Early Retirement Extreme Forums

Hi All,
My goal is to save 150K USD by 4th of July 2015 and retire; I am planning to use this journal as a way to track/share my progress with this forum, and discuss/learn.
Background:
I have been reading this forum for 2.5+ years, and got ERE book when it first came out. I am already FI: I am debt-free, own a fully paid-off small condo and have a reasonably well stocked retirement/non-retirement portfolio.
I am in my early 40s, married, no kids, and am a desk slave at a tech company in silicon valley. I was a programmer long time ago and since the dot-com bust I have moved on to greener (some say darker) pastures. And no, I did not strike rich in silicon valley which is kinda sad since it is kinda cool to to fit into the perception of silicon valley success even though others secretly resent your luck. While I really like what I do at work, my interest in holding onto a job has been slowly waning over years. I used to love new technology concepts and that interest is waning over years as well. I do not resent my life at all, although looking upwards is always been a typical human trait.
My wife and I see eye-to-eye on all major issues and I am eternally grateful for that, and it has been the primary reason for our FI. While I was careless in my early 20s, we are reasonably frugal and have been fortunate to have good health so far. Over the years I have read most well known and interesting retirement books and ERE being my last book on retirement. Since my college days, I always wanted to retire at age 40 and while it has slid by few years however we are almost there!
Our plan is to use 150K as a 4 year travel fund and we have not yet chalked out the details of our mode of transportation, what we would like to in those years etc.
Some of my current sins include owning 3 cars (sorry to unload this shocking fact on this forum) which I am going to keep till I retire (sorry for the aftershock). I am also responsible for some level of eco-terrorism as I like dirt biking. Some day I might elaborate on the reason for 3 cars
Game plan:
We have exactly 26 months to save 150K and this does not include contributions to 401k which we max-out every year. We need to save about 6K every month and it is doable unless unforeseen things derail this plan.
I will post monthly on our progress, and hope it will be interesting. One caveat would be that I plan to keep few details such as income, personal details, etc off this journal. My work gets busy at times and apologies in advance for delayed responses.
May, 2013: Savings: 6500, Total so far: 6500, Yet to save: 143500, Months left: 25
Current plan is to invest in intermediate bond ETF, and if you have better suggestions, please let me know.
Next update: end of June.
Thanks in advance for your time

> Some of my current sins include owning 3 cars
If you're gonna sin, go big... I own a dozen or more cars. Most aren't licensed/insured and they were bought cheap, so, for me, it's mainly a storage issue and lost opportunity.
> Current plan is to invest in intermediate bond ETF
If you're doing that for capital preservation, then I think you'd be better off in CDs.
If you're doing it for income, then a small argument could be made for munis in a taxable account, but, fwiw, I think most of us are avoiding US bond funds these days as the risk of rising interest rates can seriously wipe out any gains in the 2-5 year timeframe. Bond funds are not a set-and-forget situation!
For income, there are plenty of dividend growth stocks that are not yet overvalued and their yield will match any unleveraged bond fund (most bond funds are leveraged, increasing their sensitivity to interest rates).

@George.TOO
Thanks much for your responses.
All 3 cars are in use BTW. Two are compact cars used for commute since there is no good option for carpooling. SUV is for carrying the dirtbike or for family outing. When i retire, i can think of owning a dealership of PNO cars
Having always invested in all-stocks portfolio, your suggestion on CDs/Munis makes sense. My first goal is preservation of at least two years worth of savings - say 75k. Rest could grow/generate income. I believe preserving just 35k out of 150k is too small, and preserving above 75k is being too conservative. I have a fairly high risk acceptance, but considering the short-term 4-5 year outlook for the travel fund, things need to be looked at differently. I would prefer not to cut short travel due to lack of funds that was saved just for that purpose.
May be someone who is lot more financially savvy can answer my following queries
I found VDAIX with ER 0.25 and its ETF equivalent VIG with ER 0.13. ETFs allows frequent trading and they do not have fund minimums, but in this case, why would anyone buy an index fund with high ER?
Then there is VDIGX with ER 0.31, and VEIPX with ER 0.30?
What do you recommend for my situation?
Thanks much

What is your combined income? You're essentially starting from scratch and saving $145k in just over 2 years. That could be pretty ambitious, given that in your ~20 years of working you've saved only 6500. I don't mean to rain on your parade, just saying that you should make sure your plan really feels reasonable.
Are you moving somewhere cheap or just taking a few years off? $150k is not much unless you're living at Jacob-level frugality. You'd expect to pull in $6k/year from investments.
As for investments, I don't think what you invest in makes much of a difference with the savings you're targeting. I'd just dump it in SPY and a bond fund/ETF.

@M741- from the 2nd paragraph
". I am already FI: I am debt-free, own a fully paid-off small condo and have a reasonably well stocked retirement/non-retirement portfolio."
He's already FI and looking to save an additional 150k in 26 months as a 5 year travel fund. 6500 is his savings just from this past month.

Well damn. Somehow skipped that paragraph!
First, congratulations, and second, sounds like you're well on your way to a travel fund. Forget everything I said.

Update for June
Jun, 2013: Savings: 7500, Total so far: 14k, Yet to save: 136k, Months left: 24

May, 2013: Savings: 6500, Total so far: 6500, Yet to save: 143500, Months left: 25
My savings for June was $7500. In the coming months, the amount of savings will reduce a bit as I have enrolled to ESPP and part of my salary goes there. As I don't intend to retain my company stocks, I plan to do same day sale soon it gets granted, so once in six months my savings would raise a bit, while monthly savings will come down a bit.
Investment Plan: Since our current plan is to travel for 4 years with 30k per year on average, my current plan is to invest in the following sequence. Other suggestions welcome.
First 90k savings, which is about three year's worth of expense, will in invested in dividend stocks or intermediate bond – may be 50/50 mix
After that, next 30k savings which is tagged for second year's expense will be in 6 step CD ladder that expires every two months – We have about two years from time of investment to withdrawal
Lastly, 30k cash for first years expense will be in bank account – 5k in checking, and 25k in savings – this is the fist to be used
I will write about my travel plan in next month's update
Misc:
I rarely buy drinks from Starbucks or other coffee shops. Over the years I have been making a drink that has mostly healthy ingredients - no liquid flesh (milk) or animal products. I use Blendtec so not sure how smooth it will be on other blenders. Hope you enjoy
Ingredients (per cup)
2-3 cashews

2-3 walnuts

One tsp coffee (Sanka decaf: available @ Amazon)

4 tsp soy milk powder (Better than Milk brand: available @ Amazon)

1/2 of cardamom seeds without skin

4-6 drops of orange extract

Sugar (optional)
Preparation
Pour one cup hot water, and all the above ingredients to blender jar

Blendtec smoothie cycle once

Pour into a cup, heat as needed, enjoy

Calorie is around 120 kcal without sugar
Next update: end of July

Update for July:

Savings for July was 4k

I created some tables and graphs to show progress visually, and future charts/table will retain 6 monthly markers with rest of timeline rolled into quarters. Yet-to-save is on primary axis whereas Monthly-savings and Net-savings are on the secondary axis.






July savings was on the low side due to the fact that I bought a cargo van. This 4th vehicle ownership will be a temporary situation, as I plan to sell my SUV by the end of August, which should make-up for low savings in July. I expect SUV to sell quickly as it is a popular/reliable SUV with great pavement manners and good off-road capabilities.

Cargo van will make the job of transporting dirt bike very convenient as I was getting tired of the whole 1 hour I would spend to load/unload bike onto the carrier and repeat when I get home. Cargo van with interior add-ons will let me keep the bike in the van and park it outside or even go to restaurant, or run errands and keep things less conspicuous in general. Gas mileage of cargo van is crappy 14mpg, but SUV was not great either. OTOH, I have no desire to spend significantly more money to buy fuel-efficient cargo van. I may take it to work somedays which should amuse/shock my coworkers who drive mostly Lexus/Porsche etc.

Long-term travel plans are still nebulous right now and in another year or so I would like to firm it up. My situation is little complex for the following reasons

• We have already visited 30+ countries in last 15 or so years, few on business, and many on vacation. We very familiar with Western Europe, Mexico, and India – having been there multiple times. So we would prefer not to be tourists when we bail out in 2015.

• Mode of travel: RTW with motorcycle, van or sailboat each have pros/cons, and I am still not sure if our goal is to circumnavigate

Current thinking is to live in 8-10 cities for 3-4 months each, rent a house and live among locals -- not in expat area. If you have suggestions on the cities to consider or any other suggestions that would be much appreciated!

We have less than 2 years and the mental gymnastics that has ensued is not easy to handle

• I would like to work till July 4th 2015, even if I end up reaching my savings goal earlier. We are being paid very well, and it is unlikely that we are interested in pursuing such high paying jobs in the future. So, walking out before 2015 "independence day" is low on my list.

• I am restless/high energy by nature along with a perfectionist streak, so it is kind of hard to be not attached to goals and let go of things. Since all of my co-workers are invested in their careers, I am having hard time behaving in a way that I really care beyond 2 years (those business/strategy planning sessions meetings are hard to endure).

How do others in similar situation on this list daydream/count months and deal with work situations? Any visual, or verbal persuasion tips would be highly appreciated!


Misc:

• I thought honey badger was kick ass till I watched this documentary on fire ants
  https://movies.netflix.com/WiMovie/Fire ... cale=en-US

• Their other underground activities include playing soccer, drinking beer, and listening to electronic dance music -- at least per this video http://www.youtube.com/watch?v=8GT7wFODaW8

xlr650? Are you bajaing?

sshawnn wrote:xlr650? Are you bajaing?

definitely on the bucket list wanting to do it for a while but various other activities have let years slip by.

I doubt there are many movies like this one - highly recommended!

http://movies.netflix.com/WiMovie/Dust_ ... cale=en-us

Update for August

Savings was 8500 USD, made up for last month's low. Could have been higher if I could have sold the SUV. Due to work and related busyness, I was unable to sell in August, and I am targeting for September. Everything else was smooth sailing last month. I got 500USD from Etrade last month just for asking(they had promo for new IRA xfer, but i was able talk them into seeing it as a retention promo)

Love your journal, especially the smoothie recipe. I'm going to try it out on my blender. Have you been to Buenos Aires, Argentina? I spent some time there and rented an apartment and can recommend it, there's a lot to see in the country to fill up at least 3-4 months, you have glaciers in the south, waterfalls in the north, vineyards to the west, many opportunities for roadtripping. The steak is the best and the city itself is very cultural and romantic.

Would also recommend Israel and Jordan crossing the border at Aqaba, full of history (Jerusalem, Dead Sea, Petra, etc.), wonderful people (much safer than you'd think, depends on political situation in 2015).

Also Morocco, hospitable people and anything from beaches and kitesurfing to the Sahara desert.

ashe wrote:Have you been to Buenos Aires, Argentina?

Yes, I was there few months ago. It is a great city! However I would like to see rest of Argentina and possibly Antarctica, so BA is one city I will choose. Thanks for the suggestion.

Another cities we are thinking are Rio, Moscow, Johannesburg. That is 4. Need to come up with 4 more

ashe wrote:Would also recommend Israel and Jordan crossing the border at Aqaba, full of history (Jerusalem, Dead Sea, Petra, etc.), wonderful people (much safer than you'd think, depends on political situation in 2015).

Been to Israel few times - TLV is my one of my favorites. I have not been to Jordan. May be I can pick Turkey as the base and cover few surrounding places.

ashe wrote:Also Morocco, hospitable people and anything from beaches and kitesurfing to the Sahara desert

Have been to Tangier, but would love to explore southern parts which I was told are beautiful. May be that could be our North African base. I still have 2 years to decide, so keep the suggestions coming!

Update: I am still alive/kicking and have decided to post quarterly to keep things manageable. I lost my access to previous flikr account so my prior posting pictures have gone missing - will see if i can resurrect the links - otherwise this latest post makes up with aggregate year-to-date information.

SUV was sold and consequently there is a bump in October savings. I still have three vehicles and will likely keep them till mid-2015.

Cargo van conversion to Moto van is coming along very well, and since I decided to do it myself (with help from a friend) instead of shelling out few Ks, it is taking longer than usual. It is 80% done and things have stalled since mid-November and will likely resume in mid-Jan. Completed items include: installation of a passenger bench seat that can seat three, two front wheel chocks, rear and side door hockey puck locks, hard partition between bike cargo-area and the passenger seat, rear wheel anchor points so bike does not cartwheel in case of rear-end situation, sidewall rails to hook things up etc. I am really happy with the progress and all the effort that has gone into it. TBD items include installing backup camera, electrical wiring for various things, GPS/Camera display unit, and an exhaust fan to release exhaust/fuel evaporation fumes out of the cargo area. I will likely keep this van for many years even though it may not see continued use - at least that is the plan anyways.

Savings has been steady and consistent - December savings would have been lot less if not for wife's work bonus as December is the month of huge property tax bill (which we usually pay before the end of the year), charity contribution as well as gifts (we do not receive gifts, but there are kids that we like to gift to). With current savings rate we are confident that we can reach our goal by mid-2015 if things go as planned.

Here are year-to-date financials:




2014 will be an year of slowly emptying out the house we have lived in for more than 13 years, and start planning out the next phase. This is a mixed feeling to say the least.

Hope things are going well for you, and I wish you the very best in 2014!!

Next update: 1Q2014

no liquid flesh (milk)

Thanks for making milk sound creepy.

xlr650? Are you bajaing?

I did a week long supported tour of Baja a few years back. It was great! I would definitely recommend it. Stay overnight at Mike's Sky Rancho if you get a chance.

I'm jealous of both your plans and your ability to put away $6500 a month! Keep up the good work and enjoy your travels.

Gilberto wrote: I did a week long supported tour of Baja a few years back. It was great! I would definitely recommend it. Stay overnight at Mike's Sky Rancho if you get a chance.

Nice! was it via Bajabound? Thanks for the ranch suggestion - will keep that in mind. I might do the support crew for 1000 for the first year and then race the year after!

Gilberto wrote: I'm jealous of both your plans and your ability to put away $6500 a month! Keep up the good work and enjoy your travels.

I am chained to desk for at least another 6 quarters, but looking forward to the independence day! I am sure you can meet/exceed with planning and bit of luck!

Good luck!

was it via Bajabound?

It was with http://www.trailbosstours.com/. The bikes were new and well maintained, all the people working were friendly and I had a lot of fun. It felt like going on a group ride with more experienced people that really knew the area.

First three months of 2014 has been good even though there were some travel/event expenses in Jan. Got reasonably good bonus in Feb since company did ok, and there was a tax refund in March. Historically, our tax refunds are minimal since there is little variation in our financial situation and we have minimal deductions - no mortgage, no kids, max-tax on paychecks (W4 deduction code is zero).

After using Turbotax for last 10 years, we finally made a switch to TaxAct this year. How about $20 vs $70? While TurboTax has some nice features to auto populate W2, 1099 and other info from various sources, it did not make sense to pay $50 extra considering our simple tax return. TaxAct takes a bit of getting used to if you have been a long-term Turbotax user, but it was worth switching.

Last year we opted HDHP (High Deductibility Health Plan) and contributed max to HSA (Health Savings Account) so as a result we had to teach the tax software to treat it as tax-deductible item, with that and some other change, we got around $3.5K refund. I think HSA is another scam for rich (and healthy) to get richer - because outside of ERE community, only people who sign-up to HDHP are those who are healthy and can afford medical expenses so they can minimize the taxable income, and this works as long the medical expense is within the deductible limit for the year. I have not checked the non-employer sponsored plans, but I believe this might be true for them as well. It will be interesting on how things turn out when are are out in the wild from next year onwards.

DW had unexpected medical issue and we went to primary care first, who routed us to ER, and while she felt better on the way to ER and did not want to go in, I wanted to make sure we understood the situation so we can manage it better in case it recurs. Fortunately I was in town, and after 4-5 hours in the ER, they sent us home with no indication on the probable cause. We got the bill after a month and it was $16K and we did not even know the medical condition!! We were to pay around $3.5K after insurance payout, and DW was able to talk to the hospital, identify few frivolous items, etc, and in the end we paid just $320! Having never been to ER nor having any experience with it, it was a major eye opener on financial implications of medical issues! When we move out of bayarea, it may be a lot wiser to live (like border of Mexico) where affordable medical facilities might exist. If you have suggestions on countries/locations please share as I have not done much research on this.

Having grown tired of using Blackberry for the last 15 years, and knowing full well RIM will RIP in next few years once the funny money from patent trolling runs out (see: Rockstar Bidco), I have moved on to the world of Android. I bought a Moto G (no contracts), which is unlocked out-of-box, with quad-core processor, 2GB RAM, and 16GB internal flash memory, front/rear camera etc. It has few limitations: no external memory support, battery cannot be removed (Snowden would NEVER buy this phone), and it supports only 3G. I never found any bandwidth issues even though I use few bandwidth hungry/chatty apps. In fact, using 3G might be a blessing in USA as more phones are competing for 4G spectrum. I have used it in few countries and it works awesome. Here it is: http://www.amazon.com/Motorola-Moto-Glo ... 00GWR373M/

Quad-core processor with 2GB RAM/16GB Flash for $200?! and technology like this was not even generally available on laptops 15 years ago?! How come our medical system is so fucked up to be super expensive when human anatomy has not changed all that much in say last 500 years? Even if we adjust it for few factors such as massive Medicare overcharging/frivolous treatments by hospitals, sue happy idiots etc., I believe following are some things that can be abolished right now even before we can start overhauling our crappy medical system:

• Requiring undergrad degree to pursue medical degree: Engineering students learn how to build massive structures such as hospitals, lab equipments, process control computer hardware and software for drug manufacturing etc, right after high school, and still somehow AMA thinks one needs a stupid undergrad degree before they can start messing with cadavers? Many countries do not have this BS practice and American doctors are no better than say Mexican or Indian doctors from what I have seen. This alone should save $100K tuition bill to start with and might allow more people get into medical field.
  
  Rent seeking activity from AMA in terms of limiting number of doctors in the market to keep the medical treatment costs (hence salary) unreasonably high.
  
  Not allowing outside companies to market/sell generic tablets here in the USA (I am not an expert in this area, and happy to be educated on this topic)

USA is not getting better when it comes to medical coverage, so most ERE folks would have to think about an escape plan if a medical disaster hits. I sure want that backup option if reasonable alternatives exist. I am all for being healthy, however I also recognize its limitations.

I completed Ernie Zelinski's book "How to Retire Happy, Wild, and Free" and liked it a lot - while repetitive at times, it offers many ideas on how to think about retirement, how to prepare for it, what to expect in retirement, and what kind of thinking help/hinder continued enjoyment of retirement. I have read tons of financial, and other retirement related books in the past, and this book stands out in terms of the issues it addresses, and the solutions it offers. For me, this book states the seldom mentioned but crucial fact that retirement is a full-time work in itself, and it is best to view it as a retiring from paying work, and not from life, so retiree must actively seek endeavors that result in positive engagement. It is obvious once read, but his experience from living early retirement first-hand must have been a major factor in him acknowledging and emphasizing - he spends time laying things out on what to expect - and for me, knowing a priori that retirement is not all sunshine and kittens confirmed my own views. Fortunately, there are ways to address this in short-term at least.

OTOH, the book romanticizes retirement as a state of being free from work related issues such as forced hierarchy, soul crushing work, demanding bosses, etc - I could not fully identify with this as the things he complains at work have rarely been an issue for me. Sure, work sucks sometimes, but I am happy to have worked all these years than busy finding engaging activities in retirement. While I could continue to work for few more years with no big fuss, what delighted me was Ernie's wisdom in articulating that retiring early presents a chance to explore side roads, a luxury which only a few fortunate ones can afford, and if early retirement ever ceases to be enjoyable in spite doing all the right things, there is always that option of getting back to work. Late retirees, however, do not have this luxury as it is too late for them to correct/relive mistakes. For me, just that realization alone was worth reading the book.

I am definitely looking forward to March next year and taking some time off, however it is uncertain to me how long I will find it joyful. My current thinking is to give ERE a try by pursuing outdoors activities full-time for next 4 years, and if what was "fun" starts being boring after 4 years of soaking-in, I could pursue working part-time. Unfortunately, jobs available for part-time are usually the ones in backwaters of technology. So, if part-time gets boring as well, I might go back to working full-time.

The book is honest in stating that retirement is not some sort of utopia and this is especially true for those desiring active engagement in certain aspects of life. Retirement has its own set of challenges and they need to be weighed against other choices such as part-time/full-time, being consultant to stay distant from office politics, and working from home to minimize the pressure to socialize. The book states that, apparently, such existential crisis during retirement is very typical of men, and not women. Here it is: http://www.amazon.com/How-Retire-Happy- ... 96941949X/

In case it is not obvious by now, I am a glass half-empty kind of a guy, and I have plenty to learn/reflect-on when I am out in the wild with loads of free time

Finance update:






Anyways, at current rate of savings, we might reach $150K mark in October this year, a full 8 months ahead of original July 4, 2015 target. Instead of taking off in November this year, we plan to work till end of March 2015 since there are few things we need to sort out, such as selling the house, two vehicles, complete Trust paperwork, etc. Regarding selling the house, we will likely go FSBO (For Sale By Owner), and if you have experience with FSBO, I would appreciate your summary on what is important. We have read FSBO book by George Devine http://www.amazon.com/For-Sale-By-Owner ... 413310958/

I finally jumped on the Lendingclub bandwagon, and invested 10K. I picked low yielding but high quality notes, and since I am not in it for maximizing money per se, it still seemed like a good place to park some funds.

Having never been a fan of spending loads of money on food, and being addicted to spicy food, here are some cheap eats that I frequently prepare at home:

• Zesty Japanese noodles: Yakitori Soba (Costco) 1 pkg, add frozen peas, frozen vegetables (Costco), leafy greens, some water, microwave covered for 5 mins, add to taste: soy sauce, chili powder, lime juice, black bean garlic sauce http://www.melaniecooks.com/sam-choys-y ... stco/2471/
  
  Spicy potato & veggie masala: 2-3 Masala burgers (trader joe), add frozen peas, frozen vegetables, leafy greens, some water, microwave covered for 5 mins, chop masala burger, mix; avocado optional http://www.fooducate.com/app#page=produ ... FD45A4D471
  
  Spicy Peruvian rice: 1/2 package Chimichurri rice (trader joe), add frozen peas, frozen vegetables, leafy greens, some water, microwave covered for 5 mins, mix; avocado optional http://www.fooducate.com/app#page=produ ... 31380C180E

All of the above are awesome with a can of Monster. There you go - cheap/healthy food, with monster energy to kick even a red bull in the nuts

Thank you for reading, comments welcome.

Next update: end of Q2.

Wow, you got a great life and so much still ahead! On your travel list, do not live in Jburg, but choose Cape Town in SA, from there you can do so much (wineries, parks, mountains, ocean, garden route, you name it). Other suggestions: go to New Zealand (takes your breath away), Turkey (Istanbul is great), Cambodia (Siem Reap !!), Peru (amazon & machu picchu), Sydney, Hong Kong, try Italy (any old city), etc... sooo much to choose from

Hank wrote:Wow, you got a great life and so much still ahead! On your travel list, do not live in Jburg, but choose Cape Town in SA, from there you can do so much (wineries, parks, mountains, ocean, garden route, you name it). Other suggestions: go to New Zealand (takes your breath away), Turkey (Istanbul is great), Cambodia (Siem Reap !!), Peru (amazon & machu picchu), Sydney, Hong Kong, try Italy (any old city), etc... sooo much to choose from

Hank, appreciate your suggestions. I will definitely look into Cape Town, and Combodia. I have already seen enough of Italy, Australia, Hong Kong/Singapore and New Zealand, although it would be fun to buy a camper van and spend couple months in South Island -- I don't fancy the food in New Zealand though since I dislike bland food.