1.5 year FIRE estimate off by $117

[Rollin]

If this were any other forum I wouldn't dare post this, as it would be misunderstood for sure. I thought this group would appreciate it though.

I FIRE'd August of 2015 and developed my own detailed spreadsheet over the years to estimate what we would need income-wise (I'm not one that was able to do the big stash and w/d 4%, but actually have 12 sources of income = more complicated spreadsheet for sure) for a ten year period. After that the income increases and things won't be so close, but I will stretch it out in a few years. Anyway, back in August of 2015 I estimated that we would have $6,963 at the end of 2017. That is all income sources, plus 4% of our stash, less expenses (including taxes). Well, I was wrong and at this point it looks like we'll have $7,076 in the checking account! I'm so happy that my estimates worked out. There aren't many people near me that understand what it takes to retire early, so really no one to run the numbers past.

So far so good! FIRE is awesome by the way. I originally planned on going at 47, but got married to my DW (she had 3 children that became my step-children) so I put it off (had to financially) until I turned 54.

BTW - related - I just switched the stash to Vanguard and the planner I worked with was sheepish when she said the analysis would go out to when I would reach 100 years old. I said to her "why so early? I plan on being 105 and still alive!" That made her laugh, but then I told her I was serious and so I appreciated her time horizon :)

[GettingClose]

Absolutely awesome.  I hope this is me one day :-)

[marty998]

nicely done.

12 sources of income???

[dragoncar]

up your badassity and paypal $117 to me.  You hit your target exactly

[Rollin]

up your badassity and paypal $117 to me.  You hit your target exactly

I am often trying to use these things as a teaching moment with the kids (you know, plan well for your future - avoid the spending habits that get you into trouble now). When I was explaining to one I know that was the same thing running through that little mind - "hey, I'll take it!". So you have some competition :)

nicely done.

12 sources of income???

Prior to FIRE the DW was always saying "I want multiple sources of income" (along with "I wish we could win the lottery"), and I would ask her if 11 were enough (at that time it was 11). I do count my 4% SWR as one of those.

Absolutely awesome.  I hope this is me one day :-)

I just kept massaging the sheets over the years and it is starting to feel comfortable. My most difficult part was figuring out what our expenditures were/are. There are so many categories (house, auto, medical, etc.), but once I got a handle on that I could use those numbers as a budget for FIRE time. This is my first full year of FIRE and I was a bit nervous about making it. If I had made a mistake then it would mean back to work ( at least part-time) and I am just absolutely loving it out here!

Now my task is to simplify the sheets. I just switched from Personal Capital to Vanguard and in doing so VG produced a "plan" for me that uses a similar format to mine. However, they had some nice summary sheets that I'd like to incorporate so that what I have is more simple.

For example, when I was developing a sheet for income I actually had each month for each year for each income source mapped out for many years into the future. I could then control the actual month that one of the sources changed and be quite accurate (e.g., my pension has a COL increase in July, so that shows up in August each year). Also, on the expenditure side I added increases for inflation, but decreases as the kids started moving out in later years (so far 2 out of 3 have launched!).

Thank you all for your support. It is an ongoing and sometimes fluid process, with tucks and turns here and there. Another example is that in the switch to VG I have about $10,000 in capital gains to figure in. However, if my calculations are correct I'm okay with any potential increase in taxes (I don't think there will be any because my MAGI is so low in these first few years of FIRE - so zero on the capital gains). I am just feeling more confident now as this first full year is starting to end.

[Bicycle_B]

Awesome, Rollin!

[Rollin]

Awesome, Rollin!

Thanks Bicycle B. BTW Like that name :) I picked Rollin for (maybe?) similar reasons.

[ChpBstrd]

Good estimation!

FYI to others...There are a couple of potential math bugs often built into FIRE spreadsheets that probably cause a lot of us to overestimate our timeframes. I bet a lot of people considering pursuit of FIRE get discouraged by these results and give up:

1) You take an assumed rate of return and just multiply it by years instead of calculating for compound interest. Compound interest applies to stock capital gains too, btw.
2) You use the FV function with an annual Nper and Rate, which assumes you only contribute savings once a year - at the end of each year by default - when in fact you are investing and usually picking up gains throughout the year.
3) You calculate future portfolio value based on expected capital gains, but forget to account for dividends.
4) You assume today's salary throughout the period of analysis, when in fact your company is likely to give raises at some point.
5) You account for your mortgage, student loans, etc. in your cost of living and multiply by 25 to get a FIRE number, but do not account for how these will be paid off at some point.

Maybe others can contribute their own Excel bloopers.

[Rollin]

Good estimation!

FYI to others...There are a couple of potential math bugs often built into FIRE spreadsheets that probably cause a lot of us to overestimate our timeframes. I bet a lot of people considering pursuit of FIRE get discouraged by these results and give up:

1) You take an assumed rate of return and just multiply it by years instead of calculating for compound interest. Compound interest applies to stock capital gains too, btw.
2) You use the FV function with an annual Nper and Rate, which assumes you only contribute savings once a year - at the end of each year by default - when in fact you are investing and usually picking up gains throughout the year.
3) You calculate future portfolio value based on expected capital gains, but forget to account for dividends.
4) You assume today's salary throughout the period of analysis, when in fact your company is likely to give raises at some point.
5) You account for your mortgage, student loans, etc. in your cost of living and multiply by 25 to get a FIRE number, but do not account for how these will be paid off at some point.

Maybe others can contribute their own Excel bloopers.

Those are helpful and many would not be aware of without either you pointing them out, or through experience (after the fact of course : )). Thankfully we have this forum and we do not need to go it all alone!

[Rhoon]

2) You use the FV function with an annual Nper and Rate, which assumes you only contribute savings once a year - at the end of each year by default - when in fact you are investing and usually picking up gains throughout the year.

Depends how you set up the formula:

=FV(6%/12, DATEDIF(NOW(),"Retirement Date","M"), -"Monthly Contribution Amount", -"Current Stash")

I set up mine based on the period being a month. I don't think this accounts for  dividends, but when I update my spreadsheet every month, the new stash values and "earliest possible retirement date" gets updated based on the "Current Stash" value.

Determine what Day is the earliest I can retire.
=TODAY() +NPER(6%/12,-"Monthly Contributions", -"Current Stash", "25x Expenses")/12*365.25

[Rhoon]

Oh and congrats Rollin!

Curious: What 12 sources of income did you settle on?

[Rollin]

Oh and congrats Rollin!

Curious: What 12 sources of income did you settle on?

Some are small and some are large. Some are regular/ongoing and some are finite. Most of these we have coming in now and some will kick in soon or in a few years, but they were all factored into my spreadsheet I used to determine if I could RE:

Stash 4% SW (5% for 2018)
Pension
Health Insurance Subsidy
Life Insurance Annuity
Child support (expiring soon!)
DW's business income
Owner-financed home sale
My side gig income (a few times a month to a few times a week)
DW's IRA (will be at 4% SW when DW is of age)
DW's SS (when DW is of age)
My SS (when I'm ready)
I see now that my 12th is no longer applicable and I included it erroneously. It was that was rental income now turned owner-financed income.

I am working on a 12th though and that is a local investment in real estate.