I am not FI because...

[SecondCor521]

I don't know exactly what kind of mental defective I am that I want to claim FI when I'm not *really* FI. I think it has to do with that whole thing about not wanting to become FI by way of inheritance.

I'm 40, single dad of 3, considering retiring to a "boondocking in a teardrop" lifestyle.

If I take the following assets as they are valued today:

checkings
savings
taxable account
traditional IRA
roth IRA
401(k)
house
accounts receivable
Soc Sec NPV

and subtract the following liabilities:

mortgage
student loan
child support NPV

I get my FIRE net worth, $X.

If I take my last six months expenses and subtract:

child support
income taxes
property taxes
interest expense on mortgage
utilities
speeding ticket
bank charges
house expenses
work expenses

and add in:

increased fuel expenses
increased cell phone usage
increased auto insurance

and do the appropriate math assuming a 4% rate, my required FIRE nest egg is slightly smaller than $X.

There are all sorts of reasons I'm not *really* FI, though:

1. I'm at 100% equities now. Should be at 80%/20%.
2. 4% at 40 is not realistic. I really plan to use whatever FIREcalc says is the 40 year 100% survival rate for an 80/20 port...I think that's about 3.5%.
3. I assume my house has increased in value by 4% annually since 2006. Bzzzt.
4. I have kids, some of whom aren't in favor of boondocking.
5. Boondocking with 3 kids isn't practical.
6. I haven't fully funded their college educations yet (9 out of 12 years are funded).
7. I assume SS at 1/4th of what my PEBES says.
8. I haven't included a high-deductible health care plan in the budget yet.

Other than that , what have I missed?

2Cor521

 

[bbbamI]

Other than that , what have I missed?

2Cor521

A woman boondocking with you and the expenses incurred?

 

[SecondCor521]

She'd have to pay her own freight .

2Cor521

 

[bbbamI]

She'd have to pay her own freight .

2Cor521

Heh...well, check her FICO score first.

 

[haha]

She'd have to pay her own freight .

2Cor521

Take it out in trade.

 

[SecondCor521]

Take it out in trade.

For the pleasure of my company in a teardrop trailer pulled by a 14 year old station wagon owned by a homeless, jobless guy with three kids and an ex-wife, I would imagine any lady would expect me to pay her. Probably a lot. (*)

But perhaps a very good litmus test to smoke out those women who are just faking extreme LBYM in order to catch guys like me.



2Cor521

(*) But that is the subject of another thread...

 

[Nords]

4. I have kids, some of whom aren't in favor of boondocking.
5. Boondocking with 3 kids isn't practical.
6. I haven't fully funded their college educations yet (9 out of 12 years are funded).

I think you have the sort of child behavior-enhancing leverage that most parents can only dream of...

 

[W2R]

I don't know exactly what kind of mental defective I am that I want to claim FI when I'm not *really* FI. I think it has to do with that whole thing about not wanting to become FI by way of inheritance.

My advice would be to think about being FI as though there was no inheritance at all. Even if your inheritance seems like a done deal, it really isn't until the balance shows up in your bank account because anything could happen. So, I would urge that you continue to work on your financial plan and continue to save just as you always have.

All of us here know that you are living a reasonably frugal lifestyle as a single father and that you are very conscious of your financial realities. This is good for your children, too - - they absorb more information than we may think, and this teaches them the value of LBYM and saving.

OK, now assuming that you continue to save and make progress towards ER as planned, consider this. You *know* you will be FIRE'd because you are nearly there, and you are making progress step by step. I would imagine that you even know approximately when this will happen. You have nothing to prove to anyone but yourself and making progress as planned, within the timeframe planned, should do the trick.

There are all sorts of reasons I'm not *really* FI, though:

1. I'm at 100% equities now. Should be at 80%/20%.
2. 4% at 40 is not realistic. I really plan to use whatever FIREcalc says is the 40 year 100% survival rate for an 80/20 port...I think that's about 3.5%.
3. I assume my house has increased in value by 4% annually since 2006. Bzzzt.

OK, so your financial plan needs some major tweaking. I suggest doing that and working that much harder in your efforts to save and get to a comfortable FIRE on your own.

4. I have kids, some of whom aren't in favor of boondocking.
5. Boondocking with 3 kids isn't practical.
6. I haven't fully funded their college educations yet (9 out of 12 years are funded).
7. I assume SS at 1/4th of what my PEBES says.
8. I haven't included a high-deductible health care plan in the budget yet.

Other than that , what have I missed?

2Cor521

Since boondocking with 3 kids isn't practical, maybe you could include part time work of a more pleasant, less stressful nature until they graduate and are out of the house, in order to pay rent on an inexpensive condo or apartment for the four of you.

You have made terrific progress in funding their college educations for someone who is only 40 years old! That is quite an accomplishment.

 

[Zoocat]

It's great that you've almost funded all three kids college education. It's actually awesome! Another thing you might consider is encouraging your kids to develop some skills now that they could use for part-time employment through high school and in college. Both my kids worked summers during high school and worked part time jobs in college. I think it's important that kids focus on education as their primary "job" but they usually have time to work a very part time job on the side.

The benefit of this would be to take some of the economic pressure off their dad.

As for #8. That is a huge fly in the ointment. You should read some of the threads on individual health insurance in the Health forum.

And, btw, some of us became FI through inheritance and really, trust me, it's all ok.

 

[Delawaredave5]

>>There are all sorts of reasons I'm not *really* FI, though:

You hit all the reasons - and they are good ones - especially the kids. I mathematically think I can "qualify" for ER, but I am working until last kid is out of college (I'll be 55).

In the meantime I am "downshifting" work-wise and doing a "pre-ER" lifestyle - starting new hobbies, volunteering, etc.

 

[SecondCor521]

Thanks everyone. You all made very good points and I appreciate them.

W2R, I specifically think one of the reasons I want to claim FI soon is because I don't want to become FI by way of inheritance. At this point if my FIRE amount is $X, my inheritance is somewhere around $5X. I understand your point very well about not counting chickens before they hatch and I've taken it to heart. My point is that if that does happen, in a way I will feel like I had an accomplishment taken away from me because I didn't do it on my own. Of course, I didn't do it on my own anyway, but there is a matter of degree there.

Oldbabe, thanks for your last paragraph.

2Cor521

 

[Alan]

W2R, I specifically think one of the reasons I want to claim FI soon is because I don't want to become FI by way of inheritance. At this point if my FIRE amount is $X, my inheritance is somewhere around $5X. I understand your point very well about not counting chickens before they hatch and I've taken it to heart. My point is that if that does happen, in a way I will feel like I had an accomplishment taken away from me because I didn't do it on my own. Of course, I didn't do it on my own anyway, but there is a matter of degree there.

Last weekend we met up with a good friend who we have known for many years. A few weeks ago her mother had a stroke and is in long term nursing care. History is that our friend had owned her own house for many years and when her father died aged 80 a few years ago she moved in with her sick mother to look after her, selling her own house and it all seemed like the right thing to do. (She is an only child, in her early 50's, and a lawyer for the state - very well educated and, we thought, money-wise).

Well, it turns out that she invested the proceeds of the sale of her house in the market and then panicked when the market plummeted and pulled her money out somewhere at the bottom. However, she assumed that her mother's house was effectively hers through inheritance.

Now her mother is facing high nursing home costs which could mean selling the house. Our friend made at least 2 mistakes - assuming her inheritance was certain and investing money in the market which she may need within a few years. I suppose the biggest mistake was investing in the market for the first time in her fifties without really understanding the risks or her tolerance for risk. (hence the panick selling).


Our friend was saying that her retirement plans are now shot to hell and she is going to have a mortgage again pretty soon.

 

[W2R]

W2R, I specifically think one of the reasons I want to claim FI soon is because I don't want to become FI by way of inheritance. At this point if my FIRE amount is $X, my inheritance is somewhere around $5X. I understand your point very well about not counting chickens before they hatch and I've taken it to heart. My point is that if that does happen, in a way I will feel like I had an accomplishment taken away from me because I didn't do it on my own. Of course, I didn't do it on my own anyway, but there is a matter of degree there.

Well, I do know what you mean! I knocked myself to be able to ER as soon as I was eligible for lifetime medical insurance from my job, and everything has gone as planned. In fact, I would have been in better shape to ER this November than I thought, on my own. Then last year I did inherit, much to my surprise. It's nice to have that money, though I don't really need it to be FI and to retire.

My attitude is that anybody who knows me, like Frank, knows what a tightwad I am and knows that my retirement is not a result of that inheritance, but simply coincides with it. Most members here realize that as well. If someone doesn't realize it, then let them think what they want. They probably have some sort of inner need that their fantasies fulfill.

And as for my own sense of accomplishment, I have continued my "master plan", just as before, and haven't touched either my inheritance or my own nestegg at this point (since my ER has been delayed by this wait for lifetime medical). So, what I have accomplished is pretty clear to me. My suggestion is that if you do inherit close to the year when you plan to be FI, just don't touch that inherited money for a while and go ahead and do what you need to do.

 

[W2R]

Last weekend we met up with a good friend who we have known for many years. A few weeks ago her mother had a stroke and is in long term nursing care. History is that our friend had owned her own house for many years and when her father died aged 80 a few years ago she moved in with her sick mother to look after her, selling her own house and it all seemed like the right thing to do. (She is an only child, in her early 50's, and a lawyer for the state - very well educated and, we thought, money-wise).

Well, it turns out that she invested the proceeds of the sale of her house in the market and then panicked when the market plummeted and pulled her money out somewhere at the bottom. However, she assumed that her mother's house was effectively hers through inheritance.

Now her mother is facing high nursing home costs which could mean selling the house. Our friend made at least 2 mistakes - assuming her inheritance was certain and investing money in the market which she may need within a few years. I suppose the biggest mistake was investing in the market for the first time in her fifties without really understanding the risks or her tolerance for risk. (hence the panick selling).


Our friend was saying that her retirement plans are now shot to hell and she is going to have a mortgage again pretty soon.

Alan, that is so sad! And that exemplifies one of many reasons why I would urge people to never, never, never, NEVER expect an inheritance. Had she not expected to inherit money, perhaps she would have been more cautious with her own money. There are a multitude of tremendous pitfalls that can result in nothing but bitterness as a result.

 

[Alan]

Alan, that is so sad! And that exemplifies one of many reasons why I would urge people to never, never, never, NEVER expect an inheritance. Had she not expected to inherit money, perhaps she would have been more cautious with her own money. There are a multitude of tremendous pitfalls that can result in nothing but bitterness as a result.

It really has upset us as we've known her and her parents for over 20 years and never expected this. Her Dad wouldn't even invest in bonds , he was so conservative, and did everything right as far as he was concerned. Her mother can afford the nursing home using the assets she has, but our friend just made the wrong assumption that the inheritance of the house was a certainty. (she wasn't counting on any money other than the house).

Another very good set of friends, closer to us in age, had a disaster 8 years ago when he died at 60 a few days before he was due to retire. However his hand-written will left his half of the house to his daughter, with the "usufruct" of the house being with his wife ( so she could live in the house as long she wanted).

 

[W2R]

Another very good set of friends, closer to us in age, had a disaster 8 years ago when he died at 60 a few days before he was due to retire. However his hand-written will left his half of the house to his daughter, with the "usufruct" of the house being with his wife ( so she could live in the house as long she wanted).

I have known people whose father's estate has gone into "usufruct" with the mother in control. The estate can be greatly diminished by the mother very easily for various expenses, whether they are end of life expenses or simply a lavish lifestyle accompanied by some creative bookkeeping to get away with it, before the children ever get a penny.

There are a million different ways that inheritances can fail to materialize to the extent they should, unfortunately.

 

[bbbamI]

I specifically think one of the reasons I want to claim FI soon is because I don't want to become FI by way of inheritance. At this point if my FIRE amount is $X, my inheritance is somewhere around $5X. I understand your point very well about not counting chickens before they hatch and I've taken it to heart. My point is that if that does happen, in a way I will feel like I had an accomplishment taken away from me because I didn't do it on my own. Of course, I didn't do it on my own anyway, but there is a matter of degree there.
2Cor521

Well, let me give you my thoughts on this.

I understand why you want to do it on your own. I'm the same way to an extent. However, if I had inherited money that made me FI before I was able to reach that goal on my own, I'd be grateful and proud. To think that someone was able and willing to bequeath money to me shows that I was loved, that they were proud of me and knew I would handle the money well.

Money, love, guidance...to me, it's all the same. I can accept it with grace and still be proud of who I am.

....just sayin'...

 

[Spanky]

At this point if my FIRE amount is $X, my inheritance is somewhere around $5X.

That's a great deal. Hope that will materialize.

 

[SecondCor521]

@bbbamI (hello! ) -- I must be odd in that my parents are so helpful that it's almost too much. They've done far more for me than anyone else I've heard of. Maybe my "responsibility" dial is turned way too high.

@spanky -- Well, yes and no, obviously. It's a complex emotional landscape for me in this area because of the ratio involved and its my parents. 'Nuff said.

2Cor521