Author Topic: Why will it take so long?  (Read 15123 times)

arebelspy

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Re: Why will it take so long?
« Reply #150 on: December 02, 2019, 02:15:37 PM »
There's a few solutions.

The Status Quo:

1) Accept the status quo. You have a decade left. You'll be done around 40. Not bad. Accept that, and be happy.

2) Be unhappy about the status quo, but don't do anything to change it.

Not The Status Quo:

3) Turbocharge your FIRE. Cut expenses, increase income. Cut full FIRE time by 30-50%.

4) Look into more semi-ER options (part time work, sabbaticals, seasonal work, consulting, etc. and coast FIRE). Semi-ER any time from now onward, and work as needed, but be pretty free.


Given it's been a year since the OP and it still seems to be bugging you a lot, option 1 seems hard for you to do. Option 2 is the status quo, and most likely course of action.

But I'd recommend 1, 3, or 4, in some order.

Good luck!

Let's get rid of #2. That's no way to live life and it's unfortunate that's how i'm feeling today... I will work on 1,3 and 4!

I think 3 is going to be the toughest.... I will look closely at 4 and 1 is what it will need to be for today and x days/weeks/months/years for awhile,  until i figure out 4!
Your attitude is a lot better in the most recent posts.

The premise of this thread is #2. But to throw that out, shoot for the attitude of #1 while working towards 4, well, that's a lot better way to live.

I have thought for awhile about writing a book about semi-ER. I think it's the most underrated/under-discussed topic in our community.

You should absolutely spend some more time on it. :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Mgmny

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Re: Why will it take so long?
« Reply #151 on: December 02, 2019, 02:23:44 PM »
There's a few solutions.

The Status Quo:

1) Accept the status quo. You have a decade left. You'll be done around 40. Not bad. Accept that, and be happy.

2) Be unhappy about the status quo, but don't do anything to change it.

Not The Status Quo:

3) Turbocharge your FIRE. Cut expenses, increase income. Cut full FIRE time by 30-50%.

4) Look into more semi-ER options (part time work, sabbaticals, seasonal work, consulting, etc. and coast FIRE). Semi-ER any time from now onward, and work as needed, but be pretty free.


Given it's been a year since the OP and it still seems to be bugging you a lot, option 1 seems hard for you to do. Option 2 is the status quo, and most likely course of action.

But I'd recommend 1, 3, or 4, in some order.

Good luck!

Let's get rid of #2. That's no way to live life and it's unfortunate that's how i'm feeling today... I will work on 1,3 and 4!

I think 3 is going to be the toughest.... I will look closely at 4 and 1 is what it will need to be for today and x days/weeks/months/years for awhile,  until i figure out 4!
Your attitude is a lot better in the most recent posts.

The premise of this thread is #2. But to throw that out, shoot for the attitude of #1 while working towards 4, well, that's a lot better way to live.

I have thought for awhile about writing a book about semi-ER. I think it's the most underrated/under-discussed topic in our community.

You should absolutely spend some more time on it. :)

You SHOULD write a book about semi-ER!

Or put together a new documentary. You could call it, "Semi-Playing with FIRE" (just kidding) I think you were in it for a few minutes (I think that was you?). I purchased it on/around the day it came out for $20, and i'm sorry to say I was largely disappointed. I just saw a thread on Reddit about this same general feeling.

My wife thinks it was intended for an audience that knows little to nothing about FIRE, so I should have expected to be underwhelmed, but oh well.

Anyways, yes. An attitude adjustment is in order. Once I saw all the aggressive posts slapping me around a bit, it was clear. It just took a few days to sink in and for me to be OK with it.

Laura33

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Re: Why will it take so long?
« Reply #152 on: December 02, 2019, 02:45:45 PM »
This isn't the point you are making, I know, BUT i'm going to defend the house purchase (to my detriment, i know). We ended up selling the house we paid 220k for in 2015 for 315, and then purchased our new home brand new for 415k.

So, our first 30 year loan was based on 209k at 4.25% and our new loan is 240k at 3.75%. Our monthly payment is only $100 more a month. YES I KNOW MONTHLY PAYMENT MEANS NOTHING, BUT it feels really cool to trade a house we paid 220k for 4 years ago built 40 years ago for a house we had built for us with more space, efficiency, etc. for only $100 more a month. I know i know, not the point, and still effectively cost me $200k more. I realize that completely. But it's really not as bad as us taking out a half a million dollar loan with a $2200 a month disappearing into interest each month. But regardless, it was a $200k expense, yes.

Back to your post: Your list is good, and the engineer's triangle (or we call it the iron triangle in project management, so i should be very familiar with this concept) is a really important thought that I don't think of often enough. I just want it all, and I don't reflect on my situation/experiences enough to realize that I am getting about as close to having it all as possible. Just 10 years away...

As for looking at the "FIRED AT 29!" people, it does look like a lot of those people have 4+ rental properties - so a sustainable income from non-savings/investments. I'm not interested in getting into rentals or DEPENDING on any other type of side hustle during retirement - i just want my portfolio to work for me....

Look, you are completely, 100% normal.  Everyone wants it all, and no one actually wants to make the choices we need to make -- but we do it anyway.  I still occasionally fall asleep dreaming about a beachfront condo in the Caribbean.  And then I wake up the next morning and go to work.  There's nothing wrong with wanting it all -- you just have to understand that "all" is a daydream.

I've heard a lot of people say to change your attitude, and I find that's something that's very difficult to intuit how to do (at least, speaking as someone who clung to the "where's my winning Powerball ticket dammit" mindset for far longer than I'm happy to admit).  So I figured I'd tell you how I keep my whiny self in check:  I look at all of my options, and I think through, in detail, how my life would change if I pursued each of them.  And not just the "I'll sit on the beach with umbrella drinks every day!" version of change -- I mean the good, the bad, and the really truly ugly.  And usually, when I look at what some other version would really require, I realize that I've got just about the best combination of time to FIRE and carpe diem that I can manage. 

That's why I'm not criticizing the house.  I totally get it -- mine's 130+ years old, more house than I need, and I love it.  You'll pry it out of my cold, dead hands.  But that's a choice, and it has consequences:  you can buy the bigger house, and work X more years to pay off the additional costs (and foregone investment profits from that $200K); or you can decide that your old house is good enough and not worth all the extra years to FIRE.  You decided the house was worth it, and you still seem to love it, so good for you!  And if you want to, you can make that same decision again with an even bigger dream house at some point.  Or you might be 8 years down the road, and now you really hate your job, and you're desperate to FIRE and spend more time with your kids, and now you're not willing to deal with working 3-4 more years just for the house; then maybe you decide to sell it and downsize, because it no longer suits your priorities. 

Same with rental properties:  you have accurately identified that as a very good path people follow to FIRE at younger ages.  You, too, can do that.  But you have decided you don't want to deal with all of the hassle of being a landlord.  OK, so don't -- invest in the market and find another way.

But whatever path you choose, you don't get to whine about the tradeoffs.  Just remind yourself that you made this choice, and you made it because it suited your own life and priorities.  And when you feel like whining, just sit down and go through the same analysis again to see whether that choice still fits, or whether you need to go in another direction. 

robartsd

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Re: Why will it take so long?
« Reply #153 on: December 02, 2019, 04:22:05 PM »
The part time thing is a thought, and i toy with it, but it just seems SO dumb to work making $12 an hour, when i can just spend the time now and make 4x as much. In true form of "Your Money or Your Life" it would be illogical to waste 4x the life energy in the future for somethign i can get 4x as fast "now" (or in 11 years). Right?

I disagree.

Part time (Semi ER) saves you life energy, because even working at a lower rate you work for less time. By spreading it out, you let the market do the work in the meantime.

For example, say you consulted for the same rate (to keep the math simple at first) and worked 1/4th the hours. You'd have to work 4X as long to make the same amount of money.

So if you had 10 years of work left, you'd need to do 40 part time years to make the same amount.

HOWEVER, because you have investments, those will be cranking away, and likely you only need to work 20 years, not 40. 20 years of compounding can do a lot (say double twice). You've halved the life energy needed.

Now the math gets a lot trickier when we talk about earning less (though some bits work in your favor, like paying less in taxes), but in essence, spreading out work doesn't straight multiply out like you're considering, because during that time you have compounding working for you. So semi-ER can lead to more years worked, but much less total time worked.

Good if you want to be home with a kid. Less so if you want to be totally free to travel. Depends on your goals. But semi-ER can be a really good tool.

I agree that working less and accumulating slower may be a good way to maximize lifetime happiness. However, I'm not convinced it is a path to lower overall lifetime earned income because a lower earning rate would would be coupled with a much lower savings rate. For instance, based on MMM's shockingly simple math post, someone starting out at 0 making 100k/yr and spending (65% savings rate), can expect to take 10.5 years to FIRE. If instead they made 70k/yr (50% savings rate if still spending 35k) they would expect to take 17 years to FIRE. With the lower savings rate, they have to have about 13% more lifetime earnings. I expect the impact of changing earning levels on lifetime earnings required drops significantly as the amount of savings already invested relative to spending increases. Also, progressive income tax rates could have a significant impact when saving more than can be deferred in tax advantaged accounts.

arebelspy

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Re: Why will it take so long?
« Reply #154 on: December 02, 2019, 05:06:51 PM »
What you aren't taking into account is the work the compounding is doing for you.

Let me put it another way.

Most FIREees who ER on 4% WR see their portfolio go up and up. 4% WR is for a big crash immediately after ERing (sequence of returns risk). The average portfolio tends to gain. A lot. That time while FIRE'd compounding is working for you, but to a mostly pointless end--you already have enough. Sure, you could give it to kids, or charity, or whatever, but it's not super useful money to you personally.

Instead, by early semi-retiring, you use that compounding time to work for you--to earn you money that you will use, vis-a-vis less working time. So you semi-ER with much less than you need, work some along the way to earn money, and letting that compounding that would give you a huge unneeded stache instead boost you to FIRE.

Less working time overall, more happiness, but less money earned overall. It's not more actual working time to FIRE, even with a lower savings rate, cause you're shifting future useless income from compounding to useful income.

Make more sense?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

GoConfidently

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Re: Why will it take so long?
« Reply #155 on: December 02, 2019, 09:12:01 PM »


[snip]

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week everyu other week is probably far more lucrative than bagging groceries.

Youíre over-imagining substitute pay. In my area, itís $100 a day for subs that are certified teachers and $85 for non-certified subs with a bachelorís degree. School isnít in session year round, so at 1 day every other week, youíre looking at significantly less than a regular $10/hr grocery bagging job.

Your area might pay significantly more if demand is high, but I doubt it based on national teacher salary rates.

Well sure. Looks like subs make about $100 a day in MN. That's for ~6 hours of work, so about $17 / hour. The difference is i could get more hours bagging groceries than i could as a sub. Still, if we each pick up a sub shift every other week we would make $5200 a year for just 1 day a week between the 2 of us. That's not bad.

I like Arelsby's idea of part time contracting better though. I was contracting before my current gig making $65/hour. So, if i do that for 4 months a year, that's $42,000 - or almost our entire FIRE budget. We could Coast FIRE on that...

Look, I get that youíre not serious about subbing, but your math is still wrong. $100/week of public school work is more like $3600/yr assuming you each get one job every other week. Summer, Christmas holidays, thanksgiving and spring break, etc. all eliminate weeks of work. Minus taxes. Minus the possibility of a required retirement contribution (not in MN but when I was subbing I was required here to contribute to a 403b and didnít have an option to choose which one). Also, bell to bell I was teaching for 7.5 hours. Subs in my area have duty during the assigned teacherís conference period, so donít count on a class period ďoffĒ just because the teacher has planning time. Again, not MN so your mileage may vary. Maybe you mistyped and meant it would be easy to pick up $5200 worth of work in a school year for two people instead of 1 day of work per week earning $5200 per year?

Itís a solid option for someone who wants to work with children and is flexible and wants some supplemental income. Iím only pointing it it because you seem to have an overall warped perception of money and how much you need vs have, combined with a strong desire to be done working now. I understand the desire, BUT maybe you should look more closely at your consulting numbers before jumping on any idea. If you want to semi-ER, you have to make sure the numbers match up. Good luck.

blingwrx

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Re: Why will it take so long?
« Reply #156 on: December 03, 2019, 12:45:36 AM »
Quote
When I say peers comparing our 40-60k a year savings, I mean people who are our friends. Like, our not-quite 1-year-old already has $7,000 in his 529 account. We have some friends that have 2 years olds with $0 saved. I know that isn't a retirement-related comparison, but i don't think we have any friends that max out 401ks like we do. We have some friends that are probably contributing around 0% to retirement based on comments they make...

This makes us feel entitled probably, because we are "sacrificing" $60k a year, but 10 years away is such a "pie in the sky" thing. And when i say sacrificing, i mean we are shopping at Aldi and not the upscale grocer, and we are not driving new BMWs, so it's not like we aren't living a really good lifestyle, it's just we feel like we are making a lot of money and we aren't living some extravegent life of luxury because we are saving for something 10+ years away...

I repeatedly hear you say you think you make a lot of money. To me 90k+67k isnít a lot, itís about average in a HCOL city. You might be living check to check if you lived in a HCOL city. I think your mentality that you make a lot and you deserve luxury is driving you in the wrong direction. The best way to cut the 10 years down is to stay hungry and keep working hard and climbing the career ladder or find some side hustles to supplement more income. Aim to get promotions and big annual raises and be comfortable to move on to better opportunities when the current job hits a roadblock your still very young in your career. At the minimum you should be getting 2-3% annul bump just to keep up with inflation. The minute you get comfortable is when your savings will slow down. You just have to keep pushing if you want to reach your goals faster. Cutting expenses and making more money at the same time will get you there twice as fast.

Since you like to compare yourself to your friends you might want to make more successful friends so you will be more driven. Successful people usually follow other successful people. Following Less successful people can drag you down with their lack of budgeting and check to check lifestyle.

I know thereís a lot of luxuries you might want but usually that wonít fit into a FIRE plan unless youíre willing to work extra years for FAT FIRE then maybe you can have the McMansion and luxury cars, But at a 1.25 mil FIRE it looks to be more on the lean side so better to learn to cut the fat from your budget now and be more realistic on your wants given the lean budget youíll need to stick to when you do FIRE.

charis

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Re: Why will it take so long?
« Reply #157 on: December 03, 2019, 08:30:38 AM »


[snip]

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week everyu other week is probably far more lucrative than bagging groceries.

Youíre over-imagining substitute pay. In my area, itís $100 a day for subs that are certified teachers and $85 for non-certified subs with a bachelorís degree. School isnít in session year round, so at 1 day every other week, youíre looking at significantly less than a regular $10/hr grocery bagging job.

Your area might pay significantly more if demand is high, but I doubt it based on national teacher salary rates.

Well sure. Looks like subs make about $100 a day in MN. That's for ~6 hours of work, so about $17 / hour. The difference is i could get more hours bagging groceries than i could as a sub. Still, if we each pick up a sub shift every other week we would make $5200 a year for just 1 day a week between the 2 of us. That's not bad.

I like Arelsby's idea of part time contracting better though. I was contracting before my current gig making $65/hour. So, if i do that for 4 months a year, that's $42,000 - or almost our entire FIRE budget. We could Coast FIRE on that...

Look, I get that youíre not serious about subbing, but your math is still wrong. $100/week of public school work is more like $3600/yr assuming you each get one job every other week. Summer, Christmas holidays, thanksgiving and spring break, etc. all eliminate weeks of work. Minus taxes. Minus the possibility of a required retirement contribution (not in MN but when I was subbing I was required here to contribute to a 403b and didnít have an option to choose which one). Also, bell to bell I was teaching for 7.5 hours. Subs in my area have duty during the assigned teacherís conference period, so donít count on a class period ďoffĒ just because the teacher has planning time. Again, not MN so your mileage may vary. Maybe you mistyped and meant it would be easy to pick up $5200 worth of work in a school year for two people instead of 1 day of work per week earning $5200 per year?

Itís a solid option for someone who wants to work with children and is flexible and wants some supplemental income. Iím only pointing it it because you seem to have an overall warped perception of money and how much you need vs have, combined with a strong desire to be done working now. I understand the desire, BUT maybe you should look more closely at your consulting numbers before jumping on any idea. If you want to semi-ER, you have to make sure the numbers match up. Good luck.

Yeah, teachers don't work 6 hour days - I don't know where you are getting that number.  Most teachers are contracted to be in the building for 8 hours (appx 7a-3p, but it varies depending on school hours).  And if you don't have a teaching cert, you make less than the typical going rate for subs.

Mgmny

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Re: Why will it take so long?
« Reply #158 on: December 03, 2019, 09:17:27 AM »

Yeah, teachers don't work 6 hour days - I don't know where you are getting that number.  Most teachers are contracted to be in the building for 8 hours (appx 7a-3p, but it varies depending on school hours).  And if you don't have a teaching cert, you make less than the typical going rate for subs.

Well, when i was in high school, we had 6, 56-minute periods per day plus a lunch period. Teachers taught 5 periods in a day plus got the lunch that lined up with their classes lunch block.

So, as a sub, I would be responsible for educating students 5 x 56 minutes which is really 4 hours and 40 minutes daily. Would i need to be in the building during lunch and the "prep" period, sure, so we can call it 6 hours plus a 40 minute lunch, if you want.

I don't want this thread to go into a flame war about sub pay though, so let's just assume i'm not going to be a sub, and i would stick towards short-term contracts in the field i currently work in.

robartsd

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Re: Why will it take so long?
« Reply #159 on: December 03, 2019, 09:28:47 AM »
What you aren't taking into account is the work the compounding is doing for you.

Let me put it another way.

Most FIREees who ER on 4% WR see their portfolio go up and up. 4% WR is for a big crash immediately after ERing (sequence of returns risk). The average portfolio tends to gain. A lot. That time while FIRE'd compounding is working for you, but to a mostly pointless end--you already have enough. Sure, you could give it to kids, or charity, or whatever, but it's not super useful money to you personally.

Instead, by early semi-retiring, you use that compounding time to work for you--to earn you money that you will use, vis-a-vis less working time. So you semi-ER with much less than you need, work some along the way to earn money, and letting that compounding that would give you a huge unneeded stache instead boost you to FIRE.

Less working time overall, more happiness, but less money earned overall. It's not more actual working time to FIRE, even with a lower savings rate, cause you're shifting future useless income from compounding to useful income.

Make more sense?
No, I can't find an example with concrete numbers where it actually works out to less total working time. More time compounding returns makes up for some but not all of the decreased saving rate. The more you've accumulated before cutting back, the lower the impact of cutting back because the earliest years are the most important for the compounding returns. I've run a few simple projections and found that after getting about halfway to FIRE, cutting back is pretty much negligible to the total working time required to get to FIRE at that point; but cutting back earlier adds a bit to total working time (as the 13% more total working time in the example starting from zero that I provided). I get the concept, but the numbers don't seem to work out. The only way I see it being possible is if progressive tax rates and limited tax deferred savings space makes it more tax efficient to distribute the accumulation over more time to make up for the rest of the decreased savings rate.

Although I do think that coast FIRE strategies require a small bit extra total working time, the distribution of that work over more years seems like it would provide great quality of life options that could be worthwhile.

Mgmny

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Re: Why will it take so long?
« Reply #160 on: December 03, 2019, 09:29:47 AM »
Quote
When I say peers comparing our 40-60k a year savings, I mean people who are our friends. Like, our not-quite 1-year-old already has $7,000 in his 529 account. We have some friends that have 2 years olds with $0 saved. I know that isn't a retirement-related comparison, but i don't think we have any friends that max out 401ks like we do. We have some friends that are probably contributing around 0% to retirement based on comments they make...

This makes us feel entitled probably, because we are "sacrificing" $60k a year, but 10 years away is such a "pie in the sky" thing. And when i say sacrificing, i mean we are shopping at Aldi and not the upscale grocer, and we are not driving new BMWs, so it's not like we aren't living a really good lifestyle, it's just we feel like we are making a lot of money and we aren't living some extravegent life of luxury because we are saving for something 10+ years away...

I repeatedly hear you say you think you make a lot of money. To me 90k+67k isnít a lot, itís about average in a HCOL city. You might be living check to check if you lived in a HCOL city. I think your mentality that you make a lot and you deserve luxury is driving you in the wrong direction. The best way to cut the 10 years down is to stay hungry and keep working hard and climbing the career ladder or find some side hustles to supplement more income. Aim to get promotions and big annual raises and be comfortable to move on to better opportunities when the current job hits a roadblock your still very young in your career. At the minimum you should be getting 2-3% annul bump just to keep up with inflation. The minute you get comfortable is when your savings will slow down. You just have to keep pushing if you want to reach your goals faster. Cutting expenses and making more money at the same time will get you there twice as fast.

Since you like to compare yourself to your friends you might want to make more successful friends so you will be more driven. Successful people usually follow other successful people. Following Less successful people can drag you down with their lack of budgeting and check to check lifestyle.

I know thereís a lot of luxuries you might want but usually that wonít fit into a FIRE plan unless youíre willing to work extra years for FAT FIRE then maybe you can have the McMansion and luxury cars, But at a 1.25 mil FIRE it looks to be more on the lean side so better to learn to cut the fat from your budget now and be more realistic on your wants given the lean budget youíll need to stick to when you do FIRE.

I mean, we live in suburban MN. Not the cheapest state, but not San Francisco by any stretch.

https://dqydj.com/income-percentile-by-age-calculator/

According to that website, my wife and i are both at 90% for our ages (90k for 29 year old and 70k for 25 year old, plus my wife gets commission, so she is probably closer to 82k this year). So, we are 2 people in the 90th percentile for our age. I would imagine that 2, 90th percentile incomes in a family probably puts us at like 96th percentile for our age in terms of household income (it would be 99th if the distribution were even and marriage preference wasn't skewed, so i just am guessing at 96th because high earners probably marry other high earners, and the earnings curve is logarithmic, not even). So, yes, i do say we make a lot of money, and I feel like that claim is justified by the demographic statistics, but whatever.

As far as making "successful" friends, that would probably hurt us more than anything. The average American spends way too much money, so if we started hanging out with our financial peers (or people making 2-3x as much as us (so, 500k a year...), we would be pressured EVEN MORE to purchase the land rovers/lexuses and to take weekend trips to the St Regis in Park City...

Realistically, from other comments, i think we should probably make more mustachian friends who would encourage us to live more frugally and spur us on in saving.

I understand staying hungry though. For instance, before i started this full time job in July, i had another offer that was for $65/hour (contract).so, i basically left 20-40k on the table per year to get a more "relaxed" job with unlimited PTO, 12 minute commute (compared to 1 hour). So, i definitely hit the"easy" button for this job, not the "climber" or "hungry" approach like i could have to get my stache to grow faster. But again, i feel like we're making a lot at 90+70 (and you can disagree). Would it help to reach FI faster with more money? absolutely.

Mgmny

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Re: Why will it take so long?
« Reply #161 on: December 03, 2019, 09:34:24 AM »
What you aren't taking into account is the work the compounding is doing for you.

Let me put it another way.

Most FIREees who ER on 4% WR see their portfolio go up and up. 4% WR is for a big crash immediately after ERing (sequence of returns risk). The average portfolio tends to gain. A lot. That time while FIRE'd compounding is working for you, but to a mostly pointless end--you already have enough. Sure, you could give it to kids, or charity, or whatever, but it's not super useful money to you personally.

Instead, by early semi-retiring, you use that compounding time to work for you--to earn you money that you will use, vis-a-vis less working time. So you semi-ER with much less than you need, work some along the way to earn money, and letting that compounding that would give you a huge unneeded stache instead boost you to FIRE.

Less working time overall, more happiness, but less money earned overall. It's not more actual working time to FIRE, even with a lower savings rate, cause you're shifting future useless income from compounding to useful income.

Make more sense?
No, I can't find an example with concrete numbers where it actually works out to less total working time. More time compounding returns makes up for some but not all of the decreased saving rate. The more you've accumulated before cutting back, the lower the impact of cutting back because the earliest years are the most important for the compounding returns. I've run a few simple projections and found that after getting about halfway to FIRE, cutting back is pretty much negligible to the total working time required to get to FIRE at that point; but cutting back earlier adds a bit to total working time (as the 13% more total working time in the example starting from zero that I provided). I get the concept, but the numbers don't seem to work out. The only way I see it being possible is if progressive tax rates and limited tax deferred savings space makes it more tax efficient to distribute the accumulation over more time to make up for the rest of the decreased savings rate.

Although I do think that coast FIRE strategies require a small bit extra total working time, the distribution of that work over more years seems like it would provide great quality of life options that could be worthwhile.

Yeah, i think that the math and timeline checks out, but i think it's key to make sure that your investment portfolio is of adequate mass to make it worthwhile.

Like, if we start to coast TODAY, we would need ot coast for another 28 years to hit my FI number. (assuming 8% interest compounded). If we pile on 60k a year for the next 5 years, that coast drops to 10... so it's a tradeoff for sure.

Mgmny

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Re: Why will it take so long?
« Reply #162 on: December 03, 2019, 09:39:51 AM »


[snip]

Sub teaching is something I never considered - but a super idea! Thank you!! Even making $10k a year in income would impact FIRE by $250k in savings, which means my wife and I each only need to earn $5k a year, which seems very doable - even if we're just working at a supermarket bagging groceries a few hours a week (10 hours each * 2 of us * $10/hour * 52 weeks per year = $10,400), but I'm sure subbing 1 day a week everyu other week is probably far more lucrative than bagging groceries.

Youíre over-imagining substitute pay. In my area, itís $100 a day for subs that are certified teachers and $85 for non-certified subs with a bachelorís degree. School isnít in session year round, so at 1 day every other week, youíre looking at significantly less than a regular $10/hr grocery bagging job.

Your area might pay significantly more if demand is high, but I doubt it based on national teacher salary rates.

Well sure. Looks like subs make about $100 a day in MN. That's for ~6 hours of work, so about $17 / hour. The difference is i could get more hours bagging groceries than i could as a sub. Still, if we each pick up a sub shift every other week we would make $5200 a year for just 1 day a week between the 2 of us. That's not bad.

I like Arelsby's idea of part time contracting better though. I was contracting before my current gig making $65/hour. So, if i do that for 4 months a year, that's $42,000 - or almost our entire FIRE budget. We could Coast FIRE on that...

Look, I get that youíre not serious about subbing, but your math is still wrong. $100/week of public school work is more like $3600/yr assuming you each get one job every other week. Summer, Christmas holidays, thanksgiving and spring break, etc. all eliminate weeks of work. Minus taxes. Minus the possibility of a required retirement contribution (not in MN but when I was subbing I was required here to contribute to a 403b and didnít have an option to choose which one). Also, bell to bell I was teaching for 7.5 hours. Subs in my area have duty during the assigned teacherís conference period, so donít count on a class period ďoffĒ just because the teacher has planning time. Again, not MN so your mileage may vary. Maybe you mistyped and meant it would be easy to pick up $5200 worth of work in a school year for two people instead of 1 day of work per week earning $5200 per year?

Itís a solid option for someone who wants to work with children and is flexible and wants some supplemental income. Iím only pointing it it because you seem to have an overall warped perception of money and how much you need vs have, combined with a strong desire to be done working now. I understand the desire, BUT maybe you should look more closely at your consulting numbers before jumping on any idea. If you want to semi-ER, you have to make sure the numbers match up. Good luck.

Thanks GC! Good points about summer and holidays. You are right. I was assuming 52 weeks in a year and my wife and I would alternate working weeks, so between the two of us we would work 1 day a week for 52 weeks - or 52 days a year @ $100 a pop would be $5200. That's a huge oversimplification, and didn't account for the fact that school has holidays, and summers etc.

But yeah, it was just an example. Let's all just assume that the subbing thing isn't going to happen.

I think the short term contract idea is the best idea worth exploring once our investment porfolio grows to a big enough critical mass.

Mgmny

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Re: Why will it take so long?
« Reply #163 on: December 03, 2019, 09:44:02 AM »
What you aren't taking into account is the work the compounding is doing for you.

Let me put it another way.

Most FIREees who ER on 4% WR see their portfolio go up and up. 4% WR is for a big crash immediately after ERing (sequence of returns risk). The average portfolio tends to gain. A lot. That time while FIRE'd compounding is working for you, but to a mostly pointless end--you already have enough. Sure, you could give it to kids, or charity, or whatever, but it's not super useful money to you personally.

Instead, by early semi-retiring, you use that compounding time to work for you--to earn you money that you will use, vis-a-vis less working time. So you semi-ER with much less than you need, work some along the way to earn money, and letting that compounding that would give you a huge unneeded stache instead boost you to FIRE.

Less working time overall, more happiness, but less money earned overall. It's not more actual working time to FIRE, even with a lower savings rate, cause you're shifting future useless income from compounding to useful income.

Make more sense?

Yeah Arelspy's math checks out. I get what you're trying to say Robartsd, but that assumes no initial investment portfolio. today i have 225k (Friday I had 229..hrumph!). In 5 years, i couldhave 700k.At 8% returns, that is $50k in just the first year!

A lot of this can be thrown out the window if/when the market crashes in the next 10 years, but luckily, it will come back soon enough.

Mgmny

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Re: Why will it take so long?
« Reply #164 on: December 03, 2019, 09:45:19 AM »
This isn't the point you are making, I know, BUT i'm going to defend the house purchase (to my detriment, i know). We ended up selling the house we paid 220k for in 2015 for 315, and then purchased our new home brand new for 415k.

So, our first 30 year loan was based on 209k at 4.25% and our new loan is 240k at 3.75%. Our monthly payment is only $100 more a month. YES I KNOW MONTHLY PAYMENT MEANS NOTHING, BUT it feels really cool to trade a house we paid 220k for 4 years ago built 40 years ago for a house we had built for us with more space, efficiency, etc. for only $100 more a month. I know i know, not the point, and still effectively cost me $200k more. I realize that completely. But it's really not as bad as us taking out a half a million dollar loan with a $2200 a month disappearing into interest each month. But regardless, it was a $200k expense, yes.

Back to your post: Your list is good, and the engineer's triangle (or we call it the iron triangle in project management, so i should be very familiar with this concept) is a really important thought that I don't think of often enough. I just want it all, and I don't reflect on my situation/experiences enough to realize that I am getting about as close to having it all as possible. Just 10 years away...

As for looking at the "FIRED AT 29!" people, it does look like a lot of those people have 4+ rental properties - so a sustainable income from non-savings/investments. I'm not interested in getting into rentals or DEPENDING on any other type of side hustle during retirement - i just want my portfolio to work for me....

Look, you are completely, 100% normal.  Everyone wants it all, and no one actually wants to make the choices we need to make -- but we do it anyway.  I still occasionally fall asleep dreaming about a beachfront condo in the Caribbean.  And then I wake up the next morning and go to work.  There's nothing wrong with wanting it all -- you just have to understand that "all" is a daydream.

I've heard a lot of people say to change your attitude, and I find that's something that's very difficult to intuit how to do (at least, speaking as someone who clung to the "where's my winning Powerball ticket dammit" mindset for far longer than I'm happy to admit).  So I figured I'd tell you how I keep my whiny self in check:  I look at all of my options, and I think through, in detail, how my life would change if I pursued each of them.  And not just the "I'll sit on the beach with umbrella drinks every day!" version of change -- I mean the good, the bad, and the really truly ugly.  And usually, when I look at what some other version would really require, I realize that I've got just about the best combination of time to FIRE and carpe diem that I can manage. 

That's why I'm not criticizing the house.  I totally get it -- mine's 130+ years old, more house than I need, and I love it.  You'll pry it out of my cold, dead hands.  But that's a choice, and it has consequences:  you can buy the bigger house, and work X more years to pay off the additional costs (and foregone investment profits from that $200K); or you can decide that your old house is good enough and not worth all the extra years to FIRE.  You decided the house was worth it, and you still seem to love it, so good for you!  And if you want to, you can make that same decision again with an even bigger dream house at some point.  Or you might be 8 years down the road, and now you really hate your job, and you're desperate to FIRE and spend more time with your kids, and now you're not willing to deal with working 3-4 more years just for the house; then maybe you decide to sell it and downsize, because it no longer suits your priorities. 

Same with rental properties:  you have accurately identified that as a very good path people follow to FIRE at younger ages.  You, too, can do that.  But you have decided you don't want to deal with all of the hassle of being a landlord.  OK, so don't -- invest in the market and find another way.

But whatever path you choose, you don't get to whine about the tradeoffs.  Just remind yourself that you made this choice, and you made it because it suited your own life and priorities.  And when you feel like whining, just sit down and go through the same analysis again to see whether that choice still fits, or whether you need to go in another direction.

Thanks Laura. Really solid advice, thank you.

robartsd

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Re: Why will it take so long?
« Reply #165 on: December 03, 2019, 11:09:03 AM »
Yeah Arelspy's math checks out. I get what you're trying to say Robartsd, but that assumes no initial investment portfolio. today i have 225k (Friday I had 229..hrumph!). In 5 years, i couldhave 700k.At 8% returns, that is $50k in just the first year!

A lot of this can be thrown out the window if/when the market crashes in the next 10 years, but luckily, it will come back soon enough.
It looks like the difference is that I use a more conservative 6% real return in my projections. Even with a significant start, this wasn't enough returns to compound fast enough to change total earned income required by anything more than a rounding error. Assuming 8% real returns I can see a small benefit in terms of reducing total earned income required.

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Re: Why will it take so long?
« Reply #166 on: December 05, 2019, 10:14:53 AM »
Good points. With the biggest spending category (housing) we are admittedly suckers for a nice house, so that is something that we could be doing better at...

I should look at my own list and realize that the trade-offs aren't worth it and that my life is pretty good right now.

I found this post on an old thread I was reading through and it seemed to show a theoretical but not too dissimilar situation so far as in someone who is locked into high spending on the big things can mess about with smaller expenditure items, but it won't really make any difference.

Mgmny

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Re: Why will it take so long?
« Reply #167 on: December 05, 2019, 10:52:58 AM »
Good points. With the biggest spending category (housing) we are admittedly suckers for a nice house, so that is something that we could be doing better at...

I should look at my own list and realize that the trade-offs aren't worth it and that my life is pretty good right now.

I found this post on an old thread I was reading through and it seemed to show a theoretical but not too dissimilar situation so far as in someone who is locked into high spending on the big things can mess about with smaller expenditure items, but it won't really make any difference.

You are right, and it's absolutely true, but (there's always a but!) my monthly payment REALLY isn't that high! It's about $1500 a month for principle, interest, taxes, and insurance. That's really not bad!

Now, could I have used all my house equity and put into a taxable account (and therefore a higher mortgage payment) to accelerate FIRE? Yes, i could have. but in terms of trimming expenses, it's not really a huge expense to trim... I just have about $180k in equity tied up in it to deflate the monthly payment on a $415k house.

Gremlin

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Re: Why will it take so long?
« Reply #168 on: Today at 04:32:07 PM »
No one can or should tell you what your priorities need to be.  This journey should be about spending consciously on the things that matter to you.  You've asserted (by your actions if not words) that the new house you're in is more important than FIRE.  That's cool.  That's your choice.

There are a number of people that fall into a trap of measuring the cost to carry a loan rather than the opportunity cost of the purchase in the first place.  It's the same argument with why they always carry a car payment and regularly upgrade their car as a result.

This may be your family's dream home.  If so that may be a great thing to have prioritised.  But if this is a stepping-stone to a bigger, more fancypants place down the track (and again... and again...) then the trade-off is not how much it costs you to carry the loan, the trade-off is between having an increasingly large slab of money compounding FOR you versus an increasingly large slab of money compounding AGAINST you.  I know which one I would choose...