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What will you do?

August 8th, 2017 at 11:58 pm

DH and I were chit chatting in the car, seems like we always talk in the car. Probably because the kids are strapped in and can't distract us as much as in the house fighting. Maybe because we're trapped in two seats and not focused on our cell phones, cleaning, work, dealing with kids, cooking.

Anyway I asked him in 5 years at 45 or so would he retire if he could? I was running numbers and it's highly possible if not sooner. We could potentially do it now if we were willing to cut our lifestyle. But seriously 45 is not improbable.

His answer? "And do what? Why would I want to?" I said "follow your zen". His answer "I'm following my zen now. I spent a year finding my zen, moving with you, and finding my dream job. I don't need zen. I really like what I do. If I stop liking it I'll tell you again and we'll talk. Until then I'll work and be content."

I sat there stunned. Here i am on a savingadvice forum/blog, I read early retirement forums and blogs, and I'm not married to a spendthrift. I married a guy who wants to work.

He further goes on to say "LAL your dad is still working at 86! My dad is still consulting at 66. I am not sitting here at 45 doing nothing." I said "do something you like." DH "I am doing something I love. Who else plays video games pretty much all day everyday? Who gets to be a gamer and paid for it? If I had told 10 year old Mr LAL your job will be video games I'd have died laughing and kissed the ground." LAL says "okay when it stops being fun, quit." DH "okay deal."

So back to the drawing board. Seriously I don't know when or how I'll be dragging him away from work. We're about to embark tomorrow on a 3 week vacation, I'll try to post pictures but I won't have a computer just my phone so we'll see. First trip for DH in a year and he's not even sweating it. I'm dragging him away since he hates traveling. He'd rather stay at home and do nothing. Hence retirement is not his cup of tea in that sense. He doesn't want to travel and see the world.

Have you actually planned your retirement? And thought about what you would do?

Renting can beat homeownership

May 10th, 2017 at 03:38 pm

I was thinking a lot about friends discussing how renting is throwing away money. It's really, really not. I can see how people think buying a home builds wealth. It's an enforced savings plan. Every month you build up savings by paying down the principal of your house.

But here's the truth! If you saved that principal payment and invested it, as well as invested the entire down payment of your home I'm pretty sure you'd come out ahead of the home owner. But the reality is three-fold.

One how many people would actually save the principal difference between renting and owning? So in that sense yes homeowners do tend to build wealth faster because they are forced to. And typically renters don't have the discipline to save. This is usually true as well because renters often times lack the discipline to save the principal for a down payment on a house. So home buying will build wealth but renting often doesn't because of lack of discipline. I see it too often with most of my long term renter friends they say "i could afford the same monthly payment as rent but I have no down payment." My point to them is then why aren't you saving?

Second, usually people's mortgages are more than rent. Renting often is less perhaps due to the fact that many people will rent the minimum space needed but buy a home much bigger because they are stretching the budget. I can attest to that. Our townhouse we sold was 3bd/2.5 bath townhouse 1500 sq ft. We were DINKS without kids. We didn't need that much space but we bought 5 years before kids to "grow" into to. Probably would have been smarter to rent a 1 bd apartment (like we had just sold) and then moved into something bigger 5-6 years later when we had kiddo #1. So for sure we were pretty dumb, but we liked owning and having dogs. I'm sure our rent would have been something like $1600/month (it was $1400 for a month to month studio at the time) instead of our $3k/month mortgage. But we could afford it and enjoyed the space. So if we had invested the $1400/month difference? We'd likely have made more money. Granted out of the $3k we were paying down I think $700/month principal so we were saving about half the difference. But still $700/month = $8400/year for 10 years is $84k and we could have invested that. So renting would have built up our wealth just as well.

Third I've noticed and perhaps I'm wrong when you renter you get a better location than when you buy. Most people have to compromise on something. So everyone I know compromises and has long commutes of 1-2 hours to get a "big" house. This means if they rented they could usually get something closer to where they needed to be but to afford to buy?

Right now if we wanted to save money DH and I could buy the place we're in for $600k. Instead we're buying something closer and more expensive but about the same size. So we compromised on size of home instead of location. We are paying for location. Also the $600k home would probably break even with our rent which we are overpaying because we had a dog. It should have been $2k/month we paid $2400/month for a dog. Our mortgage now is quite a bit more. But we also could have tried to rent in the same neighborhood we bought at it would have started at $3500 and we probably couldn't have a dog. So to us it's a wash.

But I don't think renting is losing money. I actually think to buy a home many times you are paying a premium to own. I think that many renters don't take advantage of the financial side to keep up with savings and match a homeowner. I think if they did it would become clearer how renting can be financial advantageous.

Have you ever considered renting if you own? And have you ever considered buying if you rent? Did you run the numbers?

For us we banked the extra money so renting we easily matched a homeowner. But I like owning with the stability and I like having a dog. I like feeling like we can do something to the house and not worry. Will we be paying a premium? Absolutely but it's one that my DH and I are willing to make because we want to. We know the financial disadvantages and advantages but still want to.

FWIW I think buying property and being a landlord is different. I think it's different numbers and cash flow and it's an investment not a primary residence you live in. I think it's something that can match stocks easily but you have to know what you are doing for arguments sake we aren't talking about RE investing.

2016 Wrap up and 2017 Goals

January 3rd, 2017 at 09:15 pm

So we ended 2016 pretty good. How good? Our NW went up $41k. We are still down from our peak NW $120k, I'm still happy where we are. Our retirement contributions were $29k plus $2552 employer match into the 401k and we ended the year up $73k so we doubled our investment. We maxed out our 401k in 4 months. With income and savings we only "spent" $30k in cash from January to August, we didn't get our first paycheck till August 12th.

Our average spending was $80k for the year. $6500k/month including $2400/month rent. Not terrible to live on $4000/month for a family of 4. It was front loaded that we had a lot more expenses without employer provided health insurance. So we spent more on essentials till August then we splurged a lot more on eating out and stuff since we suddenly had more money. NOT perfect but we were okay.

Anyway our 2017? Save $100k and increase NW $150k. Big stretch goals.

Investments out of control

December 30th, 2016 at 08:59 pm

I've allowed our investments to get out of hand and out of control. Because of our move and rolling into a Roth IRA and 401ks and just starting new funds and being concerned about just our overall cash I've allowed our investments to get out of control. How out of control? I have no idea what we're invested in right now.

DH just took his 401k and dumped it into whatever we chose years ago. I didn't pick his new 401k instead he just dumped it into a couple of funds but told me the other day they told him it was super risky. I haven't done a comprehensive overlook at what we should do in about 2 years.

The kids are left in VTI for college. Boring but what else to do? I'm feeling pretty stressed out right now. I started my spreadsheet with dollar amounts and choices.

I think we've been a little to risky because my DH was allowed a lot of leeway in investing in individual stocks for fun. We rarely touch any of this even in taxable accounts we've got invested in stuff. We need to sit and make a better plan.

Goal - streamline and properly invest our accounts.

15% to retirement works!

December 16th, 2016 at 06:41 pm

I have a feel good story I thought I'd share. A friend of mine was telling me that saving 15% of her income was the easiest thing when she was working and that it did a lot of heavy lifting for retirement.

Well she started at costco at 18 and didn't go to college. She started saving 10% for the first 2 years then 15% from years 20-38, she only ones part-time now because of her kids. She maxed out at $50k/year and has always saved 15% of her income and she's 39 and has $300k in her 401k. She's now set for life even if she never saves again. All the early saving did it for her.

She said I always tell people starting out to save 15% of their income and it'll do it for them. But most people never do. She looked at me and I said "no worries we're fine."

We missed saving in our early 20s and so we had to save A LOT more money to make up for it. We're still socking it away because of it. But the compounding works!

So it doesn't matter what you make but what you save.

Roth Conversion

December 6th, 2016 at 05:28 pm

DH rolled his 401k from his old company to his new company 401k. He then withdrew $60k and we are converting that to his Roth IRA. We decided on $60k to max out our taxable income in our 25% bracket. We might as well since we are at that level and going forward I suspect it'll be higher so converting any IRA or 401k money to a Roth IRA will likely not be worth it.

I've been doing a lot of thinking about some saving goals I have. My car is 2010 which isn't old and it only has 90k miles on it bought new. But I'm thinking maybe in 3 more years when it's 10 years old maybe we'd get another car and maybe it's time to start saving so we don't have payments? $500/month for 3 years?

I also think we need to start increasing our college savings. $2k/year per kid doesn't seem like enough. I'm thinking if we increased it to $4k/year per kid that would put us in a better position. It another $325/month for both kids.

I guess since 2017 is about to start it's making me evaluate financial goals. Once we buy a house and settle into a routine monthly budget I think it'll be easier to give every dollar a name.

Have you considered your 2017 financial goals?

November 30th Net Worth

December 1st, 2016 at 06:00 pm

It's almost the end of the year and it's been good. So we hit our peak NW in June 2015. And since then we are down about 12%. From when we moved because we had a lot of costs moving, selling house, etc September 30th 2015 we are down 0.7%. So we have made up the difference. At our lowest point we dipped 19.4% from 6/15 or 9.1% from 9/30/15.

Part of it has been saving and part has been the market. We managed not miss a beat and maxed out DH's 401k and Roth IRAs for 2016 and kid's college funds $4k. We also saved our signing bonus. We hit a new high of $600k+ in retirement savings. To just show what holding steady does in DH's old 401k without contributions after August

June 2015 $332k,
9/30/15 $301k
10/30/15 $325k
1/28/16 $288k
3/24/16 $311k
5/15/16 $314k
6/7/16 $324k
6/27/16 $306k
11/3/16 $321k
11/30/16 $340k

In one year we had quite a ride. So shut your eyes and let it ride. A stretch goal for 2017 will be if market cooperate $700k in retirement.

We are right now in a holding pattern until we settle into a house. It'll be interesting what the next year financials hold with proposed tax reform. I can't say I'm upset because I know we'll benefit a lot. We pay a ton in taxes and this year more than ever.

My parents retirement plan

October 27th, 2016 at 12:19 am

I want to strangle my mom. I love her and my parents have more than enough to retire on. But my mom doesn't it. She won't spend her money. I want to smack her so hard and tell her you can't die with it and I don't want it.

My mom is in the car with me as I'm prying out about her she feels she can't buy a house she wants. I say just buy the DAMN house. She says "oh we'd have to liquidate" and how will we afford it? I point out to her she gets SS, my dad gets SS, and she gets a pension.

Her monthly take home pay is says is $3k pension, $2k SS, Dad's SS $3k, and $1500 RMD from IRA because he's still working. She's retired and has been for 10 years and still contributing to a ROTH ira. They bring home at least $10k/month and my mom is still trying to save money.

I don't know what for. I wanted to strangle her. I said please buy a new car. Please buy a house you want or renovate it. Her car is a 20 year old Avalon that the A/C is broken in Hawaii but she just constantly refills coolant. She had a leaking roof for years because she couldn't pick a roof.

I wanted to shake her. I begged her to please stop saving. She looked me in the eye and said "oh it'll go to DK1 and DK2. You don't need it, but it's ridiculously frivilous to spend $10k/month".

I give up. I'm not even sure my mom realizes that they make more than the majority of the population. They are still earning income my dad is 86 today (happy birthday dad). They are only drawing on IRA because they have to. OMG. Why aren't they enjoying it?

This same mentality is why she tells me I have to work. The idea of actually spending what you saved for retirement seems crazy.

Do you savers plan on spending your retirement money? Or do you think when you get there you'll be living only off other stuff?

My thoughts has always been we'd draw on our retirement. I always had a plan to be done working by 50 and FI by 45. Looks completely on track, but my DH has mentioned more and more he'd prefer to work a bit longer he's not ready to jump off the hamster wheel. I get it he loves his job. But I like knowing we could.

But can working/saving become addicting? I feel like my parents have worried too much.

Giving early or later?

October 18th, 2016 at 04:22 pm

I'm going to admit to suddenly for once being jealous. In a few different ways. My cousin just bought a house with down payment help from both sets of parents. Neither of them have a good job and yet they can buy $800k home without selling their $350k condo. She's an only and I've heard that he's from a "rich" family. Some envy that they get help.

But I have recently known a lot of people who get down payment help from their families. I know multiple people whose parents gave them the down payment of $50 or $100k or more. Some are even paying/funding college for their kids.

I guess my thought is how are these parents able to give their kids/grandkids money now? I know my parents and in-laws are secure. I don't expect any help nor will we get any. But it's likely they will leave us something eventually.

I guess I'm jealous because how do people know they have enough to give to their children before death? How do they know when they are only in the 60s and 70s and in "early" retirement to know they have enough? I ponder this because I'd like to think that maybe we'll save enough to help our kids.

It's a stretch goal that we are able to pay 100% for 4 years of college, some money for a wedding/house down payment, and a car out of college. In that order I'd like to gift our kids with a leg up. I've really thought about it but we'll be in our early 50s and potentially retiring when they go off and finish college. But how will I know that I have enough? How will I be able to part with so much cash so early in our "retirement" position? Of course if DH chooses to work past 50 then I'm assuming we have a large cash flow.

But how secure do I have to be? Do I think maybe whatever our parents leave behind will be used to be passed on? I think maybe we'll get something but I could be entirely wrong. Our parents have paid for homes and pensions. But I'm not sure much cash on hand, which is understandable why gifting us with anything is pretty much nil.

But how do we get there? How do you know? Have you been gifted a substantial amount of cash from your parents or grandparents? Was it before death? If so why before? How did they know they had enough? If you got it upon death did you expect it? Was it more or less than you expected?

lawyers can earn a lot

July 24th, 2016 at 12:05 am

Wow I was reading a blog about someone's journey to biglaw and I had no idea that lawyers make so much money. I mean I knew they did I just didn't have a clue it was a public payscale.

1st year (class of 2015) – $180,000 ($160,000 + $20,000)
2nd year (class of 2014) – $190,000 ($170,000 + $20,000)
3rd year (class of 2013) – $210,000 ($185,000 +$25,000)
4th year (class of 2012) – $235,000 ($210,000 +$25,000)
5th year (class of 2011) – $260,000 ($230,000 + $30,000)
6th year (class of 2010) – $280,000 ($250,000 + $30,000)
7th year (class of 2009) – $300,000 ($265,000 + $35,000)
8th year (class of 2008) – $315,000 ($280,000 + $35,000)

8 years after you graduate you are making $300k. If you started at 25 making $180k and then by age 33 you are making over $300k. Seems crazy like a lot of money. No wonder so many friends I knew said lawyers make a lot.

Had you any clue they made this much? I know this is for biglaw and smaller firms pay less. But from reading the blog they don't make that much less necessarily.

I wouldn't do it unless I like it. But it certainly is food for thought about telling my kids if they want to go into law, they could easily be like Mr Money Mustache and retire very, very early.

thoughts on FIRE?

May 1st, 2016 at 04:36 am

I've always been ambivalent about financial independence and early retirement or FIRE. I am so impressed by those who do it Mr Money Mustache and quit a few other blogs like the frugalwood, Dr Doom, root of good, etc. Now the only one who really retired was Dr. Doom. Frugalwoods, root of good, and even Mr M stayed at home with small children and a spouse that worked. By that logic I'm RE. But I don't see it that way. Mr M now has the the benefit of a multi million dollar blog, but the others aren't there yet.

I guess that's the million dollar question. I've also read a blog about a young 30 year old couple who did choose to FIRE on $1M literally and that's it. I guess I'm unsure since retirement will last say 50 years you can't draw 4%/year. And honestly I worry about the cost of healthcare as we age.

For those couples who still have one spouse working it's fine. You get employer provided health insurance. But for those who really pull the trigger, after our "sabbatical" year I have to say that health insurance makes both people in a couple with kids especially dicey to retire early and not worry about it.

Who knows if Obamacare will ever be repealed. If so will those on it with pre-existing conditions be relegated to "ghetto" pools? Paul Ryan mentioned how much cheaper it would be to repeal Obamacare and toss everyone who is expensive into one pool. But what happens to those people? We know many people don't want to subsidize them but that's how forcing insurers to not exclude them makes Obamacare work. I'm not sure what the answer is. I guarantee and so has every economist said that an open market health policy that allows insurers to not provide insurance to those most at risk mean more people would go without.

So how can one FIRE as a couple in the US without substantial assets? I fully support the idea of living frugally. I also support the idea of financial independence. But I am not sure how to fully determine financial independence? Also how will we know if the retire early part of the equation is successful? That FIRE on $20k/year or $12k/year for a family of four will work in 20 years?

Is the only answer to wait and see? What happens if in your 50s after 20 years of retirement big expenses and medical bills crop up? Do you go back to work then? What happens if you don't have a cushion for your living expenses?

I like SA because people here seem to have a balance of saving and spending. I've realized I can't FIRE like others who are mustachian. I don't want to live on $12k or $20k/year. I guess there is a lot of truth that while we try to live frugally we still have a lot of excessive spending. And without inherently changing our "wants" LAL and Mr LAL won't be retiring without a lot more in the bank.

Do you picture yourself retiring on $12k or $20k/year? Could you? Would you? Have you?

Even when you have enough

April 4th, 2016 at 06:45 pm

I don't know how to relieve my mom's anxiety. I know my in-laws are just as anxious and crazy but I let my DH deal with them. BOTH sets of parents are very financially well off. Both mom's are retired with pensions that pay at least 70% of their incomes. Both sets of dad's are working for no reason other than to not die.

Unfortunately both mom's have WAY to much time on their hands worrying about money. They both retired around age 55. My mom retired at 55 because it didn't make sense to keep working and my MIL because she took "disability" with the same condition DH has.

My mom had a state pension worth 2% per year of service, plus free medical premiums for her and my Dad for life which becomes secondary after she hits medicare age. Also their medicare premiums paid for by the state (thank you hawaii) after age 65. So my parents are basically living without a single worry with regards to medical. My in-laws live in Canada and also get an old age fund and they also have free medical for life. They are not suffering and my MIL had also a pension from the university for 2% of years of service. The most horrible thing they face? My FIL complained about being forced to start drawing on his RRSP (retired registered savings plan) by age 71 and he's 65 and hasn't touched a penny that he's saved since 25 for 40 years (my MIL in the same boat). They are "worried" about paying so much in taxes because they need to "spend" down the money. OMG!

Anyway my mom is already having a breakdown over her condo flooding from a neighbor and needing repairs when she gets upset at me for pointing out that insurance will cover it. The insurance is asking her to pay out of pocket and she'll be reimbursed. They are working on a settlement currently and my mom isn't used to doing any home repairs.

Long story my parents never repair homes they basically live in it and consider it disposable (it's a cultural thing trust me sounds nuts but it's true). They finally repaired the roof after it had been leaking for year and my DK1 said "Oh water is everywhere. We need more buckets." It wasn't lack of money but rather my parents just literally have no idea how to even hire people to do home repair. It took my mom 2 years to sell an empty house because she tried to "fix" it up and get just the blinds replaced, carpet replaced and then home cleaned to sell. So put into perspective my parents have lived in the house 25 years and are finally painting it, but the ceiling in two of the bathrooms fell down. And the "painting" of the house has been going on since AUGUST 2015 when we last visited. Because the painter can only paint and repair walls if my mom packs and cleans the house.

Anyway my mom was screaming at me over the phone for not understanding her stress over money. When I pointed out that she makes as much money now as she did working she said that's not the point. The point is that she's having to tap into her retirement funds. She's on a fixed income!!!! I pointed out that retirees who struggle are people who live on only SS! Yes they have a fixed income but it's not the same fixed income as when they were working!!!

She doesn't get it. That retirement money needs to be spent in retirement. That yes you can touch all that money you SAVED for 40 years. We got into it again because my mom yelled about not saving into her Roth IRA yet for 2016. My parents are 85 and 64 and "retired" but my dad works part time at 85 and they are SAVING $13k into a Roth IRA. My mom is still trying to save on her pension. I said why are you saving in a Roth IRA when you are retired? It's for people to use to save for RETIREMENT?

I can't take the ulcer of both sets of parents not spending their money. I want to shake them both. My in-laws are complaining when I said "just blow it on buying the retirement house you want and sell the two story homes you say is difficult to clean." I hear only FEAR.

My mom's answer is "the Roth IRA is for you and the kids." I write this as I slam my head on the table. My MIL says "oh but that retirement money is for when we're really old." I say "aren't you old enough now that you are retired?" MIL "well not really I mean like maybe 90 or 100,".

I don't think either parents wish to spend what they saved for 40 years. What the hell are they doing?????

We don't need it. We don't want it. We're fine. I can't even tell them how fine we are because we have NO job right now. So they are already anxious enough without us telling them we're fine.

I am going to inherit a ton of money. My DH will likely inherit a ton of money. We have a ton of money for retirement saved. But seriously when will either of our parents think enough is enough?

I don't know how to not end up like them. I have a feeling we already are. I think my DH and I will be FI in 5 years or less. In some ways we already are. But my DH has already shown he is interested in providing everything for the kids and has stated he's not retiring for a long time Financially Independent or not. I nudged him a little recently and he said "the kids need college, wedding, maybe grad school, and it'd be nice to give them maybe even a house DP, and we're going to afford it." So he's got this purpose of working because while we might not need it he's got it in his head we're going to give the kids everything.

I don't know how to people who were "born" savers and raised "savers" can even retire because they have enough?

why 401ks fail

March 31st, 2016 at 05:35 am

Seriously I wrote a long piece that got lost about why 401ks fail. They fail because people don't save in them. Think I'm joking? I think right now people are talking about how difficult retirement is. But the reality of the lack of pensions hasn't even started to hit. When? I think when the first of Generation X starts to retire we'll see truly what the 401k is worth. I think the majority of Baby Boomers still had pension. I don't think that's the case for Generation X (I'm one) and very few of my friends have pensions.

So the other day at lunch with my DK2 preschool friends and their moms the talk turned to retirement savings. A few women asked about talking to a financial advisor. They were wondering about retirement savings. These women were asking about Roth IRAs and investing 401k. I guess its good they were asking. But seriously?

They went and bought expensive homes and cars (denali, audi, benz, infiniti) but are now asking about retirement? I think we're in big trouble if people who supposedly are "educated" have no idea about retirement savings. I wanted to hit my hit head on the table because more than a few said "oh I leave it to my husband." Um okay, chances are hubby is as clueless as the wife. I don't think people who have no idea how to save or invest probably haven't been doing it.

And no I did not open my mouth, I couldn't. What could I say? That you should have thought about trying to save for retirement before you bought a house so it could fit in the budget? That it should work out before and not after when you put it so low on the priority list that many are in their 30s!!! without any or minimal. I haven't meet anyone I would guess has 6 figures in retirement and they've had pretty good incomes for a long time.

But seriously have you ever spoken up in a conversation when people begin talking about retirement and saving? I find that now that DH and I aren't working I shut my mouth even more. I've never been asked "how are you affording to live?" Only two people we've meet has asked me did you inherit a lot of money or the lotto? Nope. But no one has ever assumed or asked if I were mustachian and did we save a lot? Do we live frugally?

I think soon enough the real problem of 401ks and people not saving retirement will become apparent when the majority of retirees lack a pension. I don't think it's occured yet because many boomers have pensions, but it will.

Have you ever told anyone you were on a budget? Or how to save for retirement?

hardest part of "early retirement"

March 21st, 2016 at 04:01 am

I think of this year as more of a sabbatical for us than early retirement. We certainly don't have enough to retire now based on where we want to live. We might if we moved somewhere else. We might if we were heavy into real estate investing. But honestly that was never the plan. The plan was always to move and change careers and have a fresh start. Early retirement is probably still in the cards, I'll know more in 12 more weeks, but the move did hurt us financially but at the same time I think it'll pay dividends in our lifestyle.

But the hardest part of the test? The health insurance. First time in our adult lives we've been on our own plan. We've always had employer provided coverage and it's been generous. We've always not worried about what was and wasn't covered. Perhaps it wasn't clear but we had a "general" idea and felt entitled to call and ask.

Now? Well now we buy our own insurance, for which I am eternally grateful that we can even buy it. If not for Obamacare my DH would be uninsured and my kids would have pre-exisiting conditions of asthma and allergies. I would likely be on the fence as to weather I'd be insurable and I'd have a maternity rider probably and be very expensive. As it is we are on a HDHP of $6500 per person and $13k per family deductible health insurance plan. This plan basically covers catastrophic incidents but everything else we self-insure. It still costs us $700/month just to cover ourselves. We don't have dental insurance or vision.

Fortunately for us we've been knock on wood extremely healthy so far during our tenure. My DK have seen the dr for a flu shot and annual exam. They've gone to the dentist once in November and we paid OOP for that and refused x-rays but it still cost us $200/per kid. And an office visit has been $150. We also had an ER visit for stitches (DK1 head hit a post and needed 4 stitches) but I'm unsure as of yet the cost, I assume $500, waiting for my bill in the mail.

I've been to the dentist for the cost of $300 for cleaning and x-rays they insisted. My DH got in under the gun in August and has decided he won't go until he gets a job since once a year according to his last dentist was more than enough. He's got perfect teeth with no cavities or problems. Both of us did annual exams over the summer before moving and now we're about to come due.

What I really need is more birth control. I hate the idea of paying and am considering actually planned parenthood. Truth is that I had filled all our prescriptions for multiple 3 month refills before we lost our prescription coverage for both birth control and asthma. If we had to cover it now the asthma inhalers it would be $200 a month. Fortunately before we lost prescription coverage it was $20/month.

So while our monthly spending is pretty curbed right now I think the biggest factor in "early retirement" is the difficulties not having health insurance as a group plan. Being covered by an employer makes the plans much more reasonable and better coverage than can be bought as an individual.

Right now it looks like DH will be done at the end of April. He'll take sometime to pick a job but will likely start we're thinking July 2016. Basically we'll have gone a 10 months without employer provided health insurance or a paycheck. This experience has definitely made it eye opening how much money we'd need to retire early. Of course the plan was always to be Financial Independent by age 50 and retire by 55. Now I'm not so sure if we would want to do that. I'm worried that at 55 we might have enough to "retire" but what happens if we're back on this crappy health insurance? And worried about more prescriptions or ailments that come with age?

This experience has definitely brought to the forefront the idea that its not easy to retire early. Mr Money Mustaches buys his own health insurance now for $237/month for a family of 3. I can't speak for why it's so cheap but I will say that we're a healthy family of four and it's costing us $700/month for a plan that has higher deductible levels. So there is a lot of variance in "needs" when budgeting for early retirement. Plus his annual medical spending appears to be much lower than ours.

Timing the market

January 29th, 2016 at 09:55 pm

Last post I said avoidance is what I am practicing. I'm going to avoid looking at our investments for the year or until I need to. Everything is just being left alone.

But I've realized my DH and I time the market not deliberately but accidentally. We sold in 2005 at the peak in southern California and bought at the peak but it worked out. Southern California still hasn't recovered but where we were did go up. Now I think like the last bubble you won't be able to tell until you are able to look back at the market. Did we sell at a high point in the market at 2015? Who knows.

I do know the stock market did go down. I know we didn't invest any home equity because we might need it. So some timing is happening to us but it's not on our decision but rather circumstances. Twice we've not wanted to be loud distance landlords.

But this stock market downturn did cement the idea that you don't invest money you can't afford to lose or ride out staying invested. We used to invest most of our emergency fund and have only 2-3 months of cash. But before we moved we cashed in about 18 months cash and home equity. We decided the risk wasn't worth it. Turns out that was a good assumption

What do you think about the housing market? And the stick market?

avoidance...your best friend

January 29th, 2016 at 05:44 am

Okay so I've been avoiding until today looking at our retirement and investment accounts. It's not pretty.

So our cash is down $30k but that was planned expenses for the past 5 months. We moved and budgeted around $5k/month with some unexpected expenses and moving costs covered. Very planned.

What was unplanned. Tanking of the market. Our retirement savings in June 2015 hit a peak of $575k. We are currently with our contributions ending in August (we maxed out the 401k) as of today at a balance of $496k. Now in October 30th, 2015 when I checked we were down from $575k to $562k. So we had a small hit. But in 3 months we've lost about $70k in our retirement accounts and that's without me moving a penny. I left everything as is and avoided looking at it until today.

I swallowed really hard right now writing this but I am staying the course. I have a diverse asset allocation of stocks all in retirement and our taxable account right now we had it mostly in cash/cd/bonds and it's around $10k down from October. With our cash heavy position from home equity and cash for living expenses we decided to leave our retirement alone.

I'm a little sickened but I'm staying strong and I'm going to ignore it. We weather 2007-2010 and I know there were years we were losing money after contributions and company matches but by contributing and not changing our allocation (cheap low cost funds) it turned out and began to pay big dividends.

I guess the only thing left to do is avoidance. Avoid watching and worrying and realize we aren't touching this money for another 20 years. We'll survive this and start pulling in big gains soon enough. Ugh.

How are you doing?

Do kids understand money?

December 4th, 2015 at 11:53 pm

Reading a post about net worth on the forums made me think about time versus money. What my DH and I are doing right now is probably costing us a lot of money. How much? Well at least $45k in salary this year and another $100k next year. Then add in the fact we're going to likely burn through $75k in expenses from not working for 10 months plus tuition for DH's program. And we're out $220k without counting the lost opportunity cost of us not saving some and investing it.

Our kids are 5 and 3. So right now my DH is getting the opportunity to enjoy them in a way many parents can't. I'm fortunate to have enjoyed them immensely until now. He's getting to experience volunteering in class, doing field trips, etc.

I'm not sure our kids understand the sacrifice we are making right now. Or that our lifestyle changed moving cross country. We've actually mentioned to our older DK1 that we no longer have an income. That we are watching our pennies and we can't buy everything under the sun.

But the truth is that we lived very much like we did before. The only change is that we didn't shop as many sales/coupons for groceries. We ate out maybe 2x/week instead of 1x/week. We ate at more expensive places instead of places with deals. But otherwise we never shopped a lot, still give the girls extracurriculars, still go out and do experiences we did before like the zoo/aquarium/etc. We've curbed our weekend roadtrips, if we were working we'd likely have gone on 1-2 weekend trip.

But I honestly don't think our kids think our life is any different. They do understand we have a much nicer, bigger SFH with a garage that is warmer. But that's due to the fact we just moved somewhere cheaper that we could afford a home. Even if we were working we'd still have rented the same place.

I wonder if our kids will understand the huge financial risk we took when they were young? Or understand ever the financial repercussions we've done by quitting and moving? I don't know, but I hope they think we did something amazing to change our lives.

But I do know my Dk1 understands those less fortunate. And we are continuing to volunteer at shelters helping to host birthday parties for children who don't have homes. She understand that there are so many others who have so much less. And at this time of year we should be grateful for having so much.

I'm still excited for the season and while there isn't a shelter party we're going to help make goody bags instead this month. I hope that when they look back on holidays they remember these sort of things. I always remember and give my children money for the red salvation army buckets because more than once my grandfather told me he and his family were on the receiving end of the Thanksgiving and Christmas food baskets. He always gave me money to put in as does my mom till this day. If not for their generosity I don't know where I'd be.

why the 12% Return on Investment is high

November 6th, 2015 at 06:36 pm

I posted about Couple A and Couple B choosing to invest their money differently. Couple A chose to pay off the home, Couple B chose to invest in a 401k. By assuming a rate of return on investment of 6%, the difference after 30 years was $691,281.00.

Not extravagant but is a pretty penny. But making a different assumption and follow Dave Ramsey and using a 12% ROI well you get a very different scenario.

Couple A - saving $15k/year for 30 years, then saving and extra $18k/year for 15 more years
6% ROI 12% ROI
15 years retirement $358,462.00 $589,327.00
20 years retirement $566,801.00 $1,139,029.00
5 years taxable $107,773.00 $124,611.00
25 years retirement $845,365.00 $2,107,775.00
10 years taxable $251,998.00 $344,216.00
30 years retirement $1,218,146.00 $3,815,046.00
15 years taxable $445,002.00 $731,236.00

Total Savings $1,663,148.00 $4,546,282.00

So using the 12% ROI couple A would have about 3x the savings after 30 years and the number honestly seems really high.

Couple B saving $29k/year for 30 years with a 6% and 12% ROI
6% ROI 12% ROI
15 years retirement $693,181.00 $1,206,991.00
20 years retirement $1,095,510.00 $2,390,051.00
25 years retirement $1,633,918.00 $4,073,891.00
30 years retirement $2,354,429.00 $7,373,694.00

Couple B also has around 3x as much savings after 30 years. And a ridiculous amount. But then maybe I'm too pessimistic and after 30 years of saving my DH and I should have $7.3M at around age 55. I find that incredible to believe however. That we are going to be that rich. I personally think our number might be closer to $2.3M hence why I use 6% ROI.

What do most people project?

Pay down mortgage or invest?

November 6th, 2015 at 06:26 pm

Does it makes sense to pay down your mortgage or invest? For the most part it depends. Depends on your risk tolerance. Depends on your age. Depends on if you bought too much house. But honestly the numbers support investing first, especially in tax deferred (401k) or tax free (Roth IRA) accounts before you pay a penny in overage to your mortgage. The big reason being you can't go back and put the money from your mortgage being paid off into past years contributions.

What do the numbers say? I use round numbers because it's easier. Assume a couple with a stay at home mom, 2 kids, and an income of $100k and are 35 years old. Assuming Couple A contributes 15% to their retirement and the rest of their money to their mortgage. Couple B maximizes the retirement savings to 401k+Roth IRA and nothing to their home. They have a mortgage for $300k on a home worth $360k.

What ends up happening?

Couple A
$15k retirement/year, pays home in 15 years because they have an extra $10,500/year for mortgage paydown. They then divert $1551/month into retirement/taxable savings for the next 5, 10, 15 years.

Couple B
Saves $29k/year and pays less in federal income taxes. But they don't pay down the mortgage because all their extra money goes to retirements savings.

Couple A - using a 6% Return on Investment (ROI)
15 years retirement $358,462.00
20 years retirement $566,801.00
5 years tax/retirement $107,773.00
25 years retirement $845,365.00
10 years tax/retirement $251,998.00
30 years retirement $1,218,146.00
15 years tax/retirement $445,002.00
Total savings = $1,663,148.00, No Debt

Couple B - using 6% ROI as well
15 years retirement $693,181.00
20 years retirement $1,095,510.00
25 years retirement $1,633,918.00
30 years retirement $2,354,429.00, No Debt

Couple B has $691,281.00 more than Couple A after 30 years and a paid for home as well.

Couple B has been paying less federal taxes because they are using the 401k to lower their taxes. Because of this they actually after getting close a 40% bonus savings rate. How? Well they are saving $29k/year versus $15k/year for Couple A, but Couple A overall only had $10,500 extra to direct to the mortgage for extra savings. So almost a 40% bonus just from less taxable income.

But after 15 years Couple A is debt free. True, but Couple B likely are decent savers having put savings on auto-pilot. And whose to say either couple won't cash out their homes and downsize? In which case Couple B could in theory be debt free as well. But likely not.

Why you should save for retirement now...

October 30th, 2015 at 04:29 pm

I have a lot of friends who are putting off saving for retirement. Many put off retirement savings for a house. They are busy trying to squirrel away money for their first home. Then suddenly they get into the home and it's MUCH more expensive than they expected. They weren't used to saving for retirement. Then suddenly they are 30 or 32 and haven't saved a penny for retirement. Or they are saving for retirement but they want to focus on paying off the mortgage in 15 years. Or start saving for college.

Here's what happened for us. We started in our 20s. As soon as DH got a real job it was #1 priority. We determined before we bought a house that retirement savings maximum was a line item before we determined what we could afford. It just was something that we deemed necessary since we at the time only had $4k saved for me. DH didn't have any accounts being a foreigner and honestly until then I only had a Roth IRA but we were busy paying off car loans, student loans, and living as graduate students on income very close to the poverty line. So saving for retirement was a pipe dream for us. Something we knew we had to do and we felt we had to catch up.

Well we started saving and all money went to saving for retirement, building an EF, more student loans for an MBA, and the house just took a backseat. We made our payments and lived.

When we turned around we had saved over $550k for retirement in 10 years. Using a retirement calculator if we don't contribute a penny more and retire at 55, using a 7% return we'd have $1.8M for retirement. This nest egg will last us at a rate of $80k/year until age 82 not including a penny of Social Security. We currently spend including our rent $65k/year. This means our nest egg will last until 89 without social security and assuming we are still paying $2400/month in rent/mortgage. Our expenses are a lot lower if we are done with a house payment by 55 (not unreasonable). Right now we could easily live on $40k without a rent or mortgage and we've got enough cash to buy our current house without a mortgage. So our nest egg $550k would be $2.8M when we die if we lived off of $40k now and never saved another penny or used social security. Assuming we worked until 60 we'd start off with a nest egg of $2.6M and we'd die leaving behind $1.0M for our heirs.

So by saving from 26 to 36 we basically funded our retirement. If we choose not to save another penny I think with something from social security and a paid for home we'd have enough to retire early at 55 with and income more than we live on now. If we waited until 60 it'd be ridiculous.

So don't put saving for retirement on hold. I know how easy it is to justify that you have other savings like a home, car, etc. I think it's something you just have to get used and do it. Every penny we save now I know will be worth less than we had saved it 10 years ago. But doing this calculation, my plan is that we will continue saving the maximum 401k, Roth IRAs until we retire. And the goal is 100% income replacement and being financially independent by age 50. This is a stretch goal i think 55 is realistic.

Not working and how it's going

September 19th, 2015 at 04:06 am

It's interesting living a lifestyle eschewed by Mr Money Mustache. We're not "retired" but taking a break from working. We don't have enough to retire fully and live the lifestyle we want. We probably are close especially if we moved further out from where we are and lived very frugally. But the truth is my DH isn't willing to compromise and wants to work so we will continue on the hamster wheel. We just took a short break from "work" in the traditional sense.

It's been a month but a busy month for my DH and I. Since we moved cross country most of the month was spent unpacking, organizing, and just getting settled. For the most part we are close to being done and really getting settled into a routine.

I've noticed a couple of things. We curbed the eating out which is good since it's pricey. I miss it a little but we're trying to limit it to 1-2x a week. So far it's been 1x a week. Our cooking is getting back to where it used to be pre-kids. We have more time to put effort. Also we grocery shop more and look for sales and shop the circular because we're on a tighter budget. This month so far our grocery budget has been an excessive $700 but a lot of it has to do with buying stuff like spices, condiments, flour, sugar, canola oil, olive oil, etc. Things you need to start up your kitchen. Basic goods that all add up. It really was the first 2 weeks of moving in when we bought a ton of extra groceries and we don't have a stockpile either yet going. However we're also running lean and sort of buying enough for a week worth of cooking.

However we fill gas a lot less. So far this month we've spent $77 and haven't filled since the beginning of the month. We don't have cable just internet. The deal happened to be $50/month for 100 mbps and adding cable was an extra $20. Where we were cable was an extra $5/month because the "bundle" of local channels plus hbo was $84 versus $79 for just internet.

This lifestyle is pretty relaxing. I'm not sure if either of us could last long term but knowing we have 4 months of DH not "working" I think will go by quick. He went to a info session of his bootcamp and was told he has to get up to speed on Linear Algebra and Multivariable Calculus. So he's taking online classes to make sure he can ace it. So these 4 months should go by fast. He was also reassured that they had a 100% placement rate after the camp.

Guess it'll be interesting watching our savings dwindle and seeing what happens. We're starting off with $80k cash, $100k invested, and $350k for a house DP. I hope we don't tap any more than the $80k or at least that's our goal.

Staying the retirement course

May 21st, 2015 at 06:36 pm

This is the third time I am trying to do this post. I keep losing it. Retirement savings isn't about amounts, but it helps to save more. What does help is staying the course. CCF mentioned savings, we've had a few good years but staying the course helped the most. This is our retirements savings 12/31/....

2005 - $6457 - only my IRA since DH wasn't eligible until now

2006 - $34,782 - $8k IRA, $15k 401k, $2947 401k match = $2378

2007 - $67,785 - $8k IRA, $15.5k 401k, $6079 401k match = $3424

2008 - $74,245 - $10k IRA, $15.5k 401k, $6172 401k match = -$25,212 (big loss)

2009 - $117,055 - $10k IRA, $16.5k 401k, $6951 401k match = $9359

2010 - $196,368 - $10k IRA, $16.5k 401k, $7438 401k match = $45375

2011 - $232,524 - $10k IRA, $16.5k 401k, $7385 401k match = $2271

2012 - $302,841 - $10k ira, $17k 401k, $8318 401k match = $35,009

2013 - $443,762 - $11k IRA, $17.5k 401k, $8099 401 match = $104,322 (best year ever)

2014 -$514,544 - $11k IRA, $17.5k 401k, $8967 401k match = $33315

2015 - YTD $577,571

Our contributions have been $94,493 IRA and $147,500 401k = $241,993/514544 = 41.89% contributed. The matches have contributed $62356/514,544 = 12% of retirement. So our "contributions" in all have been $304,349/514,544 = 59.15% and we've "gained" about 40% of our money from returns. I think that number will start to skew soon towards returns. Also the match is the only thing that kept us positive for MANY years. Even without it though we would have kept on investing aggressively and I think having the first few years our money go down made us able to buy more.

I suspect that having the market tank when we started investing was better for us. Now if we can "retire" and pull out when the market is going up and hitting a peak we'd probably have "Ideally timed" the market.

There has been a few good years but in the beginning honestly it was pretty flat. My contributions and that was it. I would say it would have been easy to stop contributing and say what a waste. But staying the course was harder and more worth it.


And MM - If we contribute nothing for another 15 years and "retire" at 50 with an average of 6% returns we'd have $1.4M. With our current investment amounts we'll have $2.2M. I think we should be set to not save more, but we probably will.

2014 a review and 2015 Ideas

January 15th, 2015 at 06:31 pm

I probably should write goals but what I think we need to do are not really goals but ideas I'd like to see through. It's been a very interesting 9 years living where we live. Like Monkey Mama we've changed a lot. How much?

Net Worth
12/31/2005 $131,762.00
1/1/2014 $878,472.00
1/1/2015 $1,073,474.80

So in the 9 years we've lived where we are we increased our net worth 8 fold. This past year has been particularly good to us as we increased our net worth by 22% or $195k. It was a combination of decreasing our debt by $30k and I valued our house $50k more. We wiped clean the last of our student loans, we had around $8k hanging around at 2%, and $8k 0% CC debt. We also paid off one of our cars and the second car will be done in July.

Account 1/1/2014 1/1/2015
LAL IRA $62,327.00 $77,254.24
DH IRA $132,924.00 $148,527.37
DH 401k $244,399.00 $287,059.53

Fid Tax 1 $86,847.00 $85,389.30
Online Check $1,000.00 $8,642.11
Online Savings $42,510.00 $55,542.43
Fid Tax 2 $54,000.00 $50,959.49
SB 1 $10,788.00 $34,493.33
College 1 $11,239.00 $12,251.00
College 2 $6,369.00 $6,831.00
House $650,000.00 $700,000.00
Subtotal Assets $1,302,403.00 $1,466,949.80

Debts
Car 1 $7,900.00 $3,045.00
Car 2 $3,900.00 $0.00
Sallie Mae $8,000.00 $0.00
CC #1 0% $4,000.00 $1,867.00
CC#2 0% $4,000.00 $0.00
Mortgage $396,131.00 $388,563.00
Subtotal Debts $423,931.00 $393,475.00

Net Worth $878,472.00 $1,073,474.80

So we got close to my last year "goals" of increase NW by $200k, break $1M net worth, and break $500k retirement. But where does that put us?

Well my DH just came back from a job interview out on the west coast. We'll hear back in a month but they contacted him and said he hadn't filled out a formal application just resume and cover letter. So he's guessing they are going to do the background check, credit check, etc and are interested. He also has a second interview to be scheduled on the west coast.

We are still wavering on whether to move this year without a job or wait until 2016. If we wait until summer 2016 we'll have 18 more months of job hunting and potentially a lot more money saved.

As it stands we have I would guess about 1 year in cash living expenses at our current budget and no income. After the sale of the house we stand at closer to 8 years without income, not touching our retirement.

I guess our goal is to continue saving and break $200k net worth increase this year and see if we can't make a big push in saving cash since we don't have to pay down $30k in debt.

I'll write more as the story about jobs unfolds.

So much to be thankful for and yet...I worry

December 7th, 2014 at 01:32 pm

So much has happened since my last post. It was right before Thanksgiving and I was thankful for my family and I still am.

So my DH has three job interviews in California. Two are phone interviews this week but one he's passed on the phone and is flying out in January after the holidays. I am super excited and thrilled. I am however nervous and worried about San Francisco cost of living. But my DH says we'll deal with it when it comes. But honestly this might be it. I've had many highs and many lows, but I think this might be the break we need to move.

Now the low. I knew this day was coming but I didn't know it would happen so soon. My DH told me that he probably has to give up his driver's license and will be declared legally blind. He did not pass his field of vision test at the optometrist and will see his specialist in April though he is trying to move that up ASAP. He wants to know for sure what we are dealing with. His visual acuity is still 20/20 and he still has his vision during the day. And as long as I've know him nearly 15 years his night vision has been poor. But I suppose we both thought he'd be driving until his 50s. His mom has retinitis pigmentosa and still drives at 60. But he won't. I'm worried he'll lose all vision and not see our grandchildren one day.

Talks of having a third child are hard. He's feeling unsure because of this. When we had our first 5 years ago I guess he didn't care because he seemed fine. Now he's worried about the kids.

What does this means? We're not sure. But it means that moving closer to family would probably be helpful. It means that if we were to stay where we are it would also be helpful to move where commuting by public transit is easier for my DH. Where we are is great, but it could be better. It means we will likely be a 1 car family soon. It also means that my DH would prefer to move somewhere that there is more daylight, public transit, and less winter. I don't know what it means working wise. He'll still be able to work for a long time, his mother did. But we'll pay a premium to live very close to his workplace.

Previously I had discussed my DH desire to switch careers. Now more than ever he wishes to get a job working from home. I am unsure what to do about my job. I've always planned to go back part-time, but perhaps full time is better? Can I manage a third child?

Retirement obviously we talked a bit more. My DH does want to us to be Financially Independent sooner rather than later. This is imperative. Of course he will qualify if and when for SS disability. That affects our ability to FIRE. I'm not sure how but I think this means we probably could FIRE now if we wanted to. Majority of our bills would be covered. It's something we have to discuss.

Nest Egg

November 16th, 2014 at 04:27 am

I've been contemplating what our number "nest egg" is. People always say 25x expenses or 4% withdrawal rate. Maybe 33x expenses or 3% withdrawal rate for early retirees.

So assuming we need $40k/year to live on, a little more than we do now, we need $1M or $1.3M to retire. I go back and forth on whether we should count SS as part of the $40k, especially if we retire early. Or should we just assume we'll have to provide all of that income in retirement.

Another assumption for us is that $40k is a paid for home. Right now that seems so out of reach, but if we moved we could very well have a paid for home.

So I guess the question is when can we retire? My gut says 10 years at 45. Why? Because I think our house will have appreciated enough and we can sell it for a lot more, while paying down principal. And we'll have had 10 years of saving and investing which might bring us to surpassing our nest egg number of $1.3M. Currently we are at about half that number but the next half should go faster since our investments will start to generate more savings and our income should increase to allow us to save more while we curb our spending.

What was your nest egg number?

In an aside it's day 11 of my detox/cleanse and it's been both easy and hard. Hard not eating out and preparing exact meals. Easy in that meal planning is done for me and the food is quite filling considering it's fruit and veggies mostly. I guess I'm done 7 lbs.

It's been awhile

September 19th, 2014 at 12:55 pm

It's been awhile since I posted and I really need to write a bit more. Right now we are wrestling with whether to do a Roth 401k. It would mean we can save tax free but there is a 34% hit on savings. We'd have to save an extra $6k/year not a big deal, but I am more looking at the tax implications.

What if we withdraw it and it's lower? Should we have taken the tax break now? What if brackets go up? Obviously the tax brackets will get larger, but our deductions will go down as we age and the money will grow tax free. That means if we let it grow 15 years it'll double 2x by the rule of 7. So potentially we'll have another $750k saved or more. This is counting doubling of savings and assuming we are done working in 15 more years or by 50.

I'm leaning towards the Roth 401k for a couple of reasons. At most my DH has 2 years working for this company and where he moves to we may not have it offered. I don't know what the future hold but I suspect we might make more in the future since we are on one income.

Anyway though on a positive note our retirement accounts are at $515k so we reached our goal of the year to break $500k. Our taxable accounts have broken $220k and increased $25k/year and we've paid off $20k in debt. We paid off $4k car and $3k on the other (only $4800 left) we had the interest rate of 1.9% but decided we were tired of seeing the payments. We also paid off a CC we put my dental work on that was 0% $4k and still am paying on the lasik also at 0%. Both were on 24 months interest free but again I got tired of payments. Finally we paid off the last tiny bit of my super cheap 0.9% student loans $8k that I left hanging around.

Life is pretty good.

getting on the same page

August 1st, 2014 at 02:35 am

I don't know if my DH are on the same page for "early" retirement. We certainly are more in line with spending, budgets, lifestyle. Although we aren't 100% in lock step but what couple is? I'd say he's naturally very frugal (bordering on cheap) but I'm not a naturally spend person period.

Example I got my Dyson he still thinks it's nuts to buy a vacuum cleaner for $300 versus he thought my budget would be $150. Now does the vacuum make my life easier? yes! My house does feel cleaner. So I say it's worth it.

Anyway my DH recently had me borrow book on tape "four hour work week." I was surprised. When I've brought up living frugally, moving somewhere cheaper, buying a house cash he's freaked out. The idea of retiring with sooner because we live simpler I think he's coming around. My DH was mustachian before it became a "word".

But reading Mr Money Mustache retired with $800k in 2006 with one kid, meant the reality set in. I think he's thinking about it, wondering if we could do it. Expenses without our mortgage is very much "mustachian". So where do we need to be in five years? What if we could move buy a home cash with our equity and then live on what we've saved? We'd right now be close to Mr MM. But a few extra years with our extra kid or two?

I hope this is a turning point where my DH starts to believe we can do this. That don't need to work forever. It also helps I recently made a friend whose a single mother, who retired from private equity and supports herself royally. And she herself has said by living "simply" ie $100k/year she can still manage by watching her spending. She eats out, pays for preschool, etc. Life is about choices.

My mom laughed at me

July 14th, 2014 at 01:39 am

My mom laughed at me. Yep that's right I said to my mom we plan on "retiring" at 55 or at least being financially independent. She laughed and said no way is that possible. She said that people can't accomplish that anymore. Even with pensions mostly for government or public workers they have handcuffed many to retiring at 62 or 65. How did I expect to retire at 55?

My response? By saving money. She said what about medical? What about college? What about having enough? You can't save enough to retire, you have to wait until medicare and social security.

And yet my mom retired at 55. But she herself will tell you it's because she worked for the state during the golden ages. She retired with 70% of her salary, free medical for her and my dad for life, reimbursement of their medicare premiums (she's not old enough yet), pension is COLA, and two paid for homes. She also had $70k in a Roth IRA and $220k in a 457b. She didn't really save until in her 40s/50s and even then she invested in a money market in her 457.

She mostly knows other state workers and most can't retire until SS kicks in because they can't live on what they make. They weren't in the old generous plan of 2%/per years of service, while she contributed only 7.5% during her working years. She out spent her pension contributions within 5 years (I calculated for her that she'd use up her "contributions" within 5 years) and is now living off the state the rest of her life. They offered her a cash out of her contributions like $200k and a lower monthly payment. She took the maximum monthly payment instead.

That should be another 30 years (i'm not kidding my grandma is still alive and well at 86 and my great grandmother was 101 and her dads side we'll lets just say her aunts are in their 90s). My grandfather only passed at 77 because he was a 1-2 pack a day smoker who died of COPD. Otherwise both sides average age is 90+. As for me? Should be the same with genetics.

So to my mom she's confounded how anyone can retire without a pension. Her sisters who don't have pensions have always talked about retiring when they die. Everyone she's worked with has only retired at 62 or later with the pension and medical. EVERYONE always talks about how lucky she was to be on the "old" program and retire at 55.

So she truthfully said "how do people retire without a pension?" It was dumbfounding that people could actually save money themselves. That being completely self-reliant and having the expectation you'd do it without a pension seemed insane.

But more than money, my mom asked me what we would do? That my dad is still working at 83. That she would still be working if not for an eye problem (macular hole). And still desires to go back to work. Actually my parents have enough money to have retired years ago but believe it virtuous to work. That without work life would be pointless.

I don't know how to answer that. I don't know how I come from such hard working stock and don't desire to work as long as possible. Or to not worry about long term care? I don't have an answer.

Do you think you'll retire before 65? When? What are you planning on doing?

Making Choices

July 7th, 2014 at 12:59 pm

We visited with some friends this weekend at their new house! Huge, perfect, lovely. They got the lifestyle they wanted! It's 2400 sq ft house with 4/2.5 ba, attached 2 car garage, and unfinished basement, all for the rock bottom price of $650K! Amazing deal. So what's the catch?

Well they commute a solid hour without traffic and if they had to work rush hours it'd be closer to 1.5-2 hours. They live about 45 minutes from me without traffic. So it's not an easy commute and they admit that. But it's the lifestyle they wanted and they got the house they wanted at a price they could afford. We talked about it, they work close to where my DH works. And the truth is with 2 kids and a stepchild they make huge commuting sacrifices and even seeing her stepson less (he lives in the city with his mom and prefers to stay weekends to hang out with friends). But they now have a bedroom for each kid and space they didn't have before.

So my DH and I were in lust. Yeah as we looked at the brand new construction we sighed. Very cute. We agreed the sq ft and use of space was perfect. I'd change only a couple things, full bath on first floor instead of half bath, and open floor plan instead of dining room and nix the office. But size wise the house felt super large and there was tons of closet space and storage. Honestly it was more than adequate for us we both agreed.

So now I know that 2400 sq ft is more than we'd need, I suspected around 2000 depending on layout but most people I know with new construction have 4000+ sq ft, and yes it's over $1.7M. So I couldn't accurately gauge what a smaller new house would feel like.

I'm so happy my friend got the house of her dreams and the life she wants. She got everything she wanted and it is worth celebrating. I hope I get to that point as well where everything falls into place. They even managed to sell their other two homes without losing their shirts! CHEERING!!! They had been carrying one of them and shelling out $500/month because the rent didn't cover the mortgage and they were about $75k underwater. They did it! Consolidated and got something perfect they wanted. The success for them is great.

But life is about choices. And my friend said they consciously decided to live far from friends and work because they liked the quirky nature of the town they bought in, the house and lot was rural and private, and the lifestyle on the weekends of being in nature. No they are not retiring early or anytime even close to soon and this commute will be happening I would guess another 15 years. But if they decide it's too hard they can always change their minds. BUT they seems super happy with the house so I doubt it! I applaud their brave decision to go do something different.

I kind think that's the best case. If you want to change your life you do it. Life's about choices. And when it's not working you change it. And if it's still working you change it again. The only pitfall? You have to live with the choices you make.

The plan part IV

July 7th, 2014 at 12:38 am

Another reader pulled out the negative comments on the MMM post and many did say get on the same page. But at the same time more than few also said happiness needs to be felt by everyone.

So I decided to address a few things. I know that I will be happier living by family and friends. I know that I will be happier not sitting on a plane 12+ hours. I am not unhappy with the kids but I know I can be happier.

Second, the 3rd kid we are still wrestling with it. I showed him the post and he had to admit we can afford the third child and he needs to stop using finances as a defense. He isn't sure anymore. He was sure last year and I wasn't ready. He doesn't want another now, we've hit the sweet spot, and I am ready. It will be a conversation we keep having. We haven't done anything drastic so I figure we're in limbo. I don't know when we'll know if we are done, but that's something I can concede without feeling unhappy. IF he's really done then we're done. I've always said "a no outweighs the yes". But at the same time we haven't done the permanent change to prevent kids. So I think we're on the fence. Perhaps I'm wrong, but he's always agreed we'd do the snip when we were done. And we haven't done it or planned on it. I would really like a 3rd child but if he doesn't have it in him, it's okay. And perhaps he may change his mind in another 12 months but I'll be the no again. We had always been ambivalent on the number of kids we'd have. We said we'll see how it goes and when it felt right we'd stop.

Third, when I did the case study we had talked about moving but hadn't examined what it would take to move without jobs. That case study was a wake up call about whether we even could retire early. That was never in our "agenda" we just assumed we'd work until at least 55. Now the reality is it's possible and we both think so.

And if we had an update on the case study? The most interesting aspect I think is that my DH didn't get his promotion in March. He is pretty unhappy with his job and wonders if it's meant to be. He doesn't know if he'll get a promotion in March 2015, and feels he deserves one. If we weren't in the process of moving, but decided we'd stay he'd right now be looking to jump ship to another company.

He likes what he does. However he feels it took him 5 years for his first promotion and that was a very long time. It's now been 4 years and due to the length of the first promotion, he's definitely on the "high" end of where he should be. On the pay scale of his pay grade two more years and he'd be "maxed" out on his scale which makes him unhappy. This we calculated about 2 weeks ago.

I haven't influenced these comments, yes I'm not thrilled, but I certainly didn't say his job was bad. He's disappointed with his career trajectory and wonders if he needs to switch. And that more than many other things has given him a huge push to agree we should move.

So the question rose why stay where we live if he isn't happy in his job? What is holding us here? Nothing. Would he be happy if he had a promotion? Yes. But it didn't happen. If it doesn't happen next year, I think that's his reasoning behind moving next June 2015. I believe he'll be so disappointed that it'll be hard to endure working at his job.

Also in the past 4 years he's had reorganization 4 times and this time he doesn't like his direct supervisor. He doesn't feel they have the same vision. He certainly didn't feel that way in 2012 with a different boss. He was happier. Now he's not. They had another reorg, and he wasn't reassigned and not thrilled with the fact he expected to be.

So like everything in life, things change like the wind. He loves what he does. But he's not exactly thrilled with the situation he's in now. He used to love it more, and perhaps he could again. But if we were in a different circumstance he wouldn't be staying with his company.

So all signs point to exiting where we live. Right now I am about to contact another realtor because we had a realtor contact us about selling our place. They want us to come up with a number and I don't want to "lowball or be unrealistic" about what I could get. This would be hard selling and renting, but at the same time we'd be locking in equity and gaining flexibility.

And I think we need to stockpile cash like MM said. I don't know how long until we find jobs if we are unemployed when we move. That makes me nervous.


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