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Old 01-28-2008, 11:32 AM   #41
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Speaking as another ER whose spouse is still bringing in $17K/year, perhaps a more accurate description than "fully retired" would be "stay at home parent". Especially since your budget is within your spouse's part-time income.
I read your interview that is linked from your profile. (Great story. I LOVE Hawaii!) Since your wife still works and you're a parent, have you since decided to call yourself a "stay at home parent" rather than "retired"? I consider myself both. While my husband WANTS to work a couple days a week (when he feels like it), I've stopped. I'd say I consider myself 100% retired and my husband semi-retired at this point. All a matter of semantics, I suppose.

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16 stock market crashes in 28 years? I can recall 1987 and 2000-2002, and maybe 2008, but what else am I missing here?
Since I invest globally, I'm taking into account all markets - not just USA. Wikipedia lists:
List of recessions - Wikipedia, the free encyclopedia
List of stock market crashes - Wikipedia, the free encyclopedia

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I don't know anything about the data or assumptions used by MS Money. For 20 different funds, it'd be interesting to see what you get out of FinancialEngines.com or ESPLanner or some other extremely detailed calculator.
Thanks for the resource suggestions. I'll look into it.
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Old 01-28-2008, 11:38 AM   #42
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I hope you will continue posting in this site.
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Old 01-28-2008, 11:40 AM   #43
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I hope you will continue posting in this site.
Me too, FWIW.
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Old 01-28-2008, 11:51 AM   #44
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Careful about distrusting the results you don't like, and trusting the projections you do like. There's a lot of wisdom in FC, and it has been boldly and widely tested, critiqued, etc.

You are right, of course, if your input data are not valid all bets are off. What kinds of variables did you find difficulty entering in a FC model? Often there's a workaround that others with a similar situation have solved.
It's not a matter of not liking the FireCalc results, it's that I couldn't figure out where to input all of my data details. Without accurate input, output is naturally irrelevant. I do respect the enormous pool of wisdom here. That's precisely why I joined this forum.

Using the FireCalc (compared to MS Money Lifetime Planner): I couldn't figure out how to enter adjustments to our living expenses over specific periods of time (see my earlier post). I don't recall tax computations, either, or future sale(s) of assets (like a business, etc.). Any work-around suggestions?
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Old 01-28-2008, 12:03 PM   #45
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Originally Posted by MillionaireMommyNextDoor View Post
Using the FireCalc (compared to MS Money Lifetime Planner): I couldn't figure out how to enter adjustments to our living expenses over specific periods of time (see my earlier post). I don't recall tax computations, either, or future sale(s) of assets (like a business, etc.). Any work-around suggestions?
OK: for those who choose to make a donation to the Firecalc fund (like $15, I am not affiliated, author is Dory36 who founded this board) a new feature becomes accessible where you can customize your expenses (i.e. your needed income) during almost any part of your retirement. So, you can say we'll need $10k per year while DH is working for the next 3 years, then we'll need $50k per year for the next 15 years, then after kids graduate we'll need $40k. But you do have to register to get to that feature.

Future asset increases are enterable - I think it's under changes to your portfolio.

Taxes are not handled by FC, since they are so variable and complex, AMT, etc. But you can account for that when entering your custom income needs by grossing up the amount for the tax bracket you estimate you'll be in.

I think it will bring you insights you will appreciate when you get the time.
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Old 01-28-2008, 12:18 PM   #46
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wow, awsome. i am very happy for you. however, living on your husband income from WORKING is not really an early retirement. it's just that you're a one income family and you're a stay home mom.... right?

do you mind sharing your mutual funds holding?? don't answer the question if you don't want to.

thanks and congrats in your success.

enuff
I consider myself both. While my husband WANTS to work a couple days a week (when he feels like it - for fun, not the money), I stopped completely once we reached FI. I consider myself 100% retired and my husband semi-retired at this point. I suppose it's a matter of semantics and personal preference.

I use No Load FundX upgrading strategy for our investment portfolio. I discussed my holdings in a blog post titled, "My Investment Portfolio Revealed" (forum rules dictate I don't give you a link, sorry). I have made a couple of fund upgrades since that time, and the next rankings are due on 2/1. I'll try to remember to list my current portfolio holdings after the 1st.
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Old 01-28-2008, 12:41 PM   #47
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Since many very knowledgeable people have already posted on this thread, perhaps my quibbles and observations are dead wrong. Please take them in the spirit of discussion and helpfulness.
Will do.

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1. When reading "new posts" I skipped over yourís many times because I took your handle as falling on a continuum which would include mimicry and possibly copyright infringement. Hopefully you donít have a "Bernie Ward" problem.
Huh?:confused: I assure you, I don't have a child porn problem!

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2. Iím a little surprised that you would take a well-known cliched book title and insert "mommy" rather than "couple" or "family." Maybe because millionaire is not plural?
I chose "mommy" because I am the blogger/writer, not my husband or daughter. I speak from MY perspective, and I am a mom.

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3. Your blog states a NW just north of 1.6 million. Therefore, perhaps as individuals, neither you nor your DH would qualify for the idea of millionaires.
We've been married for 21 years. In our state, legally it's "our" money - not his versus hers.

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4. Disclosure: I work for a law firm that specializes in family law appeals so I subconsciously scanned your posts and blog for hints of assets derived from separate property. A full trace might reveal an even lower NW for one of you.
We married at the tender age of 23, with no assets. Neither of us has inherited a dime.

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5. 100% in anything scares me, whether its 100% in stocks, 100% in bonds or 100% out of those markets.
That's why it's important that each one of us, as individual investors, to take a good look at our OWN tolerance for investment risk and volatility.

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6. From personal experience I would say you can only get so far trading on a weak background. A pushy suggestion: You have an enviable opportunity to finish your degree now and can choose subjects that interest you rather than to concentrate on something that will help you make money; I believe a masterís degree is the floor now, I would go for it!
Not sure I understand what you mean here. What weak background do I have? As I see it, one can make money getting degrees to work for someone else, or they can be a strong self-learner and make money as an entrepreneur. I choose the latter route. Personal choice. This said, I love learning, and I return to college periodically to study my special interests. I've even taught classes at our state university before.

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I also got to FI on a relatively low income, albeit helped along by a great bull market; and think its useful to get that word out; itís a message that seems under-represented on this forum. Again, welcome.
Thank you. I appreciate your welcome!
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Old 01-28-2008, 12:48 PM   #48
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$89,000 now until 2025 (until our daughter turns 20)
$68,000 age 61 to 80 (drops after our child is on her own)
$65,000 age 80 to end

With these budgets, we do plan to spend our principal investment amount at the end of our lifespan. I use 3% ave. annual inflation and 10% average annual ROI in my calculations.

This said, we've been spending less than $89k per year. Plus my husband insists on keeping his business going so he can work 2 or 3 days a week (afraid he'll get bored), so we haven't had to tap into our investment portfolio yet for living expenses. His part-time income still covers our current budget.
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Originally Posted by MillionaireMommyNextDoor
I consider myself both. While my husband WANTS to work a couple days a week (when he feels like it - for fun, not the money), I stopped completely once we reached FI. I consider myself 100% retired and my husband semi-retired at this point. I suppose it's a matter of semantics and personal preference.
$1,600,000 in investible assests supports a 4% SWR of $64,000 /year, not $89,000 / year (although I do note that you posted that you're spending less) I wouldn't call you FI based on those assets and projected spending amounts at your age of 43.

I'd also recommend a cash cushion of five years to help ride out market downturns once you do start living off your portfolio. What is the 20-year historical volatility of your method?

With that said, I have poked around your blog, and you are far ahead on the financial knowledge and assets curve. While I have some criticisms and disagreeements, you are no spammer. I hope you continue to post.
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Old 01-28-2008, 12:49 PM   #49
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I hope you will continue posting in this site.
Thanks. I'll see how long I can stomach the reported hazing period here.
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Old 01-28-2008, 12:53 PM   #50
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OK: for those who choose to make a donation to the Firecalc fund (like $15, I am not affiliated, author is Dory36 who founded this board) a new feature becomes accessible where you can customize your expenses (i.e. your needed income) during almost any part of your retirement. So, you can say we'll need $10k per year while DH is working for the next 3 years, then we'll need $50k per year for the next 15 years, then after kids graduate we'll need $40k. But you do have to register to get to that feature.

Future asset increases are enterable - I think it's under changes to your portfolio.

Taxes are not handled by FC, since they are so variable and complex, AMT, etc. But you can account for that when entering your custom income needs by grossing up the amount for the tax bracket you estimate you'll be in.

I think it will bring you insights you will appreciate when you get the time.
Thanks for the tips. I'll give it another try soon. Have you tried MS Money's Lifetime Planner tool? If so, how did your results compare to those using FireCalc?
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Old 01-28-2008, 01:02 PM   #51
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"The Bernie Ward problem" is that he did something on the InterNet that he didn't know was illegal. I don't know if using the expression "Millionaire Next Door" on the title of a blog is acceptible, do you?
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Old 01-28-2008, 01:02 PM   #52
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I've been reading your blog ( I'll do anything to avoid weeding ) and it's very interesting . I especially liked the fnancial infidelity segment . Don't let these guys scare you away ! They are basically harmless .
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Old 01-28-2008, 01:05 PM   #53
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$1,600,000 in investible assests supports a 4% SWR of $64,000 /year, not $89,000 / year (although I do note that you posted that you're spending less) I wouldn't call you FI based on those assets and projected spending amounts at your age of 43.
As I've mentioned, I am able to plug in many variables into the Lifetime Financial Planner tool I use (and update annually). This software calculator takes a much deeper look into my financial future than simply applying the common rule of thumb of a 4% withdrawal rate. If you're interested, I can see if there is a way I can copy and paste my various assumptions and results here so you can see them.

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I'd also recommend a cash cushion of five years to help ride out market downturns once you do start living off your portfolio. What is the 20-year historical volatility of your method?
This would be a great idea if I was a buy-and-hold investor. But I'm not. Please refer to the NoLoad FundX web site for details (the strategy, long-term performance and volatility record).

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With that said, I have poked around your blog, and you are far ahead on the financial knowledge and assets curve. While I have some criticisms and disagreeements, you are no spammer. I hope you continue to post.
Thank you.
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Old 01-28-2008, 01:06 PM   #54
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Thanks for the tips. I'll give it another try soon. Have you tried MS Money's Lifetime Planner tool? If so, how did your results compare to those using FireCalc?
I haven't played with MS money's planner tool, but I would hazard a guess that it is pretty simplistic. Generally, portfolio planners fall under three categories:

1) Deterministic: input your expected return, inflation assumption, assets, spending and voila, out comes a nice, smooth, confidence-inspiring curve showing ever-growing net worth. Just compounds everything at the rates you supply. Very simplistic, not evry realistic/useful.
2) Historical simulation: Like firecalc. You input your assets, spending and a few other details (age, interim cashflows, etc.), and then the calculator shows you how you would have done in several dozen historical scenarios. These calculators assume the future will be similar to the past, but if you can make it through 1966-1982, you are likely to be OK in everything but a meteor strike.
3) Stochastic/monte carlo: these simulators work on statistical models, using assumptions about volatility of returns and other rates, and assumptions about mean reversion, serial trends, etc. These can get really complicated and may not be understandable if you don't have a background in statistics, but are useful for stress testing. I tend to think of these as "test to destruction" models.

Of the three, I would guess the MS money tool fits in category 1. Be very, very careful in relying on such a tool. Regardless of what any calculator tells you, your plan should ideally have multiple failsafes.
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Old 01-28-2008, 01:13 PM   #55
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"The Bernie Ward problem" is that he did something on the InterNet that he didn't know was illegal. I don't know if using the expression "Millionaire Next Door" on the title of a blog is acceptible, do you?
My father is also an attorney, albeit a family one, but he hasn't mentioned a problem with it. I think the important part here is that I'm not selling anything. I'm just a mommy-personal-finance blogger. It's also my understanding that there are many instances where authors/publishers title their books with the same title as one previously published by an different author. And there is NOT a book titled MMommyND.

This said, if/when I finish my book, I'll have an attorney vet everything out for me before publishing it.

You're an attorney, correct? What do you know about this issue? Care to share?
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Old 01-28-2008, 01:42 PM   #56
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You're an attorney, correct? What do you know about this issue? Care to share?
No, I already did say I don't know if it's a problem. But it does raise a red flag.
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Old 01-28-2008, 02:27 PM   #57
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MMND, given that your blog has turned into a topic of discussion, I see no problem if you want to post a link, when pertinent, to the applicable section of your blog.

For those who haven't already figured it out, here is her blog: Millionaire Mommy Next Door
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Old 01-28-2008, 03:54 PM   #58
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No, I already did say I don't know if it's a problem. But it does raise a red flag.
[moderator edit] MMND, did you get permission from JKLasser to quote their press release? I'm not a lawyer, but it doesn't look like your blog post qualifies under the fair use doctrine.

In any case, [moderator edit] you didn't clearly identify the passage as being a quote from another source, nor adequately attribute it. The paragraph just prior to the extensive quote isn't good enough in my book. [moderator edit]
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Old 01-28-2008, 04:06 PM   #59
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[moderator edit] (see here for the JKLasser source). MMND, did you get permission from JKLasser to quote their press release? I'm not a lawyer, but it doesn't look like your blog post qualifies under the fair use doctrine.

In any case,[moderator edit]you didn't clearly identify the passage as being a quote from another source, nor adequately attribute it. The paragraph just prior to the extensive quote isn't good enough in my book. [moderator edit]

2Cor521
Good grief, yes, JKLasser ASKED me to post it. It's a press release for their new book! Would you like me to foward you their original email request to prove it to you?
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Old 01-28-2008, 04:15 PM   #60
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Good grief, yes, JKLasser ASKED me to post it. It's a press release for their new book! Would you like me to foward you their original email request to prove it to you?
Good grief is so true.
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