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FIRED @ 45, getting around to introducing myself.
Old 12-03-2016, 08:08 PM   #1
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FIRED @ 45, getting around to introducing myself.

Long time lurker here; studied the forums intensely just over 3 years ago when facing a layoff and considering ER as an option. Great advice, insight, and attitude here.

In a weird twist of fate, DW (same age as me) was also laid off from her job within a week of my layoff. Both of us had worked in the technology industry and had good prospects for finding jobs if needed. We liked our jobs, but were getting tired of the long hours and frequent stress that came from it. I had long wanted to go to a 'part time' status, but in my field that is almost unheard of.

We had always been savers and deep believers in living below your means. Our two children (now 13 and 15) were just getting to a good age where they could travel with us and participate in the outdoor sports we love. So we decided to 'pull the plug'; at least for a year or two to see if it would work for us.

Now 3 and a half years into it, I can't imagine going back to my old life. I can't say that every day is awesome and that I don't get bored some times. Plus, I do occasionally wonder if I'm wasting my potential to do something great (whatever that is...).

We travel a lot as a family and when DW allows it; I do even more travel on my own. There is a limit on how much travel we can do while the kids are in school, but we managed to do a road trip across the US in the summer of 2014. We enrolled the boys in on-line school for the 2015-2016 school year and traveled to S. America, Mexico, and Europe. It really was a once in a lifetime experience and having ample time to go slowly from place to place is the best way to travel in my opinion.

The Finances: Even though I've gone through the FireCalc a couple of times and found that we have enough money to ER, I worry about finances more than I probably should. It's always been a concern for me, and the idea of living the rest of our lives on our existing savings is scary.

Looking back at our expenses, we are going through about $110K per year after ER. My original estimate had us spending less and I think we could make some adjustments to reduce expenses. But, we enjoy this lifestyle and don't feel like we are on an un-sustainable path financially.

401K account: ~$1.2M
Stocks and Land contracts: Around $3M

Rental Income: Approx $2,500/mo after expenses

No pensions. No Megacorp funded health insurance. No subsidy on our ACA plan.

DW and I had predictions of hefty SS checks, but those assumed that we would continue to be high earners. Currently our SS income is $0, so I'm not expecting much from SS in the future; especially if it changes to become means based. Maybe we will be pleasantly surprised, I've been meaning to find a SS calculator that will make a better prediction on this.

We also had several rental houses before ER. In an effort to make more time for the recreational side of our lives; I sold some of them on land contracts to the former tenants. The idea was to create a regular income stream and remove the burden of maintenance, property taxes, and other owner headaches that I didn't want to deal with in retirement. So far it's worked out OK, with the un-expected side effect of creating too much income for us. You wouldn't think this is a bad problem to have, but it results in paying more in state and federal income tax than I expected. Plus, we have to pay 'full fare' on health care which is becoming a major expense item. If I had it all in stocks I could have adjusted our income by selling only when we needed the cash flow and controlling gains (and income) through selective selling. Well, that's the theory anyway. Something to bring up in the forums...
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Old 12-03-2016, 08:56 PM   #2
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Delighted to meet you

Welcome to the forum. I spent several months just reading other folks' posts before concluding it was worth joining so I could ask my own questions. I've only been on for two months, but I have received nothing but friendly, insightful answers.

Your situation reads like a textbook case of happily ever after, and not just in terms of assets. You have an adventurous spirit and are seizing the day, taking your family on extended journeys to interesting places. Good job!

I look forward with lively anticipation to following your future posts.
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Old 12-03-2016, 10:53 PM   #3
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Just curious if "kite_rider" reflects your choice of recreational activity.

Best of luck regardless.
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Old 12-04-2016, 05:58 AM   #4
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You have substantial assets for your age. Well done. I think you will have some challenges with paying for college, but other than that you seem to be in good shape.
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Old 12-04-2016, 08:17 AM   #5
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Welcome to the Forum and congratulation on your achievement. I think if you can manage needed cash flow in on your investments, you are going to be fine.
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Old 12-04-2016, 10:35 AM   #6
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Thanks for the warm welcome to the forum!

Stepford, Kite surfing has been my passion for the last several years. It's taken me to a lot of beautiful places in the world and provides me with a great mix of challenging and rewarding experiences. I'm currently honing ocean wave technique now and considering moving toward the hydrofoil craze next..

DrRoy, would love to hear more on the challenges you foresee regarding college funding. Obviously, this is a concern for many parents regardless of retirement status. Between our parents and ourselves we've set aside approx $160K in 529 plans for the kids and we're still making annual contributions. That's not enough to fully cover the costs of a 4 year education at a public university, and far less than needed for a private university. However, the true 'out-of-pocket' costs are often different I'm told when you consider the combination of need and merit based financial aid. There a lot of threads on this topic already. As a person who put myself through college without any financial help from my parents; I'm skeptical about the wisdom of providing a 'free ride' to children during college. I think college is an appropriate time to get acquainted with the concept of austerity. Also, I don't think college is the most cost effective place to 'find oneself'. A year off travelling, working, or volunteering seems to me to be a better alternative from a financial perspective. Anyway, this is a topic I'd love to discuss on the forum.. Thanks for bringing it up.
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Old 12-04-2016, 10:53 AM   #7
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For college, I think you could establish residency in states with good and cheap public schools. UT Austin costs a bit over 30k per year. So your 529 already covered 2/3 for two kids.
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Old 12-04-2016, 05:00 PM   #8
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Originally Posted by HillCountry View Post
For college, I think you could establish residency in states with good and cheap public schools. UT Austin costs a bit over 30k per year. So your 529 already covered 2/3 for two kids.
+1
"Relocation of residence" can help with taxes too. TX has no income tax (as well as a few others). You are way ahead of the game IMO.
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Old 12-04-2016, 05:43 PM   #9
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So 'land contracts' are basically seller carry. Do you spend that money or do you invest it?
When I sold a business a few years ago, I carried for the buyer. It was nice having the income, but I realized that when it was paid off in full, that income stream is gone, and if I wasn't investing it, I would have nothing to show for it.
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Old 12-04-2016, 06:40 PM   #10
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Hillcountry and Surewhitey, 'hey y'all ' from Texas. Actually, I'm actually writing you from South Padre Island, TX. We bought a condo here about 5 years ago since the kite surfing season is the opposite of the tourist season. So we use the condo during Thanksgiving and Spring Break (when it's cold and nasty in Oregon and nice - for us at least) and rent it out the rest of the year. We get the best short term rent in the summer when it's too hot for us here - but I guess it's relatively nice compared to other parts of inland Texas.

UT Austin is a great school, and Austin is one of my favorite cities in Texas (also really like the Hill country and and I always hang out in Kernville and Comfort on my trips to and from SPI). DW's previous boss - and good family friend - is a UT graduate and he went on to MIT to get his PHD in engineering. It's true that there is no income tax here in TX, but I have to say that the property tax in SPI is more than 3X greater than in Oregon and the 8.2% sales tax (vs 0% sales tax) is something to consider. Also, home owner's insurance is really expensive here. Well, I'm paying those costs anyway, so I shouldn't complain.

Your posts made me look into public education in Oregon as well. Turns out that UO and Oregon State are both around $10K and change per year in tuition which is pretty much the same as UT Austin. FWIW, we also have a house up in White Salmon, WA (a suburb or Hood River, OR) and spend the summers up there. Washington also doesn't charge an income tax, property taxes are low, and you can live the libertarian's dream by making the very short drive across the bridge and buying all your stuff in Oregon where there is no sales tax. UW is a good school too and also charges around $10K in tuition. So that is another place we are considering for relocation.

The hard part for us that the boys are doing well in the public Oregon schools that we're currently in. Our town in central Oregon is a tourist destination and suits us well in terms of recreational opportunities and we like living there too. I don't know if a big move during high school will suit them or not.

On the general idea of 'relocation of residence' - I made to move to California from central Oregon back when I was of college age and established a new residence in Carlsbad, CA with my uncle. At the time, the University of California had no tuition and the fee's were minimal. I feel like I got an excellent engineering education and great employment prospects in California. After graduating, with a modest amount of debt; the good citizens of California were repaid with years of income taxes that I paid while I worked there. So this is a great approach to higher education.
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Old 12-04-2016, 07:40 PM   #11
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Hesperus, the land contracts are indeed 'seller financing'. On average, they are returning around 8%. I fully expected some of the buyers to refinance by now with the much lower rates you can get from Fannie Mae. But they've all held on...

Am I spending this money or the money from dividends, or the money from rental income? I don't know, it's a matter of income and expenses. At present, my family income exceeds our expenses and we invest the difference. If I could control it all, I would cut our income to match our expenses and then avoid the excessive taxes and maybe even set it up to get a subsidy on our health care! That's becoming a major expense that we don't even use. Anyway, I can only control the dividends, and even then I run into capital gains by selling some of the dividend payers.

The land contracts are amortized over 30 years. They are set to adjust for inflation every 5 years; so if interest rates go up - so do the land contract payments. I really expect all the buyers to refinance. If they don't, well then we get better than average returns until I'm well over 75. Seems like a world away... If they default, then I get the property back - at least in theory. Haven't had to cross that path yet..
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Old 12-04-2016, 08:30 PM   #12
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Both Oregon and Washington are good choices. I looked at them but picked Austin instead, where here is more liveable year round.

You have to make up your mind quickly, as your kids are (almost) in high school. My two kids are one year younger than yours, currently in 8/6 grade.
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