Out of the shadows after six months of lurking

[catman2020]

I've been a member for about six months, but this is my first post. I'm coming out of the shadows primarily to express my gratitude for the forum and how it’s helped me evolve towards FIRE.

I would say that I (and DW) were a high-earning/high-spending/OK-savings type of household. We had a good 'offense' in terms of income and decent savings by most measures, but we were on track for what would probably have been a comfy, traditional retirement in my mid-sixties (in about 10 years), so we didn't have a great 'defense' in terms of keeping our spending down and our savings up.

In the past few months, we've taken some major steps, including moving out of our (tasteful ) McMansion into a smaller, but more comfortable house in the same town (we still have kids in the local school system and didn't want to disrupt their lives too much). Overall we are much more content and comfortable in the new house - which is less than 1/2 the price and has less than 1/3 the property taxes of the old house.


The move along with some other changes has translated into pulling my FIRE timeframe from about 10 years to about 3 years.

Our housing costs are still kind-of high as we settle into the new house - it was a bit of a fixer-upper. So I am going to use 2015 as a new baseline for spending and revisit how quickly we can FIRE, or at least reach FI and keep working if that is what I want to do.

For anyone looking for some additional resources to help think through their priorities regarding money, etc., here are a few books that I found helpful:

- -- Stop Acting Rich and Start Living like a Real Millionaire by Stanley
- -- How to Retire Wild Happy and Free by Zalinski
- -- Retiring Sooner by Kirkpatrick
- -- The Power of Now by Tolle
- -- What Happy People Know by Baker and Stauth

 

[Walt34]

Welcome to the forum and congrats on starting to think about this sooner than later. An example of what not to do is the sister in this post. There are way too many of those still to wake up coming.

 

[meekie]

Welcome and Congrats on doing so well!!

I've been working a lot on happiness lately, so What Happy People Know will be put on my list.

 

[MBAustin]

Welcome and congratulations on your much-shortened ER timeline! As you have figured out, we're a friendly bunch with lots of opinions on just about anything, so jump in!

Ditto meekie's comment - What Happy People Know sounds worth reading.

 

[KrissK]

Thanks for the suggested reading. Ordering Kirkpatrick's book now!

 

[Travelwanted]

I have read What Happy People Know. . .excellent read on many levels.

I recommend to friends regularly. $10 on Amazon.

 

[Blue65]

Welcome Catman!

How did you feel about the downsizing? Your family still sounds young, and my kids are in college and I'm having trouble giving up my larger home, because I always feel like we need the space still. I'm always curious if the numbers really work out, especially since you are putting money into the new house still.


Sent from my iPad using Early Retirement Forum

 

[catman2020]

Thanks for the comments and questions.

I've been fantasizing about early retirement for some time, but hadn't really taken any action or gotten DW on board, but I was doing a bunch of studying and came to a few conclusions about what seems to help bring about a happy retirement regarding housing:

- Downsize sooner rather than later
- Pay off mortgage before retirement
- Do updates to retirement home/establish retirement budget while still working

I discussed it with DW over a period of time and around six months ago we pulled the trigger and decided to set early retirement as a goal and start taking action towards it.

We moved within an affluent zip-code/town from the higher end area to a lower end area, so it was not really a drastic move in some ways - kids still in the same school, friends still around (although some a bit curious about why we were selling our 'dream house')

Overall, we are more comfortable in the new house. Its a more manageable size, the old house was really overkill for size.

In terms of economics, here are some details:

Old house sale price = $1,860,000

MINUS:
Commission/moving costs = $90,000
Purchase price of new house= $725,000
Mortgage on old Home= $340,000
Updates to new house = $100,000

Net savings from sale = $605,000 @ 3% = $18,000/year
Change in property Tax = $38,000-$13,000 = $25,000/year
Cut 3% interest on Mortgage = $10,000

Total increase in available cash flow available for retirement from move = $53,000/year - not counting any loss in tax benefits

This change helped bring my FIRE much closer - based on Firecalc. I'm also looking for other savings both conscious and unconscious as we move out of a high consumption type neighborhood to a somewhat more moderate one - this is one of the keys that Stanley points out in his various books on Millionaire Next Door.

I guess we are one of those 'crazy' folks who have pretty high net-worth, but I'm still working, in the part to support a high consumption level. The kids play a role in that, but its also just lifestyle choices that DW and I have made.

Also, I have been working for a family business so just 'quitting' is not as easy as it sounds. I've also have a pretty high fear factor regarding withdrawal rates/etc. in retirement. I'm working on both of those issues now. I will say that the lower non-discretionary spending from the move and particularly paying off the mortgage has been a real stress reducer.

Thanks again!

 

[38Chevy454]

Old house sale price = $1,860,000


Purchase price of new house= $725,000

That is a significant difference! It sounds like the new house is just fine for you and the extra savings and lower costs will both benefit your retirement.

You are still in the same basic area, so less disruption of schools, friends and social network for your kids; and for yourself as well. Changing your mindset from high spending will soon pay off.

 

[Live Free]

Thanks for this post. It is inspiring!

I really want to downsize to significantly increase retirement savings. We don't have a McMansion - but we could certainly live in less space and be perfectly happy.

DH isn't quite on board yet, but I've laid out a timeline of 3 years for moving out and moving on. I'm ready for something different and would even love to entertain buying in a different state and starting a new life (after youngest is off to college).

 

[catman2020]

Hi,

I really thought about / and talked to DW about moving out of state, we live in a relatively high cost / high tax area and our money would stretch further somewhere else. I thought the kids would adjust etc., but that was a real sticking point with her - wanted to keep the kids in the same school system, stay close to family - which is probably the right decision in the long run.

We came together on the decision when I took the big - out of state - move off the table, and just focused on the downsizing -- She was tired of all of the running around and upkeep associated with the old house also, so she is totally on-board now.

Thanks!

 

[Blue65]

The comments from these posts are very helpful to me. I sometimes feel like since I have to work anyway, even if I downsized, the monthly payment would be the same because I would have to pay down the smaller mortgage in the new house. I wonder if the price appreciation on our present house over 10 years plus the rising equity would get me to the same place without the move right now.

If my kids love our house so much, asking for rent when they finish college wouldn't be out of the question...I guess I fear they will be with us forever until they fully launch and I would like to be comfortable and not be on top of one another.


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