Millionaire Mommy Next Door

[clifp]

Nice blog.

I think it will be fun to hear from an active mutual fund trader, since we don't have any of those. Pretty much any other type from the very conservative to the pure index folks, to the pure individual stock pickers, and a zillion folks in between.

 

[maddythebeagle]

Welcome, I saw your blog...if anyone is looking to check it out....it is in her profile so dont need a hyperlink anyway...Curious about your budget and how much income you are living off retiring so early...

 

[MillionaireMommyNextDoor]

Welcome, I saw your blog...if anyone is looking to check it out....it is in her profile so dont need a hyperlink anyway...Curious about your budget and how much income you are living off retiring so early...

I use Microsoft Money's Lifetime Planner tool and plug in the following annual expense allowances:

$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.

 

[winnie]

2-3 days a week work nets $89000 (or thereabouts...you didn't say exactly how much less than this you live on currently) for a plumber!?

Ok, now I *know* I wasted far too many years pursuing higher ed degrees....


winnie

 

[Rich_by_the_Bay]

I use 3% ave. annual inflation and 10% average annual ROI in my calculations.

If you allow for 10% ROI (and many think it will be lower for a decade, but who knows), are you thus assuming that you will be 100% in equities for the rest of your life? If you are proposing 10% on a diverse stock/bond portfolio, you'd have some convincing to do.

Many allocate much less to equities as they get within 10 years of retirement or beyond, so a total ROI will, in fact, be a blended return of perhaps 7.5% or even less.

You might find FireCalc to be interesting. Link at the top of the page.

 

[RetireeRobert]

Our income was reasonable but never sensational ($60,000 to $128,000 a year during our 30's).

We were frugal, avoided debt, invested wisely and consistently.

Welcome to the forums.

Your last statement---bingo!!!

That is what I also found looking back on a career where I never made more than $60000. And now I am a multimillionaire

*Consistency----invest----no debt----LBYM.*

It is a no so secret formula.

 

[MillionaireMommyNextDoor]

If you allow for 10% ROI (and many think it will be lower for a decade, but who knows), are you thus assuming that you will be 100% in equities for the rest of your life? If you are proposing 10% on a diverse stock/bond portfolio, you'd have some convincing to do.

Many allocate much less to equities as they get within 10 years of retirement or beyond, so a total ROI will, in fact, be a blended return of perhaps 7.5% or even less.

You might find FireCalc to be interesting. Link at the top of the page.

We are invested almost 100% in equities using a no-load mutual fund upgrading strategy that has an average ROI of 18% since 1980 (vs S&P 500 w/ divs at 13%). I know, that time spans only 9 recessions and just 16 stock market crashes, but hey, at least I can feel reasonably confident that my portfolio might outperform just a little. I choose to diversify my portfolio by investing in 20 different funds - rather than by mixing it up with bonds. Not everyone's style, but it works well for me. Remember, at age 43, I have a long investment future ahead of me. Therefore, I can (and need) to think long-term growth.

Thanks for the FireCalc link. Interesting, but I didn't find it nearly as user-friendly or flexible as the one I use in MS Money. I couldn't find ways to incorporate all of the variables of my financial plan. (Closest I could come to matching my input indicated a 77% success rate, but I don't trust it because, as I said, I couldn't figure out how to put all my data in.)

 

[Nords]

Welcome to the board, MMND.

I use 3% ave. annual inflation and 10% average annual ROI in my calculations.

I understand that the Fed likes to keep inflation low, and maybe 3% is a good number for the foreseeable future, but over the last 30 years it's averaged closer to 5%. That might have an important effect on a data set starting in 1980, when Volcker had to whomp hard on interest rates to get double-digit inflation back under control.

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.

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.

We are invested almost 100% in equities using a no-load mutual fund upgrading strategy that has an average ROI of 18% since 1980 (vs S&P 500 w/ divs at 13%). I know, that time spans only 9 recessions and just 16 stock market crashes, but hey, at least I can feel reasonably confident that my portfolio might outperform just a little.

16 stock market crashes in 28 years? I can recall 1987 and 2000-2002, and maybe 2008, but what else am I missing here?

I choose to diversify my portfolio by investing in 20 different funds - rather than by mixing it up with bonds. Not everyone's style, but it works well for me. Remember, at age 43, I have a long investment future ahead of me. Therefore, I can (and need) to think long-term growth.
Thanks for the FireCalc link. Interesting, but I didn't find it nearly as user-friendly or flexible as the one I use in MS Money. I couldn't find ways to incorporate all of the variables of my financial plan. (Closest I could come to matching my input indicated a 77% success rate, but I don't trust it because, as I said, I couldn't figure out how to put all my data in.)

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.

 

[Rich_by_the_Bay]

Thanks for the FireCalc link. Interesting, but I didn't find it nearly as user-friendly or flexible as the one I use in MS Money. I couldn't find ways to incorporate all of the variables of my financial plan. (Closest I could come to matching my input indicated a 77% success rate, but I don't trust it because, as I said, I couldn't figure out how to put all my data in.)

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.

 

[Moemg]

Welcome ,
I think you may need to read some of the old discussions to get a handle on this group . They are a great bunch who'll challenge all your claims but they will give you information you'll never find elsewhere .Most are millionaires and multi millionaires who operate below the radar like the millionaire next door .

 

[Enuff2Eat]

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

 

[REWahoo]

Enuff, see this thread: http://www.early-retirement.org/forums/f28/question-millionaire-mommy-32894.html#post607295

 

[Rich_by_the_Bay]

In fact, for convenience I'll lock this "Hi, I am..." thread so we don't keep cross-posting. Interested members can continue posting at Question for Millionaire Mommy....

P.S. Never mind. OP wants both threads to remain open.

 

[MillionaireMommyNextDoor]

P.S. Never mind. OP wants both threads to remain open.

Thank you Rich_in_Tampa. I appreciate your initial intent - and your willingness to reopen my thread so that I can respond to these posts.

 

[CuppaJoe]

Welcome, new member.

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.

1. When reading "new posts" I skipped over your’s many times because I took your handle as falling on a continuum which would include mimicry and possibly copyright infringement. Hopefully you don’t have a "Bernie Ward" problem.

2. I’m 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?

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.

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.

5. 100% in anything scares me, whether its 100% in stocks, 100% in bonds or 100% out of those markets.

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 master’s degree is the floor now, I would go for it!

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; it’s a message that seems under-represented on this forum. Again, welcome.

 

[MillionaireMommyNextDoor]

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.

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

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.

 

[steve88]

I hope you will continue posting in this site.

 

[brewer12345]

I hope you will continue posting in this site.

Me too, FWIW.

 

[MillionaireMommyNextDoor]

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?

 

[Rich_by_the_Bay]

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.

 

[MillionaireMommyNextDoor]

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.

 

[MillionaireMommyNextDoor]

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.

1. When reading "new posts" I skipped over your’s many times because I took your handle as falling on a continuum which would include mimicry and possibly copyright infringement. Hopefully you don’t have a "Bernie Ward" problem.

Huh? I assure you, I don't have a child porn problem!

2. I’m 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.

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.

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.

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.

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 master’s 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.

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; it’s a message that seems under-represented on this forum. Again, welcome.

Thank you. I appreciate your welcome!

 

[TickTock]

$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.

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.

 

[MillionaireMommyNextDoor]

I hope you will continue posting in this site.

Thanks. I'll see how long I can stomach the reported hazing period here.

 

[MillionaireMommyNextDoor]

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?