How to mentally shift from saver to spender when FIRE?

[FIREin2018]

Age = 48

I got laid off last year so im giving FIRE a try.
for the 1st time in 20+ years, i have less $ in my bank acct this quarter than last quarter.
it's quite disconcerting to me.

yes, i know it's supposed to go down since im not working.
but actually seeing it is another thing. (i tally the $ in my accts at the end of every quarter.)

How to mentally adjust?
or just give it time? the novelty of it going down will wear off and i'll get used to it?

[ericrugiero]

Disclaimer:  I'm not in this situation yet so this is all still theoretical to me. 

My goal would be to have enough money that the growth sustains what I'm spending.  So, there might be a specific account that drops but it should be offset by growth in another account.  I'd be watching the overall net worth and as long as it's not going down I'd consider myself good.  Obviously, for money that's invested long term in the stock market there will be swings up and down but in general the growth should sustain what I'm spending.  If it wasn't working out that way, I would be looking at side hustles, budget cuts, etc to give me some more peace of mind. 

You didn't really give enough information for anyone to be able to say whether you are in a good place or not. 

[ixtap]

Since the S&P has gone up ~10% in that period, I am wondering about your asset allocation and withdraw rate? That is, no, your balance probably shouldn't go down in the current market. You need growth at some point for the 4% rule to work and if you can't get it now...

On the other hand, it is possible for this to happen even in accumulation phase, if you are invested for growth.

[soccerluvof4]

I think if you could provide more detailed information about where your at we could be more helpful. I know what your feeling because I fire'd 4 years ago but to rationalize your thoughts I would prefer to know that your in a position to rationalize it. Its not only income , investments but family, college etc..

[FIREin2018]

Disclaimer:  I'm not in this situation yet so this is all still theoretical to me. 

My goal would be to have enough money that the growth sustains what I'm spending.  So, there might be a specific account that drops but it should be offset by growth in another account.  I'd be watching the overall net worth and as long as it's not going down I'd consider myself good.  Obviously, for money that's invested long term in the stock market there will be swings up and down but in general the growth should sustain what I'm spending.  If it wasn't working out that way, I would be looking at side hustles, budget cuts, etc to give me some more peace of mind. 

You didn't really give enough information for anyone to be able to say whether you are in a good place or not.

so your plan is to have MORE than enough to retire such that investments pay for expenses?

my plan to is die at age 90 with slightly more than $0. (i have no children and am not married.)
https://forum.mrmoneymustache.com/welcome-to-the-forum/i-can-last-45years-on-the-4-rule/

note: Substitute 15% total market, 15% Intl, 70% total bonds allocation in that thread with 50% total market, 25% Intl, 25% total bonds

[FIREin2018]

Since the S&P has gone up ~10% in that period, I am wondering about your asset allocation and withdraw rate? That is, no, your balance probably shouldn't go down in the current market. You need growth at some point for the 4% rule to work and if you can't get it now...

On the other hand, it is possible for this to happen even in accumulation phase, if you are invested for growth.

my quarterly tally is just my bank accts.
i dont look at my brokerage accts. they're all in mutual funds and the vast majority is in retirement accts so im not going to touch that anyway till at least age 59 1/2.

once in a while when i've accumulated alot of $ in my bank accts, i move some over to the after tax brokerage acct.
but when i do that, i know that the lower # in my bank accts is just because i moved it to another 'savings' acct that i dont count for my quarterly tally.

taking into account the gains from my non-retirement stock funds, i am up from last quarter.
but it is still disconcerting to me that my quarterly bank tally is lower.

[RWD]

i dont look at my brokerage accts. they're all in mutual funds and the vast majority is in retirement accts so im not going to touch that anyway till at least age 59 1/2.

You're not going to do a roth conversion ladder?

[ericrugiero]

Disclaimer:  I'm not in this situation yet so this is all still theoretical to me. 

My goal would be to have enough money that the growth sustains what I'm spending.  So, there might be a specific account that drops but it should be offset by growth in another account.  I'd be watching the overall net worth and as long as it's not going down I'd consider myself good.  Obviously, for money that's invested long term in the stock market there will be swings up and down but in general the growth should sustain what I'm spending.  If it wasn't working out that way, I would be looking at side hustles, budget cuts, etc to give me some more peace of mind. 

You didn't really give enough information for anyone to be able to say whether you are in a good place or not.

so your plan is to have MORE than enough to retire such that investments pay for expenses?

my plan to is die at age 90 with slightly more than $0. (i have no children and am not married.)
https://forum.mrmoneymustache.com/welcome-to-the-forum/i-can-last-45years-on-the-4-rule/

note: Substitute 15% total market, 15% Intl, 70% total bonds allocation in that thread with 50% total market, 25% Intl, 25% total bonds

Yes, I would like to have enough that my money grows somewhat over time.  I'm a little more conservative because I do have a wife and 3 kids who I would like to leave something to.  Also, if I cut it to close the last few years could be stressful for me or my family.  If it was just me and nobody else I'd be more aggressive about switching to a fun side hustle and doing whatever I want. 

[FIREin2018]

You're not going to do a roth conversion ladder?

going to try Medicaid for health insurance.
need to keep under $16000/yr.
bank interest + stock dividends + W2g (gambling) was around that level in 2017. (havent done 2018 taxes yet.)

also, applied but havent heard back about Medicaid. if rejected, then i'll do Obamacare and definitely do Roth conversions.
(im still under my former employer's free health insurance for a little while longer.)

[Valvore]

I've thought about this a lot recently. No matter if your total accounts are going up or not you are still lessening the amount of money in your stache at that time. And because we are all big savers and know what investing that amount of money can do, it must be really painful to withdraw. I think that's why so many in this community do some sort of side hustle or part time work in FIRE, because it's so difficult to pull from your stache.

This would be a great question for the Post-FIRE thread. However, when I get to FIRE I know it will be excruciatingly painful to actually make a withdrawal. You could look at is as an investment in yourself or your happiness?

[Cherry Lane]

It is an adjustment, for sure.  I've been FIREd for a year, though residual income from that employment didn't finish until mid-May 2018.  So I'm at 10 months with no employment income. 

A little over two years before I left work I asked some smart people I knew to look over my plan and give their opinion on whether it would work.  One of the things we did was go year-by-year for the next 20 years and identify where my living money would come from.  I had a theoretical drawdown strategy, but watching the actual accounts be reduced each year (even on paper) was painful.  I learned that I was not yet ready to do that for real, but I had 2 years to prepare. 

So I knew it was coming, and planned for it.  I had a bit of ready cash in the bank, but I've had to make two withdrawals from my investment accounts so far.  The first one was still tough, the second was easier. 

It definitely helps to look at the whole picture, not just what is in your bank account.  Your bank account may be dwindling, but that is because none of your income is being auto-deposited there.  (Though maybe it should be:  I've changed the dividends in my non-retirement investment account from automatic reinvestment to paying out, so it's like getting a paycheck once per quarter.)  Seeing the investment account increase even while I'm pulling from it helps a lot.

[MonkeyJenga]

It is an adjustment, for sure.  I've been FIREd for a year, though residual  Your bank account may be dwindling, but that is because none of your income is being auto-deposited there.  (Though maybe it should be:  I've changed the dividends in my non-retirement investment account from automatic reinvestment to paying out, so it's like getting a paycheck once per quarter.) 

I just made this change too! At least for my vanguard mutual fund. I wasn't able to for the etf's, not sure why. Of course I realized I should do it the day after dividends were already reinvested for that quarter.

[FIREin2018]

It is an adjustment, for sure.  I've been FIREd for a year, though residual income from that employment didn't finish until mid-May 2018.  So I'm at 10 months with no employment income. 

A little over two years before I left work I asked some smart people I knew to look over my plan and give their opinion on whether it would work.  One of the things we did was go year-by-year for the next 20 years and identify where my living money would come from.  I had a theoretical drawdown strategy, but watching the actual accounts be reduced each year (even on paper) was painful.  I learned that I was not yet ready to do that for real, but I had 2 years to prepare. 

So I knew it was coming, and planned for it.  I had a bit of ready cash in the bank, but I've had to make two withdrawals from my investment accounts so far.  The first one was still tough, the second was easier. 

It definitely helps to look at the whole picture, not just what is in your bank account.  Your bank account may be dwindling, but that is because none of your income is being auto-deposited there.  (Though maybe it should be:  I've changed the dividends in my non-retirement investment account from automatic reinvestment to paying out, so it's like getting a paycheck once per quarter.)  Seeing the investment account increase even while I'm pulling from it helps a lot.

yes, exactly what im feeling right now.

and your suggestion about dividends  sounds great!
even though i dont need the extra $ in my bank acct right now, having the dividends deposited to my bank acct like a paycheck would probably lessen my anguish.

now to change some of my after tax allocation to a high dividend mutual fund...

[Linea_Norway]

You could make a spreadsheet. Just put down the remaining years you expect to live off your savings, each in a row. Calculate for each year how much your savings will grow from investment. Reduce the savings with your yearly expenses. Calculate how high your yearly expenses can be without your savings going below 0 after 45 years.

Then you will have the number of what you can safely spend each year. As long as you don't go over that amount, there is no reason to feel nervous. As long as you stay under, or get a side income, you are on the safe side.

I have such a spreadsheet for my own future FIRE situation. I hope I will be as relaxed about it as I am describing now. Somehow, I think we will strive for staying far under our yearly expenses.

[kei te pai]

You need to think a bit differently. Think of your years left to live as the balance in your account.
Every day, week, year you spend confined to an office or car you are drawing down on your life account.
There is a risk you may not have enough money to live comfortably for the rest of your life.
But there is also a risk that you wont have enough life to use up your money.