Just the Numbers, Ma'am

[TheSixYearPlan]

Hello! A quick background:
My spouse and I are mid-30s with a one-year old, living in Austin, TX. We are about 9 months into our FIRE journey and hoping to reach FIRE in another 5-ish years. I have been reading FIRE blogs and books for years but never got serious about saving until Covid-19 hit. During lockdown, my spouse and I re-examined our life goals and realized that we wanted to feel less stress about potential job loss/changes and have more time/flexibility for extended travel with our child. The plan has morphed a lot over the last 9 months, but we are currently shooting for full FI by May of 2026 with the plan to travel during the summers and maybe pick up work during the school year to support our tendency toward indulgent spending.

Our numbers:
Annual income: $300k-ish combined
Annual spending: $85k is our budget, but tbh we are probably closer to $100k (and this is after cutting back - it's hard to believe, but we used to spend most of our post-tax income other than maxing out 401(k)). Spending will drop next year after the house and car are paid off. Daycare is also a big, but unavoidable, part of the budget for the next four years. Our post-FIRE budget is $60k but of course the big question mark is health insurance. We do plan to earn some money post-FI so that we can continue to enjoy nice wine, travel, and nights out, but we would like our portfolio to cover at least our baseline spending.
Net worth: $925k according to Mint. Unfortunately, about half of this is home equity due to Austin's crazy housing market and is completely worthless because we do not plan to move for a very long time, if ever.
Home: Bought for $375k in 2016, currently $85k left on the mortgage. We have started paying this down very aggressively, and our goal is to pay it off this year. I know this is not necessarily the smartest financial move, but with the market feeling over-valued and our mortgage at 3.75%, the idea of giving ourselves a paid-off house for Christmas is just too tempting. Even after it is paid off, property taxes are about $10k per year, and only going up.
Investments: $400k in 401(k)s and $100k in after-tax accounts. We are following the two-phase retirement approach from Our Next Life/Work Optional, so our goal numbers here are around $900k in 401(k), which will then have 18-20 years to grow before we touch it, and around $850k in after-tax accounts to sustain us for those 18-20 years. Obviously, we have a lot of work to do, but with reasonable market gains and no change in income, we should be able to hit this goal by May 2026.

I plan to update our progress monthly. If anyone reads this, I would love your journal recommendations!

[Hristo Botev]

Welcome! I for one sure don't miss those daycare payments; felt like a little piece of me died every time that auto-debit went through.

I plan to update our progress monthly. If anyone reads this, I would love your journal recommendations!

If you're looking for inspiration to cut your spending, I recommend avoiding my journal.

[2Birds1Stone]

Welcome, but this is not a FIRE forum

Let the learning commence.

[UK-with-kids]

Half of your net worth of $925k is home equity and your outstanding mortgage is $85k. Therefore your home is valued at approx $550k.

You also have between $462k to $500k in savings and investments (being either half of your Mint valuation of $925k or your $400K + $100k investments).

By the end of this year you expect to have paid off your mortgage and earned another $300k, of which you will have spent between £85k to $100k but presumably saved at least $200k less whatever taxes you have to pay on your income. Let's say $150k just to be on the safe side.

So you will have a paid off house worth $550k plus $650k of further investments, which is $1.2m in total.

Your post FIRE budget is $60k, which is more than double Mr Money Mustache's (ex) family budget, and more than triple what Jacob and his wife spend.

In order to fund this budget from investments you would need a fund of $1.5m using the 4% safe withdrawal rate rule of thumb. You would also need a paid for house.

However, you also suggest you might work during school term time. In which case you won't need to fund everything from your investments.

You also plan to spend most of your time travelling when you're not working. However, you don't have any plans to move from the expensive house that you won't be spending much time living in.

If you moved to a cheaper type of house and/or cheaper location, if you did a small amount of work during term time (e.g. teaching?), and/or if you reduced your spending levels, you could easily retire before the end of this year. If not today.

In which case daycare would not be such an unavoidable cost as you say it is. And you would get to spend more time with your child at home, not just during periods of travel.

[TheSixYearPlan]

@Hristo Botev: Thank you! The daycare payments are tough but much easier to stomach after trying to work and have the baby at home for most of last year!

@2Birds1Stone: Yes, admittedly I have a lot to learn

@UK-with-kids: We live in a small home in a great neighborhood where we can walk to many things, schools are good, and family is nearby. Moving to a home that is significantly cheaper would require us to give a lot of that up (either moving far outside of the city or to a different city). Cashing out the equity on our home is certainly a contingency plan, but we would prefer to stay put. We are happy enough with our jobs and have a good enough work/life balance that we don't mind staying with it a while longer to have a bigger safety net and continue some of our indulgences. Of course that could always change, in which case you are right that we could pull the trigger much sooner and still make it work.

[2Birds1Stone]

There ERE book is a great place to start!

[Western Red Cedar]

Welcome to the forum. Well done on the large incomes and net worth!

With an open mind and a little flexibility I suspect your six-year plan could be cut in half. Things like nice wine, travel, and nights out don't necessarily need to be expensive. I don't have any specific recommendations on journals, but if you look around I'm sure you'll find some that interest you. One of my favorite thing about the journals here are all of the different paths people take. They are all generally rooted in financial stability, freedom, learning, and limiting one's environmental footprint.