50 year old lawyer seeks enlightenment as to ER

[meanmrmustard]

Hi. I’m 50 year old lawyer. Wife same age, home with 4 kids aged 11 – 19. Downtown Toronto Canada. House paid off in 1999 (mortgage interest not deductible here in great white north, so greater incentive to pay it off asap). No debt. Savings, mostly in equities, $4 million (above and beyond house) achieved through combination of high earnings (varies widely year to year, but in good years can reach $1.8 million pre-income tax), relatively low spending (small house, two mediocre cars that we typically drive for eight or ten years or until they give out, fairly unsnazzy life style mostly consisting of long hours at work and making most of weekends with kids) and reasonably successful investing (about 7% per year compounded since January 1 2000 v. indexes which gained little or nothing over same period). Strong interest in investing. Must read Wall Street Journal every day, plus UK and Canadian financial and general interest papers or suffer junkie-like withdrawal symptoms. Hard to give a precise figure on annual spending because money seems to leak from many holes in the bathtub on teenager/kid stuff such as lessons, money for movies, concerts, skiing, clothes, food (difficult to dine out with family of six for less than $150), excursions, once a year trips (travel is expensive when you have to pay for six airline tickets and two maybe three hotel rooms). I would say maybe expenses are maybe $100,000 per annum, excluding income tax (many $hundreds of K every year paid in income taxes – by far my biggest expenditure). Three younger kids are in public schools which are good here, but oldest is in university at lower cost (roughly 16K per annum all in) than would be the case in the US because government subsidizes universities to a greater extent than in US. Health care is “free” (i.e. my taxes pay for our family’s plus many other people’s). I practice litigation in highly complex and specialized field. Hours ridiculously long. Much drudgery. Antagonism with other lawyers common. Court appearances and cross-examinations are stressful, even after 25 years of practice. Not surprisingly, early retirement has crossed my mind.

My assessment (if you disagree, let me know) is that ER is achievable financially. If I stop working extraordinary income taxes would mercifully stop. (There would still be taxes on interest and capital gains). Calculators, including the excellent FIRECalc calculator, seem to indicate no “failure” (i.e. won’t go bust), even in worst market scenario. “Retirement” would probably consist of spending a lot more time on investing, with possibly better results (can’t be sure), not much travel since kids are in school. Moving not feasible due to kids in school, aging parents in city, social and emotional links etc. I would pursue various creative or athletic interests. I was a commercial artist and free-lance writer back in law school days (law school is boring as hell, ya gotta do something to keep yourself entertained).

I just found this site. Seems great! It makes me wonder: why I am still working?

Hmmm. Various alternate, contradictory theories (I’m spilling my guts here people!): (1) Duty to clients: I’m in the middle of various lawsuits, most at appellate level, can’t leave clients in the lurch; (2) Theory 1 is a lie, no one’s irreplaceable; real problem is I’m chicken; (3) Duty to partners: I’m head of firm and rainmaker; partners and associates screwed if I leave as legal work might go elsewhere; (4) Theory 4 possibly a lie, reality maybe is it’s hard to walk away from prestige of being court room big shot (much as I may despise the life), might be hard to adjust to being anonymous guy in sneakers hanging around the public library; (5) Don’t know what I would do with myself and don’t want to face possibility I’d wander around uselessly; (6) Theory 5 probably a lie, as I have many interests and like to read a lot, plus I work out fairly seriously and would love to do more in that department, also both my parents and wife’s are aging and will need assistance and more help soon.

Another thing. I throw this out for what it is worth, and would be interested in comments. I do not know a single person who has retired early. Occasionally lunching with lawyer/business types who I assume may have similar assets, I ask whether early retirement is in the cards. The response is astonishment. I am not sure if this is because people lack the money, so the option has not seriously occurred to them or because they love the life they lead.

 

[aaronc879]

If the $4M is after tax then I would say your good to go financially with your stated expenses. If you get along with the people at your firm and don't want to leave them hanging then I would suggest that you give them notice. I'm not talking the customary 2-weeks but more like 6-12 months. Give them time to figure out what they'll do without you. Maybe slowly decrease you're role even if that means less money.

Welcome and good luck!

 

[Rich_by_the_Bay]

Welcome aboard. Re: financial preparedness for ER, unequivocally yes, assuming you protect yourself from yourself within your retirement portfolio, and confine your other trading to play money alone. Really.

As to the nonfinancial gyrations that you identified, I have had very similar issues if not in the same priority. My solution was to fade out by working under half time until I either decide to keep that going, or just find the work to be too much of a hassle. Like yourself, I am in a high profile role in an intense environment, and still haven't figured out how much of my self-image is tied up in my work (a lot, to be sure), and I really like much of what I do.

Retiring at my age of almost 61 is considered early in my world, and is very counter-cultural. Everyone was concerned that maybe I was ill, or wondering how I would avoid stagnation. We'll see, but I doubt it given numerous outside interests and scattered kids and grandkids.

PS: I gave 4 months notice and agreed to hang around very part time for a few more months to help recruit and break in my successor.

Anyhow, congratulations on your impressive asset accumulation. Whether you retire or not, you have achieved financial independence early, no small feat.

 

[Westernskies]

You have the assets, get off the hamster wheel!

Case closed, counselor.

Welcome to the forum!

 

[RedMist]

Although not in your field, but being in a similarly financially-rewarding industry, the feelings you have developed are not unique, at least to me.

There are certain aspects of my job which I like a lot and other aspects which I absolutely hate. I think regardless how glamorous, lucrative or powerful a job is, the daily drudgery part will wear someone out over a long haul (20+ years).

For me, I wish I could take a long sabbatical (6-12mon) to get away from it all and rejuvenate. But I don't think I can do it because I work in a large firm and lots of things aren't within my control. Maybe a long sabbatical is what YOU need. Since you're the principal of your firm, you surely can plan ahead and delegate projects accordingly to accommodate a long leave.

Just my 2 cents.


RedMist

 

[Rambler]

You could be ready, financially you appear pretty well set. Emotionally? well you have to be the judge...pun intended.

We are within 10% financially, age 48, similar swings in income due to good years and less good years, but with the downturn I agreed (about this time last year) to hang around until end to 2012. Its Just DW and me at home now, but with 2 kids in college, the expenses are still kinda high.

Personally I am debating with myself about whether I can fully punch out or do something similar to what Rich in Tampa is doing, something part-time as I fade out. In my case, I am considering a Board seat or two, maybe current megacorp, or maybe a couple of smaller firms, but still have a couple years to get that worked out. I enjoy some of what I do, but not all of it. (For example, I am writing this from the airport in Shanghai, a city that I really do not like...but I really get-off on the success that I have helped bring to my mega-corp and to the people who work with me. There are just lots of plusses and minuses).

I guess what I am trying to say is: if you are the rainmaker, could you not do much of the rain-making with a lot less time than you are spending now? Could you not get the work and direct it, but do less of the litigation yourself? If you are the head, you really do need a succession plan (that is another reason I agreed to stick it out until end of 2012...my successor is not yet developed and ready). Do you have partners who you are comfortable with as potential successors? If not, then you have not done your job as head of the firm...sorry, that is just the megacorp sr manager in me coming out. Also, if they are not ready to take the reins, how did you intend to deal with this issue when you were in your 60s and REALLY needed to slow down?

Sorry, don't mean to rake you over the coals...that's not my intention. Just wanted to give you some food for thought. When it comes to ER, there ARE a lot of things to consider...your finances, your family, your firm, your people and their livelyhoods considering your importance at the firm, and the "whaddya gonna do with your time?" questions.

Just some food for thought. Stick around here and keep us posted on the progress of your considerations. I'm interested to see how it all works out.

Good luck!

R

 

[Katsmeow]

Like several here, I am also an attorney. I posted a few weeks ago that I didn't think that I knew any attorney who had voluntarily retired, whether early or not. I can certainly hypothesize some reasons for it.

I am mid-50s hoping to retire soon. I do think that there is to some extent an ego component for some people or even just the feeling of being someone who takes action and does things. Many attorneys are workaholics and, as you know, don't understand someone not wanting to work long hours, let alone retire. For me, the high stress level is a huge factor in my wanting to retire. We don't have as much saved as you do but feel we'll be OK.

The only caution I have for you is that you don't know your spending. You really need to get a handle on that and make sure you are right on your estimates.

I am not saying you have to have the same spending in retirement. I am actually looking forward to simplifying certain aspects of life resulting in a lower expense lifestyle. But, I have kept detailed expense records for years.

 

[clifp]

Interestingly I know two attorney who retired early (neither was partner). One of my best friends an IP lawyer at prestigious firm decide that he didn't want to become partner, ask to be allowed to work part-time, was refused and then quit. He does occasional consulting work (and lives a very spartan life). The other moved from private practice to corporate counsel at Intel. (#2 or 3 I think) and then retired from the law and is currently acting in regional theater. The guy had a great voice, and would burst into show tunes at the drop of a hat, by far the funniest lawyer at a party.

Evidently this harder for lawyers to do than most other professions but why not take a 6 month or 1 year leave of absence? That is what I did before ultimately deciding that working is overrated. Of course you'll face resistance from your fellow partners, but you can't be the first partner to leave. Ultimately an orderly wind down I think is more appreciated then a "I'm mad as hell and I am not going to take it anymore moment."

Rambler is absolutely right we all eventually retire, the only question is do you go out at the top of your game, gentle pushed out the door, or sometimes shoved, or worse case feet first in an ambulance.

Good luck and welcome to the boards.

 

[traineeinvestor]

I'm another private practice attorney working as a partner in a large firm hoping to retire early. I should hit my number at the end of 2011 but will scale back to part time work for 1-2 years after that (i) to give me an emotional transition and (ii) as a safety cushion on the finances as I really do not want to be forced to resume working after I FIRE and the money will have to last me/my wife for 40+ years.

The two year part time retirement should allow the firm to transition clients and the lawyers in my team with minimal disruption.

If you are not sure about retireing emotionally, you could consider either (i) a sabbatical or (ii) stepping down to a part time position. In the circumstances you describe, I assume your fellow partners would be flexible. If there is no one within the firm who could step up, it may be time to consider a lateral hire ( which I appreciate can take a long time to bring into a firm and even longer to fully integrate).

While the reasons for staying may have some validity (only you can know that for sure), you may want to scroll through this thread for some reasons why people should retire: http://www.early-retirement.org/forums/f28/the-case-against-retirement-47731-7.html#post891353

The subject of lawyers retiring early is one that has come up before. In my current firm, several partners retired at year end (which is normal). Two were in their early fifties.

I agree with Katsmeow on the expenses. Once you have a handle on the expenses you will know if you are good to go financially. That said, your numbers look good to me. Query whether you will also get some capital back from your partnership when you retire.

My pre-retirement planning includes:

1. track expenses on a daily basis starting in December 2009
2. produce a long list of things to do in retirement (I'm actually starting on some now)
3. put in place medical insurance for the family which will continue once I leave my firm's medical plan
4. put a bit of work into that part of my social circle which is independent of work
5. make sure mrs traineeinvestor is fully on board with our family having no income

 

[donheff]

My assessment (if you disagree, let me know) is that ER is achievable financially.

Based on your description of your current (non tax) spending you could safely expand your lifestyle in ER.

Duty to partners: I’m head of firm and rainmaker; partners and associates screwed if I leave as legal work might go elsewhere; .

My wife has effectively retired from a major firm starting this week. She brought in a new group to her practice a couple of years ago and feels a bit of the duty you mentioned. She worked out a continuing relationship with the firm to handle that. She cut back to 1/2 time two years ago and closer to 1/3 time last year. This year she will be pretty much retired but remain as a non-equity partner on a sort of retainer with the firm so she can be involved with new clients she brought in last year and participate in some limited business development. You might set up something of that sort although, as I am sure you know, your perceived worth to potential clients will drop rapidly with you not around on a FT basis to hand hold.

 

[chris2008]

Hi,

This comes from a 51 year old corporate counsel, planning to ER in 2012.
My 2 cents: Please track expenses in detail (with at least as much effort as your investment research) before you make an irrevocable decision.
With your stated expenses and 20(?) years in practice, your income and ROI there should be more than 4M and a house.
My guess is that there is more than one hole in the expenses. Identify them!
It really is not “…Hard to give a precise figure on annual spending because money seems to leak from many holes in the bathtub on teenager/kid stuff such as lessons, money for movies, concerts, skiing, clothes, food…” once you have started tracking your expenses.
And corrective measures against holes are easier now than later under pressure.

We track in detail for several years now. So when we retire we know exactly how much we need (at least at todays prices) to keep our current lifestyle.

Good luck,
Chris

 

[chris2008]

... and, as someone recommended in another thread, try to live on the projected ER budget for at least a year while still working and before you take a decision.

Chris

 

[Rich_by_the_Bay]

With your stated expenses and 20(?) years in practice, your income and ROI there should be more than 4M and a house.

Chris your points are well taken, as is your caution.

OTOH, the man has a paid-off house, no debt, $4mm + in investments, a $1.8mm annual income for at least a few more months, dividend income taxed at 16%, low cost tuition, and minimal health care liability. Could he blow it? Sure, but if you can't make it on that, we're all in trouble.

I agree with a careful look at expenses just as a sanity check. But I'd trade financial situations in a heartbeat .

 

[LOL!]

Maybe I mis-read his income level, but the high amount seems a one-off occurrence rather than a continuing amount.

 

[Milton]

By the sounds of it you are likely in a position to retire now if you wish, but as Katsmeow suggests, no one can say for certain because you don't really know what your total expenses are. Your rough guesstimate of 100K should not be considered reliable, and you would do well to keep track of all of your spending for the next six months or so.

Have you read Your Money or Your Life, by Joe Dominguez and Vicky Robin?

Hours ridiculously long. Much drudgery. Antagonism with other lawyers common. Court appearances and cross-examinations are stressful, even after 25 years of practice. Not surprisingly, early retirement has crossed my mind.

No kidding.

FWIW, here are my comments on your points (1), (3), (4) and (5):

(1) If you have a decent practice, you will always be in the middle of various lawsuits, so that isn't worth considering. In any case, (2) is correct: no one is irreplaceable and clients come and go, so why not lawyers? You do not owe them your life.

(3) You don't know what will happen if you leave: it should be possible for you to pass on at least some of the work, which will build your partners' and associates' personal practices and should be welcomed by them.

If the other lawyers in your firm are so weak or inexperienced that you cannot count on clients remaining with the firm after you're gone, you need to work on developing their skills and promoting them to your clients.

(4) Prestige is nothing but high regard in the minds of strangers (what do you care what strangers think? Do they care what you think?). And I don't know of any litigation lawyers that are really a 'big deal' in anyone's minds but their own. You are not J.J. Robinette.

(5) This might be a big problem (although (6) suggests not), but if so you can easily fix it. Start cutting back on your hours and develop some outside interests and hobbies.

I do not know a single person who has retired early.

Well, there are plenty of people on this board in that position! So you now have plenty of anonymous 'friends' who will be happy to share their experiences.

May be of interest: Early Retirement.

Occasionally lunching with lawyer/business types who I assume may have similar assets, I ask whether early retirement is in the cards. The response is astonishment. I am not sure if this is because people lack the money, so the option has not seriously occurred to them or because they love the life they lead.

Another option: confessing that one is contemplating early retirement is not exactly a career enhancer, and many lawyers are champion gossips. I suspect that some of your colleagues with sufficient assets to retire may perhaps be contemplating doing so, but are too discrete to mention this to you.

 

[Achiever51]

Hi, MMM -- and welcome to the forum!

Although I'm not an attorney, I did have a very high profile career in MegaCorp with significant "psychic perks" that provided many once-in-a-lifetime memories. When I decided to retire early, some people simply couldn't believe that I could walk away -- but long ago, I separated myself from the job and I understood that WHAT I did was not the sole definition of WHO I am.

After I left MegaCorp, I wasn't really ready to retire fully, so I took on a challenge of running a local non-profit organization. After five years of that, I stepped down and now have enjoyed (truly enjoyed!) the past three years of retirement. I still volunteer for several charities, and would suggest that non-profit volunteerism is a wonderful way to stay active.

Unlike you, I DO know a number of very successful former lawyers, all of whom have created very very fulfilling next chapters of their lives. You apparently have the financial means to do it; now it's up to you to figure out when to take the leap.

Life is short and you don't get a chance for a do-over. If the life of an attorney isn't doing it for you, here's your opportunity to find out what does.

 

[FUEGO]

I'm currently a non-practicing attorney, so here's my thoughts. Develop a transition plan. You sound like a key person at your firm. It sounds like you are financially ready to ER. Sit down with your other partners and discuss with them that you are ready to make the transition into the next stage of life and want to make it as easy as possible for all concerned. 2-4 years seems like plenty of time to go to 1/2 time to 1/4 to no time. Get rid of active case management and actual legal duties - delegate them to others over the next year or so. Focus on rainmaking and training others to make said rain. Take the opportunity to hand off new/old clients to your other partners and/or sr associates as time goes by.

This gives you a slow winding-down of your practice and a nice transition into ER. And saves you a ton of taxes. And keeps up good relations at the firm. Who knows - with reduced hours and reduced stress after a year or two, you may still like it and be able to stretch out the part time rainmaking role - ie "of counsel".

 

[meanmrmustard]

I logged in toward end of working day, expecting maybe one person would have posted some flippant answer to my post. Instead, I find many responses, every single one intelligent and thought provoking. I'm taken aback! Thanks guys! It's going to take some time to get my head around all the comments, some of which require some serious thinking on my part. A few quickie answers and comments:
aaronc879: advance notice to others in firm makes sense. I've been procrastinating bringing RE up. Why? Dread? Uncertainty? Dont know.
Rich in Tampa: Thanks. Gradual transition a good idea.
Western skies: Maybe it's that simple!
Red Mist: Can't see sabbatical for me. It wld piss everyone off. Might be great for you.
Rambler: Yr thought about succession plan a good one. Frankly I never really thought of what happens at firm if I get hit by a bus tomorrow (despite having read innumerable articles about succession problems in megacorps and everywhere else). You're right I have a responsibility. It also leads into discussion of issue: what happens if I RE. They are similar issues from point of view of firm. Never been to Shanghai. Want to go.
katsmeow: interesting that you also don't know other lawyers who RE. Probably true there's ego involved, foolish as it is. In novel Right Stuff, which I read years ago, what stuck in my mind was "ziggurrat of prestige" that military flyers must climb. They need impress the other pilots with flying machismo, but know that no one else outside their community knows or gives a ****. Weird. This law stuff is like that. A part of me needs to be the meanest, hardest working, smartest, toughest under pressure, guy with biggest court wins, striving for respect of my small group of similar legal types. Maybe its the same with surgeons. Where does this come from? It makes no sense. You're right re expenses, as per various other comments
clipf: I know lots of lawyers, at junior levels, who quit to become a [fill in blank], go in-house, travel the world, go to get some masters/doctorate degree etc etc. Legal profession is full of these over-smart, over-educated wanderers. I have interviewed many looking for jobs. What's rare as far as I can see is the 50ish type whos been in the thick of it for years, made a go of it, earned some bucks, who then REs, maybe because such people see themselves as tough survivors who have hung in there through thick and thin while others fell by the wayside, because such folks by habit base their self-respect on that survivor I-can-handle-anything, bring-it-on mentality. Then it seems to be harder to quit, even if possible to do it. See rest of thread. Yr right about the feet first part. A close friend of mine since about Grade 8, also a lawyer recently died unexpectedly of a heart attack. Food for thought!
tranineeinvestor: agree and thanks for thoughts. Lateral hire thing hard because what I do is very specialized. See above re expenses. Pretty sure they're OK because both me and wife have gone out of way for years to be frugal. Unspoken deal with wife: I don't make herkeep records, but she won't spend much. It works but I sometimes I wish I knew the details better. At the firm I know where every nickel goes.
donheff: fascinating about your lawyer wife retiring this week, and her transition. Can I ask age?
Chris2008: I don't know if should be more assets. $1.8mm earnings has been last two fiscal years, but has been a big upswing in recent years, more in few 100K per year typically previously, lower in current downturn likely. Like I said it goes up and down. I hear you about expenses. OK already! I guess I'll try to figure it out. Basically, unspoken deal with wife has, as above been she'll be frugal, and I know that's true, but she'll be damned if she's going to enter every expenditure on some spreadsheet, like in Your Money or Your lLfe. We're busy as hell. Plus there's four kids. Partly we haven't worrried too much because we know big items are under control. Mortgage paid off years ago. Cheap cars. Few trips. Rarely buy furniture or any big ticket item. Don't renovate.
MILTON: OK OK probably right, gotta get better handle on expenses. Yes I've read Your Money Or Your life years ago, and in fact that was what prompted my last unsuccessful attempt to get some recordkeeping going on expenses. Not not sure why I find this so hard. I guess its (a) six people involved, and (b) my wife's master of home domain, and not a record keeper by nature, although she's generally frugal, thank god. Maybe time for a talk. Thanks for thoughts re work-related hang-ups. You must be Canadian, and you're right I aint no JJ Robinette.
ACHEIVER: agree
FUEGO: You're right. A plan, and talking to other folks in firm of course makes sense. So far I have not brought this up at firm. Nor have I put pen to paper even privately as to transition steps.

 

[Milton]

Can't see sabbatical for me. It wld piss everyone off.

A sabbatical may not be possible in your situation; but don't discount it just because it [-]would[/-] might annoy other people. FIRE generally involves thinking about what's right for you and not worrying about other people's (perceived) desires. Your primary responsibilities are to yourself and your family.

See above re expenses. Pretty sure they're OK because both me and wife have gone out of way for years to be frugal. Unspoken deal with wife: I don't make herkeep records, but she won't spend much. It works but I sometimes I wish I knew the details better. At the firm I know where every nickel goes.... Partly we haven't worrried too much because we know big items are under control. Mortgage paid off years ago. Cheap cars. Few trips. Rarely buy furniture or any big ticket item. Don't renovate.

Sounds good. But no one is suggesting that you (or your wife) spend too much money. The point of the keeping track of expenses is not to reduce them, but to ensure -as much as possible - that your passive income will be sufficient to cover your foreseeable needs in retirement. While the exercise is not strictly necessary, it does provide peace of mind for those of us who are victims of this problem: http://www.early-retirement.org/forums/f29/handling-the-just-one-more-year-syndrome-20091.html.

 

[plex]

I strongly agree with doing a final, and thorough, audit on your expenses. It is the keystone to ensuring you can retire right now. With your assets, there is absolutely no reason for you not to be in a position to retire right now, if your expenses really are fairly close to $100k/year. This is not to cut your expenses, it is just a very important safety procedure before you start the (possibly long) process of winding down.

 

[donheff]

donheff: fascinating about your lawyer wife retiring this week, and her transition. Can I ask age?

She will be 57 next Thursday. She started cutting back at 55. I pulled the plug on an enjoyable Federal career at 56, five years ago.

 

[chris2008]

Meanmrmustard,
When you track expenses the level of detail is up to your decision. YMYL is focussing on lots of detail.
Most people are turned off by recording the small items paid in cash. But cash comes from accounts and as a start you could record the cash amounts taken from the accounts just as "Cash out". If the total per month is very high for several months you will probably find it challenging to go more into detail.
Most of your other expenses also leave a paper trace, be it as invoices, checks or credit card statements. I would start with this existing documentation + create a monthly spreadsheet.
And after a year all this information produces all by itself the total per year.
(My own excel spreadsheet automatically projects all expenses into a column "estimated p.a.". Our total time for tracking takes not more than 2 hours per month, incl. a balance sheet of all assets).
If it is close to 100.000 p.a.: perfect
If it is more like 300.000 p.a.: better know now than after ER.
Chris

 

[mark500]

4) Theory 4 possibly a lie, reality maybe is it’s hard to walk away from prestige of being court room big shot (much as I may despise the life), might be hard to adjust to being anonymous guy in sneakers hanging around the public library; (5) Don’t know what I would do with myself and don’t want to face possibility I’d wander around uselessly;

Your situation is very similar to mine. I have decreased workload the past year and in 6 months plan to decrease it furthur. I suspect the loss of a paycheck and the respect and authority at work will be missed. A gradual change seems logical rather than cold turkey. Also, seeing the deaths of friends and acquaintances their 50s jolts you a little bit, and causes you to ponder mankind's persistent question: What is the purpose of my existence?

 

[Milton]

FWIW (not much!): 35 Year Old PI Millionaire Retires - Lawbuzz.

On a more serious note: Richard Moll, The Lure of the Law (1991), is worth a quick read.

 

[Danmar]

Mustard: Expenses really are key. My wife and I have tracked every expense since 1993. I can tell you how much we spent on clothing in Septemder 2003 ($313). Not as difficult as you may think. Analyse your cheque book and credit cards each month. Obviously you can lump small items together as "cash". These items are about 6% of our current spending, very consistent, and include such things as groceries, taxies, cleaning ladies, books newspapers, etc. Should also have a net worth section in your spreadsheet so you can track that over time. Ignore real estate assets-treat them as expenditures. I am really good at this stuff. It helps that both my wife and I are accountants I think. In our case biggest discretionary expense is travel.