Gus' road to retirement

Where are you and where are you going?
Augustus
Posts: 395
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: 395
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: 224
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: 395
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: 224
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: 374
Joined: Sun Jun 12, 2016 9:09 am

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: 224
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: 395
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: 224
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: 395
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: 224
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
Posts: 300
Joined: Sat Oct 18, 2014 12:49 pm

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: 395
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
Posts: 227
Joined: Thu Nov 19, 2015 11:20 am

Re: Gus' road to retirement

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

Boom, I am looking forward to following your adventure!

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