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10-29-2017, 02:41 PM
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#21
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by FrugalLady
I don't think you are saving too much. As others have noted, you are a long ways from ER and a lot of unforeseen things can happen, i.e. job loss, illness or injury that can drastically impact your income and even your ability to work at all. The more you save now the more options you will have in the future.
Are you feeling deprived? If so, maybe loosen the purse strings just a little bit. After all, it is tough to stay on a course of action for 20 plus years if you start to resent the lifestyle. But if you are content with the life you are living, keep it up. The end game is worth it.
Definitely don't neglect saving in taxable accounts. Having access to that money may wind up being a crucial at some point.
I was always an extreme saver by nature, and was content with a simple lifestyle. So the things that I missed out on, weren't really the things that mattered to me to begin with. As long as I had money to do the things that truly brought me joy, I didn't miss the trappings of a luxurious life. Fortunately, I enjoy local trips, reading a good book, puttering in the yard, hanging out with family and friends. All of these things cost very little.
Best of luck to you! It sounds like you are on a good path towards ER.
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We live a decent lifestyle now. I’m not missing out on anything. I mean I can sure travel more but with limited vacation time and wanting to slow travel I wouldn’t be satisfied with only two weeks of vacation. The last vacation we went on was Hawaii in May for a week. Next year I’m pushing for 3 weeks for S. Korea. However I’m also happy taking a vacation and not doing anything at all. My all time favorite thing to do is to watch international dramas. I could spend 12 hours straight on a Korean drama marathon. I’m very simplistic and no urges has popped up yet to go anywhere.
The reason why we don’t contribute to an IRA is so we can have a bigger taxable account. I understand the concept of the Roth ladder conversion but my 457 can be withdrawn penalty free when I separate from my employer.
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10-29-2017, 02:44 PM
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#22
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by vtd0918
The increase is actually $1000 not $500. In my original post I said we currently live on $2k a month but expect $3k after home purchase. The current $2k has a lot of extras like eating out everyday that will be cut down as we intend to cook at home on the week days. We won’t have a car payment in 2 years. Cutting food costs and not having a car payment will free up $700 already. We plan on putting close to 40% as a down payment on our house.
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Edit- oops I meant to say 20% not 40%. A decent house around here is $350k.
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10-29-2017, 02:48 PM
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#23
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by ivinsfan
Your original post suggested 20% down..how long do you estimate it will take you to save 40%...In a market like California it seems with rising prices you could be chasing that number for a long time
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I meant 20% but it will take us about another 1.5 years to meet this goal since we will need some cushion for new home furnishings.
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10-29-2017, 06:10 PM
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#24
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Moderator
Join Date: Jul 2017
Posts: 5,762
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No, you are not saving too much. It doesn't seem like you are depriving yourself at all. Down the road when your expenses increase you may no longer have the opportunity to save like you are now.
As the main breadwinner with the good benefits, do you have good term life insurance to protect your SO and daughter is something happens to you?
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10-29-2017, 06:43 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 9,958
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So you are living more then a decent lifestyle with trips to Hawaii and eating out everyday.I suggest you you might want to accelerate your down payment savings and get in that house sooner. Interest rates are likely rising and so are house prices.
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10-29-2017, 09:49 PM
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#26
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Recycles dryer sheets
Join Date: Nov 2014
Posts: 150
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Quote:
Originally Posted by vtd0918
SO wages is our current living expenses. I don’t feel like we’re missing out on anything. We live a happy life and only cut back on travel but other than this one area we quite blessed. The reason why I don’t contribute to an IRA is due to wanting to have a larger taxable account.
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Just a thought, you may want to pay expenses out of both of your wages so some of your SO's wages can go into their 401k. That's one optimization I see you could make.
__________________
The kids used to call me Captain Slow; now they also use Captain Cheap. I tell them, "Talk to the portfolio!"
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10-30-2017, 03:28 PM
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#27
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Thinks s/he gets paid by the post
Join Date: Sep 2016
Location: Acworth
Posts: 1,214
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If your family isn't lamenting the lack of monetary ability to do XYZ that you wish you could be doing, then I'd say you aren't saving too much.
Are you saving "more" than you "need to" for your current plan though? I'd say quite likely. I put the following into FIRECalc:
Spending $54,000/year ($4.5k/month).
Current savings $0.
65 years (20 years pre-retirement to take you to age 50, 45 years in retirement to get you to age 95).
Retiring in 2037 (age 50 for you)
Adding $48k/year until then (your $36k/year current plus your planned $12k/year additional moving forward).
The results came back with:
Quote:
FIRECalc looked at the 82 possible 65 year periods in the available data, starting with a portfolio of $0 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 82 cycles. The lowest and highest portfolio balance at the end of your retirement was $0 to $18,481,135, with an average at the end of $7,991,321. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 65 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
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Now, that doesn't include your pension, or SS (if you or your husband would have it), or your current investment balances (presumably greater than zero), etc. and to get that down to a 95% success rate I still had to pump up the spending by another $10k/year.
So, I wouldn't say you're saving too much, but I would say your current stated goals and spending support a lower savings rate than you're saying you'll have moving forward, especially assuming your current balances are likely greater than the $0 I was using to get those numbers..
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11-01-2017, 07:34 PM
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#28
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Confused about dryer sheets
Join Date: Oct 2017
Posts: 8
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I don't mean to rain on your parade but most long term calculations I have read indicate a pension from CA twenty years from now is highly unlikely. I hope it all works out but as you can imagine, 70% pension after 25-30 years plus free healthcare to a 55 year old who might live another 45 years is *****-pocus at best. I hope the prognosticators are wrong but I'm not sure I would bet my retirement financial future on it.
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11-01-2017, 08:03 PM
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#29
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,211
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A few thoughts -
- First - great job at saving, living frugally, setting up a plan.
- Second - 20% is a good healthy downpayment. And depending on where in California, it can be an achievable goal. Are you near the capital? That's a lot more affordable than 80 miles west of the capital.
- Money is fungible... but retirement savings accounts aren't so much... You are putting your salary largely to savings in accounts that your SO may have not claim to... And he is putting up 100% of your joint living expenses. That doesn't seem fair. But - since money is fungible... he could contribute to his 401k - and you could kick in the equivalent amount towards living expenses.
This last bit is based on the fact that you use the term SO... so not married? If you're married then it's less of a worry because assets (savings) acquired during the marriage are community property - including retirement assets.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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11-01-2017, 08:08 PM
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#30
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,211
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Quote:
Originally Posted by Silverton34
I don't mean to rain on your parade but most long term calculations I have read indicate a pension from CA twenty years from now is highly unlikely. I hope it all works out but as you can imagine, 70% pension after 25-30 years plus free healthcare to a 55 year old who might live another 45 years is *****-pocus at best. I hope the prognosticators are wrong but I'm not sure I would bet my retirement financial future on it.
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I don't disagree that pensions will change for state employees... but current employees are probably in better shape than new employees. When San Diego reformed the pension they kept current employees on the pension, and put new employees on a tax preferred savings with match - but no pension. I suspect any pension reform at the state level will be similar.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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11-02-2017, 09:21 AM
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#31
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,046
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Quote:
Originally Posted by rodi
You are putting your salary largely to savings in accounts that your SO may have not claim to... And he is putting up 100% of your joint living expenses. That doesn't seem fair. But - since money is fungible... he could contribute to his 401k - and you could kick in the equivalent amount towards living expenses.
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I thought I was the only one that noticed this but since there's one other person posting here who gets gender biased pretty easily I didn't want to say anything.
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11-02-2017, 09:51 AM
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#32
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by rodi
A few thoughts -
- First - great job at saving, living frugally, setting up a plan.
- Second - 20% is a good healthy downpayment. And depending on where in California, it can be an achievable goal. Are you near the capital? That's a lot more affordable than 80 miles west of the capital.
- Money is fungible... but retirement savings accounts aren't so much... You are putting your salary largely to savings in accounts that your SO may have not claim to... And he is putting up 100% of your joint living expenses. That doesn't seem fair. But - since money is fungible... he could contribute to his 401k - and you could kick in the equivalent amount towards living expenses.
This last bit is based on the fact that you use the term SO... so not married? If you're married then it's less of a worry because assets (savings) acquired during the marriage are community property - including retirement assets.
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Yes we live in the heart of the capitol. Prices have been creeping up steadily here and I have heard many around me say rent is getting too expensive. We will eventually get married. We have agreed upon this type of set-up as it works for us in terms of savings will be done by me and living expenses will be paid with his check. We’ve been together for 14 years and still have separate bank accounts. When we lived on our own years ago when I earned a lot less than now I was the one who paid everything mostly but not to say this was the reason for of current agreement. We just think it’s easier to do this.
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11-02-2017, 09:56 AM
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#33
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by rodi
I don't disagree that pensions will change for state employees... but current employees are probably in better shape than new employees. When San Diego reformed the pension they kept current employees on the pension, and put new employees on a tax preferred savings with match - but no pension. I suspect any pension reform at the state level will be similar.
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I agree with Rodi. I’m with CalPers. I believe for anyone who was hired after 2013 their retirement age is 62 years old. I was hired back in 2007 and mine is 2% at 55 but the earliest I can go is 50 with a reduced take home percentage. If changes do occur in the future at least all the money that was taken out of our pay for the pension will be given back to us. I guess my savings towards the 457/401 will save us from not having a possible pension when we retire.
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11-02-2017, 10:00 AM
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#34
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by dvalley
I thought I was the only one that noticed this but since there's one other person posting here who gets gender biased pretty easily I didn't want to say anything.
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I guess I never really thought about others seeing it in this way. SO always tells me I’m the smart one when it comes to our finances so he agrees with everything and never disagrees to our plans.
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11-02-2017, 10:06 AM
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#35
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by exnavynuke
If your family isn't lamenting the lack of monetary ability to do XYZ that you wish you could be doing, then I'd say you aren't saving too much.
Are you saving "more" than you "need to" for your current plan though? I'd say quite likely. I put the following into FIRECalc:
Spending $54,000/year ($4.5k/month).
Current savings $0.
65 years (20 years pre-retirement to take you to age 50, 45 years in retirement to get you to age 95).
Retiring in 2037 (age 50 for you)
Adding $48k/year until then (your $36k/year current plus your planned $12k/year additional moving forward).
The results came back with:
Now, that doesn't include your pension, or SS (if you or your husband would have it), or your current investment balances (presumably greater than zero), etc. and to get that down to a 95% success rate I still had to pump up the spending by another $10k/year.
So, I wouldn't say you're saving too much, but I would say your current stated goals and spending support a lower savings rate than you're saying you'll have moving forward, especially assuming your current balances are likely greater than the $0 I was using to get those numbers..
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Thank you for putting our numbers into this perspective. I guess it’s our safety net to save more now since we can than later on when unexpected expenses comes up or even just life gets more expensive with our growing daughter and if we add another little one in the future.
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11-02-2017, 10:12 AM
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#36
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Quote:
Originally Posted by Silverton34
I don't mean to rain on your parade but most long term calculations I have read indicate a pension from CA twenty years from now is highly unlikely. I hope it all works out but as you can imagine, 70% pension after 25-30 years plus free healthcare to a 55 year old who might live another 45 years is *****-pocus at best. I hope the prognosticators are wrong but I'm not sure I would bet my retirement financial future on it.
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In this case savings to my 457/401 and taxable account would alleviate this worry in the future if there’s any chance I won’t see a pension in 25 years.
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11-02-2017, 11:18 AM
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#37
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Full time employment: Posting here.
Join Date: Feb 2012
Posts: 648
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Some perspective
I'm mid-thirties, and also LOVE the travel. It's one thing that adds so much value to my life, in fact. I didn't realize until I turned 30 just how much I missed it (I grew up with a family that often did road trips everywhere... lots of hiking, etc...). Seeing and experiencing the world... new things. In my 20's my "fun" would revolve around going out to eat with friends and getting dragged along to parties, because in the suburbs... what else would someone do with their weekends? And I think a part of me yearned to break from that cycle manifest itself in FIRE planning. So I've always been good there, with the savings.
Something changed in my situation a couple years ago that allowed me to revisit my finances. I decided to start spending a percentage of my income a year on travel and "adventure" as I'd put it - every 3 months or so I pick a new city to explore and off I go for a long weekend. I bought a camera, and took up photography as a means to explore the world and master a new skill capturing what I saw. When I look at my FIRE plans, I know this spending has pushed my FIRE date back a couple years, but I would never give it up. It's enriched my life... and pushing this kind of thing off till 50-53 isn't worth it to me. It's an area of my budget I'm happy to factor in now.
I think one of the risks future oriented mindsets like ours and those on this forum can miss is that the journey is what's important... more so than the destination. Make sure you plan your path in a way that also accounts your ability to feel you're living, and not just surviving towards a goal. On that note, I'd recommend keeping the travel, though strict look at t he budget might say otherwise. Sometimes there are variables at play that can't be put to logic and numbers. Be careful over planning, because you may miss them I know I once was.
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11-03-2017, 12:35 PM
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#38
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Recycles dryer sheets
Join Date: Aug 2017
Posts: 199
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Every dollar you save today will become $8 when your 60. Every dollar you save when you're 50 will be $2
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11-08-2017, 04:17 PM
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#39
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Dryer sheet wannabe
Join Date: Oct 2015
Posts: 19
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Thanks everyone for their kind suggestions and advice. I️ am so grateful for everyone on this forum who have similar end goal to FIRE. I️ appreciate all the posts and replies since I️ know it takes time to type all of it out. My journey is only in its early stages and I️ can’t wait to post more updates as I strive towards FI.
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11-08-2017, 10:12 PM
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#40
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
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Quote:
Originally Posted by ivinsfan
I'm going to drill down a little here and ask, you are a family of 3 who live in a generally HCOL state and can live on a total of 25K a year? How about cars, rent and all the other stuff that needs to be accounted for.
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California isn't that HCOL if not renting and they only pay $300m rent. FWIW: my total utilities run less than 200 a month in California and food's cheap here. So take out housing and it's not HCOL
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