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Texan Newbie here....would like a reality check!
Old 08-30-2007, 01:09 PM   #1
Confused about dryer sheets
Join Date: Aug 2007
Location: San Antonio, TX
Posts: 3
Texan Newbie here....would like a reality check!

Hello to all-

Would like to say that I've only been on this forum for 30 minutes, and I am pleased with what I am reading. Wish I had found it sooner, but better late than never.

First of all, I keep seeing posts about your Fire date....know what it means, but was hoping I could gain some insight on how to calculate mine.

I am about to be 30 here in a few months, and am about to build a new house in preparation for our first child. Scared to death, as this is the first time I'll consider my self in debt. However, we are fortunate enough that her father will be the acting GC, and won't be charging us a dime to do it. We will be putting 70K of our own money into the deal, and borrowing 200K from the bank.

I have about 85K in my IRA (folks started one for me at 12 or 13), another 15K in my 401K, and another 100K in various stocks, etc. My plan is to see where I stand for now, check my projections on my savings alone, and everything my wife and I can save/invest on her money is only gravy on top.

Any idea what my chances are at Early Retirement?:confused:

Thanks, and glad I found this place!!
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Old 08-30-2007, 03:16 PM   #2
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Originally Posted by dahcdahc View Post
Any idea what my chances are at Early Retirement?:confused:
Oh boy! Another d*amn Texan. (Just kidding....I'm just up the road from you.)

Welcome to the forum. Looks to me like you're in pretty good financial shape for someone your age.

According to one most some financial advisers, the answer to your (and most other) questions is: it depends.

Bottom line - how much will you spend each year after you retire? If you can figure that out, then the rule of thumb is to multiply that amount by 25 and that's the size of nest egg you'll need before you can retire. To get a better idea of how pensions, SS, etc. will impact the size of nest egg you will need, use FIREcalc (link in my signature line) to run some "what if" scenarios.

Those who disagree with me will be along shortly to enlighten you...
Numbers is hard
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Old 08-30-2007, 03:24 PM   #3
Confused about dryer sheets
Join Date: Aug 2007
Location: San Antonio, TX
Posts: 3
That's just it, I'd like to figure all of this without SS (lets face it, will it still be here wen I'm due) That way, if it is still around, more gravy.

I don't like factoring in outside tangents when it comes to security. I need a house, and if I owned it F&C and sold it, yah, I'd have another 300K. But then I'd have to find something else, so I'd like to keep that out of the formula too.

Thanks for the reply. 28 views and you're the first. Apparently Texans ARE more friendly than other states....
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Old 08-30-2007, 03:30 PM   #4
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Give me a forum ...
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If you want a pat number/date, you can fool around with firecalc and it will give you a pretty good idea of what it will take to meet your goal.

In reality, there are a LOT of things that will change in the world and your life in the next 10 to 20 years and any forecast you do now should be viewed as illustrative only. Heh, wait until you see how much money kids cost, for example. Instead of fixing on a specific date, I would suggest that you just concentrate on the basic blocking and tackling:

- Make and stick to a budget
- Pay yourself first and make sure you tuck away a good amount of money every year
- Invest in a diversified, low cost portfolio
- Live life and enjoy in the meantime.

You'll probably get there faster than you think, but don't get hung up on a specifc date.
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
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Old 08-30-2007, 06:06 PM   #5
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Welcome! I am also a relative newbie (33 yr old and only been FIRE planning for a few years) so I don't have any sage advice other than to keep reading the old threads here.

As others have said, you seem to be doing very well for your age, but it's hard to draw any conclusions without knowing more about your expenses.

One thing I notice - you mention having some of your $ in "various stocks etc" - do you mean individual stocks? Are they part of a thoughtful plan? Many here recommend index funds or exchange traded funds (etf's) as a FIRE foundation that is more secure than stock-picking.

If you spend time here you'll quickly find excellent recommended reading lists and loads of good information about putting together a FIRE plan. The nice thing is that if you're doing a good job of saving along the way you can't help but be ahead of the game.
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Old 08-30-2007, 08:05 PM   #6
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Welcome to the forums. Glad you found the site and are participating.

Originally Posted by dahcdahc View Post

Thanks for the reply. 28 views and you're the first. Apparently Texans ARE more friendly than other states....
There are a lot of folks on this site but the sheer volume of posts prevents a lot of us from seeing every post at it happens. Some of us are very busy in our retirement and find it hard to spend a lot of time looking at all the new traffic so be patient and understand that most folks on the forum are lurkers and not active posters and some are a little of both.

As the others have already said, how much you need depends on
1) Your expenses during retirement
2) Your income sources (pension, SS, trust fund, etc.)
3) How long you live
4) If you want to leave money to family or charities after you are gone
5) Healthcare insurance (group plan or self insured?)

When you can FIRE depends on:
1) How early you start to save
2) How you invest your savings
3) How fast your salary or other income increases over time
4) How cheaply you can live so you can save a higher percentage of your income.
5) How much faith you have in SS or other government pension or corporate pension and/or healthcare plans to continue to payout after you retire
6) Your comfort level that your FIRE number is accurate
7) How soon you get gut wrenching sick of your job.
8) etc.
Work? I don't have time to work....I'm retired.
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Old 08-31-2007, 05:24 AM   #7
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Of the 70k you are putting into the house .... Is that from the 100k you have in various stocks or is this other $$ you had been saving above the listed amounts you gave?

What is the value of the house after your done building and have the 200k mortgage? your equity ...

Will you have a pension from your job? At what age -- Does it include Healthcare in retirement (huge factor)

If you do have the 70k, above the stated amounts in 401k and IRA and stocks, and do have a future pension of some amount with healthcare benefits and have a decent equity after the build I'd say you are golden.... Just keep a steady stream of new $$ going into investments and you will be really close in 10-15 years depending on your standard of living ... Course if that pension keeps you from getting benefits until 55 or so then your stuck like me ....
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Old 08-31-2007, 08:34 AM   #8
Confused about dryer sheets
Join Date: Aug 2007
Location: San Antonio, TX
Posts: 3

No, this 70 will come from other accounts that I have not listed. The house is a true custom, and my father-n-law thinks that we can keep it right at $100 p/sqft, 2750 sqft total. (builders cost...same house is Houston or Dallas would probably add another 100K to the price tag)However, we will not be finishing out the 2nd floor (maybe later on, little at a time) and there's an additional 800-1000 sq ft there.

Smaller customs are fetching anywhere from 115-130 p/sqft, so we're going with the lower figure, which brings the value to about 315K or so not including the lot (paid cash for last year), possibly higher since there is room for improvement upstairs. The lot sold for 37K, and the "appraised" value for this years taxes climbed to 48K. We had offers on the lot shortly after buying it for 50K, but chose not to sell....probably a dumb move, but we NEED a house.

We've been fortunate enough to live on her grandparents land, in a house that's so old, I wouldn't be suprised if Jesus stayed a few nights in it along the But, the rent is only $500, and I help them out in return. But, when it feezes outside in the winter, we have to cover our plants INSIDE the house to keep em alive. Literally NO insullation, and with a winter baby on the way, we NEED a house.

I work for a large insurance company, and yes, I have a pension. Haven't paid close attention to it yet, again, I consider it an outside tangent. What if I plan on having it, and 15 years from now it goes away? I just want to rely on first bank of Serta...aka: My money that I have saved and nothing else.

I'll be honest, I don't necessarily make a killing. this is my second job out of college, and the base is about 60K, and put about 700/mo. into a couple of stocks (Exxon being one, but mainly all bluechips) via automatic investment. My 401K matches .93 on the dollar, which is great, so I max out the 7%, or an additional $250p/mo. The 1K a month doesn't include my annual IRA contribution, which is normally 3K a year.

Wife and I are completely debt free, and my 95 tahoe just got a new engine and paint job last month. Lets face it, at $500/mo payment, it'd cost me 6K a year just in payments to own new, I spent about 4K on the paint and engine, and plan on keeping it for another 3-4 years. It only has 310K miles, and it's a chevy, so I'm (quick jab at Ford fans). Her car is paid for and in great shape for a 2001, so no immediate need for a upgrade, even with the baby on the way.

We both have been fortunate that the grandparents will probably help out providing clothes/toys/etc, and my folks suprised us with the "we want to pay for its college" idea. We are extremely lucky.

Living within our means is no problem, with the exception of the house. But, since we have equity, we built the biggest house we could afford with the intentions of flipping for profit in a couple of years. Even if the market tanks (here, custom homes are red hot) we'll still have enough equity to cover our butts with the bank.

To me, it's all about covering your down sides. If I lose my job, I can get a job at walmart (if need be) to make my payments. If the market tanks, I can still sell my house and cover the mortgage.
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Old 08-31-2007, 04:37 PM   #9
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"To me, it's all about covering your down sides. If I lose my job, I can get a job at walmart (if need be) to make my payments. If the market tanks, I can still sell my house and cover the mortgage."

You'll make it. I always said that if I had to I could go back to (fill in the blank) and I have. Thats why I know that you will make it!

HOWEVER, Be careful of assuming you can flip that house like a burger, and at a profit. Next to poor marriage decisions and too many, and too expensive aytomobiles, this is arguably the next biggest FIRE dampener.
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