The Final (?) Countdown

Where are you and where are you going?
Salathor
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Location: California, USA

The Final (?) Countdown

Post by Salathor »

Hi all,

I've been a forum member for a few years and a reader/follower for probably 7-8. We're finally getting close to our FIRE date (around the first of the year, when I turn 35!) unless I chicken out. Our current plan is to leave our HCOL area and move onto a large family property where we can live rent-free in a house that needs a lot of work (which we plan to do ourselves, in stages).

The initial plan is to get the living room and second room cleaned up, strip the floors and walls, check for water damage, evaluate the roof, etc., while we live in the main house with my wife's parents. We hope to limit this stage to two months maybe before we move into the other house.

Between some small internet income (about $7,000/yr, all from my wife) and dividends, we expect to be able to live on very little--ideally less that 1% of our total portfolio. Last year, with a paid off house, we spent ~$1,100 per month for a family of 4 in an HCOL area (including property taxes and homeowner's/earthquake insurance). Insurance won't be an issue thanks to the Affordable Care Act (I'm in CA). After the initial home repair stage, I aim to either seek home employment or a part time 'jobby' that I enjoy (working in a distillery, gun store, animal conservation, etc.).

I've never kept a journal but we're getting close now, so I figured it might be time. Might give me a good place to noodle through some ideas, so fears, and to come for advice if I come up with any problems that need solving!

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Ego
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Re: The Final (?) Countdown

Post by Ego »

Nice. Congratulations!

Salathor
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Location: California, USA

Re: The Final (?) Countdown

Post by Salathor »

Thanks Ego. Just writing it down was scary. It's stuff I haven't talked about except with my wife and my brother (who is also pursuing FIRE). Makes it feel more real.

rube
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Re: The Final (?) Countdown

Post by rube »

Although I ended up working part-time instead of quiting completely, the 365 day countdown I used in my journal helped me to plan, take the required actions and not chicken out.
Good luck with the journey!

Salathor
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Joined: Fri Dec 18, 2015 11:49 am
Location: California, USA

Re: The Final (?) Countdown

Post by Salathor »

I'll take a look at your journal! Thanks!

EDIT: Just skimmed through a fair bit of it and read a couple pages a few months apart. Looks like your timeline pretty much went as planned, despite the occasional surprise (COVID, water leaks?). Congrats!

Is the part-time work working out for you? I unfortunately don't think that's an option for me--I proposed going down to 4 days a week before COVID, after my second daughter was born, but was rejected. I'm currently enjoying working from home about half-time, but I'm not sure how long that will last. Hopefully for a while. Even so, I feel like it should make for a nicer final year, but I'm really ready to turn my attention away from office work and toward something else as I get older. I'm in a government/hr/IT style position, and I just don't see myself wanting to be a salary-man for my entire life.

I fantasize about a lot of future options, but in general that's just my pattern. I have a bad habit of abandoning hobbies too soon to achieve a level of competence necessary for earning an income. This job (9.5 years now!), saving for FIRE, and my family are pretty much the only things I've stuck with.

It's a personal weakness, and I'm hoping to find strategies to overcome it. I would love to try:
-self publishing fiction
-releasing a video game
-starting a distillery
-running a market garden

as possible self-employment options, but I don't know how to push through the fear/lack of interest that hits after a few months of hard work.

Salathor
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Location: California, USA

Re: The Final (?) Countdown

Post by Salathor »

Just got our first "child tax credit", which is nice (for us--probably doesn't feel as good for tax payers who don't have kids), even though I know mentally that it's no different than the tax credit we used to receive at the end of the year (other than that it's higher and fully refundable).

Given how hard it is to walk back handouts, I give this a far better than even shot to be something that is extended by the Dems and never yanked by Republicans. An extra $6,000 per year will go a long way toward keeping that withdrawal rate down.

If it is continued, I expect that we may be able to achieve a 0% withdrawal limit in years without surprise expenses (like a new car, etc.) solely from my wife's writing and the tax credit. Any money I earn will probably go to funding Roths for us both. I still get a little scared about the idea of not actively working to save money, but all the numbers I see make sense.

rube
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Re: The Final (?) Countdown

Post by rube »

Salathor wrote:
Wed Jul 07, 2021 3:58 pm
EDIT: Just skimmed through a fair bit of it and read a couple pages a few months apart. Looks like your timeline pretty much went as planned, despite the occasional surprise (COVID, water leaks?). Congrats!

Is the part-time work working out for you?
It is okay, not always perfect. it has some pros and cons. Some weeks are better than other. I am currently planning to do this for another 12 months. Sometimes it is just time to move on and start doing something else.
Good luck with your journey!

Smashter
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Re: The Final (?) Countdown

Post by Smashter »

Awesome, congrats! I'd be curious to know more about how your money is invested at this stage of your FI journey. Scott 2 had some interesting discussions on asset allocation and sequence of return risk in his journal as he got ready to retire.

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

I haven't read that discussion. I'll have to take a look!

We're 90% in equities and 10% in cash, although that's going to be closer to 96% : 4% when I'm finished. No bonds. We've got about half in taxable accounts and the other half in a variety of retirement accounts, some of which are easy to access (government 457s) and others that will require a roth conversion ladder (iras and a solo 401k).

I don't know our exact split, but it's about 70:30 US to international stocks, and within those groups about 50/50 between broad indexes and vanguard's high dividend indexes (VYM/VYMI--none of these 12% income funds).

What about you?

Smashter
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Re: The Final (?) Countdown

Post by Smashter »

Nice, I call that 90/10 split the "Warren Buffett's will portfolio" 8-) (he talks about it on page 19 of that link)

I have recently shifted into a portfolio that is about 70% stocks 15% gold 5% long bonds 10% cash. And probably ditching the rest of the long bonds soon. I was doing the golden butterfly but I got disillusioned with long term bonds (which of course have been doing great exactly when I thought they would tank, shows how much I know!)

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

Do you hold your gold physically or as an ETF? If physically, what is your plan to sell it if ever desired? I would love to own some cool gold coins, but every time I've looked at them they always seemed to have too high of a premium to buy/sell. The fantasy nerd in me though craves a chest full of glittering metal.

white belt
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Re: The Final (?) Countdown

Post by white belt »

Salathor wrote:
Thu Jul 15, 2021 6:03 pm
Do you hold your gold physically or as an ETF? If physically, what is your plan to sell it if ever desired? I would love to own some cool gold coins, but every time I've looked at them they always seemed to have too high of a premium to buy/sell. The fantasy nerd in me though craves a chest full of glittering metal.
Not directed at me but I'll take a stab at this. Right now I have a mix of physical and Gold ETF (GLD and IAU). There are pros/cons to both which is why I prefer a mix. Gold ETFs are easy to transact but have risks because there is the possibility they could become decoupled from the physical cost of gold in the future. Physical gold requires storage and has the risk that someone will come along and steal it or you could lose it for a number of reasons.

For the investor at the typical FIRE or ERE scale, generally 1 oz gold coins from public mints of well-known countries (e.g. USA, Canada, Australia, etc) make the most sense. They are relatively easy to sell in the sense that you can go down to your local pawnshop/gold dealer, or the major retailers like Apmex and JM Bullion allow you to sell them online. You can look at those sites to do the math of what percentage you would be losing in transaction costs. A cursory glance looks like an $80-100 difference between the sell to them price and the buy from them price. You might have taxes to pay as well depending on if you have gains.

Those transaction costs are quite high, but if you are buying and holding gold as a wealth preserver in your portfolio, then it is unlikely you will have to sell it very often. The only scenarios I see where I sell are if gold appreciates in price enormously, at which point it's likely I'll care very little about ~5% in transaction costs. The other option is to only re-balance with your Gold ETF since it is much simpler to transact.

Smashter
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Re: The Final (?) Countdown

Post by Smashter »

Ha, now I wish I had a chest full of glittering metal. But alas, I just hold the IAU.

When I want to sell I'll just have to bite the bullet and pay the taxes. But those are not as onerous as some believe. Allow me to link to another Portfolio Charts article, which talks about all things gold. Tyler writes about gold with the most knowledge and nuance of anyone on the internet in my opinion.

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

I posted more than a year ago how much I love the concept of the koku (a Japanese measure that meant enough rice to feed one man for a year) and how it revolutionized my thinking about food spending. Although we don't eat that much rice, I love thinking in terms of staples and how common grains/beans/etc. can form the inexpensive bedrock of a diet and be supplemented by inexpensive and healthy fruits, vegetables, dairy, meat, etc. Being westerners, our traditional 'koku' is culturally more wheat than rice, but I don't like bread that much, so I've been trying to come up with other fun ways to eat.

A 25# bag of all purpose flour can serve as a good base for a koku-centric diet (supplemented by other grains like whole wheat flour, oats, corn meal, etc.). A bag this size costs ~$9 (this has gone up a lot recently) and provides ~41,000 calories. If an adult needs (365*2000=) 730,000 kCal per year, that would translate to a koku of 17.8 bags, or 445# of flour per year, for a total cost of $160 for base calories. Since wheat, beans, whole grains, etc. all cost approximately the same, I think it would therefore be trivial for a person to feed themselves with ALL necessary macronutrients (kCal, protein, fiber, fat) for under $200 per year.

However, none of us are eating only staple grains/legumes (and we wouldn't be healthy if we did), so let's assume we only get half of our calories from our base. That gives us a $100/yr expense for 1,000 kCal per day, and we can then fill in the remaining 1,000 kCal with eggs, milk, cheese, home grown fruits and veggies, meat, etc.

We aren't vegetarians but we aren't big meat eaters either (a bit of chicken, sausage, or hamburger; never steak!). Using this strategy, our food cost for a family of 4 is under $300/mo (not counting alcohol).

Anyway, one of the points of this post is to come up with fun ways to consume the koku without getting bored of the same thing every day.

So far, we've made (this is just the grain side; I'm not including bean dishes here):
-ramen noodles
-udon noodles (I would love to post a picture of these but I don't know how to post an image here)
-biscuits
-flat bread/naan
-pizza
-pretzels
-oat and buckwheat pancakes
-baguette style bread for dipping in oil
-pita chips for hummus
-??? what else have you got?

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

I've been trying to determine my goals going forward in life, post-employment. So far I've nailed down a few things that are important to me:
  • raise healthy kids
  • have a happy marriage
  • be healthy
  • do good for the earth
  • figure out a way to use my time to make a difference
Unfortunately our current plans will, I believe, contribute toward the first three items, but the fourth and fifth will be harder. Reducing personal consumption to very low levels is already being done, but we'll be so far out of town on this family property that our driving will have to increase (currently we drive very little). Eliminating a few 1000 mile road trips to visit family may make up this difference though.

The fifth, though? I'm just not even sure where to begin. I read Jacob's book and blog over and over again, I watch Rob Greenfield's videos, and I think, here are some guys who are using their time to do something important. I don't want to just drop out without helping, but at the same time I don't want to just get a job with some org I agree with and then have to work in an office again. I'm pretty thoroughly done working at a computer in a/c for 9+ hours per day.

Just a little frustrated and confused I guess.

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mountainFrugal
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Re: The Final (?) Countdown

Post by mountainFrugal »

I do not have kids, but I would not discount raising healthy kids as not contributing significantly to making a difference in the world. :). Maybe you can take those lessons and apply them in an after school program for the local district?

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

mountainFrugal wrote:
Thu Aug 05, 2021 11:48 am
I do not have kids, but I would not discount raising healthy kids as not contributing significantly to making a difference in the world. :). Maybe you can take those lessons and apply them in an after school program for the local district?
Not a bad idea! We're thinking we'll be home schooling the girls, at least for a few years, but creating some kind of school program is certainly something my wife and I are both interested in (I earned a teaching credential before I went to work in another industry). Especially since we're going to need some way to get the girls socialized, if we 'retire' out in the boonies.

cmonkey
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Re: The Final (?) Countdown

Post by cmonkey »

Simply dropping out of the broken culture we have is making a difference in my opinion. Not everyone can (or should) be Jacob Fisker or Rob Greenfield, but we can all reduce our footprint by not consuming, traveling, etc... and it all adds up.

This was a big motivator for me early on.

Salathor
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Re: The Final (?) Countdown

Post by Salathor »

Those are good points, of course. And I'm hoping I'll be able to find local communities/missions to contribute to, as well.

One thing I'm not looking forward to is all the driving. They're deep in ag land and it's going to be a massive change from walking/biking almost everywhere. Bad enough I'm considering buying a used electric car. I'd really like one of the gas and electric ones though, since the majority of miles we currently drive are on 500+ mile trips.

Western Red Cedar
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Re: The Final (?) Countdown

Post by Western Red Cedar »

Hi Salathor. Have you thought much about a detailed withdrawal strategy for your 457 and 401k accounts? Are you planning on focusing on a Roth conversion with the 401K first and living off the taxable accounts, or slowly drawing from the 457 as well? Do you plan to empty out the 457 before you can access social security, or is that even a concern?

The main reason I'm asking is that I have about 40% of our NW in a 457, and it will probably be closer to 50% when we pull the plug. That is all of our after tax money (other than funds in a pension). I'm thinking about doing a Roth conversion with it for at least a couple years while we are traveling and won't have any income. I think I want to transfer as much into a Roth IRA as possible (under the standard deduction) while we are not making money because it is possible we pick up some paid work or side gigs in the future. I haven't completely solidified my plans though.

I don't hear about a lot of folks with 457s, so always curious to hear how others are treating those accounts.

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