Preparing for retirement in mid 30s

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Tingting1013
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Re: Preparing for retirement in mid 30s

Post by Tingting1013 »

I recommend you pull your and your wife’s SS earnings history from ssa.gov and put it into the calculator at ssa.tools

My wife & I are about the same age as you and have accumulated a similar amount, and if we quit our jobs today our projected SS payout at age 70 would be $45k, assuming no benefit cuts.

Apply a discount for a future benefit cut, yet this may give you comfort to spend a bit more from ages 35-70.
AnEngineer
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Re: Preparing for retirement in mid 30s

Post by AnEngineer »

sailaway wrote: Thu Sep 17, 2020 3:24 pm People get so easily distracted between a feasible plan on general principles and a plan that they could personally thrive on.

In this case, the OP has not given any indication that they know what a $45k budget looks like for their family, but there are certainly other families thriving on that.
Do there EXIST people with families of four who could retire at your age with 1.5M? Yes, but it's pretty clear that you're not prepared to do it.

1) You are presently spending significantly more than you plan to.
2) You don't seem to have thought through the benefits of tax-advantaged accounts. You justified this by saying that you didn't get a match. Unless you have a better reason, this indicates you haven't planned through early retirement.
3) You haven't included medical costs in your budget. This includes insurance (I believe ACA subsidies are based on ACTUAL income for the year, so if you end up with too much or too little, you have to pay it back). Also some states don't have any good plans available. Even if you do get free insurance, out of pocket costs could explode your budget.
4) What's your expectation on child and college costs?
5) You're planning to simultaneously quit working and move to "A" LCOL location, without anything specific in mind. This is likely to be a huge shock on you and your family.
EddyB
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Re: Preparing for retirement in mid 30s

Post by EddyB »

lecithar wrote: Wed Sep 16, 2020 11:46 pm
tj wrote: Wed Sep 16, 2020 11:32 pm Did you work at least 10 full years to qualify for social security benefits?
Yes. According to ssa.tools I will receive 22k/yr at normal retirement age (67) if I retire today. I think my wife would get to claim half this amount (not sure), so that would add another 11k/yr. We are not counting on this income in our retirement planning but it is nice to know it is available as a margin of error.
I don’t know if this has been addressed already, but if that’s a factor in your plan, please check that your are making that projection on the basis of no future earnings (or whatever you think is appropriate); the default projection assumes that you will continue to earn the same amount as in your most recent year of reported earnings.
runner540
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Re: Preparing for retirement in mid 30s

Post by runner540 »

AnEngineer wrote: Fri Sep 18, 2020 8:43 am
sailaway wrote: Thu Sep 17, 2020 3:24 pm People get so easily distracted between a feasible plan on general principles and a plan that they could personally thrive on.

In this case, the OP has not given any indication that they know what a $45k budget looks like for their family, but there are certainly other families thriving on that.
Do there EXIST people with families of four who could retire at your age with 1.5M? Yes, but it's pretty clear that you're not prepared to do it.

1) You are presently spending significantly more than you plan to.
2) You don't seem to have thought through the benefits of tax-advantaged accounts. You justified this by saying that you didn't get a match. Unless you have a better reason, this indicates you haven't planned through early retirement.
3) You haven't included medical costs in your budget. This includes insurance (I believe ACA subsidies are based on ACTUAL income for the year, so if you end up with too much or too little, you have to pay it back). Also some states don't have any good plans available. Even if you do get free insurance, out of pocket costs could explode your budget.
4) What's your expectation on child and college costs?
5) You're planning to simultaneously quit working and move to "A" LCOL location, without anything specific in mind. This is likely to be a huge shock on you and your family.
+1
OP really needs to learn more about taxes, since he’ll need to manage earned income and capital gains carefully with everything In taxable.
achillesheel
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Re: Preparing for retirement in mid 30s

Post by achillesheel »

Good job being open to all the feedback being given. But, at the risk of beating a dead horse...
lecithar wrote: Fri Sep 18, 2020 1:24 am (2) develop a realistic budget for a family of 4 on 45k/yr
Let me turn task (2) around: I think you should determine whether 45k is a realistic budget, given your goals. What are your goals? If you don't want to help with kid's college education, then fine. Is it a goal to make sure your family gets decent healthcare/dental/vision? That may or may not happen with ACA, and will probably be more expensive than the $0 you budgeted. Is it your goal to have your teens drive when they are of age? $300 a month seems awfully unrealistic for that. At a certain point, you can't shoehorn reality into a certain budget number.

lecithar wrote: Fri Sep 18, 2020 1:24 am In my budget I have kept Other/Discretionary/Margin very high at 1000... The idea is that each month we will pick and choose what is most important to us. On a small budget, we must recognize that we cannot have everything all the time.
I agree with the principle: we can't have everything all the time. But I disagree with your application of it, especially where teenagers are involved. You can't just decide to pay for music lessons one month, but not the next. If you're investing in real skills / experiences, that often requires a continued outlay over time.
Last edited by achillesheel on Fri Sep 18, 2020 9:37 am, edited 1 time in total.
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Brianmcg321
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Re: Preparing for retirement in mid 30s

Post by Brianmcg321 »

This thread can be summed up best as “How much money do you need to live like your broke the rest of your life?”
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flyfishers83
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Re: Preparing for retirement in mid 30s

Post by flyfishers83 »

I live in an area where you can buy a nice house for $200,000. We sold our house last year for 150,000, and it had 5 bedrooms and 3 bathrooms.

A couple of thoughts:
-Your budget seems a little light. Probably less likely to get 3% on a small mortgage. Need to factor in home repairs and maintenance which will add up. Utilities and property tax could be light, but heavily dependent on location.
-A lot of areas with houses in the price range you're talking about don't have good public transit-or don't have any. Are you going to be a 1 car household and be happy with that?
-Have you tried being a stay at home parent? I love my son dearly, but I don't want to be a stay at home parent.
-When looking at a house, you'll be balancing a lot of things, as you won't be spending the majority of your day at work. Is it comfortable and close to things you want to do? Can the family spread out? That can be harder to achieve with your budget. I also would want a very large garden. Basically, your housing decision seems to become more important based on your circumstances.
-As others have mentioned, healthcare is the big unknown.
-There is a social piece with moving to a new area and not planning to work. In many areas of the country that is a really foreign concept.
getthatmarshmallow
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Re: Preparing for retirement in mid 30s

Post by getthatmarshmallow »

A couple of thoughts:
One thing that's jumped out at me is that you're currently spending $90K and planning to cut that in half. I wonder if that's ambitious, even accounting for housing costs, and if that means a significant lifestyle change. Most of the people pulling that kind of FIRE also have the paid off house or a very manageable mortgage.

You also might find yourself, depending on the state, caught between Medicaid eligibility and ACA subsidies, which will affect your ability to economize during a downturn. If you have a bad year with a lot of lumpy expenses you might compound that problem.

Plenty of households live on $45K with no benefits but it's not always a lot of fun. I also suspect there's a psychological difference between "my parents worked and gave us everything they could and made only $45k so I missed the class trip/didn't get tutoring/didn't get the surgery I needed"" and "my parents had to keep their Medicaid eligibility and couldn't touch their millions so I couldn't go on the class trip/etc."

I mean, you could move to a lcol, take software contracts that you found interesting and manage a great work life balance with a great nest egg. What are you retiring to?
redmaw
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Re: Preparing for retirement in mid 30s

Post by redmaw »

I see a few holes in the plan that need to be worked out before inacting.

First the positives:

45k on 1.5M is 3% withdraw rate, that's pretty bullet proof historically.
45k even with 2 kids does not require horrible frugality in much of the country.
At this withdraw rate you can afford to occasionally spend more than budget... a 60k year to replace the roof won't break the bank.
If things don't go horribly wrong, you will be growing assets and likely be able to increase spending somewhere along the line...maybe enough to cover the teen and college costs many are worried about.

The problems I see are:
1) you are currently living on twice your projected budget...I don't know how you can reliably say 45k is enough. Moving to an unspecified lcol area sounds like hand waving to me, and I wouldn't bet my future on it.
2) you have no plans for healthcare, and likely can't make any real plans without knowing where you will be retiring. This could easily blowup the 45k budget.
3) with young kids you don't have a measure for how much you will want to spend on them as they grow up. You may end up living within your means without going back to work, but really regretting not being able to spend a bit more on them.

What I am noticing in my own feedback, and most of the other feedback you are getting isn't related to withdraw rate and the potential of running out of money. Its based on your budget number. No one can tell you if 45k is enough or not... lots of opinions here that teens cost more than that (I disagree with a lot of the reasons, but its up to you not me)...a few saying they are spending less (I do...with a 1 and 3 yr old, but paid off house). In the end none of that is all the relevant to whether or not you and your family will be able to live on that. I think you before you make any serious plans for quitting your job, you need to do a serious deep dive into the details of your budget...what things you will pay for for your kids, and what you will expect them to cover. You need to find this lcol area and make sure housing is a cheap as you expect in a place you are actually willing to live. I think you need to figure out what an ACA plan will actually cost, and what out of pocket medical expenses may look like with that plan. What happens if ACA goes away, will that send you back to work for insurance?

Once you have all that figured out, what does it look like if you increase your budget by 10 or 20%... how long would that take to cover with your current income? What does it look like if you buy a modest house instead of rent? Reducing monthly outlay by actually owning your house can reduce sequence risk even as it reduces your nest egg. Running real numbers is important. You also eliminate the risk of being evicted (could be through no fault of your own), or having rents skyrocket (RE taxes can still jump on you).

In the end I think your plan isn't necessarily overly optimistic, its just not fleshed out enough to act on.
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queso
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Re: Preparing for retirement in mid 30s

Post by queso »

Brianmcg321 wrote: Fri Sep 18, 2020 9:36 am This thread can be summed up best as “How much money do you need to live like your broke the rest of your life?”
There is a whole forum dedicated to that over on MMM. :happy
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Brianmcg321
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Re: Preparing for retirement in mid 30s

Post by Brianmcg321 »

queso wrote: Fri Sep 18, 2020 10:42 am
Brianmcg321 wrote: Fri Sep 18, 2020 9:36 am This thread can be summed up best as “How much money do you need to live like your broke the rest of your life?”
There is a whole forum dedicated to that over on MMM. :happy
Lol. I’ve been there. Quite entertaining.
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pasadena
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Re: Preparing for retirement in mid 30s

Post by pasadena »

redmaw wrote: Fri Sep 18, 2020 10:41 am 1) you are currently living on twice your projected budget...I don't know how you can reliably say 45k is enough. Moving to an unspecified lcol area sounds like hand waving to me, and I wouldn't bet my future on it.
I think that's one of the biggest holes. I mean, if someone is used to live in San Francisco and planning to fully retire in, say, rural Tennessee forever, one should REALLY go ahead and try it for a few months - a year - before pulling the trigger. This is a huge change in almost every aspect of life - not just COL.

Same for living "somewhere cheap" on half your current budget - and habits. You have to try it. It's a lot different than a number in a spreadsheet.
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lecithar
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Re: Preparing for retirement in mid 30s

Post by lecithar »

marcopolo wrote: Fri Sep 18, 2020 2:47 am
lecithar wrote: Fri Sep 18, 2020 1:24 am Great ideas from everyone! I have turned the ideas into a workable plan. What I need to do next is: (1) buy a house in a LCOL area so long-term expenses are as fixed as it can be, (2) develop a realistic budget for a family of 4 on 45k/yr, and (3) do more research on ACA/medicare/medicaid/etc.

My budget is shown below for comment. For the house, I am assuming I will get a 200k house with a 3% mortgage which is 1000/mo for principle, interest, taxes, and insurance. I will need to get the mortgage before I quit my job.
  • Housing (principle, interest, taxes, insurance): 1000
  • Utilities (gas, electric, water, trash): 200
  • Grocery: 1000
  • Car (gas, insurance, future car savings): 300
  • Cell Phone: 100
  • Internet: 50
  • Subscriptions (netflix, disney+, etc.): 100
  • Other/Discretionary/Margin: 1000
  • Total: 3750
In my budget I have kept Other/Discretionary/Margin very high at 1000. This provides flexibility to pay what is most important for the month. For example, one month it may be to pay for clothing. Another month it may be to pay for school lessons. Another month it may be to pay for travel. The idea is that each month we will pick and choose what is most important to us. On a small budget, we must recognize that we cannot have everything all the time.
How does that compare to your budget currently?
What will you reduce/eliminate to get from $90k currently to the $45k outlined here?
The differences between my current 90k/yr budget and 45k/yr budget are:
  • Housing cost is 1500/mo cheaper going from VHCOL to LCOL. This is actually a big improvement area for us. A 3BR SFR in a LCOL area will be a huge improvement over our current very small apartment.
  • Grocery budget is reduced from 2000/mo to 1000/mo. This can be achieved by adding budget food to our lineup. For example, eating rice and beans once or twice a week won't kill us. People say variety is the spice of life, so we should enjoy both budget food as well as the typical food we have grown accustomed to.
  • Other/Discretionary/Margin will be reduced from 2000/mo to 1000/mo. This will mean less flexibility. But the way I will explain this to my kids is, we have a small bit of money each month to spend on whatever we want. It is enough for us to do something nice with it, but we have to prioritize. If we can't afford to do everything we want, we will just wait for the next month. This is a good way to teach delayed gratification.
Regarding some other comments I have gotten:
  • My wife is frugal just like me. So I am not concerned that she will have a problem with the lifestyle.
  • I will be open with my kids regarding my finances. I don't want them to resent me later on. I will explain to them my thinking process for why I am doing this. I will explain that we have a small bit of money each month to spend on discretionary items but we just have to prioritize.
  • Yes the lifestyle is very minimal in terms of spending. Absolutely. But my family will never starve and we will always have a roof over our heads. Is it worth giving up more years of my life to get more/better material things?
Last edited by lecithar on Fri Sep 18, 2020 11:06 am, edited 1 time in total.
pasadena
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Re: Preparing for retirement in mid 30s

Post by pasadena »

lecithar wrote: Fri Sep 18, 2020 10:57 am
marcopolo wrote: Fri Sep 18, 2020 2:47 am
lecithar wrote: Fri Sep 18, 2020 1:24 am Great ideas from everyone! I have turned the ideas into a workable plan. What I need to do next is: (1) buy a house in a LCOL area so long-term expenses are as fixed as it can be, (2) develop a realistic budget for a family of 4 on 45k/yr, and (3) do more research on ACA/medicare/medicaid/etc.

My budget is shown below for comment. For the house, I am assuming I will get a 200k house with a 3% mortgage which is 1000/mo for principle, interest, taxes, and insurance. I will need to get the mortgage before I quit my job.
  • Housing (principle, interest, taxes, insurance): 1000
  • Utilities (gas, electric, water, trash): 200
  • Grocery: 1000
  • Car (gas, insurance, future car savings): 300
  • Cell Phone: 100
  • Internet: 50
  • Subscriptions (netflix, disney+, etc.): 100
  • Other/Discretionary/Margin: 1000
  • Total: 3750
In my budget I have kept Other/Discretionary/Margin very high at 1000. This provides flexibility to pay what is most important for the month. For example, one month it may be to pay for clothing. Another month it may be to pay for school lessons. Another month it may be to pay for travel. The idea is that each month we will pick and choose what is most important to us. On a small budget, we must recognize that we cannot have everything all the time.
How does that compare to your budget currently?
What will you reduce/eliminate to get from $90k currently to the $45k outlined here?
The differences between my current 90k/yr budget and 45k/yr budget are:
  • Housing cost is 1500/mo cheaper going from VHCOL to LCOL. This is actually a big improvement area for us. A 3BR SFR in a LCOL area will be a huge improvement over our current very small apartment.
  • Grocery budget is reduced from 2000/mo to 1000/mo. This can be achieved by adding budget food to our lineup. For example, eating rice and beans once once or twice a week won't kill us. People say variety is the spice of life, so we should enjoy both budget food as well as the typical food we have grown accustomed to.
  • Other/Discretionary/Margin will be reduced from 2000/mo to 1000/mo. This will mean less flexibility. But the way I will explain this to my kids is, we have a small bit of money each money to spend on whatever we want. It is enough for us to do something nice with it, but we have to prioritize. If we can't afford to do everything we want, we will just wait for the next month. This is a good way to teach delayed gratification.
Regarding some other comments I have gotten:
  • My wife is frugal just like me. So I am not concerned that she will have a problem with the lifestyle.
  • I will be open with my kids regarding my finances. I don't want them to resent me later on. I will explain to them my thinking process for why I am doing this. I will explain that we have a small bit of money each money to spend on discretionary items but we just have to prioritize.
  • Yes the lifestyle is very minimal in terms of spending. Absolutely. But my family will never starve and we will always have a roof over our heads. Is it worth giving up more years of my life to get more/better material things?
Hmm well, I would definitely recommend that you try to live on that for a year first (obviously accounting for the housing cost difference), and then that you try to incorporate the fact that your kids are going to grow up fast, and cost more and more.

What LCOL area are you thinking of? Have you ever tried to live there?
EnjoyIt
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Re: Preparing for retirement in mid 30s

Post by EnjoyIt »

OP,
You have received good advice particularly with those who talk about being sure about your budget and is $45k/yr enough.

I’m sure that one can make do on $45k/yr even with a family as plenty of people in the US already live on that. The question is, can you? How do you know? What is your plan on making sure you have enough income for the next 30 years to qualify for ACA subsidies which is a key necessity for your plan?

For example without ACA we are budgeting $20k/yr just for healthcare costs. That’s $13,500 for insurance and another $6500 for deductibles.

I think your plan is very doable but requires more detail and thinking through. Particularly because you your $1.5 million has a chance to grow when spending less than 3%.

One option you may decide is to move to the new area and find a job there. See what your lifestyle and expenses will be at that point. Track all your spending and re-evaluate. Sort of like a trial run without taking the risk of being wrong.
Last edited by EnjoyIt on Fri Sep 18, 2020 11:29 am, edited 1 time in total.
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MrBobcat
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Re: Preparing for retirement in mid 30s

Post by MrBobcat »

Brianmcg321 wrote: Fri Sep 18, 2020 10:50 am
queso wrote: Fri Sep 18, 2020 10:42 am
Brianmcg321 wrote: Fri Sep 18, 2020 9:36 am This thread can be summed up best as “How much money do you need to live like your broke the rest of your life?”
There is a whole forum dedicated to that over on MMM. :happy
Lol. I’ve been there. Quite entertaining.
Though I've heard of it I've never read that forum before. :shock: I always thought I was cheap frugal.

I've lived broke and having to be the family budget nazi sucked, living not broke and not worrying so much is IMO so much better and less stressful. I'm still frugal but it's all relative.
humblecoder
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Re: Preparing for retirement in mid 30s

Post by humblecoder »

My knee-jerk reaction when I started reading this thread was the same as many of the posters: "$45K/year with a wife and 2 kids, are you crazy?" Then after reading some of the OP's replies and doing some reflection, I realized that I was applying my own personal values and making a value judgment on the OP on his situation. He clearly strongly values extra time (or more accurately stated: the freedom to control his time how he sees fit) over extra material things. There is absolutely nothing wrong with that, and to be very blunt, nobody should question his values. In some ways, it is commendable as we probably put more emphasis on material things in our society than we should.

Anyway, some thoughts on the OP's original question about whether this is feasible:

1. Others have talked about health care, but I echo the sentiments that this is the biggest blindspot. Make sure you have a plan for this, and then a backup plan, and then a backup backup plan. Given how political heath care is, what might be possible today may not work in the future.

2. VLCOL areas are VLCOL areas for a reason. Make sure you select your new home wisely before you move there. I would go so far as to suggest that you rent initially in case it isn't to your liking so that you can move if it isn't.

3. Given the amount of interest in your situation (over 200 posts and counting), maybe you should start a blog about it. I'm serious!
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vitaflo
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Re: Preparing for retirement in mid 30s

Post by vitaflo »

Your biggest question to answer is where to live. This will determine almost everything, from ACA/Medicade rules, to taxes (property and otherwise), to heating/cooling costs. Your money will go a lot farther simply by where you decide to park yourself. This should be the first thing you figure out.

IMO, you should move somewhere rural, as that will have the lowest COL combined with the ability to have some land. No need for just rice and beans if you can grow your own food. Since you'd be retired many of your expenses could be replaced with things you do with your free time, whether it's grow food, be a tutor for your kids, do your own house maintenance, etc. Most spending is just trading your money for someone else's time. Since you will have tons of time, you don't need to do as much spending. Just use the time you now have. At the very least, your sweat equity is something you can fall back on should you need to.

Another benefit of living in LCOL, especially rural, is you will be living among other people who have a similar (or likely less) budget as you do. There will be no "keeping up with the Joneses" and if you can't afford the kids field trip, most likely neither can anyone else. However like others have said it will certainly be a culture shock if you have never lived like this before, so there will be a bit of transitioning. That said, humans are adaptable so it's usually not an issue long term.
Greentree
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Re: Preparing for retirement in mid 30s

Post by Greentree »

Assuming that you can work from home right now, why not move to a LCOL place, set your budget at $45k and work for one more year (or a few months) to test it out? There's almost never been a better time to do this.
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queso
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Re: Preparing for retirement in mid 30s

Post by queso »

MrBobcat wrote: Fri Sep 18, 2020 11:25 am
Brianmcg321 wrote: Fri Sep 18, 2020 10:50 am
queso wrote: Fri Sep 18, 2020 10:42 am
Brianmcg321 wrote: Fri Sep 18, 2020 9:36 am This thread can be summed up best as “How much money do you need to live like your broke the rest of your life?”
There is a whole forum dedicated to that over on MMM. :happy
Lol. I’ve been there. Quite entertaining.
Though I've heard of it I've never read that forum before. :shock: I always thought I was cheap frugal.

I've lived broke and having to be the family budget nazi sucked, living not broke and not worrying so much is IMO so much better and less stressful. I'm still frugal but it's all relative.
+1. I wonder if some of the popularity of the early retirement philosophy is kind of a romanticization of the austere lifestyle as a reaction to the ridiculous levels of materialism in Western culture. If so I totally get that. It's like watching "Alone". I can't watch it without wanting to drop everything and move into a shelter I built myself in the middle of nowhere and live off the land. However, that feeling is fleeting largely due to growing up living in a trailer with a single parent with an HHI of about $20k. Definitely not on my radar to go through that again. Every problem was a massive financial emergency that often entailed begging extended family for help. I get the desire to jump off the hamster wheel, but I wouldn't do it myself until I am uber sure that I have way more than I need based on the models/tools I am using for planning purposes.
playtothebeat
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Re: Preparing for retirement in mid 30s

Post by playtothebeat »

I question whether a food budget can be halved by simply moving to a LCOL? I don’t think it can. Cost of food isn’t materially different from one place to another, unless you’re talking about a lifestyle change (I.e. no longer going out to eat, etc). But again that’s more about your ability/desire to alter your lifestyle compared to what you’re used to.
EnjoyIt
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Re: Preparing for retirement in mid 30s

Post by EnjoyIt »

playtothebeat wrote: Fri Sep 18, 2020 12:05 pm I question whether a food budget can be halved by simply moving to a LCOL? I don’t think it can. Cost of food isn’t materially different from one place to another, unless you’re talking about a lifestyle change (I.e. no longer going out to eat, etc). But again that’s more about your ability/desire to alter your lifestyle compared to what you’re used to.
Moving and not working will cut a good budget if there is plenty of eating out involved. Also, groceries in NYC are more expensive then in upstate NY though I agree not 50% cheaper.
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random_walker_77
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Re: Preparing for retirement in mid 30s

Post by random_walker_77 »

playtothebeat wrote: Fri Sep 18, 2020 12:05 pm I question whether a food budget can be halved by simply moving to a LCOL? I don’t think it can. Cost of food isn’t materially different from one place to another, unless you’re talking about a lifestyle change (I.e. no longer going out to eat, etc). But again that’s more about your ability/desire to alter your lifestyle compared to what you’re used to.
It depends on where you start from. OP said they're cutting from $2K to $1K. To my mind, $2K for a family of 4 is extravagant. They must be eating out a lot. If you're entirely cooking at home, buying in bulk, shopping the advertised specials, etc, $600/mo should be easily achievable and still eat pretty well, especially in a LCOL area.
Ilikesparklers
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Re: Preparing for retirement in mid 30s

Post by Ilikesparklers »

lecithar wrote: Fri Sep 18, 2020 1:24 am Great ideas from everyone! I have turned the ideas into a workable plan. What I need to do next is: (1) buy a house in a LCOL area so long-term expenses are as fixed as it can be...

...For the house, I am assuming I will get a 200k house with a 3% mortgage which is 1000/mo for principle, interest, taxes, and insurance...
I'll echo what other have commented about carefully selecting your LCOL location. I wouldn't pick a town and buy a house without first having lived there for a while. Doing so seems rash. Once you quit your job and move, you'll need time to adjust to your new life, and as you do, you'll see what's really important to you and your family. If you buy a rural house, choices for food and entertainment will be vastly different than buying a house close to a city/town that's walkable to a market/park/library/restaurant. I think you need time to figure those things out while living there, and renting gives you that flexibility.

$200k is a lot of money to tie up in a house in a location you've never lived. I'd imagine you can find a very affordable rental in the same location where houses are going for $200k.

You're breaking from the corporate ladder; why immediately chain yourself to a house/life/town you don't yet know you LOVE?
playtothebeat
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Re: Preparing for retirement in mid 30s

Post by playtothebeat »

random_walker_77 wrote: Fri Sep 18, 2020 12:49 pm
playtothebeat wrote: Fri Sep 18, 2020 12:05 pm I question whether a food budget can be halved by simply moving to a LCOL? I don’t think it can. Cost of food isn’t materially different from one place to another, unless you’re talking about a lifestyle change (I.e. no longer going out to eat, etc). But again that’s more about your ability/desire to alter your lifestyle compared to what you’re used to.
It depends on where you start from. OP said they're cutting from $2K to $1K. To my mind, $2K for a family of 4 is extravagant. They must be eating out a lot. If you're entirely cooking at home, buying in bulk, shopping the advertised specials, etc, $600/mo should be easily achievable and still eat pretty well, especially in a LCOL area.
I'm not arguing that, but again that's more of a "lifestyle" choice then, as opposed to just a "saving money by living in a LCOL area". That, i think, is the real crux of the OP's question/decision making. Are the "numbers" appropriate? sure, if you're willing to adjust to that lifestyle.

Housing costs are a true saving from HCOL to LCOL areas, assuming you're comparing apples to apples (i.e. a 1600-SF house in the Bay Area vs a 1600-sf house in Kansas, as an example). Most other items, in my view, are more trivial and likely don't make nearly as big of a difference. Yes, they're likely cheaper to some extent, but at the same time there's probably some trade offs the other way (for instance, assuming you're no longer walking distance to parks and entertainment, you may be putting more gas and mileage on your car than before, etc).
matthewbarnhart
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Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

lecithar wrote: Fri Sep 18, 2020 10:57 am The differences between my current 90k/yr budget and 45k/yr budget are:
Unlike the most vocal people in this thread (and on Bogleheads generally), I'm personally very much on the MMM/Frugal Professor/Root of Good/Go Curry Cracker/JL Collins team of living frugally and pulling the plug when you have enough, worrywarts be damned. In most similar scenarios I'd suggest pulling the plug already, but my two red flags are:
  • Proposed budget: sure, it's fine, but why aren't you living on that now? The folks who pulled the plug early did it by walking the walk, so the transition to doing-whatever-the-hell-you-want-all-day wasn't a shock. Slash your spending today and see how it feels. Until you do that you're just... sitting under a tree and dreaming.
  • Lack of tax-advantaged accounts: This shows a massive lack of understanding of the tax system and lack of planning. There are zero reasons not to have maxed these accounts out at your income level. Again, the folks who have done this generally took advantage of every available opportunity to cut their costs, including taxes. I worry what other big picture items you haven't fully considered.

    ex: Had you maxed those accounts out, you could be pulling that proposed $45k/yr tax-free while qualifying for ACA subsidies, and protecting the growth of so much of your assets.
Last edited by matthewbarnhart on Fri Sep 18, 2020 1:30 pm, edited 1 time in total.
AnEngineer
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Re: Preparing for retirement in mid 30s

Post by AnEngineer »

random_walker_77 wrote: Fri Sep 18, 2020 12:49 pm
playtothebeat wrote: Fri Sep 18, 2020 12:05 pm I question whether a food budget can be halved by simply moving to a LCOL? I don’t think it can. Cost of food isn’t materially different from one place to another, unless you’re talking about a lifestyle change (I.e. no longer going out to eat, etc). But again that’s more about your ability/desire to alter your lifestyle compared to what you’re used to.
It depends on where you start from. OP said they're cutting from $2K to $1K. To my mind, $2K for a family of 4 is extravagant. They must be eating out a lot. If you're entirely cooking at home, buying in bulk, shopping the advertised specials, etc, $600/mo should be easily achievable and still eat pretty well, especially in a LCOL area.
OP stated $2k/month was grocery cost, so it does not include eating out.

OP: Have you been planning to retire, or you just suddenly considered the possibility and think it's possible given your $1.5M? Spending $2k/month on groceries doesn't seem to align with planning for it. Why shift cost down in retirement? I don't think you and your family are going to enjoy it.
Keenobserver
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Re: Preparing for retirement in mid 30s

Post by Keenobserver »

matthewbarnhart wrote: Fri Sep 18, 2020 1:11 pm
lecithar wrote: Fri Sep 18, 2020 10:57 am The differences between my current 90k/yr budget and 45k/yr budget are:
Unlike the most vocal people in this thread (and on Bogleheads generally), I'm personally very much on the MMM/Frugal Professor/Root of Good/Go Curry Cracker/JL Collins team of living frugally and pulling the plug when you have enough, worrywarts be damned. In most similar scenarios I'd suggest pulling the plug already, but my two red flags are:
  • Proposed budget: sure, it's fine, but why aren't you living on that now? The folks who pulled the plug early did it by walking the walk, so the transition to doing-whatever-the-hell-you-want-all-day wasn't a shock. Slash your spending today and see how it feels. Until you do that you're just... sitting under a tree and dreaming.
  • Lack of tax-advantaged accounts: This shows a massive lack of understanding of the tax system and lack of planning. There are zero reasons not to have maxed these accounts out at your income level. Again, the folks who have done this generally took advantage of every available opportunity to cut their costs, including taxes. I worry what other big picture items you haven't fully considered.

    ex: Had you maxed those accounts out, you could be pulling that proposed $45k/yr tax-free while qualifying for ACA subsidies, and protecting the growth of so much of your assets.
Arent his LT capital gains taxes going to be low since it only be 45K a year? Meaning his total income will.be 45k from LT capital gains. How much will he be paying on that?
matthewbarnhart
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Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

Keenobserver wrote: Fri Sep 18, 2020 1:35 pm Arent his LT capital gains taxes going to be low since it only be 45K a year? Meaning his total income will.be 45k from LT capital gains. How much will he be paying on that?
Today, yes. But 1) he has already paid a crazy amount of unnecessary taxes, and 2) the current capital gains tax laws are subject to change.
AnEngineer
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Re: Preparing for retirement in mid 30s

Post by AnEngineer »

matthewbarnhart wrote: Fri Sep 18, 2020 1:40 pm
Keenobserver wrote: Fri Sep 18, 2020 1:35 pm Arent his LT capital gains taxes going to be low since it only be 45K a year? Meaning his total income will.be 45k from LT capital gains. How much will he be paying on that?
Today, yes. But 1) he has already paid a crazy amount of unnecessary taxes, and 2) the current capital gains tax laws are subject to change.
It may also make realizing the desired income (e.g. for ACA) to difficult (compared to say Roth conversions) in a tumultuous market.
tj
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Re: Preparing for retirement in mid 30s

Post by tj »

EddyB wrote: Fri Sep 18, 2020 9:02 am
lecithar wrote: Wed Sep 16, 2020 11:46 pm
tj wrote: Wed Sep 16, 2020 11:32 pm Did you work at least 10 full years to qualify for social security benefits?
Yes. According to ssa.tools I will receive 22k/yr at normal retirement age (67) if I retire today. I think my wife would get to claim half this amount (not sure), so that would add another 11k/yr. We are not counting on this income in our retirement planning but it is nice to know it is available as a margin of error.
I don’t know if this has been addressed already, but if that’s a factor in your plan, please check that your are making that projection on the basis of no future earnings (or whatever you think is appropriate); the default projection assumes that you will continue to earn the same amount as in your most recent year of reported earnings.
He would receive a lot more than $22k if he had 35 years of six figure income.
Tingting1013
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Re: Preparing for retirement in mid 30s

Post by Tingting1013 »

tj wrote: Fri Sep 18, 2020 3:27 pm
EddyB wrote: Fri Sep 18, 2020 9:02 am
lecithar wrote: Wed Sep 16, 2020 11:46 pm
tj wrote: Wed Sep 16, 2020 11:32 pm Did you work at least 10 full years to qualify for social security benefits?
Yes. According to ssa.tools I will receive 22k/yr at normal retirement age (67) if I retire today. I think my wife would get to claim half this amount (not sure), so that would add another 11k/yr. We are not counting on this income in our retirement planning but it is nice to know it is available as a margin of error.
I don’t know if this has been addressed already, but if that’s a factor in your plan, please check that your are making that projection on the basis of no future earnings (or whatever you think is appropriate); the default projection assumes that you will continue to earn the same amount as in your most recent year of reported earnings.
He would receive a lot more than $22k if he had 35 years of six figure income.
There is a cap, I think it’s $45k per person?

Is that worth working an extra 20 years for?
EddyB
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Re: Preparing for retirement in mid 30s

Post by EddyB »

tj wrote: Fri Sep 18, 2020 3:27 pm
EddyB wrote: Fri Sep 18, 2020 9:02 am
lecithar wrote: Wed Sep 16, 2020 11:46 pm
tj wrote: Wed Sep 16, 2020 11:32 pm Did you work at least 10 full years to qualify for social security benefits?
Yes. According to ssa.tools I will receive 22k/yr at normal retirement age (67) if I retire today. I think my wife would get to claim half this amount (not sure), so that would add another 11k/yr. We are not counting on this income in our retirement planning but it is nice to know it is available as a margin of error.
I don’t know if this has been addressed already, but if that’s a factor in your plan, please check that your are making that projection on the basis of no future earnings (or whatever you think is appropriate); the default projection assumes that you will continue to earn the same amount as in your most recent year of reported earnings.
He would receive a lot more than $22k if he had 35 years of six figure income.
True. I didn't see any information about OP's 2019 income.
hood
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Re: Preparing for retirement in mid 30s

Post by hood »

Out of curiosity assume OP lived in Spain. Free healthcare, free or super cheap university for the kids. What say yee then? How much of this ER backlash is US-centric?
visualguy
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Re: Preparing for retirement in mid 30s

Post by visualguy »

What could be so awful about software engineering to make someone give up voluntarily in their mid 30s, and live on fairly little with a family? I can understand if someone works in the mines, or if they have a lot of wealth, but otherwise it makes little sense to me. Even if one particular software engineering job is really bad, there are others. All possibilities of employment in the field are worse than living a bare-bones existence with a family? Hard to imagine feeling that way beyond maybe a temporary phase, so make sure it's not some passing thing before making changes which are hard to reverse. It's definitely possible to have a software engineering job with a decent work/life balance.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

matthewbarnhart wrote: Fri Sep 18, 2020 1:11 pm
lecithar wrote: Fri Sep 18, 2020 10:57 am The differences between my current 90k/yr budget and 45k/yr budget are:
Unlike the most vocal people in this thread (and on Bogleheads generally), I'm personally very much on the MMM/Frugal Professor/Root of Good/Go Curry Cracker/JL Collins team of living frugally and pulling the plug when you have enough, worrywarts be damned. In most similar scenarios I'd suggest pulling the plug already, but my two red flags are:
  • Proposed budget: sure, it's fine, but why aren't you living on that now? The folks who pulled the plug early did it by walking the walk, so the transition to doing-whatever-the-hell-you-want-all-day wasn't a shock. Slash your spending today and see how it feels. Until you do that you're just... sitting under a tree and dreaming.
  • Lack of tax-advantaged accounts: This shows a massive lack of understanding of the tax system and lack of planning. There are zero reasons not to have maxed these accounts out at your income level. Again, the folks who have done this generally took advantage of every available opportunity to cut their costs, including taxes. I worry what other big picture items you haven't fully considered.

    ex: Had you maxed those accounts out, you could be pulling that proposed $45k/yr tax-free while qualifying for ACA subsidies, and protecting the growth of so much of your assets.

You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.

I agree with the other points you are making, particularly the lack of planning around taxes, I alao raised that as a red flag earlier in the thread.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Nate79
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Re: Preparing for retirement in mid 30s

Post by Nate79 »

I'd go for it in a heartbeat. Try it out for a few years. Maybe buy an RV and see the country. Figure out where you want to live in LCOL area and then buy a house. During that time keep your software skills sharp. Maybe even take on some contract gigs which should be pretty easy with your background. Could probably even make half your expenses with just side gigs without barely trying. There are lots of places across the country in LCOL and MCOL that a software engineer can make a decent living if you need to go back to work but critical to keep up on latest skills.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

Nate79 wrote: Fri Sep 18, 2020 5:57 pm I'd go for it in a heartbeat. Try it out for a few years. Maybe buy an RV and see the country. Figure out where you want to live in LCOL area and then buy a house. During that time keep your software skills sharp. Maybe even take on some contract gigs which should be pretty easy with your background. Could probably even make half your expenses with just side gigs without barely trying. There are lots of places across the country in LCOL and MCOL that a software engineer can make a decent living if you need to go back to work but critical to keep up on latest skills.

I would even question how important it is to keep up on latest skills. Sure, if you want to be on the cutting edge of technology, that is critical. But, not sure how important that is if you are just looking to side gigs or low key job to make a little money to sustain yourself. A lot of software development jobs are pretty mundane. Many are still using technologies from decades ago. You can still find ads for COBOL programmers.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

Keenobserver wrote: Fri Sep 18, 2020 1:35 pm
matthewbarnhart wrote: Fri Sep 18, 2020 1:11 pm
lecithar wrote: Fri Sep 18, 2020 10:57 am The differences between my current 90k/yr budget and 45k/yr budget are:
Unlike the most vocal people in this thread (and on Bogleheads generally), I'm personally very much on the MMM/Frugal Professor/Root of Good/Go Curry Cracker/JL Collins team of living frugally and pulling the plug when you have enough, worrywarts be damned. In most similar scenarios I'd suggest pulling the plug already, but my two red flags are:
  • Proposed budget: sure, it's fine, but why aren't you living on that now? The folks who pulled the plug early did it by walking the walk, so the transition to doing-whatever-the-hell-you-want-all-day wasn't a shock. Slash your spending today and see how it feels. Until you do that you're just... sitting under a tree and dreaming.
  • Lack of tax-advantaged accounts: This shows a massive lack of understanding of the tax system and lack of planning. There are zero reasons not to have maxed these accounts out at your income level. Again, the folks who have done this generally took advantage of every available opportunity to cut their costs, including taxes. I worry what other big picture items you haven't fully considered.

    ex: Had you maxed those accounts out, you could be pulling that proposed $45k/yr tax-free while qualifying for ACA subsidies, and protecting the growth of so much of your assets.
Arent his LT capital gains taxes going to be low since it only be 45K a year? Meaning his total income will.be 45k from LT capital gains. How much will he be paying on that?
I think you are missing the point. If he had utilized tax-deferred accounts, he would have a lot more saved (assuming he maintained same spending, and invested the tax saving). He could then pull living expenses out during retirement at close to 0 taxes. He unnecessarily paid high taxes on the money going in.

It is very sub-optimal planning for an early, frugal retirement, which makes me wonder about other such decision making.
Once in a while you get shown the light, in the strangest of places if you look at it right.
matthewbarnhart
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Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
visualguy
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Re: Preparing for retirement in mid 30s

Post by visualguy »

matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm
marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
I think the point is that switching careers isn't retiring. If I tell someone that I "retired early", I doubt they would consider that to be correct if I simply switched to working on something different to make money. There may be some gray area here; for example, if I switched to something that pays very little compared to what I was doing previously. Generally, though, switching paid occupations is just that, it is not retirement.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm
marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
Who said anything about them doing it secretly? Televangelists don't do it secretly either.

Yes, they are upfront about their "Off-the-books" spending. That does not change the fact that they subsidize their lifestyle quite a bit with the money they make form their new career. Absolutely nothing wrong with that. They earned it, and should enjoy it.

But, it is simply false to say that they have pulled the plug, they readily admit to having a business now. It is a career change. It is also simply false to claim they live as frugally as they claim in their charts when there is so much subsidizing their lifestyle with the "off the books" spending.

To point to that as an example and say, "see, people can pull the plug and live frugally", is simply comparing apples to oranges.

By the way, here are some excerpts from a MMM blog post i found in about 10 seconds of googling (bolding is mine):




So What is Mr. Money Mustache Hiding From Us?

In a word: Nothing – this is my best guess at what our true expenses would be, if we lived a normal, retired life.

But here are the exceptions and special situations, which you can account for however you like:

Higher Income is forcing me to pay full-price for health insurance. Health insurance pricing comes on a sliding scale from “nearly free” below $25,000 in family income, up to full price for incomes over $80,000 (see subsidy calculator)

But then again, our family business (of which we are employees) pays these premiums on our behalf, so they are pretty painless

I built this nifty studio, spending about $30,000 in the process. Is it spending, or investment? Since it increases the value of the house by much more than that amount, and I will be selling this house and moving somewhere else eventually, I chose to treat it as investment. On the other hand, spending money on repairs, changing paint colors, gardens, or swimming pools would count as spending to me, since these items are more likely to be recurring and/or not recouped at the time of sale.

I bought a Nissan Leaf for roughly $14,000 after all costs. This was $9,000 more than I got for selling the old Scion xA. Is this spending? Well, I definitely would not have bought it if it weren’t for the blog (it served as a strong form of advocacy) and I think it may have actually made a noticeable difference in US Leaf sales numbers – which was my main purpose. Sure is a nice car, but we barely use cars for personal purposes (I had to become an Uber driver in order to even get enough drive time to properly test the car!)

In late 2016, I gave away $100,000 of this blog’s income to various charities, with much more to come. Having a business that makes and gives away money probably reduces the need to give away my real retirement savings.

Travel as Mr. Money Mustache (trips to Ecuador, Los Angeles, Portland, Seattle, and a couple of other places) added up to about $4,000 between flights, hotels and food. None of this is stuff I would have done for personal fun, but it may have burned me out enough that I skipped or missed other personal trips (camping, etc) that would have increased my travel spending.

Mrs. Money Mustache’s Etsy shop spent more than $20,000 on materials, shipping, tools, etc. Most of this went right back out the door and earned a profit, but you could argue that both of our business expense accounts satisfied our “spending desire”, displacing personal spending in some way. In fact, writing for you consumes so much of my limited free time, that it may prevent me from expanding into other, more expensive hobbies (like upgrading my mountain bike or snowboard gear).
Once in a while you get shown the light, in the strangest of places if you look at it right.
matthewbarnhart
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Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

visualguy wrote: Fri Sep 18, 2020 6:41 pm
matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm
marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
I think the point is that switching careers isn't retiring. If I tell someone that I "retired early", I doubt they would consider that to be correct if I simply switched to working on something different to make money. There may be some gray area here; for example, if I switched to something that pays very little compared to what I was doing previously. Generally, though, switching paid occupations is just that, it is not retirement.
This was covered 7+ years ago: https://www.mrmoneymustache.com/2013/02 ... nt-police/
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

matthewbarnhart wrote: Fri Sep 18, 2020 6:57 pm
visualguy wrote: Fri Sep 18, 2020 6:41 pm
matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm
marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
I think the point is that switching careers isn't retiring. If I tell someone that I "retired early", I doubt they would consider that to be correct if I simply switched to working on something different to make money. There may be some gray area here; for example, if I switched to something that pays very little compared to what I was doing previously. Generally, though, switching paid occupations is just that, it is not retirement.
This was covered 7+ years ago: https://www.mrmoneymustache.com/2013/02 ... nt-police/
I have no problem people calling themselves whatever they want.

The problem is when people point to them as examples when advising posters here.

The OP clearly does not have any plans to have a second career after pulling the plug. How does the MMM approach even remotely apply to him?
Once in a while you get shown the light, in the strangest of places if you look at it right.
visualguy
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Re: Preparing for retirement in mid 30s

Post by visualguy »

matthewbarnhart wrote: Fri Sep 18, 2020 6:57 pm
visualguy wrote: Fri Sep 18, 2020 6:41 pm
matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm
marcopolo wrote: Fri Sep 18, 2020 5:55 pm You do realize those people you say you follow didn't actually live frugally and pull the plug, right?
They switched careers, make a lot of money, and have a lot of "off the books" spending.
I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
I think the point is that switching careers isn't retiring. If I tell someone that I "retired early", I doubt they would consider that to be correct if I simply switched to working on something different to make money. There may be some gray area here; for example, if I switched to something that pays very little compared to what I was doing previously. Generally, though, switching paid occupations is just that, it is not retirement.
This was covered 7+ years ago: https://www.mrmoneymustache.com/2013/02 ... nt-police/
He says explicitly that he is redefining "retired" to mean no longer having to work for money and feeling retired, rather than stopping to work for money. He says he can get to define what "retired" means because of his popular blog. Well, no, retired still means what it meant before he redefined it, sorry. According to the dictionary: "withdrawn from one's position or occupation : having concluded one's working or professional career".
matthewbarnhart
Posts: 61
Joined: Sat Feb 25, 2017 4:05 pm

Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

marcopolo wrote: Fri Sep 18, 2020 6:45 pm
matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
Who said anything about them doing it secretly? Televangelists don't do it secretly either.

Yes, they are upfront about their "Off-the-books" spending. That does not change the fact that they subsidize their lifestyle quite a bit with the money they make form their new career. Absolutely nothing wrong with that. They earned it, and should enjoy it.
I truly don't understand your point. They make more money than planned, and therefore might spend a little more. What's the objection, exactly?
But, it is simply false to say that they have pulled the plug, they readily admit to having a business now. It is a career change.
They pulled the plug from a 9-to-5 job. That they still make some income doing something else is irrelevant. Again: what's the problem here?
It is also simply false to claim they live as frugally as they claim in their charts when there is so much subsidizing their lifestyle with the "off the books" spending.

To point to that as an example and say, "see, people can pull the plug and live frugally", is simply comparing apples to oranges.

By the way, here are some excerpts from a MMM blog post i found in about 10 seconds of googling (bolding is mine):

So What is Mr. Money Mustache Hiding From Us?...
I find literally nothing in this list questionable or "off-the-books spending".
  • Health insurance: it max sense from a tax perspective for their business to pay the premiums, sure. And if they didn't have the business they'd get subsidized ACA coverage like Justin from Root of Good does.
  • The studio: it was an outbuilding of his home. Home improvement. Standard stuff any homeowner with some extra cash might do.
  • Travel: he says it right there, he wouldn't have done it otherwise.
  • Etsy shop: yeah, again, not sure what the objection is. It's a small business with expenses.
marcopolo wrote: Fri Sep 18, 2020 7:07 pm The problem is when people point to them as examples when advising posters here.

The OP clearly does not have any plans to have a second career after pulling the plug. How does the MMM approach even remotely apply to him?
It applies because the math still works. Have a workable plan, live below your means, maintain flexibility. That's literally it.

How about instead of MMM (who is obviously very polarizing), take a look at Root of Good's spending: https://rootofgood.com/august-2020-earl ... nt-update/

I think his lifestyle and expenses are more in line with the average FIRE-type person, and there's no massive readership or business expenses to raise any eyebrows. He and his family seem happy.
AnEngineer
Posts: 105
Joined: Sat Jun 27, 2020 4:05 pm

Re: Preparing for retirement in mid 30s

Post by AnEngineer »

matthewbarnhart wrote: Fri Sep 18, 2020 7:19 pm
marcopolo wrote: Fri Sep 18, 2020 6:45 pm
matthewbarnhart wrote: Fri Sep 18, 2020 6:20 pm I find these people to be upfront about their finances. If you choose not to believe them, that's your decision. If you have evidence of any of them secretly living the life of, say, your average televangelist or extremely-high-profile personal finance radio show blowhard, I'd be more doubtful.

Many Bogleheads seem to think FIRE means asceticism or sitting around doing nothing with your life. The point isn't to show off how little you spend or force yourself into poverty, it's to focus your time, energy, and money on things that actually make you happier. Who spends exactly what and how they might make money is irrelevant.
Who said anything about them doing it secretly? Televangelists don't do it secretly either.

Yes, they are upfront about their "Off-the-books" spending. That does not change the fact that they subsidize their lifestyle quite a bit with the money they make form their new career. Absolutely nothing wrong with that. They earned it, and should enjoy it.
I truly don't understand your point. They make more money than planned, and therefore might spend a little more. What's the objection, exactly?
But, it is simply false to say that they have pulled the plug, they readily admit to having a business now. It is a career change.
They pulled the plug from a 9-to-5 job. That they still make some income doing something else is irrelevant. Again: what's the problem here?
It is also simply false to claim they live as frugally as they claim in their charts when there is so much subsidizing their lifestyle with the "off the books" spending.

To point to that as an example and say, "see, people can pull the plug and live frugally", is simply comparing apples to oranges.

By the way, here are some excerpts from a MMM blog post i found in about 10 seconds of googling (bolding is mine):

So What is Mr. Money Mustache Hiding From Us?...
I find literally nothing in this list questionable or "off-the-books spending".
  • Health insurance: it max sense from a tax perspective for their business to pay the premiums, sure. And if they didn't have the business they'd get subsidized ACA coverage like Justin from Root of Good does.
  • The studio: it was an outbuilding of his home. Home improvement. Standard stuff any homeowner with some extra cash might do.
  • Travel: he says it right there, he wouldn't have done it otherwise.
  • Etsy shop: yeah, again, not sure what the objection is. It's a small business with expenses.
marcopolo wrote: Fri Sep 18, 2020 7:07 pm The problem is when people point to them as examples when advising posters here.

The OP clearly does not have any plans to have a second career after pulling the plug. How does the MMM approach even remotely apply to him?
It applies because the math still works. Have a workable plan, live below your means, maintain flexibility. That's literally it.

How about instead of MMM (who is obviously very polarizing), take a look at Root of Good's spending: https://rootofgood.com/august-2020-earl ... nt-update/

I think his lifestyle and expenses are more in line with the average FIRE-type person, and there's no massive readership or business expenses to raise any eyebrows. He and his family seem happy.
The objection isn't that there's any problem with what he's doing, it all makes sense. But to say I'm retired and spend X per year, when Y is spent by my business for things that benefits me, the X amount loses its grounding in reality.
matthewbarnhart
Posts: 61
Joined: Sat Feb 25, 2017 4:05 pm

Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

visualguy wrote: Fri Sep 18, 2020 7:14 pm He says explicitly that he is redefining "retired" to mean no longer having to work for money and feeling retired, rather than stopping to work for money. He says he can get to define what "retired" means because of his popular blog. Well, no, retired still means what it meant before he redefined it, sorry. According to the dictionary: "withdrawn from one's position or occupation : having concluded one's working or professional career".
https://effectiviology.com/appeal-to-definition/
The appeal to definition (also known as the argument from dictionary) is a logical fallacy that occurs when someone’s argument is based, in a problematic manner, on the definition of a certain term as it appears in a dictionary or a similar source.

The main problem with such arguments is that dictionaries are descriptive in nature, rather than prescriptive, meaning that they attempt to describe how people use the language, rather than instruct them how to do so in a definitive manner.
deanmoriarty
Posts: 355
Joined: Tue Jan 28, 2014 1:19 am

Re: Preparing for retirement in mid 30s

Post by deanmoriarty »

hood wrote: Fri Sep 18, 2020 3:47 pm Out of curiosity assume OP lived in Spain. Free healthcare, free or super cheap university for the kids. What say yee then? How much of this ER backlash is US-centric?
I’d be very curious to hear that as well.
matthewbarnhart
Posts: 61
Joined: Sat Feb 25, 2017 4:05 pm

Re: Preparing for retirement in mid 30s

Post by matthewbarnhart »

AnEngineer wrote: Fri Sep 18, 2020 7:26 pm The objection isn't that there's any problem with what he's doing, it all makes sense. But to say I'm retired and spend X per year, when Y is spent by my business for things that benefits me, the X amount loses its grounding in reality.
Even though the "Y spent by my business" wouldn't be spent if not for the business?

In the case of MMM's post, he says it clearly: if it weren't for his business, he wouldn't have bought the Nissan Leaf, spent $4,000 on travel, or $20,000 on inventory for their Etsy shop.

An example of an actual problematic situation might be: say he claimed to spend $0 on internet service (and insisted you should too!), but in fact he had standard internet service at home paid by his business. Or that he had a $0 grocery bill because the business bought his food.

I guess I'm sympathetic because my own situation has some similarities. When I was a full-time tour manager for music groups, I had a more expensive phone plan, ate out a lot, had multiple airline club memberships and fancy credit cards with lots of perks, spent lots of money on taxis and Lyft rides, and had a much fancier computer and luggage.

Now I don't travel and instead work at home, and I don't need any of those things. I've cut them out because they were used for my business and now no longer are. Same deal with MMM.

The dude doesn't need me to defend him on the internet, his writings just turned my life around. I went from $0 net worth in 2013 to 10x my annual expenses today thanks to his site, and I am happier than ever.
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