Lightmyfire's FIRE Journal

[lightmyfire]

Hello! I'm lightmyfire and this is the first step towards chronicling my FIRE rollout sometime in 2021. A recap: I am a 41 year old single gal living in the southwestern part of the U.S. I work full time in a professional arts management position (aka low salary). Through a combination of frugality and careful investments since my early 20s, I am now in this fortunate position to be technically FI and considering FIRE next year. I guess I want to add a perspective that shows you don't have to be in a lucrative career or make a lot of money in a short period of time to succeed at these goals. I'm super inspired by Jacob and his spending levels, but I am not really on the "extreme" end of ERE. My spending usually hovers between $18-$20K, though that could and should go down significantly when I shift into a more nomadic lifestyle in FIRE. One of the things that I enjoy most about personal finance is simplifying and optimizing, and I'm really excited to apply that mindset more expansively as I get out of my comfort zone and figure out exactly how little I need to live a fulfilling and happy existence.

Well, it's the end of the month and time for a spreadsheet update. I will share my numbers each month as a way to track my progress.

Net income - $2325
Individual pension contribution - $358
Employer pension contribution - $474
Additional income (checking account interest, CC rewards, etc.) - $160
Total - $3317

Regular Monthly Spending*
Rent - $700 (just went up from $600 this month )
Utilities (Mint cell phone plan, electric, gas) - $77
Groceries - $138
Pets - $56
Discretionary - $217
Total - $1188
Budgeted - $1200 (+$12)

Irregular Spending
Vet visits - $711 (cat teeth cleaning and exam)
Pet medication - $40
Car insurance (6 months) - $399
Travel - $2225 (mostly payment for bucket list Grand Canyon rafting trip in May. Travel is actually paid from a pre-funded Opportunity Fund, so doesn't really count in this year's spending, but I'm including it in the interest of full disclosure)
Personal care - $26
Camping/hiking gear - $19
Personal enrichment/art - $26
Total - $3446

IRA/457b investments - $1000

This was an unusually expensive month for irregular expenses. I do try to budget for these categories and have estimated around $8000 for the year. This is high due to the Grand Canyon trip. Along with my $14,000 in monthly expenses, that will put me close to $22,000 this year. Yikes!

*I'm not including my gifts/donations in this amount as I'd rather keep that information private.

I thought I would include my net worth calculations/investment performance in this entry, but I've already probably outwarmed my welcome...I'll save that for another day. Happy Friday!

[wolf]

Hi. That's a pretty detailed budget and cost analysis.
How did it come that you have been frugal right from the start in your early 20s?
And have you also started to invest into stocks back then? Before or after the dot-com crash?

[lightmyfire]

Hi wolf, thanks for reading. Good questions...I guess I've always been naturally frugal. I remember stockpiling my Halloween candy and saving my allowance for years (until my brother raided it, lol). I was lucky to get a full ride academic scholarship to college, but still was stuck with about $18K in cost of living loans that I didn't fully realize I was taking. That was a huge wake-up call for me and prompted me to budget from there on out and get control of my situation even when I was making a ridiculously low wage. The saving grace was working for a university, with good retirement benefits. I became obsessed with personal finance books around 2004, and that's when I got serious about maxing out a Roth IRA every year with low fee index funds. I was hit by the 2008 crash, but not super affected in 2001. Now I just wish I'd invested more after the crash!

[classical_Liberal]

Welcome! Another new poster who's already about to retire. Exciting! Sounds like you have some definite plans for immediate post-RE. Would love to read them if you wanna share.

[lightmyfire]

Two separate friends have approached me recently looking for personal finance advice, leading to some interesting conversations and big progress on their parts towards paying off debt. Hearing their enthusiasm reinforced one of the major motivations I have in this journey - sharing my own progress and inspiring other people to take back power in their own circumstances. My friend also told me about a local financial independence Facebook group. We both joined and I floated the idea of starting a small discussion group. People were quite receptive, so that's exciting. I've always wanted to find a group like that locally, but my city doesn't seem to have much of a personal finance community. This is a good start.

Onto the numbers. I gathered this data on Friday morning, so they probably tanked a bit later in the day with the market slide.

Roth IRAs - $129,813
Traditional/Rollover IRAs - $92,296
Brokerage accounts - $16,620
403b/457b - $8,673
Pension - $67,062
Checking - $104,636
Frozen Assets - $500 (rent deposit)
Work leave balance (this is the total they will pay me out of my excess vacation time when I leave my job) - $2500
Car value for 2014 Honda CRV (I count this in net worth because I could easily go without a car or trade it for a beater) - $17,000

TOTAL NET WORTH - $439,100

Going by this number alone, a 4% SWR would provide me $17,564 in income each year, close to my current level of spending and more than I actually calculate I will need in retirement due to simplifying my lifestyle. My original FIRE number was actually only $350,000. Easy peasy, so I should FIRE now, right? However, I'm focusing more on accessible cash flow. My pension is frozen until I turn 65. I'd like to keep driving my car as it will be a decent tow vehicle for a small trailer. Ideally, I want to leave my investments alone and simply spend down my Roth contributions and other accessible funds for as long as possible. I'll write another post detailing my FIRE strategy.

I know I'm holding too much in cash. This is in part a windfall I received late last year as part of a sad chapter in my life when I lost both my parents in the past three years. I'm still working out how I want to distribute the money. On a positive note, at least it earned me $50 in interest last month by opening a new high interest checking account. (1.8%, cha-ching!)

[Forskaren]

I also like low cost index funds for investments. I am a bit jealous about that in the US you not only invest in stocks by index funds, but also invest in bonds in the same way. Index funds for bonds not common where I live.

How do you think about health care costs in retirement? If you live outside the US, you sometimes see news about people in the US working at 80 years old just to get health care coverage from the employer.

[lightmyfire]

@Forskaren, yes, there are distinct pros and cons to be being based in the U.S. One of the largest pros for me is geographic arbitrage in the form of being able to set up temporary residence on public lands and basically live for free. Our investment options are also plentiful.

Health care is a definite challenge, and a wild card. I'm looking into a few options. If a single payer system looks to be a possibility on the horizon, it might make sense for me to get a cheaper short term plan and see how things unfold. I could also get a plan on the ACA marketplace for not *too* much right now, somewhere around $200 a month. Unfortunately I may not be eligible for a subsidy if I choose to go down the no-income route. I could also choose to keep earning income somehow to get a subsidy. I'm also looking into health-sharing "ministries" (ideally one without religious basis). The final option, which I am avoiding because it makes me somewhat squeamish, is Medicaid. Under expanded Medicaid, I've been told I would be eligible regardless of assets if I'm making no or nominal income. This is a last resort for me because I don't really want to be part of the increasing dysfunction dragging this country down in terms of health care.

[lightmyfire]

Just popped onto Vanguard to do my monthly $500 Roth contribution and noticed I'm already up $4000 for the month...this bubble is starting to look pretty precarious. I'm not too concerned about the inevitable recession as it relates to my personal plans, but the unprecedented volatility does give me some concern about economic conditions generally. I guess we'll just see how things go. If there is a large scale economic collapse, I can't imagine I'd feel a whole lot safer still relying on employment income. My museum job would probably not be deemed essential anyway, nor would anything in my immediate skill set (I have an MA in art history and an MLIS in library science). While I'd like to think there will be curators and librarians in the brave new world, I don't count on it. Besides, we're all going to be replaced by robots eventually, right?

It all adds food for thought. Generally my overarching motivation for FIRE is gaining greater meaning in what I do on a day-to-day basis. I actually happen to really like my job and feel incredibly fortunate that I get paid to do some of the things I would definitely do for free. On a M-F, 8-5 basis, not so much. This devolves pretty quickly into my ongoing existential mid-life crisis...what is meaning? What is the meaning of life? I don't have the answers, because that's part of the goal of this journey. I know I help people in my job, at least part of the time. The rest of the time I'm mostly sitting behind a desk. There is identity to my job that will be hard leave. When students tell me they think I have the coolest job ever (and I was that student not so long ago), it's hard to imagine just walking away. I'm actually glad I was not in a position to make these choices earlier, because I'm very grateful for my work experiences and all the education I pursued. It hasn't always been about the bottom line financially, so I feel like I've had a good balance in my life. This next stage is uncharted territory, without the same clear goals along the way. That's the scary and exhilarating part for me.

[lightmyfire]

Somewhat out of the blue I got a small promotion and raise at work, taking over some relatively menial tasks that won't really add any stress to my job and will actually help with flow, I think. So that's a win-win. I would like to find more flow at work, but that has always been like the unicorn holding the colored parachute. I find it when I'm creating something, researching, writing. I enjoyed college and grad school because I was incentivized to research and write and the process was satisfying. I plan to continue doing these things my whole life, but I need to find the Why. Is it enough to simply follow a passion or curiosity for personal enrichment? That seems to be where I'm stuck. I decided against getting a PhD because I don't want to publish a bunch of esoteric articles. I'm not inspired by vanity or fame/ambition, and the only reason I want money is a tool for freedom and experience. School moved me along a natural progression of satisfying challenges towards tangible goals - eventually get a job working with and talking about art on a daily basis. Here I am, now what?

One of the extra-curricular things I do related to my grad school research is recording rock art (e.g. petroglyphs) and compiling reports for the state archive. This is the kind of thing I'd like to expand on in my retired life. It gets me out in the wilderness to amazing places, I socialize with people who share my interests, and I am inspired. I see the world differently each time I go out. I don't get paid, but that's the last thing on my mind. To me that's the purpose of this journey.