M's Journal

Where are you and where are you going?
M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

M's Journal

Post by M »

So - I lurk here a lot. I've posted a few times. I suppose that it's time that I contribute something meaningful, like a journal. First the stats:

ERE Pros:
28 year old physical body, in average shape (I think I would be considered overweight and out of shape in most countries, but in America most people consider me skinny and in shape. Go figure.)
$300,000 USD taxable investments
$35,000 USD IRA
$15,000 401k
Paid off house
Three paid off cars (Yes, I know I know)
Bicycle
No debt
90K /year salary/bonuses

ERE Cons:
Stay at home wife (who loves children)
Two children

Monthly Expenses (Average trailing 12 months):
$50 property taxes
$50 water/trash/sewer
$130 electricity (this is mostly for heating during winter and cooling during summer)
$400 food/household items
$30 Internet
$30 car insurance
$90 car gas/maintenance (I do my own maintenance+drive fuel efficient cars+don't drive much)
$20 cell phones
$200 eating out
$100 misc

Total budget is $1,100 /month
Note that this budget DOES NOT include medical care, which is covered by my employer. I'm still trying to figure out how one is supposed to achieve FI AND pay for family medical insurance. Would obamacare cover someone in my situation if I were not employed? (I live in a state where Medicaid was expanded)

I think I'm one of the few posters on here who have children, and I'm trying to figure out how realistic achieving FI really is with young children. Are there any posters on here who have achieved FI with children?

I'll write more later on. Right now I'm struggling to figure out when/if I should pull the trigger with the uncertainties surrounding medical care and future child expenses. Can anyone chime in with their experience with the cost of raising children? For now I plan on working a few more years.

I'm not on here all too often, so I may not be as responsive as you may expect. But eventually I will post more.

RealPerson
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Re: M's Journal

Post by RealPerson »

With your wife staying home, day care is a major expense you avoid. My experience is that the cost of children rises progressively every year. Because kids have endless desires and because of the social pressure to take your kids to piano lessons, soccer teams, hockey teams, etc, it is very easy for their expense to escalate. You really have to watch the cost and prioritize. This is definitely possible but requires great vigilance and prioritizing your values.

The expense of health care insurance goes up almost exponentially as you age. Nothing you can do about it. I have tried and with the cheapest plans still pay $1,200 for a healthy family with a huge deductible.

George the original one
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Re: M's Journal

Post by George the original one »

M wrote:Would obamacare cover someone in my situation if I were not employed? (I live in a state where Medicaid was expanded)
If your income is high enough (but not too high), yes it would. Family of 4 needs to earn a minimum of $33k (approx) to get a subsidy and the subsidy phases out by about $93k. These levels will go up each year as the government recalculates the federal poverty level (fpl is usually increased by annual CPI).

Following the 4% rule, that suggests you should have $825k in liquid assets before retiring. Since your current family expenses are only $13.2k, you might consider whether just buying a health plan without the subsidy will require lower liquid assets than meeting Obamacare's minimum income.

George the original one
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Re: M's Journal

Post by George the original one »

In a rural Oregon county, if you paid out-of-pocket instead of relying on the subsidy, your cost today would be in the $4k-5k/yr range for a Silver plan. That cost will likely go up at 2x-3x CPI inflation each year. Thus it seems that if you budgeted $20k-25k expenses, you could retire early with $500k-$625k in liquid assets... significantly less than if you wanted to use the subsidy!

M
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Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

@George

I was wandering more about whether I would be covered by the Medicaid expansion, which was part of Obamacare. From what I have read there are no asset tests, and it's only based on MAGI. If I were to quit my job and my MAGI was 10-12k, would I be covered by this even though I have >300k in assets? It seems too good to be true almost. I wander if anyone who is FI can comment on whether they qualify for medicaid? I know some people may have ethical objections to doing this since I am well off, but I don't really view this as an ethical problem anymore than I view the obamacare subsidies as an ethical problem.

@scriptbunny

Yes - the wife wants another child eventually. We're still negotiating the timing of this. Having children does present a unique set of challenges. The largest of which seem to be the cost of family medical insurance followed closely by the stigma of others for living a frugal lifestyle. It's one thing to deprive yourself of something but most people see it as deprivation if your children *only* have 250 plastic trinkets instead of the usual 1,000. The most recent fight has been with my MIL over the fact that I buy all of my family's clothing from yard sales and thrift stores. In her mind I am depriving the children of a part of their life by not buying all of their clothes new from wallie world or Kohl's. Since new clothes seem to become used clothes over time, I don't understand how this is so horrible.

Somewhat ironically I've found that the people who criticize me the most for being frugal also almost universally have the most financial problems of their own, as well as various other problems. This pattern has been so consistent throughout my life that I can now predict pretty well who is going to be broke and homeless in a year or two strictly based on how much they criticize my lifestyle. :-P

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C40
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Re: M's Journal

Post by C40 »

If your wife is willing, this is where a white lie works well.

It's none of the MIL's fucking business where you buy these clothes. If the clothes themselves are horrible, then maybe she could complain about them.

When she asks, just say they came from wherever she wants to hear. Something like "ahh, I Kohl's I think". It's not even a lie if your answer is just where they may have originally been sold.

Tyler9000
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Re: M's Journal

Post by Tyler9000 »

Yes, since your state expanded it I believe you should be covered by Medicaid. No ethical issues from me - you're simply following the rules. My concern would be more about the doctor networks compared to the paid plans, and depending on a benefit that could be easily taken away by future government action.

FWIW, there are also a few ways to optimize MAGI for subsidy levels. Part of my plan involves converting just enough of my IRA to a Roth every year to get my income up to the minimum level to qualify.

M
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Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

@C40

Yes - I've considered taking this approach. My wife is completely on board with my plans, so this is a big plus for me. She grew up poor, so somewhat ironically our frugal lifestyle is still more luxurious than the life she had growing up (We have internet, our bed is new, we can afford to eat out, etc). Which is why I find it somewhat strange that her mom would complain about where we got the clothes from. The clothes themselves look brand new - I usually like to hit upper class neighborhoods on garage sale days. A lot of the clothes were never even worn by the people we bought them from, and they're usually just trying to get rid of them. I've been to garage sales where I've bought entire trash bags worth of new name brand clothing for $20 dollars that has never been worn (some of them still had the tags on them from when they were bought!!). The children of rich people are spoiled beyond belief, so much so that they often have so many clothes that they grow out of their clothes before they get a chance to wear them all.

@Tyler

My knowledge of medicaid is pretty low. I guess there are some doctors/hospitals that don't take medicaid? Does this mean that medicaid still pays but not the whole bill and the patient has to pay the rest, or are there some medical establishments that don't take medicaid at all and the patient would have to pay everything? Is there such a thing as max out of pocket with medicaid?

The plan to optimize MAGI for subsidy levels by using well planned IRA to roth IRA conversions is pure genius. It looks like I just found a reason to start maxing out my 401k at work.

It just occurred to me that I didn't include my HSA account in my first post. I have around 9k in it and rising. I'm not sure how useful this account will be if I take the medicaid approach..hmmm...

George the original one
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Re: M's Journal

Post by George the original one »

Realistically, you don't want to be on Medicaid except as a last resort.

My 62-yr-old sister is on Medicaid (negative income) and has been since 2007. It is working for her, but only because she has no choice at this time. Dental, for instance, is tooth removal with no option for a replacement prosthetic... she is missing a few molars now.

GandK
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Re: M's Journal

Post by GandK »

M wrote:I'm still trying to figure out how one is supposed to achieve FI AND pay for family medical insurance. Would obamacare cover someone in my situation if I were not employed? (I live in a state where Medicaid was expanded)
Then you'd be placed on Medicaid. There are two downsides to this: one, not all doctors accept Medicaid. So your physician choice would be limited. And two, Medicaid keeps track of how much they spend on you after age 55 for certain expenses. And, once you and your spouse are gone, in most states they then seek to recover that money from your estate. So being placed on Medicaid could mean that your nest egg can't go to your children. And you can really only mitigate this by moving to a state that doesn't do that.

From the Medicaid web site: Estate Recovery and Liens
M wrote:I think I'm one of the few posters on here who have children, and I'm trying to figure out how realistic achieving FI really is with young children. Are there any posters on here who have achieved FI with children?

I'll write more later on. Right now I'm struggling to figure out when/if I should pull the trigger with the uncertainties surrounding medical care and future child expenses. Can anyone chime in with their experience with the cost of raising children? For now I plan on working a few more years.
jennypenny and I both have multiple kids. You should check out our journals. Also, here are a couple of threads about kid-related expenses:

Childcare Affordability thread
Kids on ERE thread

M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

I guess I should update this journal every now and then. :-P

So I've been spending a lot of money over the past few months. My taxable investments have only increased to around 310K and my 401k is now around 20k or so. Everything else is mostly the same.

I've been thinking a lot lately about WHY people want to ERE. And I think a lot of the time it's to get themselves out of a bad working situation or its because they've started to associate money as the source of life with the logic of - it takes time to earn money, I have finite time in my life, therefore to spend money is to waste my life. While I don't disagree with this logic I often times wonder if it doesn't lead people to make choices that may temporarily increase their savings, results in long term unhappiness. For example when people are too afraid to spend money to invest in themselves, don't understand the value of their own physical health and thus won't spend money on it, don't understand the value of their own life satisfaction and happiness and thus won't spend money on it, etc.

It seems like all too often I see people get stuck in the trap of seeing the only thing that is valuable as being monetary. Then they spend their whole life accumulating financial assets and then wonder why they are sick, freezing inside, and alone in January that they are miserable in life. It seems that people live too much in a fearful cave, always aspiring for freedom but never accepting it for themselves. I have seen this in this forum a lot lately. People who are sick and freezing inside of their house because they don't want to spend any money to keep themselves warm, People who are lonely and unhappy because they see all relationships as simply financial transactions where they exchange money for sex, etc.

I think to a certain extent people are holding themselves back from their true potential because they are too unwilling to let go of their money and/or too obsessed with security.

Sometimes it is only when you truly let go that everything falls into place.
Sometimes the reason everything hasn't fallen into place yet is because you are still holding on.

It seems that many people are simply exchanging one form of suffering for another. Instead of obsessing over who can buy the best shoes now people are obsessing over who can lower the thermostat the most. Instead of worrying about losing their job now they are worrying about a failure of their portfolio.

Other people on this forum are relatively enlightened and speak of having a 'weight' they are carrying now which is their financial portfolio. And yet they can't make the connection and realize that this new weight is the same as their old weight but in a different form. Worrying about losing your money is the same basic experience as worrying about losing your job, losing your status, or any other kind of worry. This is not freedom. Freedom will only come when you surrender your emotional attachments to things, people, outcomes, etc.

Only when you cut the bands that are attaching you to all of the negative things you experience in life. Only then can you be free.

Until then all you have done is exchanged one master for another.

...

There are a lot of people who are not fully present because they spend so much time craving the future. How to be happy during the accumulation stage? Perhaps the first step is to figure out what happens is and how best to bring this subjective experience to you.

And - contrary to what many people will tell you - there is no secret to happiness. The secret is that your mind is an extremely complex work of art. And - just like you can be overcome with lust, love, fear, anger, just like you can experience jealousy, playfullness, deep thought, have language abilities, experience a sense of time, space, and balance, your mind can also allow you to experience a sense of freedom and exquisite peaceful joy in life. This is brought about by eating well, exercising moderately, and continously striving to let go of all feelings, thoughts, desires, and attachment, and instead embracing with your whole heart that which brings you the utmost joy in life. In my experience this is how to live a lovely life.

In the end the means to obliterate the great questions of the meaning of life are given above and are very simple. Basically - learn about your mind and then artificially manipulate your subjective experience of life to be one of never ending peace and joy.

But of course taking this approach, much like ERE itself, doesn't answer any real questions. Instead it simply gives you more options about what kinds of experiences you wish to have and allows you to choose a little more freely...

M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

Hmm...So it's been a year now. I guess I should provide a more useful update instead of more ranting about nonsense, lol. I really suck at maintaining a journal.

I bought a new house this year. A 2,800 square foot McMansion, in cash. I know this will derail my ERE (ER?) goals quite a bit, but this was pretty much the last material thing I wanted in life. So I think I'm going to be done now with buying expensive things.

My financial stats took a serious hit, however. I now have:

-220K taxable account
-80k IRA/401K account
-14K in HSA account
-New paid off house, worth ~140k
-Old house, which is now a rental property that nets ~$300 /month after property taxes, maintenance, etc

Property Tax expenses have increased by ~$100 /month, and utilities have increased by ~$50 /month.

On the bright side - I still have no debt at all. Woohoo!

My job really sucks. The amount of politics and games that are played at work is mind boggling. Why can't they promote things in corporate America like Honesty? Or Communication? I enjoy working - but the amount of political BS that one has to overcome just to do something like serve the customer, or do something innovative, is insane. Management will actually chastise people for creating innovative solutions that make the company tons of money. So I've been thinking more and more about what I want to do with my life.

And - you know - lately I've been thinking that this guy --> http://www.gq.com/story/the-last-true-hermit didn't have a half bad idea.

Alternatively I can try and find a work from home software development job.

Anyone know of any work from home software development jobs? Preferably something part time, where I get to set my own hours, with health insurance. That would be awesome.

Or perhaps I should get into a different career all together...or a side business of some kind. Hmm...

Anyone have any good ideas for a side business for someone with good software development/plumbing/electrical/mechanic/finance skills?

-M

bottlerocks
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Re: M's Journal

Post by bottlerocks »

http://remoteok.io/

I know that site is popular over at r/digitalnomad for finding remote work, haven't used it myself though.

inchicago
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Re: M's Journal

Post by inchicago »

I have to agree with you on the part about cutting back so severe that you bring on yet another unhappiness. I refuse to freeze here in the cold Midwest just to save a few bucks. Not. Going. To. Happen. However, I think a lot of posters here scale down their homes so it's gets warmer with more energy, because they have a smaller space to heat, which I totally get. I also believe not ever going out with friends, etc., to save money probably isn't the best, but maybe for some people it is more important at this point in their life to reach their financial goals versus having a social life or family. That's what makes us all unique. We can choose our own path.

M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

Well - the financial position has improved since my last update. I now have:

Assets:

+300k in taxable accounts
+100k in 401k/IRA accounts
+17k in HSA
+Old house which is still netting ~$300 /month after taxes, maint, etc
+140k paid off primary house
+Two paid off vehicles
+More stuff than I will ever need.

Debt:

-None - like always.

Expensese:

Hovering around $1,000 to $1,500 /month

Being a landlord seems much more fun than being a software developer - at least where I currently work. My expenses have been hovering between $1,000-$1,500 /month. With three kids and a spouse this comes to around $200-300 /person. And honestly - my kids are completely spoiled by grandparents and other people, and I don't feel like we have any material things lacking in our life. We have several televisions, exercise equipment, gaming systems, eat out a lot, kids have lots of toys, bikes, clothes, etc. I have no idea how many of the people I work with somehow manage to spend 5-8k /month without even having kids. I honestly wander what that kind of budget must look like. I think I would struggle to find 8k worth of stuff every month to even buy.

Between my dividends and rental income I'm pulling in ~$1,200 /month average in passive income. There are some months now where I'm actually putting more money into my investment account than I earn from my job...And this doesn't include my 100k in 401k/ira.

My job - it still sucks. But I pretty much don't care anymore. At this point if they fire me I'll be like - eh - that place sucked anyway. I hate this place so much I have to constantly resist the urge to walk out. The politics, the drama, the backstabbing, the complete lack of autonomy and trust. Sometimes I have internal debates with myself if I shouldn't just find somewhere easy to work with health insurance and wait for my investments to compound. Like some sort of easy slacker job...hmmm...I'll ponder this some.

Josué
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Re: M's Journal

Post by Josué »

Hi M,

I'm also 28 as you were in your first post but I only have 19.000€ in a savings account as opposed to the impressive portfolio that you had at my age.

I see from your posts that you work in software development. Could you disclose some more details about what you do?

I'd like to understand how much money I could make in the US, since it seems that salaries are much higher than in Europe so I would be willing to give US a try.

M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

@Josue

I have done a variety of software development over the years, but my focus is .NET development. I'm actually in the bottom 10% in terms of pay where I work, and I live in a low COL area where developers are not paid as well as they are in California, New York, etc. I could definitely do better if I was willing to relocate. Some of my coworkers - who make more than I make - have relocated to other areas of the country and received 50%+ raises in the process. If you have the right combination of skills, experience, and education companies will throw crazy sums of money at you.

Of course at a lot of places the work can be crazy. Impossible deadlines and expectations, fuzzy or made up requirements, non-technical management trying to be in charge of technical decisions. In addition at some tech companies the management has about the same level of sleeziness and lack of ethics as your average used car salesman. You will be amazed at how low people will go to defend a 250k salary sometimes. Something about excessive money seems to corrupt people.

I would recommend software development for someone who is young looking to make a quick buck. Kind of like prostitution, it's not a great money making option as you get older and have to deal with age discrimination, etc.

Josué
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Re: M's Journal

Post by Josué »

That's an interesting perspective, thanks.

M
Posts: 186
Joined: Wed Sep 29, 2010 7:34 pm

Re: M's Journal

Post by M »

So it's time for my random periodic update.

I now have:

316K taxable
113K 401k/IRA
19k HSA
30k - Rental property can be sold for at least this amount, but currently nets $300 /month in income.
140k - value of primary residence.

Lots and Lots of stuff. I mean clothes, toys, bikes, tv's, furniture, cars, video games, etc, etc. I'm drowning in stuff. Somehow a person in America can live like a 'poor' person and yet still have so much stuff they can barely keep track of it all, yet children in Africa die due to lack of clean water. Strange world.

My expenses are still hovering around $1,000-$1,500 /month. Doing some quick math my invested networth is now at $478,000 and my total networth is at $618,000. According to the 4% rule I should be able to withdraw $19,120 /year from portfolio, or $1,593 dollars /month. Of course my expenses don't included health insurance, which I've concluded will be the death of me.

I've been spending a lot of time reading @theanimal's journal lately. It makes me want to buy some land in Alaska and build a cabin so I can live in the woods...Sounds like fun.

AussieGirl
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Joined: Thu Oct 20, 2016 7:32 pm

Re: M's Journal

Post by AussieGirl »

Hi M,
It was fascinating to stumble on your journal as I have almost identical stats and situation to you but located in Australia. A few details in my journal. I'm thinking of doing a comparison between our expenses ours are definitely higher. Keep in touch. Best wishes.

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