Hi, Schizo saver from IT

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dallas27

Thinks s/he gets paid by the post
Joined
Jun 14, 2014
Messages
1,069
Hi All,

Turning 36 this month, lovely wife of 44 and no kids. I've been a decent saver since my 20's. Recently got propelled into a well compensated (but unsteady) position with a startup. For the first time in my life retirement seems within my calculators grasp.

House worth about $280k, owe $180k, 12 years left at 2 7/8 % (I'll never pre-pay at that rate)

Savings, $425k, mostly in 401k.

I have never had credit card debt, only ever made payments on a vehicle 1 year of my life. I save first then buy, unless there is a 0% finance deal, then I have a debate with my intellect. :)

My wife and I work from home, have an LLC S-corp that we bill our time through. With my new gig that started this year, together we will pull in $250k in revenue give or take 30k, then play tax games to recognize as little as possible of it. 25% of total salary 401k match, 100% health care reimbursement, education reimbursement, etc. About 200k of the revenue is from my hours.

So far this year, we have been putting more than 10k a month into savings through one account or another. 11k really. I have never been more worried about money in my life now that I have so much and and losing the high income stream could so severely affect my future. It's literally distracting me from work. I started working in the late 90's and literally during each of the financial disasters, while everyone got broke, my salary doubled over night because of hard work, willingness to relocate, and some luck. Although I'm a bright dude, it's starting to feel like I have a good run on the casino (my job, no the market), but can't win forever.

One day I run the retirement numbers and I can drop the full time work in a year or two and live a modest life working just some part time gigs while my nest egg compounds. The next day I run the numbers and I need to work 20 more years because I want to be "comfortable". For the record, I'm not a schizo, I just play one during retirement planning. Or wait, maybe I am a schizo.

FWIW - I'm invested 100% in vanguard stock indexes evenly split among these 5. I'm quite confident Bond is a four-letter word.

VIG - US Large Div Increasers
VOE -US Mid Val
VBR - US Small Val
VEU - Ex US Large (includes emerging)
VSS - Ex us Small (includes emerging)

And about 10K in VWO (Emerging only) to pump up that exposure some.


Also, I've read WAY to much about markets and planning, and I've come to the conclusion that past performance does in fact predict future results (over reasonable time frames). How else to explain everyone repeating that tag line, then acting and investing directly based on the past performance of asset classes. Everyone trying to prove new algorithms and "this time it's different" arguments are, in fact, delusional and only half as bright as they think they are. Well, possibly less. :)

And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house with a beautiful wife
And you may ask yourself, "Well, how did I get here?"
 
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Almost forgot, our expenses are around 60k post tax. That includes the mortgage.
 
If that's the case, there must be a corner of this forum for marriage counseling. Please point the way!
 
Welcome,

I guess I missed it.. but your looking to ER at what age and living expenses of?? You have a great start, but the big thing is in my mid 30s.. I started dumping my money outside my 401K too and with your monthly savings you can easily do that.. whole problem with early retirement is having it all tied up in IRA and 401ks where you can't get to it.

I think if you run your calculators, you have to split the money if your looking to retire super early. For example, I was thinking $1.6M to retire early 40s to generate a modest $50K. However, in order to let that 401k money just sit there and not be touched, I figure I need at least $800K in non-401K/IRA money and would prefer $1M and that is where I'm stuck .. too much in 401k not enough outside it.. so I keep working to stash money outside.
 
I think if you look at the math of a business owner, it actually advantageous to maximize the 401. You have to realize i can put away about 50k between my wife and i that is before any tax, including fica, both personal and business. Plus the fact that recognizing that income would be in the 28 bracket plus put me over the roth limit. (Have 2 do a backdoor then) In the end, taking a withdrawal penalty would be the lowest hit. But regardless, my wife is older than me, we could run a 72t for her pretty easily when the time comes.

I haven't decided when I want to retire or what expenses, my goal now is just to reach FI as fast as is reasonable. Then the question will be what do i want to do from then on and how much more money do i want.

That said, I am forced to put a small chunk in taxable now as the advantaged accounts can only accept so much. About 20k so far this year, more once i hit the 401 personal limits.
 
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Looks like you're off to a great start.

I can relate a little bit to the schizo part - I'm 37, still single (and still looking for "the one"). I swing between "just retire already" to "if I get married, I"ll want to work another 6 years"...although the marriage/kids variable obviously is a valid reason for changing your retirement budget compared to when it's just yourself. ;)

But just one observation to help you put things in perspective - you say that you are becoming so worried about your good luck run on the casino, and are obsessed with worrying about it ending...

dallas27 said:
I have never been more worried about money in my life now that I have so much and and losing the high income stream could so severely affect my future. It's literally distracting me from work.
Click to expand...


...but then you say:

dallas27 said:
One day I run the retirement numbers and I can drop the full time work in a year or two and live a modest life working just some part time gigs while my nest egg compounds.
Click to expand...

If you truly think you can semi-retire in just 1 or 2 years then work part-time, then why are you worried about your 'luck streak' ending? If it does end, part of your plans indicate you are fine with working part-time for a number of years. So why the worry?

Personally, if I were you, I'd much rather work just 3-5 more years full-time to run up your stash, and then having the ability to call it quits for sure (and then see about working part-time), because I'm the conservative type that doesn't want to be stuck having to find that elusive part-time gig that pays well enough but also allows you to truly work part-time. It's not like there's this magic wishing well that you simply go up to whenever you want, pull the lever, and get 20 billable hours this week, then come back to the wishing well 1 month later for another 40 hours.

But look at your stash - it's pretty damn good, and growing leaps and bounds at the moment. So even if things suddenly changed tomorrow (which they most likely won't), so what? You are so far up the mountain, it wont' take too much more effort to finally reach the pinnacle of ER, one way or another. You're very resourceful, and managed to make the opportunity you now have. If something changed, I'm fairly certain you and your DW will be able to create a respectable alternate Plan B or Plan C. May not be the same great thing as now, but will likely be not too far away.

dallas27 said:
VIG - US Large Div Increasers
VOE -US Mid Val
VBR - US Small Val
VEU - Ex US Large (includes emerging)
VSS - Ex us Small (includes emerging)

And about 10K in VWO (Emerging only) to pump up that exposure some.
Click to expand...

Not bad. Personally, I have more exposure to emerging markets. Also, while value has had a good track record, it looks like you don't have any overall exposure to Mid and Small growth. I'd want to have some exposure to that if I were you. But that's just me...
 
Moorebonds: you aren't wrong. I flip flop on this so much. Part of the schizo persona i guess. Confident one moment, paranoid the next. Am i rich. Or woefully overestimating my future returns and underestimating expenses.

Oh, and i literally just got done running payroll, will boost the vwo position by 10k on monday.
 
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Welcome dallas27. I think it is good to save up to be FI, then work part-time or full-time if you want without any pressure. I am a fan of the book Who Moved My Cheese, so I think you are smart to save while you can. We have a lot of peers with small businesses who didn't plan on ever having their cheese moved, even though most small businesses don't last forever, and yet they seemed surprised when competition heated up or something else happened for their income to drop.

Until a few years ago, my husband had a job and we had a couple of small businesses, which we still run but have scaled back. We have also been big on maxing out the tax deductions and taking advantage of the higher limits for retirement accounts for small business owners. It was a big part of our ability to ER. Good luck with your plans.
 
daylatedollarshort said:
Until a few years ago, my husband had a job and we had a couple of small businesses, which we still run but have scaled back. We have also been big on maxing out the tax deductions and taking advantage of the higher limits for retirement accounts for small business owners. It was a big part of our ability to ER. Good luck with your plans.
Click to expand...


I have to ask because im a geek for tax tricks. Are there any advantages to having multiple businesses incorporated when it come to retirement accounts? Are you able to do more company contributions or something?
 
dallas27 said:
I have to ask because im a geek for tax tricks. Are there any advantages to having multiple businesses incorporated when it come to retirement accounts? Are you able to do more company contributions or something?
Click to expand...

For us the two businesses were more for branding and unique business reasons, not taxes. It is an advantage from an asset protection point of view as they are separate entities.

Most of the deductions we have are pretty mainstream - retirement accounts, office supplies, home office, health insurance, Internet, phones, etc.
 
It's been a good month in the market. I was at 425 a month ago june 14th, but if the market holds steady I will be at 450 with my contributions on the 14th.

Love hitting those round numbers.



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