Living a Bucketlist lifestyle, now paying for it, now what?

[Pacifica]

Hello,

This is my first post on this forum.  My husband and I lived well in our 20s and 30s.  We held a philosophy that work was the means to funding our adventures.  We took many expensive trips pursuing hobbies, week long kayak trips in far away places, climbing mountains, diving the Great Barrier Reef, and Hawaii, and Mexico...etc.  I was not motivated to work and settle down and live in Suburbia.  I can't say that I regret that lifestyle, I've done more in one year than most have done in a lifetime.  I have incredible memories and laughs, and my body was able to handle the challenges.  But, I have to acknowledge now, in my 40s, that it came at cost.  We don't have the net worth that our peers have.  To this day, I am grateful that we made it through that period of our lives and didn't get seriously hurt, and I am also grateful that I managed to keep the same job because it funded my trip and I didn't want to cut off my stream of income.

Now I am ready to reign in my restlessness and settle down, and get on the path to growing my net worth.  When I talk with coworkers and read posts here, I am starting to get the picture that we are very heavy spenders.  I didn't see it that way in the past, but I can't help laying out the facts and thinking that others aren't spending the way we are.  My husband and I were raised in families that lived well, so we just sort of expected that lifestyle in our adult lives, without understanding the budgeting side of it.

We have 2 mortgages, our primary house and a vacation home.  The vacation home isn't really an option (to get rid of) because we *really* don't like living fulltime in our primary town, and rather than quit our jobs, we made the decision to live part-time nearby.  Both mortgages combined are 20% of gross take home, so I don't see that as a reckless decision.

Because of the 2 houses, we have two sets of bills.  We have cable in both places, internet etc.  We also have a car payment, and send our child to private school.  We eat out, and have season ski passes, go to Hawaii annually.  This all sounds like a bit much, but to me it seems normal.

We worked hard to build up an emergency fund, and have insurance coverage, and pay off bills every month.  Those were big steps for us.

Now we are getting serious about retirement and net worth building and are in the position to save $30K-$40K after taxes, without making changes to the above lifestyle.

Husband has $125K in pension plan
Me, I have 90K in pension plan
additional $96K in 401K
We have another house paid-off that the renters are buying back from us, worth 60K

Now we need to decide what is the best use of the $30-$40K that we project to save annually.  Maxing out the 401K and Roth is the safest route, but we are playing around with the idea of buying a rental property that would later serve as our parttime retirement home.  It seems like a good idea to buy into the retirement home now, with lower prices and locking in property tax (Prop 13, California), but I think we may putting too much in liability in real estate.

Being in our mid-40s, we may not have time to play with real estate, and should just put our heads down and work and save for retirement.

Please, any advice is appreciated.

[lizzigee]

I wouldn't personally put any further funds into real estate and would definitely diversify, but there are others here who have chosen to go full time down the real estate route an done very well out of it.  What I would suggest though,  is posting a full case study so we can give you better quality advice.  Saving $40K per annum is great if you only plan on spending $30 thousand p/yr for the rest of your life, but some serious adjustment will have to be done if you actually spend $160K per year and don't intend to cut back. Anyway, welcome to the forum, remember we all take away different information that suits our own circumstances, and be brave, you're bound to get the odd facepunch but don't get pissy about it - use it as the motivator it's intended to be.

[aspiringnomad]

I agree that you should stay away from further real estate investments, and put all your savings towards maxing your 401ks then Roths, then a taxable account using ETFs to index according to your preferred asset allocation.

As for your travelling lifestyle, it doesn't have to be incompatible with Mustachianism. Some of the most adventurous travel I've had has come on a shoestring, usually spending less on the road than I do in the same number of days at home. I suppose extreme sports/activities get expensive quickly, but there are a lot of mountains out there that you can climb for free or with minimal gear. Also, look into credit card travel hacking.

[Kakashi]

You haven't really defined your goal.  You're wanting to build wealth, but haven't defined how much wealth and when you want to retire. 

At the end of the day, your choice of continuing your lifestyle simply means there will be no early retirement.  Perhaps there's going to be late retirement.  As such, both you and your husband are tied to your jobs.  You need it to support your lifestyle. 
That is fine, no judgement...really!  Because that is how the vast majority of Americans are. 

The goal for most on MMM is to become financially independent and retire early.  Many have set a certain $$ amount or certain date. 
Hence, you need to define what it is you want financially before deciding how to get there.

[pbkmaine]

Do you WANT to be a landlord? Do you plan to take enough time to master the subject? My college roommate owns a bunch pf properties. They throw off enough income to support her. She learned rental real estate economics from her mother, who was a pro. She knows what kind of properties to buy, and how to hire and fire management companies. It's not for me. I like index funds.

[former player]

Welcome, and congratulations on starting your journey to mustachianism.

$311,000 in retirement funds.  Say 20 years to retirement at 65.  Compound interest at 4% brings that to a total of $680,000 which at a sustainable 4% withdrawal gives you $27,000 per annum to live on in retirement.  How does that sound to you?  Will you have a social security entitlement to go with it?  If you add $30,000 to those retirement funds each year, on the same assumptions you are now up to a retirement fund of $1.6M, giving you a retirement income of $64,000 per year.  How does that sound to you?  That is basically all your spare cash for the next 20 years going to retirement.

Have you any savings for the kid to go to college?  I'm guessing that if you are paying for private school you will be looking to help out with college, which is an extra expense on your current levels of expenditure.

I don't understand why the vacation home, if it is so dear to you, won't be your retirement home (that's what I did)?  Or why, if you want something else to be your retirement home, you don't sell the current vacation home and buy your eventual retirement home now?   Whichever, three/four houses is a level of over-investment in real estate that you can't afford, given that you don't seem to have any non-retirement cash investments, just an emergency fund, and you still have debt (car payment) on top of your existing two mortgages.

[Metric Mouse]

MDM's post on this is probably a helpful place to start.


Investment Order

[MayDay]

Don't buy your retirement home and rent it out unless it makes sense as a rental independent of your desire to eventually live in it.

You aren't going to be living in it for a long time. Given the lifestyle you describe, I'm guessing you spend 100k a year or more. If you want to retire on that kind of income, it's going to be 30 years. Why buy a house now that you may want to live in in 30 years?

More info about current spending and goals (what income you want in retirement, what is more important, retirement vs. paying college vs. travel vs. owning multiple houses etc) it's hard to give specific advice.

[BTDretire]

Welcome, and congratulations on starting your journey to mustachianism.

$311,000 in retirement funds.  Say 20 years to retirement at 65.  Compound interest at 4% brings that to a total of $680,000 which at a sustainable 4% withdrawal gives you $27,000 per annum to live on in retirement.  How does that sound to you?

  Something that many people don't highlight when talking about future money is the decreased buying power
caused by inflation. With 3% inflation, the buying power of $27,000 today is only $15,000 in 20 years. Ouch!

[Metric Mouse]

Welcome, and congratulations on starting your journey to mustachianism.

$311,000 in retirement funds.  Say 20 years to retirement at 65.  Compound interest at 4% brings that to a total of $680,000 which at a sustainable 4% withdrawal gives you $27,000 per annum to live on in retirement.  How does that sound to you?

  Something that many people don't highlight when talking about future money is the decreased buying power
caused by inflation. With 3% inflation, the buying power of $27,000 today is only $15,000 in 20 years. Ouch!

4% assumes inflation, generally.

[ysette9]

I see with just the scant details you provided that there is a ton of room for optimizing your expenses without sacrificing actual happiness. The biggest issue I pick up on is that you have intertwined "living well" with "spending a crap-ton of money on stuff". One of the most powerful philosohipical things I have gotten out of MMM is the idea of stepping back and taking time to reflect on what your true goals are. What really makes you happy? Doing this e revise with my husband over the course of several conversations has really opened our eyes and crystallized our big goals.

From what I gather you both enjoy adventure and travel. I don't see how tying yourself down with multiple houses and mortgages and car debt and multiple cable packages supports that goal. That sounds like a bunch of cords tying you down to earth and squashing your dreams. Sure, you need a place to stay, and if you don't have enough assets to fund your dream life yet it probably means you need to live close to work. You probably don't need to buy three houses though and you probably don't need to pay for private school. I don't know the details though. I recommend a case study to get third-party input. You can't always see what is directly under your nose.

Overall, to second what others have said, spend time cogitating on what really is important to you, what brings happiness, and then coke back with some more concrete ideas. As an example, for us, freedom to do whatever we want is hugkyey important. Free time to spend with my husband and toddler is most important to me. Free time to exercise, to cook, to run and hike and camp and travel and see family and spend time with friends. I want to read more. I want to do little projects and improve my language skills. All of that is more important than a nicer car or a big house, do we put our money in places that aligns with what brings us happiness. That answer will look different for each of us, but hopefully for all comes out of self-reflection and not just prior programming that spending money on X brings happiness.

[honeybbq]

Hard to say without seeing specifics of your income and outcome. I would not buy any more real estate if I were you.

My feeling is you guys need to find a little balance. My suggestion is to max your tax advantaged strategies, contribute to Roths if you are eligible (sounds like maybe no?), set a fixed amount for after-tax savings, and then spend the rest. At least for starters. You need to pay yourselves first instead of having fun first and then saving whatever is left. Check out books like the Wealthy Barber and other simple investing books. Do you have any debt other than the houses?

You can still go to Hawaii and you can still ski but you may need to make more conservative decisions in travel and lodging, etc. Just remember to set aside the savings first, then be smart with the rest.

[Pacifica]

Thank you all for the input!  It truly gave me direction and helped me to see that you have to specifically define the goal before you can make adjustments and create a plan to reach it.  I don't think we have a very defined goal other than:  work a bunch, save some money, spend some money and figure it out when we get there.

I am happy to see that the consensus was to "not buy any more real estate" as I didn't like the risks involved.  I just had to bounce the idea off the MMM community to see if there was any compelling reason to go the real estate route, that I wasn't seeing.  I know real estate would likely double the investment, but there are more risks.  My husband and I spoke about this today, and we would both rather max the 401K contributions.

A few people suggested that I give details to help give feedback on my other issue of overspending.

Our annual gross income is roughly 200K from a few sources.

Salaries are 90K each. We work for the same company with a mandatory pension contribution of 8.5% (that is matched by the company)  So we are both contributing 8.5% of 90K, with the company matching another 8.5% in a defined benefit plan.

Net monthly take home is about: $11,500
Car payment: $645, for 6 more months, both cars paid for and in good condition.  We live 6 miles from work, and travel 140 miles on weekends to the vacation home.
Private school is $600, but there is a chance that will go away as another schooling option may happen.
Mortgage 1 is: $1802
Mortgage 2 is: $1248
After credit cards, food, utilities, gym, transportation, traveling, there is about $3300 left.

So, my original question is what to do with the $3300.  If I understand the math right, we are saving about 36% of gross...is that right?  I figure $1275 is pulled for the pension contribution and then $3300 (before taxes) would be about $4714 pre-taxed in a 401K.

So here are the details, and please share any advice you may have.  Thanks!

[ysette9]

If it were me, I'd open up a vanguard account and stick the extra each month in a 60/40 mix of VTSAX and VTIAX. You should do what your Investment Policy Statement says is your target asset allocation. :) If you haven't written one of those yet and need a place to park your cash while you figure it out, see my recommendation above. Just promise me, hope-to-die, stick-a-needle-in-my-eye that you will buy and hold and not be tempted to sell if the market has a temporary downswing, as it inevitably will.

[Sibley]

+1 on ysette9's observation that you've built a lifestyle that isn't actually what you want. Just because you're mature and have kid(s) doesn't mean you have to live in suburbia. Growing net worth doesn't mean you automatically have to turn into the boring people down the block. You've opened one eye and have seen some possibilities, now open the other eye and realize the trap you're falling into. There are many people on these forums who live unconventional lives, even while we APPEAR to be plain vanilla. You can do the same.

You own a house that you don't like living in, so you own a 2nd house that you travel 130 miles to every weekend to live in. You also pay for cable at both places. Get rid of both places and find 1 place that you don't mind living in that works for the lifestyle you want and location you need for work. Dump the cable too - go rock climbing or something in the area (no idea where you actually are or if you want to go rock climbing, but find something to do other than watch tv).

Keep reading MMM. This really is a lifestyle if you choose to embrace it, and since you spent so much time on a bucketlist, I suspect that you might like the adventure involved in bucking society's expectations while appearing to meet them.

[runewell]

Seems very strange to work in city X where you don't like to live and then drive 140 miles away to city Y.  I would think the point of Mustachianism is to trim the fat and only make yourself need to work another N years so that you can quit your job at X and just live at Y.  You can spend more and work longer and continue this strange commuting lifestyle (and maybe you like it?) or perhaps you can trim some fat and save more aggressively and leave city X sooner than later.

I agree with others: (1) no more real estate, and (2) what are your goals?  As Joe Jackson said, "you can't get what you want, til you know what you want" 

https://www.youtube.com/watch?v=XGqmiT7JJVg

[Lucky Recardito]

After credit cards, food, utilities, gym, transportation, traveling, there is about $3300 left.

... does this mean that you are making monthly payments on carried cc debt? If so, the presence of cc debt is an important non-detail. It sounds like you're just sort of tilting at windmills at the moment, without a realistic understanding of what you've got going on.

[TheAnonOne]

After credit cards, food, utilities, gym, transportation, traveling, there is about $3300 left.

... does this mean that you are making monthly payments on carried cc debt? If so, the presence of cc debt is an important non-detail. It sounds like you're just sort of tilting at windmills at the moment, without a realistic understanding of what you've got going on.

I agree, it sounds like your savings rate is really up in the air.

It is highly unlikely you will "FIRE" before 65 at this rate which is fine, but seems a bit defeatist on this board.

I have hope though, most join here and read for a good year and start making incremental changes that eventually accelerates to fire within 7 to 15 years.

You have built up some really high obstacles though.. Two houses? Two sets of bills, heating, travel ect.

The good news is that vacations are probably the least of your worries in this, we travel a TON (using travel hacking when we can) and don't probably spend 3k a year. (3 to 4 domestic trips and 1 to 2 international trips per YEAR)

Good luck and welcome! The journey is long, slow and sometimes hard, but remember, your just switching from buying cable to buying freedom.

[Guses]

How do you go from living a bucketlist lifestyle (i.e., active and spontaneous) to a lifestyle where two houses and two cables bills are a necessity? Unless maybe you are working your way to the "1,000,000 hours of TV watched" bucket list challenge.

Is TV so important that you need to watch it and pay for it at both places? PVR? Netflix?

Both spouse work at the same place, live 6 miles from work, own two cars? Why?

Yearly Hawai trips?

Are you looking to change the way you live your life or just looking for advice on investing the 3,300$? If the latter, it does not really matter what you do with it, you'll need to save for 30-40 years to retire at your current level of spending.

[JoJo]

It's the yearly Hawaii trips that also stick out - Hawaii ain't cheap!  Unless there is a time share that is already paid for have you considered a different trip - like a trip to national parks by car?
For the fun of it, I looked at airfares from west coast to hawaii & alternatives next year.  In May, I can fly to Honolulu for $600 or to Philippines for $522.  Sure it takes a little longer to get there but there are some beautiful beaches, snorkeling, tropical adventures in the Philippines for a fraction of activities in Hawaii.  For example, it's possible to do a full day of snorkeling with lunch included for less than $20.  A nice meal $5-10.  Hotels are generally cheaper too. 

[Giro]

I'm not mustachian by any stretch of the imagination.  But, what sticks out to me, is your spending to get away from your life.  It seems to me that you could make some changes to better the 5 out of 7 days of your life rather than spending all of your money on 2 out of 7 days trying to escape.

Just an outside opinion. 

[deeshen13]

It seems to me that you could make some changes to better the 5 out of 7 days of your life rather than spending all of your money on 2 out of 7 days trying to escape.

I agree here. I've found that making the "regular" days pretty good or even great is a more direct path to happiness than flinging large sums of money to compensate for the alternative.

For me, that means arranging a favorable work situation, living situation, maintaining healthy relationships with friends/family, staying physically active every day, and learning new skills or ideas (reading).

You'll find a lot of us here don't submit to the typical "suburbia" lifestyle of many of our peers -- which is why we are here doing it a different way.

Best of luck!

[Pacifica]

I agree with everyone that my husband and I need to do a better job scaling back while at the same time defining how we want the future to look.

Having two houses doesn't make sense when I read it on a forum post, and posting can limit details that would help make sense of the current situation.

In the past, when my husband and I were actively pursuing extreme sports and travel, it was nothing for us to go ice climbing one weekend, then rock climbing the next weekend, put our kayaks on the car and go, then over the summer go and hop on a plane to travel and live in another country for a month.  Back then, when it came time to settle down and start looking at buying a house, we knew that our lifestyles (and the monetary cost that came with it) wasn't going to be compatible with the cost of living for that area.  We wanted to have adventures, not live in a HCOL condo and be house poor.

After consideration, we uprooted and planted ourselves outside of a National Park so we would have unlimited access to outdoors, and free up money to travel.  Fast forward, and a town that has cheap housing, but good outdoor opportunities also has all the other elements that come with it: lots of poverty, lack of culture, lack of education, lack of opportunity; Unless a person has experience this kind of town it is really easy to oversimplify and judge that one should make it work.  Once we had a child, all of the issues of living in this location were amplified.

After 5 years of living there, we were considering moving somewhere else.  The thought of relocating mid-career and starting over weighed heavily on our minds, ageism in our field is a real concern.  About that time, we discovered a very nice mountain community about 70 miles away (140 miles roundtrip).  The area offers skiing, hiking, kayaking, arts and entertainment, nice restaurants etc and more importantly a community of people that we enjoy being with.  We had thought about relocating to the mountain area, but piecing together work would significantly reduce our income stream.  So our rationale was, instead of ditching 180K income to move to the mountain place for what would amount to 60K in annual income and lose healthcare, pension etc., instead we would just buy the vacation home and spend our 3 months of summer there, along with holidays and weekends.

But given our propensity for "novelty" we still end up traveling to Hawaii, and fly-fishing in Montana, when we feel like it.  If we want something on Amazon, we buy it.  I think this "novelty" seeking part is the real issue that we need to manage better.

My husband and I are getting better at understanding this personality trait, so we are learning to enjoy the things we have in our own locations.  As many of you said, we have the wiggle room to scale back and save more, and I agree.

Some of the changes that we have made this year alone was to:

1) start crockpot cooking instead of eating out.  We were eating out 3-4 times a week.

2) changing our mindset that a vacation has to be "grand", that a new place can be a drive to the California coast instead of Hawaii.

3) We are playing with hotels reward points and starting to stay with friends and family when possible, and bringing our dogs with us instead of paying for a dog sitter.

4) Lastly, taking my dogs for walks.  That's been a great way for me to enjoy my surroundings and quell the need for newness.

If you don't have the "novelty" trait, you may not understand how hard it is to think that you will stay home for the evening and read a book...that can feel like a prison sentence.  It is getting easier with age, though. I've taken up gardening and that is enjoyable.

My husband can retire in 11 years once he hits 30 years of service.  He would get $4100/month.  If I retired at the same time, I would get $2500/month.  If we put away $3000/month now in a 401K, we would have another $2500/month.

That would allow us to live a modest retirement, not the current lifestyle we are living now.  So you all have got us thinking about what we want:  more money to spend in retirement or learning to downsize now and reduce spending down the road.

Right now, I can honestly say, that I would like to have options in my future, hence more money, so I guess we better start trimming things.

[Much Fishing to Do]

If you don't have the "novelty" trait, you may not understand how hard it is to think that you will stay home for the evening and read a book...that can feel like a prison sentence. 

Being spontaneous and active doesn't equate to spending a lot, just like owning nice stuff doesn't equate to overspending.  The first I was always good at, the second is something I've learned from MMM forums.

My daughter skis all winter at the local slopes.  I would think this a ridiculously expensive non-mustachian hobby, but she spends $300 on the season lift pass, and bought used equipment that she will use for years.  It serves as her entertainment and exercise expenses for the whole winter and at a cost most people spend on 1-2 nights at a hotel for a weekend getaway

[Slee_stack]

You should be striving to maximize your efficiency.

You need to take a hard look at what the holding costs of these houses are.

There is no guarantee they any house will increase in value.  Even those that do might only track inflation.  Factor in running/maintenance costs and private residences are usually BAD investments.  Sure, you might luck out in a well-timed hot market.  You also might win big in a casino...

Having more than one house sounds truly horrifying to me.  I'd be renting or selling the second one as fast as humanly possible.

I tend to look at an object and estimate how much I'm losing each month by 'owning' it.  It makes things VERY EASY to get rid of.  Even if I'm getting enjoyment out of something, I still try to gauge if its really worth it.

Your vehicles might be 'paid for' but that's fairly meaningless.  That just means you have XXX dollars tied up in motorized couches instead of working for you.  They are also depreciating and costing you fuel, insurance, and wear every month.  Are they returning acceptable satisfaction for their cost?  Could you get more happiness by downgrading and/or driving less?

You're better off than the average consuma sukka, but I'd be concerned if we were counting on full pensions to have a comfortable retirement.  Hopefully you truly love your job and they truly love you!

The sooner you make big changes, the better off you will be.  Good luck!

[Pacifica]

You need to take a hard look at what the holding costs of these houses are.

There is no guarantee they any house will increase in value.  Even those that do might only track inflation.  Factor in running/maintenance costs and private residences are usually BAD investments.  Sure, you might luck out in a well-timed hot market.  You also might win big in a casino...

Having more than one house sounds truly horrifying to me.  I'd be renting or selling the second one as fast as humanly possible.

I need help understanding why a primary residence is a bad investment.  The house that I live in (when I work) has a mortgage that matches the cost of renting.  It has steady appreciation, tracks inflation, but isn't that the point, that your mortgage payment is a hedge against inflation?  Plus, the tax write-off.  We are union workers and intend to stay put in our jobs.  The job is considered highly stable.  So, to me, it seems like having a mortgage outweighs renting.  Maintaining a house is an ongoing cost, but besides big hits like needing a roof, I've always found the maintenance to not be such a great risk/concern for what you get in return for home ownership.  I have pets that landlords may not approve of, and I like landscaping and gardening.

As for the vacation home.  Yes, that is a cost that we are happy to pay.  I would rather have two cheaper homes in different locations than a nicer, bigger home in the one place.  It greatly enhances our life.  Having lots of time off from work, and spending time in the vacation home is worth it, for quality of life.  But, again, is it worth it financially?  I've run the numbers.  The vacation home has appreciated at 7% steadily for the last 5 years...will it continue?  I wouldn't think so, but it is California, and I've been saying for 12 years that it can't continue to go up, and it has.  Even if it matches inflation, the difference between what it appreciates by and the paydown amounts to $80,000 less than what that same amount of money could make in an investment at 6%...but then I would have to pay quite a bit more in 11 years for the same house (plus the interest rates could be higher), so it could be a wash.  Even if I could make more investing that money, for us it gives us a quality of life that we are seeking.  Plus, to have the same experience would cost me $150/night to rent a place, and at peak season can be $250 night...what will it cost in ten years?

I tend to look at an object and estimate how much I'm losing each month by 'owning' it.  It makes things VERY EASY to get rid of.  Even if I'm getting enjoyment out of something, I still try to gauge if its really worth it.

So yes, the vacation home is worth it.  Going to Hawaii may not be worth it, I think that we could get the same experience by just driving to the California coast.  I have family and friends that offer up their house, so that is something that we should really look into.  It would be practically free verses all the costs associated with Hawaii.

Eating out is another cost that I need to reevaluate.  Cooking meals at home saves a ton, and is way more healthy.

Your vehicles might be 'paid for' but that's fairly meaningless.  That just means you have XXX dollars tied up in motorized couches instead of working for you.  They are also depreciating and costing you fuel, insurance, and wear every month.  Are they returning acceptable satisfaction for their cost?  Could you get more happiness by downgrading and/or driving less?

The cars are necessary for work.  We both have professional jobs that occasionally require travel for meetings/trainings in opposite directions.  We are in a somewhat rural area, so public transportation isn't really an option...it would take 2 hours to get to where I need to be.  Generally work is a 6 min. drive and husband and I drive together at times, but we have picked up extra jobs afterwork, so we need two cars.  I'd say we average 15 miles a day, and 70miles*2 roundtrip to the vacation home.

You're better off than the average consuma sukka, but I'd be concerned if we were counting on full pensions to have a comfortable retirement.  Hopefully you truly love your job and they truly love you!

The sooner you make big changes, the better off you will be.  Good luck!

Thanks, yeah, I worry about the pensions being there in the future.  If they aren't we would have to make significant changes and probably move out of state.
[/quote]

[Cannot Wait!]

Airbnb whichever place you are not presently in? Or rent your mountain home out over the winter?

[Erica]

We all make mistkes so hopefully you won't mis-understand but it is clear the most important people in your life got jipped. Please apologize to your children for your greed. There is no way this didn't factor into their life bigtime. And I pray they do not follow in your foot-steps.

You have plenty of $$ to retire. Concentrate on what is important, not $$ but your children. You screwed up Bigtime. Love and nurture them. That is what's important. Not your next "strategic move"

[sleepyguy]

I don't find you spending too extravagant but keeping up with this... good luck on FIRE at 50 or earlier if that's your goal.

The two houses living seems a tad silly, just rent a few times a year if you need to get away and boom, you cut out 50% of your pointless monthy cost.

Just my 2 cents.

[Guses]

We all make mistkes so hopefully you won't mis-understand but it is clear the most important people in your life got jipped. Please apologize to your children for your greed. There is no way this didn't factor into their life bigtime. And I pray they do not follow in your foot-steps.

You have plenty of $$ to retire. Concentrate on what is important, not $$ but your children. You screwed up Bigtime. Love and nurture them. That is what's important. Not your next "strategic move"

Can you substantiate your claims based on what was posted?

[FireHiker]

Someone else beat me to the suggestion already, but I'm going to ask also: any reason you can't use airbnb or vrbo rent out whichever house is vacant while you're at the other one? Then, instead of the liability of two mortgages, you may generate enough income to pay for at least one of them.

[elaine amj]

Hawaii makes more sense knowing you live in California :) Much cheaper and shorter flight!

We love travel and the novelty of being somewhere different too and think nothing of packing up and going on the road more weekends than not. That's where the vacation house in the mountains has me a little confused. I LOVE the idea of a vacation house. But every time I consider it, I remember our wanderlust and the fact that we will also want to vacation elsewhere - at which point, its cheaper to pay a little bit more to rent cabins/airbnbs since we wouldn't be maximizing the use of a vacation place. Plus, the thought of being tied down to vacation in ONE place for years is too much commitment for me lol.

I'd suggest just looking into optimizing your life and the things you spend money on. A few easy wins is a great place to start!

[alewpanda]

I have a question that I have not seen asked yet....


Your lifestyle in your 20s and 30s, what parts of it made you legitimately happy?

And I don't mean, happy for the weekend, I mean, really happy over and over again?


You enjoy "doing", "going", "not staying home", which is not wrong or bad.  But can you define a little better what you know really brings you joy?  Obviously your family.  But what locations? What activities?  Which of those were one time or occasional "flings", and which were/are in line with what you want your years now and in retirement to be like?


It sounds like, for certain, your current working location and living location is NOT one of those places that brings you joy.  Your vacation home location DOES bring you joy.  Therefore, you should consider making it a goal to make living there full time happen as soon as possible.

Ask yourself which of your yearly vacations are the best in your mind?  Which make you the happiest?  Can you narrow that down and use that to limit your expensive trips?  If Hawaii is legit your favorite, go there every other year and try a new place on the off years.  You could do those trips for a few thousand if you are smart about it and use rewards.  Limit spendy trips otherwise and do more stuff at your vacation home area instead.

Try to live off of the pension amounts.  Can you do it and still travel?  I wouldn't count on those amounts if I were you, which is why I think you should try to live on them.  That way if one is lower than expected, you are still good --you will have personal retirement savings to use instead.

Find novelty in smaller things.  Reconnect with family, friends, locations you love, animals, pets, volunteering, etc.   Learn to differentiate between novelty and joy.



What I would do:

Suck it up and cut way back.  Save, save, save.  You are two of the lucky few that may still have pensions to depend on.  With you combined income, you could probably have a great supplemental stash in only 4ish years.  (DOn't know enough to do specific math).  Keep the vacation home, but cut back on unnecessary expenses like trips, novelty experiences, shopping, cable, etc.  Save your stash. 

Meanwhile, look for other options to your living situation and working situation.  Would you receive a decreased pension by retiring a little earlier?  Could you avoid retirement by working from home 4 or 5 days a week?  Could you work from the vacation home for a majority of the week and drive into town once a week?  If you could manage that, you could get rid of your hated location home asap and live where you want to, without losing income. 

You mentioned you live in a low income area.  We live in a low income area on 75,000 with lots to set aside still.  If you learned to live off of even just the 75,000, your pensions could be smaller and still go further, and your supplemental stash would only take a few years to really get built.  You could be free from hated-location-home in such a short time frame!  And truly live freely....

[Pacifica]

Thanks for everyone's responses as it has my husband and I running the numbers and deciding what matters to us now and in the future, and how we are going to get there.

With every year of work the pension is a better deal, however, I don't want to work just to have a huge pension payout and not as many years to enjoy it, plus my energy level and health may not be as good.  I think 11 years maximizes the money-time equation.  Any earlier, may be self-defeating as we would lose healthcare, dental, vision, life insurance etc, 125 plan.  My perspective might be different if I worked all year with a couple of weeks off for vacation, but as teachers we get 9 weeks off, so it's like we have a taste of retirement every Summer.

We both agree that the vacation home brings us the most joy.  It is our home, and our community.  Our child has good friends there and is immersed in sports, acting, Summer camps, and the neighbors.  We are 1 mile from a ski resort, and 3 miles from a lake.  In the Summer, we don't have any AC because it isn't needed.  I really can't beat that!  I volunteer at the local animal rescue place and my husband enjoys helping with the local Soccer league.  There is plenty to do.

The "work" home is in a place that we don't really connect with much besides going to the National Park nearby, but in recent years, and even more so this year it is becoming really popular.  People are turning their properties into airbnbs, and even renting out their yards to campers as there are not enough campsites available within the park.  So, the property has the potential to yield income in the future.

We also both agree that reducing expensive trips and to stop eating out so much wouldn't diminish our quality of life...we've had so many adventures of a lifetime, that slowing down and smelling the roses would be fine.  In the past, we used to rough it quite a bit, then lifestyle inflation set in, and then came the expensive trips...we are fully capable of creating awesome (cheap) trips right in our backyard and throughout California, along with staying with family members in Oregon, Colorado, Florida.  I estimate that we could save $5000/year by enjoying inexpensive trips.  We also have a lot of wiggle room with the food budget.  I actually enjoy cooking, so if we cut back on eating out, I think another $2000 could be saved.  So right there is $7000 after taxes.

A lot of what you all said about rethinking trips and realizing that adventures can still be had for a whole lot cheaper, made me laugh...I still remember when my husband and I deliberated for weeks about whether to purchase a $400 tent.  We still have that tent.  Now we don't discuss anything longer than a day, and boom, there goes $1000 on a vacation, lifestyle inflation.

We are both on the same page about getting back to that mentality.  I am optimistic that we can save a lot more than we are.  My husband likes to have a goal to focus on, and throws all his energy into it, so I could see him going with this more "frugal" approach and getting obsessed with it, ha!

I'm sure I'll be posting more as we head into this income-outcome money adventure!  Thanks again.

[alewpanda]

Thanks for everyone's responses as it has my husband and I running the numbers and deciding what matters to us now and in the future, and how we are going to get there.

With every year of work the pension is a better deal, however, I don't want to work just to have a huge pension payout and not as many years to enjoy it, plus my energy level and health may not be as good.  I think 11 years maximizes the money-time equation.  Any earlier, may be self-defeating as we would lose healthcare, dental, vision, life insurance etc, 125 plan.  My perspective might be different if I worked all year with a couple of weeks off for vacation, but as teachers we get 9 weeks off, so it's like we have a taste of retirement every Summer.

We both agree that the vacation home brings us the most joy.  It is our home, and our community.  Our child has good friends there and is immersed in sports, acting, Summer camps, and the neighbors.  We are 1 mile from a ski resort, and 3 miles from a lake.  In the Summer, we don't have any AC because it isn't needed.  I really can't beat that!  I volunteer at the local animal rescue place and my husband enjoys helping with the local Soccer league.  There is plenty to do.

The "work" home is in a place that we don't really connect with much besides going to the National Park nearby, but in recent years, and even more so this year it is becoming really popular.  People are turning their properties into airbnbs, and even renting out their yards to campers as there are not enough campsites available within the park.  So, the property has the potential to yield income in the future.

We also both agree that reducing expensive trips and to stop eating out so much wouldn't diminish our quality of life...we've had so many adventures of a lifetime, that slowing down and smelling the roses would be fine.  In the past, we used to rough it quite a bit, then lifestyle inflation set in, and then came the expensive trips...we are fully capable of creating awesome (cheap) trips right in our backyard and throughout California, along with staying with family members in Oregon, Colorado, Florida.  I estimate that we could save $5000/year by enjoying inexpensive trips.  We also have a lot of wiggle room with the food budget.  I actually enjoy cooking, so if we cut back on eating out, I think another $2000 could be saved.  So right there is $7000 after taxes.

A lot of what you all said about rethinking trips and realizing that adventures can still be had for a whole lot cheaper, made me laugh...I still remember when my husband and I deliberated for weeks about whether to purchase a $400 tent.  We still have that tent.  Now we don't discuss anything longer than a day, and boom, there goes $1000 on a vacation, lifestyle inflation.

We are both on the same page about getting back to that mentality.  I am optimistic that we can save a lot more than we are.  My husband likes to have a goal to focus on, and throws all his energy into it, so I could see him going with this more "frugal" approach and getting obsessed with it, ha!

I'm sure I'll be posting more as we head into this income-outcome money adventure!  Thanks again.

I'm glad you guys are re-evaluating!  You mentioned you both teach.  Could any of that teaching be done online?  Could be an opportunity to move to your vacation home earlier down the road if you could switch to online schooling instead.  Just something to think about :)  Good luck!

[bwhite12603]

Wow!  We constantly hear about the low paid teachers.  This doesn't seem low pay at all to me.  I would love to have that type of pension available to me.  I've worked hard all my life, have an MBA and a reasonably paying position, but I've been trying hard to save enough for $30k of retirement income from my 401k.  I need to get a teaching position in CA!

[Classical_Liberal]

I'm just looking at some simple math, and here are the number you provided:

Net monthly take home is about: $11,500
Car payment: $645, for 6 more months, both cars paid for and in good condition.  We live 6 miles from work, and travel 140 miles on weekends to the vacation home.
Private school is $600, but there is a chance that will go away as another schooling option may happen.
Mortgage 1 is: $1802
Mortgage 2 is: $1248
After credit cards, food, utilities, gym, transportation, traveling, there is about $3300 left.

Right now you are spending about 11500-3300 or $8200 a mo, correct?  This includes maintaining two residences, one of which you have only because you are working. The $1802+some amount of utilities and maintenance is no longer needed at retirement.  Conservatively this is 2K.  Spend rate without "work house" goes down to about $6200.

My husband can retire in 11 years once he hits 30 years of service.  He would get $4100/month.  If I retired at the same time, I would get $2500/month.  If we put away $3000/month now in a 401K, we would have another $2500/month.

Your estimate of retirement income in 11 years is: $4100+$2500+$2500= $9100, pretax.  With no payroll taxes (SS & medicare), a 25% tax rate is about right,  so $9100*.75 = $6825 a mo. 

If I'm following this disjointed information correctly, in 11 years you can retire and have $625 a month in excess. Your spending already includes $600 a month in private tuition which can be filtered into college funds for the kiddo once it's no longer required.  Additionally, this does not include the equity in your current primary residence (plus 11 more years of principal reduction) that could be invested for more income or perhaps to eliminate the mortgage on your retirement home, reducing expenses.  Because you dont need the work home if you're not working, right?  Nor does it include any future potential SS benefit.

Important points: Are your pensions inflation adjusted and how confident are you they will not suffer a cut? How much will Medical insurance cost without your employer sponsored plan, until medicare kicks in?  How are you determining the extra $2500 a month from investments (4%rule?)

If your goal is to retire in 11 years, I'm not sure what all the negativity is about.  You are on track.  However, some of the information provided is too vague for anyone to be sure.  With more specifics regarding spending, income, home equity, pensions, etc.  The folks here can probably get you there in well under 11 years without sacrificing the lifestyle you enjoy.

Congrats and good luck!

[Kansas Terri]

Pacifica, I think you need to CONTINUE to live well, because you value it. But, my advice to you would be a to write down what you are currently spending, and then decide if any one item is actually worth it.

For example. 20 years ago I looked at my list and I realized I was spending $50 a month on diet coke. That is $600 per year. Yes, I do like diet coke but there are other things I liked almost as well! So, I started making home-brewed ice tea and kept a cold pitcher of it in the fridge. Instead of spending $600 per year I was now spending $20 a year, and I still drank diet coke when I ate out or when I felt like stopping by a gas station and buying one for 50 cents.

Then there is my phone: it cost me $35 for a basic model, as I use very few bells and whistles. My husband DOES use the bells and whistles, so he has a smart phone and I do not! Because why should I pay for what I do not use?

I do the same with my vehicle: it was a  pretty pickup but it was gently used, and is pretty basic. I bought what I wanted to fix it up, but since it has no CD player or power seats or whatever, that saved us some cash. I do not use them so I bought a model that did not have them, and even with the taxes and registration and tool box for the bed and such my new ride cost under $9000. And, it was what I REALLY, REALLY wanted: I simply paid less for it than I would have paid for a new, loaded vehicle by many thousands of dollars. I only ever use the radio anyways! So why should I pay for what I do not use? The perks that it DID have were cosmetic, which I DO enjoy, and I added a silver tool bed that looks good on the silver truck.

I also put off buying the "new" vehicle until what I had been driving was toast.

Food. There are a lot of ways to save on food, including learning how to cook what you like so you can have it at home. I make an excellent soft shell taco. DH really likes my pizza and lasagna. I also make a pretty cool cashew chicken! And, every Friday I try to make a free meal out of the leftovers in the fridge. While I make my own pizza crust you do not have too: buy a Boboli kit at the grocery store and then you can spread the sauce on, and top it with any leftover ham or leftover hamburger or leftover bell pepper that you removed from the leftover salad, and so forth.

And, I keep a small pantry so I no longer have to pay full price for our favorite foods. Every time they go on sale I but enough to last us for a while.

Also, I see that you are interested in crock potting. Another way of coming home to a hot meal I to put a chunk of frozen meat in the oven and set the timer.  It will take hours to thaw, and then the heat will come  on before it has a chance to turn bad. And, there are a lot of meals you can prepare with leftover meat.

It al starts with writing down what you spend, and then figuring out what you can do to still live well while spending less money!

[Cassie]

It makes perfect sense to work 11 more years to max out your pension and benefits. My DH & I were in a similar situation and did not retire until 53 and 58 because of this. It was well worth it. Even so our medical premiums through the state skyrocketed for retirees to 10k/year when if we were still active employees we would only be paying 2k/year. So I would definitely check on what your future medical insurance might cost.  It sounds like you will retire to your mountain town when you retire so it seems worth it to keep it. Since you have been to Hawaii many times it might be an easy place to cut back on.  Now that we are semi-retired we are actually spending more $ then ever on travel. WE have the time to do it and take 2 big trips a year.  We are not fancy car/house people but do enjoy our experiences.  Unlike you guys we were not able to travel a lot while raising our kids so now this time is for us. I think you are on the right path by examining what is worthwhile to keep and what you can let go.

[MrsPete]

Pacifica, Mostly what I'm hearing is a bunch of excuses to justify big spending. 

You say that you're looking for ways to build up your net worth, yet you're not interested in cutting back in any but the most trivial ways.  Crock pot meals are a great start, but they aren't going to catch you up for years and years of not having saved.  You're earning a good salary, yet you're not making it count -- you're in the same shoes as the average American, and those shoes have holes in the sole. 

Specific thoughts:

- Getting rid of one house is a sensible choice.  I get that you need to work in location A and like weekending in location B.  But do you need to OWN in both places?  You justify this by saying you'd rather own two small houses rather than one big house ... are those the only two options available?  Since you like going to new places, you might be a good candidate for a small RV; used models can be picked up cheaply.  You could store it in the weekend location you like so you don't have to drive it (with its big gas bill) back and forth.  Alternately, you could make your vacation house "pay you" by renting it out frequently.  Yeah, I know that's a sacrifice because it means you can't use it yourself, but something has to change if you want your net worth to increase.  Or, could you rent a small apartment in the town where you work? 

- You're fortunate to be in a job with a pension.  That's going to be your saving grace, but it also means that you have to put in X number of years.  You say you've done some math and have determined that 11 years is your "sweet spot"; obviously, we have no access to your numbers, but be sure you're being honest with yourself.  How much do you trust your pension?  I'm a teacher too, and I am aware that some states are altering their pension plans.  Are you keeping up with the pension news in your own state?  And think through everything, even the unpleasant parts:  For example, if you and your spouse BOTH get a teacher pension, you'll be comfortable -- but what happens when one of you dies?  That means that the remaining spouse's household income is cut by 50% -- for life.  If you have cash reserves in addition, this isn't too bad financially, but if all you have is the pension, it could be difficult for the remaining spouse. 

- Ditching one car would be a HUGE money saver for you and would go a good ways towards catching you up.  You say that you need to go to meetings in different directions.  Just how often does this happen?  Do other teachers attend these same meetings?  Could you occasionally bum rides?  Is an occasional Uber ride an option?  Even if you need to pay for a ride once a week, it'd still be cheaper than maintaining a second car on a regular basis.  Could you offer to host meetings in your own classroom instead of traveling to another location?  Note I didn't ask, Would it be convenient to do this?  I said, Can it be done? 

- You're on the right track with saying you'll cut back on meals out.  The crock pot can be a great resource, as can your freezer.  Look for other small ways you can save on a daily basis:  Can you pick up bread at a day-old bread store?  Can you consolidate your errands to save gas?

- If you really want to catch up to where you should be, you really do need to search for ways to bring in additional money.  What can you do during the school year?  Can you coach a sport?  Can you supervise detention in the afternoons?  Can you administer the SAT?  Can you get yourself on the county's tutor list?  What can you do during your summer break?  Does your local elementary school offer a summer day camp?  Can you work as a tour guide at the National Park you love?   

- The person who suggested that you live on the amount you anticipate having in retirement was right on track.  If you can do it now, you'll be comfortable then.  Also, since you're interested in your adventure /hobbies, can you reasonably expect to pick up work seasonally /part-time in retirement in these hobbies?  For example, could you work at the ski slopes? 

Wow!  We constantly hear about the low paid teachers.  This doesn't seem low pay at all to me.  I would love to have that type of pension available to me.  I've worked hard all my life, have an MBA and a reasonably paying position, but I've been trying hard to save enough for $30k of retirement income from my 401k.  I need to get a teaching position in CA!

Teachers in a few areas of the country earn big salaries like the OP.  These states tend to be unionized and high cost of living -- and jobs are hard to get in those areas.  I'm also a teacher past the mid-point in the salary scale, and I don't earn half what the OP's earning.  I'm more typical. 

[Dicey]

First off Pacifica, I have reported erica's comments to the moderators. It is unacceptable for her to have been so rude to you. Our of the strengths of this place is that people are remarkably respectful. Her approach is far too harsh, and I am sorry you were subjected to that unkindness.

Second, slee_slack is not as over the line, IMO, but has also stated their position rather strongly and apparently expects you to walk only in his/her shoes. What's scary to s_s isn't all that relevant in your life.

I say there are ways to have your cake and eat it too. For SoCal, your housing costs are remarkably reasonable. As a SoCal native, I've got a fair idea of where you are and I say brava to you for figuring out a way to make the work location bearable.  There is plenty of fat to be trimmed from your budget and great FI gains to be had with just a few relatively minor tweaks, without selling off real estate.

FWIW, my very first home was in Riverside, and we still have multiple SFH rentals in eastern Riverside County. Were it not for real estate, I would not be FIRE now, so I get it. The low-hanging fruit is elsewhere in your budget. Your subsequent posts have shown that you know where it is. Now it's time to start the harvest. You're closer to done than you appear. You've got this!

[Slee_stack]

Second, slee_slack is not as over the line, IMO, but has also stated their position rather strongly and apparently expects you to walk only in his/her shoes. What's scary to s_s isn't all that relevant in your life.

OP is keeping multiple personal residences, not rentals.  There's also some significant regular travel/time involved between them.  They also posted with concern over their savings.

You admit yourself that you fired because of investment/rental properties, not by owning extra personal residences.  So what are you really suggesting?


Pensions are not guaranteed beyond 50%.  Less, if you are involuntarily asked to leave.  Is this a state or local pension?  Generally, the smaller the locality, the greater the risk.

As both a landlord and a future pension recipient (hopefully), perhaps my viewpoint might possibly have some relevance.

'Apparently' you are wrong though.  I don't EXPECT anything from anyone...particularly on a forum.  Are there people that actually do?

[Rife]

You did come to the MMM forums, so, people will be harsh with spending. Personally, we make a similar income gross 195000 a year. We saved over 100000 this past year, and even just came back from an anti-mustachian trip to disneyworld that just by skipping would have added another 5% to our annual savings. Heck, we could have saved a few thousand just by making budget choices on the trip. To us, going on the trip with our four year old daughter was something we didn't want to pass up. We understand the impact of the choice cause we have several detailed spreadsheets that track and project everything years into the future.

In our case, we saved 64% of our disposable income by trimming all the fat. My co-workers go out to eat for lunch several times a week. They don't bother asking me anymore cause we stopped all eating out except for special occasions. We dropped cable, only buy clothes when we really need them, stopped spontaneously buying my daughter toys or stuffed animals (I had an issue for a while by buying her too many stuffed friends), and only buy food at Costco. When we first started tracking it a few years ago we were spending 12-1800 a month on food total. Now our total budget is 600 and we normally fit a lot of non-food stuff in that (from Costco of course).

I am only sharing this because a lot can be done by just taking out the fat in the budget. You emphasize that you love the outdoors yet have two cable subscriptions. I freakin love TV and have no cable subscription. It sounds like you are headed down this path already. We trimmed the fat, but like you, kept the overly expensive vacations. When our friends try to complain about us being too frugal (and they tend to do that sometimes), we just remind them of how much we spent on WDW. The one expensive trip doesn't sink us, but we did make choices. Again, sounds like you are headed down the right path. Good Luck.

[Goldielocks]

I don't find you spending too extravagant but keeping up with this... good luck on FIRE at 50 or earlier if that's your goal.

The two houses living seems a tad silly, just rent a few times a year if you need to get away and boom, you cut out 50% of your pointless monthy cost.

Just my 2 cents.

Look, not everyone has a goal to retire early.  The OP is making more money than they spend, and is quite happy about it (aparently).   They did not name any specific goals that I can see, other than a question of where to save the modest surplus they are making.

OP,  as it will be a long time until you retire, most likely, feel free to put the money into Vanguard stock market like VTI ad ride out the fluctuations.   Do this through an IRA (use 401k if you get matching), and max out your ROTH if able.  Put any tax refund into the IRA, too.   (don't spend it).

[financialfreedomsloth]

The two cars is definitely a comfort choice. You guys used to do extreme sports but now have two cars because occasionally you have to go to different locations? Sell 1 car and buy a decent bike. Make it an electric bicycle if need be, and perhaps (very, very perhaps) a cheap motorcycle. But two cars? Sorry that is ridiculous. We are a 1 car family, work is about 12 miles for both of us but not in the same direction. I use an electric bike to get to work. I am 42, out of shape and about 20 kg to heavy and live in Belgium (it rains a lot here, and it gets below zero in the winter). If I can do it, everybody can.

Paying cable at the vacation home as well is also ridiculous. It is your vacation home! If you have Hulu, Netflix or amazon prime you can hook up a laptop to the TV (chromecast makes this dead easy) at the vacation home and stream a bit of entertainment that way. Check with a neighbor if you can share an internet subscription and cut that bill in half as well.

[AshStash]

The two cable subscriptions stood out to me as well--are you actually using your cable subscription to watch current tv shows? If so, have you looked at something like Playstation Vue (you don't need a Playstation, it's on streaming devices like Roku, Fire stick, etc)? You can pay for one month-to-month subscription to Vue, which has a cloud DVR service, and use it in both locations. If you aren't watching current TV shows, ditch the cable both places and get whatever combination of Netflix/Amazon Prime/Hulu makes you happy. If you don't actually watch that much tv in the first place, ditch all cable and streaming subscriptions and rent the occasional series or movie from your local library and Redbox.

Without more specifics, it's hard to offer more advice but it sounds like using your surplus to max out tax advantaged retirement accounts is the way to go. I think you've got the right idea to look at alternatives to your annual Hawaii vacation. It sounds like you used to be people who traveled a lot all over the place and now you've settled on a few favorite destinations, returning to the same spots over and over (the same mountain town every weekend, same National Park, Hawaii) every year. You can use that to your advantage by finding a new, cheaper annual beach vacation destination in CA or, since you are so close to a lake when at your vacation home, give up the annual beach trip entirely, getting your fill of water activities in at the lake, and just go to a beach once every 2-4 years.