Gus' road to retirement

Where are you and where are you going?
User avatar
bryan
Posts: 1006
Joined: Sat Nov 29, 2014 2:01 am
Location: mostly Bay Area

Re: Gus' road to retirement

Post by bryan » Fri Jun 03, 2016 5:09 pm

Augustus wrote: Q1 2016: Computer Architecture by Hennessey & Patterson
One of my favorite textbooks from uni! One of my favorite courses (embedded systems was great too). Have you finished it? Lent my copy to a sort-of-polymath friend years ago and haven't gotten it back yet :/

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Jun 06, 2016 9:46 am

@bryan: Yes, I finished earlier this year. It was a great course, the breadth and depth was a little too much towards the end, I had to start speed reading to finish off the last 2 chapters. Not sure when you took the course, but they added 2 new chapters, one on mobile devices, and one on warehouse computing. Both fascinating. The thing that struck me the most is how often the same problems are encountered. Performance wise with the applications I write caching, parallelism, etc come up again and again. Computers are so insanely powerful these days it's easy to get sloppy, but I'd really like to explore parallelism techniques in my coding at some point.

I switched up my schedule a little, I'm doing MIT Physics 1 8.01, and Linkers and Loaders right now. You may like linkers and loaders if you like comp arch.

For anyone who's interested, there's a copy of the physics course on a mirror in iran of all places: mirror.mit-ocw.sbu.ac.ir/courses/physics/8-01sc-physics-i-classical-mechanics-fall-2010/index.htm I guess the professor was a douche bag and was sexually harassing students and they took it down, so the character of the professor is not that great, but his teaching is fantastic, it's sad that he tarnished his career at the end.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu Jul 14, 2016 7:19 pm

Finances
Assets:
280k primary house market value, less transaction costs if I sold it
4k - economy car
15k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
10k in taxable vanguard funds
89k in cash accounts
Total:
530k (following suit with the rest of the forum, I am now counting current home valuation minus transaction costs if I sold)

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1200 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3325

Retirement Update
By the end of the August, I should reach 100k in savings! This is huge, as I'll be able to pay off the rental property in cash for the first time. I don't plan to because I want to keep a buffer of cash available, but it is a huge milestone for me. I've been talking with my wife, and we've agreed that I'll take a year or two off work around mid next year. I have one client who hired on some new, and very irritating staff, one who likes to play a lot of political games. I am taking them on a month to month basis. The other big client I have now has been awesome, and my hope is that they'll renew their contract at the end of the year. If they do, I plan to pay off the rental immediately in January, and fire the annoying client.

After that, depending on whether the good client wants to renew or not, I'll either finish up in June and have a good buffer of around 60k in cash, or I'll keep working for them and no one else until the contract ends. They're really nice, I'm working with people who know more than I do who I enjoy working with, and the work load is minimal with just a few hours a day.

I'm getting really excited, and I think about it just about every day. With my wife paying in her half of the expenses, my passive income will pay the other half thanks to the paid off rental property. That means I don't have to work anymore!!! My plan is basically to be a stay at home dad, which is eliciting hilarious reactions from neighbors (about 80% stay at home moms in the neighborhood), they're all nice and respectful, but I have fun being an outlier and messing with expectations. I hope I can handle it. I will probably need to budget some money for babysitting, especially on the weekends so we can have a date night/day.

Additionally, I like the idea of doing a dry run on retirement. Seeing how expenses actually pan out, what I end up doing with myself, etc. This should teach me a lot and I can adjust accordingly when I'm ready to quit for good. I have been slowly stocking up on what I consider to be retirement supplies, nothing too expensive, but I have a guitar that I have barely played for the last 7 years, restrung it and got an amp since I think I gave the last one away. I also plan to purchase some cheap dumbbells as improving my fitness is a huge goal of mine in retirement, my goal there is to look good naked haha.

I plan to be a stay at home dad until my daughter is in preschool, then I'll probably go back to work until I have another 1k/mo in passive income. However, I plan to take it much slower this time, I'm thinking that working 6 mos a year for 4-6 years is better than grinding full time for 2-3 years. At that point I'll be fully FI, and any work I do after that would be for vacations or toys. I think it's a good idea to keep my skills sharp, so I want to take about 1 project a year, for maybe 1-2 months a year. It's more an insurance policy than anything, as you never know what can happen.


Base expenses after retirement are projected to be:
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
40 - reguar internet
55 - car ins
500 - health insurance (I plan to take advantage of subsidies, and considering my tax burden for the last couple years has been over 50k per year I don't feel bad at all)
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
50 - clothes (mostly for wife, I rarely buy clothes)
10 - amazon prime (love the music streaming and tv)
130 - vacations/trips rolling budget - wife made me promise when we moved here she could take a quarterly trip to visit friends in CA
36 - gym membership - they have a really nice olympic pool, I may cancel this if I don't use it enough
Total: 2111


Food
I've been making a big effort to sort out my food budget. After keeping closer tabs on total spending, I found that I was spending about 30 dollars a week on coffee and green smoothies. I've optimized that to 24 dollars a week by doing the following:
-Started buying staples in larger quantities at costco, and optimizing by combining some staples instead of buying premade.
-Started making my own coffee creamer (flavored coffee syrup, sugar, condensed milk, and milk)
-Set up a monthly budget for bulk items to last the month, such as chips, oils, frozen foods and vegetables, etc.

I found some good, easy prep slow cooker recipes. Here's my favorite so far: http://americastestkitchen.tumblr.com/p ... -beef-stew It's delicious.

I also did my first batch of cold brew coffee a few weeks ago, and I LOOOVE IT. I knew I would, because I buy it regularly when I work from coffee shops. The coffee shops don't do it as well as this though, I can't stand when they take hot coffee and just drop some ice in it. Cold brew is a different beast entirely, and the flavor is fantastic as well as being super potent.

I had to work on the economy side of it a bit, as it uses way more coffee beans than drip or espresso. I found that I can get 10oz of beans to last a week if I make a second batch using the grounds from the first immediately after the first batch is finished. It's a little more bitter than the first batch, and I cut the water added in half, but it gives me about 50% more yield. If flavor is paramount, 1 batch is better, but for day to day this works great.
Last edited by Augustus on Fri Jul 15, 2016 12:42 pm, edited 7 times in total.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Fri Jul 15, 2016 11:17 am

Investments
I have neglected equity investments because of my interest in real estate, but now I think I would like to start educating myself more about them. I have an old copy of the intelligent investor that I plan to reread. I don't think I'll ever get too heavily invested in stocks, but I also don't want to be 100% in real estate either, so I'll probably settle for a mix of the two, maybe 70/30 or 60/40. In the past I have used a little fun money, just a couple hundred or so, to see how well I could do at picking my own stocks, and I did poorly. After that I just went with index funds, which did well for me. That said, I am paying more attention to Jacob's warnings about the risks of index funds, here is an interesting graph of the index fund share of the total stock market funds available:
Image

I've always been contrarian, and when it comes to investing I think it is very profitable to be contrarian in the right way. When too many people are buying and bidding up the price, it's time to sell, and when they're all panicking it's time to buy, as long as there isn't a legitimate reason. I think that's why index funds have done so well for me, I don't like to buy when the market is doing well, like right now, but when it crashes I buy a lot. Right now, as I've said a few times, I think everything is overvalued, which is depressing for me. It means I've got to look harder to find good deals, I wouldn't buy real estate right now unless I found a very motivated seller, or a foreclosure. I think the equity markets are suffering from the same problem.

Back to my main point though. I would like to educate myself more on equity investments. There are a few things I don't like about equity investments. One thing I don't like is that they are so irrational. Two prime examples in my mind are facebook and twitter. http://money.cnn.com/2016/03/21/technol ... niversary/ I hope I don't offend anyone, but what kind of idiot would invest in twitter? It's like investing money in a prom queens popularity, what could be more ephemeral? Another thing I don't like about equity investments are that you have so little control over them. If I buy $10,000 in stock, I have no say in the business, and I have no control over performance. I just have to sit and hope that my vote of confidence was correct, and that someone else will buy it for a higher price down the road, or that it will deliver consistent dividends. These two things make the equity investments seem dangerous to me, which they are.

However, it is also obvious that a lot of money can be made, or at least maintained, with them.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Wed Jul 20, 2016 11:33 am

Spouse
It may seem odd, but I feel that my spouse is going to be my hardest challenge with ER. I know that I can scale down, and feel that my projected retirement budget ($2111/mo) is rather luxurious. But now that it's getting closer to being a reality, at least temporarily until my daughter is in preschool and I go back to work, my wife is starting to freak out. Yesterday she told me, very seriously, that she thinks she needs to spend $400 on clothing every month to stay competitive with her coworkers. She also thinks that we need more than $200 per month for entertainment and dining, and that lately she has been eating out at work practically every day.

The above reasoning is odd to me for two reasons, the first being that both of those exceed what we've been spending the entire time we've been together, except for some blips here and there. We may have been wasteful, but never in a $400/mo clothing budget kind of way, clothing budgets have always been around $400-600 per year for her, and far less for me. Although this year I did compromise and gave her a $1200 budget since her body changed after pregnancy. The second reason it's odd to me is that before we married, she was a poor college student living on probably $1000 per month, so we've never had really fancy lifestyles either before or after we met.

Anyways, we talked and compromised yesterday. The clothing budget will stay at $600/yr for her while I'm not working. In all likelihood she'll be earning more in 2 years, and we plan leave her monthly contribution to our bills at the same, so she'll end up with more spending cash to do with as she pleases. The entertainment budget wont go higher, but I have pledged to cook a lot more when I'm not working so that she doesn't feel the need to eat out all the time.

I am really glad that I'll be able to do a dry run of retirement by staying home for 2 years, as I think the experience will be invaluable. I'm optimistic that my budgeting will work, and we wont get hit with too many unexpected expenses. If my numbers work out we'll actually have money leftover, but I have a feeling it will get used up on things like house or car repair. After the two years is up I plan to boost passive income by another thousand per month, which should provide more than we'll ever need, and retire completely, probably another 4-5 years after I go back to work.

Anyone else have a spendthrift spouse? Any ideas?

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Aug 15, 2016 10:44 pm

Finances
Assets:
280k primary house market value, less transaction costs if I sold it
4k - economy car
15k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
104k in cash accounts
Total:
535k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Retirement Test-drive Update
My wife got rear ended (again, [thankfully she's okay]). My income dropped by a lot. I can't remember what else happened, but it was a really stressful last few weeks.

I ended up losing the client that was getting to be such a pain in the ass. They have financial difficulties, and a cluster-F (on their end) of miscommunication occurred that made the whole situation really awkward, nobody told me to stop billing so I billed the same amount as I have for the last couple of years, and it all blew up when they figured out what had happened. I am happy to have them gone, but it does put me 20k short of my end of year goal for 160k in cash savings.

I sold my non retirement stocks that I bought earlier this year, at a 16% gain, and moved that over to my cash accounts to lock it in. By the end of the month I project that I'll have 113k in cash. By the end of the year I should hit 140k. This is less than I had hoped, but I think it's good enough to go ahead with my retirement test drive next year. So next year, unless my good client renews, I'll take the year off and spend it with my daughter. I'll also plan to pay off the rental, which will start giving me a $925 income stream each month, which might drop a little if there's a vacancy.

It has taken a while for me to get used to this mentally. I don't like not hitting my savings goals, and it is going to feel very weird to have my savings rate go to zero, and quite likely negative. I've had a few sleepless nights panicking over it already, but I'm finally starting to feel comfortable with the idea, and how I will relate to the world without having an income. But I think it will be great practice for the real thing. I also think it will be great practice for just being alive. I'm only 31, but I started working when I was 14, so at this point I've spent more years working than I have not working. I am very much looking forward to living up the next year, even though a lot of it, pretty much all of it, will be spent watching an 18 month old. I already know I'm going to have to shake a lot of bad habits, and focus on seizing the day, rather than wasting it away clicking and typing.

We'll see, not there yet, and that good client may renew. But I'm looking forward to embarking on a new phase of the journey. From here on out I don't want anymore long, multi year contracts. I'll be aiming strictly for 6 mos a year or less.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Fri Sep 09, 2016 3:24 pm

Finances
Assets:
280k primary house market value, less transaction costs if I sold it
4k - economy car
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
115k in cash accounts
Total:
541k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Retirement Test-drive Update
Well August was the month from hell. I hope that part is over. I am thinking now that I will sell my house and downsize a bit, the market is crazy high where I live, and a townhouse would mean less yard work for me (and more of my precious time). I should be able to pull about 30k, or 40k on the high end, by doing this, and get some things we've been missing in our current home out of the deal as well. At first I thought I would love having a yard, but now I realize that I have other things that I enjoy much more, and the yard work is just an always looming task that never goes away.

Downsizing has so much upside to it that it makes me happy just thinking about it, by the end of the year, if we downsize and I get 30k out of the deal (tax free too! woohoo!), then we'll easily have enough to pay off the rental and be really comfortable for the next year that I want to take off work.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Sep 19, 2016 11:39 pm

Minor Update
Things have finally calmed down, I hope. We have been house hunting for the last two weeks, with nothing quite hitting the mark. I am hopeful that tomorrow we will see a property worth buying. I saw one today without the wife that nailed everything but the layout, which had rooms that were oddly rectangular instead of nicely square. The downsizing makes a lot of sense in that it will shorten my wife's commute (I told her to find a place close to home, but noooo), increase my cash buffer to a comfortable level, allow me to pay off the rental and boost passive income by 500 per mo, and free up time I'd otherwise spend weeding and mowing the lawn. All that aside, I'll really miss this place, I haven't lived in a place that I looked forward to coming home to in many years. It is making me very picky, which is good, but the positives of moving I think outweigh my emotional attachment.

In other news, I halted my studies when my life started going haywire. I also signed up to finally finish my bachelor's, I have two semesters left with an online school. The degree itself is rather useless, and I know more then the teachers in practically everything software development related, it's cute when I see them saying something that I know is outdated or wrong but I know what they were intending to say and can answer correctly anyways. Who the fuck uses html frames???? But I digress, the point of the bachelor's is a) to jump HR hoops, and b) it's accredited so I can pursue a master's at a brick and mortar for fun when I retire, which was really the whole point all along.

I have been very happy and relaxed lately, I think in large part because I am starting to have FU money. I feel less need to work, and more often than not will turn down work if I feel agitated with a particular job, or if it means I won't have time to workout midday and read a book or some other hobby. I have between 3 and 9 mos before I quit working full time, and instead plan to work 6 mos on and 6 mos off, excepting next year when I plan to take an entire year off, the first vacation longer than two weeks that I've had since I was 15 years old, I smile every time I think about it.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Fri Sep 30, 2016 7:39 pm

Two steps forward, two steps back
The good news is that nothing bad happened this month. The bad news is that my plans were stymied.

The market is not as hot as it was, and my understanding of what houses were selling for (based on list prices of comparable housing) was overly optimistic. I had a realtor come out and let me know what it would sell for, she said around 289k, but estimated 29k in closing costs (seriously?!?!). Downsizing into a newer, nicer on the inside townhome, would cost roughly the same, so I don't see the point as I like this house, and I hate moving, and I have no financial incentive. Sure would have been nice though!

I looked for a few other gigs to increase savings by the end of the year, but turned down one because they were annoying (constantly missing appointments before even signing a contract), and got turned down by another. So no progress there.

All in all, it's a bit aggravating, but who cares? I have plenty of cash reserves to take next year off.

After my wife's two accidents this year, we upgraded my car to another subaru for safety reasons (both rear end collisions, one at ~40mph, both with her at a full stop and the other driver 100% at fault), all the money in the world isn't worth much if I don't have my health. I'm getting way more paranoid about safety, not to the point of not enjoying life, but just being more aware of my surroundings in order to prevent bad things from happening, looking both ways twice, keeping distance from things that can cause grievous bodily injury, making sure to exercise enough, sleeping enough, eating right, etc. I gotta say nothing would piss me off more than getting this close to freedom and having some random occurrence fuck it all up. I guess that means I have a lot to lose at this stage of my life (wife, daughter, money). I even got a life insurance policy a few years back.

Anyways, all the annoyance aside, I keep focusing on the positive. I am super stoked about next year. I don't see anything derailing the plan. Every day I think a bit about what I'm going to do with my time. I've got a whole queue of projects lined up. I really enjoy thinking about what I'll do with my first day, my first week, and my first month of freedom. I'm stockpiling recipes as I plan to be cooking up a storm. I've got a bunch of hobby stuff ready to go. I'll have my stress relief valves lined up (the local fitness center has an awesome olympic pool, and they charge 1 dollar an hour, 2 hr max, for daycare, as much as I love my daughter, getting 2 hrs a day to myself and having a nice swim and soak in the jacuzzi sounds like heaven).

All of which reinforces my mind set: I don't care anymore! Ahahahahaha, I am finally getting some of my life back, suckersss!!!! Fuck you, fuck you, fuck you, you're cool, fuck you, I'm out!

https://www.youtube.com/watch?v=hTOKJTRHMdw

Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
112k in cash accounts
Total:
524k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Nov 07, 2016 5:48 pm

Not much going on this month. Unexpected medical expenses for wife. I shopped around for insurance plans this year, after crunching numbers and factoring in the rate my family goes to the doctor and the ER, I settled on a $918/mo plan. Obamacare has been pretty much the worst thing that has ever happened to my finances. The current plan we're on went to $1500/mo this year, and dropped the doctors we like. After childcare it is my largest expense and from what I hear it will only go up. I plan to mitigate this in two ways, hopefully I can get all the medical problems cleared out (my wife is having chronic stomach and back problems), if we can get the root cause cured then I wont need a higher cost plan. The second way I plan to mitigate health care costs is to get my income down below the 4x poverty line mark and start using some of those subsidies I have been paying into, seeing as our costs were $200/mo a few years ago, I'd figure on a $600/mo price if I weren't paying for everyone elses healthcare.

I'm going to be short of my original goals, but I should still be at the 120k in cash reserves range by the end of the year. It's not enough of a buffer to make me feel safe paying off the rental, but it is still plenty, I will take next year off unless my good client renews. If they renew I'll just keep riding that gravy train as far as it will go, until I no longer need it.

Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
114k in cash accounts
Total:
526k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu Dec 01, 2016 7:04 pm

Grinding away.

I've finished off one course for the online bachelors degree, it's a buffet style thing where you can take as many courses as you can fit in. I feel like I'm level grinding in an RPG game, it's boring to the point of tears, but it is kind of useful knowledge at least, and rounds out things I don't already know. This course gets me the Linux+ certification, so now I know more about systems administration on a linux. I've been a casual user for years, so it is fun to poke around behind the curtain and build a stronger foundation of knowledge.

I can't wait until I'm finished with this damn bachelors though, I've been working on it for around 7 years haha. I've got a little over a year left. I hope it actually turns out to be useful, originally I had wanted it so that I could pursue a masters degree for fun. But after having a kid that idea seems kind of far fetched. At this point I've sunk so much money and time into it that I feel it would be best to just finish it, otherwise I've wasted all that time for nothing, the sunk cost fallacy. Ideally the kiddo grows up a bit and I can pursue some classes for fun a few years down the line. There is a good chance I'm throwing money away though :( Which is aggravating.

That's about it for this month I guess. Looking forward to Christmas and having some more time off, until I can start on my year off plan next year. In my down time I often plan out the first day, first week, and first month of my retirement test drive. I really enjoy it. So far the first day looks like this:
7am: cook a huge breakfast of pancakes, bacon, hash browns, toast, orange juice, and espresso.
9am: teach kiddo
10am: gym/drop kiddo off at gym daycare for 2 hrs, swim, then read a chapter of walden
12pm: put kiddo down for bed, read the hobbit
2pm: clean and paint house
4pm: whatever...

Can't wait till that is what my daily life looks like, minus the ridiculously fattening breakfast. But I do plan to cook something fresh 4-5 times a week, just healthier.


Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
117k in cash accounts
Total:
529k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Jan 16, 2017 1:18 pm

I've really been enjoying Lin Yu Tang's The Importance of Living, it's starting to rank as one of my favorite books of all time, and I'm probably grand totaling in the high hundreds or over a thousand books read at this point in my life. Some of the paragraphs I like to savor, reading over and over, then sitting and thinking on the idea. This one struck a chord yesterday and this morning:
I can see no other reason for the existence of art and poetry and religion except as they tend to restore in us a freshness of vision and a more emotional glamour and more vital sense of life. For as we grow older in life, our senses become gradually benumbed, our emotions become more callous to suffering and injustice and cruelty, and our vision of life is warped by too much preoccupation with cold, trivial realities. Fortunately, we have a few poets and artists who have not lost that sharpened sensibility, that fine emotional response and that freshness of vision, and whose duties are therefore to be our moral conscience, to hold up a mirror to our blunted vision, to tone up our withered nerves. Art should be a satire and a warning against our paralyzed emotions, our devitalized thinking and our denaturalized living. It teaches us unsophistication in a sophisticated world. It should restore to us health and sanity of living and enable us to recover from the fever and delirium caused by too much mental activity. It should sharpen our senses, re-establish the connection between our reason and our human nature, and assemble the ruined parts of a dislocated life again into a whole, by restoring our original nature. Miserable indeed is a world in which we have knowledge without understanding, criticism without appreciation, beauty without love, truth without passion, righteousness without mercy, and courtesy without a warm heart!
I had a long sleepless thinking session one night, didn't sleep until 4am, brain was just on fire with new ideas bursting to the fore. I decided that I'm going to put personal cultivation first, instead of after I finish work. For years I've been trying to integrate a program of self cultivation, some time for reading heavy books, playing an instrument, creative writing, etc. I used to try to finish my tasks for the day first, then embark on that, but I was always just wanting to veg out after finishing everything. I've started to get up earlier with the goal of carving out 3 hours for myself in the morning before I do any work, 1 hr for meditation and writing as a tool to clarify my thoughts, 1 hr for reading books with big ideas or fun new technical knowledge, and 1 hr for arts such as piano or creative writing. So far I've been loving it. I think that doing these things first is probably the best way to go, as you still have all your energy and creativity in the morning. I've had some awesome mornings at coffee shops writing an entry in a journal, sipping coffee, and reading (I find hand writing vs using a computer to be much more conducive to clarity of thought, it's amazing how much ones style of writing changes on an electronic device versus paper and pen, I very much prefer paper and pen).

Anyways, financially same old same old. Assets are increasing, much slower than last year. I'm down to one client, which is great for my morning sessions as I have a lot more free time, but slows down asset accumulation to around 5-6k/mo in savings. I'm okay with that, I still feel a spike of panic thinking of what would happen if I lost my income, but I'm pretty set on coasting until I have no clients and taking time off. I'm still very bearish on the market, so I'm hoarding cash, I don't know what all the optimism is about in relation to the economy, it still seems very precarious to me. These articles are a pretty common refrain:
http://www.cnbc.com/2016/07/06/foreign- ... homes.html
http://www.zerohedge.com/news/2015-09-3 ... re-chinese

The chinese market in particular seems VERY fragile.
http://www.wsj.com/articles/chinas-late ... 1475860134
http://www.businessinsider.com/china-de ... ort-2016-9

The only thing they have going for them is that the people in government have most of the money, and they'll probably fight tooth and nail to hold on to it. On the flip side of that, they all have a huge incentive to be corrupt and bad with money, which has probably caused most of this in the first place by giving out huge sums of money to bad businesses so that they can line their pockets with kickbacks and part ownership.

Seeing as they are acting like they're fleeing a sinking ship by buying investments out of country instead of in China, and that they are keeping prices high by paying top dollar in places like socal, if the Chinese hit a rough patch and the current demand disappears I am hopeful that I might find some real estate bargains.

Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
127k in cash accounts
Total:
539k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs, baby has to go a lot
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Wed Feb 01, 2017 7:36 pm

On track numbers wise, not much to see there.

In other news, I am really hoping for a property market crash, I did a lot of fun research and found tons of proof that the Chinese are driving up property prices in many areas of the US. The most damning evidence of that is in Vancouver, which enacted a foreign transaction tax, and promptly had prices plummet:
Image
The graph is a before and after of home prices and the new tax law.

Lots of the same old story all along the west coast and a lot of the east coast, in many neighborhoods 50%+ of buyers were Chinese. Which is mainly due to the insanely inflated real estate market in china, which entirely the fault of the government, which I also found out makes up to 60% of total price in fees and taxes on each sale of a house in China. As it stands I'll just keep hoarding cash, because I would be so mad if I missed out on a 30% off sale price for real estate, even though I hate having large sums of uninvested money. I've determined that once I hit 150k in cash so I'll use all new funds to pay off the rental property, but I want to keep that 150k on hand as a down payment for my next property, and as a very nice security blanket. It sounds kind of ridiculous while writing it to keep that much cash on hand, but one of my big regrets about the 2008 crash was not having the funds to get in on it, I really don't want that to happen again.

Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
132k in cash accounts
Total:
544k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Jason
Posts: 1243
Joined: Mon Jan 30, 2017 8:37 am

Re: Gus' road to retirement

Post by Jason » Wed Feb 01, 2017 7:53 pm

Man, for that nanny fee I hope she flies around like Mary Poppins.

Question: I don't count cars or non-real estate property as assets. I'm guessing our paid off Subaru might be worth 5k and we probably have 30-40K in jewelry but that's not something I include. To me its strictly house and money.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu Feb 02, 2017 2:41 pm

Jason wrote:Man, for that nanny fee I hope she flies around like Mary Poppins.

Question: I don't count cars or non-real estate property as assets. I'm guessing our paid off Subaru might be worth 5k and we probably have 30-40K in jewelry but that's not something I include. To me its strictly house and money.
Yeah, daycare and healthcare are the bane of my early retirement. We found that to keep ourselves sane, and our marriage strong, that at minimum we'll be spending ~500/mo until the kiddo is old enough to be home alone so that we can get a little me time and us time. We don't have family nearby so that's not an option. If you cut those two items back to what they were in 2012 pre baby, my expenses would be 1625/mo. The only good thing in my mind is that the cost will decrease as time goes on, these years are the years the kiddo needs the most care, as she gets older she'll need less and less. I also don't plan to pay for her college or any of that crap. At best she'll get a safe but cheap economy car to be able to get to work. I believe it's important for them to earn what they get as soon as possible, otherwise you don't attach value to money. My parents didn't pay for my education and I turned out better than my friends whose parents did pay.

I include cars because I can sell them and convert them to cash, and I only include the value that I could sell them for after transaction costs. When I am out of the accumulation phase I will probably sell one of them as I wont need to be driving around for business meetings all the time, and could switch to using uber when that is the case. Both cars are paid off. Regardless, they are the smallest asset we have value wise.

Why not convert half the jewelry to cash? That is a lot of jewelry :) My wife and I combined probably have 4-5k in jewelry, 90% of that is her wedding ring.

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Mon Mar 27, 2017 1:40 pm

Missed a month there. I went to China to visit inlaws, and then did my taxes, all of which were depressing. Going to China makes me appreciate living in the US. I miscalculated on my tax estimations, and I owe an additional 12k on top of what I thought I had earmarked, that sucks. I did an awesome job deducting business income, but did not factor in the increase in personal w2 income now that my wife is working, thus her income is taxed at ~30%+. So that sets me back a bit. They both set me back a bit, I'm effectively at 120k in cash, so negative 12k from where I was in february.

Oh well. I can pay it, it's a 2 month setback at my current savings rate. I'll spend more time working on personal income tax deductions this year and I should be able to write off/eliminate the extra taxes for 2017.

This coming year is going to be pretty sucky in a lot of ways. My wife is going to do her masters degree in a night program, which means I'll have a lot less help raising our 2 year old daughter, and my wife will probably be pretty stressed and that's bound to leak out and affect our relationship. I'm on board with it long term, it will boost her income quite a bit, I imagine she'll be able to double it over the next few years and get into the 80-90k range.

We are also contemplating financial masochism via a move back to southern california. We both are sick of cold winters, and the job market here is lackluster for our professions. I have a lot more competition here because there are simply too many programmers where I live, it's pretty crazy. My wife as an accountant is seeing the same thing. There are lots of jobs, they just pay very poorly because they typically get ~150 applicants or so, most of those get weeded out, but you're still competing with at least 50 legitimate candidates which means it's an employers market. Those two factors combined have convinced me to go back to socal, where I can make triple the hourly rate and negotiate much better. A lot of businesses here want onsite work, which to me is a joke, they want all the benefits of an employee with none of the disadvantages. For me, to go onsite all the time would wreck my business, I can't service multiple clients if I'm in someones office every day, so it's just not a working business model.

Anyways, wife has a year to go on the masters. California will suck housing cost wise. My plan is to hit it hard for a few years, save 100k for 3 years to pay down a significant chunk of mortgage, then go back to cruise control working a few months a year.

Finances
Assets:
260k primary house market value, less transaction costs if I sold it
10k - subaru
10k - subaru
90k in equity in a rental property
42k in IRAs (vanguard 500 index)
120k in cash accounts
Total:
532k

Liabilities:
100k mortgage on rental property

Base Monthly Expenses (not including emergencies):
200 - home ins/taxes
300 - my food/gas/misc
150 - baby food, clothes, diapers, etc
60 - family cell phones
40 - gas
80 - electricity
110 - water,sewage,etc - flat rate lowest tier from the city
80 - business class internet
55 - car ins
700 - health insurance
1100 - nanny
100 - misc
50 - drs
200 - entertainment - movies/dining/museums/family day trips/etc
Total: 3225

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Sun Jun 25, 2017 10:52 pm

So I'm on my retirement test drive, hopefully for the next 5 months. I haven't worked since 5/19. Gotta say I'm loving it and have no desire to find work yet beyond a little self doubt and herd mentality here and there, but then I just go over the numbers and see that everything is going according to plan.

I'm not FI yet, I figure I've got another 3-4 years of hard work before I get there. My definition of FI is that my wife will also be covered by my passive income and will no longer need to work. I've scaled back the nanny, and my wife is contributing her half, my passive income the other half, and the bank account is stable. Hooray!

One big thing I've found is that I hate to be on the computer haha, there's so much else to DO!

Augustus
Posts: 448
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Fri Aug 04, 2017 11:29 pm

Still not working, yay! Other than wife's tuition, spending is the same as income (wife's job + passive income), yay!

Oddly enough I've entered a sort of depression, I did not expect that. I have lots of time to think, and I must have put some of my self worth in working/running my business, and I notice that despite my best intentions I can fritter days away which irritates me and makes me disappointed in myself.

On the other hand, I don't miss working at all. If I plan out my day a bit to accomplish things that are important to me, say reading some astronomy articles or practicing piano, I am obscenely happy.

I still don't feel like I have enough time in a day.

Zanka
Posts: 20
Joined: Tue Aug 01, 2017 2:33 am

Re: Gus' road to retirement

Post by Zanka » Sat Aug 05, 2017 2:47 am

Great journal! it takes a while to shift your mindset im sure, but you seem to be the kind of person that enjoy learning and finding solutions. Im sure you will find your own path forward.

For me, meditation have been huge.

wolf
Posts: 586
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: Gus' road to retirement

Post by wolf » Sat Aug 05, 2017 3:46 am

Hi Augustus. Just found your journal and reading it. Your journey is interesting so far and I do appreciate your experiences with self-employment, freelancing. I am als looking forward to read more about your recent "retirement" experiences because I think I can learn some lessons here. Thanks and I wish you all the best with your sad feelings. As Zanka have said also, meditating works also for me. But I guess you do also know your best practices.

Post Reply