DK's journal

Where are you and where are you going?
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davebobk47
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Joined: Tue Dec 13, 2016 10:41 am
Location: Colorado
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DK's journal

Post by davebobk47 »

What am I missing?

Short version of current state & future plans:
I turn 40 next month and have been working towards retiring before 45 however the more I look at the numbers I think i can retire in 36 months. My wife(teacher) took this last year off to stay with our 2 kids and avoid dealing with covid in the schools. She was just hired and will be starting at a new school in Aug. She likes teaching and plans to keep her job. I do plan on working part time doing something I enjoy (target of making $500/month avg)
Between passive income, social security, house downsizing, and retirement portfolio I'll have plenty once I hit 62 so the goal is to get from where I am now to 62.

Down to the numbers - in 36 months this is where I expect things to stand:
non-retirement portfolio - $750k-$800k
Wife's income: (take home will be about $2600 after taxes/insure)
Passive income: $3000/month (2 rental properties, some dividends)
My income: $500/month
Avg monthly spend: $8500 (this includes mortgage, setting aside a few hundred a month for future car replacement, large medical expenses, etc)
Avg monthly draw down once I retire = $2400/month

I've run this through cFIREsim with all sort of different combos as well as some homemade spreadsheets and most scenarios put me at a portfolio balance the same or higher than my starting balance.

Things I've thought about -
Inflation: Definitely a big topic now but rental properties should hold up well here and our mortgage is fixed (3.25%). Dividends could of course go down but this is a smaller portion of passive income and if needed I can reallocate.
College: both kids have a 529 account not included in the above numbers. our goal is to provide $40k per kid for education and without adding any more the current balance should hit that by the time they turn 18
Car: Above plan includes a new (well, actually used) car every 10 years at a cost of $24k. Typically 10 years is the minimum we've kept vehicles.
Insurance: Wife will carry the family - current plan has a max out of pocket expense of $10k. (only time we've come close to that were the years the kids were born)
Family: Parents are retired and will not need any financial assistance
Data: Been tracking our monthly spending for over 4 years, one rental property I've had for 13 years (the other is newer) so I feel I have accurate data

So... what am I missing, or, do I really only have 36 more months of the corporate world?

white belt
Posts: 1452
Joined: Sat May 21, 2011 12:15 am

Re: DK's journal

Post by white belt »

Read this thread for ideas (the non-financial aspects are just as important as the numbers): viewtopic.php?f=3&t=12001

Your spending is absurdly high even by MMM standards. Do you have any interest in reducing expenses?

davebobk47
Posts: 14
Joined: Tue Dec 13, 2016 10:41 am
Location: Colorado
Contact:

Re: DK's journal

Post by davebobk47 »

white belt wrote:
Fri Jun 11, 2021 10:35 am
Read this thread for ideas (the non-financial aspects are just as important as the numbers): viewtopic.php?f=3&t=12001

Your spending is absurdly high even by MMM standards. Do you have any interest in reducing expenses?
I certainly agree it is very high - $7500 is more typical but there is always "big" expenses that come up -the latest was braces for my oldest (big under bite so medically needed - not cosmetic) which is why i plan on $8500. My wife is not terribly interested in early retirement which drives some of it. A big part is our mortgage - $2600 - we moved from a very high cost of living area to a somewhat cheaper place (buying a house $125k less than what we sold our previous place for). While we could pay this off it is only 3.25% so I think it makes sense to keep this debt.

white belt
Posts: 1452
Joined: Sat May 21, 2011 12:15 am

Re: DK's journal

Post by white belt »

The first issue I see is it sounds like you and your wife have different ideas of frugality and spending, so that might cause some friction especially if you stop working and she continues to work.

Regarding the numbers, it would be useful to have a bit more detail about about your non-retirement portfolio allocation and expenses. Do your expenses include the mortgages for the 2 rental properties?

The bigger issue I suspect you’re going to have us figuring out what you’re retiring to: viewtopic.php?p=244656#p244656

In other words, the impression I get is you are looking at things from a pure quantitive perspective when really you should have a holistic perspective that takes into account your goals, desires, skills etc of yourself and your family. It’s not so easy figuring out how to live a rewarding life outside of a consumerist culture when you have spent your entire life pursuing financial capital.

davebobk47
Posts: 14
Joined: Tue Dec 13, 2016 10:41 am
Location: Colorado
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Re: DK's journal

Post by davebobk47 »

@white belt - thanks for replies, here's more details:
There definitely is some friction when it comes to certain spending however I do think it is improving. Regarding the 2 rentals - one is paid off - the other is $1k/month PITIA (fixed at 3%). I recently acquired this with a tenant in place so current rent is lower than market but I cannot raise until the current lease is up. Currently generates $100-$200/month depending on maintenance however if current tenant moves out I should be able to raise rent $200/month. Here is a general breakdown of a month:

Mortgage 2600
Rental mortgage 1000
House Projects 200
Food 1300 (this has gone up a ton since covid - we rarely go out to eat but compared to 18 months ago this is up about 300-400)
Life Insure 50
Transportation (Gas, insure, reg) 350
Daycare 450 (2 more years and this goes away)
Gifts/Donations 100
Healthcare 500 (so far this year isn't great in this category - i fell while running and had an ER visit and follow up with ortho doc and my wife had appendix out... not much can be done there)
Utilities *** 450 (this includes elec/gas/phone/internet/garbage/water - this is very high but about 200 of this goes to crypto mining. I did not include any income from this because who knows where its going however I typically make a few thousand a year. As a computer engineer i had a lot of fun building and operating the machines. so real cost for all utilities is about $250/month)
My hobbies 100 (I like trail running so I need new shoes about every 6-8 weeks plus i do a few ultra races per year)
Activities (sports, camping, etc) 400 (this may be high but I have no problem with this - it is family time w/ kids doing things we enjoy)
Vacation/Travel 300 (non-COVID years typically include a trip to visit my family requiring a flight plus a driving trip or two to visit wife's family - this is avg as many months are 0)
Clothes/Hair/Material Items 150 (my wardrobe consists of t shirts i get from running races and I cut my own hair - this is mostly stuff for kids/wife)
Target/Walmart/Amazon 600 (this should be close to 0 - this is where the friction comes from)

Regarding retirement plans for me I'd love to coach track or XC at the local school. There are also opportunities to teach mountaineering classes for kids or adults in the area - both of these would generate the $500/month target although I would do them on a volunteer basis. I would also like to get back into doing Search and Rescue (I've taken a break from this since having kids)

white belt
Posts: 1452
Joined: Sat May 21, 2011 12:15 am

Re: DK's journal

Post by white belt »

davebobk47 wrote:
Fri Jun 11, 2021 11:25 am
Regarding retirement plans for me I'd love to coach track or XC at the local school. There are also opportunities to teach mountaineering classes for kids or adults in the area - both of these would generate the $500/month target although I would do them on a volunteer basis. I would also like to get back into doing Search and Rescue (I've taken a break from this since having kids)
Have you talked to your wife about these things? You don't need to have a huge nest egg to live a retirement lifestyle like you wrote there, but you will if your wife is expecting to live upper middle class lifestyle and you are more interested in frugal outdoorsman/community leader lifestyle. To me it sounds like you and her have a different shared vision of what the future looks like. This is just my assumption from the limited information you've shared.

Other than that I feel like I'd pretty much give you the same advice as what I gave M in the thread I linked earlier. The difference between you and him is his spending level (so he's a little more comfortable creating solutions that don't require him to spend money) but I think the fundamental challenges are the same. I'm guessing as a computer engineer that you are INTJ and likely downplaying the non-financial benefits you get from work. When you retire you might very well find yourself bored and back to work within a few years.

davebobk47
Posts: 14
Joined: Tue Dec 13, 2016 10:41 am
Location: Colorado
Contact:

Re: DK's journal

Post by davebobk47 »

white belt wrote:
Fri Jun 11, 2021 1:01 pm
Have you talked to your wife about these things? You don't need to have a huge nest egg to live a retirement lifestyle like you wrote there, but you will if your wife is expecting to live upper middle class lifestyle and you are more interested in frugal outdoorsman/community leader lifestyle. To me it sounds like you and her have a different shared vision of what the future looks like. This is just my assumption from the limited information you've shared.
Yes, she's all for that but I think you hit the nail on the head that she may want "higher" lifestyle than I. Will read more of M's thread since it sounds like there might be relevant material there.

Thanks!

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