Semi-ERE Experiment - Month 3 - "The Art Of Not Working At Work"

Where are you and where are you going?
CS
Posts: 385
Joined: Sat Dec 29, 2012 10:24 pm

Re: 42 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by CS » Fri May 03, 2019 11:14 am

2B1S -
This journal is so inspiring! I'm excited for you. It's helping me get re-excited about my own stuff.

classical_Liberal
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Re: 46 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by classical_Liberal » Fri May 03, 2019 6:28 pm

2Birds1Stone wrote:
Thu May 02, 2019 10:58 am
I'm actually doing this Semi-ERE thing :)
Yeah baby!

2Birds1Stone
Posts: 675
Joined: Thu Nov 19, 2015 11:20 am

Re: 41 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Sat May 04, 2019 4:43 am

Here is a graph of rolling 12 month expenses vs. income @ 4% WR, since I began tracking these metrics in December of 2014.....

Image

Hopefully these lines never have to cross again.

2Birds1Stone
Posts: 675
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Re: 40 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Mon May 06, 2019 4:15 am

Today, I leave you all with this gem before hoping on a flight for work.

https://youtu.be/21j_OCNLuYg

Life is easy, why do we make it hard?

2Birds1Stone
Posts: 675
Joined: Thu Nov 19, 2015 11:20 am

Re: 35 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Fri May 10, 2019 8:53 am

Things are chugging along in life and at work.

Traveling a lot at the tail end of this long work stint. I haven't had more than 2 weeks off work in 7 years! Really looking forward to a decompression phase.

The presidential tweet induced market volatility has been a good litmus test for asset allocation going into this leave.

I've always had the fear of quitting my job, only to experience a severe market drop shortly after. Statistically that's very likely to happen at current valuations in equities. My exposure to equities as of this morning is 59% of net worth, and my IPS has be rebalancing only if an asset class is 5% off of it's target allocation, thus we would need a ~9% drop from here for me to move any bond/CD funds into stocks. Similarly, we would need a ~9% rally for me to rebalance into bonds.

Still working on building up a little cash reserve outside of my core portfolio for the short term (12 months).

I have been so busy with work/travel this month that I'm behind on my activity goals. Going to hit the MTB trails today, and a nice 5 mile run tomorrow.

classical_Liberal
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Re: 35 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by classical_Liberal » Sat May 11, 2019 3:10 am

Dude! You are sooooo close. I resolved my final contract extension and have 50 shifts left, maybe I should start a countdown too?

Seppia
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Location: Italy

Re: 35 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by Seppia » Sat May 11, 2019 3:38 am

Getting closer, can't wait!
Please keep us posted when you take your time off, I'm very curious how you will feel because I have the impression that we have similar work lives and life attitudes.
2Birds1Stone wrote:
Fri May 10, 2019 8:53 am
I haven't had more than 2 weeks off work in 7 years! Really looking forward to a decompression phase.
A three week vacation* is a whole different planet compared to a two weeker, immensely more than just 50% better.
I don't know how you feel, but when I go on vacation the first three-four days are wasted just mentally disconnecting, and the last two are also wasted getting back into "work mode".
I only did a full four weeks once (when I lived in France) and boy was that amazing.

*that's standard here in europe for summer vacation time

Jin+Guice
Posts: 363
Joined: Sat Jun 30, 2018 8:15 am

Re: 35 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by Jin+Guice » Sat May 11, 2019 11:23 am

RE: That Ted Talk.

As usually from Ted Talk's an oversimplification, but fuuuuuck this guy is slaying all of us.

2Birds1Stone
Posts: 675
Joined: Thu Nov 19, 2015 11:20 am

Re: 32 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Mon May 13, 2019 12:13 pm

Getting closer indeed!

Working in beautiful Boulder Colorado, on a 75 degree day, poolside.

This trip is a nice mix of R&R and work. And one of the aspects of my job that I truly enjoy.

Went for a 5.4 mile run today, which kicked my ass at such a high elevation vs. running at sea level back home.

Watching 1 year of expenses evaporate from my portfolio in hours =D

2Birds1Stone
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Re: 29 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Thu May 16, 2019 1:19 pm

Feels amazing to be back home in my own element. I enjoyed my trip but it was exhausting, especially having to be completely extroverted for 72 hours straight. Physically as well, with little exercise, a lot of food and libations, and little sleep. I got home ~2 AM, which also left me feeling less than 100% this morning.

Had a nice long cup of coffee out in the yard this morning, hit the gym with SO, worked a few hours outside, and planning on a little run when the sun comes down a bit.

I'm really going to miss our back yard when we move next year. We lucked out for our area, in terms of size, layout/mature shade trees, and neighbors in our house-share who simply never use it in the nearly 6 years living here. I'm typing this laying in a hammock listening to song birds.

No travel for the next two weeks! Means I get to enjoy the shit out of my immediate area.

2Birds1Stone
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Fri May 17, 2019 7:18 am

@c_L, I'm looking forward to your countdown!

A mere 16 work days left for me. Two more paychecks and then I get to practice living off of savings/investments for the foreseeable future. I think I should update my IPS with an ERE addendum. Right now it has a high level outline of investment strategy and asset allocation rules, but nothing about future work or stop losses (thanks for the idea c_L!), that would govern when/if I went back to work.

Going through the mental exercise I have some general ideas, but nothing too specific yet. Going to think out loud here, regarding the criteria for considering myself FI as well as some rules to prevent financial ruin and ensure forward momentum on spending freedom in inflation adjusted dollars.

1) Many here are not fans of absolute numbers, but I like round ones, so a longer term goal for me would to get to/keep my asset levels/net worth above the $500k mark. I haven't seen this amount yet, and the markets could bring me above/below this number rather quickly based on how close I am currently. This is a portfolio level that at 3% WR throws off $15k/yr or $1,250/month and covers all of my basic needs + some wants, or very basic needs for both my SO and I in dire emergency. This dropping below $500k does NOT mean I go back to work until it's back over, but it's a good barometer for sequence of returns risk awareness.

2) The 4% WR vs. Trailing 12 month spending lines do not cross in the opposite direction (see chart on top of this page). I go back to work or cut non essential spending until this crosses again.

3) Target a maximum 3% WR from portfolio and attempt to cover remaining desired spending from creative income sources/side hustles. Do not indulge in discretionary spending beyond 3% WR unless I can fund the spending alternatively.

Three basic rules prevent any long term (financial) failure of basic semi-ERE, while encouraging slow growth of assets and thus increased future spending flexibility.

In a scenario where portfolio grows beyond a 4% inflation adjusted rate, spending could theoretically go up little by little. Side hustle/creative income is also going to dictate any discretionary spending, thus avoiding "easy-mode" extreme early retirement.

This plan also indirectly addresses my desires to help SO, as I could do so by choosing to earn a little side income, or simply design our lifestyle such that it's ~3 JAFI's/yr.

bigato
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by bigato » Fri May 17, 2019 4:11 pm

The fact that you didn't even mention that you'll need to adjust the 500k warning mark for inflation yearly makes me think that you must be very confident that it will just keep on growing in absolute numbers, right?

2Birds1Stone
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Sat May 18, 2019 4:23 pm

Hi, bigato.

I would certainly look to maintain the $500k watermark of initial asset levels in an inflation adjusted fashion. I hope to keep it growing ever so slightly above the level of inflation that erodes its purchasing power.

Right now my liquid NW is ~$475k, so I still have a little ways to go :)

classical_Liberal
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by classical_Liberal » Sun May 19, 2019 7:31 pm

Sounds to me what you really want is a perpetual WR. I think there are two ways to look at this.

1)Be more flexible in your life. Only withdraw real gains from assets each year. This means in years without gains, you will require yourself to make enough income to cover expenses. If you only withdraw what you need in very good years, this will likely lead to money growing over time and guarantees you never drop too far below start point.

2)Go to Portfolio charts and slap in your AA. Determine the Perpetual WR, then plug that into the Withdrawal calculator. Look at the lowest point in assets with that PWR. This is your emergency withdrawal hold point. If your assets fall below this level, something is happening that has not been accounted for in the historical data set. Time to earn some income.

Frankly, I highly doubt you'll never earn money again, so either way it's a mute point. But if you choose one of these options off the bat, at least you can move forward confidently. Knowing when and how you will react to adversity. That is, in the unlikely event you are not accidentally a millionaire by 50. Knowing what I know of you, classical_Liberal sim gives that scenario a 75% chance.

2Birds1Stone
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Tue May 21, 2019 6:00 am

c_L, you hit the nail on the head. Being risk averse, and not really wanting to spend down my principal, it only makes sense.

That being said, anyone with a <3.5% WR will likely end up with a LOT more money than they started with. Another strategy is to not adjust WR upwards for inflation every year. Use a 3-4% (or whatever desired spend is) and keep it constant while slowly adapting to the lower purchasing power of that absolute $ amount. Even doing this every other year dramatically increases success rate of a standard 4% WR on a 60/40 portfolio for periods of 30+ years.

I played around with Portfolio Charts this morning, and with my current AA ~40% VTI/20% VXUS/25% CD/10% BND/5% Metals I get 3.9% Perpetual Withdrawal Rate, and 4.6% Safe Withdrawal Rate....and both seem really high. The calc will only let me go out 40 years.

Say I were to begin executing my plan outlined 4 days ago, tomorrow.

My portfolio excluding any illiquid assets such as my car, sits at $471k this morning.

Using the Portfolio Charts data, I should be able to spend $18,370/yr or $1,530/month in perpetuity, $21,666/yr or $1,805/month with a reasonable likelihood of success over a 40 year period.

My initial plan was even more conservative, using 4% as the upper band, and 3% as the floor. This should ensure an even faster accumulation of assets in the first decade or two of ERE. Once those PWR/SWR numbers can cover our spending as a household, I am sure we will loosen the purse strings.

My plan is designed so that floor spending can go up as portfolio grows in absolute terms. If we double from $500k to $1M in 20 years, I can double the floor spending of 3-4% WR. Super slow lifestyle inflation? Or spending that money on causes greater than ourselves.

It's funny running the numbers yet again.....the past 5 years have proven that I can enjoy a pretty awesome lifestyle on ~$18-20k/yr, and the current asset levels support this on their own, any additional income will be gravy, literally beer and ice cream money.

Life is easy, why do we make it so hard?
Last edited by 2Birds1Stone on Tue May 21, 2019 7:37 am, edited 1 time in total.

ajcoleman22
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Re: 24 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by ajcoleman22 » Tue May 21, 2019 7:20 am

Seems as if you have everything figured out to me.

classical_Liberal
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Re: 28 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by classical_Liberal » Tue May 21, 2019 11:04 pm

2Birds1Stone wrote:
Tue May 21, 2019 6:00 am
Life is easy, why do we make it so hard?
IDK :?: , if you figure it out let me know.

An interesting side note. I have also run Cfiresim in time periods that cover the same periods that Tyler9000 has data for. I approximate my AA as best I can with cfiresim. Interestingly enough, there's a pretty big difference. My portfolio tends to look much better on Portfolio Charts. My guess is that having international stock (not accounted for in Cfiresim) and Treasuries vs a total bond fund makes a pretty huge difference. I specifically looked at the worst time periods both have data for, so 1972-1973, 1999-2001. This is important since my portfolio is constructed to handle the bad times better and give up some of the gains in good periods vs more traditional portfolios. I'd rather not be broke than super rich.
EDIT: I also have a small % of REIT, Emerging, and small cap tilt. Together though, these things make up less than 10% of total portfolio and the differences were pretty dramatic. Treasuries and total international make up almost a third of my portfolio, so since Cfiresim doesn't use them, that's the reasoning for my guess above.

Anyway, the only weakness of Portfolio Charts is the data pool timeframe. So that's why I suggested #2 above. It's basically a failsafe for economic situations not dealt with in the more limited historical data set. It's one of two things I looked at when creating my failsafe #, which actually increases over time, so I need a bigger inflation adjusted number as I get older.

2Birds1Stone
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Re: 15 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Fri May 31, 2019 11:34 am

I've started re-reading ERN's Withdrawal Rate Series, and I'm currently up to part 13.

There is some gold here that applies very much to the strategy I've outlined above. He does a fantastic job laying out why the 4% rule doesn't work, how to adjust WR based on desire for different levels of capital preservation, how to deal with low interest rate environments, as well as using CAPE10 to adjust WR based on projected future returns. The biggest eye openers for me were around how the math can drastically change during a 50-60 year retirement horizon based on just .1-.2% WR difference, where in 30 year windows it's not such a big deal, especially if you consider "success" just short of ending up broke after 30 years.

For anyone close to/considering super early retirement, I think it's a must read series.

The caveat is that ERN is SUPER conservative in his personal approach, so if you can cut back spending during downturns, or earn some side income along the way, it's not all doom and gloom with a 3-3.4% "safe" WR.

I also really have to get my equity allocation up over 60%.......the math on 60% vs. 75% equities during 50-60 year retirements is staggering! Hard to do when you see things falling with seemingly no bottom in sight ;)

2Birds1Stone
Posts: 675
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Re: 15 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by 2Birds1Stone » Fri May 31, 2019 8:07 pm

May Financial Recap

Assets
$117,400 Rollover IRA
$20,100 401k
$212,700 Taxable
$21,160 Savings
$59,200 Roth IRA
$11,600 AG Holdings
$10,800 Vehicle Equity
$19,900 HSA
$9,500 AU Holdings
$482,360 Total Assets (-$12,140)

Spending
$550 Rent/Utility
$118 Grocery
$159 Gas
$343 Entertainment
$132 Travel
$27 Health
$10 Misc
$43 Gifting
$1,382 Total Spending

Income
$7,375 Salary
$220 Other
$7,595 Total Income

81% Savings Rate

$17,997 Actual Expenses, Last 12 Months (currently 26.80X, or 3.73% WR)
$14,400 - Actual bare-bone, last 12 months (currently 33.50X, or 2.99% WR)

Monthly Combined Tracking

$2,947 - Combined Spending
$9,197 - Combined Income

68% Savings Rate

Combined NW = $590,360 (-$14,140)
Combined Spending = $36,180 (based on last 12 months)
Combined WR = 6.12% (16.31 x annual expenses)

Musings

Financial and non-financial musings TBD tomorrow :)

Seppia
Posts: 1015
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: 15 Days To Semi-ERE - Backpacking, Thru-Hiking, Van-Living & Shenanigans!

Post by Seppia » Sat Jun 01, 2019 12:05 am

We will toast to you this weekend!

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