of 5 in a HCOL area:

Clothes- no way you need to spend that much. A budget of $1k should buy all of you a ton at ThredUP

Cars- why so much for two used cars? You aren’t going to be doing a ton of commuting or replacing them every two years.

Travel- our FIRE travel budget is $10k. I plan on using our extra time to learn about credit cars points and travel hacking and the like. My dream is to do house exchanges for longer periods of time, something that should be easy to do as we live in a desirable area. You too, perhaps?

Childcare- I totally get that you need a break, but how much? Some of your kids must be school age, yes?

Lessons- yowza. Ours are young enough that we have only had some swim lessons so far. I am conscious of the fact that people in our demographic are prone to tiger mom-ing and not letting their kids be kids. I am hoping we can strike a balance that gives them opportunities to learn and have plenty of unstructured time to get bored and invent and be creative. That is the best part of childhood. For myself I look forward to classes at the junior college again.

[bbqbonelesswing]

2.  Never want to feel like I'm depriving the family of anything--should I keep working to put a little more cushion on the stash?

Frankly, I think this point cuts right to the core of your spending. There is a fine line between your kids never feeling deprived, and being totally spoiled. I'm sure you have a lovely family, but your spending seems to suggest the latter. It's ok for your kids to want- it creates ambition to pursue those things themselves.

It seems like there is room to cut in every one of these categories, but it will require a change in this overall mindset. You spend more on groceries and dinners than I spend all year, and I go out. $8k on phone and utilities... let me guess, the kids all have phones/tablets/Netflix/other goodies? $5k on clothes... you and your wife are established professionals and should already have basic wardrobes built up, and your kids are all under 10. Are they wearing designer clothing?

You may have enough invested to maintain this current level of spending, but with your family's attitude towards money, I would expect these expenses to only grow larger with time. Your kids are being conditioned to enjoy fancy meals, vacations, and new clothes all the time- what do you think will happen when they become teenagers? That clothing budget is going through the roof. Add on nice cars for all three once they hit 16, and the morning stop at Starbucks on the way to school every morning. Just wait until they hit college: 3 kids x $50k for private school = $150k/y. Then you'll be taking trips to visit them, buying dorm supplies, etc.

You are in a very lucky position and I'm sure you have also worked hard to be able to provide all of this for your kids. But, with your spending habits, there is no magic bullet or single line item to cut that will make you feel secure. You will need to rethink this lifestyle, or save a hell of a lot more money.

[Tuskalusa]

I would recommend seriously tracking you expenses for 6 months before making a decision to leave paid work. With the amount of assets you have, you should definitely be able to make FIRE work. However, with your level of expenses, not having the monthly cash flow to cover them easily will be a big shock.

Also, you might want to be sure that you’re ready and willing to take over all the household responsibilities if you quit paid work. With a family of 5, that’s a lot of cooking, cleaning and childcare that you’ll have to shoulder. Even if your spouse makes less money, they will be the one still working, and that should see some benefit to you being the parent at home. (I say this as a spouse who left paid work to stay home...there was a lot of work when we let go of our cooking/cleaning/daycare support).

It all looks doable, but I think a 6-month period to truly plan for the realities.

[optimusprimal]

Add on nice cars for all three once they hit 16, and the morning stop at Starbucks on the way to school every morning.

Scary thought but considering I drive a 10 year old Prius I'm not sure they're going to expect to drive something nicer than Dad!

[optimusprimal]

Clothes- no way you need to spend that much. A budget of $1k should buy all of you a ton at ThredUP

Cool website!  I've gotta admit I'm a total dummy on clothes--I just buy what I need when I need it.  Couldn't care less about the topic.  But that website looks great--save the environment and money!  Too bad they don't have men's clothes...

[ysette9]

Clothes- no way you need to spend that much. A budget of $1k should buy all of you a ton at ThredUP

Cool website!  I've gotta admit I'm a total dummy on clothes--I just buy what I need when I need it.  Couldn't care less about the topic.  But that website looks great--save the environment and money!  Too bad they don't have men's clothes...

My husband keeps saying the same thing! I haven’t found an equivalent for men yet. For kids’ clothes I find it is so-so. Sometimes I find great deals and sometimes a $5 pair of pants from Target is just as good. For women though I have found amazing deals. It is also a great way for me to clear out old stuff that I am not wearing anymore, which I appreciate.

[Dicey]

PTF

[lutorm]

2.  Never want to feel like I'm depriving the family of anything--should I keep working to put a little more cushion on the stash?

That's a very materialistic way of thinking, it seems. One of the most powerful things I took away from MMM's attitude towards kids (or in general) was the fact that there is no free lunch -- there's always a tradeoff, in this case between giving your kids money or giving them your time. While you obviously don't want to let your kids starve so you can spend time with them, you're way into the other extreme.

I suspect if you give your kids the choice of whether they want Dad to work a few more years so you can go on another luxury vacation or for Dad to be home and do things with them every day, they'd choose the latter. Certainly before they start school is the time to get to hang out with them. I know that personally I don't have the energy to do that as much as I want to while working a full-time job, and this has me seriously considering maybe not FIREing (we're not quite there yet) but at least postponing work for a while before the kids start school.

I also think that there is another important dimension to this that others have already touched upon: If you provide for their every want, you are depriving them of the very important experience that nothing in life comes for free and that it is possible to be happy without material possessions. If you've been reading MMM, I'm sure you've heard of the hedonic treadmill and all that. If you want to raise your children into self-reliant adults, learning to prioritize expenses and think about needs vs wants is a really important lesson.

[SwordGuy]

2.  Never want to feel like I'm depriving the family of anything--should I keep working to put a little more cushion on the stash?

That's a very materialistic way of thinking, it seems. One of the most powerful things I took away from MMM's attitude towards kids (or in general) was the fact that there is no free lunch -- there's always a tradeoff, in this case between giving your kids money or giving them your time. While you obviously don't want to let your kids starve so you can spend time with them, you're way into the other extreme.

I suspect if you give your kids the choice of whether they want Dad to work a few more years so you can go on another luxury vacation or for Dad to be home and do things with them every day, they'd choose the latter. Certainly before they start school is the time to get to hang out with them. I know that personally I don't have the energy to do that as much as I want to while working a full-time job, and this has me seriously considering maybe not FIREing (we're not quite there yet) but at least postponing work for a while before the kids start school.

I also think that there is another important dimension to this that others have already touched upon: If you provide for their every want, you are depriving them of the very important experience that nothing in life comes for free and that it is possible to be happy without material possessions. If you've been reading MMM, I'm sure you've heard of the hedonic treadmill and all that. If you want to raise your children into self-reliant adults, learning to prioritize expenses and think about needs vs wants is a really important lesson.

Dear God, but this is SO VERY TRUE.

Your plan sounds like it's designed to raise emotional cripples that are used to their every whim being met for them.   

Taken to extreme, this is how people end up in prison for bribing people to let their kids into a college the kids didn't do the work to qualify for.

The best thing you could do for your kids is ratchet down your spending until they are out of college.  Let them see you have to pay attention to what things cost.  Let them hear you discussing what's the best choice because you can't have everything you want.   As they get older, let them join in the discussion and help guide them to make a wise decision.

People NEED to learn this.   They need to fail when they are younger.  They need to be disappointed when they are younger.   I'm not saying that's true ALL  the time, but it does need to be true enough for them to learn how to deal with it in a positive, pro-active, adult manner.

If you live in a merely nice neighborhood instead of one chock full of spoiled rich kids, they will learn these lessons much better.   

[lutorm]

Phone -- $2k
Replacement phones -- 0.5 (say get a new iphone every three years--two of us)

Sorry but I have to ask about this too: You're saying you have 2 phones and spend $2k/year on just the service?

We have 2 Google Fi phones and our monthly bill is $45-50 depending a bit on how much we're out of the house and use the data. You're spending more than 3x that. The summer we spent in Europe it was still below $100/month. Either you must be watching movies on the data connection 24/7 or you have an outrageously expensive service. It seems easy to cut that by a lot by just investigating the options for an hour or two.