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Tim in Texas
Old 09-27-2016, 07:30 AM   #1
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Tim in Texas

Hey everyone,

This is the first time I'm posting on here. I've been binge reading FIRE blogs for the last year and have been making a lot of adjustments in the way I think about spending, saving, retirement, etc. When I first started I was super happy to have been on track to retire at age 57 from the federal government (US). Now, I've ratcheted up my savings and am shooting for 45 instead, and likely sooner if I go part-time. And as of yesterday, I'm sadly very excited to say my net worth is now above zero! I was worth -130K when I was hired out of internship, so this is a big milestone for me.

Background: 31, married, expecting to adopt in the next year or so, living in south Texas. My husband and I both have ultra-stable jobs and jointly make approx. 190K. So how am I worth nothing?

Debt:
Bought house in 2012 right as the market started to come back, (~200K @ 3.7%) planning to pay at 15 yr mark. Don't include this in net worth, but it's increased in value dramatically since we bought.

We would be way, way ahead of schedule except I spent 9 years in school, 4 undergrad + 5 PhD program, and emerged with a lovely $105K in student loans when I graduated in 2012. I am now responsible for only $30K thanks to a loan repayment program and aggressively paying down the others. Plan to be done Dec 2017.

$18k car loan @ 0% that was taken out before I realized how ridiculous it was, but this will also be done within 3 years. Biking not an option for my husband who works far south of town, and the neighborhood near my employer is... well we'd need private school, which negates the savings of biking. Current neighborhood is established, 15 min from my work, great schools, no plans to move ever, until downsizing at retirement.

No credit card debt, learned that lesson.

Savings:
Husband loves his job, no plans to retire before 50, and has an insane pension that will replace 85% of his pay. Full medical at retirement for both of us. No joke. He also funds a Roth IRA each year that will bridge him between retirement age 50 and his pension at age 55. He's on track for his plan.

Me: Federal pension means I will get 1%*yrs employed*top 3 salary. If I go at 45, that will mean I get about 18% replacement starting at age 57. Not terrible.
$50K Roth TSP (gov't version of 401K), but have now increased to max of $18K/year with a matching $4500 to Traditional TSP. Allocated to 40%large cap, 40%small, 20%international. No bonds as I'm far from retirement. Since TSP expense ratios are miniscule, I want to take advantage as much as possible here. Decided against traditional TSP since our income in retirement will still likely be quite high with husband's pension. Plan to begin funding an IRA as well once my loans are completed.

Spending: I only account for my own since we keep finances separate. I've managed to roughly maintain spending I had during school, at ~$20K/year (this doesn't include ~$15K in student loan payments). Will increase somewhat with child, but essentially the money I pay to loans will go to daycare for the first several years.

What I'm curious about:
1) Anyone noticing anything glaring terrible above? I hate that I have a car loan, but I'm treating it as a necessary evil since I seem mostly on track on most calculators. Do not plan to buy a new car until the cost of maintaining is more than a newer used car payment (so pretty much never).

2) Has anyone found a good retirement calculator that can factor in Roth 401K amounts? I have to input artificially inflated numbers to try to approximate, but it would be MUCH easier if there was one that had pre-tax (my employer contributions), post-tax (my Roth contributions), pension, and future social security that allows for retirement before 60. Thoughts? I've tried creating my own spreadsheet, but it gets maddeningly frustrating when I try to calculate the withdrawals.

Thanks for any thoughts/suggestions!

Tim
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Old 09-27-2016, 07:54 AM   #2
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Welcome aboard, SATim. You seem to be doing well so far. Good luck on the adaption. You will find that having children in your house will change your life - and may change your financial outlook.

Others will give feedback on your financials. You will need to focus on your expenses, and understand them quite well, as you build your plan to ER.
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Old 09-27-2016, 08:23 AM   #3
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Quote:
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Welcome aboard, SATim. You seem to be doing well so far. Good luck on the adaption. You will find that having children in your house will change your life - and may change your financial outlook.

...

Yup on this. Kids are AWESOME and also awesomely expensive. I would suggest you have underestimated whatever cost you are thinking kids will be. Let me be clear it's well worth it and I am incredibly happy with my little blessings. However, moneywise they aint no joke!

I probably wouldn't micro-analyze everything quite so much at your age. Just focus on spending as little as reasonable possible. That will do two things: 1) increase savings and 2) decrease desires to allow a less expensive retirement.
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Old 09-27-2016, 10:26 AM   #4
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Welcome, Tim. Several folks here have mentioned iORP as a calculator that does a good job modeling Roths so you might want to check it out.

As others have mentioned, detailed tracking of expenses is a great tool to help you continue to LBYM and achieve FI sooner.

Good luck and keep us posted!
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Old 09-27-2016, 02:17 PM   #5
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Flexible Retirement Planner

The Flexible Retirement Planner | A financial planning tool powered by Monte Carlo Simulation

You may also want to check this website :
Retirement Calculator Archives - Can I Retire Yet?
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Old 09-27-2016, 04:07 PM   #6
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Welcome aboard Tim.
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Old 09-27-2016, 05:52 PM   #7
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Welcome, Tim!

It will help your progress if you and your husband are on the same page as far as spending habits. My wife and I are fortunate to agree on almost everything.
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Old 09-28-2016, 05:05 AM   #8
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My suggestion would be to get a copy of Quicken Deluxe or higher if you do not already have one and do your retirement planning on Quicken Lifetime Planner. QLP is intuitive, easy-to-use and covers a lot of bases.

It tracks taxable and tax-deferred funds separately. While you can tag an account as a Roth in Quicken in QLP it includes that account within tax-deferred... however this flaw is not huge since your pre-retirement and post-retirement tax rates are separate assumptions. So while it is imperfect, it is a good tool and good enough at your young age.

The bonus is that you can also put all your finances on Quicken and use it to track your progress and the plan will update automatically, you'll just need to periodically review the assumptions.
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Old 09-28-2016, 05:25 AM   #9
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Your leaving FERS early ( 12 years before age 57 pension collection date )

That means 12 years of inflation erosion, so if you were retiring at a top three of say $100K and were expecting $18,000/year the inflation effect @ 3% will make the $100K have the buying power of about $70K and $18K will feel more like $12,500
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Old 09-29-2016, 09:58 AM   #10
Confused about dryer sheets
 
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You said "Me: Federal pension means I will get 1%*yrs employed*top 3 salary. If I go at 45, that will mean I get about 18% replacement starting at age 57. Not terrible."

I do not believe you will be able to draw a deferred pension at 57. At the age of 57 you would need 30 years of federal service. At 60 you need 20 years of federal service. At 62 you need five years of service.
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Old 10-01-2016, 05:31 AM   #11
Confused about dryer sheets
 
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Originally Posted by Vizini View Post
You said "Me: Federal pension means I will get 1%*yrs employed*top 3 salary. If I go at 45, that will mean I get about 18% replacement starting at age 57. Not terrible."

I do not believe you will be able to draw a deferred pension at 57. At the age of 57 you would need 30 years of federal service. At 60 you need 20 years of federal service. At 62 you need five years of service.
Thanks for the catch--I hadn't fully understood how that would work and I used 57 as when I had originally planned to retire. This means I'll need to fund an extra 5 years to meet the 62 year mark, which is preferable to working an additional 12 years in my book. Not upset that I will lose some of it to inflation, overall my independent savings should take care of me for the long haul, I'm mostly counting on pension/SS as a backup, plus I can always do private practice to fill in gaps early on.
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Old 10-01-2016, 11:54 AM   #12
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Quote:
Originally Posted by SATim View Post

Debt:
Bought house in 2012 right as the market started to come back, (~200K @ 3.7%) planning to pay at 15 yr mark. Don't include this in net worth, but it's increased in value dramatically since we bought.

We would be way, way ahead of schedule except I spent 9 years in school, 4 undergrad + 5 PhD program, and emerged with a lovely $105K in student loans when I graduated in 2012. I am now responsible for only $30K thanks to a loan repayment program and aggressively paying down the others. Plan to be done Dec 2017.

$18k car loan @ 0% that was taken out before I realized how ridiculous it was, but this will also be done within 3 years. Biking not an option for my husband who works far south of town, and the neighborhood near my employer is... well we'd need private school, which negates the savings of biking. Current neighborhood is established, 15 min from my work, great schools, no plans to move ever, until downsizing at retirement.
You're doing fine, in that you recognize cash flow dilemma. If you continue to chip away at debt, cash flow will improve. With a child, your perspective will change.

It sounds like you need the car to work, so don't agonize over that. What job would you have without the education? It will take a while for the advanced degree to pay off in absolute numbers.

Enjoy the ride!
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