Author Topic: Semi-Fire  (Read 5037 times)

willow

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Semi-Fire
« on: July 24, 2015, 06:41:21 AM »
I've been doing some planning on this fine morning and experienced a small elation.

Basically, on our current savings track(not including 401k, that's a whole different debate I'm having in my head). We can FIRE in 15 years in our current state of fanciness.

What is beautiful about the projections however, is that I can see where we can start to semi-fire before that. Or mostly, reach the idgaf state of life.

4 years in we can have the house paid off and still have a sizable savings.

11 years in, with a paid off house, we can FIRE with a very minimalist lifestyle(perhaps in 11 years I'll have trained myself to that point).

I'm excited about this because even right now, with the house payment(only debt we have) and our modest savings I already have a very nice sense of financial stability. Work never gets too stressful because if I lose my job, I'm pretty confident I can find another in 6 months, and we don't even need both our incomes to survive(50% savings rate FTW). So the exciting part of all this to me is that you don't even have to get to FIRE to enjoy the benefits of the mustache lifestyle. The benefits grow each year, much like your savings.

deborah

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Re: Semi-Fire
« Reply #1 on: July 24, 2015, 05:49:40 PM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

steveo

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Re: Semi-Fire
« Reply #2 on: July 24, 2015, 06:41:52 PM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

I think that this is about right dependent on some other circumstances. My housing costs are ridiculous and I have 3 kids. Those costs add up. Some people won't earn a decent income - I don't believe a good income is a requirement. Still I do believe that frugality enables fairly early retirement.

woodnut

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Re: Semi-Fire
« Reply #3 on: July 24, 2015, 07:09:11 PM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

I think that this is about right dependent on some other circumstances. My housing costs are ridiculous and I have 3 kids. Those costs add up. Some people won't earn a decent income - I don't believe a good income is a requirement. Still I do believe that frugality enables fairly early retirement.

It was shocking to me how the math works out.  The expense side of the equation has a much larger gain than the income side on the projected FIRE date.  I just started the semi-FIRE thing working 4 days a week.  I'm taking a 20% pay cut but only adding 7 months to my original 5yr FIRE date.  So yes, you don't actually have to get all the way to FIRE to start enjoying the benefits.  Now if instead of a 20% paycut, I could cut another 20% from the expense side without causing marriage problems, I could damn near FIRE today.

Retired To Win

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Re: Semi-Fire
« Reply #4 on: July 25, 2015, 06:25:33 PM »
... It was shocking to me how the math works out. The expense side of the equation has a much larger gain than the income side on the projected FIRE date....

Absolutely.  Based on the 4% SWR, trimming $1000 a year off your expenses results in reducing your target FI stash number by $25,000.  That's huge.  In my case, it was huge enough to cut 9 years off my wait to reaching FIRE.

And such cuts would certainly also accelerate your attainment of "semi-fire" status.

willow

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Re: Semi-Fire
« Reply #5 on: July 25, 2015, 08:54:18 PM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

Oh believe me I have. The 15 implies that we continue living our current fancy life style. I definitely think we can do it in about 11 if we cut back a bit more.

We're at about 50% take home pay savings rate. This does not include the 15(and 20)% we're both putting into our 401ks. Which is the 2nd part I'm debating. We could Fire much quickly if we just put the minimum into our 401k(for the match) and put the rest into the FIRE account. As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account. It's probably a bit overly cautious but more than anything I think it's just a habit we've had that needs to break. Even with the tax break, I'm not sure it's worth it to put so much into a 401k if you want to retire early.

deborah

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Re: Semi-Fire
« Reply #6 on: July 25, 2015, 09:05:18 PM »
Even I, an Australian, know that you don't need to do this - see http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

I think the outcome is to definitely put it into a 401k, and then use the method in the post to take it out.

forummm

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Re: Semi-Fire
« Reply #7 on: July 26, 2015, 07:16:18 AM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

Oh believe me I have. The 15 implies that we continue living our current fancy life style. I definitely think we can do it in about 11 if we cut back a bit more.

We're at about 50% take home pay savings rate. This does not include the 15(and 20)% we're both putting into our 401ks. Which is the 2nd part I'm debating. We could Fire much quickly if we just put the minimum into our 401k(for the match) and put the rest into the FIRE account. As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account. It's probably a bit overly cautious but more than anything I think it's just a habit we've had that needs to break. Even with the tax break, I'm not sure it's worth it to put so much into a 401k if you want to retire early.

Is there any reason to treat your 401k money as 55+? That seems suboptimal. It's definitely suboptimal if you're increasing your tax bill to do that.

steveo

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Re: Semi-Fire
« Reply #8 on: July 26, 2015, 03:48:29 PM »
As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account.

I honestly don't get this. Even if its for money when you are older the idea of becoming FI is that you can live off your savings for life. To me that means all your money needs to be considered because at some point you will use it.

FI40

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Re: Semi-Fire
« Reply #9 on: July 27, 2015, 02:25:19 PM »
As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account.

I honestly don't get this. Even if its for money when you are older the idea of becoming FI is that you can live off your savings for life. To me that means all your money needs to be considered because at some point you will use it.

Well imagine all you had was 401k money, and no other investments. Even if your 401k is 25x annual expenses, what will you live on before you are 55?

forummm

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Re: Semi-Fire
« Reply #10 on: July 27, 2015, 02:41:46 PM »
As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account.

I honestly don't get this. Even if its for money when you are older the idea of becoming FI is that you can live off your savings for life. To me that means all your money needs to be considered because at some point you will use it.

Well imagine all you had was 401k money, and no other investments. Even if your 401k is 25x annual expenses, what will you live on before you are 55?

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

willow

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Re: Semi-Fire
« Reply #11 on: July 28, 2015, 10:37:51 AM »
As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account.

I honestly don't get this. Even if its for money when you are older the idea of becoming FI is that you can live off your savings for life. To me that means all your money needs to be considered because at some point you will use it.

The idea is, I want to retire before 59 1/2. I assumed I could not touch the 401k money before that time. So the money needed to get me through say, age 30 to age 59 & 1/2 is the only money I'm allowed to consider.

Based on the posts made by some of the others here, it seems there is some information about 401ks to which I was not privy.

willow

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Re: Semi-Fire
« Reply #12 on: July 28, 2015, 10:39:00 AM »
As is, I treat the 401k money as 55+ money so it doesn't go into my calculations.

We're trying to decide if we should try to focus on FIREing without the 401k savings taken into account.

I honestly don't get this. Even if its for money when you are older the idea of becoming FI is that you can live off your savings for life. To me that means all your money needs to be considered because at some point you will use it.

Well imagine all you had was 401k money, and no other investments. Even if your 401k is 25x annual expenses, what will you live on before you are 55?

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

Thanks everyone, this was helpful.

willow

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Re: Semi-Fire
« Reply #13 on: July 28, 2015, 10:50:20 AM »
You should do some projections with lower spending rates to see how quickly you could become FIRE. In general, I think people should be able to FIRE within 10 years of discovering frugality, so 15 years means that you could be overspending.

I think that this is about right dependent on some other circumstances. My housing costs are ridiculous and I have 3 kids. Those costs add up. Some people won't earn a decent income - I don't believe a good income is a requirement. Still I do believe that frugality enables fairly early retirement.

It was shocking to me how the math works out.  The expense side of the equation has a much larger gain than the income side on the projected FIRE date.  I just started the semi-FIRE thing working 4 days a week.  I'm taking a 20% pay cut but only adding 7 months to my original 5yr FIRE date.  So yes, you don't actually have to get all the way to FIRE to start enjoying the benefits.  Now if instead of a 20% paycut, I could cut another 20% from the expense side without causing marriage problems, I could damn near FIRE today.

This is awesome to hear. That's exactly the kind of thing I look forward to.