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Old 12-27-2013, 08:05 PM   #41
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To the OP, my compliments to you for having accumulated $1.6M networth at the age of 35 plus extra college savings, and for living on just $12K/yr, which of course most of us find difficult to imagine.

However, as others have pointed out, your $1M stash can support a withdrawal rate of 2X or 3X of what you are spending now. So, you are set. And people who manage to save something like this would know to get themselves out of trouble if their finance runs short later, such as getting back in the job market, or to find a low-pressure part-time work.

You are good to go if you like, my friend. Hope you will be happy with the free time you have, and not wonder what to do all day like some of us.
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Old 12-27-2013, 08:07 PM   #42
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Some things I can think of we spent money on not in your budget - braces for each kid - one had to be redone, reaching out of pocket max in medical bills some years, major dental work, new roof, sewer line breaking, helping out relatives, major foundation issues, major plumbing issues, major car repairs, replacing cars, cars for kids, prom tickets and clothes, new PCs and laptop - us and kids, car insurance for kids (ouch!), four figure vet bills, legal fees for our trust, legal fees to have trust revised and many more non-recurring expenses.

If you can live on 12K a year good for you but I would not know how to do it for a family with kids, pets and a house to keep up. Last year we had around 20K in medical expenses alone (co-pays, deductibles, travel and out of network costs), plus premiums. I budget 5K just for home repairs and upgrades each year.
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Old 12-27-2013, 08:25 PM   #43
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Nice avatar. You look exactly as I pictured you
For people who might not know, that's Rob Ford, the current and controversial mayor of Toronto, Canada. How REWahoo "identifies" with Rob Ford is another story.
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Old 12-27-2013, 08:32 PM   #44
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Looks like the mayor is about to go postal, eh?
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Old 12-27-2013, 08:36 PM   #45
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Well, substance abuse can do strange things...

Sorry to the OP for the thread hijack.
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Old 12-27-2013, 08:52 PM   #46
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I also didn't account for possible future appreciation of income (the savings has grown approx. 40% per year thanks to stock market).
Spending < $12k / year on the few items you include as necessities would be easy to do and isn't far off from my current spending in those categories here in Canada and the only thing I can seem to grow is dandelions. And we like to eat steak and crab legs. Real spending that I don't want to have to cut is more like 2.5 times that (not including mortgage which triples it) for a somewhat similar sized family that likes to wear clothes (except the fur-kids). So yes, for me, $1MM would be a clear FI point without a working spouse.

I've taken several sabbaticals or worked extremely flexible contracts (eg. only quarterly reporting / corporate tax prep one year) through the years starting in my 30's. Were I to do it again at your age, that's exactly what I would do rather than go for the RE part of FIRE. It gives you a break, no gap in the resume and time to figure out what you want to really do with your life. Do you know what that is? That's more important than the magic FI number IMO at your age.

What I'd really like to know is how you're getting the 40% returns? And this isn't including contributions? Or is this a statement based on just the past year? If not, can you explain how you're investing to get that kind of return YOY?
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Old 12-27-2013, 09:03 PM   #47
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Hmm... I missed the OP's post about 40% return. This level is achieved by some small-cap ETFs this year. Check out IWO, or even Vanguard MF VISGX. Of course people who are conservative and diversified investors like myself and most geezers here cannot get that.
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Old 12-27-2013, 09:46 PM   #48
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Investments that can go up 40% in one year usually can go down the same amount other years. Unless the money gets moved to less potentially volatile investments before you quit work, you have to count on some bear markets along the way. Sequence of returns matters.
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Old 12-27-2013, 11:00 PM   #49
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4) yes, partly b/c it was my sacrifice to led us to financial independence. I graduated from college in my teens and slaved 15 yrs in the corporate world to amass the earnings that paid for the house and is the basis for most of the savings. I'm burnt out and they all agree I deserve time to relax.
Thanks for your reply.
Good for you. We're about the same age, I've also sacrificed for 15 years and am burnt out, but have much, much less to show for it. I've always been a late bloomer, apparently that applied to savings rate, too.

I would be looking at ER, too, if I was in your position. I think EWR concerns others are sharing are valid. FWIW, you still have a lot of life to live. If I was doing what you're doing, I'd be considering PT employment doing something interesting or income producing hobbies, just for my own entertainment as much as anything. Two birds one stone.
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Old 12-28-2013, 11:12 AM   #50
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To answer the OP's original question....

Yes you have enough money to retire with the way you are living today. It seems that you been tracking your expenses for a while so you know how much you need and seems that you are living comfortably. You should be able to pull 30K a year if you want. Just pull the trigger and enjoy life with your family.

Me, my wife and two cats spend around 17K a year but we go out to eat and have fancy cells phones and spend money on services that we really don't need etc etc. I can't imagine spending 30-40K a year. I guess I would spend money every month on stuff that I don't need.

Dager if you don't mind can you share the specifics on how you are getting a return of 40% per year? what stock or funds are you investing on?

I am 28 and we are shooting to retire when we hit 750K; with a return of 7% I will hit the mark around 36-37. I would not mind retiring earlier

Thanks.
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Old 12-28-2013, 11:19 AM   #51
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Congratulation on having accumulated 1.6M at age 35.

That said, I don't think a budget of 12K or even 24K is realistic for a family of four. In addition to failing to include your insurance premiums (mentioned in an earlier post), here are some other items you may want to add to your budget:

New car every x years
Car maintenance
House maintenance, including a new roof every 25 years
Heating/AC replacement
Major appliance replacement
Home computer/tablet/phone/TV/stereo replacement

10% more for unexpected expenses

Lastly, I have a significant amount of money in my vacation/travel budget every year. What have you budgeted to fly to your favorite vacation area for 2-4 weeks per year for the next 40 years
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Old 12-28-2013, 12:37 PM   #52
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I can't help but wonder if there are a number of forum members reading this thread wondering...why would someone who has amassed so much money at such a young age want to live on $12K per year for a family of four?

I also keep thinking about the food and gas budget of $440/month. We don't know the breakdown between food and gas, but let's assume it's mostly food, or $400 per month. To feed four people on $400 per month, assuming 30 days per month and 3 meals per day, that equates to $1.11 per meal per person. Even if the fruits and vegetables are free, what are you eating that averages $1.11 per meal?
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Old 12-28-2013, 01:28 PM   #53
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I can't help but wonder if there are a number of forum members reading this thread wondering...why would someone who has amassed so much money at such a young age want to live on $12K per year for a family of four?

I also keep thinking about the food and gas budget of $440/month. We don't know the breakdown between food and gas, but let's assume it's mostly food, or $400 per month. To feed four people on $400 per month, assuming 30 days per month and 3 meals per day, that equates to $1.11 per meal per person. Even if the fruits and vegetables are free, what are you eating that averages $1.11 per meal?
We live very comfortably in a 4000 sq ft house. Solar (fully paid for) helps us save considerably on electric bills. We have Netflix at $8/mth and don't pay $100+/mth for cable (we always watched everything on DVR and realized we were wasting money on live tv).

As for food, I suggest you try using coupons and shop at Stater Bros instead of Trader Joes and Whole Foods, and avoid the pricey steaks and seafood (I didn 't grow up eating that, so I'm not missing out). We 're not an obese family like many, so that cuts down on food costs as well.
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Old 12-28-2013, 01:39 PM   #54
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To answer the OP's original question....

Yes you have enough money to retire with the way you are living today. It seems that you been tracking your expenses for a while so you know how much you need and seems that you are living comfortably. You should be able to pull 30K a year if you want. Just pull the trigger and enjoy life with your family.

Me, my wife and two cats spend around 17K a year but we go out to eat and have fancy cells phones and spend money on services that we really don't need etc etc. I can't imagine spending 30-40K a year. I guess I would spend money every month on stuff that I don't need.

Dager if you don't mind can you share the specifics on how you are getting a return of 40% per year? what stock or funds are you investing on?

I am 28 and we are shooting to retire when we hit 750K; with a return of 7% I will hit the mark around 36-37. I would not mind retiring earlier

Thanks.
I do a lot of daily stock research; it keeps me busy since I'm semi-retired as of two years now. I've made a killing in AAPL, GOOG, MSFT, AIG, C, BAC, JPM, GM, F and QCOM. I generally look for beaten down blue chip stocks (value investing) and ride them up after a patient (and oft volatile) quarter. It has worked wonders for three years. At present , I own C and AIG, but will sell both when they reach 54-share (I bought them both under 40). I'm not sure yet what I'll buy next b/c everything in the market seems a bit pricey. I have my eyes on DVN if it goes back under 60, I may buy and ride it to 70, but that's the only low-risk opportunity I see for now. I suspect a market correction with the next gov't impasse will present me with new opportunities.
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Old 12-28-2013, 01:47 PM   #55
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Me, my wife and two cats spend around 17K a year but we go out to eat and have fancy cells phones and spend money on services that we really don't need etc etc. I can't imagine spending 30-40K a year. I guess I would spend money every month on stuff that I don't need.
As has been said here many times before, it's interesting to notice the large variation in spending levels between members. I spend about the same you, but am just one person, living alone with 3 cats and unlike you, don't spend money on things I don't need; I have no cellphone, no paid subscriptions to anything (no Netflix, Hulu etc), no car.

You must live in an area where the cost of housing is fairly low. I envy you! (Well, sort of - I'm actually quite content but I envy you in a kind of whimsical-yet-reasonably-satisfied kind of a way . )
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Old 12-28-2013, 01:47 PM   #56
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Our SCHA is up over 36% YTD. "Magic Diligence" stocks are up 41% as of Nov 30th.
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AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 12-28-2013, 01:51 PM   #57
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Congratulation on having accumulated 1.6M at age 35.

That said, I don't think a budget of 12K or even 24K is realistic for a family of four. In addition to failing to include your insurance premiums (mentioned in an earlier post), here are some other items you may want to add to your budget:

New car every x years
Car maintenance
House maintenance, including a new roof every 25 years
Heating/AC replacement
Major appliance replacement
Home computer/tablet/phone/TV/stereo replacement

10% more for unexpected expenses

Lastly, I have a significant amount of money in my vacation/travel budget every year. What have you budgeted to fly to your favorite vacation area for 2-4 weeks per year for the next 40 years
Thanks for your comments. We actually bought two new cars and have all new heating/AC, appliances, tablets, etc. within the past two years, so I don't expect to replace them. I don't consider these significant costs b/c I buy the cars cash (when extra money is there for it) and the rest came free and will probably always be free (lots of friends in those businesses who offer those items in exchange for my occasional help -- basically bartering. As for the insurance cost, it's $600/yr for my home insurance...that $50/mth isn't significant.
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Old 12-28-2013, 01:57 PM   #58
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How much of the wife's income can support a higher budget?

What about taking the kids to Disneyland or amusement parks for the adults (Europe, Asia, etc)?
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Old 12-28-2013, 01:57 PM   #59
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Investments that can go up 40% in one year usually can go down the same amount other years. Unless the money gets moved to less potentially volatile investments before you quit work, you have to count on some bear markets along the way. Sequence of returns matters.
Depends on how good you are at investing. A good investor makes money in both up and down markets. I don't buy funds and let my money sit only to watch it tanked three months later. I buy individual stocks after thorough research and watch them daily. In three years, I've bought and sold over 100 stocks and not lost a penny on a single one. I suspect you are buying funds/indexes and letting others make allocations/decisions for you.
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Old 12-28-2013, 02:05 PM   #60
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In three years, I've bought and sold over 100 stocks and not lost a penny on a single one..
Can you say the same for how you performed in the three years prior to the past three?
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