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Old 07-11-2016, 09:08 AM   #1
Confused about dryer sheets
Join Date: Jul 2016
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I'm learning so much from you all!

Hello Everyone. First off – I’d like to begin by thanking all of you for your posts on this forum. I can’t recall how I found the forum originally, but over the last 2-3 years I’ve been reading from the sidelines, taking solace in the fact that I wasn’t alone completely alone in my thinking: happy with my personal / professional accomplishments, but thinking twice about whether I’d be truly satisfied following the “work up the corp. ladder; upgrade home occasionally; treat oneself to occasional trip / branded good, etc.” Reading your posts have inspired me & my wife: to challenge our beliefs, to re-think what it is that makes us happy and to dare to dream.

A little about us: me: 43; she’s 27. We met while I was working overseas and in a couple of days we’ll celebrate 3rd wedding anniversary (7+ years together as a couple though). When we met, I was living as an expat and had enjoyed a few years of touring Europe & Asia; making a decent living (but spending as well) and nursing a six-figure student loan debt. Now living in SE US (arrived in 2014) and intend to stay here for at least next 7-10 years.

That’s where FIRE comes into play: Am trying to figure out a way to RE between the ages of 51 – 53. We’re still in what I would call the “turnaround” phase but we’re looking at ways to increase our NW in an aggressive & sustainable way. Actions taken to date:

- Student loan debt: 120k – paid off in full
- Home purchase: purchased in 2014 for 430k with 20% down; have been prepaying mortgage and outstanding debt is 212k. At current values, total home equity would be roughly 288k
- 401k: 225k
- IRA: 10k
- Emergency Fund: 24k
- Company retirement: discontinued when they transferred to 401k; but I’m still eligible for some of it; approx. $560 a month when elected
- Income: approx. 300k gross (mainly mine; she’s recently become a licensed real estate agent)
- Misc: 2/1 apartment in southern Europe (potential retirement destination); approx. value 150k

Actions under consideration:

- Downsize home: we’ve placed home on the market and are planning to buy something smaller. I was an expat for 10+ years so when I returned to the US I was blinded by the desire to “settle down” and definitely bought something oversized (5/3/3; 3000 sq. ft.; pool, etc.). Our original thinking was to wipe out that mortgage in a 4-5 time frame (I know there’s much debate on this topic). We could probably do so in another 2.5 – 3 years, but we’ve revised our thinking to: take the out the equity we have now, purchase ‘right-sized’ home and eliminate mortgage payments ASAP. This in turn, would enable us to channel savings in new direction (i.e., brokerage account).
- 401k: I’ll continue to max out contributions here (emp. match = 4%)
- IRA: I had neglected this in years past; but moving forward, I plan on maxing this out (QUESTION: anyone know a good source of info re. spouse IRA? We file together; to date she hasn’t had income; when she does, it’ll be commission-based with no other retirement program in place. I’m a simpleton in this regard, but want to find out how to setup a Spousal IRA in her name)
- Savings: assuming we down-size and have no other real debts, I believe that in addition to savings listed above, we could set aside 100k a year and maintain our std. of living (based on what I’ve observed in past 2 years)
If so, that would mean a target scenario in 8 years of approx.:
- Home equity: 300k
- IRA: 54k (contributions only; not assuming any growth just to get to a high-level estimate; not counting hers)
- 401k: 470k (contributions only; not assuming any growth just to get to a high-level estimate; not counting hers)
- Offline savings: 800k (contributions only; not assuming any growth just to get to a high-level estimate; not counting hers)

So, an estimated net worth of ~1.5M. Perhaps not enough for most people to feel comfortable with FIRE, but I look at that figure & think to myself:

- 470k of that will continue to grow until retirement age
- If the plan is to retire overseas (which it likely is) then the home equity can be cashed out & put to work (rental properties, etc.) to help pay for interim between ER and traditional retirement age

Anyways, as to the “why” of the post; I’m a firm believer in the “obligation to dissent” and working off the feedback of others. I’d be curious to hear other’s thoughts on proposed next steps, pitfalls to look out for, etc.

Have a great day!

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Old 07-11-2016, 09:20 AM   #2
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Join Date: Jul 2010
Posts: 3,337
Glad to have you posting, freedom50!

On the spousal IRA, the short answer is that a non-working or low-earning spouse is eligible for their own IRA and contribution from the working spouse's income: Probably the easiest way to get this figured out is to call Vanguard or Fidelity and have them walk you through it - they are very happy to do so.

Have you run your numbers through FIREcalc?

Most of us would recommend detailed tracking of expenses for the next few years to help on that end of things, particularly if you're considering downsizing your lifestyle as well as your house.

Finally, we have a good list of questions to answer if you haven't seen it before:
Some Important Questions to Answer Before Asking - Can I Retire?

"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
ER'd Oct. 2010 at 53. Life is good.
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Old 07-11-2016, 09:25 AM   #3
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Are you tracking your expenses?
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