Hi, I am RootofGood! Retired at 33, life is good!

[RootofGood]

I figured I would put up a "Hi, I am" thread here since I've been posting for a while (and lurking for a couple years). 

In brief, 33 years old, living in Raleigh, North Carolina, married with 3 young kids (age 1, 7, and 8).  Just retired from the engineering field one month ago.  As you could imagine, it has been a little surreal this last month. 

How did we get to financial independence at 33?  We have been mustachians our whole life without even knowing it until a couple years ago when the concept of Mustachianism came about.  Hard core saving and low cost investing and just letting the portfolio grow passively (with some rebalancing every month or two based on target allocations).

I have to admit, we don't follow the mustachian principles in full (I don't even have a bike!), but we do live very well on the cheap ($23000 core expenses in rough terms).

What have I been up to in my first month of retirement?

Here was my list of goals for the first month or so:
1. Ebay a bunch of stuff
2. Learn a foreign language or 3
3. Investigate starting a blog and/or a Youtube channel
4. Get more exercise
5. Cook even more than I already have been, and perfect some new dishes
6. Hang out with more people more often
7. Play more video games
8. Read more books

How am I doing?
1. Ebayed a couple things, but not the 8-10 things I wanted to.

2. Learn a foreign language - working on French language at Duolingo.com, and trying to do one module per day at least.  The last week I have been pretty successful, but I need to focus more

3. Investigate starting a blog and/or a Youtube channel - got the blog up and going, no progress on the youtube channel.  The blog is an incredible time suck and an addicting hobby.  I regret I never spent any time before on a project like this!  But I plan to back off the time investment a little bit in month #2.

4. Get more exercise - big check. Walking kids to/from school (total 2+ miles/day) and walking to grocery, other shopping, library, community center etc with the 1 year old.

5. Cook even more - check.  Plenty of time to cook, and try some new recipes and techniques.  Tamales and french bread have been two recent successes.  And I don't feel guilty at all that it took me almost all day to make tamales.   
 
6. Hang out with more people more often - check!  Play dates with other kids and their parent(s), and we hosted our older girls' first sleepover.  Ample lunches with old buddies and reconnecting.  Getting good vibes from everyone on the retirement, no "complainypants" so far. 

7. Play more video/computer games - I'm a little disappointed in myself, I thought I would do a better job.  I'll leave this on the list for month #2 and subsequent months.

8. Read more books - I have slacked off here as well.  This will be a higher priority next month.  I love to read, and I'm pretty sure the weather will be perfect for some porch sitting and book reading. 

If you are interested in a little more detail of how I managed to retire at 33, I finally got around to putting together a not so brief overview and posted it to my blog today:

rootofgood.com/early-retirement-at-33-an-overview/

Overall, I have to say it has been a blast even though I have been extremely busy.  I figured I would lay around and decompress for a month or two but instead I've been pretty busy.  Kids will do that to you I guess.

So "hi" and I look forward to seeing old friends and new here at the MMM forums. 

[Kriegsspiel]

Very good sir, I dig it.

[Paul der Krake]

Hey Root,

Now that you have time on your hands (!), keep an eye on the NC meetup thread, there is a bunch of us in the Triangle. We haven't been great at arranging dates so far, but the more the merrier.

Congrats on your awesome trajectory, always inspiring to read others' successes.

[jrhampt]

Nice post! I look forward to seeing the follow-up posts.

[Stasher]

Congrats and great job with the ER. The part of your blog that most impressed me was your carful work to hit that 0.5% tax rate in 2012, wow .

[Daleth]

Try Pimsleur for learning foreign languages. It's all-oral--you won't be able to read (though of course you could learn, and it's much easier once you can already speak), but you will learn to speak/listen/converse VERY quickly, and Pimsleur CD's are available at many public libraries, if not directly then on interlibrary loan.

[RootofGood]

Try Pimsleur for learning foreign languages. It's all-oral--you won't be able to read (though of course you could learn, and it's much easier once you can already speak), but you will learn to speak/listen/converse VERY quickly, and Pimsleur CD's are available at many public libraries, if not directly then on interlibrary loan.

Thanks for the tip.  I have tried Pimsleur before and didn't get very far, but maybe I'll give it another shot.  It could be because I'm a better visual learner than an auditory learner.  I also have a good strong foundation in learning and understanding how to learn foreign languages from learning Spanish for so many years in middle, high, and college.  Duolingo is cool because you can mouse over words to get hints, and click on verbs to get the conjugation for different persons and plurality. 

I also like the fact that it is kind of game like.  Makes it a little easier to squeeze in a 20 minute session to earn another 10-15 points or whatever.  Or have a marathon session and level up.  Ha ha.  And the progress tracking and web access is cool.

As far as auditory learning, they read a sentence out loud and you have to write down what you hear.  Pretty tricky at times, but there's a discussion forum that talks about some of the nuances of the sounds (oh so many in French it seems...). 

[totoro]

Great job and so early too!

[ace1224]

hihi!!! my brother lives in raleigh and loves it.  although he's still very anti mustachian.  hopefully he'll come around any day now lol.  i like your story thats awesome!

[RootofGood]

hihi!!! my brother lives in raleigh and loves it.  although he's still very anti mustachian.  hopefully he'll come around any day now lol.  i like your story thats awesome!

Awesome!  I'm pretty sure I don't hang out with your brother since my friends seem to self select into being mustachian of some variety. 

[tooqk4u22]

Congrats, but I will admit it is a bit suspect to me at this point, not because it is not possible but because it seems a bit prepackaged and positioned hear to garner some quick traffic...but I will let it play out and see more.

I am curious about how to get to 0.5% tax rate on $140k of income - more detail would be great.

Does your spouse work?

SWR?  You mention $23k core spending and there are references to $1million, of course that would be a great SWR but do you consider core spending? Health care included in $23K?  What is not core spending that you spend on?

[Insanity]

Congrats, but I will admit it is a bit suspect to me at this point, not because it is not possible but because it seems a bit prepackaged and positioned hear to garner some quick traffic...but I will let it play out and see more.

I am curious about how to get to 0.5% tax rate on $140k of income - more detail would be great.

Does your spouse work?

SWR?  You mention $23k core spending and there are references to $1million, of course that would be a great SWR but do you consider core spending? Health care included in $23K?  What is not core spending that you spend on?

According to the blog,  spouse does work.  I'm curious about the business ventures.

one thing that really helps - good health and great health care plans (especially those that are almost free).  Not saying the other stuff doesn't help, just that it when you have poor health care options it severely hinders the ability to save as much as you would like.   

[RootofGood]

Congrats, but I will admit it is a bit suspect to me at this point, not because it is not possible but because it seems a bit prepackaged and positioned hear to garner some quick traffic...but I will let it play out and see more.

I am curious about how to get to 0.5% tax rate on $140k of income - more detail would be great.

Does your spouse work?

SWR?  You mention $23k core spending and there are references to $1million, of course that would be a great SWR but do you consider core spending? Health care included in $23K?  What is not core spending that you spend on?

If you are skeptical, I will provide the answers to your questions eventually (so, yes, please let it play out!).  The answers will probably be in the form of additional blog posts, as I intend to fully flesh out most areas of my "Early Retirement at 33: An Overview" post.  It may take a few weeks, but I'll explain everything.  My "Overview" post was mainly intended to be a placeholder and an index for the future detailed posts of each topic area.  The post kept growing and growing and I had to edit down to 2500 words or it would have been a treatise.  Some trimmings were picked up off the draft room floor and saved for subsequent blog posts.

I promise you I'm not some gimmick or just posting to get traffic (although "hi" to those that have visited!).  I have lurked here in the forums for quite a while and read the mmm blog posts since close to the beginning (though not religiously).  I've actively posted on a large early retirement forum for almost 10 years and am one of the more verbose posters there with over 5000 posts. 

To answer your questions in brief,

Low tax rate = deductions out the wazoo.  Maxing out: 401k x2, 457 x1, government pension deduction (6%), HSA, tIRA x2;
capital loss carry forward of $3000/yr (mega tax losses harvested in 2008-09); student loan interest deduction; 3 kids = 3 more dependent deductions and 3 child tax credits ($1000x3); child care FSA, medical FSA for dental expenses (I may have missed a few small items)

Spouse still works for now, but not for long. Not interested in getting more specific at this point, but it'll be a future blog post :).  In sum, money is good, job isn't bad, there are financial and non-financial reasons for staying. 

$23k/yr = core spending today.  That is from my expense tracking spreadsheet and the core expenses we pay right now (excludes child care, mortgage that will be paid in 3 years, and health/dental insurance premiums).  I have an "additions and subtractions" spreadsheet to get us to our early retirement budget (gas expenses drop, health ins. expenses increase for example). 

Let's say $25k core expenses in ER to cover core additions to expenses (health insurance premiums and taxes mainly). 

The total fully loaded budget with ample contingencies and a decent $6000 travel/vacation budget is around $38000.  I don't want to disclose our portfolio value today, but let's take out $50k to pay off the mortgage, and another $100k for college for the kids.  We still have a seven figure portfolio.  Much closer to $1 million than $2 million for sure. 

So we are still comfortably below 4% SWR for a very high spending (for us) lifestyle, and core expenses (should times get tough) will be closer to $25000 (2.5% SWR).  Our portfolio paid $21000 in dividends in 2012, and I anticipate that rising for 2013 to roughly cover that $25000 figure.  Not saying this is a zero risk plan, because zero risk is unpossible.

This also excludes any consideration of income from things like credit card/bank account sign ups, selling junk on ebay, occasional part time work or freelance, the $0.07 per day I make on my blog, etc.  :)

Hope this helps clarify any questions, and I promise to answer everything in full as I get more free time.  I'm about to change the baby's diaper, drop him at grandma's, head out to a volunteer gig, meet some politicos, and chit chat with them about strategies for issuing municipal bonds. 

[RootofGood]

I'm curious about the business ventures.

If you're referring to the business ventures during college that I mentioned, I don't want to reveal exactly what it was, since I may pick up a little very part time work doing some of that type work.  Just call it "engineering consulting" or "engineering field work".  Pay isn't great ($15-20/hr 1099), but the real bennies are free travel and expense plan (the latter being tax free of course).  It's very flexible so I could do zero hours per week or 60+ if inclined (I'm not at all for the latter).  Heck, I may even rebuild a business in that line of work and sell it if I get bored. 

[tooqk4u22]

Thanks Root.  Don't take it personally as I subscribe to trust but verify or probably more to verify then trust.....although I will never trust anything fully on the web.  Still have my reservations as to whether MMM is real or just a well written blog and he is really driving a BMW and living in a mansion...reservations are low at this point given how public he has made is life with pictures, stories and other accounts.

Anyway, I am still struggling with the tax rate....I just can't think of how that is possible no matter how many deductions unless you had $75k in capital gains that was offset by $75k of prior losses (a $3k loss carry forward won't do much) and a lot of those other dedcutions/credits are typically phased out with higher incomes.   Not to mention the AMT generally rears its head at some point.  Although, a big piece is the 2x component from both spouse and you being able to do both, but still.

[RootofGood]

Thanks Root.  Don't take it personally as I subscribe to trust but verify or probably more to verify then trust.....although I will never trust anything fully on the web.  Still have my reservations as to whether MMM is real or just a well written blog and he is really driving a BMW and living in a mansion...reservations are low at this point given how public he has made is life with pictures, stories and other accounts.

Anyway, I am still struggling with the tax rate....I just can't think of how that is possible no matter how many deductions unless you had $75k in capital gains that was offset by $75k of prior losses (a $3k loss carry forward won't do much) and a lot of those other dedcutions/credits are typically phased out with higher incomes.   Not to mention the AMT generally rears its head at some point.  Although, a big piece is the 2x component from both spouse and you being able to do both, but still.

I'm as real as MMM, and that's all you can hold me to.  Although creating fake blogs with outlandish stories does sound like a fun hobby...  :)

I think our AGI was down to around $6X,XXX, then all the deductions and personal exemptions and tax credits made the tax under $600.  Oh, and we had a couple hundred in foreign income tax credits.  So otherwise our tax would have been closer to $800-900.

[DoubleDown]

RootofGood's tax situation is completely believable to me. I've had several similar tax years where our total income was quite high (pushing $150 - 200k) but our AGI ended up quite low through rental home deductions, child credits/deductions, charitable donations, etc., where our total tax rate went down to 1 - 2%. IIRC, that was even Fed + State total! I almost felt guilty paying so little, even though it was 100% by the book.

It made me realize just how much the deck is stacked in the U.S. tax code for "wealthy" people (I say wealthy by MMM standards, relative to folks struggling to get by or in other parts of the world -- I'm not rich by the common definition of rich). I paid a far higher tax rate (somewhere in the 10 - 20% range) as a struggling student with low paying jobs, and might have even paid more in actual dollars even though I was earning 20% of what I earn now, and without the luxuries of investments, 401k deductions, rental homes, etc. Seems pretty inequitable to me.

[RootofGood]

RootofGood's tax situation is completely believable to me...

Seems pretty inequitable to me.

Thanks - glad to hear others are able to use the tax code to their advantage (for once!).

Big 10-4 on the inequitable nature of the tax code.  I figure if billionaires have teams of tax advisers working to minimize their taxes, I might as well make a decent shot at being tax savvy as well. 

As my law school tax professor said: "Tax avoidance is totally acceptable and encouraged.  Tax evasion is not."  I got a 4.0 in personal income taxation :)

[Insanity]

RootofGood's tax situation is completely believable to me...

Seems pretty inequitable to me.

Thanks - glad to hear others are able to use the tax code to their advantage (for once!).

Big 10-4 on the inequitable nature of the tax code.  I figure if billionaires have teams of tax advisers working to minimize their taxes, I might as well make a decent shot at being tax savvy as well. 

As my law school tax professor said: "Tax avoidance is totally acceptable and encouraged.  Tax evasion is not."  I got a 4.0 in personal income taxation :)

Does it favor the wealthy or the educated more?

[Paul der Krake]

Does it favor the wealthy or the educated more?

There is only so much you can do when childless, renting, and with a single W2 (my current situation). Most people fail massively at the wealth accumulation phase, which means they will never be able to afford all the goodies the tax code has in store for the savvier taxpayers.

Not saying this is a good or bad thing, that's just the way things stand currently.

[totoro]

In Canada tax laws favour high income individuals who can afford assistance or those that understand the laws, and low income families with children.   

In BC if you had a family with three children and earned under $30,000 in family income you receive a non-taxable benefit of $871 per month.  Your tax rate would also be less than 10% after accounting for the deductions for the children, but not accounting for other deductions.

The self-employed with incomes over $100,000 can do some tax planning using an RRSP and a corporation with income splitting and dividends to bring their effective tax rate down significantly (ex. dividends are taxed in the corporation at 15.5% and a spouse with no income can receive up to approx. $39,000 annually in dividends with no personal tax consequences). 

A corporation can hold and invest excess cash far into the future and distribute income and dividends as needed.

Up to $375 000 in tax exempt profits can also be realized on the sale of a qualifying small Canadian-owned corporation http://www.taxtips.ca/smallbusiness/capitalgainsdeduction.htm

[Insanity]

Does it favor the wealthy or the educated more?

There is only so much you can do when childless, renting, and with a single W2 (my current situation). Most people fail massively at the wealth accumulation phase, which means they will never be able to afford all the goodies the tax code has in store for the savvier taxpayers.

Not saying this is a good or bad thing, that's just the way things stand currently.

I'm not sure I understand.  I am not a tax expert, that's why I'm kind of asking the question.  The comments that you are making lead me to believe being married with kids offers more benefits.  I know that when I was a single with a W-2, I paid more in taxes, but I also had significantly fewer expenses.  So, I guess I'm saying isn't there some washout there?

[hybrid]

Does it favor the wealthy or the educated more?

There is only so much you can do when childless, renting, and with a single W2 (my current situation). Most people fail massively at the wealth accumulation phase, which means they will never be able to afford all the goodies the tax code has in store for the savvier taxpayers.

Not saying this is a good or bad thing, that's just the way things stand currently.

Agreed, there are all sorts of things in the tax code that will lower ones total bill that can seem rather arbitrary.  Mustachian Buddy and I have had this conversation more than once.  I was in a much lower tax bracket than him at one point because I was a homeowner with a child and he was not.  Is that fair?  Depends on your defintion of fair, and there is no single definition.  A great topic for another thread.

In the meantime, the tax laws are what they are.  Whether you like them or not there is little sense in not playing by them to the best of ones ability.  How you vote is completely different.

[DoubleDown]

Yes, big goodies available to most of us mere mortals (not billionaires) that come to my mind are:

1. Child tax credits and deductions, which also includes child care, education, etc.
2. Writing off business or real estate investment expenses (hence the comment above about a single W-2 not giving any tax advantages
3. Mortgage interest deductions esp. in high COL areas. Works for both primary homes and investment properties (up to a limit)
4. Deducting 401k/IRA contributions

So in general, if you're single, no kids, renting, earning a good income from an employer, you're going to pay a pretty stiff amount in taxes relative to the married-with-kids homeowners. #2 and #3 above of course assume you're paying more than you're deducting, but those expenses can be viewed as an "investment." For example, if I pay $10,00 in mortgage interest, and can deduct $3000, I still paid $7000 in interest. However, if my home value goes up $15,000, paying that interest ended up being a good investment.

[RootofGood]

So in general, if you're single, no kids, renting, earning a good income from an employer, you're going to pay a pretty stiff amount in taxes relative to the married-with-kids homeowners. #2 and #3 above of course assume you're paying more than you're deducting, but those expenses can be viewed as an "investment." For example, if I pay $10,00 in mortgage interest, and can deduct $3000, I still paid $7000 in interest. However, if my home value goes up $15,000, paying that interest ended up being a good investment.

Homeowners who have humongornomous houses might get the best tax benefits of anyone.  All the interest and real estate tax deductions (itemized), plus a cool half million in tax free cap gains if you buy and sell every other year (half that if single). 

I have always assumed I could save more money living in a reasonable house than paying a buttload of interest just so I could deduct some come tax time.  I think I have itemized in only a year or two ever. 

[Undecided]

RootofGood's tax situation is completely believable to me. I've had several similar tax years where our total income was quite high (pushing $150 - 200k) but our AGI ended up quite low through rental home deductions

I'm not sure how that works. Are you a real estate professional? Otherwise, isn't the special allowance for passive rental real estate activity completely wiped out at $150,000 MAGI (and phasing out long before that), and the loss is excluded from the MAGI calculation, isn't it?

[DoubleDown]

I'm not sure how that works. Are you a real estate professional? Otherwise, isn't the special allowance for passive rental real estate activity completely wiped out at $150,000 MAGI (and phasing out long before that), and the loss is excluded from the MAGI calculation, isn't it?

I'm not a real estate professional so yes, our deductions are generally phased out completely at $150k MAGI. I should have been more precise in my words, plus I had a somewhat special situation.

One of our rental properties was a vacation home that was rented on a weekly or weekend basis, so it's treated differently than a typical long term rental. That property I got to treat 100% as a business, not subject to the passive activity limitations. I found that somewhat buried in the tax code, and it made a great difference.

Also, I should have said our AGI did not end up low just through rental home deductions -- our AGI ended up lower through all the deductions combined, so many years we were able to deduct all or at least some of the rental expenses. For example, if we had close to $150k gross income, it wasn't hard to get under $100k MAGI and be able to deduct 100% of rental expenses. Lately we've been going over the MAGI limits completely and losing out on all the passive rental deductions. Even then, our federal tax rate is still down to somewhere around 11%, I think, because of all the other write-offs (mortgage interest and property taxes on primary home, child credits, etc.).

[Undecided]

One of our rental properties was a vacation home that was rented on a weekly or weekend basis, so it's treated differently than a typical long term rental. That property I got to treat 100% as a business, not subject to the passive activity limitations. I found that somewhat buried in the tax code, and it made a great difference.

I'm glad I asked. I didn't realize there was different treatment for vacation for residential rentals, I'll have to look into it.

[RootofGood]

One of our rental properties was a vacation home that was rented on a weekly or weekend basis, so it's treated differently than a typical long term rental. That property I got to treat 100% as a business, not subject to the passive activity limitations. I found that somewhat buried in the tax code, and it made a great difference.

I'm glad I asked. I didn't realize there was different treatment for vacation for residential rentals, I'll have to look into it.

I think the daily or weekly rentals are treated as a business because you are managing them much more closely, unlike a rental that you turn over to someone for a year and generally don't do anything day to day (ideally).

[DoubleDown]

I'm glad I asked. I didn't realize there was different treatment for vacation for residential rentals, I'll have to look into it.

Yeah, I was also glad I found it since it was such a giant difference in my tax calculation. Four agents at the IRS, in their real estate section, had no idea what I was talking about when I brought it up. Check out page 2 of the instructions for IRS Publication 8582 under "Rental Activities -- Exceptions":

http://www.irs.gov/pub/irs-pdf/i8582.pdf

Exceptions
An activity is not a rental activity if:
1. The average period of customer use is:
a. 7 days or less, or
b. 30 days or less and significant personal services were provided in making the rental property available for customer use

[RootofGood]

Doubledown, I remember that provision in the tax code from law school.  Basically the rental becomes an active income source if short term.  For some reason I was remembering it as 2 weeks or shorter rentals.  Maybe it was that "significant personal services" involved in renting 30 days or less.

Oh, and totally weird but I just posted on your "I'm about to retire" thread and just came back here and realized you are the same poster.  Somehow that escaped my attention before I posted in your thread just now. 

[jrhampt]

I would pay much less in taxes if I were single (vs. married to someone with a similar income and childless).  They don't double the amount of income for two people as you go up in the tax brackets.  Not sure where this myth comes from...I think this works if you are married to someone who is earning much less than you are.

[RootofGood]

I would pay much less in taxes if I were single (vs. married to someone with a similar income and childless).  They don't double the amount of income for two people as you go up in the tax brackets.  Not sure where this myth comes from...I think this works if you are married to someone who is earning much less than you are.

We have never had the burden of being in the 25% bracket where there is a penalty for being married.  Down in the 10% and 15% brackets (and part of the way into the 25% bracket), married couples income brackets are double the single income brackets.  Looks like once your combined taxable income exceeds $146,400, you start paying a marriage penalty in effect. 

[MrsPete]

Wow, that's a list of goals!  Considering you have a one-year old, that's an ambitious first month. 

[RootofGood]

Wow, that's a list of goals!  Considering you have a one-year old, that's an ambitious first month.

Oh that reminds me, I took my introductory post here and expanded it into a blog post with some more details. 

http://rootofgood.com/one-month-into-my-early-retirement-adventure/

[brewer12345]

Likely a dumb question, but what does your screen name mean?

[avonlea]

Likely a dumb question, but what does your screen name mean?

I might be rude in responding to this before RootofGood but my guess is:

1 Timothy 6:10 "For the love of money is the root of all evil."

I bet his name is a play on those words.

[RootofGood]

Likely a dumb question, but what does your screen name mean?

I might be rude in responding to this before RootofGood but my guess is:

1 Timothy 6:10 "For the love of money is the root of all evil."

I bet his name is a play on those words.

Thanks!

I took the old saying "Money is the root of all evil" and flipped it 180.  It's the root of all good. 

[jrhampt]

I would pay much less in taxes if I were single (vs. married to someone with a similar income and childless).  They don't double the amount of income for two people as you go up in the tax brackets.  Not sure where this myth comes from...I think this works if you are married to someone who is earning much less than you are.

We have never had the burden of being in the 25% bracket where there is a penalty for being married.  Down in the 10% and 15% brackets (and part of the way into the 25% bracket), married couples income brackets are double the single income brackets.  Looks like once your combined taxable income exceeds $146,400, you start paying a marriage penalty in effect.

Oh, good to know -- I didn't realize the lower brackets worked this way.  Even more impressive that you retired so early not having exceeded that income threshold! Or maybe you were just a master at lowering your AGI.

[RootofGood]

Oh, good to know -- I didn't realize the lower brackets worked this way.  Even more impressive that you retired so early not having exceeded that income threshold! Or maybe you were just a master at lowering your AGI.

Mostly the latter.  AGI was normally no more than $70-80k.  Gross income has been $130-140k for a couple years. 

[RootofGood]

Congrats, but I will admit it is a bit suspect to me at this point, not because it is not possible but because it seems a bit prepackaged and positioned hear to garner some quick traffic...but I will let it play out and see more.

SWR?  You mention $23k core spending and there are references to $1million, of course that would be a great SWR but do you consider core spending? Health care included in $23K?  What is not core spending that you spend on?

If you are skeptical, I will provide the answers to your questions eventually (so, yes, please let it play out!).  The answers will probably be in the form of additional blog posts, as I intend to fully flesh out most areas of my "Early Retirement at 33: An Overview" post.  It may take a few weeks, but I'll explain everything.  My "Overview" post was mainly intended to be a placeholder and an index for the future detailed posts of each topic area.  The post kept growing and growing and I had to edit down to 2500 words or it would have been a treatise.  Some trimmings were picked up off the draft room floor and saved for subsequent blog posts.

To answer your questions in brief, 

$23k/yr = core spending today.  That is from my expense tracking spreadsheet and the core expenses we pay right now (excludes child care, mortgage that will be paid in 3 years, and health/dental insurance premiums).  I have an "additions and subtractions" spreadsheet to get us to our early retirement budget (gas expenses drop, health ins. expenses increase for example). 

Let's say $25k core expenses in ER to cover core additions to expenses (health insurance premiums and taxes mainly). 

tooqk4u22, I wanted to get back to you so you don't think I'm a flim flam artist!  ;)

I finally got around to summarizing our "core expenses".  They came in just under $24,000 per year on average (family of 5).  That's before adding in health insurance and taxes.  Throw those in and call it $26k per year.  That number includes vacations we have actually taken the last 3 years, so not exactly "core" since we could cut out vacations if we needed to (but what fun would that be??).

Here's the blog post for more details on spending:  http://rootofgood.com/root-of-good-household-spending/

Here's a quick summary of core expenses (average of 3 years from 2010 to 2012).


Mortgage, childcare, and student loans are "temporary" expenses by my reckoning.  They will go away or be minimal within a few years.  For a more detailed breakdown of expenses, check out my blog post. 

Are these expenses mustachian enough? 

[sol]

That budget is nearly identical to what we spend on our family of five. 

We're not quite as tax efficient because we only have one rental property and we have a higher gross income, but that's not really something to complain about.

[RootofGood]

That budget is nearly identical to what we spend on our family of five. 

We're not quite as tax efficient because we only have one rental property and we have a higher gross income, but that's not really something to complain about.

I have seen similar budgets from many very early retirees that are in the same $25-30k sweet spot.  I seem to recall Mr Money Mustache himself has a similar budget. 

We live a pretty charmed life in most respects, and I'm not really sure how I could significantly increase my happiness by spending double that.  Maybe if I could buy an extra 10 hours each day? 

The fact that people spend 3-4x what we spend (ie most of what we earned back when I was working) amazes me.  And then some are perpetually broke and constantly seeking the next thing to buy.  So they are potentially _less_ happy than me since they aren't fulfilled?

[Roland of Gilead]

You are not really retired until your spouse stops working but excellent job on reducing taxes.

We fall into that childless couple, one high W2 income category.  We are not quite at AMT territory, but pay about 21% in overall federal tax (excluding SS).  Paid off our house so are almost at the standard deduction, which isn't much.  Hard to stomach that we are paying twice what our yearly expenses are each year in federal taxes but what can you do?

[giggles]

You are not really retired until your spouse stops working but excellent job on reducing taxes.

What what?  Come on, now.  His spouse working does not mean HE isn't retired, esp. with 3 kids!

[Southern Stashian]

RootofGood - looks like your doing well and nice job on the early retirement! I can relate with the deductions and AGI, as we have been at @ $110K - $125K + in income over the past few years now. With the deductions of our family of five (HOH, dependents, day care, charitable), FSA, HSA, mortgage interest, 401K's ... we have had an AGI somewhere between $53K - $65K plus no state income tax here in Florida. Our friends think we are doing something shady but everything is on the up and up, plus we have received around $1500 - $2500 back per year from Uncle Sam.

Like you, we have a mortgage that we will be done with shortly and daycare has fallen off by almost 70% with the kids getting older. We should be done with it in the next 14 months and the mortgage in 36, taking our savings rate to near 90%. We also pay most of our utilities once a year, pay our car insurance off annually and pay off the credit cards every month.

When we look at our expenses all that we see is our savings contribution (always pay yourself first), the mortgage, child care and credit cards that we put our gas and groceries on. It's pretty sweet!

We have also created a blog that hasn't paid us anything in ad revenues, but we have made a few hundred $$$'s with referrals to our realtor (from people overseas looking for homes in our area) and some discounts (percentages off full price) from other sites that we have sent people to - so its a start.

Also, I have recently taken on designing another site for a charity that liked our site so much they wanted one of their own, so that will turn into a few hundred more $$$'s and some more exposure for future jobs. I also have a possible business venture with a virtual tour operator out of Colorado that hopefully will come together here soon. Not to shabby for being our first year!

Anyway, keep up the good work!

www.HavingFunInFlorida.com

[RootofGood]

You are not really retired until your spouse stops working but excellent job on reducing taxes.

We fall into that childless couple, one high W2 income category.  We are not quite at AMT territory, but pay about 21% in overall federal tax (excluding SS).  Paid off our house so are almost at the standard deduction, which isn't much.  Hard to stomach that we are paying twice what our yearly expenses are each year in federal taxes but what can you do?

What can you do?  Retire!  ;)  Or semi-retire.

The potential tax burden always kept me from working really hard at my career.  I almost went into soul crushing hour cranking BigLaw, then I did an analysis of my tax burden and figured out the marginal benefit after taxes of a much higher salary wasn't much on a per hour basis.  So I basically kicked back, put in my 40 hours/wk for 9 years (in engineering) and then retired. 

Or maybe not retired.  Perhaps financially independent non-working person of means?  Or "stay at home dad/kept man"?   :)  I really do struggle with a title to give myself and variably say "retired", "I do consulting", "stay at home dad", "in between jobs" depending on how many follow up questions I want to answer or how many eyebrows it is appropriate to raise. 

[Roland of Gilead]

What can you do?  Retire!  ;)  Or semi-retire.

The potential tax burden always kept me from working really hard at my career.  I almost went into soul crushing hour cranking BigLaw, then I did an analysis of my tax burden and figured out the marginal benefit after taxes of a much higher salary wasn't much on a per hour basis.  So I basically kicked back, put in my 40 hours/wk for 9 years (in engineering) and then retired. 

Or maybe not retired.  Perhaps financially independent non-working person of means?  Or "stay at home dad/kept man"?   :)  I really do struggle with a title to give myself and variably say "retired", "I do consulting", "stay at home dad", "in between jobs" depending on how many follow up questions I want to answer or how many eyebrows it is appropriate to raise.

Yep, we are going to retire.  We will collect back some of that excessive federal tax between ages 45 and 65 by keeping our income around 133% of FPL and getting maximum ACA subsidy while paying zero federal tax.  Life will be good.

I am also a "kept man" as I left my job a few years ago (commute wasn't worth the costs when your wife makes over $200K by herself and you were making $40K).  I don't consider either of us retired though until she can quit.  We couldn't go on vacation to the Florida keys and just decide to stay there for 5 months losing our shakers of salt....that is the definition of retired in my book.

[iamlindoro]

I am also a "kept man" as I left my job a few years ago (commute wasn't worth the costs when your wife makes over $200K by herself and you were making $40K).  I don't consider either of us retired though until she can quit.  We couldn't go on vacation to the Florida keys and just decide to stay there for 5 months losing our shakers of salt....that is the definition of retired in my book.

http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/

[Roland of Gilead]

I am also a "kept man" as I left my job a few years ago (commute wasn't worth the costs when your wife makes over $200K by herself and you were making $40K).  I don't consider either of us retired though until she can quit.  We couldn't go on vacation to the Florida keys and just decide to stay there for 5 months losing our shakers of salt....that is the definition of retired in my book.

http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/

What does that link really mean?  It is one person's opinion of what retirement is, this is my opinion.  Maybe the OP's (RootofGood) spouse is working just for the fun of it.  If so, then he is indeed retired.   My wife is not working for the fun of it and I am trying to make her life outside of work as easy as possible (doing house chores and renovation, cooking meals, getting our finances ready for when she quits).  I don't consider either of us retired until we both can work for fun or not work at all.

Otherwise you can say my mom retired at age 17 (I think she had a job as a babysitter at 15 and 16).  If so, then she should start a blog, "how to retire at age 17"