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Old 11-06-2014, 12:01 PM   #21
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Hi,

I see some parallels between your situation and mine - lot's of differences too - but here is where I've come out in grappling with some of these issues.

I see the issue of FIRE as breaking down into three components:

- Financial Independence = having enough money to support your lifestyle, which is a combination of how much you have and how much you spend

- Early Retirement = which may or may not happen when you reach FI - you can keep working if you like - or change jobs, etc.

- Happiness = what I, and I'm guessing a lot of folks, are really looking for from FI and RE, and also from earning and spending a lot of money - for that matter.

I had the luck of going through a career crises that forced me to really examine my life. I found it helpful to break my thinking into these three areas and try and address each one directly.

1) To make happiness a priority for myself and my family - independent of from how much I earn, whether I work, what I own, etc.
2) To be financially independent within 36 months (now 34 months) - combination of spending changes and staying at my career through a really difficult time (now largely resolved)
3) To stop worrying about whether or when I was going to RE (retire)

In addition to this community, which I'm very grateful for, here are some books that were useful to me:

- -- Stop Acting Rich and Start Living like a Real Millionaire by Stanley
- -- How to Retire Wild Happy and Free by Zalinski
- -- Retiring Sooner by Kirkpatrick
- -- The Power of Now by Tolle
- -- What Happy People Know by Baker and Stauth

Best of Luck!
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Old 11-07-2014, 12:29 AM   #22
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I've watched many past friends and past co workers get a bit over ambitious with nicer homes which just about always ended up hurting them financially. We've always been the hicks but have had a few new homes (no where near $mm). We are down to 1100sq ft. The very last thing I want to do is work on or up keep a large home. It's actually very nice having a small home and gives a lot more time to do the things that really make you like golfing! A 2mm home is over a third of your NW. That seems high but I am not as experienced as others are about $.
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Old 11-07-2014, 12:42 AM   #23
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You are able to FIRE when your passive income exceeds your recurring expenses. Your expenses depend on your chosen lifestyle. Only you can determine your priorities and how to allocate your income against the cost of your chosen lifestyle.
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Old 11-07-2014, 03:32 AM   #24
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Sidestep: I keep seeing Colorado pop up as a place that has alot of positive things about it, on this forum and others. Is there indeed anything special there or am I just seeing things?

With regard to OP: choose: High living costs or don't work. At the moment you are very clearly choosing the high living costs. Only you know what is right. Only thing I would advise you though is to mentally reconsider your house as an investment that will appreciate swiftly - there is no garantuee there, and in the longer run most housing investments barely keep up with inflation. Not even in the Bay area.

Also, consider sending your kids at least for one or two years to a good European university. Excellent for their development, and normally easier on the finances.
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Old 11-07-2014, 10:44 AM   #25
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I keep seeing Colorado pop up as a place that has alot of positive things about it, on this forum and others. Is there indeed anything special there or am I just seeing things?
Rocky Mountain High

I also am someone concerned about the housing prices in the Bay Area though they did not collapse much in many places during the Great Recession the sales did slow a lot. There is only so much land around here and a lot of people which tends to keep places with good schools high. I have my budget for Fire worked out around living here since a place like Colorado, while it might work for me would not work for my wife and that's not going to change. The OP seems to be in somewhat of a similar situation (wanting to stay around because of family/friends) and that's very understandable. The increased housing if they chose to go that way will be a choice they make as many are mentioning. The choice will dictate what they can and cannot do. Just one other word of caution, make sure your choice doesn't put you into a situation where you MUST work. You are in a position now to Fire if you chose. That means you can walk away from the BS if it gets too much at work. Many cannot and have to put up with whatever crap their bosses/companies dump on them because they NEED to work.

It's always good to have options IMO
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Old 11-07-2014, 12:27 PM   #26
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In Germany, all higher education is now free, even for foreign students. And many universities teach in English.

http://www.gooverseas.com/blog/8-bes...ional-students


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Old 11-07-2014, 01:25 PM   #27
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Nuke__diver you say it so well. The risks of locking yourself into must work for many years are high, even if you love your job. That often changes. Also todays dream home will likely be something you will want to downsize from in a little over 10 years.
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Old 11-07-2014, 01:56 PM   #28
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Nuke__diver you say it so well. The risks of locking yourself into must work for many years are high, even if you love your job. That often changes. Also todays dream home will likely be something you will want to downsize from in a little over 10 years.
I would agree and add - I think the idea of including value of a residence in net worth is misleading because
- it doesn't generate any income
- really acts more like a drag on FI = the more house you have the more you need in other types of passive income
- you aren't ever really sure what its worth after commission, closing, replacement house, etc.

I just ignore the value of my house and only consider it as a possible option if I'm tapped out and make it to 95-100 y/o and need some cash to move into assisted living - or whatever
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Old 11-07-2014, 03:17 PM   #29
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I would agree and add - I think the idea of including value of a residence in net worth is misleading because
- it doesn't generate any income
- really acts more like a drag on FI = the more house you have the more you need in other types of passive income
- you aren't ever really sure what its worth after commission, closing, replacement house, etc.

I just ignore the value of my house and only consider it as a possible option if I'm tapped out and make it to 95-100 y/o and need some cash to move into assisted living - or whatever
Ditto. The house might be something to count on in case of LTC but it is probably the least liquid resource you have. I use the house as a buffer in scenario's where I might run out of money due to wild spending or a crash the likes we haven't seen But likely in the latter case I wouldn't be able to sell the house cause no one would be buying
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Old 11-08-2014, 09:09 AM   #30
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Does DW work? If so, when does she want to retire? If not, maybe she can find a job and help pay for son's education and upgraded home. That may help with earlier retirement planning.
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Old 11-08-2014, 02:18 PM   #31
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I find the whole concept of a "dream home" absurd. If you dream about homes, you need to dream a little more entertainingly.

Re: Bay Area, it is a wonderful place, and certainly anything in San Francisco costs plenty. The best of San Francisco is going to cost, but not necessarily a huge amount. The best of SF can be had expensively but not astronomically in a small place. The best of SF is what is outside your doors all year. But once you leave the urban core of SF, why not go on the BART yellow line toward Concord until you find a price/quality neighborhood that you like?

Ha
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Old 11-11-2014, 09:48 AM   #32
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I think the idea of including value of a residence in net worth is misleading
Why do so many people insist on using their own interpretations of perfectly well defined terms?

Net worth is assets minus liabilities (sources: Net Worth Definition | Investopedia, or What is Net Worth? definition and meaning, or wherever else you want to look it up). That's it. OF COURSE that includes real estate. If you don't want to count your primary residence among your investments, fine. (Neither do I.) But that is a totally different concept.

It makes zero sense to talk about a well established concept like net worth, and use it in a different way than everbody else. /end rant
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Old 11-11-2014, 10:20 AM   #33
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Why do so many people insist on using their own interpretations of perfectly well defined terms?

Net worth is assets minus liabilities (sources: Net Worth Definition | Investopedia, or What is Net Worth? definition and meaning, or wherever else you want to look it up). That's it. OF COURSE that includes real estate. If you don't want to count your primary residence among your investments, fine. (Neither do I.) But that is a totally different concept.

It makes zero sense to talk about a well established concept like net worth, and use it in a different way than everbody else. /end rant
Fair enough - I suppose I should have used the term 'portfolio' or 'retirement assets' - the larger point being that I don't think it make sense to include equity in one's primary residence as part of the same class of assets that one expects to produce income to achieve FI For example, if I have $10million, but its all in a house, I'm in an very different situation in terms of reaching FI than if I have $9million on stock/bonds and $1million in a house, but in both cases my 'net worth' is $10million.
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Old 11-11-2014, 11:08 AM   #34
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Why do so many people insist on using their own interpretations of perfectly well defined terms?

Net worth is assets minus liabilities (sources: Net Worth Definition | Investopedia, or What is Net Worth? definition and meaning, or wherever else you want to look it up). That's it. OF COURSE that includes real estate. If you don't want to count your primary residence among your investments, fine. (Neither do I.) But that is a totally different concept.

It makes zero sense to talk about a well established concept like net worth, and use it in a different way than everbody else. /end rant
I think the proper term is really "investable assets."

Your house may be part of your "net worth" but they aren't called "money pits" for nothing. When forum discussions talk about SWR, they all hinge on the assets available for investment. Including the value of a primary residence in "net worth" may be technically correct but it is also misleading for 99% of the discussions here.
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Old 11-11-2014, 11:20 AM   #35
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9 months+ after my first post. I recalculate my portfolio. My NW including primary residence is now 5.6-5.7MM, thanks to appreciating investment assets. But I am not closer to FIRE because DW wants to move up to a ~2MM house(in Bay area, this is just a decent house, not even close to my dream home), considering the extra principle/mortgage and much higher property tax. FIRE is not even in sight.
We all get one shot at this life. You have to buy your ticket and take your chances. I have a net worth safely below yours but my Texas house is worth about $340K. With my limited knowledge of Cali real estate, I suspect it's larger and nicer than your $2MM next step.

I've had several opportunities to work in California. After seeing what I'd have to pay for housing and how long my commutes would be from the housing I could afford, I have always said "no thanks." One time I had a decent salary offer for a position in the Bay Area but I decided I was better off out of work in Texas than employed in California. I was FI at the time so it wasn't a hard call.

I have a SIL/BIL living in California. Their house is nice but way out in the burbs and astronomically priced. They are financially stretched just paying for their house. Someday it may actually be back to being worth what they paid for it.

You and your DW need to get on the same page on retirement. She may be perfectly happy having you work for the next 40+ years. You need a vote in your future.
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Old 11-11-2014, 11:31 AM   #36
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We all get one shot at this life. You have to buy your ticket and take your chances...You and your DW need to get on the same page on retirement. She may be perfectly happy having you work for the next 40+ years. You need a vote in your future.

That was very well said.


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Old 11-11-2014, 03:08 PM   #37
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Including the value of a primary residence in "net worth" may be technically correct but it is also misleading for 99% of the discussions here.
No, it's not. What's misleading is saying "net worth" when you mean "investable assets". This is the equivalent of saying "my gross salary is $xx,xxx. Of course I do not include taxes in that figure, because I cannot spend them."

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Fair enough - I suppose I should have used the term 'portfolio' or 'retirement assets' [...]
Thanks - appreciate it!
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Old 11-12-2014, 10:01 AM   #38
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Originally Posted by sewang View Post
9 months+ after my first post. I recalculate my portfolio. My NW including primary residence is now 5.6-5.7MM, thanks to appreciating investment assets. But I am not closer to FIRE because DW wants to move up to a ~2MM house(in Bay area, this is just a decent house, not even close to my dream home), considering the extra principle/mortgage and much higher property tax. FIRE is not even in sight.
We bought 1 small home in the East Bay and paid off the mortgage last year. I credit this as a significant reason I was able to ER 3 yrs ago. The three biggest reasons my colleagues can't retire are:

1 - House mortgage
2 - Young children
3 - Not enough years into the pension system

Think about house expenses carefully as part of your retirement plans.
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Old 11-12-2014, 10:46 AM   #39
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I find the whole concept of a "dream home" absurd. If you dream about homes, you need to dream a little more entertainingly.
Yeah, but you're a guy. Some of us women have a sort of nesting instinct, and need a dream home that is the perfect nest. I often dream of having a home with a nice garage and a big shower. I don't even dream of what we could DO in that big shower; delightful possibilities come to mind but as far as my dreams go, I just want the doggone shower.

Guys seem to dream of multiple vehicles; cars, boats, motorcycles, RV's, airplanes.... how boring! I doubt they dream any more entertainingly than women do.
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Old 11-12-2014, 11:05 AM   #40
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Yeah, but you're a guy. Some of us women have a sort of nesting instinct, and need a dream home that is the perfect nest. I often dream of having a home with a nice garage and a big shower. I don't even dream of what we could DO in that big shower; delightful possibilities come to mind but as far as my dreams go, I just want the doggone shower.

Guys seem to dream of multiple vehicles; cars, boats, motorcycles, RV's, airplanes.... how boring! I doubt they dream any more entertainingly than women do.
I think guys are more likely to dream about what we could DO in that big shower.
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