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Old 09-23-2012, 12:49 AM   #21
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One other item to keep in mind as you evaluate your exercise/tax optimization moves are the use of Donor Advised Funds.
Thank you for mentioning these. I am under a set of rules that prohibit me from transferring shares into such a fund. Nevertheless, the ability to "pre-load" charitable giving during the highest tax years of my life is very important, because I do intend to RE, and we do quite a bit of charitable giving.

One challenge with DAFs is that they do have a fairly high fee -- something like 1% for my one with Vanguard. Although, I know for a fact that some of my charity recipients keep their endowments in investment assets that are structured with even higher fees, so maybe I'm doing them a favor?

One last challenge is that it is somewhat hard to predict whether this year (or any year near this one) will be the year with the highest tax rates. So many of the rules are subject to change in the coming years that it is quite a guessing game. Probably smoothing the investing over time is the best way to reduce the variance.
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Old 09-23-2012, 12:51 AM   #22
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Welcome to the forum, Symbiotic.
Thank you, obgyn! I have actually been a member here for close to ten years, but I am posting under a second screen name because my regular one identifies me in the real world. This is one of the best forums on the internet, in my opinion.
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Old 09-24-2012, 05:59 AM   #23
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Old 09-28-2012, 04:02 PM   #24
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Congrats on your success with the business! Your OP struck me. It's good to know there is someone out there is even younger and way more successful than I am and humble, so good for you and your family.

I also suspect the $50k bankroll profitable habit is mid-high stakes poker.
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Old 09-28-2012, 04:26 PM   #25
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I also suspect the $50k bankroll profitable habit is mid-high stakes poker.
Good read, sir.
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Old 09-28-2012, 05:26 PM   #26
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Good read, sir.
Haha, excellent.

Keep us updated on your financial journey.
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Old 12-23-2012, 02:05 AM   #27
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Hey, look at that: 2012 has just about exited the building. Time for a quick update.

A few months ago, perhaps at the behest of you all and your comments, I accelerated the move out of company stock somewhat. I am now taking closer to 5% "off the table" every quarter.

I am (somewhat arbitrarily) projecting the finish line to be some time in the middle of 2016, and the model suggests an exit with about $2.8m post-tax liquid and about .4m pre-tax in an IRA. That's includes all family opex, a fairly aggressive increase in taxes, a home value depreciation of 10%, the frictional costs of the sale and move to our longer-term home, medium underperformance of the business relative to both our historical results and our pipeline projection, and conservative IRR on investments.

I also adjusted the model to a "this really sucks" case as well as a "dream scenario where all the stars align," what I would guess would be give or take 1.5 sigma, and the value at the end fluctuates only about +/-1M. We will have to make a lifestyle adjustment if we end up with a 2m net worth -- our destination has very expensive housing -- but the marginal value of the 4.5m+ outcome is pretty low as well... basically, extra space for capex. You know, Ferraris, airplanes, MacBook Pros, and other material goods of dubious utility.

This makes me more comfortable, so I think I'll go to Vegas for the new year. See you all in 2013!
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Old 03-17-2013, 04:52 AM   #28
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Another quarter, another update? Let's see, highlights:

1. Taxes are just going up and up. I actually don't mind paying taxes, but it's disheartening to see the increases arrive so coincident with the handful of my taxpaying years where I will have totally disproportionate income. I ended up paying 39% in 2012 and am projecting a 43% total rate for 2013 if things go as planned. Good grief.

2. Company valuation has risen sharply. The market is pricing in future growth at an accelerating (dizzying? unjustified?) pace, and that means I should look at divesting my ownership more aggressively. This weekend, I ran the numbers bringing forward all of my exercisable equity and selling as early as possible. Interestingly, it only makes about a 6% difference in net worth at the end of 2016 when the simulation stops, even though it jacks up my taxes. We have a few months to decide whether to make a change, but I think we'll almost certainly do this.

See you in the summer.
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Old 03-18-2013, 05:56 PM   #29
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What do you think will have changed by next summer ? I hope your wife is doing better.
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Old 03-18-2013, 09:24 PM   #30
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What do you think will have changed by next summer ? I hope your wife is doing better.
Thank you; she is stable and the issues seem to be well-managed now, for which we are very thankful.

Hmm, next summer? 15 months from now the reality will have "converged" the model a lot. It will be clear whether we can proceed with ER or whether we have more work to do. That will be close enough to the end that there won't be much ambiguity. I look forward to it, mostly.
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Old 09-28-2013, 03:59 AM   #31
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Happy Fall, everyone.

I'm please to report that things are going swimmingly.

Stock market has rocketed on up, and company stock has done markedly better. In fact, I now think it is priced close to accurately with respect to my assessment of growth expectation. So, I have exercised and sold almost all of my shares as a result. See, I listen to you guys...

Way-too-expensive home is now showing a significant, leveraged, paper gain due to the massive run-up in housing prices in this area in the last year. Let's hope it sticks around. That would be a really lucky bonus.

We have managed to lower some expenses and get ourselves down to about a 130k/year run rate. My budget still says we'll do 55k/year in ER, not including housing, if we're careful.

My taxes are really complicated to forecast. Estimated payments, annualization, multiple states, AMT, safe harbors, and more. I have opened a Fidelity DAF to load up some future charitable giving into these next few peak-tax years. (Effective tax rate this year is 46%. Thank you, please drive through.)

Currently plan is that we'll call it a day in mid-2015 with about 3M after-tax and .5M in pre-tax savings. I think there is a decent chance I'll end up with some kind of part-time work staying on with the company after that, one or two days a week maybe. That would preserve the long tail of my option grants and maybe generate another 800k before tax over a few years.

See you in 2014!
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Old 05-20-2014, 03:00 AM   #32
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Hello there, 2014.

I just wanted to post a quick update for those playing along at home. There have been four meaningful (financial) changes over the last nine months.

(a) Real estate in our super-expensive area has really gone off the rails, I guess in a good way. We live in one of the best cities for commuting, and it has some of the best schools. Ironically, we won't get to take advantage of those schools if we hold to plan, but they sure help with home appreciation! I believe we would net 700k if we sold today, which makes us look like geniuses for buying two years ago instead of renting. Of course, past performance and guarantees and all...

(b) We are eager to begin our move back home to be near the mountains we love. We are thinking we may accelerate the move, based on gradual shifts in my job responsibilities, potential lengthy periods to find a home or build one, and the big spike up in RE value already mentioned. The downside would be that I would have increased air commuting as long as I kept trying to do my job. Maybe that is a reasonable price to pay. (The actual price to "pay," in lower state income and property taxes, is about $85,000 per annum.)

(c) Growth stocks have been decimated in the last few months, so my income projections are, too. Welcome to the game! However, as the timeframe shortens, I am dialing out some of the conservatism in my model. Combined with the increased home value, I think we end up still around 3.0/0.5m if I stick with it for another 16 months. That should be enough for us.

(d) My side hobby generated outsize profits in the last six months, so I bought a completely unreasonable vehicle. My wife says it is my mid-life crisis purchase, but I reminded her that that one will come in my late 30's! (I admit, however, that I hide this thing in the garage and try not to drive it when our super nice neighbors are around. It's such an ostentacious consumption item... sigh.)


If, in fact, we do close in on our ER plans later this year, I expect I will update this thread a little more frequently leading up to the transition. I am really looking forward to being able to work on a few of my own projects in a more serious, focused way!

Bye for now.
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Old 05-21-2014, 08:56 AM   #33
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Hello there, 2014.







(c) Growth stocks have been decimated in the last few months, so my income projections are too.






Bye for now.

You must be in some real go-go type stocks with no real earnings, i.e. TWTR, TSLA, AMZN, LNKD, P. The rest of the market has not faired badly thus far 2014.
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Old 05-21-2014, 11:04 AM   #34
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You must be in some real go-go type stocks with no real earnings, i.e. TWTR, TSLA, AMZN, LNKD, P. The rest of the market has not faired badly thus far 2014.
My portfolio is in "every" stock, but I also have a huge concentration of company stock options that drives most of my future compensation, and my company sort of falls into that "go-go" category, yes.
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Old 12-02-2014, 03:28 AM   #35
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Whoa, happy December, ER forum.

Let's see, where are we?

First, we returned to our "home" after finding a great house we purchased from a friend. Did an all-cash transaction with no agents: heaven. And I'm proud to report that our fourth home is the least expensive one so far.

Second, we will sell our expensive California house in the springtime when the market is at its warmest (hopefully). Until then, there is a series of small touch-ups and improvements we need to make to it, anyway, so that it is in unobjectionably perfect condition.

Finally, my current plan is to log out of my work in February. That gives me enough time to max one more year of retirement contributions, hand over responsibilities to coworkers, and most importantly shift a slug of stock option gains into the new tax year instead of loading them into 2014.

Right now my model says we can then retire with a 3.4% wr on investment assets, should we choose. I'm very comfortable with 4.0%, actually, so this is a good extra margin of safety. In fact, the uncertainty in the sale price of our old home could swing that to as low as 2.9%, but we'll stay conservative there until the chicks hatch.

We have some additional safety factors as well: SS, ACA subsidies, depreciating toys, and home equity are not factored into the plan. Also, the budget includes roughly 30% "fun" expenses -- but I have raised the budget a good bit relative to the numbers I was using earlier. Finally, a lump sum roughly equal to 25% of the new house's purchase price is budgeted for remodeling, but we may choose to invest sweat or skip some nice-to-have's. We certainly won't be able to do that much stuff in the first year anyway... we have to live here, after all.

A very likely outcome is that I ease into "working" on several other areas of interest, one or more of which is bound to create some income one day. Because our kid is not yet school age, though, these next few years offer a degree of flexibility that we won't have once kindergarten comes around... so we may want to make travel hay while the sun shines?

Toughest financial call left for this year is whether to send more funds to the DAF. Tax rate will be 1/3 lower next year, and then close to 0% in subsequent years if no earned income. Per the above, we probably will have more than we need in savings. On the other hand, I would like a bigger portion of my charitable giving to be in the form of time rather than dollars going forward, so that would argue against committing too much away just for the tax benefit.

It's likely that by the next update I will be RE in some form, how about that? Can't wait! See you then.
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Old 04-07-2015, 10:19 PM   #36
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Hey, I predicted something, and I was right for once. I'm posting this on the first day of the rest of life, a.k.a. ER. Whoohoo!

I stuck around for a couple extra months, mostly to help smooth over the transition a little bit more at work, but I also bagged an extra good little chunk of stock compensation for holding out through March. Can't complain about that. I had a ton of vacation time to use up as well, so I only kind of half-worked anyway.

Totally by coincidence, our old house closed today as well, injecting a lot of dough into our checking account for a few short hours, until I can move it into equities tomorrow. I kind of like making a late night run to the ATM and getting a receipt with all those digits on it, but it is a guilty pleasure. I would only rub it in with you guys, ha ha!

Our house sold for above my estimate, and my model suggests our retirement wr will be 3.1% on investment assets, or 2.6% on total assets. We have a 75/25 split in post/pretax savings.

We're going to take a year and travel the country while camping with a young child, or at least that's the theory. The great thing about this plan is that in four months when we're totally sick of being cooped up together all day in some random national park, we can come home and go back to being normal.

I think my pace of updates will slow now, at least as long as I stay retired and have no interesting financial things to journal. I'll gladly respond if anyone has questions, but otherwise I'll probably just give a quick update once a year or so.

I've been on this forum for 9 years, and it took that long to get to this point. I've really enjoyed all the conversation over that near-decade. See you in the next one.
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Old 04-07-2015, 11:03 PM   #37
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Well, you've been here for nine years, and I just joined on here, but congratulations.
I have not read your story yet, but I can see you put in some extra time ... and it sounds as if you are almost ready to hit the road.....
You've planned for a long time... must feel great.
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Old 04-07-2015, 11:41 PM   #38
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Well, you've been here for nine years, and I just joined on here, but congratulations.
I have not read your story yet, but I can see you put in some extra time ... and it sounds as if you are almost ready to hit the road.....
You've planned for a long time... must feel great.
Thanks, Eileen, and welcome to the forum. It does feel pretty great!
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Old 04-08-2015, 03:39 AM   #39
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Congrats Symbiotic! Very motivational to read about your successes at a young age. I'm looking forward to hearing more about your ER adventures.

I'm curious, did you have to walk away from unvested options? How did/does that feel? I ask because it's one issue I'll need to deal with when I pull the ripcord.


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Old 04-08-2015, 08:34 AM   #40
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Congratulations, I especially enjoy reading the threads where people have posted over time and we can see their changes in plans, successes and, hopefully, a good outcome. Enjoy your travel and keep us posted on "your next stage" when you can!
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