Gus' road to retirement

Where are you and where are you going?
Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Wed May 23, 2018 10:27 pm

SavingWithBabies wrote:
Wed May 23, 2018 5:34 pm
I'm thinking maybe beach veranda would be perfect if I could find a spot by the beach in Mexico that wasn't too populated but still had okay internet (even if cellular).
I would not bring a family to Mexico. Too much violence right now. Plenty of cheap beach front real estate in areas that got hit by hurricanes recently. I looked a few months ago, you can snag land with power hookups for 20-30k.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Wed May 30, 2018 10:56 am

Moving is expensive, and moving to a high COL area even more so. I've been fixing up our current house and getting it ready to rent, and I've dropped about $10k on maintenance/safety/idiot proofing/replacing things that were about to fail but hadn't kicked the bucket while I lived here, like my incredible AC that is 20 years old and still kicking, I don't want it to fail over the summer with tenants though. Ugh... Add to that my first months rent and security deposit, moving van, movers, etc, and I'm getting pretty depressed watching my bank account go lower. I think it set me back about $18k all said and done, which is more than I had budgeted. My rent is going up to 2800/mo, ugh. Daycare goes up to 1700/mo (it was the only daycare that had a spot, I got on 3 waitlists in January). My wife will be jobless for a few months, ugh. My total costs rise to about 6300/mo. OMFG!

My plan to tame all this is that my wife gets a job in 3 months or less, she'll chip in 2200/mo, bringing my responsibility down to 4100/mo. I'll get my house rented in a month from moving out I hope, bringing in 1200/mo profit. I've got another rental that brings in about 500/mo profit. That'll bring my responsibility down to 2400/mo. In 2 years my kid is old enough for kindergarten, bringing childcare down to say 400/mo for the after school program.

So, these next 2 years are going to be expensive. But in 3 months, I should be back to a high savings rate, once house is rented and wife is back to work. After my kid gets in to public school, I've only got a 400/mo shortfall. I'm hoping to save 180k over the next 3 years. That money is earmarked to get 1 more rental with 50% down, and a down payment for a house in California. With one more rental turning out about 400-500/mo that would make me kind of FI? I hope? We'll see.

I'm hoping to save 20k more this year. Then 60k in 2019, 60k in 2020, and 40k in 2021.

My longer term plan revolves around putting 10k/year in extra principal payments to the CA house mortgage, paying it off in 15 years or less, while only working 3-6 mos per year. At that point, I'd have a surplus of cash. My wife could go to part time or whatever if she wanted. In 30 years or less I'll have 3 fully paid rentals, bringing in 3300/mo or so of present day dollars. I'll also have money in retirement funds for things like medical expenses. Alternatively, if my wife wants to fully retire without chipping in a rental of her own, I told her we can always move back to a LCOL area :) But she really likes California, and is the prime driver of the move, so my deal with her is fine we can move but she needs to chip in and cover the cost increase.

So the really good news is I'm hopefully nearing the end of working hard. After 3 years, it's time to take it easy.

Mister Imperceptible
Posts: 434
Joined: Fri Nov 10, 2017 4:18 pm

Re: Gus' road to retirement

Post by Mister Imperceptible » Wed May 30, 2018 5:26 pm

Augustus wrote:
Wed May 30, 2018 10:56 am
My total costs rise to about 6300/mo. OMFG!
OMFG!
Augustus wrote:
Wed May 30, 2018 10:56 am
In 30 years or less I'll have 3 fully paid rentals, bringing in 3300/mo or so of present day dollars.
Well at least the future is secure.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Wed May 30, 2018 5:44 pm

@MI: daycare and rent = 4500/mo. Insane... It'll go down in 2 years.. but holy shit..

If my wife ever wants to stop chipping in her 2200/mo, you better believe we're moving to LCOL area.

Mister Imperceptible
Posts: 434
Joined: Fri Nov 10, 2017 4:18 pm

Re: Gus' road to retirement

Post by Mister Imperceptible » Wed May 30, 2018 11:32 pm

Well she has *3* months before she even starts chipping in, yes?

At what point does home care of children become more economical? $1700 for daycare and $2200 for your wife to chip in....so your wife is essentially working to make the $500 surplus value and strangers can raise your children? If she can’t bring more than $2200 I don’t see why she wouldn’t just raise the biological replacement units full-time.

Seriously dude, you’re spending 0.9 Jacobs in one month at this rate. An 11% expense increase and you’ll earn some kind of dubious ERE Raspberry Award.

User avatar
Fish
Posts: 380
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Re: Gus' road to retirement

Post by Fish » Thu May 31, 2018 12:37 am

I've advocated before that childcare spending should be considered an adjustment to income rather than an expense. For many dual-income households it's really a cost of employment. @Augustus - you probably already know this, but assuming your wife does W-2 work and is eligible for dependent care benefits, get them! It's like paying the first $5,000 of childcare costs with pre-tax money. Second best is to claim the childcare credit on Form 2441, which is capped at $1,000 (or 20% of $5,000 - your marginal tax rate is likely higher).

@MI - There are legitimate reasons for working even if it barely covers childcare expenses. 1) Easier to find or get promoted into more lucrative work in the future, 2) Fear of not being able to find a job with a gap in resume, 3) Earn SS credits, 4) Some parents simply need the break from their kids.

(Edited to remove non-productive comment regarding proper use of "Jacob" as a unit of spending. See viewtopic.php?p=155024#p155024 if interested. I give up. Trying to police this thing is like calling out mistakes in grammar or punctuation. It benefits no one, and the math was correct anyway in the frame of mind of the poster.)

Mister Imperceptible
Posts: 434
Joined: Fri Nov 10, 2017 4:18 pm

Re: Gus' road to retirement

Post by Mister Imperceptible » Thu May 31, 2018 8:03 am

@Fish

I have no children so these details are appreciated for future reference. I just like to bust Augustus’s chops. As long as he is still making the decisions at least some of the time.

Regarding the Jacob unit, I was unawares, thanks for the clarifying links.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu May 31, 2018 8:24 am

She'll be pulling in 90k probably, 2200 is what she chips in to shared expenses. She one day hopes to buy a rental of her own and save up for that. She'll hopefully get flex spending dependent care. She'll also be covering all her personal spending, which I'm currently covering, so it's more than 2200 total.

We tried her staying home before, she goes crazy. If I tried to force that, we'd be divorced, and if lose 50%+ of my net worth. It makes the daycare stuff look cheap.

Also, the general idea that it's bad to let strangers raise your kid is not practical. Everyone needs a break from their kids, it's like they're designed to drive you crazy... When I took time off, kid still went to daycare, so I could have me time. I picked her up early and dropped her off late, but I needed time for myself.

Mister Imperceptible
Posts: 434
Joined: Fri Nov 10, 2017 4:18 pm

Re: Gus' road to retirement

Post by Mister Imperceptible » Thu May 31, 2018 8:54 am

If she’s pulling $90k and saving on top of the $2200 she contributes to monthly bills, that’s different.

I maintain that all else the same, not only raising the children at home but schooling them at home is a net positive. I would sooner show my children the multiplication tables and work through geometric proofs and have them read Plato and Machiavelli, rather than pack them off to the land of Common Core Math where everyone learns to be envious of the best dressed students and is prepared for an adulthood where they rack up credit card debt in the pursuit of status. I would hope Mini-Augustus gets the straight dope on everything from her pa, regardless.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu May 31, 2018 9:34 am

It sounds like it's time for you to pony up and produce offspring. I'd love to see what happens to your plans when you make contact with the enemy.

I'm more moderate now, obviously. Between work and family I get about an hour a day to myself, often times less. You start getting really greedy with your personal time when you have so little. When I can stop working so hard, I'll give her more. But she's still going to public school, I am getting some damned time back for myself. A good 5-6 hour block a day of time for myself is what I really want. It'd be balanced then, 8 hrs for fam, 5-6 hrs for me.

Mister Imperceptible
Posts: 434
Joined: Fri Nov 10, 2017 4:18 pm

Re: Gus' road to retirement

Post by Mister Imperceptible » Thu May 31, 2018 10:06 am

The search for a worthy Missus Imperceptible is ongoing.

suomalainen
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Re: Gus' road to retirement

Post by suomalainen » Thu May 31, 2018 2:44 pm

Augustus wrote:
Thu May 31, 2018 9:34 am
It sounds like it's time for you to pony up and produce offspring. I'd love to see what happens to your plans when you make contact with the enemy.
:lol: :lol: :lol: :lol: :lol: :lol:

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Fri Jun 08, 2018 1:49 pm

We downsized from a 5 bedroom 2200 sq ft in an LCOL state, to a 3 bedroom 1300 sq ft in an HCOL state that costs twice as much. Serendipitously, the third bedroom door was too small to fit my desk, so my office is now in the living room (I work from home), and we're thinking, why do we even need a 3 bedroom then? I have no desire to move in the next year or two because of how exhausting that was, our next move will be because we're planning to buy when the real estate market calms down a bit, but I've already adjusted my house hunting searches to look for 2 bedrooms. We donated/threw away about 30% of our possessions on this move. I'd like to donate/throw away about 20% more. Then it's all about finding the right 2 bedroom house, but I think we can do it. The layout of the current house is just about perfect, single storey, very little wasted space, a somewhat closed off living room, and a very open kitchen/dining room, are our priorities. If this place was 2 bedroom, we'd honestly be fine, the only thing I'd change if I owned this place would be to enclose the office/living room a little more with an extra door/wall.

If we do that, when we buy, if mortgage rates are 5%, and house price around 520k, that would be 2400/mo. Currently I'm paying 2800, so that would be a significant reduction.

Next up is preschool, I'm going to try to get my kid on a waiting list for another preschool in the next month. They all have 6 mo+ waiting lists, but my target is 1200/mo instead of the 1875/mo we're paying right now. That will be another 675/mo savings.

Both would cut my current 6300/mo burn rate to 5225/mo. In 2 years kid starts kindergarten at public school, and we'll cut it by another thousand or so, so 4300 probably. Wife chips in 2200, so I'm responsible for 2100. My old house should turn 1200/mo profit in rent, plus 500 in profit from my other rental, so then I'm responsible for 400/mo in about 2 years. In 3 I should have a third rental down payment saved up, turning about 400/mo profit, and then I'd be FI!

2Birds1Stone
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Re: Gus' road to retirement

Post by 2Birds1Stone » Fri Jun 08, 2018 3:48 pm

Boom, I am looking forward to following your adventure!

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu Jun 21, 2018 12:36 am

Kid went back to school on Monday, yessssss! It coincidentally was my first work at the beach day since moving back. I'm planning to make that a 2-3x/wk thing. Unless I get sick of it, which is not any time soon.

Burn rate is ridiculous... Hoping wife gets job and rental gets rented soon. Toured a cheaper preschool today, but the owner/teacher seems a little... heartless? I got a bad feeling, will look for more. 500/mo cheaper though.

Finn
Posts: 34
Joined: Sat Jun 09, 2018 7:18 am

Re: Gus' road to retirement

Post by Finn » Thu Jun 21, 2018 4:17 am

Nice to hear from someone else with rentals! Best of luck to you in finding a tenant, SO and I are in the same boat from July onwards.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Thu Jun 21, 2018 2:31 pm

Finn wrote:
Thu Jun 21, 2018 4:17 am
Yes, I like real estate a lot. Stocks/bonds account for ~20% of my portfolio. We just moved to a new state, which is making it a lot trickier though, I've used property managers twice and both times now I have been disappointed. They just don't care about small time landlords, or they're just careless in general, I can't really tell.

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Tue Jul 03, 2018 11:29 pm

Good news, finally!

Wife has gotten 2 job offers, but they are below what she's looking for. I told her to stay strong, figuring from the beginning it would take 3 mos to get one that is in the right pay range and close to home.

We got a tenant! Whew...

So, in 1 months time, it is possible my burden drops from 6700/mo (I miscalculated before, ugh, 4700 of which is rent and daycare, and 800 for health insurance), to
-2200 wife chip in
-1700 rental profits
=2800/mo
Woohoo!

Next up is getting a new preschool, I'm still working on that, it will probably take another month to find, and 6 mos of waiting. But when that happens, likely expense reduction is
-600
=2200/mo for my burden.

I probably sound like a broken record, but I think about this a lot. So...
In 2 years, kid goes to pub school
-1200
=1000/mo
We downsize/buy a 2 bedroom for monthly rent reduction of
-400
=600/mo burden

In 3 years, I pay off or buy a new rental
-400 to 500
=100 to 200/mo burden

Close enough to fi for my purposes... Throw in a health insurance subsidy, or sell a car, and I'm there.

I plan to pay off the house by lobbing 10k towards principal per year from my 3-6 mos of contracting, and the house is paid for in 15 years. Wife wants to work that long anyways. Likely I earn extra with no use for it, and pay down more. Consolation prize for wife, I told her if she gets sick of working we can find a nice LCOL place and live on the 2200/mo easily, especially considering we'd have 200k+ in equity from CA house to buy elsewhere. So if she wants to stay here she can chip in, if she wants to quit sooner it's totally doable. She loves it here though. I dig the weather as well, just not the cost...

Augustus
Posts: 486
Joined: Sat Apr 02, 2016 10:15 am

Re: Gus' road to retirement

Post by Augustus » Tue Jul 24, 2018 8:38 pm

Good month, *knock on wood*.

Total 6700/mo expenses (I know...I know..., in my defense: happy wife happy life, right?)

Progress made since move back to socal:
Wife got job this month, so burden drops by 2200/mo that she chips in to family expenses
Found a new preschool for kid, that should start next month, 525/mo reduction there
Other house is rented, 1200/mo reduction there
Plus 2nd rental, 500/mo reduction there

6700-2200-525-1200-500 = 2275/mo left to cover, which is about as good as I'll be able to do for the next 3 years. In 3 years, kid will go to public school, and we'll downsize into a 2 bedroom that we'll purchase once interest rates stabilize. If all that income is stable, that puts me at around a 60%-70% savings rate or more depending on variables like taxes, random project/side income, unexpected expenses, vacations, etc.

3 years:
2275 - 400 (downsize house) - 1100 (no more preschool) - 400 (third rental or pay off second rental) = 375. fuck. yeah.

In 3 years I should basically be FI. I know, I'm a broken record. But I have to keep telling myself that it's going to get better...

In other news, I never want to move again after we buy a house. I hate moving. I finally feel like my life is calming down, and it's wonderful. The less responsibility the better! I need to get new car insurance, switch drivers licenses, and some other crap, then the move is finally over and my life can hopefully be boring.

In other good news, I started back up on my reading list now that I've eliminated a lot of other unnecessary activity from my life. I predict it will take 5 years to read my bookshelf backlog list, I burn through scifi voraciously, but I have had a very bad habit of buying neat sounding technical books, reading for a few weeks and getting bored. I've got all kinds of oddball technical books, ranging from premed text books, to astronomy, to electronics, etc that I need to get through. Plan is to tackle 1 hard book every 3 months. Starting with Carl Sagan's Cosmos, I LOVE that book, I did a read through once about a decade ago, want to do it again. Hoping to finish Cosmos by the end of Sept, then tackle harvard medical school guide to eating along with possibly valter longos FMD book from oct-dec.

In other other good news I've finally gotten serious about apps. I've been doing 2 days a week for most of the day. It's slow, but there's progress. Maybe by the end of the year I'll get my first app on the market? It's possible. We'll see what happens. Every date I've set has slipped, which is annoying.

SavingWithBabies
Posts: 337
Joined: Mon Aug 31, 2015 2:50 pm

Re: Gus' road to retirement

Post by SavingWithBabies » Tue Jul 24, 2018 10:55 pm

Are you making mobile apps? If so, are you going native or using something like React Native, Xamarin, etc. If native, Swift/Kotlin?

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