Family of 4 moving into Tiny House on wheels

[Tiny]

Hey! It’s a pleasure to be here. I’ve been a long time lurker, and have learned a ton from you over the years, and excited to finally make an account here to get your input. Here’s a little bit about our situation and specifics:

Background:
Wife and I have both worked pretty normal jobs over the last 15 years, got married young, traveled and waited to have kids, had tons of fun, didn’t start investing seriously till about 5 to 6 years ago (except we always put something in the 401(k) for the match). Fast forward to now, we have a couple sweet kids, we both worked full-time, and my wife quit her job a few years back. I work remote in IT. The last two years we have realized that our time is short with our kids and we’d like an adventure. We are also interested in a more minimal and simple life (we’ve gotten rid of most our possessions). We also want to move closer to family so that I can take care of my mom whose mind/health is going bad. We have access to a nice family property out there where we plan to live in a tiny house on wheels. We should be able to stay as long as we want, but we dream of having our own place and build a little cabin. Hookups are all setup, it’s a sweet location near my family and right in the great outdoors. Our kids are excited and so are we! Feel free to ask any questions about the plans.

Personal and financial details:
Late 30s male, married with two children (under age 8)
No state income tax
About $700,000 in VTI in brokerage account
About $300,000 in the 401(k) all pretax, in a mixture of total international and US funds
About $150,000 in VTI in Roths
A little bit of cash and coins
No real estate
We have no debt
Income is around $200k tc (work remote, have nice starlink at family property)
We currently rent in a nice HCOL area and our annual spend is about $85k
We have some money set aside for helping girls start a business or go to college (not counted in our net worth)
Have term life insurance (plan to keep it for another 10 years maybe)
Two paid off cars, some other paid off small toys
Inheritance will be sizable, but not banking on it

So we are pretty close to 90% equities 10% cash/coins totaling $1.3m NW. This does not include the property and paid off tiny house or education funds.

Future plans:
We decided to downsize and so we built a tiny house on wheels (all paid for). It’s nice and has been a lot of work. Over the last couple years we rented a couple of tiny houses and got a feel of what we like and if it would work for us, and we are really happy. We plan to move in the spring of 2023 and it’s our dream to live on land, build a garden, and enjoy the slower life. I plan to work for another one to five years depending on how things go. we would like a more permanent house once the kids are a little bit older, but it doesn’t have to be fancy. We have the option to build on this property, potentially, but we may want our own. I’m pretty handy so I will probably do this in phases myself and get some help here and there. I like my current job, but I’ve always seen it as just a job and would like a different pace of life. The stress does get to me. We have some side hustle options. Really excited to focus on the family, getting healthy, learning new things, and staying active! Life is too short to continue the rat race for too much longer.

We will spend about $40,000/year living in the Tiny House
We won’t spend much in utilities, and this budget provides cushion for some unexpected things. Already researched our health benefits, won’t be a problem getting some on the exchange, especially once i stop working, for now my job has good benefits for all of us.

Questions:
-financially, how are we looking if I stopped working at some point? With inflation, it’s a little scary, but we plan for 3-3.5% withdrawal rate even with taxes, and I also plan to work for another couple years as needed. My goal is for my income the next couple years to pay for building a small permanent house
-any thoughts or questions on the plan?

Thanks for all your support, great to be here, and I’ll keep you posted!

 

[daylatedollarshort]

Sounds like an interesting change. I've been intrigued with tiny house living for years. Good luck on your new lifestyle.

 

[ut2sua]

OP, your plan sounds like a lot of fun to me.
If you don't mind working for a year or two more, giving your current income, you should be able to build a nice cushion against future inflation and other unexpected things (if that is where your concern is).
I think you know what you are getting into, so have fun and welcome to the forum.

 

[Sunset]

With such a short work life, and a long retirement, my concern would be:

What is your SS payment looking like for each of you ?
Also with a retirement period starting at 40, you can expect to live 40-50 more years, so the withdrawal rate maybe at 3% max would work.

OP should run firecalc to see what it says.

One issue with quitting IT, is after a few years it's really hard to get back in, and if you need to get a job due to high inflation/healthcare McD's or Walmart does not pay like IT.

 

[FLSUnFIRE]

4% WD for such a long draw period is too risky for me. Starting in a Tiny House to get to the $40K leaves little room to further cut expenses/adjust. Also, a Tiny House with 2 under 8 is likely to be a lot different than when the kids are teens....and they'll eat a lot more! Certainly people live off of less but again, seems very bare bones for a 4% WD. For longer draw periods, I like to look at FIRECal and do a 30 year period and then use the lowest ending balance to run another cycle (get more samples than longer draw periods). At 30 years and 90% equity, lowest final balance is a little over 1/2 million.... not sure I'd be excited about drawing ~8% in my 60s. That's assuming your COL grows at inflation without accounting for additional kid costs that will likely increase your personal inflation. You are not in bad shape but immediate ER seems risky to me... I'd want to be =<3% for such a long draw period and/or have headspace to downsize if necessary.

 

[Dtail]

What are the schools like in your new area?

 

[JoeWras]

Not enough, right now, with small kids and future plans for a big house.

Do the tiny house for sure, now, when you are all young. Keep working for that 5 year window, save a ton, then reassess.

Once you get older and have more aches and pains, tiny houses are not as enticing. As one who has a history of back problems, I ache just thinking about living like this.

 

[DrRoy]

4% WD for such a long draw period is too risky for me. Starting in a Tiny House to get to the $40K leaves little room to further cut expenses/adjust. Also, a Tiny House with 2 under 8 is likely to be a lot different than when the kids are teens....and they'll eat a lot more! Certainly people live off of less but again, seems very bare bones for a 4% WD. For longer draw periods, I like to look at FIRECal and do a 30 year period and then use the lowest ending balance to run another cycle (get more samples than longer draw periods). At 30 years and 90% equity, lowest final balance is a little over 1/2 million.... not sure I'd be excited about drawing ~8% in my 60s. That's assuming your COL grows at inflation without accounting for additional kid costs that will likely increase your personal inflation. You are not in bad shape but immediate ER seems risky to me... I'd want to be =<3% for such a long draw period and/or have headspace to downsize if necessary.

I totally agree with this. I would not be comfortable with less than $1.75M plus a college fund that covers both kids. Plus, FWIW, I found that I spent more after RE for travel and upgrading my house. I would really suggest $2.5M plus college, including inflation to your RE year.

 

[Tiny]

With such a short work life, and a long retirement, my concern would be:

What is your SS payment looking like for each of you ?
Also with a retirement period starting at 40, you can expect to live 40-50 more years, so the withdrawal rate maybe at 3% max would work.

OP should run firecalc to see what it says.

One issue with quitting IT, is after a few years it's really hard to get back in, and if you need to get a job due to high inflation/healthcare McD's or Walmart does not pay like IT.

Thanks for the feedback. Here’s our projected financial picture (I lowered our portfolio by $100k, increased spending by 10%, added in conservative SS and extremely conservative inheritance numbers). I will likely work 1-5 more years which will save another $80-300k, but doesn’t seem like we need to since spending will be $40k until we start building a small cabin permanent dwelling (which we can do in phases doing the labor):

[mod edit]

Kids are home schooled, we have other skills for doing non corporate work for money if needed, again, planning 3.5% WR

 

[Fermion]

I don't know exactly why it is, but for some reason, building a house yourself is very expensive. It may be that you don't get the quantity discounts on certain things like siding and shingles, or it could be that there is a temptation to use quality products instead of cheapest available as I guess a lot of low budget builders would do to ensure a overall profit.

Then you encounter a whole lot of little things you didn't calculate, like the inability to use the 30 amp breaker than came with your 200 amp panel because 2021 codes now require it to be a $120 GFCI breaker since one person in the last decade was electrocuted when plugging in their improperly wired dryer.

 

[38Chevy454]

I hope the tiny house can work out for you. Your family of 4 in a small space may get too tight after the novelty wears off. But then maybe you can make it work and it's a great way to save a bunch. I agree with JoeWras, give it a try for 5 years and reassess at that time. Or reassess sooner as needed.

 

[MarieIG]

Hi Tiny, Welcome.

I look forward to hearing more about your Tiny house life. Hopefully, you will describe your house for us.

You are off to an impressive start; and I like your plan to build your cabin while still work to cash flow the expense. There will need to be some fine tuning as you get closer to your goal. I would probably keep your term in effect, on the breadwinner, until your youngest is at least through college; and on your spouse until the youngest is at least through high school. Term at your ages should be cheap - although frankly, this is money that you never want to collect.

I would continue to build up your Roth, and your brokerage account (although you may also want to take advantage of some deductions though a 401k, and do Roth conversions when you stop working). You may also need to diversify at bit more as you near retirement.

Considering your ages, and the possibility of SORR, I think the withdrawal rate might be a bit high (or you may want to consider "guardrails" to start). However, you will have a better handle on your expenses after you build and move into your cabin.

You have plenty of time to review (work on) the pre-retirement check list: https://www.early-retirement.org/fo...-answer-before-asking-can-i-retire-69999.html

Enjoy your time with your family.

 

[Exchme]

With a young family, there are a lot of unknowns.

For instance, considering you have the means to do it, you may want to give your kids a leg up on paying for their college. There are a lot of house maintenance, car or emergency medical expenses that could blow such a budget up on a fairly routine basis. Maybe you may get tired of such close quarters and want to go back to a traditional house that has a lot higher cost. Maybe you want to go on nice vacations now that the kids are old enough to remember, but not so old as to be jaded. While I don't want to go down the legislative speculation rabbit hole, your retirement plan seems to rest heavily on getting subsidized health insurance for decades, that feels risky to me (all it takes is an asset based means test - which feels like it could be sold to voters - and you have a problem).

You have a pretty nice gig, good pay with no commuting time or expense and the ability to shift your day around a bit and still enjoy time with the kids. I would continue to do remote work for a while and sock away education money for the kids and a bigger retirement cushion for you.

 

[Time2]

What are you considering tiny?
My daughters landlord put a tiny house on their property for her recently divorced sister, then the sister got a boyfriend and never moved in. They rented it to my daughter while she finished her last year of school. It was fine for her, for two, it would be passable, having no loft and one bedroom with the toilet and shower in the bedroom, not off the bedroom, in the bedroom, it would a poor conditions for a family. The water heater was too small for even my just my daughter. It was $800 a month for us, which was great.

 

[JoeWras]

I don't want to dissuade OP from trying the tiny house. I think it is a great way to LBYM for a while, get rid of "stuff", focus on family, and so on.

I just see it as a phase in life. Back issues are one thing, kneeling is another. I'd have to wear my knee pads constantly if I lived in one.

 

[pacergal]

Hi Tiny, Welcome.

I look forward to hearing more about your Tiny house life. Hopefully, you will describe your house for us.

You are off to an impressive start; and I like your plan to build your cabin while still work to cash flow the expense. There will need to be some fine tuning as you get closer to your goal. I would probably keep your term in effect, on the breadwinner, until your youngest is at least through college; and on your spouse until the youngest is at least through high school. Term at your ages should be cheap - although frankly, this is money that you never want to collect.

I would continue to build up your Roth, and your brokerage account (although you may also want to take advantage of some deductions though a 401k, and do Roth conversions when you stop working). You may also need to diversify at bit more as you near retirement.

Considering your ages, and the possibility of SORR, I think the withdrawal rate might be a bit high (or you may want to consider "guardrails" to start). However, you will have a better handle on your expenses after you build and move into your cabin.

You have plenty of time to review (work on) the pre-retirement check list: https://www.early-retirement.org/fo...-answer-before-asking-can-i-retire-69999.html

Enjoy your time with your family.

I agree with everything MarieIG wrote, especially reviewing the questions/checklist. They are great for drilling down to some of the nitty gritty details you might not think of.

Tiny house living sounds interesting, but for a family of 4, it depends on how Tiny and for how long. Teenagers will not want to be in that small of space, I don't think.

It is wonderful for you and your family to be able to move closer and help out your Mom.
Look forward to hearing more from you and your journey!

 

[Gumby]

We lived in tiny houses when I was a boy, but we just called them trailers. As I recall, they were usually 10 feet wide and about 30-40 feet long. Of course, we didn't do it to prepare for retirement, but because it was the only way we could sleep inside and still eat. In any event, there were four of us and it seemed sufficient space at the time, although I couldn't tell you how my parents felt about it.

I do think it is a good way to force a halt to the purchase of any but the most essential goods, since there's no place to put them. It also forces kids to get out of the house more than some of them seem to do these days. If you can cope with cooking in a tiny kitchen and don't resort to takeout all the time, you can save on daily living expenses.

 

[4legsgood]

I have a small cabin and think the tiny house concept is fun.

The weather here is not always great for outdoor living and during extended cold or rainy periods (or recently wildfire smoke) I tend to head to my primary home. The cabin is fantastic in weather that allows for lots of outdoor time.

An easy fix to kids getting older for me was having a trailer on the property. No need to have hookups - just extension cord and they could come into the cabin when bathroom is needed. Teenagers really like a separate abode.

I also have a 10x20 shed and plan to have some work out equipment in it or just use as a reading nook eventually. It didn't work too well for teenagers - too many spiders - but I will make good use of it someday I'm sure.

I think you have a very cool plan!

 

[Tiny]

We lived in tiny houses when I was a boy, but we just called them trailers. As I recall, they were usually 10 feet wide and about 30-40 feet long. Of course, we didn't do it to prepare for retirement, but because it was the only way we could sleep inside and still eat. In any event, there were four of us and it seemed sufficient space at the time, although I couldn't tell you how my parents felt about it.

I do think it is a good way to force a halt to the purchase of any but the most essential goods, since there's no place to put them. It also forces kids to get out of the house more than some of them seem to do these days. If you can cope with cooking in a tiny kitchen and don't resort to takeout all the time, you can save on daily living expenses.

Thank you for your response, we think about that all the time. There have been so many families over the last few hundred years in our country (including my ancestors), who have had large families in a tiny dwelling, in many cases out of necessity. It’s not all peaches and roses, but we are excited to see what we learn, and keep building towards the future. We only have ~10 more years before our kids will be driving and more busy, so trying to take advantage of each moment. We are so excited to spend more time together as a family and explore the great outdoors!

 

[Tiny]

Thanks for all the responses so far. The tiny house is 30 ft long, has plenty of space for us, but we are also building a covered patio/deck with our grills and outdoor kitchen and dining stuff. We will build out buildings as needed, and have access to a shop that has internet and storage.

FireCalc and other calculators (like engaging data and FI Calc) are giving 100% success (US stock data) which likely gives us plenty of buffer for unexpected things.

By the time the kids are grown, we plan to have some sort of business up and running that will give us income plus allow the kids to join in and take ownership. My family has a couple businesses in this area already so familiar with the market. It also gives us access to reclaimed materials and some services/equipment/tools that might be quite expensive for normal people.

We are concerned with the consumption culture and the corporate environment in general, so this is our chance to live more simply, and according to our values. This last couple years has definitely taught us a lot about our priorities, and we are thankful that we feel like we are in touch with what’s important to us.

Lots can change and go wrong, but that’s the same in any lifestyle, and we are significantly lowering our environmental and financial footprint which gives us a level of flexibility that many people don’t have access to.

Excited to learn from you along the way!

 

[Fermion]

If your property and budget allow for it, maybe build a pole barn near the tiny home. We had a 30x40 foot pole barn built, complete with poured concrete floor, metal sides and roof, totally mouse proof, for about $30,000, no work required by us.

This would be a lot of cheap extra space to work on things, spread out, so the tiny home itself doesn't become too cramped.

Just a thought.

 

[Tiny]

If your property and budget allow for it, maybe build a pole barn near the tiny home. We had a 30x40 foot pole barn built, complete with poured concrete floor, metal sides and roof, totally mouse proof, for about $30,000, no work required by us.

This would be a lot of cheap extra space to work on things, spread out, so the tiny home itself doesn't become too cramped.

Just a thought.

Great advice, we have definitely watched a lot of pole barn videos on YouTube lol! What year did you spend 30K on that? sounds like a good deal. There’s a little shop on the property which should tide us over for awhile.

 

[4legsgood]

Great advice, we have definitely watched a lot of pole barn videos on YouTube lol! What year did you spend 30K on that? sounds like a good deal. There’s a little shop on the property which should tide us over for awhile.

Is this your property or will be for sure in the future? If not, I would be reluctant to add improvements.

 

[Tiny]

Is this your property or will be for sure in the future? If not, I would be reluctant to add improvements.

We probably won’t do any significant building until we have our own property, but that might be right next to this one, for now just need essentials.

 

[Fermion]

Great advice, we have definitely watched a lot of pole barn videos on YouTube lol! What year did you spend 30K on that? sounds like a good deal. There’s a little shop on the property which should tide us over for awhile.

We had it built in 2020, just as Covid was hitting everything. Materials went up (mostly OSB and lumber) right after we had it built but most of that has come back to reality now. The crew was super fast, like 10 days start to finish.