introducing myself

[fiwantbe]

Hi everyone,
I've been reading this forum for years. I finally decided to post here. Hoping I get some good feedback on my FIRE plan.
I got interested in FIRE after my husband was laid off in 2012 around his 40th birthday. We were not doing anything in taxable investment accounts or much savings and we knew nothing about FIRE. I had to close our only savings account 2 times in the past due to not able to maintain the minimum. 2012 was a wakeup call for me. We make decent salary working in the Bay Area but I feel we were living paycheck to paycheck. There’re good financial things we did before 2012: we started contributing to our retirement accounts in our 20s; We’ve purchased our house at a reasonable price (our house had never gone below purchase price even in 2008 downtime) at young age; No student loan.
This is where we are now:
I’m 45 and husband is 48. We have a 14 years old daughter in 1st year high school. Our house was refinanced to a 15-year loan @ 2.75% in 2016 with $290,000. Current balance on the loan is $161,000. I’m paying extra into principal and planning to pay it off in 5 years when I’m 50. House is estimated about 1.3 million. If we don’t have any mortgage payment, I’m looking at $6000/month or $72000/year in current expenses. This is being very generous with everything including 1-2 vacations/year and a sudden medical expense (like an emergency room visit with an irregular heartbeat).

We have reached coast FIRE with 1.4 million in our retirement accounts (401k/rollover IRA/Roth IRA). My goal is to have 2-2.5 million when husband turns 60. This should generate $80,000-$100,000/year for us and husband will take social security when he turns 62.

Daughter’s education IRA & 529 plan has $80,000 and another 2k in custodial account. Grandma has been and will continue contribute to her college fund and has told us that she will help with her college cost. Plan is to have $100,000 for her when she finishes high school and covers her undergraduate degree 100%.

We definitely increased our savings and in taxable investment accounts in past 8 years. We now have 2 savings accounts: $55,000 and $10,000. 2 brokerage accounts with about $90,000.

My plan for me is barista FIRE at 50 (more like mini retirement traveling for 1 year then barista FIRE for 7 years) after the mortgage is paid off and child is in college.

Husband has no plan to RE. He carries some hobby debt with Paypal (like $5,000 interest free). His hobby expense is one of the biggest financial problems with us. At the worst case, sell all his stuff. We don’t have joined account together. We just split expense and he can spend on whatever after expense. Since I’m managing our family expenses, savings & investments, I have good idea with our family finances except his hobby spending.

 

[Dtail]

Welcome to posting on the forum.
If you retire at 50, what will your hubby do at 53 y.o.?

 

[Koolau]

Welcome to the forum. It sounds as if you are well on your way and you have considered a lot of the issues facing those who wish to retire early.

Without suggesting anything specific, I would encourage plenty of communication within the family. While folks have individual goals for their lives, family units can compound any issues surrounding retirement in general and early retirement specifically. Case in point: DW was originally skeptical of my early retirement once I reached FI. At that time, we had 3 kids still in k - 12. Honestly, the issue did not become intractable because (as luck would have it - actually I made my own luck) I didn't want to retire at that time. Relayed elsewhere, I had "arrived" at an ideal (for me) j*b assignment. So I stayed 7 more years (only last child still completing HS.) At that time, the numbers were truly unambiguous (amazing how the portfolio can grow in 7 years.) DW dropped all objections and we were blissfully on the same page. NOT suggesting you are NOT on same page. Only suggesting you evaluate your individual "place within the book" (to maintain the analogy.)

By the way, have you (at least at the back of your mind) considered the value of your primary residence as a "back up" to your portfolio? IOW 1.6 MM would go a very long way in, let's say, the mid west, mid south, northern states (think Nebraska, South Dakota, etc. etc.) I always suggest "back ups" to every FIRE plan.

Please continue to post and enter into discussions here. We're a pretty friendly bunch - for the most part. YMMV

 

[nap470]

Congratulations on your financial success to date. You appear to be in great shape!

Just an FYI - One item that was a surprise to us as our daughter prepared to start college last year, was the cost and the lack of scholarship opportunities based on our financial success. Her grades were top level from a very strong high school which got her accepted to some outstanding universities. But every school said their scholarships were based on financial needs, not academic success. Due to our financial status, we did not qualify for any scholarships or assistance. Fortunately, we had saved a large amount in her 529 fund and have other funds set aside on top of the 529. First year tuition/room & board was $73K. She is at a private university. State schools may still offer some support, but your income and savings/assets definitely are used to determine scholarships and assistance these days.

Not trying to scare you, just sharing something we learned. We could have insisted she choose a less expensive school, but we are very happy where she ended up and the success she is having.

 

[fiwantbe]

Welcome to posting on the forum.
If you retire at 50, what will your hubby do at 53 y.o.?

Thanks. I'm looking into a mini-retirement at 50 as my 50th birthday gift for myself. One of my top interests in life is to travel and sampling local food. I'm planning to take 1 year off to focus on extensive traveling. After the 1 year travel, I will do part-time/seasonal work from 51 - 57. I'm not planning to fully retired at 50. Husband can join me in travel but it's up to him.
My full retirement target date is when I'm 57 and husband 60. This is when we can 100% FI but it does not mean both of us will stop working. We may still continue to work but I want us to have the financial backing in case we do want to retire early.

 

[fiwantbe]

Welcome to the forum. It sounds as if you are well on your way and you have considered a lot of the issues facing those who wish to retire early.

Without suggesting anything specific, I would encourage plenty of communication within the family. While folks have individual goals for their lives, family units can compound any issues surrounding retirement in general and early retirement specifically. Case in point: DW was originally skeptical of my early retirement once I reached FI. At that time, we had 3 kids still in k - 12. Honestly, the issue did not become intractable because (as luck would have it - actually I made my own luck) I didn't want to retire at that time. Relayed elsewhere, I had "arrived" at an ideal (for me) j*b assignment. So I stayed 7 more years (only last child still completing HS.) At that time, the numbers were truly unambiguous (amazing how the portfolio can grow in 7 years.) DW dropped all objections and we were blissfully on the same page. NOT suggesting you are NOT on same page. Only suggesting you evaluate your individual "place within the book" (to maintain the analogy.)

By the way, have you (at least at the back of your mind) considered the value of your primary residence as a "back up" to your portfolio? IOW 1.6 MM would go a very long way in, let's say, the mid west, mid south, northern states (think Nebraska, South Dakota, etc. etc.) I always suggest "back ups" to every FIRE plan.

Please continue to post and enter into discussions here. We're a pretty friendly bunch - for the most part. YMMV

Thank you. Yes. I agree communication in terms of family finance is a big issue with me and my husband. He is not interested in FIRE and he thinks he will work until he dies. I do keep telling him that he doesn't have to if he can control his spending on his hobby. Our family finance is in a good shape. I do tell him that we will be able to generate a good income when he's 60 and he should take SS at 62. He does not have a good family longevity history so he thinks he is going to drop dead before he can get any money out of his 401k. I used to pressure him to contribute to 401k. I stopped doing that because my coast FIRE calculator already give the number I need.
Of cause our next 5 year plan is to pay off the house and have enough for kid college.
Yes. The house is a kind of backup plan in 5 years once the kid is in college. Husband is less willing to move but there's wiggle room there.

 

[fiwantbe]

Congratulations on your financial success to date. You appear to be in great shape!

Just an FYI - One item that was a surprise to us as our daughter prepared to start college last year, was the cost and the lack of scholarship opportunities based on our financial success. Her grades were top level from a very strong high school which got her accepted to some outstanding universities. But every school said their scholarships were based on financial needs, not academic success. Due to our financial status, we did not qualify for any scholarships or assistance. Fortunately, we had saved a large amount in her 529 fund and have other funds set aside on top of the 529. First year tuition/room & board was $73K. She is at a private university. State schools may still offer some support, but your income and savings/assets definitely are used to determine scholarships and assistance these days.

Not trying to scare you, just sharing something we learned. We could have insisted she choose a less expensive school, but we are very happy where she ended up and the success she is having.

Thank you.
Yes. I'm not surprised by the price tag. In fact, I have a co-worker has a daughter in Duke and the annual cost is $80k.
I've definitely gave a lot of thoughts in terms of my child's education fund. The number is based on state public school system and no, we are not expecting any scholarships or assistance. I only plan to fund 529 up to 100k is due to another fact is that I don't have anyone to transfer the fund to in case she can't use everything in 529. I'd rather invest more money into my other investment accounts than guessing for next 4 years which school she is going to. I feel 100k in 529 is a good amount to start no matter which school she is going. Everything else will be either our investment accounts or selling the house as backup.

 

[Dtail]

Thanks. I'm looking into a mini-retirement at 50 as my 50th birthday gift for myself. One of my top interests in life is to travel and sampling local food. I'm planning to take 1 year off to focus on extensive traveling. After the 1 year travel, I will do part-time/seasonal work from 51 - 57. I'm not planning to fully retired at 50. Husband can join me in travel but it's up to him.
My full retirement target date is when I'm 57 and husband 60. This is when we can 100% FI but it does not mean both of us will stop working. We may still continue to work but I want us to have the financial backing in case we do want to retire early.

Sounds like a plan.

 

[The Cosmic Avenger]

Congratulations on your financial success to date. You appear to be in great shape!

Just an FYI - One item that was a surprise to us as our daughter prepared to start college last year, was the cost and the lack of scholarship opportunities based on our financial success. Her grades were top level from a very strong high school which got her accepted to some outstanding universities. But every school said their scholarships were based on financial needs, not academic success. Due to our financial status, we did not qualify for any scholarships or assistance. Fortunately, we had saved a large amount in her 529 fund and have other funds set aside on top of the 529. First year tuition/room & board was $73K. She is at a private university. State schools may still offer some support, but your income and savings/assets definitely are used to determine scholarships and assistance these days.

Not trying to scare you, just sharing something we learned. We could have insisted she choose a less expensive school, but we are very happy where she ended up and the success she is having.

I didn't realize this was so unusual, but our kid is going to a small (~1400 students) private college in the Baltimore area, and while the full bill is about $65K/year, they offered $30K in merit scholarship, which was a relief, although I was working at the time they applied and we assumed we'd tighten our belts and pay the (full) tuition from our income. No better way to give your kid a head start on saving for retirement than to let them start their career debt-free.

 

[pacergal]

OP--
Your overall plan looks very good.

My question (and this is coming from a married couple who only have joint accounts) is, will your DH share how much he actually owes/spends on his hobby? It sounds like you do not know this number in full, does create some conflict in your marriage per your post, and if something happens to him, you could be liable for any other debt, along with the PayPal. It is a flag to me that he doesn't want to share how much his "hobby spending" is.

 

[fiwantbe]

OP--
Your overall plan looks very good.

My question (and this is coming from a married couple who only have joint accounts) is, will your DH share how much he actually owes/spends on his hobby? It sounds like you do not know this number in full, does create some conflict in your marriage per your post, and if something happens to him, you could be liable for any other debt, along with the PayPal. It is a flag to me that he doesn't want to share how much his "hobby spending" is.

Thank you. Yes. I totally agree his hobby spending is a big red flag in our marriage. We used to have a joined account (both paychecks 100% go into the joined account) but I managed it. However, this gives him a false sense that we have unlimited fund and He can buy a $10k guitar with a finger snap. If I tell him "no, we don't have the fund for a $10k guitar" he still got the Paypal loan behind my back. It has caused a lot conflicts in our marriage. By not having joint account, he is now forced to figure out how to manage his own money. He is more open to discuss money matter, paying more attention to bills. He will complain how expensive things are after a trip from ACE store, which he has never complained about before. Ever since he started manage his own money, he actually said to me that his take home pay is much less than he thought. Yes. He has never checked his own pay statement in the past. By me not managing his money and letting him to take on the responsibility, I feel our money communication has improved.
Although, I don't know exactly how much he may owe but I did a worst case assessment and it shouldn't be more than $20k. My backup plan in case something happens, sell all his "toys".

 

[HI Bill]

Although, I don't know exactly how much he may owe but I did a worst case assessment and it shouldn't be more than $20k. My backup plan in case something happens, sell all his "toys".

Sorry, but that doesn't seem like a sound backup plan. Selling used 'toys' usually results in a 30-70% loss on the purchase price, especially with used vehicles and electronics. $ can be the root of significant problems in marriages (mine and my parents, for two examples), and spending priorities rarely align. I'd suggest some serious discussions and planning... However, if he plans to maintain his job, it may not be as serious of a problem. Of course, after he sees you not w$rking, he may change his mind...

 

[Dtail]

Sorry, but that doesn't seem like a sound backup plan. Selling used 'toys' usually results in a 30-70% loss on the purchase price, especially with used vehicles and electronics. $ can be the root of significant problems in marriages (mine and my parents, for two examples), and spending priorities rarely align. I'd suggest some serious discussions and planning... However, if he plans to maintain his job, it may not be as serious of a problem. Of course, after he sees you not w$rking, he may change his mind...

+1
Usually have to be on the same page with money issues.

 

[Bob_Walter]

What about health insurance?

 

[fiwantbe]

Sorry, but that doesn't seem like a sound backup plan. Selling used 'toys' usually results in a 30-70% loss on the purchase price, especially with used vehicles and electronics. $ can be the root of significant problems in marriages (mine and my parents, for two examples), and spending priorities rarely align. I'd suggest some serious discussions and planning... However, if he plans to maintain his job, it may not be as serious of a problem. Of course, after he sees you not w$rking, he may change his mind...

Yes. You are right about married couple should be on the same page financially. If I decided to leave my husband and marry someone else, my first criteria will be FIRE minded. However, no plan to divorce and definitely not re-marry anyone else. We married relatively young (25/28) after 2 years dating so we’ve been together for 22 years. We were pretty opposite when come to money. We are very much in-sync with everything else. I would say 99% disagreement is money related. Although, over the year we’ve compromised. I become more willing to spend money for fun and he is more willing to save.
We still have many differences in terms of money, like I want early-retirement and he wants to keep working. I feel if he wants to keep working to pay for his hobby, that’s his choice. I made my choice to save my money for traveling and early retirement. I feel this is personal choice which we don’t have to be 100% in-sync. What we need is better communication. I think part of his unwillingness to disclose how much he owes is because my immediate anger after knowing he borrowed money for hobby. I’m making my own changes in attitude so he can be more open about his spending.
Thanks to this forum, I made small progress on that, I calmly asked if he carries any credit card balance and he told me no. Only few thousand dollars no interest financing from PayPal and he is paying installment before the no interest period ends. Least for now, the black whole is not as dark. Hopefully, we can continue improve our money communication.

 

[fiwantbe]

What about health insurance?

Health care is included in the 80k-100K/year FIRE number. Yes, our current expense is $6k/month (72k/year) does not include health care deduction cost. This is the reason I didn’t reduce the expense once FIRE happens instead, I increase it to $80k-$100k to count for health care out of pocket cost. Our current 72k/year expense also includes child expense, like summer programs, tutoring, etc which will no longer apply when we reach FIRE. I estimated $10k/year (2 of us. Child will be 26 by then) for health care deductible once FIRE.

 

[Bob_Walter]

Health care is included in the 80k-100K/year FIRE number. Yes, our current expense is $6k/month (72k/year) does not include health care deduction cost. This is the reason I didn’t reduce the expense once FIRE happens instead, I increase it to $80k-$100k to count for health care out of pocket cost. Our current 72k/year expense also includes child expense, like summer programs, tutoring, etc which will no longer apply when we reach FIRE. I estimated $10k/year (2 of us. Child will be 26 by then) for health care deductible once FIRE.

Sounds good. I haven't retired, yet. But what I did was take all my expenses from the past 8 years and averaged them out per month. I have one bank account, so I downloaded the checking account info, since everything comes out of that. I did it this way as there are no surprises. Going back years will capture those expenses that you might not think of. I also included other one time expenses, such as paying cash for a car, etc. I also included a 10% inflation rate for the expenses that were over 5 years old.

My brother says he keeps everything in Quicken, but I still like using the bank statements as it captures everything.

 

[Koolau]

Yes. You are right about married couple should be on the same page financially.

<SNIP>

I have a good friend. He and his wife are on the same page financially. They BOTH spend more than they take in! He is 76, she is 72. Their net worth is NEGATIVE half a million dollars! I don't even know how that is possible (IOW what financial institutions would have allowed themselves to be on the line for my friend's debt.)

My friend loves expensive toys (cars, boats, racing, etc.). His wife is simply addicted to shopping and spending. Their house is packed floor to ceiling with her "stuff" and the garage is packed with his toys. The single expense that has them in the most trouble is a clapped-out house, mortgaged and second mortgaged to the hilt - and unsalable, even though they have a NEW mortgage on a new place. Again, what lending institutions let this happen??

I would say you are fortunate by comparison to my friend. It also sounds like you are slowly converting DH toward your way of thinking.

Regarding selling toys: YES, that is a viable back up. Maybe not ideal as there is likely a loss involved, but it can make a difference.

I must say, if you are compatible on all other marital aspects, you are to be envied! It sounds like you can communicate - for the most part. That is worth gold! Congratulations!

 

[braumeister]

Their net worth is NEGATIVE half a million dollars! I don't even know how that is possible (IOW what financial institutions would have allowed themselves to be on the line for my friend's debt.)

I assume the ones that allow you to just keep making small "minimum monthly payments". I'm guessing that few of us here fell into that trap, but there are many who do.

 

[Koolau]

I assume the ones that allow you to just keep making small "minimum monthly payments". I'm guessing that few of us here fell into that trap, but there are many who do.

Yes, CC companies allowed them to get back into CC charging EVEN though they went through one of those "forgiveness" companies and got rid of $50K of their CC debt! The one that puzzled me most was the mortgage Co. that allowed them a mortgage on a new home even though they had the old (crappy, mortgaged-to-the-hilt-unsaleable) home to get rid of. Eventually, they defaulted on that home. They DO have decent income. They have 2 SSs at near the top plus a modest pension. Best SWAG is they pull in $7K/month. That's livable (with room to spare) in the mid west (farm country.)

With all this, he got dissatisfied with his 800 HP Camaro. Now he has a new project - a late-model Vette which he thinks he can add a super charger, etc. I really like the guy and enjoy his stories. But I just shake my head when I think what he spends. I KNOW he envies me and doesn't understand why I would live in a paid off condo worth what he owes. HE would borrow every cent he could on the condo and buy more toys. I think his philosophy is - He who dies with the most toys, wins. I hope his insurance is good - but I doubt it.

Now returning you to our regularly scheduled discussion since YMMV.

 

[fiwantbe]

I have a good friend. He and his wife are on the same page financially. They BOTH spend more than they take in! He is 76, she is 72. Their net worth is NEGATIVE half a million dollars! I don't even know how that is possible (IOW what financial institutions would have allowed themselves to be on the line for my friend's debt.)

My friend loves expensive toys (cars, boats, racing, etc.). His wife is simply addicted to shopping and spending. Their house is packed floor to ceiling with her "stuff" and the garage is packed with his toys. The single expense that has them in the most trouble is a clapped-out house, mortgaged and second mortgaged to the hilt - and unsalable, even though they have a NEW mortgage on a new place. Again, what lending institutions let this happen??

I would say you are fortunate by comparison to my friend. It also sounds like you are slowly converting DH toward your way of thinking.

Regarding selling toys: YES, that is a viable back up. Maybe not ideal as there is likely a loss involved, but it can make a difference.

I must say, if you are compatible on all other marital aspects, you are to be envied! It sounds like you can communicate - for the most part. That is worth gold! Congratulations!

He is not as extreme as your friend. He does not collect expensive cars which he often use as excuse for his hobby. He buys way too many plants (orchids, fruit trees, maple trees. my backyard looks like nursery); he likes guitars having 4 of them, 1 being custom made Spanish guitars and he collects vintage chess sets. His toys are smaller in sizes and prices.

Before we got married. I kind paused on the fact we are on the opposite side with money. I'm super frugal and he is spendy. Then, I thought if we both frugal, life would be less fun with 2 penny-pinchers. If we both spendy, then we will be broke. Maybe being different, we can somehow help each other.

It took us almost 20 years adjusting and finding the middle ground. Like if we go shopping for household items together, he will always pick the most expensive one and I always go with the cheapest. Then, we will somehow come to the middle priced one with what we need not what we want.

 

[fiwantbe]

Latest update for the new year:
Last year ended in a great shape. Our retirement accounts have passed 1.5 million mark. Hoping to pass 1.6 million mark by the end of 2021.
Our taxable brokerage and savings accounts have passed $170k and our mortgage balance is down to $150k. This is a big milestone for me last year knowing I have enough liquid asset to pay off the house. Hoping to pass 200k and get the mortgage down to $120k at the end of 2021.
I've decided to stop contribution to kid's 529 but instead putting money into UTMA and brokerage accounts to allow the flexibility. Guessing kid's future game coursing me anxiety, I think this is best way at the moment.
We also had better financial communication. DH told me he has 8k hobby debt and he will never go over that amount because he can't manage more than 8k. If anything happens, all his "toys" and car can be sold to cover this debt.

 

[Free2030]

Sounds like you're made very good progress, both on the communication and financial fronts. I am in the minority like you in that my husband and I aren't on the same page when it comes to spending. I am a saver and LBMM, and he likes to live in the moment and spend money on expensive electronics, shoes, and watches. To minimize my stress and avoid marital conflicts, we also decided to have separate accounts and credit cards. It's worked wonderfully and I now feel like it's a sustainable situation. My FIRE planning is based on my finances knowing he will contribute to a very limited extent. I have accepted it and will make it work (plus divorce would be a lot more expensive!!).

I am now working on a document that tells him if I die, what he should do with my money (where to find it, how to invest, how much he should withdraw a year) in order to support the kids and reserve enough to not run out. Hopefully it won't be needed!

 

[fiwantbe]

Sounds like you're made very good progress, both on the communication and financial fronts. I am in the minority like you in that my husband and I aren't on the same page when it comes to spending. I am a saver and LBMM, and he likes to live in the moment and spend money on expensive electronics, shoes, and watches. To minimize my stress and avoid marital conflicts, we also decided to have separate accounts and credit cards. It's worked wonderfully and I now feel like it's a sustainable situation. My FIRE planning is based on my finances knowing he will contribute to a very limited extent. I have accepted it and will make it work (plus divorce would be a lot more expensive!!).

I am now working on a document that tells him if I die, what he should do with my money (where to find it, how to invest, how much he should withdraw a year) in order to support the kids and reserve enough to not run out. Hopefully it won't be needed!

I'm so happy there's someone here in the same group as me. Not managing DH's finance has reduced so much conflicts and anxiety from me. We could actually sit down talk about money vs. in the past, he doesn't care how things are paid. Ever since having separate accounts, I could actually have much clear FIRE timeline for myself as long as I cover my part of expense. I feel such freedom.

 

[Free2030]

I'm so happy there's someone here in the same group as me. Not managing DH's finance has reduced so much conflicts and anxiety from me. We could actually sit down talk about money vs. in the past, he doesn't care how things are paid. Ever since having separate accounts, I could actually have much clear FIRE timeline for myself as long as I cover my part of expense. I feel such freedom.

Totally. I used to feel that I was the only adult in the family! Now at least we're sharing the burden of acting responsibly. Even though he's not doing what I would do, I've quit trying to change him and am much more at peace!