Planning and saving too much?

[mickeyd]

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whether others out there feel like they plan and save too much at the expense of having fun.

To this I say that fun is fleeting but ER is forever. There has to be a little pain along the way so that you can appreciate the payoff during ER. Save you ass off when you are young, invest it in a senseable manner along the way, and spend like hell later on.

There is a lot to be said for delayed gratafication.* Of course, I am not refering to this in relation to any sexual act. :

[cute fuzzy bunny]

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Originally Posted by dusk_to_dawn I don't think the wife wants any hookers at our house, but I haven't asked her.

You should ask...the answers are often surprising. A couple of years ago I asked my wife if I make it to my 90's and I'm a multibillionaire, if I could marry Anna Nicole Smiths granddaughter or great granddaughter (whichever was youngest and of age). Without looking up or batting an eye, she said yes.

As far as overplanning and oversavings, I didnt even know I was ER'ing when I took my companies voluntary separation package. But I can see how someone can get stuck in the "one more year" or "just another million" bucket.

For some folks it might not be true, but you can try it and go back to your old job, or at least A job.

I've told this story before. Used to live with a woman I worked with. She'd been there a lot longer than me, so she had 5x the stock options I did. All unexercised. I'm guessing if she sold, after taxes she'd be looking at about $7-10M. I asked her "why are you still working". "Because I want to travel". "But you have more than enough to quit working, travel non stop for the rest of your life, and still have money left over". "Well, its about 95% of the way there.". I sold. She didnt. I ER'ed. Her stock options are nearly worthless. She'll be working until she's in her late 50s or 60s.

Sometimes you just have to pull the trigger.

[ESRBob]

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Originally Posted by Cute Fuzzy Bunny I've told this story before. Used to live with a woman I worked with. She'd been there a lot longer than me, so she had 5x the stock options I did. All unexercised. I'm guessing if she sold, after taxes she'd be looking at about $7-10M. I asked her "why are you still working". "Because I want to travel". "But you have more than enough to quit working, travel non stop for the rest of your life, and still have money left over". "Well, its about 95% of the way there.". I sold. She didnt. I ER'ed. Her stock options are nearly worthless. She'll be working until she's in her late 50s or 60s.

Not only that but she let you slip out of her hands, too. Which do you think she regrets the most?

Anyway, on the bright side, at least she'll get to do lots of business travel on the company's nickel

[cute fuzzy bunny]

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Originally Posted by ESRBob Not only that but she let you slip out of her hands, too. Which do you think she regrets the most?

Losing the money. No doubt about it.

[free4now]

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* I sold.* She didnt.* I ER'ed.* Her stock options are nearly worthless.* She'll be working until she's in her late 50s or 60s.

I had a roomate with stock options worth millions during the dotcom era.* He exercised some, didn't pay the taxes, and as the stock price slid down he ended up selling everything to pay the taxes and was left with $11k and a Lexus RX300.* Then he got laid off and left to move in with a relative.*

During those dotcom days my stock options could fluctuate in value in one day by an amount greater than my annual salary. It was at that moment that I realized that I needed to get really serious about learning how to handle these options. I spent hours every day on the net learning about investing and money management. Learning how to manage my money basically became my job... I was in a once-in-a-lifetime position and I realized that even if I ended up getting fired for wasting time at work learning about investments, it was worth it for me to maximize the value I got out of these options. And it was then that I began seriously thinking about retiring early. I didn't have enough, but it seemed possible that I might soon.

I took a more middle of the road*approach than my roomate and exercised my options gradually during the dotcom era.* I got more than half exercised before the crash.* *In retrospect if I had exercised everything on the day when the stock price was at the all time high (about 4x the current price) I would have been able to retire six years earlier and with a larger stash than I now have.* *

I am newly semi retired at 35... I think I'll eventually find another job but I'm going to take a year or two to figure out what kind of work I want to do.* It's a stretch for me to retire now... I'm living in one of the most expensive cost of living areas (SF Bay Area) on about $2000 per month (4% SWR) for everything except housing.* *For me the decision to retire now didn't involve too much planning.* I decided to do it now because I was just incredibly unhappy with my job and realized I now had enough to live a simple life without it.* Why not go for it.

[Cool Dood]

With the type of stock options you guys are talking about, is there a minimum period before you're allowed to exercise them? I'm just wondering, because it seems like there are countless stories of paper millionaires who lost it all, but could have been more or less fine if they'd had a diversified portfolio. I have no knowledge of the subject, so I'm sure I'm missing something, but I wanted to know...

[maddythebeagle]

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My original question really centers around whether others out there feel like they plan and save too much at the expense of having fun.

This is a great thread. I cant think of anything that I have missed out on from not spending money. Fine food, expensive cars, huge house, plasma tvs, or even hookers.

[free4now]

To answer Cool Dood's question, it's pretty typical for a stock option grant to vest 20% or 25% per year. So you are 4-5 years out before your whole grant is vested (exercisable). Often even if you wanted to sell everything and diversify, you can't because not everything's vested.

One perplexing thing about employee stock options is that when you exercise them you lose the main advantage of those options: Racking up gains on money you haven't actually invested. They grow a lot faster before they are exercised. Once you exercise and convert to cash or actual stock in another index or company, then they just grow at normal market rates.

So diversification has a much higher price than with normal portfolios.

[cute fuzzy bunny]

Absolutely. But I sold every year, took the tax hit, reinvested in a diversified portfolio, and retired early.

I was a moron for 7 straight years for doing it when the company stock kept rocketing up. Then when it dropped 80% I became a genius.

Sometimes it pays to be a moron.

[audreyh1]

You can also exercise them (i.e. buy the stock at the option price), pay the AMT, and hold on to them for at least a year hoping that the stock will go up and you can pay long-term cap gains on them instead of the much higher tax rates that you'd owe if you did an immediate exercise and sell.

A lot of dot-commers got burned with this transaction.* They exercised and held, paid outrageous AMT, and then when the stock cratered they were left holding the bag with having paid all these taxes yet having a stock that was not worth much.

Pretty brutal.* Dealing with stock options is a risky business.

My company wasn't even public when I first had to exercise my options or lose them. It was kind of "funny money". But thankfully the company did eventually go public - almost a decade later.

Audrey

[kaudrey]

There was another thread on a similar topic a few weeks ago, asking if people were having fun while they are still working (or something similar).

My response was "well, I couldn't answer you last week because I was in Costa Rica".

I save about 30% or more of my gross income, and I like to think I am pretty practical, but I do spend money on the things I like to do.

I love to travel, so I do. I usually take 1 big trip and a few smaller trips each year, not including weekend travel to go camping or whitewater rafting or skiing, all of which I like to do as well.

Three years ago I splurged and bought a used 2001 Honda S2000. So I have that in addition to my "practical" car. I love the Honda and don't regret spending the money one bit.

I eat out about once a week, meet friends for drinks on the weekends, and play lots of sports. I spend money on these things, because they make me happy. Luckily for me, I HATE to shop, so I save lots of money that way!

I'm 37 and plan to RE at 52.

[Enuff2Eat]

we saved too much also. our style is way lbym but not to the point of depriving.

i was a moron buying real estate but i am no longer a moron, at least for now.

we saved and saved and pleased to know that we reach the millionaire status at the age of 36 but somehow, we're always seems to be insecure about the future.

would like to retire at the age of 50

enuff