Levels of FI

[Gumby]

The young wife and I are FI with respect to our current expenses. We are essentially working for First Class airplane seats right now. But not much longer.

 

[ExFlyBoy5]

Fuego: thanks for telling how you do it. I don't travel hack and we like to eat out, etc and spend about 400/month on that. We have 2 cars but when one dies will go down to one because some days our cars just sit in driveway. Our house is paid for and our taxes low too. our biggest expenses are our old pets and our health insurance -10k/year. WE also live in a walkable neighborhood. It was one of the reasons we down sized to this home.

You aren't kidding about old pets! We are lucky in that we have a family friend that's our vet, so we get a nice discount. Nonetheless, we spend a not insignificant amount of money on those bastages!

It has been mentioned a couple of times and I have to agree...having a paid off house (especially in a low COL area) sure helps with being ERd.

 

[Teacher Terry]

I always leave a CC for my son to care for the pets when we leave. This time I told him Josie has a DNR since she is 20 and if he could get a hold of us call before spending thousands. However, we only had 4 port dates out of 10 days. Luckily nothing happened. I had never had dogs before so had no idea how expensive they would get. Even when young we had some huge expenses. Some people said put them to sleep but I could not.

 

[karen1972]

Well to me as long as you can sustain greater than poverty income, technically your FI.. ie you won't starve and people survive on it, so anything more than that is for the extras in life... that is the bare bones level of FI.

Then theres the if we made some sacrifices, we'd be fine, but there would be sacrifices. That's the level we are living at right now.. just to test our boundaries. After 1.5 years, we've agreed the 1 car thing is not something we want to continue long term. That we will want a little bigger place as we downsized a little too much... etc.

Then there is of course, the lifestyle you would like, where you don't have to sacrifice anything and you have money left over...but are you willing to keep working to get to this level? We are currently in between Level 2 and Level 3... so my BF will keep working part time until at least we know the bigger house and second car is taken care of, plus a little more for health care (especially with the drug prices jumping), Since he only needs to work 15 hrs a week for the next 5 years to make up that gap.. he's fine with that as long as we don't sacrifice our food budget. I'm a cook so supper was a curry tomatoe shrimp bisque.. he would not be ok if we switched to campbells tomato soup.

 

[Teacher Terry]

By the time our cars wear out it will be another 10 years and we will be in our 70's and with cheap alternatives such as uber I think one car will be fine then. We downsized to 1400 sq ft which has been fine with a yard, small garage and big shed. If we had went much smaller it might have been a problem. I knew we each needed our own office and own tv space. S0 we have big tv in our bedroom and one in the LR. I still work about 10 hours/week by choice and my DH when he gets consulting work.

 

[Quest4Fire]

he's fine with that as long as we don't sacrifice our food budget. I'm a cook so supper was a curry tomatoe shrimp bisque.. he would not be ok if we switched to campbells tomato soup.

Lol. Cheers to the cook!


Sent from my iPad using Early Retirement Forum

 

[W2R]

I am happy with what I have in retirement. I retired in 2009, and the market has soared since then. I didn't expect that or plan for that.

Year after year in retirement I kept thinking that OK, surely NOW the market would crash. Year after year it hasn't. At least not yet. My nest egg grew and grew. So, as many here know, last year I spent the accumulated excess on the only thing left on earth that I really wanted: a nice home that is suited for me as I grow older.

 

[FUEGO]

Fuego: thanks for telling how you do it. I don't travel hack and we like to eat out, etc and spend about 400/month on that. We have 2 cars but when one dies will go down to one because some days our cars just sit in driveway. Our house is paid for and our taxes low too. our biggest expenses are our old pets and our health insurance -10k/year. WE also live in a walkable neighborhood. It was one of the reasons we down sized to this home.

Yeah, no problem. We spend about $100/mo on dining out which isn't more than 2-3x with a family of 5. Probably chinese restaurant 1-2x/month and/or some chinese takeout. Maybe pizza. Sometimes a lunch or two out with an old friend to catch up.

I'm on an ACA plan, and with family of 5 you get subsidies up to $115k income. At $42k AGI we pay about $125/mo for a $0 deductible plan, so we're "saving" about $10k/yr on health insurance premiums from the ACA tax credit, plus several thousand $ worth of not having a deductible (probably saved us $0.5-1k this year).

We drove the car once this week so far to pick up a prescription at walmart and go downtown to a museum. The museum is directly on the bus line and we almost walked to walmart, so a car wasn't really necessary, but it needs its exercise too so we drove it to both places on one trip on Monday. I think I have 14 miles on the current tank of gas that I bought last week sometime. I see enough 70-80 year olds out and about walking around my neighborhood, and I hope I'm one of them too (in another 34-44 years).

 

[Teacher Terry]

Our health insurance is through a former employer. At 65k income if we take ACA insurance the premium plus the high deductibles we aren't any better off. I have spent a lot of time checking. I was much more frugal when raising my kids but now is our time to eat out, travel, entertainment, etc because at 62 you don't know how much time you have left. I have had a few friends die in 50's and 60's and one now with brain cancer. We walk a ton everyday because we love it and want to stay in shape.

 

[Major Tom]

And I'm surprised at how many people waste money by poor choices, too much house, too many new cars, etc., and spend $80k - $100k a year when they can live just as good on $50k with nothing more than a few simple smart painless choices. But they don't and then they can't retire in their late 40's or early 50's like many of us.

They are doing it wrong...the rest of us did it right.

I don't relate to this "they are wrong and we are right" way of thinking at all. It is not a virtue, in my opinion, to live on a very modest income, neither is it a grave misdoing to live on a larger income. If I had a portfolio that would support a high income, I'm pretty sure I could find ways to spend it - not to blow it, but to use it to purchase goods and experiences that I would enjoy and derive satisfaction from. My portfolio, at ~$780K, with a modest amount of SS coming online in the future, will only support a very modest income, so I find a way to live on that. I am a happy and content soul at heart and whether I have a lot of money or (more likely) a little, there will still be a base level of contentment in my life.

This is an amazing achievement, to live in the close-in SF Bay in easy reach of BART and spend so little. Your discipline is impressive. And that is a wonderful place to live. Last few days we have had beautiful Indian Summer weather in Seattle, but while your pleasant weather will continue, ours will get rainy before long.
Ha

Thanks Ha, but it is not such a difficult thing to do, if needs and desires are simple, and one has the good fortune (as I did) to find cheap accommodations. If I am one day no longer able to live in this characterful old house in Oakland , I will most likely have to move further afield to find affordable living options, which is what I will do.

This part of the East Bay has just about the most pleasant weather of anywhere I have lived. Even in the summer when it becomes hot, we only have to wait for a few days before the weather breaks and turns cooler. There is enough variation to keep things interesting (clouds, rain, wind, as well as sunshine) but not so much as to truly test the spirits. I expect to have to move when the current cheap rent situation changes, and don't expect to ever live in such an agreeable climate again. We adapt though, and life continues.

 

[brucethebroker]

We're not at super low spending levels compared to many posters here, but a lot lower for us than where we used to be. A big deal for us was simply optimizing our spending. We can live pretty much the same lifestyle as before but on a lot less money now. But some of it was chicken and the egg. We wouldn't have had time to analyze all our expenses without the free time we have now. Like we got rid of the landline for Ooma, cut most of the cable TV channels no one was watching anyway, switched the cell phones to Consumer Cellular, made the house energy efficient, joined some rush ticket memberships for concert and theater tickets, learned how to get free travel with the credit card point hacks, have time to cook more from scratch, and probably a hundred or more other expense improvements. And living on less means a lower withdrawal rate so lower income taxes.

If we had known how much we could cut relatively painlessly, we probably would have semi-ERed many years ago and both just worked part-time.

Interesting, since we have found the same to be true. Although very, very part time work, we consider ourselves semi-retired. We love the work and extra income and travel as much as we want. But I have noticed also being able to save money based on having the free time. And the reduced taxes.

 

[Music Lover]

I don't relate to this "they are wrong and we are right" way of thinking at all. It is not a virtue, in my opinion, to live on a very modest income, neither is it a grave misdoing to live on a larger income. If I had a portfolio that would support a high income, I'm pretty sure I could find ways to spend it - not to blow it, but to use it to purchase goods and experiences that I would enjoy and derive satisfaction from.

Don't forget that not everyone has the opportunity to earn a large income. Those with modest means who want to retire early must learn to live less expensively than others. That was my point when I said that some "do it right and others do it wrong". If someone only makes $40k - $50k a year, then brand new cars every 3-4 years, too much house, etc., are the things that must be addressed to achieve the early retirement goal.

 

[scrabbler1]

Has anyone on here found themselves wanting more after FIRE? Basically the numbers worked for an X K/yr RE but then you wanted more so those numbers no longer worked? I would like so much of a cushion that I could support a wide range or RE options.

Wanting more? Not really. Just being ERed is sooooooooo much better than anything I had before. One condition of my being able to ER 8 years ago was that I would have no change in my day-to-day lifestyle. I could keep doing the stuff I was doing before, go out to eat once in a while, go on a trip once in a while, without busting my budget.

As for building a cushion into my ER budget and planning to alter my budget in case my original plan wasn't working out quite the way I planned, I'll say this: I built into my ER budget a surplus of monthly income over monthly expenses to cover me in case I have small, unforeseen expenses. I have had to tap into this often over the years, without tapping into the principal which underlies my monthly income.

I made a Plan B to take my quarterly stock fund dividends in cash instead of reinvesting them, in case the main monthly bond fund income dropped and could no longer cover my expenses which have risen a little over the years. I have had to implement that Plan B which simply means my overall large surplus has dropped to a smaller one, but not nearly to the point where I have had to dip into principal. Not even my 12-day hospital stay last year busted my monthly budget because the hospital took 5 months to finally bill me for the copay/coinsurance/deductibles, giving me time to build up my running cash surplus to pay the bill.

 

[Major Tom]

Don't forget that not everyone has the opportunity to earn a large income. Those with modest means who want to retire early must learn to live less expensively than others. That was my point when I said that some "do it right and others do it wrong". If someone only makes $40k - $50k a year, then brand new cars every 3-4 years, too much house, etc., are the things that must be addressed to achieve the early retirement goal.

Then I apologize, and partially retract my comment. It wasn't apparent to me from your post that you were referring to folk with modest means who want to retire early. It could be that I was taking your comment out of context, and not considering it in the frame of reference of the discussion in the thread. I've seen a fair amount of inverse snobbery in this forum - folk who live on smaller incomes, and seem to think that somehow makes them more virtuous than those here who spend more, even when they have the means to support their larger incomes. Likewise, if anyone wants to spend the majority of what they make, and accept the consequences of that decision (inability to retire early, and other possible problems due to lack of emergency funds), that is OK with me too. It's only when anyone is unwilling to accept the consequences of their actions that I get a bee in my bonnet - particularly if I know them. I tend to care much less about people I don't know!

 

[ShokWaveRider]

I think it is all Relative. I only track mandatory expenses. We do not stick to a budget as such, we spend what we have to in order to maintain our above average Standard of living (IOHO), we eat Steak, Lobster and Lamb, not Spam and Bologna, but neither of us like caviar.

Last years Mandatory expenses (not including food) for Insurance, RE Tax, Utilities, HOA etc was $14,470 (Give or take ) BUT we spent $46,503 overall for the year, including cars, travel, toys and food. All After Tax.

We do not have a mortgage and Zero Debt, which makes a big difference.

 

[karen1972]

Yeah, no problem. We spend about $100/mo on dining out which isn't more than 2-3x with a family of 5. Probably chinese restaurant 1-2x/month and/or some chinese takeout. Maybe pizza. Sometimes a lunch or two out with an old friend to catch up.

I'm on an ACA plan, and with family of 5 you get subsidies up to $115k income. At $42k AGI we pay about $125/mo for a $0 deductible plan, so we're "saving" about $10k/yr on health insurance premiums from the ACA tax credit, plus several thousand $ worth of not having a deductible (probably saved us $0.5-1k this year).

We drove the car once this week so far to pick up a prescription at walmart and go downtown to a museum. The museum is directly on the bus line and we almost walked to walmart, so a car wasn't really necessary, but it needs its exercise too so we drove it to both places on one trip on Monday. I think I have 14 miles on the current tank of gas that I bought last week sometime. I see enough 70-80 year olds out and about walking around my neighborhood, and I hope I'm one of them too (in another 34-44 years).

We live in Raleigh too, so can relate. We do currently spend about $18K more than you but we dont' have significant subsidies for health care, we spent $14k this past year (which would change if he stopped working, but even part time puts him over the cap for a single person). We live a very decent lifestyle including both of us having to replace cell phones and payed retail price for new iPhone 6S plus, new laptop, new furntiture for the new townhouse, several trips this year, and tons of good craft beer.

We use our car mostly to get to different greenways and I don't trust Uber to find me in Umstead.. going to Duke gardens, the zoo in Ashboro, and lots of trips to the ocean.

 

[Teacher Terry]

WE use Uber when we travel etc in big cities and rural areas and it is awesome. You can see when you ask for one where the closest one is and watch it coming towards you. Much faster and cheaper then a cab.

 

[jkern]

My goal to ER was to continue or slightly enhance current standard of living. I wasn't looking to cut back or spend a ton more money.

 

[daylatedollarshort]

I think advertising has done a good job equating spending more money with more happiness, but I don't think that is necessarily true. I've been trying to focus on principles from positive psychology and sustainable living to improve our standard of living instead while spending less, not more. And spending less means more financial security, which does make us happier. Most of the positive psychology principles are pretty inexpensive to implement. There's lots of good books and Tedtalks on the subject.

 

[RobbieB]

No matter how much you spend you are cool if you can afford it.

What to spend on and how much to spend is a decision only you can make. Just like when to retire vs how long to work.

It doesn't matter what anyone else thinks, it only matters what you think. It's "ducats and buckets", how many ducats to throw in which buckets. As long as you don't run out of ducats you may throw as many as you like and we all have our favorite buckets and they are all different too.

Have fun!

 

[Andre1969]

I feel exactly the opposite. I want much less than I did 10 or 15 years ago- also I care far less about what anyone thinks of how I dress, what I drive or how I live. I'd downsize if I could after the kids leave for college, but hubby says they're carrying him out of this house in a pine box, so I guess we're staying...

Well, I might feel the same way if I was coming from a higher level, so to speak. But, I already live in a small, old house with only 1 bathroom. The house is 100 years old, needs a lot of work. It's about 1500 square feet, but not laid out all that well...although in casual house hunting, I've discovered that most houses in the 1500 square foot range are laid out even worse, for my needs. Plus, the neighborhood, hell, the whole county, has been on the decline for awhile, and I think it's only going to get worse.

I also don't travel all that much. I haven't been on a "real" vacation in about two years...just short little day trips here and there. If I was to retire right now, I could maintain my standard of living. But, moving would put a strain on me. And I wouldn't be able to travel much. So that's why I'm holding out a bit longer in the w*rkforce. I'm not overly concerned about fancy cars, clothes, fine dining, etc. But I don't want to retire just to be stuck in an old house all day, and be too dependent on the stock market to improve my standard of living.

If I already had the big, fancy house, and all the other luxury trappings, I might be tempted to downsize and make do with less. But, I'm already fairly minimalistic.

 

[RobLJ]

DW could retire now (she's 53) and we could live on a 4-5% withdrawal rate until SS.
She's afraid of boredom, however, so probably will continue to work. I'll continue working 1/3 of the time from home until the employer cuts me off from 'modified employment' gig. We were saving about 40% of earnings after the kids graduated in Houston, so the down-sizing and down-salary hasn't affected us a bit after last year's move to Reno. And the free hiking is a low-cost form of vacation on weekends.

Assuming DW continues to want to work, I'm figuring we can tack on at least 25% extra spending on vacations/travel than now and spoiling the grandchild (due in March).
Our oldest is only a 3.5 hour drive away in the CA Central Valley.
Other than more travel, there's not much else that I want. Maybe a used pickup and trailer in a few years when DW does decide to go part-time or retire.

 

[Walt34]

Has anyone on here found themselves wanting more after FIRE? Basically the numbers worked for an X K/yr RE but then you wanted more so those numbers no longer worked?

Occasionally, but then I think "would buying 'x' materially affect my happiness or overall satisfaction?" The answer is always no. For example, while I enjoy photography and have a nice DSLR and several lenses for it, would spending $40k+ on a Hasselblad improve my photography? Most definitely not.

We generally don't like travel because of the crowding and hassles involved but I suppose if we were at the level of private jets we'd travel more. Again, speculation, maybe not. We certainly don't feel deprived because we don't travel much.

More often than not I'd prefer eating hamburger at home than filet Mignon in a fancy restaurant, but have been known to occasionally spring for the filet both at home and in a restaurant.

But we are very much aware that we have what matters, that being friends and family, a comfortable lifestyle, (at least for us) and generally good health.

BTW, if you're feeling down because your income isn't in the top 1% take a look at this site: Global Rich List.

On a global scale we are quite wealthy indeed.

 

[Teacher Terry]

That puts it into perspective.

 

[RobLJ]

If you had asked me 25 years ago if I/DW would be where we are now, I would have laughed. I assumed I would be working into my 70s. Even the frugal here are living the life of the 1%ers.

Occasionally, but then I think "would buying 'x' materially affect my happiness or overall satisfaction?" The answer is always no. For example, while I enjoy photography and have a nice DSLR and several lenses for it, would spending $40k+ on a Hasselblad improve my photography? Most definitely not.

We generally don't like travel because of the crowding and hassles involved but I suppose if we were at the level of private jets we'd travel more. Again, speculation, maybe not. We certainly don't feel deprived because we don't travel much.

More often than not I'd prefer eating hamburger at home than filet Mignon in a fancy restaurant, but have been known to occasionally spring for the filet both at home and in a restaurant.

But we are very much aware that we have what matters, that being friends and family, a comfortable lifestyle, (at least for us) and generally good health.

BTW, if you're feeling down because your income isn't in the top 1% take a look at this site: Global Rich List.

On a global scale we are quite wealthy indeed.