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small celebration...
Old 12-31-2009, 02:02 PM   #1
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small celebration...

Because I don't want to seem like I'm bragging to most friends or family, and don't want to alienate people, this seems like a good place to quietly jump up and down: Made ~$54,000 today!

Company stock is repriced in the ESOP annually, this year up over 60%. I've been with the firm almost 8 years, and generally LBMM (not to the level of many here, but still), and today with the repricing, it's a big payoff. I managed to save about 1/3 gross this year, and with the increase in stock price, I'm over $200k for the first time (excluding home equity)!

I don't know if it's something that people here have looked at, and it'll need some revising with inflation, but a way I've been using to gauge my progress is: I live on about 37k, thats roughly $100/day (includes mortgage). By rule of 25, every day of freedom is going to cost me $2500 (amount to generate living costs for one day, every year going forward). I've set up a calendar so that I can cross off days as my (non-home) net worth increases, so that I can see progress and feel like I'm actually getting somewhere. it also helps to put some things in perspective on spending. Today bought me three weeks of vacation every year for the rest of my life! ($54k/2500=21.6 days)

Just wanted to share with people who understand that I'm celebrating a milepost, not bragging. Currently 31, would like to retire at 40, current conservative schedule looks like about 43 years old. This helps. Here's to a good finish to a long year!

Seabourne
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Old 12-31-2009, 03:30 PM   #2
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Congratulations!! That's a nice chunk of money to have added to your net worth, and it puts you ever closer to retirement.

Before I retired, I did it the other way - - I took what I had, divided it by 25 and then again by 12. That would give me the before-tax amount that I could get from my nestegg if I wanted to retire.

When I was most motivated to retire, I found that the idea of living on less was more attractive to me.
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Old 12-31-2009, 06:21 PM   #3
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Congrats!
I must admit, I had to Google "Rule of 25" to know what you are talking about.
For anyone who doesnt know, this is what I found:
The Rule of 25

Very good info.
Again, congrats!
I'm so happy for you!!!!

~M
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Old 12-31-2009, 06:31 PM   #4
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Quote:
Originally Posted by megcrispin View Post
Congrats!
I must admit, I had to Google "Rule of 25" to know what you are talking about.
For anyone who doesnt know, this is what I found:
The Rule of 25

Very good info.
Again, congrats!
I'm so happy for you!!!!

~M
The link you found does tell you what is the rule of 25, but the author was a person who questioned the validity of the underlying research. I suggest you take what he says with a grain of salt.

You might be interested in this FAQ listing of threads on how much do you need to retire: (FAQ archive) "How much is enough?"
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Old 12-31-2009, 06:33 PM   #5
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I suggest you take what he says with a grain of salt.
Grain? Heck, I'd suggest you take anything on that website with a large dose of Epsom salt...
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Old 12-31-2009, 06:45 PM   #6
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Congratulations! that is great. Happy news for the new year!
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Old 12-31-2009, 10:51 PM   #7
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Quote:
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The link you found does tell you what is the rule of 25, but the author was a person who questioned the validity of the underlying research. I suggest you take what he says with a grain of salt. (snip)

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Grain? Heck, I'd suggest you take anything on that website with a large dose of Epsom salt...
Mr Russell died in November—see this thread, where I inadvertently stirred up a bit of a hornet's nest by asking about his ideas. Who knew investing in TIPs could be so controversial?!

And congratulations to seaborne on adding over $50K to your nest egg. That ai'n't chicken change!
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Old 01-01-2010, 08:08 AM   #8
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The only TIPS controversy is that you need a bigger nestegg than you would with a balanced portfolio and thus might have to delay retirement for a very long time for a "TIPS retirement" to work. Especially as TIPs inflation is not the same as personal inflation, which might be heavily weighted with high inflation items like healthcare.
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Old 01-01-2010, 01:11 PM   #9
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To state the obvious, the rule of 25 and the 4% rule are basically saying the same thing; i.e. 1/25 = 0.04...

So if you need $40k to live, multiply by 25 to get the portfolio size you'll need to support it. ($1M)

Conversely, if you have $1M, the 4% rule says you can take $40k/yr.
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Old 01-01-2010, 05:37 PM   #10
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Seabourne, nice going on the big growth. I know what it is like to have 60% or more growth in my company's ESOP. I had that for 4 straight years (2003-2006), a big factor in my being able to retire in 2008 at age 45. I cashed it out and I am living off the dividends after I put it (~$300k) into a bond fund.

My company's ESOP was re-evaluated every quarter but the 4th quarters were usually the best ones.

I would feel very happy for you if you are able to retire at an age younger than I was. I sincerely hope you get there.
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Old 01-02-2010, 12:01 PM   #11
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How much are you earning on that 300K at the bond fund, scrabbler1?
Seems interesting that you can live off just the dividends from it?
Which bond fund is it? I would like to put some in it.
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Old 01-02-2010, 12:36 PM   #12
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How much are you earning on that 300K at the bond fund, scrabbler1?
Seems interesting that you can live off just the dividends from it?
Which bond fund is it? I would like to put some in it.
The bond fund is Fidelity's Focused High Income Fund (FHIFX). It invests mainly in corporate bonds just below investment grade such as BB. It might be technically considered a "junk bond" fund but I can sleep at night with the slightly added risk of having bonds slightly below investment grade (BBB).

I happened to buy into that fund when the NAV was at is bottom so I bought about 25%-30% more shares than I expected to when I retired in November, 2008. Using DPS/NAV as a way to measure the rate of return, I have been earning about 6.5%-7%. The December 2009 dividend just announced 2 days ago was a shocking double that typical amount, giving me nearly a $4,000 dividend instead of my usual $1,950. I also reinvested a cap gains distribution.

The NAV has rebounded from its low in late 2008 and early 2009 but is still a little lower than its usual range in 2005-mid-2008.

I have another bond fund (a muni) whose dividends I take in cash just in case this FHIFX fund has an "off" month so my total cash inflow is more reliable (i.e. a higher minimum). It pays just under $200 a month. A third bond fund I invest its monthly dividends in the FHIFX fund.

My annual expenses are about $21k but some months are much higher than others because some insurance payments (health, auto) are quarterly or semi-annually.
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