riding out the storm - r u battening down the hatches?

[lazygood4nothinbum]

from all i've been reading, watching and listening so far, it looks like the optimistic view is 2 to 5 years (with the so-called bailout) of economic challenging times (like how politically correct i said that?) to a pessimistic 5 to ten years (without the bailout).

having two houses mired in the midst of this muck of which i was counting on selling one & selling or downsizing the other for early retirement and having quit a perfectly lovely (now, in retrospect--of course then i thought it had turned to crap) job just seconds before the crash, i maybe could survive this well enough as is but i'm not secure enough with firecalc (a calculator, no offense, but which i haven't noticed mentioned recently) to simply ride out this economic tsunami (no one has yet told me the term for "not as bad as a depression but worse than a recession") without taking steps to assure my secure future. (hey, that sentence was about as complex as mortgage securitization, go figure.)

as i quit working with only three years of money market funding and i’m down to one (previously thinking i’d simply replenish with tax-free inherited house proceeds--jokes on me), here's what i'm doing:

1. i've already rented out the inherited house; cheap in case i can sell, but at least i've stopped money from leaking there. when contract ends with superduper international bigwig realtor, will place on mls, at low cost, offer 3% to any ol’ buyer's realtor. if it sells, fine, if not, i'll just ride it out.
2. turning my house (ok, you're not going to like my reference here) from a liability into an asset. i'm abandoning this ship (with a lifeline) and renting out two bedrooms plus house privileges (keeping 3rd bedroom locked up for me) to maintain homestead yet cover ownership costs and bring in a little income. i’ll be here monthly to collect rents, work the garden and do repairs as needed. i could also do an addition on the house while rented (as house is so configured) possibly doubling invested money when times improve enough to sell.
3. moving onto my brother's ranch as ranch manager, which involves feeding & watering the horses twice daily (about an hour total) with coverage for time i want off, which won't be much because i'm going to be restricting my expenditures anyway.
4. renting out a room or two in the ranch house for income & company as I’m not greatly enjoying this early retirement being without a partner.
5. possibly ending or limiting e.r. by taking a job, part or full time, maybe a minimally stressed office position or retail if required (lets see how bad things get) but preferably a zoo position like maybe a petting zoo area or a caretaker.
6. possibly go back to school for a year to get teaching certification in case this is going to be a prolonged predecession (there, now we have a word for it). i might get a sub certificate first and see if i actually like the job. if i do, maybe work it for six years so as to be 100% vested and then quit in time for a late early retirement (i'm 51 now) and just consider this to have been a lovely two-year vacation.

so, is everyone else still as comfortable with their early retirement as they were two years ago? if you were planning to retire this year are you now considering delaying that decision? what are your plans?

(mods note: wasn't sure what category to place this, other, life after or money--feel free to relocate if i misplaced.)

 

[CyclingInvestor]

I retired 2 years ago at 48. I am even more comfortable with the decision now than I was then. I am living on the dividend flow from my IRAs (accessed via 72t withdrawals) plus some aftertax money, so the drop in the market value of my stocks is irrelevant. The "economic crisis" does not seem any worse than the others that have blown through in the last few decades - if it gets so bad that PG / JNJ / MMM / SYY / etc. start feeling significant earnings and dividend pressure, then I will start to worry.

 

[CuppaJoe]

I've only been RE for one month. The day of the dramatic drop I was out playing, "I am retired and I can do anything I want" so wasn't sitting at my computer getting constant updates on the financial news as I would have at w*rk. I'm very happy to be on this side, and join those who say they wish they had done it earlier. However, in my case "earlier" would have been only a few months.

Lazy, it's interesting that you pick two years for the comparison. Two years ago I didn't realize I was FI; only realized it one year before pulling the plug.

 

[freebird5825]

Q: so, is everyone else still as comfortable with their early retirement as they were two years ago?

A: i retired April 2007 at age 48. i hit a few minor bumps with cash flow, but holding steady and learning from mistakes.
recent stock market carnage has given me pause, but no freakouts. i am not drawing on my retirement portfolio at all. nor shall i til much later, approx 10 years.
if inflation continues to climb, i may have to w...wo...wor.... part time just for mad money. i am avoiding that like the plague. but if i can find something off the books, why not for maybe 10 hours a week?
other than that, life eez good

 

[dex]

as i quit working with only three years of money market funding and i’m down to one

You should have a bit more funding if you take into account interest and dividends.
Also, estimate when you might have other sources of income kick in.
sale of house
pension
social security

I'm closing in on 2.5 years of ER and probably have enough money in cash to last me many years of estimated spending. Also, I have some money in some conservative investments - Wellesly - that I could tap into if needed.

Many of the post I've read mention inflation - that will not be the issue. The dollar will strengthen - the USA is ahead of the world in this finance problem. It has lowered its rates - the other have to follow. People are buying dollars for safety - look at the FX markets. Commodities should come down because of the economic slowdown.
The issue over the next few years will be low interest rates and low stock market rates of return.

 

[Dog]

Hi Lazy,

I'm 4 1/2 months away from being ER'd (on track with my five year plan). DH will still be working for 4 - 8 more years (for his FERS). I've always earned a much higher income so it will be tricky to cut the lifeline of a GOOD steady paycheck. I've been tracking all spending and cutting costs where possible to make sure we can afford for me to leave megacorp (after 32 years). We also have two homes within 30 miles of each other. One is our future retirement home that we recently built paying cash. It is smaller, more energy efficient and on the water (puget sound). We spend weekends there now. The main house has a $220k fixed rate mortgage.

Anyway, I'm very concerned with the financial meltdown. So, we have taken the following steps.

1) Cut back to basic landline at main house
2) Cut to basic cable at main house
3) Disconnected cable modem at retirement house
4) Renting out downstairs at main house (until January)
5) Stopped going shopping except for essentials (very effective)
6) Reduced eating out (couple times a month instead of couple times a week)
7) Stocked up on my recreation gear for ER (cycling, hiking, snowshoeing & kayaking)
8) Building cash & liquid assets to prevent tapping into equities
9) Started a vegetable garden (retirement house)
10) Consolidated to a family plan for wireless with my daughter and her SO

Anyway, we still have much work to do. I want to move to the retirement house after I leave megacorp and work PT in a small gym or studio teaching Spin/Yoga/Pilates classes (currently do that today about 6 hours a week). This would be mostly for spending money and to help cover some utilities. I'm trying to convince DH to sell or rent out main house and rent a small apartment close to his work (he won't consider transferring to the PO near our retirement home). So, considering everything that is going on - this ER thing could be in jeopardy. We shall see.

 

[Gotadimple]

I'm doing OK, considering. I retired in July with intent to spend the annual bonus on new kitchen counters and replacing a few kitchen appliances.

Haven't done it yet as I consider it optional. I have been living off savings and won't tap investments until January. Will wait to see the outcome of legislation over the next few weeks before committing dollars to home 'maintenance,' some of which may not be optional, i.e., new water heater.

-- Rita

 

[ziggy29]

Not really. We already live well below our means, have an emergency fund of close to a year of expenses and have plenty of room to cut if we need to.

We have, though, put a little more urgency on what was once a fairly casual job search for my wife, just to make sure we have a backup set of benefits if I found myself getting a pink slip.

And although I am being a little more cautious about expenses, I don't want to be the type of person who nails the wallet shut and helps all the doom and gloom talk become a self-fulfilling prophecy.

 

[lazygood4nothinbum]

You should have a bit more funding if you take into account interest and dividends.
Also, estimate when you might have other sources of income kick in.
sale of house
pension
social security...
Many of the post I've read mention inflation - that will not be the issue. The dollar will strengthen....

am taking ss & pension out of my cyphering for now. even with selling out the two houses at rock bottom i still could have a nice life in rural u.s.a. or even nicer overseas. but i want to protect & grow the tax advantaged accounts and have been directing dividends there. i'm not real savvy on all this, i'm not comfortable with highfalutin finance so i'm opting for what i think will be safest instead. i simply thought i'd live on tax free/after tax dollars for a while but got stuck big time in housing market.

the calculators tell me that i don't have to take all these steps but they also have that end of the world caveat and i've yet to see a single face talk about this once in a hundred year event without some dread. (how many times will we experience this once a hundred year event over the next 50 years?) if things turn around in two years and look solid enough, maybe then i'll take a stand and turn as well.

on the other hand, i might like playing on the ranch, having roommates and i might even enjoy another career. don't know. haven't tried it yet.

ps, this economist i refered to above suggests that the dollar will be weakening. sorry but i did not understand his explanation well enough to relay it here.

maybe i'll get a big dog and a zorse or a zebroid

 

[Bikerdude]

Home improvement projects - on hold

Replace current ATV with new - on hold

Adventure over sea's motorcycle trip - on hold

Other than that, no other changes....yet.

 

[kumquat]

Increased WR from <2% to about 3.5%. All coming from a 5-6 year cash reserve. After that, there's always Smith and Wesson.

 

[Martha]

Eh, I don't know. No plans to change anything as of yet, but still am keeping my law license in effect. Need another ranch hand? It sounds better than filing people into bankruptcy.

Me and Lazy feeding the animals:

English Russia » Moscow Zoo at 1920

 

[Goonie]

so, is everyone else still as comfortable with their early retirement as they were two years ago?

A: i retired April 2007 at age 48. i hit a few minor bumps with cash flow, but holding steady and learning from mistakes.
recent stock market carnage has given me pause, but no freakouts. i am not drawing on my retirement portfolio at all. nor shall i til much later, approx 10 years.

Like freebird, I also ER'd in April '07....but at a much older age....50. I'm not drawing on my retirement investments either....not for at least 10-12 years (maybe longer). I've watched and cringed a few times lately, but haven't lost any sleep over the financial goings-on. Of course I should add a brief disclaimer here also, since I'm currently living off a fully-funded, COLA'd DB gov't pension. Even with that being said, I still don't want to lose any of my @$$ets.......retirement or otherwise.

So I'm just riding out the storm waiting for the break in the clouds....kinda like that guy down in Surfside Beach TX did with Hurrican Ike:

Ray Wilkinson, 67, didn't want to leave Friday until it was too late. When authorities realized he was there, they decided not to endanger their personnel to get him out of town.

When authorities got to him Saturday morning, Wilkinson was drunk.

"He kinda drank his way through the night," Davison said. Wilkinson was waving when officials got to the house.

I've got a bottle of Jack Daniels tucked away for cooking & 'medicinal' purposes.

 

[dex]

am taking ss & pension out of my cyphering for now.

OK.
Then the mental balance of finances and life come into play. We don't want the money to end before life does. Then again who needs the money when you're dead.

To me the earlier years are more valuable than the later years. (Hopefully, I will still feel the same when I get there.) So, today see if you can find that balance where you are not squeezing the money and life out of early years of ER.

I would play around with various budgets and find one where I felt I found that balance. Also, try not to let fear take away your happiness.

 

[Urchina]

Me and Lazy feeding the animals:

Dunno, Martha. I spent a summer syringe-feeding orphaned baby songbirds at a wildlife rehab center during college. Not as fun as it looks. Maybe horses are better, if all that hay doesn't make you sneeze.

LZ, you get to feed the horses but don't have to clean up after them? What a deal!

As for battening down, we're already pretty battened-down around here but are accelerating full funding of our emergency fund.

 

[Walt34]

so, is everyone else still as comfortable with their early retirement as they were two years ago? if you were planning to retire this year are you now considering delaying that decision? what are your plans?

If anything, we're spending more since I got a job that nearly doubles our income. Somehow, it's different when I know that working is forever optional and my KMA hat is firmly in place. Of course, I'm one of the lucky ones with a 100% COLA'd pension and my former employer has no unfunded pension liability, and we have about four/five years worth of living expenses in savings/conservative investments.

So right now the discussion is whether to buy a new kitchen floor or a motorcycle. But gee, the house is only six years old! Where I came from we didn't put down new linoleum until the old stuff had holes in it. Unless I develop an attitude problem and quit, within a year we'll have both.

 

[Coach]

lazy, it sounds like you are taking prudent steps to prepare for the worst while hanging on to a lifestyle that you'll be comfortable with. That seems smart and forward thinking.

I'm not convinced that any of the pundits on the air are any better than you or me at predicting the financial future years out. Doom and gloom sells better and gets more media exposure.

Coach

 

[lazygood4nothinbum]

Eh, I don't know. No plans to change anything as of yet, but still am keeping my law license in effect. Need another ranch hand? It sounds better than filing people into bankruptcy.

Me and Lazy feeding the animals:English Russia » Moscow Zoo at 1920

wow, big pelican.

martha, come on down. i see you already have your riding crop at hand. you and greg can pull up the travel home by the house. i'll plant some bamboo by then to create a nice shady spot for yas.

Then the mental balance of finances and life come into play. We don't want the money to end before life does. Then again who needs the money when you're dead.

To me the earlier years are more valuable than the later years. (Hopefully, I will still feel the same when I get there.) So, today see if you can find that balance where you are not squeezing the money and life out of early years of ER.

I would play around with various budgets and find one where I felt I found that balance. Also, try not to let fear take away your happiness.

leaving money on the table is so beyond my thinking that i don't relate at all to that train of thought. i'll be dead; why would i even concern myself that i didn't spend it all. in my life i made some money, i inherited the rest. but money isn't what makes my life.

i don't amortize living. i don't see less value in the elderly than i do in a child. in fact, i'm quite fed up with justifying every little expense & regulation with children this and children that which i believe benefits & destorts some issues at the expense of other worthy ages & points of view.

er was never the holy grail for me. it was nothing more than an escape from all the stress of a job that had turned crappy & from buring too many loved ones in a short period of time while watching my mother dying of alzheimer's. it was never my goal, nothing i worked for, just something that life made available to a guy who always saved as a way of life. that's how i lived. why would i be living any differently now? i'm neither dissing nor dismissing early retirement, but also it does not rule me and i will be neither judged nor restricted by it.

another reason why i wanted to retire early, even though i only thought about it at the last minute when i realized i could, was to give myself playtime between work & getting alzheimer's myself. but in the last two years, now that i've had time to relax and think a little more clearly, i've found no evidence in me like i saw in my mom at this age. also, in the last five years, science has come a lot closer to finding causes and cures so i am getting comfortable that even if i do eventually succumb, that they'll be able to stave off serious ill-effects until my old age, when, as you say, my life will not be so valuable anyway.

thanx for the concern, but i don't believe that fear is taking away my happiness. i think i will be happier playing with horses all day than hanging out in this fabulous gayborhood where every year i become less desirable to the natives. i haven't enjoyed these last two years so much in part because i prefer having more people to play with so maybe some roommates makes sense for me.

maybe it might have been different had there been no crash, had i been able to sell these houses and vagabond in good comfort. but that is not this. this is less fear and more making the best of what ya got. if i was giving into fear, i would take no action at all, stick my head in the sand and pretend that there is no predecession (what's a predecession, you ask? that's when you are on the precipice between salvation and the world turning to crap).

LZ, you get to feed the horses but don't have to clean up after them? What a deal!

ya, i'm sort of a spoiled bastid. tenants muck their own stalls. niece & sil are responsible for their horses. of course i could contract out if i wanted, but then i'd only sub that work out to one of my new extremely cute roommates (ulterior motive--the happiness factor).

 

[Dawg52]

Eh, I don't know. No plans to change anything as of yet, but still am keeping my law license in effect. Need another ranch hand? It sounds better than filing people into bankruptcy.

Me and Lazy feeding the animals:

English Russia » Moscow Zoo at 1920

Might want to watch this before signing up for ranch duty.

YouTube - Dirty Jobs - Birthing a Cow

 

[haha]

So far I haven't noticed much change. I think my cash flow is well covered by dividends, I have additionally about one year of cash. I rent, my car is pretty new, my hobbies are reasonably cheap, I drink and even enjoy $2 Chuck. My dates are cheap and enjoyable.

So in my case any big changes would be just posturing. My accounts may be down a bit come yearend, but again I have three months and I may find them at new highs. One dusting of snow does not a blizzard make.

I am not at the stage of life where I am still finding out who I am. I know what I like, and I know about what it costs. It would take a lot of hardship to make me feel inclined to make big changes.

I didn't ever and still don't plan on any liquidating or amortizing asset allocating total return retirement funding schemes, which makes it easier to remain focused.

ha

 

[lazygood4nothinbum]

lazy, it sounds like you are taking prudent steps to prepare for the worst while hanging on to a lifestyle that you'll be comfortable with. That seems smart and forward thinking.

I'm not convinced that any of the pundits on the air are any better than you or me at predicting the financial future years out. Doom and gloom sells better and gets more media exposure.

Coach

thanx coach. ya know, if worse comes to worst, i'll be either better prepared or i'll have hadn't lost a thing.

normally i'd agree with you on the pundits and all the doom and gloom, until today when the president of the united states (i rarely refer to him so respectfully, so ya know i'm referring to the office, not the person), in warning how important the bailout bill is to pass, sat in chair alongside a highly decorated military man. these guys are serious.

 

[JDARNELL]

My dates are cheap and enjoyable.


ha

Just had to ask how you are using your adjectives No matter your answer I got a good laugh out of my interpretation

Tomcat98

 

[Gardnr]

I'm not convinced that any of the pundits on the air are any better than you or me at predicting the financial future years out. Doom and gloom sells better and gets more media exposure.

And it's very contagious. It's really hard not to get pulled down by all this. I've tried to keep a good historical perspective on it all but I've found myself swinging back and forth a bit.

 

[lazygood4nothinbum]

Two years ago I didn't realize I was FI; only realized it one year before pulling the plug.

that was pretty much my style and also that's my style now. i would have hated going through working life with the constant thought of a time when i wouldn't be working. i think that would have driven me nuts (and certainly distracted from the day at hand) just like i never thought about what would i do if faced with an economic disaster until now that the talking heads are telling me its here.

Anyway, I'm very concerned with the financial meltdown. So, we have taken the following steps.

1) Cut back to basic landline at main house
2) Cut to basic cable at main house
3) Disconnected cable modem at retirement house
4) Renting out downstairs at main house (until January)
5) Stopped going shopping except for essentials (very effective)
6) Reduced eating out (couple times a month instead of couple times a week)
7) Stocked up on my recreation gear for ER (cycling, hiking, snowshoeing & kayaking)
8 ) Building cash & liquid assets to prevent tapping into equities
9) Started a vegetable garden (retirement house)
10) Consolidated to a family plan for wireless with my daughter and her SO

good details, dog. got me to think of the line items i can be cutting in my own budget. one that quickly comes to mind is my cell phone bill. i had extended the minutes on it because two people who i no longer associate with used to keep me on the phone for an hour or more at a time (one month i wound up with a $350 bill and freaked out). now that they've abandoned me i suppose it's pretty dumb that i'm still paying for minutes i don't use. will look in other places to cut as well.

I don't want to be the type of person who nails the wallet shut and helps all the doom and gloom talk become a self-fulfilling prophecy.

isn't that a little like blaming the rising water on the guy who sandbagged his house after all the tv meteorologists warned everyone about the upcoming 100-year flood?

the 11:00 pm advisory? hopefully we are not on the national hurricane center's center line, but certainly we are within the economic cone of death. maybe not time to board up, but seems a good time to know where your supplies are.

i did take a good deal of comfort from watching buffett last night and am scaling back at least to first do a two week trail run on the ranch before i commit to a longer term.

 

[Purron]

DH and I have re-thought our plans. We had planned on him joining me in retirement early next year, selling our two homes, and buying a much less expensive retirement home in a more rural setting. Our homes are both located in the Washington DC suburbs and I gotta tell you the market is brutal right now. Foreclosures have skyrocketed and prices are falling fast. On the one hand, we have thought we should sell before prices fall more, but the buyers seem to have vanished.

So, we are considering riding this thing out and staying put for awhile. I have thought about returning to work and he may stay on at his job longer than planned. We are financially secure, but keeping up two houses in the DC area is not cheap. On the bright side, we are lucky to have great renters in our second home who are very low maintenance. Plus, the job market is still very strong in the DC area and, hey, people gotta live somewhere, right?

We just don't think the time is right to make big moves and hope the market finds a bottom soon and starts going up again. We are not down in the dumps about this. Why get worked up over things out of your control? Just gotta keep on keeping on and hope for the best. We've been together for about 34 years now and have seen good times and bad. This too shall pass.