Author Topic: Reached minimum FI  (Read 3886 times)

jonp

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Reached minimum FI
« on: December 25, 2015, 07:26:17 PM »
Long-time lurker here.   I created an account just to post this as I can't talk about it with too many people.

The Good

I tallied the numbers today and I came up with $598.5k in our stash.   With the saving at the end of the month, which are basically automatic, it will be $600k.

We also own a house worth ~$480-500k.  We owe about $100k so there is $380-400k home equity.  I am calculating that it is possible that we could sell our house, pay the realtor/lawyer fees, buy a modest townhouse in a different area of the country with our remaining equity and pocket about $150k.   I don't feel that I am making a large sacrifice either, I am pretty confident I could find an area I love and buy a townhouse for the $200k range.

Put the two numbers together and I'm at $750k.  So at 4%WDR, that is $30k per year.   I think that for the two of us, this would be just the bare minimum to FIRE.   So I think I am at a very basic, starter level of FI.   For me this is huge.

The Reality

We have 1 child, 3 years old.   This complicates things A LOT.  We are not prepared to live off of the $30k at this age in our lives and actually retire.   I know it is possible but not something that is worth it given a bunch of things.  How young we are, that we don't hate our jobs, that we want to be near family while ours is little, college, and frankly that stuff can happen, hard to know what expenses will be with a kid.

So we are at this minimum level for ourselves right now, but we can't actually take advantage of it.  I still find it very comforting to know that all we really *NEED* to do is cover our expenses until our kid grows up.  It is very likely that even if we didn't save the stash would be 10-30% larger (or double), so I think we should have considerably more than a basic stash when the time comes.

The Plan

I think I will just continue to work full time until the stash is at $1M.  Not because it is a round number but because the number just works well.  At that level when we choose to retire we would be quite comfortable on a 4% WDR and could pull back to $30k indefinitely if needed.  We also have government benefits at some point as a buffer/safety net.  For me that is good enough.

Once/if I get to that magical round number, due to kid expenses/more expensive house I think we will continue to work but will cut back in order to just cover the bills and put away for college.   I think that would mean both of us working half-time. 

When ours hits 18, or maybe 1-2 years earlier we would fully retire.

So many, many variables between now and then but it feels good to have a plan at least.  I will keep posted how it goes.
« Last Edit: December 25, 2015, 07:38:11 PM by jonp »

cawiau

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Re: Reached minimum FI
« Reply #1 on: December 25, 2015, 07:42:07 PM »
Good luck with our plan; seems like a solid one. Doesn't feel good to be FI? I know for us it relieved the pressure of needing to have  a job!

We have similar hold up as you in regards to RE but the age is 23-24 vs 18.

We could possibly fire within the next 10-15 years but my wife has reservations about college costs. She graduated with over 120k student loans (undergrad and grad) and would love to have our kids finish undergrad with no debt (grad and above they are on their own, that was my line in the sand).

She rather work longer to be certain we could do that or cash flow as much as we can.


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arebelspy

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Re: Reached minimum FI
« Reply #2 on: December 26, 2015, 08:46:46 AM »
Congrats.  Now it's just a matter of deciding when is enough.  :)  Good luck!
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zephyr911

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Re: Reached minimum FI
« Reply #3 on: December 26, 2015, 09:52:18 AM »
You may not be comfortable with quitting yet, and it sounds like you don't even want to... but that doesn't mean you "can't take advantage of it".
You are now in a rare and enviable position of strength for an employed person... that of being totally, 100%, NOT obligated to put up with any shit you don't like. FI means mega-FU money. It means all negotiations about duties, pay, location, etc, are tilted in your favor by the sure knowledge that you could walk out tomorrow without consequences.
I'm not quite there yet. I'm just close enough that it permeates my attitude, affects how I'm treated, and makes stupid stuff easier to deal with. Even if you do nothing tangible about your new status, by all means enjoy it.

Cassie

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Re: Reached minimum FI
« Reply #4 on: December 26, 2015, 12:40:46 PM »
YOu are doing great!  Congrats:))  I don't blame you for wanting a bigger number before calling it quits. 

Lindy

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Re: Reached minimum FI
« Reply #5 on: December 26, 2015, 01:55:57 PM »
Congrats!  I can't wait to experience that feeling.  Hopefully in another 6-8 years!

jonp

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Re: Reached minimum FI
« Reply #6 on: December 26, 2015, 02:29:08 PM »
You may not be comfortable with quitting yet, and it sounds like you don't even want to... but that doesn't mean you "can't take advantage of it".
You are now in a rare and enviable position of strength for an employed person... that of being totally, 100%, NOT obligated to put up with any shit you don't like. FI means mega-FU money. It means all negotiations about duties, pay, location, etc, are tilted in your favor by the sure knowledge that you could walk out tomorrow without consequences.
I'm not quite there yet. I'm just close enough that it permeates my attitude, affects how I'm treated, and makes stupid stuff easier to deal with. Even if you do nothing tangible about your new status, by all means enjoy it.

I think you really nailed it.  I DEFINITELY am noticing this effect on my perception of the work-place.  It is also opening up other options as I am in a bit better position to take risks.  I was going to add something about this to my post but kind of ran out of energy.  There are benefits to being near FI, such as lower stress, that should not be under estimated.
« Last Edit: December 26, 2015, 02:31:51 PM by jonp »

EscapeVelocity2020

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Re: Reached minimum FI
« Reply #7 on: December 26, 2015, 02:55:27 PM »
Yup, sounds a lot like me 7 years ago.  At barebones FI, I switched companies to get a job overseas with my young family and sold our house.  Also had a back-up plan to become an independent engineering contractor in Aberdeen.  Had a contract and company all set up, but going overseas with a corporation was a much better structured, lower risk option.  Ironically I made myself even more valuable in my industry.  Before my kids got too old, we took a second expat assignment in Dubai.  Still enjoying my work today, but the kids are 10 and 12 now so I would turn down anything I'm not willing to do (like another expat gig).  Teenagers need a stable social life, but I'm glad they spent 5 childhood years living overseas.  FI is really liberating and I'll do what I can to instill in my children the need to achieve FI ASAP!  Congrats
« Last Edit: December 26, 2015, 04:28:07 PM by EscapeVelocity2020 »

The Viking

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Re: Reached minimum FI
« Reply #8 on: December 26, 2015, 03:37:38 PM »
Congrats! Now take a moment and acknowledge what you have accomplished already, take care of the little one and enjoy the journey.