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Old 08-25-2014, 04:26 PM   #61
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Fuego,

We had similar responses from the daughters' friends when they would come over for the afternoon and then stay for dinner. They would say, "Do you mean that you all actually sit down and eat dinner together?" We did, almost every night until the girls were in high school and even then we managed about 4 nights per week. The girls also went to bed by about 10:30 on weeknights through their high school years. This was viewed by other students as unbelievable since many of them would be up until 1:00 AM or so most nights.

It is possible to live a life that cuts against the grain of society, it just takes some backbone.
First day of school here, and we bumped into friends on the walk home so invited them over for an hour or so to play (while the adults chatted). I started making the chicken marinade and I guess the friend got the clue so started packing up to go. Simple times. This never would have happened if we were busy with a packed schedule of extracurriculars.

My kids will never play in the (W)NBA or be concert level performers, but I bet they will end up doing something profitable and hopefully enjoyable later in life. In the meantime, they have fun and learn on their own.
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Old 08-26-2014, 09:53 PM   #62
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Where I live we have a walk score of 0. We are 15 minutes away from the closest gas station/convenience store (soon to be closer to 10 minutes which is really exciting for me). There is no real public transportation that is practical and reasonable in cost.

While DH and I like to be together we are not always together. I never want to be in a situation where he has taken a car somewhere and I need to go somewhere and can't.
That is about our situation as well. We have two vehicles (three if you count the motorcycle) and mostly use the Honda car. The GMC pickup, which I used to drive a lot, is used about once a week now but I'm not going to sell anytime soon for the reasons you mention.

And a pickup truck is always nice to have:
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Old 08-26-2014, 10:08 PM   #63
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Life around here would be tough if there were not so many hopeless others for us to throw off on. Thanks be to god for all those unenlightened wastrels, they are our salvation.

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Old 08-27-2014, 01:52 AM   #64
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$80k a year after taxes is likely about $90k a year before taxes.

For an early retiree using a fairly safe 3% SWR that is a $3,000,000 portfolio.

I think a more appropriate rant would be how we expect a large portion of the population to be able to save that amount and retire early.
SS? Pension? 4% WR?
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Old 08-27-2014, 02:10 AM   #65
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I used to peruse many other ER sites, but came to the same conclusion as Balance. Many of them IMHO do promote a kind of extreme early retirement that is probably not realistic for the long term. The bloggers after all are trying to promote their point of view, their site, (or book or whatever) and with that axe to grind will rarely want to point out any potential pitfalls. Often the blogger very young or not retired himself.

Rather than being a rant, I felt he was addressing this forum because the members here are NOT like that, that there is a great deal of wisdom here from people who have been there, done that. It is also why I am a member of only this forum. I want to know about the problems as well as possible remedies. I find that here. I think his post was actually a bit of a complement to this forum.

In addition I do feel that there must be a fundamental difference between retiring with young kids, and retiring after they have left the nest. Certainly for me it has been much easier to estimate expenses post kids.
+1. Nicely said.
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Old 08-30-2014, 10:42 PM   #66
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However, one thing that has me perplexed is reading about what others proclaim are their budgets and expenses, especially the ERE and MMM folks who proclaim to live on less than 40K per year. It is my opinion that a lot of these people do not factor in capital expenditures with their typical annual expenses. Let me give a simple example. A small family (3 kids or less) in America is going to have housing, transportation and maybe college expenses. As such, they need to have reserves for replacement for housing components, cars and some college costs. In my case, I have banked enough in college funds for my kids already, but I put about 5k a year in there for over 15 years. As to housing, I assume around 4K per year as a reserve which covers Roofing, Paint, HVAC, Water heater, Appliances and Maintenance equipment (lawn mower, etc) for a 20 yr cycle. Lastly, I buy a new car to me every 4 to 5 years (We drive our cars for 8 to 10 years). This means I need around 25K (today's dollars) each 5 years, so 5k per year.

Thus, if one is being realistic, this small family needs around 14k for cap ex or in my case at least 10K. My insurance costs are running around 24K and my housing costs (taxes, utilities, etc) less insurance and cap ex is running around 6K.

So, what I am saying is I find it hard to believe people are being realistic when they say they can live on less than 40k per year "all in" when I need at least 40K to cover insurance, housing and cap expenditures for large ticket items. My current budget is 70k net and it's tight. Remember, I have no mortgage, college funds banked and no other debt.

I feel compelled to drop in on the MMM and ERE crowd and point out that they may not be realistically factoring in all of life's costs. However, I brought this up here because most of you in the Early Retirement forum are the more experienced group and would like your thoughts and comments.
You're presuming that people have kids, own homes, and buy new cars.

I'm a little confused at the characterization of three kids as a "small" family.

Jacob Lund Fisker (the guy who started ERE) has none of the above (although he parked his RV on a rental lot). He lived a lifestyle austerity that many would find unacceptable, but he lived it for a number of years and faithfully documented the costs. I think they were accurate and sustainable.

Pete (MMM) has one kid, fearsome DIY skills, and beater vehicles. He learned how to replace a wheel bearing from YouTube. I suspect that it's going to cost next to nothing to put his kid through college, and his budget for home & vehicle maintenance is probably limited to raw materials.

I think you're unreasonably skeptical of the expenses paid by the people who started those websites, as well as many of their posters. While many ERs have expenses of around $4K/month, a significant minority are down around $2000-$2500/month. Probably without owning homes, kids, or frequent car replacements. You call $70K "tight", but my spouse and I have been retired for the last 12 years on about that level with two mortgages, a child (since graduated from college) and money left over nearly every year.

I'm personally offended by your phrase "most of you in the Early Retirement forum". I'm a poster here, I've posted on ERE, I post extensively on MMM, and I also contribute to Bogleheads. So perhaps we all have different levels of experience on all of those forums, and they're not mutually exclusive.
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Old 09-02-2014, 01:30 PM   #67
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That's a great point about MMM (and the folks willing to do DIY in general) - the internet and especially YouTube has made it so much easier to fix most anything, to the point where your maintenance costs for common household stuff can be much lower.

Cars and trucks are a different story because of all the tech and the limited access that makes it harder to do work on them, but they are much more reliable in general nowadays. And with the limited miles most retirees put on them, they can last 20 years easy.
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Old 09-02-2014, 02:11 PM   #68
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The diversity of the different forums is great, and I'm glad they are all here.

One thing about DIY. I am an ardent DIYer. However, as I age, I cannot do everything I used to do. No more 3 story ladders. I'm down to only 2 stories. So, that means hiring a professional painter for my house.

I'm sure as time goes on, I will not be able to do other things too. This is the kind of thing that I think we need to keep in mind.

Now, for the ERE crowd, they should be young today and very capable of much DIY. Just keep in mind that 30 or 40 years hence, it will be different.
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Old 09-02-2014, 10:57 PM   #69
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A grand total of $61,700
New energy efficient water heater $1200
Electrical system upgrade $3,000
New metal roof $21,000
PV System $12,000 (20 year pre paid lease)
Kitchen Remodel 58K -50K budgeted $8,000
Replacing plumbing with copper lines $7,000
New Fence $2,500
Flooring and cabinets for downstairs $3,000 so far probably $7,000 total0 even after subtracting the $20k that should have spent it is still an extra $4200/year. I have lots of cushion but for people on tighter retirement budget this could spell trouble.
The worst of it is you spend all that and you're just back to where you were before.
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Realistic expenses over the long haul rant
Old 09-02-2014, 11:15 PM   #70
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Realistic expenses over the long haul rant

70k a year and it's tight? I have a nice looking porsche and a 4 door jeep in the garage, and live on 45k a year, 16k is the mortgage before insurance and taxes. I have a man cut my grass. I feel like im spending more than i should.




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Old 09-03-2014, 11:04 AM   #71
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Now, for the ERE crowd, they should be young today and very capable of much DIY. Just keep in mind that 30 or 40 years hence, it will be different.
For our finances, I figure our kid-related expenses will drop to near zero about the same time as my body decides it's had enough DIY for one lifetime. Redirect expense stream from kid costs to hiring it out costs. I figure my $1500/yr amortized capital costs might double to $3,000/yr. I bet I spend more than $1500/yr on kids right now...

Last time I was crawling under my house through muck to replace the failed sump pump (which was 3 feet under water), I was thinking about how I won't be able to do this forever. I'm 34 now, but these pumps fail every 7-10 years. At 44 and hopefully 54 I'll be up for it, but not so sure about at 64 or 74!

I expect our portfolio will significantly increased in real value in the next 30 years (we're spending under 3%) so I bet we can hire out about everything and not break the ER plans.
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Old 09-04-2014, 09:49 PM   #72
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We are at 70K a year: 15K is health care, 15K is travel. Our cars are paid for, have small mortgage 800 per month. (Will downsize in less than 5 years) Although I totally believe people can live on these low amounts, we can't either. We used to spend 85K, but cut a lot of stuff. Would be interesting to compare where the differences are.
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Old 09-05-2014, 12:55 AM   #73
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The Consumer Expenditure Survey has average expenses broken down by various categories including age and occupation:

CE Expenditure Tables

I don't have any super amazing low budget like some of the ER forum and blogger have, but comparing these numbers to what we used to spend really helped bring our expenses down.
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Old 09-05-2014, 01:03 AM   #74
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We are at 70K a year: 15K is health care, 15K is travel. Our cars are paid for, have small mortgage 800 per month. (Will downsize in less than 5 years) Although I totally believe people can live on these low amounts, we can't either. We used to spend 85K, but cut a lot of stuff. Would be interesting to compare where the differences are.
I think a key part of many of the low expense folks; budgets are low or zero incomes taxes and significant ACA subsidies. With subsidies and a fairly healthy household, medical expenses can be a couple thousand a year or even less.

Pre-ACA many of the ER bloggers did not plan for increased health care costs as they aged, reaching OOP maxes or not being able to price shop insurance every year once any pre-existing conditions occurred, so their plans were not realistic long term.
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Old 09-05-2014, 07:12 AM   #75
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My realistic budget, and this is in New York, I live alone...

Condo (fully paid for) Maint $316 x 12 = $3792
Taxes $225 x 12 = $2700
Electric (averaged) $53 (-$10 mo low inc break) $43 x 12 = $516
Medical (UnitedHealthcare Medicaid) $0 x 12 = $0 ($300 year max)
Cell phone (low income break) $0 x 12 = $0
Food $300 x 12 = $3600
Gas $60 x 12 = $720
Car Ins. $100 x 12 = $1200
Car Payment (fully paid for) $0 x 12 = $0
Car Maint $40 x 12 = $480
Car Depreciation $100 x 12 = $1200
Clothing $25 x 12 = $300
Internet $65 x 12 = $780
==============================
Total $15,288

Major expenses
Car replacement: Usually keep cars 20 years, should be longer since no need to commute now, cost is part of depreciation above.
Major housing expenses, roof, boiler, lawn care, heat, and water are covered in monthly maintenance. Special assessments are possible, but my association is in good shape right now.

So about $15k are base expenses, way below 40K. The OP assumes that everyone needs a house, which is nonsense, also a new car every 4-5 years, which is also absurd. I could get by without a car if I had to, but it is nice and not that expensive since I already have it.
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Old 09-05-2014, 08:07 AM   #76
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The OP assumes that everyone needs a house, which is nonsense
Ding ding ding, winner!

When retired on a fairly big budget, what are you mostly doing? Traveling. Why do you need a 3 or 4bd big expensive house while vacationing in Costa Rica or Europe?

A retired couple could likely drop expenses by $10,000 to $15,000 a year by significantly downsizing or even selling their home and renting a tiny 1bd apartment. Just the saving on insurance and taxes for a lot of people would be more than the rent. The money tied up in the house could then be invested to generate positive real returns.
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Old 09-05-2014, 08:29 AM   #77
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I don't see how renting an apt drops expenses of a paid off house by 10-15K? Maybe for some. Our taxes are less than 5K and there is maintenance (we budget 3600 per year), insurance is 1200. That totals less than the amount we would pay for a 1 bedroom apt where we live (Boston suburbs). A really crappy 1 bedroom in this area (unsafe) would be 1K - a decent one would be 1500 a month.

Don't get me wrong, I can't wait to downsize, but we don't expect to see huge savings since we will likely replace the mortgage interest we pay with HOA fees which tend to be high here due to snow removal and the beating parking lots and roofs take.

Also I just noticed I was wrong, we budget 18K for medical due to the high deductible plan. Boston has the highest insurance rates in the country due to all the teaching hospitals. If we moved to NH, we would save a ton. But not willing to do that since we feel ACA is at risk - and Mass will retain their plan if republicans get in control and vote it out.
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Old 09-05-2014, 09:04 AM   #78
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I don't see how renting an apt drops expenses of a paid off house by 10-15K? Maybe for some. Our taxes are less than 5K and there is maintenance (we budget 3600 per year), insurance is 1200. That totals less than the amount we would pay for a 1 bedroom apt where we live (Boston suburbs). A really crappy 1 bedroom in this area (unsafe) would be 1K - a decent one would be 1500 a month.
$5k taxes, $3.6k maint., $1200 insur. = $9.8k

Assuming your house is worth around $400,000 (maint. is usually 1% of house value) you also have to consider the opportunity cost of the $400,000 if invested at 4% real return (assuming the house "investment" just matches inflation as it should in the long run).

4% of 400,000 = $16,000

So a total of $25,800 a year to stay in your house vs paying $18,000 for a decent safe apartment. $7,800 added to the bottom line per year.
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Old 09-05-2014, 09:36 AM   #79
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Makes sense.

I just could not live in a small apt and take the risk of having to move, etc. I do agree with the numbers though. :-) Maybe I am saying it's worth 7800 a year to have peace of mind and not end my marriage due to lack of space. ;-) (that would cost a whole lot more!)
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Old 09-05-2014, 09:43 AM   #80
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Makes sense.

I just could not live in a small apt and take the risk of having to move, etc. I do agree with the numbers though. :-) Maybe I am saying it's worth 7800 a year to have peace of mind and not end my marriage due to lack of space. ;-) (that would cost a whole lot more!)
Sure, I agree with you. Your numbers are also a lot closer to parity than some. If you don't travel very much then having a nice larger home with a yard to spend a lot of your retirement makes sense.

If you are out of the state/country for 6 months out of the year, maybe the small apartment starts to make sense.
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