I've been playing around with http://www.cfiresim.com/ and its interesting.
If I retire in 2020 and live for 60 years past that point with a spending of $30k per year with a 70/30 equity/bonds split and a portfolio of $800k the simulator provides a 100% success rate. In my opinion that is fairly conservative.
We do have some problems with spending more than right now but we also have 3 young kids and I think $30k for myself and my wife would be plenty.
I sort of would like to get to a cool $1million but really who cares.
FI in 10 years
Re: FI in 10 years
i'm right there with you one those thoughts, 30k looks perfect for most costs with a buffer included in that 30 for unseen expenses; but that one million is a goal I want to hit too; even though I don't need to with a sub-3 SWR.
Re: FI in 10 years
Its interesting isn't it. If you get to one million you can spend 35k without any chance historically of running out of money.leeholsen wrote:i'm right there with you one those thoughts, 30k looks perfect for most costs with a buffer included in that 30 for unseen expenses; but that one million is a goal I want to hit too; even though I don't need to with a sub-3 SWR.
Looking at those figures I'm starting to think getting to one million is pointless. Even if you budget for 30k but you expect to spend less than that you will probably end up getting to a million dollars. The average ending portfolio is about $8 million.
Re: FI in 10 years
I've come up with some more figures that I'm tracking at the moment:-
FI date: "2022-03-07"
WR: 21.55233
Savings Rate: 0.7453851
Dividends % of living expenses: 6.474238
Working Days To FI: 1553
It'll be interesting how these figures change over time. Its a long way to go based on current spending however I think we can reduce spending. Its really the 3 kids that cost a lot of money.
FI date: "2022-03-07"
WR: 21.55233
Savings Rate: 0.7453851
Dividends % of living expenses: 6.474238
Working Days To FI: 1553
It'll be interesting how these figures change over time. Its a long way to go based on current spending however I think we can reduce spending. Its really the 3 kids that cost a lot of money.
Re: FI in 10 years
I thought I would give another update. Work isn't bad at the moment but there is so much on. I don't know if anyone reads http://livingafi.com/ but I can relate to that blog so much because I work in a similar environment although mine is much better.
Still the general theme on that blog and where I'm coming from are completely in sync. I like my job but there is also a lot of suckiness in it.
My wife has a much worse job (its basically a call centre) and she had the double because she had terrible management. She just got another job though - same pay but hopefully less crap.
One thing that I really notice about work sucking is that I train jiu-jitsu a lot less. Last week I went twice and the week before it was only once. I then put on weight although its probably not much. Anyway I'd rather be doing other stuff than working.
Still the general theme on that blog and where I'm coming from are completely in sync. I like my job but there is also a lot of suckiness in it.
My wife has a much worse job (its basically a call centre) and she had the double because she had terrible management. She just got another job though - same pay but hopefully less crap.
One thing that I really notice about work sucking is that I train jiu-jitsu a lot less. Last week I went twice and the week before it was only once. I then put on weight although its probably not much. Anyway I'd rather be doing other stuff than working.
Re: FI in 10 years
Another update with regards to thoughts on my finances and what FI will mean to me from a metric perspective:-
FI = 800k predominantly share based investments + 5 years no drawdowns + paid off house
I am thinking of investing this as follows:-
400k super (Australia's tax advantaged account that you cannot draw on until 60 in my case) - 90/10 shares/bonds
400k outside super which consists of:-
300k Australian shares - generates 15k per year dividends with franking credits
50k USD Shares
50k Non USD Shares
I intend to use low cost index investments basically vanguard ETF's for the funds outside of super and just stick with my current super account which although the fees are relatively high they are as good as what I can see that is available to me.
5% drawdown per year which is above our current spending but save excess cash to counter for any down years.
I think that this looks fairly safe even though it also appears aggressive in some ways.
FI = 800k predominantly share based investments + 5 years no drawdowns + paid off house
I am thinking of investing this as follows:-
400k super (Australia's tax advantaged account that you cannot draw on until 60 in my case) - 90/10 shares/bonds
400k outside super which consists of:-
300k Australian shares - generates 15k per year dividends with franking credits
50k USD Shares
50k Non USD Shares
I intend to use low cost index investments basically vanguard ETF's for the funds outside of super and just stick with my current super account which although the fees are relatively high they are as good as what I can see that is available to me.
5% drawdown per year which is above our current spending but save excess cash to counter for any down years.
I think that this looks fairly safe even though it also appears aggressive in some ways.
Re: FI in 10 years
I found the blog recently and spent several hours reading it. His posts, especially the recent ones, resonate with me. The three of us must be in similar places in our careers (mentally at least).steveo73 wrote:I thought I would give another update. Work isn't bad at the moment but there is so much on. I don't know if anyone reads http://livingafi.com/ but I can relate to that blog so much because I work in a similar environment although mine is much better.
Still the general theme on that blog and where I'm coming from are completely in sync. I like my job but there is also a lot of suckiness in it.
Re: FI in 10 years
Its interesting isn't it. I really like the management within my team but the culture of stupid crap has I think invaded IT.Carlos wrote:I found the blog recently and spent several hours reading it. His posts, especially the recent ones, resonate with me. The three of us must be in similar places in our careers (mentally at least).steveo73 wrote:I thought I would give another update. Work isn't bad at the moment but there is so much on. I don't know if anyone reads http://livingafi.com/ but I can relate to that blog so much because I work in a similar environment although mine is much better.
Still the general theme on that blog and where I'm coming from are completely in sync. I like my job but there is also a lot of suckiness in it.
Re: FI in 10 years
I chucked a sickie today and spend the day playing chess, doing jiu-jitsu, cooking and reading all sorts of crap on the Internet.
One thing I just did is reassess where we are at and the FI goals and I seriously think that I could lower my target and be okay. I also think that a lower target might be a better goal to aim for.
I could change my target to something like:-
1. Paid off house
2. 600k
3. 5 years no drawdowns
The house will be paid off hopefully this year and the 600k based just on saving should he obtainable by the end of 2018. This drops the timeframe back from 5 years post the house being paid off to 3 years post the house being paid off. We would still need enough money to live for 5 years post that point however that should be fairly easily obtainable.
The reason I think that this is achievable is based on drawing down 5% of the portfolio every year post the no drawdown phase. The average spend based on this via cFIREsim is about 40k per year. This is more than what we are spending. I think that there is also some buffer in those figures because I am not assuming any inheritance (potentially a lot) or any social security etc.
One thing I just did is reassess where we are at and the FI goals and I seriously think that I could lower my target and be okay. I also think that a lower target might be a better goal to aim for.
I could change my target to something like:-
1. Paid off house
2. 600k
3. 5 years no drawdowns
The house will be paid off hopefully this year and the 600k based just on saving should he obtainable by the end of 2018. This drops the timeframe back from 5 years post the house being paid off to 3 years post the house being paid off. We would still need enough money to live for 5 years post that point however that should be fairly easily obtainable.
The reason I think that this is achievable is based on drawing down 5% of the portfolio every year post the no drawdown phase. The average spend based on this via cFIREsim is about 40k per year. This is more than what we are spending. I think that there is also some buffer in those figures because I am not assuming any inheritance (potentially a lot) or any social security etc.
Re: FI in 10 years
Some interesting points today. My company just restructured and I'm not sure how many but 20-30 people were retrenched. The team did look massive when we all caught up but I assume its about 100-150 people. That is a lot of people being let go. I also caught a bus home with another guy from work and we were discussing finances. He is 55 with a mortgage of 280k. Apart from that I assume that he has minimal assets.
It makes me wonder how people survive at all. I feel sorry for the guys that are in that position but what can you do.
I'm truthfully not ready to lose my job just yet however I'm concerned that I will not be able to have it as good as I have it now. At this point I can ride my bike to work in 5-10 minutes and I can work from home whenever I want.
I have a job and I seem to have a bigger team and it all looks good for me personally but it makes me realize that we really need to keep on the path that we are on. If I lose my job in 3-5 years time its probably not a big issue. I could of course get another job now as well and a retrenchment wouldn't really bother me. I'm more concerned about moving work locations and now having it as good.
It makes me wonder how people survive at all. I feel sorry for the guys that are in that position but what can you do.
I'm truthfully not ready to lose my job just yet however I'm concerned that I will not be able to have it as good as I have it now. At this point I can ride my bike to work in 5-10 minutes and I can work from home whenever I want.
I have a job and I seem to have a bigger team and it all looks good for me personally but it makes me realize that we really need to keep on the path that we are on. If I lose my job in 3-5 years time its probably not a big issue. I could of course get another job now as well and a retrenchment wouldn't really bother me. I'm more concerned about moving work locations and now having it as good.
Re: FI in 10 years
I don't know how people live on the edge like that 55 year old guy you talked too. It has to be depressing to be that age and still not be financially established.
Re: FI in 10 years
They don't even seem depressed. That is what kills me. I think my house is probably worth a lot more than his house and I owe 50 grand. That 50 grand kills me. When he said he owed that much I didn't say anything.Chad wrote:I don't know how people live on the edge like that 55 year old guy you talked too. It has to be depressing to be that age and still not be financially established.
I saw all these people lose their jobs. It could have been me. I want to be at the stage where if that happens I say hell yeah.
Re: FI in 10 years
Yep, I definitely want to be able to say "hell yeah." Even right now, most of us could at least say, "oh, well", if we lost our job. For me it would just be an opportunity to do something else.
Re: FI in 10 years
I like a number of things about my job - I live so close to my work and I get to work from home typically one day per week. If there is some reason to work from home more than that I can. The pay is good and the work is good.Chad wrote:Yep, I definitely want to be able to say "hell yeah." Even right now, most of us could at least say, "oh, well", if we lost our job. For me it would just be an opportunity to do something else.
I can see though those benefits changing. I have more responsibility and I can see myself having to turn up every day. I also think my work will be relocated.
In a few years time I would welcome losing my job in this scenario. At this point I would have to get another one and it wouldn't be that bad however I can't really be bothered right now.
Still I don't get how people spend so much money.
Re: FI in 10 years
I haven't posted on this for a while so I thought I'd provide an update.
A couple of points:-
1. We've had some additional car expenses recently which led us to withdraw $2 grand from our mortgage.
2. I am thinking of getting rid of the 2nd family car. I really only need it once per week to drive my son to my parents to take care of him. That though won't be required next year as he goes to school.
3. I am so sick of work. Its going to be a grind getting through the next 5 years.
4. My wife got sick of saving and wanted to spend some more money recently. We went out to a restaurant and a movie but the movie tickets were free as she won them from work. I don't have a problem with this but I think it shows how we need to have enough saved up so we aren't on a budget that is too tight for us when we retire.
5. I think despite everything listed above we are still on track towards saving about 70% of our income this year.
I'll expand on the work sucking point a bit. I am just working too hard and there is too much pressure. This leads to less exercise and more junk food and alcohol being eaten/drunk. Its just not the the lifestyle that I want to lead. The job itself is not really bad. I work with some really good people that I like and the work itself is interesting. Its just the pressure and the time spent doing stuff that I would rather not do.
A couple of points:-
1. We've had some additional car expenses recently which led us to withdraw $2 grand from our mortgage.
2. I am thinking of getting rid of the 2nd family car. I really only need it once per week to drive my son to my parents to take care of him. That though won't be required next year as he goes to school.
3. I am so sick of work. Its going to be a grind getting through the next 5 years.
4. My wife got sick of saving and wanted to spend some more money recently. We went out to a restaurant and a movie but the movie tickets were free as she won them from work. I don't have a problem with this but I think it shows how we need to have enough saved up so we aren't on a budget that is too tight for us when we retire.
5. I think despite everything listed above we are still on track towards saving about 70% of our income this year.
I'll expand on the work sucking point a bit. I am just working too hard and there is too much pressure. This leads to less exercise and more junk food and alcohol being eaten/drunk. Its just not the the lifestyle that I want to lead. The job itself is not really bad. I work with some really good people that I like and the work itself is interesting. Its just the pressure and the time spent doing stuff that I would rather not do.
Re: FI in 10 years
Interesting day today. My job at the moment is freaken tough. I have a tonne of pressure on me. I manage projects (1 at the moment) and a team that delivers work (about 5 projects and 10-20 staff).
I've been working too hard but I am working on managing it so that life is a little better. So last week and this week I've had long lunch breaks twice per week to go to the gym and do jiu-jitsu at lunch time. That is fantastic and getting close to how I would like to live my life when I retire.
Today at work though a number of the guys in my team got taken off one of the projects they are working on because they (some moron in management) believe that another team can do it quicker. Its not my decision and I think its shit but at the same time I think it reiterates why becoming FI is so important.
I've been working too hard but I am working on managing it so that life is a little better. So last week and this week I've had long lunch breaks twice per week to go to the gym and do jiu-jitsu at lunch time. That is fantastic and getting close to how I would like to live my life when I retire.
Today at work though a number of the guys in my team got taken off one of the projects they are working on because they (some moron in management) believe that another team can do it quicker. Its not my decision and I think its shit but at the same time I think it reiterates why becoming FI is so important.
Re: FI in 10 years
Another update but not a good one from my perspective.
The TV broke on the weekend and we replace it with an $1800 dollar 60 inch TV. So this year we have had a massive amount of increased expenses:-
1. Laptop (admittedly this was last year but it was really this year ad we bought it right at the end of last year) - $1000
2. Car Expenses - $2000
3. New TV $1800
4. Braces - $2500
That is a lot of extra expenses and it is killing our FI target asset level and therefore our WR.
I honestly can only see the car expense being somewhat reduced next year if I sell the 2nd family car. We don't need a TV like the one we bought and the laptop shouldn't be an ongoing expense however expenses similar to this will continue especially while the kids are in school. The braces expense may drop however that is just for child no 1. I have 2 more kids that may need braces. The youngest child is 4 turning 5 soon so his braces will be a while off however we have to budget for that expense.
Its a tough situation because although we can minimize the expenses there will be stuff that we have to buy.
I think we will still save about 70% of our income and I expect the mortgage to be gone by the end of this year or extremely close to it.
I'm really thinking about any ongoing expenses that we can drop but the only thing that I can really see is the 2nd car. We don't have cable of Netflix. We have Internet. Maybe I could get rid of one of the mobile phones and see if work could pay for my phone.
The TV broke on the weekend and we replace it with an $1800 dollar 60 inch TV. So this year we have had a massive amount of increased expenses:-
1. Laptop (admittedly this was last year but it was really this year ad we bought it right at the end of last year) - $1000
2. Car Expenses - $2000
3. New TV $1800
4. Braces - $2500
That is a lot of extra expenses and it is killing our FI target asset level and therefore our WR.
I honestly can only see the car expense being somewhat reduced next year if I sell the 2nd family car. We don't need a TV like the one we bought and the laptop shouldn't be an ongoing expense however expenses similar to this will continue especially while the kids are in school. The braces expense may drop however that is just for child no 1. I have 2 more kids that may need braces. The youngest child is 4 turning 5 soon so his braces will be a while off however we have to budget for that expense.
Its a tough situation because although we can minimize the expenses there will be stuff that we have to buy.
I think we will still save about 70% of our income and I expect the mortgage to be gone by the end of this year or extremely close to it.
I'm really thinking about any ongoing expenses that we can drop but the only thing that I can really see is the 2nd car. We don't have cable of Netflix. We have Internet. Maybe I could get rid of one of the mobile phones and see if work could pay for my phone.
Re: FI in 10 years
Hey Steveo,
Just reading this right now. Have you ever calculated how much the second car costs? I'm betting it costs at least 100 dollars per month (depreciation, taxes, insurance, gas, repairs). If so, then from next year onward, you would save 1200/year just by not having that second car.
The new TV was pretty expensive, I think. Hopefully this tv will provide for all of your family's TV needs for the next 15 years or so. Maybe the next tv you buy can be a $400 one instead of a $1500 one.
I think your expenses will drop in the future when the kids start leaving the house. No more braces, for example, but also less groceries to buy, etc. The mortgage will be gone, too, and perhaps you could move to a smaller house (or have a renter or two to bring in extra income).
So in short, don't be too pessimistic
. No matter the expenses, your savings rate is still impressive, too.
How many weeks of holiday do you have? And are you actually using them? Being sick of work could be a sign that you need some time off. I hope you're taking that time off now and then, as I believe it's good for your mental health. It might help you care a bit less about work, and thus it might help you let it affect you (your health, your mood) less.
Just reading this right now. Have you ever calculated how much the second car costs? I'm betting it costs at least 100 dollars per month (depreciation, taxes, insurance, gas, repairs). If so, then from next year onward, you would save 1200/year just by not having that second car.
The new TV was pretty expensive, I think. Hopefully this tv will provide for all of your family's TV needs for the next 15 years or so. Maybe the next tv you buy can be a $400 one instead of a $1500 one.
I think your expenses will drop in the future when the kids start leaving the house. No more braces, for example, but also less groceries to buy, etc. The mortgage will be gone, too, and perhaps you could move to a smaller house (or have a renter or two to bring in extra income).
So in short, don't be too pessimistic
. No matter the expenses, your savings rate is still impressive, too.How many weeks of holiday do you have? And are you actually using them? Being sick of work could be a sign that you need some time off. I hope you're taking that time off now and then, as I believe it's good for your mental health. It might help you care a bit less about work, and thus it might help you let it affect you (your health, your mood) less.
Re: FI in 10 years
Hi Dutch Girl.
I think getting rid of the car even if I only drive it once per week will save about $100/month as well. It is an easy thing to cut. I'm not really pessimistic regarding where we are at but it really sucks when we are basically frugal but this year we haven't done as well as last year. If we keep the TV for a long time though as you state it will probably be fine. I'm more concerned about on-going costs like the car.
I'd add that I am a big fan of cutting expenses. I think it has the biggest impact of getting to FI. As we have spend too much this year out FI number at 4% will be over 1 million dollars. I honestly think that this is crazy and I don't want to worry about hitting that number.
I have 4 weeks of holiday per year and this is my last week at work and then 2 weeks off. The problem is that I am on the project from hell and I will have to work some of the time over that period. I honestly have a decent job but the pressure is full on. I will FIRE as soon as I can with some degree of buffer. That might though be at a 5% WR with some additional years of part time work or working in a crappy job or saved up holidays. I am close to having 6 months long service leave accumulated now. By the time I retire this should easily occur. 6 months full time leave will be 12 months 1/2 pay. 1/2 pay for myself will still mean that we can save money.
So the areas to improve next year will be interesting. I can see a couple of areas:-
1. Sell the second car.
2. Save more into our emergency or cash fund. I am not really a big fan of this but I think having a buffer is just smart as things break and expenses come up. Having spare money enables these hiccups not too bother us. I don't consider this money as part of my savings. I view it as expenses but at least its a buffer with regards to costs that come up when you don't expect them.
3. Next year we should be investing money. This should be the start of additional money coming to us in the form of dividends. So less expenses due to no mortgage plus income from a source outside of our jobs.
I think getting rid of the car even if I only drive it once per week will save about $100/month as well. It is an easy thing to cut. I'm not really pessimistic regarding where we are at but it really sucks when we are basically frugal but this year we haven't done as well as last year. If we keep the TV for a long time though as you state it will probably be fine. I'm more concerned about on-going costs like the car.
I'd add that I am a big fan of cutting expenses. I think it has the biggest impact of getting to FI. As we have spend too much this year out FI number at 4% will be over 1 million dollars. I honestly think that this is crazy and I don't want to worry about hitting that number.
I have 4 weeks of holiday per year and this is my last week at work and then 2 weeks off. The problem is that I am on the project from hell and I will have to work some of the time over that period. I honestly have a decent job but the pressure is full on. I will FIRE as soon as I can with some degree of buffer. That might though be at a 5% WR with some additional years of part time work or working in a crappy job or saved up holidays. I am close to having 6 months long service leave accumulated now. By the time I retire this should easily occur. 6 months full time leave will be 12 months 1/2 pay. 1/2 pay for myself will still mean that we can save money.
So the areas to improve next year will be interesting. I can see a couple of areas:-
1. Sell the second car.
2. Save more into our emergency or cash fund. I am not really a big fan of this but I think having a buffer is just smart as things break and expenses come up. Having spare money enables these hiccups not too bother us. I don't consider this money as part of my savings. I view it as expenses but at least its a buffer with regards to costs that come up when you don't expect them.
3. Next year we should be investing money. This should be the start of additional money coming to us in the form of dividends. So less expenses due to no mortgage plus income from a source outside of our jobs.
Re: FI in 10 years
Well, yes, those extra expenses are going to happen now and then, right? This laptop will need to be replaced, well, five years from now or so. The family car will also need to be repaired, and replaced, at some point in time. Same is true for the fridge, and the water heater, and the furniture. I'm not completely sure how to handle those expenses (save a certain amount every year? Just "suck it up" when they happen?), but yes, things run out, bluescreen, break, get lost, malfunction, etc...