The Money Mustache Community
General Discussion => Post-FIRE => Topic started by: girton on January 15, 2017, 01:59:03 AM
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Trying to FIRE.
age 43 at the moment with c. $1.6m Stash.
Unfortunately it does not look like enough for my family. We are committed to bay area and also looking after a parent. Cost of schooling, college and healthcare is my primary concern.
girt.
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Sorry to hear you're struggling. Try to enjoy what you have, instead of regretting what you feel you're missing!
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You need to get a good handle on your expenses, if less than 4% of stash you're good to go, says the common wisdom. So $64k.
Many here will say that's plenty It's not enough for my family of 5 and we live in low cost of living Ohio. We send our kids to our excellent public schools. We do have college savings for them (some here will say your kids should pay their own college).
Healthcare is a concern and totally up in the air. We spent $15k last year (no subsidy). I budgeted $20k for 2017. No idea yet what to budget for 2018.
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The reality is that if you want the Bay Area, healthcare, schooling, and care for a parent, you'll need more than most are planning on here. Probably closer to $5M than to $1M. I'm in a similar boat as you, but around here you get derided for wanting more than $1M:
http://forum.mrmoneymustache.com/mustachianism-around-the-web/$5-million-its-the-new-$1-million/
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This is something that has always irked me a little bit about MMM. (which overall I think is wonderful) It's hard to get people to acknowledge how difficult it is to get to FIRE with kids. And I think that sets a lot of people up for feeling discouraged.
We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
The only other option I see for a full FIRE with kids would be to buy a very inexpensive property out in the country and homeschool (with very limited extracurricular activities), and make them pay 100% for their own college. That's a lifestyle change we are not willing to make. But some do and are happy with that.
The other option would be to get to $1M (I think we have three more years of savings before we'll be there unless the market tanks) and then do a more semi-retirement where one of us maintains part time work that covers insurance and some education expense.
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But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
Why do you not consider that FIRE?
Sure you won't be a spry 35 year old... but for a GenX'er (I'm assuming), you are probably going to be amongst the youngest you know to retire... and probably more than 10 years before the rest of your generation.... I'd say as long as you aren't HATING life before then, 53 is still a pretty admirable age to retire.... it also depends on when you "discovered" MMM or the notion of early retirement.
If you weren't "enlightened" until you were in your late 30's, I don't think you should be hard on yourself nor compare yourself to 20 year olds who were fortunate enough to realize the path at a much younger age.
And 53? That's hopefully 30 more years without work!
Back to the topic... Our target FIRE year is 2026. My youngest will be 12. I'm personally not finding that my kids are inhibiting my path to FIRE, but they are still pretty young... I'm sure I'll hear comments about must-have summer camps, field trips, equestrian lessons, and away games that I'll have to keep up with when they get older :)
Barring a significant loss in income... and not knowing exactly what health care costs will be like...like many of you, my biggest concern is higher education costs for my kids.
Right now we are funneling more into the paying down our mortgage by 2026 - and I think that's really going to be what allows us to FIRE. If we don't have enough saved up for college by then, then I don't think I'll mind working "pleasurable" side jobs in order to add to their education bucket.
OP, is your residence paid off/or have you minimized your housing costs? Does that 1.6MM include your home equity if any? What in particular makes you uncomfortable with FIRE-ing on about $64K per year?
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How flexible are you on location? Within the bay area there is a pretty big range of costs. If you are tied to the peninsula for good schools yea, no way its going to happen. FIRE is more important and living on highway 24 or 680 area is ok, there are actually a lot of smaller/older housing options that are quite cheap and in some good school districts. Kids will have to share a room if you are serious about FIRE.
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@girton: I am interested in your situation because of you similarities to ours. We are in the Bay Area and plan on staying. We had one toddler and, Mother Nature willing, may have another in the future. Our NW just reached $1.5M.
More details are needed in order to make any assessment at all. I think $5M is ridiculous but maybe you need to shoot for something like $2M? That is essentially the MMM $40k/year living expenses plus the cost of a small house in this area.
What do you mean by cost of schooling? Aren't your kids going to public school? How much do you have saved for college? It is okay to tell your kids that you have X amount and help them make good decisions about how to make that go as far as possible. I would like to pay for everything for my kid, but it is not required. I can't speak for your parental support: can you do the same where you draw a line and say that you are willing to support up to Y amount? If the sky's the limit then you can't budget and you can never know if you have enough.
Finally, healthcare. The huge, fat, stinking pile of poo that could be the undoing of many of our FIRE plans. I'm taking a wait-and-see approach as we still have a few years left. If the outcome is bad then we explore other options, including leaving the country. Perhaps that would look like one spouse with a 20 hour/week job just to keep insured. It totally blows that we are in such a shaky situation in this country in that regard.
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Post a case study? Do you want help, input, celebrate, or commiserate? All can be provided :)
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More details are needed in order to make any assessment at all. I think $5M is ridiculous but maybe you need to shoot for something like $2M? That is essentially the MMM $40k/year living expenses plus the cost of a small house in this area.
I thought the MMM "example" was $25K for a family of three with a paid off house.
For our family of 5 that's something like 25/3*5 = $42K.
We spend almost exactly double that...for shame...not including charitable contributions, retirement account contributions and college savings.
Utter spendthrifts!
I feel we are quite frugal compared to some in our peer group (no BMW SUV every two years, no fully-inclusive vacations, no $1M house, etc), but...
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You're right that his spending was more like $25k/year. I spend much more time on the forums where the number thrown around for a lot of default calculations is $1M/ $40k per year.
I completely feel your "shame" as our spending is about double that also. With rent at $29k and daycare at $17k I don't see that changing. :) Perhaps the important thing is that we strive for relative frugality. Older, paid-off cars, cook at home, second-hand clothes, blah blah blah. Who am I kidding though? I don't budget groceries down to the dollar each month and we definitely enjoy eating out sometimes. Hanging around these forums is always a good influence in the right direction though.
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We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
How are you calculating child related costs? You don't need 25x (annual living costs including child related costs) if you won't be paying these forever. You need 25x (annual long term living costs) + Yx (annual child related costs) + one off costs (less growth if they are a way off). Y is some number less than the number of years your kids will be with you for (to account for growth).
Not meaning to tell anyone what they know, but it took me a while to recognise that I could take a bunch of my current costs out of my number, because they will stop when I stop work.
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I just assume that once the kids are gone we will spend the extra money on travel!
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We have a 4 y/o, a 2 y/o and a 4 month old. Without kids we would be FIREd today. With the kids we are 78% of the way to FI. A typical year brings our percentage of FI about 9% higher. Having the kids is delaying FIRE by about 3 years in our case.
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We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
How are you calculating child related costs? You don't need 25x (annual living costs including child related costs) if you won't be paying these forever. You need 25x (annual long term living costs) + Yx (annual child related costs) + one off costs (less growth if they are a way off). Y is some number less than the number of years your kids will be with you for (to account for growth).
Not meaning to tell anyone what they know, but it took me a while to recognise that I could take a bunch of my current costs out of my number, because they will stop when I stop work.
I agree with you math! This is what I did. My wild card is health insurance for DH and I. I'm thinking it could be $1,000 a month to self insure. Hope I'm wrong.
Honestly paying for our own health insurance is one of the reasons why I don't think we can FIRE with kids.
I'm also finding that as the kids get older they are getting more expensive and I'm afraid to FIRE and then have to possibly deny them things because the budget doesn't allow them. Like braces, tutoring, physical therapy if needed, or a study abroad.
I'm probably being too conservative though and anticipating higher costs than I need to. I do worry that we'll actually end up with too much money.
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But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
Why do you not consider that FIRE?
Sure you won't be a spry 35 year old... but for a GenX'er (I'm assuming), you are probably going to be amongst the youngest you know to retire... and probably more than 10 years before the rest of your generation.... I'd say as long as you aren't HATING life before then, 53 is still a pretty admirable age to retire.... it also depends on when you "discovered" MMM or the notion of early retirement.
If you weren't "enlightened" until you were in your late 30's, I don't think you should be hard on yourself nor compare yourself to 20 year olds who were fortunate enough to realize the path at a much younger age.
And 53? That's hopefully 30 more years without work!
Thank you for this. It was a good reminder. I think we were "enlightened" around age 31. Low earnings have dragged us down, making it so we could never think of retiring at 30 even if we had been trying. But we've never lived above our means or had debt (aside from mortgage) so that has put us ahead in many regards.
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can you downshift your career to part time? maybe a 3 day workweek at 60% of your current pay? if you are able to live on that amount, your existing stash will keep growing untouched
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I agree with you math! This is what I did. My wild card is health insurance for DH and I. I'm thinking it could be $1,000 a month to self insure. Hope I'm wrong.
Honestly paying for our own health insurance is one of the reasons why I don't think we can FIRE with kids.
Cool, I can only commiserate about health care costs as I'm outside the US.
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I agree with you math! This is what I did. My wild card is health insurance for DH and I. I'm thinking it could be $1,000 a month to self insure. Hope I'm wrong.
Honestly paying for our own health insurance is one of the reasons why I don't think we can FIRE with kids.
I'm also finding that as the kids get older they are getting more expensive and I'm afraid to FIRE and then have to possibly deny them things because the budget doesn't allow them. Like braces, tutoring, physical therapy if needed, or a study abroad.
I'm probably being too conservative though and anticipating higher costs than I need to. I do worry that we'll actually end up with too much money.
Health insurance is a problem. Perhaps we will have more clarity soon, perhaps not? So a worse-case has to be built in to the FIRE budget, in my opinion. You can still FIRE with kids - we are (well, I still do part-time consulting work, but so do many others who consider themselves FIRE'd).
Our health costs last year: $15K. Budget this year: $20K. Next year: better assume $25K. That's for a healthy family of five.
Our premiums are tax deductible - another reason to have some self-employment income.
The Republican plans might work out OK for us healthy, well off folks. Tax credit independent of income, expanded HSAs, high deductible plans with lower premiums. I'm optimistic.
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Look up health share. I think it's a viable option for healthy young families planning to fire. I started a thread on it in ask a mustachian
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Our health costs last year: $15K. Budget this year: $20K. Next year: better assume $25K. That's for a healthy family of five.
Shit, that is my whole budget, right there on healthcare. And this is for the lucky, healthy, rich folk.
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Completely ridiculous, right? Stay over in the U.K., for sure. Things are insane over here.
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Our health costs last year: $15K. Budget this year: $20K. Next year: better assume $25K. That's for a healthy family of five.
Shit, that is my whole budget, right there on healthcare. And this is for the lucky, healthy, rich folk.
You pay for it in other ways, of course. Petrol here is $2.50/gallon. Sales tax typically 6 or 7%. Income taxes are lower. Houses are cheaper on average. Pay is higher (in my experience). Most everything is cheaper.
Now, my plan was to make my money in the US then move back to the UK to FIRE. What could go wrong? Well, a smart, funny, sexy brunette American that "just loves your accent"...not that I'm complaining. She likes the UK to visit but couldn't live there. Too damp. Too weird. Maybe after her father and aunt have checked out I could bring it up again. Be tough on the kids, though.
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I do hear you when you say things are cheaper in that US. No doubt it is easier to amass your stash here. As I get older and now that I have a kid I am less and less willing to live in a situation where we are so utterly exposed to utter financial and personal ruin by events totally out of our control such as getting sick or falling and breaking something. As long as we work we have coverage by being in big group plans, but looking forward to FIRE the thought of ridiculously expensive insurance that could go up to even more ridiculous amounts at any time that is not budgetable, or worse, losing insurance at the very worst time and not being able to get any at any price really frightens me. I am not very risk tolerance and I just can't see myself enjoying life and living FIRE to the fullest if I am afraid each day of losing insurance or getting sick and having my savings (and therefore everything I have worked hard and saved for all of these years) wiped out. In my mind this is just a massive risk that scares me to death. I'm happy to pay more to fill my car or buy groceries if the trade off is not the risk of total financial ruin.
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We are FI/RE'd (ish) with young child(ren). For reference to the OP were also in the Bay Area for a while. We cut out time by a few years by moving, but I can see the appeal of staying (we had purchased a cheap, for the area house, so that helped). We cut our time to FI/RE by about two years by moving out of the Bay Area.
Regarding the healthcare problems. It hasn't been a problem so far, but I would be lying if I didn't sleep sounder know that wife and I are both Canadian citizens, so there is always a back up plan (whether that's good policy from the Canadian point of view is another matter)
Regarding paying for it other ways. I think that's debatable, and very hard to compare apples to apples. It's true that many cost of living items are lower in the US, but I think a lot of that is more a function of the huge market size, and associated efficiency than government policies. On the other hand, when we were high income and living in California, the tax load might have been comparable to what it would have been in Canada. I'm not sure if this myth of the US as a low tax country compared to some other destinations is always true. For example, the current highest us federal tax bracket is almost 40% while the top Canadian federal tax bracket is 33% (comparing tax brackets for illustrative purposes, I know the whole story is more complicated).
Didn't mean to derail the thread, just every now and then I've wondered about it..
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More details are needed in order to make any assessment at all. I think $5M is ridiculous but maybe you need to shoot for something like $2M? That is essentially the MMM $40k/year living expenses plus the cost of a small house in this area.
I thought the MMM "example" was $25K for a family of three with a paid off house.
For our family of 5 that's something like 25/3*5 = $42K.
We spend almost exactly double that...for shame...not including charitable contributions, retirement account contributions and college savings.
Utter spendthrifts!
I feel we are quite frugal compared to some in our peer group (no BMW SUV every two years, no fully-inclusive vacations, no $1M house, etc), but...
With inflation, $25k in 2007 ago is closer to $35k in 2017. And that $25k involved a lot of creative accounting to exclude expenses that most normal people would have. Oh, that travel that I took? That was "business" travel so I excluded it from the budget. Oh, and I haven't been to the dental hygienist in 10 years, so you don't need to worry about that expense either. And I did some home renovations, but I excluded that too because I did it myself.
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Our health costs last year: $15K. Budget this year: $20K. Next year: better assume $25K. That's for a healthy family of five.
Shit, that is my whole budget, right there on healthcare. And this is for the lucky, healthy, rich folk.
You pay for it in other ways, of course. Petrol here is $2.50/gallon. Sales tax typically 6 or 7%. Income taxes are lower. Houses are cheaper on average. Pay is higher (in my experience). Most everything is cheaper.
Now, my plan was to make my money in the US then move back to the UK to FIRE. What could go wrong? Well, a smart, funny, sexy brunette American that "just loves your accent"...not that I'm complaining. She likes the UK to visit but couldn't live there. Too damp. Too weird. Maybe after her father and aunt have checked out I could bring it up again. Be tough on the kids, though.
I agree that somethings in the US are cheaper than the UK, and not saying that the UK is perfect. But still, for the money that will cost you to buy this one thing, I can buy all the things. Including the sales tax and my property tax, including fuel to get the things, and including the fact that the GBP is currently in the toilet.
The bit that would scare me the most, is that even with good insurance, you could still be shit out of luck when you find that the medication recommended isn't covered by your insurer, or that it might be related to a pre-existing condition, or that the ambulance took you to the wrong hospital and so it's out of network, or your employer fires you after a week off sick just before you find out it's a major illness.
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I do hear you when you say things are cheaper in that US. No doubt it is easier to amass your stash here. As I get older and now that I have a kid I am less and less willing to live in a situation where we are so utterly exposed to utter financial and personal ruin by events totally out of our control such as getting sick or falling and breaking something. As long as we work we have coverage by being in big group plans, but looking forward to FIRE the thought of ridiculously expensive insurance that could go up to even more ridiculous amounts at any time that is not budgetable, or worse, losing insurance at the very worst time and not being able to get any at any price really frightens me. I am not very risk tolerance and I just can't see myself enjoying life and living FIRE to the fullest if I am afraid each day of losing insurance or getting sick and having my savings (and therefore everything I have worked hard and saved for all of these years) wiped out. In my mind this is just a massive risk that scares me to death. I'm happy to pay more to fill my car or buy groceries if the trade off is not the risk of total financial ruin.
Is it as bad as all that? There is uncertainty now, for sure. I'm very concerned that insurance companies will pull out of the individual market altogether for 2018 due to uncertainty of an ACA replacement. We can hope our representatives actually do their jobs and don't let that happen.
Longer term there will be affordable high-deductible insurance available, I'm quite sure. Probably tax breaks to help buy it. Probably HSA accounts with generous contribution limits. Us upper-middle class rich folks will do just fine.
We've bought family insurance on the individual market for 9 years. It's an insane system, to be sure.
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I agree that somethings in the US are cheaper than the UK, and not saying that the UK is perfect. But still, for the money that will cost you to buy this one thing, I can buy all the things. Including the sales tax and my property tax, including fuel to get the things, and including the fact that the GBP is currently in the toilet.
Could a family of 5 live well on GBP20k? I'm out of touch. My brother lives there but his family spends like drunken sailors. Not typical.
When we visit it seems like everything costs about the same in Pounds as we would spend in US$. Houses are expensive compared to where we live in the US.
The bit that would scare me the most, is that even with good insurance, you could still be shit out of luck when you find that the medication recommended isn't covered by your insurer, or that it might be related to a pre-existing condition, or that the ambulance took you to the wrong hospital and so it's out of network, or your employer fires you after a week off sick just before you find out it's a major illness.
There's risk, for sure, but put in in perspective. Say the ambulance takes you to the wrong hospital and it's out of network - you get a bill for $10K. It hurts, but it's still just a drop in the bucket for us rich, FIRE'd folks.
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I agree that somethings in the US are cheaper than the UK, and not saying that the UK is perfect. But still, for the money that will cost you to buy this one thing, I can buy all the things. Including the sales tax and my property tax, including fuel to get the things, and including the fact that the GBP is currently in the toilet.
Could a family of 5 live well on GBP20k? I'm out of touch. My brother lives there but his family spends like drunken sailors. Not typical.
When we visit it seems like everything costs about the same in Pounds as we would spend in US$. Houses are expensive compared to where we live in the US.
The bit that would scare me the most, is that even with good insurance, you could still be shit out of luck when you find that the medication recommended isn't covered by your insurer, or that it might be related to a pre-existing condition, or that the ambulance took you to the wrong hospital and so it's out of network, or your employer fires you after a week off sick just before you find out it's a major illness.
There's risk, for sure, but put in in perspective. Say the ambulance takes you to the wrong hospital and it's out of network - you get a bill for $10K. It hurts, but it's still just a drop in the bucket for us rich, FIRE'd folks.
Yes, a family can live (what I consider) really well on GBP 20k. We have foreign holidays and do a bunch of home improvements on that. A family can also spend GBP 100k like it is water and be complaining that they are skint.
Motor fuel is pricey compared to the US, but in many cities the public transport is better and we typically don't drive as far to work and we drive more fuel efficient cars. I suspect that your brother is taking you to pricier shops than necessary.
Housing costs vary hugely with location in the UK, I think similarly to the US even though our absolute distances are much less. A family home can be GBP 50k (https://toughnickel.com/real-estate/15-of-the-cheapest-places-in-the-UK-to-buy-a-3-bedroom-house).
From my understanding of US healthcare costs, the fee for going to the wrong hospital for a heart attack could easily be $100k's rather than $10k's. I wouldn't just shrug this off.
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Right, and that is just one event. For a family you can easily see that there might be more than one ambulance trip, more than one health scare, more than one surgery for multiple people over multiple years. Again, this is if you are lucky to be able to retain insurance at all. There are plenty of horror stories of how the system didn't work before ACA; it doesn't take much research or imagination to see how bad it could get in a post-ACA world.
There definitely is a case here for me personally of getting older and becoming less risk tolerant. With a kid now also I am just not willing to roll the dice on something so crucial to our financial and personal well being.
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From my understanding of US healthcare costs, the fee for going to the wrong hospital for a heart attack could easily be $100k's rather than $10k's. I wouldn't just shrug this off.
Currently this is not true.
Post ACA insurers have to cover out of network emergency care at no additional cost to the member.
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Once your kids are gone you will probably spend the $ on travel that you would have spent raising them unless you don't want to travel. WE have health insurance from our former employer but it costs 10k/year for 2 people. That is our biggest expense. Teens cost more then little kids due to events they want to attend, camp, braces if they need them, etc. While we did not spoil our kids and they had less then many of their peers we wanted them to have experiences, etc.
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From my understanding of US healthcare costs, the fee for going to the wrong hospital for a heart attack could easily be $100k's rather than $10k's. I wouldn't just shrug this off.
Currently this is not true.
Post ACA insurers have to cover out of network emergency care at no additional cost to the member.
Thanks, I'd heard this sort of story from a couple of places (but clearly a while ago). I haven't followed all of the ACA developments.
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From my understanding of US healthcare costs, the fee for going to the wrong hospital for a heart attack could easily be $100k's rather than $10k's. I wouldn't just shrug this off.
Currently this is not true.
Post ACA insurers have to cover out of network emergency care at no additional cost to the member.
Thanks, I'd heard this sort of story from a couple of places (but clearly a while ago). I haven't followed all of the ACA developments.
That doesn't surprise me. All kinds of weird stuff goes on like balance billing, denials for need etc. Unfortunately here in the US we all have to know and understand our plans really well and how to ask questions and appeal if I feel its not right. You can't just accept a denial.
There is certainly lots of uncertainty around the future of course and this is what makes me very uncomfortable with FIRE. Both DH and I like our job well enough. I'd hate to give it up and FIRE only to find out we can't travel, do anything or give up stuff the kids need because my medical coverage becomes $20k.
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That doesn't surprise me. All kinds of weird stuff goes on like balance billing, denials for need etc. Unfortunately here in the US we all have to know and understand our plans really well and how to ask questions and appeal if I feel its not right. You can't just accept a denial.
I would agree with BeanCounters appraisal. Just because something should be covered by an insurance plan you pay for, doesn't mean they won't try to get you to pay for it. Doesn't mean they will take your first, or second call asking why. I don't think it's always malice, as much as it is incompetence and overly complicated system that nobody understands. *shrugs*
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Just because something should be covered by an insurance plan you pay for, doesn't mean they won't try to get you to pay for it. Doesn't mean they will take your first, or second call asking why. I don't think it's always malice, as much as it is incompetence and overly complicated system that nobody understands. *shrugs*
Right? I can't wait to live in a post-insurance age.
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This is something that has always irked me a little bit about MMM. (which overall I think is wonderful) It's hard to get people to acknowledge how difficult it is to get to FIRE with kids. And I think that sets a lot of people up for feeling discouraged.
We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
Whoa, haven't seen a BeanCounter post in a while! Good stuff. Along the same lines, I think the MMM message was somewhat undercut by the fact he blogs now with ridiculous 400k income (2015 (http://www.mrmoneymustache.com/2016/02/10/should-you-do-your-own-taxes/), maybe more now) and retired with a paid off home and 600k at the 2008 depths. Even then, his wife didn't feel comfortable and retire until 2011. Nowadays they are set many times over. It would have been a more universal test case had he seen some ups and downs during his blogging career and had to deal with a little 'true hardship' (like DividendMantra's Jason living off of PB&J for over a year to divert everything to his portfolio). MMM would come through swimmingly I'm sure, but there would have been some more realistic stress and moments of doubt.
Anyway, we only have the world going forward to place our bets on. Markets are at all time highs, politics and healthcare are unpredictable, and the Fed has started to raise rates but is still at a historic low. In other words, right now ain't no 2008.
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anyone fully fired (no working spouse) with younger children?
Yes. My three primary keys are: passive income independent of stocks (I have the latter, but their benefit won't kick in for quite a few years yet); frugal living (more like MMM and Jacob vs some of the spendier forum families); strategically keeping total home costs to under $650/mo (rent or mortgage, utilities, internet, insurance, etc). My tricks for the latter are here: https://financialtipsforthebroke.com/2016/06/23/how-to-avoid-paying-market-rent/ This has been and is the game-changer for me, I think.
It's TOTALLY okay (of course!) to choose a higher COL area, a bigger or fancier home, costlier activities for kids, etc. 100% fine.
I just wanted to respond to your topic, and offer one path that might make all the difference for someone eager to FIRE.
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My husband and I are about to FIRE this summer, with 4 children ages 5 to 13. We will be 39 and 40 then. Already FI for the last year or so but DH is finally mentally accepting that we really can. We live in the Portland area (probably a little lower cost housing than you) and have been carefully tracking expenses long enough to know that we can easily live (in a rather luxurious manner, in our opinions) on about $30k per year. Our net worth is similar to yours, and we are pretty confident that it will be plenty. We also have enough savings for tuition for each child at a state school, so we can help them if we choose to at that time.
We are really looking forward to this time with our children while they are still at home and want to spend time with us. I highly suggest getting your expenses tracked carefully enough (including health insurance quotes) for long enough that you know pretty well how much you need to be happy (the book Your Money or Your Life is very helpful for helping you pinpoint that level for you). Once you know your income needs, build in a nice buffer in addition to that. It seems sad to me to wait until your children leave home to retire because once you finally have time to spend with them, they often have very little time for you, and you will never get those years of their youth back.
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anyone fully fired (no working spouse) with younger children?
Yes. DH FIRE'd at 35 in 2014 and I followed him in late 2016 at age 39. We have a four year old son.
We live in Australia though so we have a lot of different factors at play. COL is much higher here than in the US, but our higher incomes seem to account for that. Also, our healthcare and education situation is not as concerning as yours.
Our property market has been growing significantly in the last few decades and I've done quite well from capital growth since I started property investing in 2000. To FIRE we downshifted to a smaller country town where property prices are much more reasonable. Sold a few of our city properties and bought a 'relatively' cheap home.
In addition to investment property income we have income from dividends, and early payouts from our Superannuation (aka retirement accounts). I feel much more comfortable with multiple streams of income and do not plan to touch the Stash at all for a good lone while.
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I highly suggest getting your expenses tracked carefully enough (including health insurance quotes)
What are you paying for health insurance this year?
What do you estimate it will be next year?
You say you can live on $30K/year. Our health insurance and out of pocket medical/dental was $15K last year.
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This is something that has always irked me a little bit about MMM. (which overall I think is wonderful) It's hard to get people to acknowledge how difficult it is to get to FIRE with kids. And I think that sets a lot of people up for feeling discouraged.
We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
Whoa, haven't seen a BeanCounter post in a while! Good stuff. Along the same lines, I think the MMM message was somewhat undercut by the fact he blogs now with ridiculous 400k income (2015 (http://www.mrmoneymustache.com/2016/02/10/should-you-do-your-own-taxes/), maybe more now) and retired with a paid off home and 600k at the 2008 depths. Even then, his wife didn't feel comfortable and retire until 2011. Nowadays they are set many times over. It would have been a more universal test case had he seen some ups and downs during his blogging career and had to deal with a little 'true hardship' (like DividendMantra's Jason living off of PB&J for over a year to divert everything to his portfolio). MMM would come through swimmingly I'm sure, but there would have been some more realistic stress and moments of doubt.
Anyway, we only have the world going forward to place our bets on. Markets are at all time highs, politics and healthcare are unpredictable, and the Fed has started to raise rates but is still at a historic low. In other words, right now ain't no 2008.
haha. Yeah I know I tend to get on my soap box about this. :) I didn't know about DividendMantra's rough year, I'll have to check that out. I'm willing to have a little hardship like that myself, but I am not willing to put my kids through that. Not when we have the ability to work.
That's what drew me to this thread. I have yet to find a family in the US achieving this. Other than MMM. Solana314, I'd be really interested to read more about your families plan and how it goes. Maybe your success will give me more comfort.
Being an accountant, I'm totally risk adverse so there's that. I think the best case for us is that one of us continues enough work to maintain insurance. We should hit $1M in liquid assets in about 2 years, and I think I'd be comfortable backing down at that point.
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This is something that has always irked me a little bit about MMM. (which overall I think is wonderful) It's hard to get people to acknowledge how difficult it is to get to FIRE with kids. And I think that sets a lot of people up for feeling discouraged.
We are a family of four living in a decent sized city in the Midwest. No matter how I run the numbers I come up with needing about $1.5M to cover our cost of living plus the kids school, activities and healthcare. And healthcare is the wildcard I'm terribly afraid of. Once the kids are grown and out of the house $1M would probably be enough. But that won't be FIRE, DH and I will be 53 when our youngest turns 18.
Whoa, haven't seen a BeanCounter post in a while! Good stuff. Along the same lines, I think the MMM message was somewhat undercut by the fact he blogs now with ridiculous 400k income (2015 (http://www.mrmoneymustache.com/2016/02/10/should-you-do-your-own-taxes/), maybe more now) and retired with a paid off home and 600k at the 2008 depths. Even then, his wife didn't feel comfortable and retire until 2011. Nowadays they are set many times over. It would have been a more universal test case had he seen some ups and downs during his blogging career and had to deal with a little 'true hardship' (like DividendMantra's Jason living off of PB&J for over a year to divert everything to his portfolio). MMM would come through swimmingly I'm sure, but there would have been some more realistic stress and moments of doubt.
Anyway, we only have the world going forward to place our bets on. Markets are at all time highs, politics and healthcare are unpredictable, and the Fed has started to raise rates but is still at a historic low. In other words, right now ain't no 2008.
haha. Yeah I know I tend to get on my soap box about this. :) I didn't know about DividendMantra's rough year, I'll have to check that out. I'm willing to have a little hardship like that myself, but I am not willing to put my kids through that. Not when we have the ability to work.
That's what drew me to this thread. I have yet to find a family in the US achieving this. Other than MMM. Solana314, I'd be really interested to read more about your families plan and how it goes. Maybe your success will give me more comfort.
Being an accountant, I'm totally risk adverse so there's that. I think the best case for us is that one of us continues enough work to maintain insurance. We should hit $1M in liquid assets in about 2 years, and I think I'd be comfortable backing down at that point.
i come up with 2MM for our lifestyle with kids and we're still gonna FIRE at 37
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It's too bad the OP hasn't come back with a comment or two. Everyone has their own level of comfort and risk tolerance, it's fun to see folks work theirs out. Once you've saved up a significant amount (600k for the hardcore 24k/yr crowd, 2M for the bells and whistle crew) then it's really up to you. The advantage Mustachians have is in the planning to get to FI, maintaining after ER should be successful.
For us, it is more the practical, non-financial part that holds us back. The one 'young ER family' in our neighborhood drew lots of comments on how weird it was for them to be home all the time and questions about how they made ends meet (are they rich? Do their parents send them money? Surely they are going to go broke... etc). They since sold their fancy home to live out in the sticks homesteading. Not entirely sure the motivation, they claimed that they wanted to homeschool and have chickens and live closer to the land, but basically everyone has lost touch with them. Different strokes for different folks. I personally would be looking to move out of Houston or at least have a small summer home in a better location (more nature, better weather) if our family FIREs, but having kids (11, 13) in public school and maintaining their social networks does limit some of the flexibility. At the end of the day, I'm more content with the choices we've made and more relaxed about work, and my wife is going back to SAH after this school year. Maybe I'll join her after a few years if the health insurance situation settles or my job starts to suck, maybe I'll get a severance package, or maybe we'll get moved overseas again - not making a choice has also worked out pretty well so far :)
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For us, it is more the practical, non-financial part that holds us back. The one 'young ER family' in our neighborhood drew lots of comments on how weird it was for them to be home all the time and questions about how they made ends meet (are they rich? Do their parents send them money? Surely they are going to go broke... etc).
Say you do consulting work from home. That's what I did full-time for 8 years. Since late 2015 I've been accepting much less work and consider myself FIRE, or FI-part-RE if you prefer. There's been no comments because everyone knows I work from home and have a very flexible schedule anyway. I don't see any need to flaunt that we're FI and don't need to work for money. I'm still doing some projects, but only the ones that interest me and I know will not involve lots of travel (been there).
I put my kids on the bus and meet them off the bus (well, not my 13 year old daughter, of course...parents of teenagers know what I mean). DW has been a SAHM for 9 years.
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Currently this is not true.
Post ACA insurers have to cover out of network emergency care at no additional cost to the member.
January 2014, when my kid had cancer (but before it was fully diagnosed) he was in the ICU for a month. He required 2 non-emergency ambulance rides during that time. Once within town to get a particular kind of scan the hospital did not have, and once between towns, to get from the general hospital to the children's hospital which was better for his needs and closer to home.
The rides were a week apart and both non-emergency. Both required high levels of support as he was an ICU patient at the time. Each cost about $10k, the insurance paid a small share and balance billed me for the remainder. This was legal even after ACA.
EDIT: his ICU stay actually began in the last days of Dec 2013. So when you think about "what ifs", consider we met the annual deductible and out of pocket limits in the last week of 2013 and again at the start of 2014, for the same medical problem. Also note that out of pocket limits do not apply to balance billing by out of network providers and ambulance companies.
I have no idea how the US healthcare and insurance landscape will change in the future, but to the OP, I would think that in early retirement you could engineer low enough income to qualify for state healthcare programs like Medicaid or CHIP for the kids, depending on what state you live in and what your assets and income structure is. Similarly, you might not need to save for college as much as you think, if your income and assets during those years are structured in a way where your kids qualify for plenty of aid. There are existing threads that can tell you more about that.
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Say you do consulting work from home. That's what I did full-time for 8 years. Since late 2015 I've been accepting much less work and consider myself FIRE, or FI-part-RE if you prefer. There's been no comments because everyone knows I work from home and have a very flexible schedule anyway. I don't see any need to flaunt that we're FI and don't need to work for money. I'm still doing some projects, but only the ones that interest me and I know will not involve lots of travel (been there).
I put my kids on the bus and meet them off the bus (well, not my 13 year old daughter, of course...parents of teenagers know what I mean). DW has been a SAHM for 9 years.
Yeah, I'm not really too worried about what the neighbors might think. It's probably more that I still enjoy going to work enough that I just haven't felt a burning desire to hang it up. The company benefits probably push me toward the voluntary OMY too, not having to worry about health and dental insurance, automatically stashing 50k in 401k, ESPP, and retirement plan savings). I might start taking longer periods off (I typically take 3 weeks during the summer but maybe I'll up that to 4 or 5 weeks spread out over 2 vacations). Not worried about being laid off, and that's really the only time I feel restricted by being tied to a job while the wife and kids are 'free'.
I also worry a bit that our family has become much less Mustachian, yet our NW goes up 200k+! Spending like unprincipled, non-optimized normal people yet getting further ahead? It's very disorienting, but also makes it difficult to continue to force my former frugality on my gradually less willing DW. She keeps pulling the 'do we really need to die with more money?' card on me. All I've got in return is that we haven't put our kids through college yet, so let's at least maintain some shred of self control! And we both grew up in modest households, so we aren't going to spoil our kids or upgrade our lifestyle too terribly much. We maybe spent 20 - 30k more last year than we normally would (say, if it was a down year for the market or after my wife returns to SAH). Like MMM's latest 'studio addition', there were a few nice to haves that were even nicer to have sooner rather than later, get a few more years of value out of while the kids are still with us... As someone mentioned upthread, once the kids are on their own, it will open up a lot of discretionary spending room and eventually philantropy. In the meantime, I'm hoping that my wife quitting will help rein in some of the lazy, convenience spending and help transition back toward our Mustachian roots so that we give the kids a reasonably good example of how to live within more reasonable means.
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That's what drew me to this thread. I have yet to find a family in the US achieving this. Other than MMM. Solana314, I'd be really interested to read more about your families plan and how it goes. Maybe your success will give me more comfort.
Achieving what? Not working? There are a few families (I assume you mean household of adult and kids?) on the forum, all over the web aren't there?
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That's what drew me to this thread. I have yet to find a family in the US achieving this. Other than MMM. Solana314, I'd be really interested to read more about your families plan and how it goes. Maybe your success will give me more comfort.
Achieving what? Not working? There are a few families (I assume you mean household of adult and kids?) on the forum, all over the web aren't there?
I'm looking for examples of families like mine, living in the US with two or more school aged children with both parents RE. I would love some examples of how they have navigated things like education, insurance and health care over a long period.
MMM is one example but I would argue that he really has been working. Which is fine. If the reality is that we need to have a side hustle to make this possible then I just need to make that happen. But he's also made some choices I'm not comfortable with so I know from that example and my own tracking that I need a bit more.
GoCurryCracker and ARS are traveling with infants. I'm interested to see how that plays out as the kids get older or if they have another. I've found it gets more complicated. Honestly GoCurryCracker's blog is so monetized now, I'm not sure they are a good test case.
Other good examples?
EDIT- Forgot RootofGood. Looks like they are both retired now. They might be a really good example. I'll have to read more.
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RoG is probably the closest to a mainstream life and most transparent example that I know of (many blogs like MrTakoEscapes and Retireby40 are what I consider a non-traditional male SAHP with a working spouse). GCC is good if you are willing to dabble in geographic arbitrage.
With that said, the reality is that ER means being really conservative and probably doing a few questionable things, like taking the free handouts you are entitled to. Although he is a millionaire, his children are on CHIP (http://rootofgood.com/affordable-care-act-coverage-subsidies-pitfalls/) (Medicaid) and he lives in a questionable (but apparently gentrifying) area that had a driveby shooting (http://rootofgood.com/first-person-view-gentrification/) and some of the worst schools in the state. He also qualifies for foodstamps and free lunches at school since none of these things are means tested, but basically does not see these as being worth the hassle. Of course, he is free to use the system as it stands, but my wife would be mortified and divorce me if I suggested we retire and live like we are economically disadvantaged. Apparently his family was happy to trade-off two good careers and live like this, to each their own.
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RoG is probably the closest to a mainstream life and most transparent example that I know of (many blogs like MrTakoEscapes and Retireby40 are what I consider a non-traditional male SAHP with a working spouse). GCC is good if you are willing to dabble in geographic arbitrage.
With that said, the reality is that ER means being really conservative and probably doing a few questionable things, like taking the free handouts you are entitled to. Although he is a millionaire, his children are on CHIP (http://rootofgood.com/affordable-care-act-coverage-subsidies-pitfalls/) (Medicaid) and he lives in a questionable (but apparently gentrifying) area that had a driveby shooting (http://rootofgood.com/first-person-view-gentrification/) and some of the worst schools in the state. He also qualifies for foodstamps and free lunches at school since none of these things are means tested, but basically does not see these as being worth the hassle. Of course, he is free to use the system as it stands, but my wife would be mortified and divorce me if I suggested we retire and live like we are economically disadvantaged. Apparently his family was happy to trade-off two good careers and live like this, to each their own.
This is a really interesting and helpful discussion. I will read more on ROG, but I would also really like more examples.
I don't doubt that FIRE with kids is possible, I just want a better understanding of what choices are necessary to make it possible. (other than no debt and low consumerism, I get that)
Side note on GOC- something has changed about the blog and I don't like it anymore. Did he sell?
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RoG is probably the closest to a mainstream life and most transparent example that I know of (many blogs like MrTakoEscapes and Retireby40 are what I consider a non-traditional male SAHP with a working spouse). GCC is good if you are willing to dabble in geographic arbitrage.
With that said, the reality is that ER means being really conservative and probably doing a few questionable things, like taking the free handouts you are entitled to. Although he is a millionaire, his children are on CHIP (http://rootofgood.com/affordable-care-act-coverage-subsidies-pitfalls/) (Medicaid) and he lives in a questionable (but apparently gentrifying) area that had a driveby shooting (http://rootofgood.com/first-person-view-gentrification/) and some of the worst schools in the state. He also qualifies for foodstamps and free lunches at school since none of these things are means tested, but basically does not see these as being worth the hassle. Of course, he is free to use the system as it stands, but my wife would be mortified and divorce me if I suggested we retire and live like we are economically disadvantaged. Apparently his family was happy to trade-off two good careers and live like this, to each their own.
This is a really interesting and helpful discussion. I will read more on ROG, but I would also really like more examples.
I don't doubt that FIRE with kids is possible, I just want a better understanding of what choices are necessary to make it possible. (other than no debt and low consumerism, I get that)
Side note on GOC- something has changed about the blog and I don't like it anymore. Did he sell?
So what do you think makes it not possible. the same math applies to someone with kids vs someone without... kids are just an added cost. Our first will be born in Aug/Sept. we will FIRE in 7 years.
-our plan for childhood education is public schools.
-Assuming all kids are born healthy - health share unless something dramatically changes in the next 7 years with the ACA setup
-College education. living by the 4% rule more often than not money will grow exponentially. we dont need specific funds for this we likely can cover it - if its even something the pursue - i see the education landscape changing in 20 years. on the higher education front. towards cheaper over the internet from home etc. maybe localized labs for hands on classes.
i will likely always have side hustles though b/c i just love figuring out low cost low effort ways to make extra money. - scalping tickets - selling tradelines - buying and reselling on CL ... etc.
wife is a photographer who could easily shoot a few weddings etc. each year.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
I would agree. And I think that's the ticket to making it work. I do think it's possible. I just also believe it's more difficult. I also agree that the math is the same. I've been tracking our expenses for a couple years in preparation of FIRE and it has fluctuated more than I am really comfortable with and that's when the doubt creeps in.
When the kids were babies and toddlers, it was easy peezy. They needed nothing but our love, some hand me down clothes and a few medical/dental visits. As they have gotten older more things seem to hit our bottom line. DS1 needs physical therapy, that's $100 a month for a year. Then he needs orthodontia- that's looking like $3k-$5k. DS2 will likely need orthodontia as well. Both would like to try martial arts- dojo fees are $80 a month each. They would also like to play an instrument. We don't let them do every thing they ask to do, but I do think one sport and music is reasonable. It starts to add up. Makes me feel like I can't really budget. And what about food, clothing and transportation for teenagers?
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
I would agree. And I think that's the ticket to making it work. I do think it's possible. I just also believe it's more difficult. I also agree that the math is the same. I've been tracking our expenses for a couple years in preparation of FIRE and it has fluctuated more than I am really comfortable with and that's when the doubt creeps in.
When the kids were babies and toddlers, it was easy peezy. They needed nothing but our love, some hand me down clothes and a few medical/dental visits. As they have gotten older more things seem to hit our bottom line. DS1 needs physical therapy, that's $100 a month for a year. Then he needs orthodontia- that's looking like $3k-$5k. DS2 will likely need orthodontia as well. Both would like to try martial arts- dojo fees are $80 a month each. They would also like to play an instrument. We don't let them do every thing they ask to do, but I do think one sport and music is reasonable. It starts to add up. Makes me feel like I can't really budget. And what about food, clothing and transportation for teenagers?
but you can budget you can set an entertainment budget for them. braces arent continuous etc.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
I would agree. And I think that's the ticket to making it work. I do think it's possible. I just also believe it's more difficult. I also agree that the math is the same. I've been tracking our expenses for a couple years in preparation of FIRE and it has fluctuated more than I am really comfortable with and that's when the doubt creeps in.
When the kids were babies and toddlers, it was easy peezy. They needed nothing but our love, some hand me down clothes and a few medical/dental visits. As they have gotten older more things seem to hit our bottom line. DS1 needs physical therapy, that's $100 a month for a year. Then he needs orthodontia- that's looking like $3k-$5k. DS2 will likely need orthodontia as well. Both would like to try martial arts- dojo fees are $80 a month each. They would also like to play an instrument. We don't let them do every thing they ask to do, but I do think one sport and music is reasonable. It starts to add up. Makes me feel like I can't really budget. And what about food, clothing and transportation for teenagers?
but you can budget you can set an entertainment budget for them. braces arent continuous etc.
Totally. And this is what we're figuring out. Plus a reasonable contingency.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
I would agree. And I think that's the ticket to making it work. I do think it's possible. I just also believe it's more difficult. I also agree that the math is the same. I've been tracking our expenses for a couple years in preparation of FIRE and it has fluctuated more than I am really comfortable with and that's when the doubt creeps in.
When the kids were babies and toddlers, it was easy peezy. They needed nothing but our love, some hand me down clothes and a few medical/dental visits. As they have gotten older more things seem to hit our bottom line. DS1 needs physical therapy, that's $100 a month for a year. Then he needs orthodontia- that's looking like $3k-$5k. DS2 will likely need orthodontia as well. Both would like to try martial arts- dojo fees are $80 a month each. They would also like to play an instrument. We don't let them do every thing they ask to do, but I do think one sport and music is reasonable. It starts to add up. Makes me feel like I can't really budget. And what about food, clothing and transportation for teenagers?
but you can budget you can set an entertainment budget for them. braces arent continuous etc.
Totally. And this is what we're figuring out. Plus a reasonable contingency.
yeah makes sense... you just seem to come across as sounding like its impossible to FIRE with children which i think is highly untrue. you just have to do the math and figure out your comfort level.
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i think you're ruling out lots of people who could be examples based on pretty strict criteria
1 - couples - some of us parents are single you know : )
2 - living on a fixed 'stache and the 4% rule - many FIRE people have income streams such as rental real estate and aren't drawing down a traditional stache of stocks/funds/bonds.
3 - many of us, especially when younger, do paid work that isn't financially necessary but we choose to do it anyway. maybe we enjoy the challenge, or the socialization, or we just don't want to let our credentials to get stale yet.
4 - the above can combine in such a way that you RE and live off your current cash flow just fine while your stache continues compounding whether or not you add money to it.
and, going back up to item 1, some of us single parents have kids whose health insurance is covered by their other parent's employer and so the insurance costs and market concerns just don't exist in the same way.
I have primary custody of 3 school-age kids, 2 with high medical needs. Of course, I still have to pay half the orthodontia, the copays, the hospitalizations, the speech therapy etc. But so far I have had an easy and affordable path to keeping them covered, which is not applicable to your "2 FIRED parents" criteria
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CChrissyy
you dont "draw down a stache" when using the 4% rule. in some cases yes it decreases over your life but more frequently it increases and grows forever.
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yeah sorry for the word choice, I meant "using" or "relying on" not "drawing down"
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
Making money in FIRE is ridiculously easy. Don't work longer than you have to.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
Making money in FIRE is ridiculously easy. Don't work longer than you have to.
Maybe, but I do hate it when SAHP's do stuff like Tupperware parties and hawking jewelery. Selling tradelines sounds iffy and blogging for income has mostly dried up. Not to say it can't be done, but it's not ridiculously easy to replace the income and benefits package, in my humble opinion. In our experience, by the time my wife began to make real money, she basically was working again.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
Making money in FIRE is ridiculously easy. Don't work longer than you have to.
Maybe, but I do hate it when SAHP's do stuff like Tupperware parties and hawking jewelery. Selling tradelines sounds iffy and blogging for income has mostly dried up. Not to say it can't be done, but it's not ridiculously easy to replace the income and benefits package, in my humble opinion. In our experience, by the time my wife began to make real money, she basically was working again.
Selling trade lines is not that iffy. I have 5 cards in now. Should pull in 2200 a month. 2 are actively being filled monthly and by this time next year I'll have 15 cards in pulling down 3-4k monthly
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Since some folks have asked about Healthcare as FIRE, I thought I'd share...
Transitioned from United Healthcare (that I had when in the corp world) to Liberty Healthshare. It is technically NOT healthcare, but rather a sharing coop. Because it is private, they can limit to people who genuinely care about health, non-smokers, non-heavy drinkers, etc. We pay $450/mo for a family (regardless of 1 or 10 kids). First $1500 OOP is on me, and the rest is covered 100% (up to $1m/incident). To be honest, the coverage and support, thus far, has blown away the traditional stuff. They haven't turned down a single thing, whereas our traditional health coverage was very selective and had multiple different deductible versions.
Liberty Healthshare was recommended to me by the folks that run Checkbook IRA, which was also helpful when I FIRE'd. CB IRA allowed me to turn my company 401k into an IRA that is literally like a CB. I can use it to invest in real estate, the market, etc. Only restrictions are collectible's, wine, and alcohol/tobacco.
Happy to explain further for anyone who has questions about my experiences. Hope this helps! Cheers.
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Just looked at the Liberty website. Faith-based healthcare?
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Just looked at the Liberty website. Faith-based healthcare?
the Faith part just is to bypass the requirement to be on ACA mostly. its a loop hole. at its core its a very affordable way to buy insurance for the FIRE crowd assuming no large pre existing conditions that would make sense for you to be a drain on the other healthcare system.
that is until we fix our super messed up system we have now.
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. First $1500 OOP is on me, and the rest is covered 100% (up to $1m/incident). To be honest, the coverage and support, thus far, has blown away the traditional stuff.
I am interested in understanding this better. The bolded above scares me. Is that a cap on spend by diagnosis? A perfectly healthy individual with great lifestyle choices can be diagnosed with a blood cancer or brain tumor and hit $1M in a heartbeat. Especially if the healthshare doesn't have the best network rates with those specialized providers.
I admit that I haven't done a lot of reading about this yet though.
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. First $1500 OOP is on me, and the rest is covered 100% (up to $1m/incident). To be honest, the coverage and support, thus far, has blown away the traditional stuff.
I am interested in understanding this better. The bolded above scares me. Is that a cap on spend by diagnosis? A perfectly healthy individual with great lifestyle choices can be diagnosed with a blood cancer or brain tumor and hit $1M in a heartbeat. Especially if the healthshare doesn't have the best network rates with those specialized providers.
I admit that I haven't done a lot of reading about this yet though.
Multiple stories out there about cancer patients who had it all covered. Including a woman who was only on the up to 250k/incident plan. The healthshare negotiated a 650k total medical bill cost down to 200k for her. and it was all covered by the plan. Also if you do get a big disease that you think will cost less when enrolled in a traditional plan you can opt back into it under the current laws.
You can also couple this with a catastrophic coverage plan that would cover those insane costs over 1MM dollars.
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Just looked at the Liberty website. Faith-based healthcare?
the Faith part just is to bypass the requirement to be on ACA mostly. its a loop hole. at its core its a very affordable way to buy insurance for the FIRE crowd assuming no large pre existing conditions that would make sense for you to be a drain on the other healthcare system.
that is until we fix our super messed up system we have now.
Do they exclude treatments or diseases due to the faith aspect? [I'm thinking stem cells, contraception, STI related illnesses, but not trying to start a debate as to whether that would be good or bad]
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Just looked at the Liberty website. Faith-based healthcare?
the Faith part just is to bypass the requirement to be on ACA mostly. its a loop hole. at its core its a very affordable way to buy insurance for the FIRE crowd assuming no large pre existing conditions that would make sense for you to be a drain on the other healthcare system.
that is until we fix our super messed up system we have now.
Do they exclude treatments or diseases due to the faith aspect? [I'm thinking stem cells, contraception, STI related illnesses, but not trying to start a debate as to whether that would be good or bad]
i started a whole thread on this
http://forum.mrmoneymustache.com/ask-a-mustachian/let's-talk-about-health-share/
just to talk about any issues. you have to read the terms. Each group is different in what they allow.
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I think it would be hard to find someone who does absolutely nothing to make another dollar after FIRE and just lives with their family. People driven enough to FIRE will likely still be making money once FIREd in other random ways they enjoy.
Making money in FIRE is ridiculously easy. Don't work longer than you have to.
Maybe, but I do hate it when SAHP's do stuff like Tupperware parties and hawking jewelery. Selling tradelines sounds iffy and blogging for income has mostly dried up. Not to say it can't be done, but it's not ridiculously easy to replace the income and benefits package, in my humble opinion. In our experience, by the time my wife began to make real money, she basically was working again.
Selling trade lines is not that iffy. I have 5 cards in now. Should pull in 2200 a month. 2 are actively being filled monthly and by this time next year I'll have 15 cards in pulling down 3-4k monthly
And that's probably a conservative estimate. I know people who do this who pull in even more than that. They are mid-late twenties and pull in enough to quit their job and travel the world with their S/O. Completely doable.
May I ask what company you use? It'd be nice to know a little bit (or pretend to) if it ever comes up in conversation.
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I said 'iffy' because the income comes on a 1099-misc. Not sure how the IRS will view thousands or tens of thousands of this income. Also, not a fan of giving the host company basically your complete identity. Even if they have no incentive to steal it, surely hackers (or an employee) could. Still seems like a shady area, getting money for nothing usually ends badly, but more power to the folks that are benefiting and feel like the risk is worth the reward. Being FI, I'm extra sensitive that the risk is low, and don't mind if I end up getting a very low or only charitable reward if I eventually jump in (maybe on a personal level, offering AU spots to help others).
*A good idea, probably what MetricMouse's friends employ, is having a good tax accountant that sets up a business entity that receives the income and pays you a salary. Probably ways you can take away the income risk and potentially defray the ID theft via an ITIN, but I didn't become FI to spend my retirement figuring stuff like this out.
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Selling trade lines is not that iffy. I have 5 cards in now. Should pull in 2200 a month. 2 are actively being filled monthly and by this time next year I'll have 15 cards in pulling down 3-4k monthly
Heading off topic...you're renting out your credit history so someone with worse credit can fool a loan company and get better terms. The loan company takes on greater risk than they expected. How is this not cheating the loan company? How is this not loan fraud?
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Whole thread to debate that topic elsewhere
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I'm looking for examples of families like mine, living in the US with two or more school aged children with both parents RE. I would love some examples of how they have navigated things like education, insurance and health care over a long period.
One example I almost forgot about: Brave New Life (http://www.bravenewlife.com/about/). Two smaller children, no working spouse, retired mid 30s; unfortunately hasn't posted in quite a while.
For reference, wife and I are mid 30s, with a two year old and another one one on the way. Based in the US and neither one of us works currently. Though if I go back to work, it will be because toddlers are terrible, and daycare isn't cheap :)
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Whole thread to debate that topic elsewhere
Found it. I don't go into that section normally. For ref:
http://forum.mrmoneymustache.com/share-your-badassity/selling-tradelines-piggybacking-$600hr-20-40kyr-side-gig/
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Selling trade lines is not that iffy. I have 5 cards in now. Should pull in 2200 a month. 2 are actively being filled monthly and by this time next year I'll have 15 cards in pulling down 3-4k monthly
Heading off topic...you're renting out your credit history so someone with worse credit can fool a loan company and get better terms. The loan company takes on greater risk than they expected. How is this not cheating the loan company? How is this not loan fraud?
It's obviously fraud but seems to be applauded around here. I give it a year before the cc companies get wise to this scheme and shut it down.
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Selling trade lines is not that iffy. I have 5 cards in now. Should pull in 2200 a month. 2 are actively being filled monthly and by this time next year I'll have 15 cards in pulling down 3-4k monthly
Heading off topic...you're renting out your credit history so someone with worse credit can fool a loan company and get better terms. The loan company takes on greater risk than they expected. How is this not cheating the loan company? How is this not loan fraud?
It's obviously fraud but seems to be applauded around here. I give it a year before the cc companies get wise to this scheme and shut it down.
A - the credit card who is being rented is not misleading anything - so no fraud on their part.
B - This has been a business for several years. I don't see it changing significantly in the near future.
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I said 'iffy' because the income comes on a 1099-misc. Not sure how the IRS will view thousands or tens of thousands of this income. Also, not a fan of giving the host company basically your complete identity. Even if they have no incentive to steal it, surely hackers (or an employee) could. Still seems like a shady area, getting money for nothing usually ends badly, but more power to the folks that are benefiting and feel like the risk is worth the reward. Being FI, I'm extra sensitive that the risk is low, and don't mind if I end up getting a very low or only charitable reward if I eventually jump in (maybe on a personal level, offering AU spots to help others).
*A good idea, probably what MetricMouse's friends employ, is having a good tax accountant that sets up a business entity that receives the income and pays you a salary. Probably ways you can take away the income risk and potentially defray the ID theft via an ITIN, but I didn't become FI to spend my retirement figuring stuff like this out.
Yeah, I'm not sure how their tax situation is set up. Identity theft may not be one of their largest concerns - if it comes up in conversation and I can grok how they do I'll post in the side-gig tax thread.
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Making money in FIRE is ridiculously easy. Don't work longer than you have to.
Not to say it can't be done, but it's not ridiculously easy to replace the income and benefits package, in my humble opinion. In our experience, by the time my wife began to make real money, she basically was working again.
When people say "it's easy to make money in FI/RE", I don't think anyone is talking about replacing your normal career income, but rather making a small amount of money doing stuff you find fun, meaningful, or easy. This is where having a high savings rate during your working career, and low overhead in terms of your spending comes in handy:
Say you find yourself making $5,000 / year doing fun stuff in retirement. If your annual spending is $100,000, the perception is "Well this is not going to replace my $120,000 salary". But if your spending is $20,000 / year, all of a sudden you just met 25% of your annual spending needs.
I don't want to dismiss what you said, and I'd like to hear more about you and your wife's experience in that regards.
In my case, other then silly bonus stuff (bank bonuses, mystery shopping type things: eating chicken), we haven't really made a lot of money, but it's still a good percentage of our spending so far. I occasionally send out emails if I come across an interesting consulting/contracting type opportunity. Nothing has come out of it yet, but I don't mind it either, it's something I can do while having a latte, eating a pastry, and between browsing the forums. It's not what I'd call a full time job :)
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I need to know more about this chicken-eating income
Please and thank you.
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We have a 2 year old and a 4 year old. Maybe will have another, and we are (theoretically) FIRE thanks to some rental income and a modest set of retirement/taxable accounts. DW quit her job about 15 months ago.
But I'm not quitting, for several reasons:
-Healthcare, as others have mentioned, is terrifying. I have to plan for the possibility of paying $20k+ a year (or more) just for crappy insurance for 4 very healthy people with no chronic conditions. We're not so wealthy we can just self-insure, not even close.
-College costs. I'd prefer to pay for my children's college (I know this is controversial here) and I also have to plan for a worst-case scenario where college is $250k a year or something. I guess the whole system would probably collapse before that, but then again I'd have said that about today's $70k/year costs 20 years ago when I was in college.
-I like my job. And I'd prefer to keep doing it. I've scaled back to about 50% time (so 3-4 hour workdays) and am taking a lot more vacations, though.
I think the big issue here isn't kids - it's kids and healthcare. Maybe we'll have some clarity about that in the next few years, but I'm not holding my breath.
-W
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If you really are that afraid of healthcare costs and are planning on college being so astronomically expensive, I would think you should be looking at other countries as a serious option. There are plenty of other countries that are good to live in that have single-payer healthcare and affordable or even free university.
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If you really are that afraid of healthcare costs and are planning on college being so astronomically expensive, I would think you should be looking at other countries as a serious option. There are plenty of other countries that are good to live in that have single-payer healthcare and affordable or even free university.
Yes, that is certainly the case for us. Given that I enjoy my work and probably won't quit completely, however, I imagine that we'll be stupidly wealthy in another decade and a half, so it might not matter.
-W
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With that said, the reality is that ER means being really conservative and probably doing a few questionable things, like taking the free handouts you are entitled to. Although he is a millionaire, his children are on CHIP (http://rootofgood.com/affordable-care-act-coverage-subsidies-pitfalls/) (Medicaid) and he lives in a questionable (but apparently gentrifying) area that had a driveby shooting (http://rootofgood.com/first-person-view-gentrification/) and some of the worst schools in the state.
I think you may have read a little too much into Justin's post- I have seen the neighborhood first hand and there's nothing ghetto about it. One isolated shooting doesn't tell much. It's just a pretty boring working class area, maybe a 6/10?
Also, the school he mentions is the worst in Wake County, which is head and shoulders above the rest of the state.
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Say you find yourself making $5,000 / year doing fun stuff in retirement. If your annual spending is $100,000, the perception is "Well this is not going to replace my $120,000 salary". But if your spending is $20,000 / year, all of a sudden you just met 25% of your annual spending needs.
I don't want to dismiss what you said, and I'd like to hear more about you and your wife's experience in that regards.
I'd agree with that $5,000 and no benefits figure being about the top of fun / hobby income. My wife was about there doing substitute teaching, but it was getting to be regular enough that she just went ahead and became full time. Still low stress, but income jumped up to $25k and full health, retirement, vacation benefits.
She's going back to SAHP next year to make the most of our kids while they are still in middle school, but enjoyed her year of subbing and 2 years of teaching at the Elementary school. If nothing else, it has re-set her appreciation of the joys of SAHP'ing which helps put the 'fun money' spending back in perspective. We noticed that, after several years as SAHP, her fun spending was creeping up, but not as much as her peers. Some of the SAHP's start tennis lessons, regular lunches out, scrap-booking, massages, housecleaners, manicures, etc. after the initial excitement wears off.
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We noticed that, after several years as SAHP, her fun spending was creeping up, but not as much as her peers. Some of the SAHP's start tennis lessons, regular lunches out, scrap-booking, massages, housecleaners, manicures, etc. after the initial excitement wears off.
Interesting. My wife has been a SAHP for 9 years now. She does lunch about once a week and some of her charity work ends up costing us some (gas, donations). Other than that she's still the frugal, coupon-clipping girl I married. She spends so much time volunteering at our elementary school that she might as well get a job there...be nice too get those benefits :-)
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We noticed that, after several years as SAHP, her fun spending was creeping up, but not as much as her peers. Some of the SAHP's start tennis lessons, regular lunches out, scrap-booking, massages, housecleaners, manicures, etc. after the initial excitement wears off.
Interesting. My wife has been a SAHP for 9 years now. She does lunch about once a week and some of her charity work ends up costing us some (gas, donations). Other than that she's still the frugal, coupon-clipping girl I married. She spends so much time volunteering at our elementary school that she might as well get a job there...be nice too get those benefits :-)
My wife went SAH when our 2nd was born, then we went overseas not long after. We were frugal through that, but other expat wives were living it up while we 'stached away. Came back to Houston living a little higher than when we left (160k starter house replaced with a 300k house, mainly to get in to a better school district). Similar story, after a few years and another expat assignment, wife volunteered so much that she started part-time paid positions. Amazingly, being on the paid side gave her a much more influence, so she went full-time.
Our youngest is 11 now, so my wife did ~2yrs SAHP, 2.5 yrs volunteer overseas, half year home-school, 2 yrs volunteer in our new school district, 2 yrs substitute teaching overseas, 2 yrs full-time back in Houston...
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I need to know more about this chicken-eating income
Please and thank you.
Since you asked so nicely, and I think it's funny: Bought and (eventually) ate eight boxes of fried chicken strips, got paid $500 (minus the cost of the chicken strips), and took about an hour between two of us.
It was mystery shopping type thing: Order chicken at location A, eat some and complete survey with thoughts. Order chicken at location B, eat some and complete survey with thoughts. The study paid $125, and there were two locations relatively close to eacher we could do it at, also two of us, for a total of $500.
It seemed very geographically targeted. We happened to be passing through that area while travelling. A friend knew about the study, and that we were in the area so emailed me. Presumably he guessed correctly that I would jump at the chance to eat friend chicken and get paid for it.
So, I think this is a funny story, and the moral isn't that you can scale $500/hour chicken eating, it's pretty one off. But $500 did happen to pay our rent for the two weeks we were in that town, so goes to the advantage of low overhead, and taking advantage random opportunities that come up. I sadly admit that most probably won't be that tasty or lucrative :(
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Thanks CanuckExpat! That is a cool story. I do bits of mystery shopping but mostly in the $20 range. It doesn't scale but is a good way to eat for free.
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Very funny story indeed! :)
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That's awesome! Probably more than the professional eating contest people make, and a lot more sane.
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That's awesome! Probably more than the professional eating contest people make, and a lot more sane.
If you count actual contest time, it could be about the same rate per hour.
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To reply to the OP question:
Yes. We fired 3 years ago with an 8 year old living at home and 2 daughters in college.
Since then, our oldest daughter has graduated and our stash has increased by about 6%.
Living overseas helps quite a bit.
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Posting mostly to follow replies.
To partially answer the OP:
we have 3 kids, We plan to move to a very HCOL: Tokyo (but we're flexible in how far from Tokyo we might want to live). Wife has been a Stay at Home mom for 5 years, and I plan to pull the plug in 2 years (or hopefully before that - technical my math says we're already FI but I'll need a job in Japan to secure a low-interest mortgage, before I can pull the plug).
Japan is not the US, but has similar constraints, in particular Tokyo which is roughly as expensive as HCOL areas in the US in my experience (education costs and housing* costs through the roof, health is expensive although controlled by compulsory national plans. I estimate we will have to pay 12k a year for national health + national pension).
I believe you have 2 choices: have a very crisp budget for the 20 years to come, or expect flexibility in life, which is how I approach things. I have not planned specifically for college costs for my 3 kids. However I have planned to spend a specific amount of money every year for them, which I know will fluctuate in practice. If things go my way, it will be cheaper in the early years so I can save a bit to pay more when they get to college. Worst case scenario, we can skip the international vacation once in a while to get back on track financially if needed, or cut on other expenses, move to some European country where education is virtually free, or, god forbids, go back to paid work at some point if my calculations turn out to be off by 5 digits.
I think flexibility is the key as you add members to your household: each new member adds lots of variables to your life, so your plans basically need to adapt to that. With more kids, you statistically increase the risk that one of them will have expensive medical costs. Incidentally, you also increase the chance that one of them decides to leave home and start a career without going to expensive college.
You've mentioned you're committed to the Bay Area. Do you have details? Not that I pretend I could change your mind, but I'd love to try (from my perspective the only reason to stay in a given location would be family. Anything else is negotiable)
* our 700sq feet condo cost us $500'000 in Japan, when we lived there before. And that was in the suburbs of Tokyo, not Tokyo itself. I don't know of many families of 4 in the US who would find it ok to live in 700sq feet. Again, flexibility.
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I have two young kids not even in school and a non working spouse. My main goal is FU money instead of FIRE. FIRE means I can work somewhere I truly enjoy or for myself. Insurance is a scam and the medical industry the racket; I kind of want to enter their business
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When people say "it's easy to make money in FI/RE", I don't think anyone is talking about replacing your normal career income, but rather making a small amount of money doing stuff you find fun, meaningful, or easy. This is where having a high savings rate during your working career, and low overhead in terms of your spending comes in handy:
Say you find yourself making $5,000 / year doing fun stuff in retirement. If your annual spending is $100,000, the perception is "Well this is not going to replace my $120,000 salary". But if your spending is $20,000 / year, all of a sudden you just met 25% of your annual spending needs.
I don't want to dismiss what you said, and I'd like to hear more about you and your wife's experience in that regards.
In my case, other then silly bonus stuff (bank bonuses, mystery shopping type things: eating chicken), we haven't really made a lot of money, but it's still a good percentage of our spending so far. I occasionally send out emails if I come across an interesting consulting/contracting type opportunity. Nothing has come out of it yet, but I don't mind it either, it's something I can do while having a latte, eating a pastry, and between browsing the forums. It's not what I'd call a full time job :)
This is my gameplan, hopefully it works out.
#1 - love this post topic. Too many FIRE couples on these forums are DINKs , not having that added expense cuts out many readers here I imagine.
#2 - the US healthcare system scares the crap out of me, seriously. I am very fortunate like CanuckExpat and enjoy my free healthcare
#3 - I have two kids, one graduating and one in grade 10. I have a bit saved up to help with university costs (RESP) but otherwise that can pay their own way.
#4 - I am giving FIRE a shot and will be done work May 19th. The wife will continue to work (she/we own our now business and she loves it so will keep working)
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I didn't become FI to spend my retirement figuring stuff like this out.
And just like that <snap> you have assuaged my guilt for not pursuing that potentially lucrative path.
It's fine if you want/need to, but it isn't really leaving money on the table if you have amassed enough.
Whew! Thank you, EscapeVelocity2020!
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You're right that his spending was more like $25k/year. I spend much more time on the forums where the number thrown around for a lot of default calculations is $1M/ $40k per year.
I completely feel your "shame" as our spending is about double that also. With rent at $29k and daycare at $17k I don't see that changing. :) Perhaps the important thing is that we strive for relative frugality. Older, paid-off cars, cook at home, second-hand clothes, blah blah blah. Who am I kidding though? I don't budget groceries down to the dollar each month and we definitely enjoy eating out sometimes. Hanging around these forums is always a good influence in the right direction though.
If you are FIRE, no reason to pay for daycare...
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I'm planning on at the end of this year (unless I get a job offer I'm hoping for...). One big thing that is greatly greasing the wheels here in Canada is the Canada Child Benefit. For kids under the age of 18, it's a progressive monthly payment to help pay for expenses related to children, designed to help prevent children from living in poverty, and to simplify the overly complex mess of tax credits and various allowances that existed prior.
For a fairly typical Mustachian-style family of 4 with FIRE spending of around $35-40k, it can result in up to over $10k tax-free income, which according to the tracking I've been doing for the past few years, is pretty much exactly what we've been spending on our kids, factoring in all aspects - school costs, sports and activities, RESP savings, allowances, family outings and vacations, groceries, etc.
As my kids head into the teenage years, I'm a bit concerned about increasing expenses in those years (cell phones, more expensive activities and groceries), but hopefully that won't be too much.
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This is a great thread. Good to see the different perspectives. It certainly is a different story when you have children to take care of.
I don't have any good answers but our plan is to continue full time until we have enough for just the 2 of us to FIRE. Then we will downshift to part-time until everyone grows up and is out of the house. At that point we will cut our expenses and FIRE. Hopefully the investments will have grown as well so should be comfortable. There are some real advantages to this as regards government pension and just not having to worry about the somewhat random expenses with kids.
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If you are FIRE, no reason to pay for daycare...
I can think of a few reasons.. as many reasons as one might have kids :)
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I'm planning on at the end of this year (unless I get a job offer I'm hoping for...). One big thing that is greatly greasing the wheels here in Canada is the Canada Child Benefit. For kids under the age of 18, it's a progressive monthly payment to help pay for expenses related to children, designed to help prevent children from living in poverty, and to simplify the overly complex mess of tax credits and various allowances that existed prior.
For a fairly typical Mustachian-style family of 4 with FIRE spending of around $35-40k, it can result in up to over $10k tax-free income, which according to the tracking I've been doing for the past few years, is pretty much exactly what we've been spending on our kids, factoring in all aspects - school costs, sports and activities, RESP savings, allowances, family outings and vacations, groceries, etc.
As my kids head into the teenage years, I'm a bit concerned about increasing expenses in those years (cell phones, more expensive activities and groceries), but hopefully that won't be too much.
We made it a goal to have the teenagers start making their own money for extra clothing, school trip fees, cell phones. Mowing lawns, delivering papers, babysitting, small chores for neighbors or other relatives, tutoring at school -- there are lots of ways to earn an extra $50 or more a month, even before they hit 15 years old.
Otherwise, there is a spike in food costs (teenage boys, especially), and in graduation costs (girls, especially). We found that as teenagers, the costs for braces, physio, or other educational "intervention" programs and daycamps from elementary school pretty much ended. Both our kids chose hobbies that were not "rep" teams, however, when they realized that they would need to pay for a portion of them. (House league equivalent was all mom and dad would pay for). It helps if their friends do not have wealthy parents, I think.
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If you are FIRE, no reason to pay for daycare...
False! Daycare can be great, even for two non-working parents like XS and myself!
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My kid LOVES her daycare and asks hopefully about going on Friday nights. "Sorry kid, you actually have to spend two full days with your loving parents!"