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[HCFMR Studios]

Looks like there are many thoughtful and helpful folks here.

We're new to the forum and would like some input on our situation and maybe you could offer some scenarios or suggestions.

He: 48 yrs old, earn $120k, 15 yrs as gigantic computer corp manager. really need OUT! Can no longer pretend to be corporate monkey.

She: 50ish, earn $35/yr as office mngr/accnt - very happy in her career. Has 24 yr old son, graduating college this year (w/ any luck..)

We: $515k in 401k; $30k in vested stock options, another ~$30 will vest over next few yrs. Owe $110k on $220k home (will be paid off in 12 yrs); owe $60k in CC, cars and other debt.

We just read "Your Money of Your Life" and we choose our lives. Have begun tracking expenses (very relevatory!) and know we must eliminate CC debt first.

We're creative/learning types - old hippies, really - and enjoy playing music, art, reading, writing, hiking, photography, woodworking. Would like to travel the US/Canada with a small travel trailer for a few years before deciding where to 'settle down'. Did I mention that I really NEED to get off the corporate treadmill!

Any thoughts on the viability of early retirement for us? Suggestions for further reading? Are we dreaming? Are we typical? Are we there yet?

Many Thanks,
Tim & Kathy
HCFMR Studios

 

[Nords]

Welcome to the board, Kathy. Sounds like you're on the right track.

YMOYL is a classic yet financially outdated. The principles are timeless but I doubt that Joe could do it again on Treasuries in today's market. If you're not done reading yet, a more modern approach is Bob Clyatt's "Work Less, Live More", just about anything by Ernie Zelinski, or Ralph Warner's "Get a Life". (Many of these are in libraries.) You could also look at the Terhorst's or Kaderli's websites or the Kaderli's CD.

Now that you're tracking your expenses, the next step is to start putting numbers into FIRECalc and deciding how long it'll take to reach ER.

 

[foxhuntr]

If he really needs to get out, I'd recommend getting the misc. debt paid off, get your expenses down, and then look for another field to work in - one that may pay less, but where you can enjoy life more. I got out of high tech management at 58 (laid off for the 3rd time) five years ago. I got a job with a small non-tech company in a smaller town than San Jose at about 60% of the money, and have never been happier.

I've got about 10 more months to ER, so I'll see if l enjoy that even more!

Good luck.

 

[HobbyDave]

Looks like there are many thoughtful and helpful folks here.

Yup I'm here, don't worry.

He: 48 yrs old, earn $120k, 15 yrs as gigantic computer corp manager. really need OUT! Can no longer pretend to be corporate monkey.

Now first of all, I'm going to suggest that we be a bit more confident in ourselves. Calling yourself gigantic is not a good way to have self confidence, which is important when looking to break free of the corporate grind. (Sorry, couldn't help myself)

We: $515k in 401k; $30k in vested stock options, another ~$30 will vest over next few yrs. Owe $110k on $220k home (will be paid off in 12 yrs); owe $60k in CC, cars and other debt.

At this point of your life, budgeting is very important. With a 220k home, I'm assuming you are not in california.. in fact I assume you're some place fairly affordable. You should be able to save quite a bit of money with your combined salary. Since you've built up some hefty credit card debt, budgeting and getting your debt under control would be the first step.

In numbers, you can usually pull 4% of your invested funds per year. Since you're talking of around $575k (once you've paid down the c-card / car debt), that's around $23,000 per year you would be able to get from your investments. Since you're in debt with a $150k combined salary, you'll most likely want more than this.

My suggestion would be to budget, pay down debt, save more, and read these (and the many other early retirement boards).

As for Tim's job situation, if you're making $120k as a corporate manager (hey, I'll take over, I have some steam left), I'd suggest you take a look at downshifting. Unless you have some expenses you haven't mentioned yet, there's no reason that you need to be making $120k per year. I assume that if you're decent at what you do, there would be lower level jobs at another company where you could take a responsibility / time / pay cut. It's always hard to take the downgrade step, but it may be your best choice if you can't afford to jump out of the race right now.

 

[SteveR]

If he really needs to get out, I'd recommend getting the misc. debt paid off, get your expenses down, and then look for another field to work in - one that may pay less, but where you can enjoy life more.  I got out of high tech management at 58 (laid off for the 3rd time) five years ago.  I got a job with a small non-tech company in a smaller town than San Jose at about 60% of the money, and have never been happier.

I've got about 10 more months to ER, so I'll see if l enjoy that even more!

Good luck.

I am in about the same boat as Foxhuntr.
I ER'd from a major pharma. company after 24 years of progressive management positions and was fried well done and crispy.  I took another job in a company far far away and 10% the size.  My pay went down 25% but my happiness factor went up 100%.  I am set to ER for good (this time) in 16 months.  

This company offers no pension, no medical in retirement, and my stock options (all underwater) expire after I leave.  But being appreciated for your experience and valued as a resource while being treated as a human being is priceless.  

 

[astromeria]

Tim, my hubby was fried after 30 years in software engineering. He "downsized" to a job as a college CS instructor (starting ~25% former pay, but now ~50%) and loves the work as well as the month off at Christmas and 3 months off in summer    Just a few minutes ago he proudly showed me an email from a former student who's using what she learned in his class at her first professional job and suggesting that a special class he gave only once be added to the curriculum becasue it is so relevant. While it's true there's "nothing like bringing in the code," the hubster finds this kind of acknowledgement extremely satisfying. He's so much more relaxed and chipper about work than he was in the land of the cube and the option.

So...wipe out that debt, save as if your life dependied on it (and doesn't it?), and figure out where to go from there--downsized job, chicken wrangler, banjo player, math tutor, perpetual traveler, or whatever floats your boat.

 

[gtmeouttahere]

Making that amount of money, with so little of a house payment, WHY do you even need/use credit cards and why not pay cash for your vehicles.  My guess is they are "luxury auto's." (buy a Honda) and keep it for awhile. Your spending is out of control. Where does all your money go?

I can almost picture you guys.  I'm sure with your hubby's job you have an "image" you are trying to portray.  That image is not going to get you what you need and where you want to be in the end.  It only sinks you in deeper in a trap.  It will force you to stay with job you don't like (rat race) just to keep up with expenses, and unfortunately, that will never end unless you refuse to be caught in it any longer and choose to stop doing what you are doing.  It is YOUR choice.   

BTW right now you are NOT hippies.  I think the word yuppies would probably fit you more.  Maybe at heart you are hippies, but definately not in lifestyle.  If you were, you'd already be loaded and probably retired, out hugging tree's or something that doesn't cost much.

Read "The millionaire next door" that may give you a idea on how to start curbing your spending and start saving. 

You're doing ok with your 401k's but with the amount of money you spend, you will have a tough time ever being able to retire with that amount in savings.  It may last you 4 years.  The amount you would need to continue spending that way would be far, far greater than what you've saved.  Maybe find a good financial planner to help you iron things out and get you on track.  That would be money well spent.  And start doing more of the "hippie" things you enjoy doing for entertainment.   That should also curb spending.

I don't mean to sound negative.  That's not my intent.  You make more in a year than most people and have the power to overcome these financial obstacles far faster than most people.   You came to the right board for help and I'm only trying to help.  I want everyone who takes the time to be on this board to succeed.  I'm being as real as I can for you, not sugar coating, and calling it as I see it.  Good luck!!!  I really mean it!!! 

You already took the first step, you recognized there might be a problem and you acted on it by posting on this board.  Congratulations on step #1.

 

[kaudrey]

Hi!

It's great you came to this board, you'll get great advice. I agree with gtmeouttahere that it is very important in your situation to see where all of your money is going.

I am single, 37, and make about the same as your husband. My mortgage is double yours (so much bigger mtg pmt), and yet I have no credit card debt, no car payments, and save $30K-$40K a year toward retirement.

You are on the right track but you should realize that you have some hard choices to make and need to get a better handle of what your spending is. What is your spending after taxes? How much is going toward savings?

As noted, the amount you could get from your current savings seems to be a lot less than you are currently living on. You should think about what adjustments you want or can make, and what things you absolutely must have. This will help you determine how much you need to save to comfortably retire.

If you provide more details or give us some of your thoughts about your cost of living in retirement, that would help also.

Good luck!

 

[HCFMR Studios]

Thanks all, for your thoughts and insights. We appreciate your direct and honest assessments. We know our debt is item number one and we're taking steps to fix it. The plan is to be clear of non-mortgage debt in about 2 years.

My income is a relative new facet in our lives - I was making substantailly less until about 5 years ago. Also: We financially assist my three sisters and their kids as well as my wife's 24 year-old semi-student. Oh, yes, and two cats.

Nevertheless, you're right, we need to tighten up and get this ship steaming in the right direction. I have gone a little overboard indulging my hobbies: a small home recording studio (well, the dining room, actually), a few too many guitars, and a basic wood shop. Also buying books, DVDs and CDs on Amazon is crazy addictive. Great business model, that.

Our home is a modest but comfortable 2000 sqft, 30 yr old ranch house that I bought in 1999. We refi'ed  3 years ago at 5.25% for 15 yrs. We do most of the repairs and improvements ourselves. We grow our own veggies (just planted 'maters, peppers, cukes, beans and squash this weekend - my back is still barkin'!) We take a road about trip 2 or 3 times a year - drive to West TX or NM and stay at State or National Parks or visit family in PA and WA. No cruises or international travel - we like to drive and "motel camp".

I currently contribute 15% to my 401k and another 15% to an employee stock purchase program that, frankly, has flat-lined for the last few years.

I have no image at my job. I hate it and want out. It's something I fell into, it's been very financially rewarding, I've done it for 15 years - I can't pretend to be "corporate boy" any more - enough already!

Our ideal retirement is 1) SOON!; 2) buy a small travel trailer and cruise the USA for a year or two; 3) decide where to move; 4) design and build a small (1500 sqft) 'green' modular home; 5) make that home base; 6) continue to travel intermittently; 7) have lots of fun ; 8 ) die.

Again, we really do appreciate your upfront, direct, realistic input.

Thoughts?

 

[Martha]

My income is a relative new facet in our lives - I was making substantailly less until about 5 years ago. Also: We financially assist my three sisters and their kids as well as my wife's 24 year-old semi-student. Oh, yes, and two cats.

One problem with a forum like this is that we never have all the facts so we have to be careful about making judgments about people's financial situation.

We too have a number of family obligations. Have you thought about how you are going to address these expenses into the future? Will they continue or are they one time things? The needs of extended family can make budgeting for retirement and in retirement difficult.

 

[Ed_The_Gypsy]

Dutch Uncle here.

Got debt, you're dead. (How do I know this?) Kill it as fast as you can. Burn the CC's.

My favorite is "Cashing In on the American Dream--Retire at 35" by the Terhorsts (see Nords' post).

Ed,
Wooden head with wooden shoes

 

[HFWR]

One can never have too many guitars...

Four electrics, two acoustics, and a bass... But only a couple of grand in the whole kitten kaboodle... 8)

Gotta love those stolen guitars pawn shops!!

 

[old woman]

At your income and low house cost you should be able to pay off about 100K in debt in a year if you want it badly enough.
Stop supporting other people, the 24 year old can take care of himself and your sisters and nieces and nephews will need to learn to take care of themselves. You can't take care of the whole family after retirement so stop now. Right now if I were you I would put the max amount in to a ROTH IRA for each of you before April 15 and your 2006 in the next year and pay off your debt by next April. Then work at paying off the house or saving in taxable accounts. Learn to live on 50K per year with no debts and no kids at home you shouldn't have a problem living on that. Then the other 100K can be saved in 401K and ROTH and pay off the debts. Two years from today you can have no mortgage, no other debt and be pretty much living on your wife's income. Then you can downsize your job to something you enjoy earning just what you feel like earning and still not need to touch your retirement savings until you both quit working. Every year you work from here on should put another 100K in savings. So call in sick a few times and use up your vacation time to make your job bareable for a little longer.

 

[HCFMR Studios]

Old Woman: You're right - We'll be cutting off the 24 yr old and the sibs. It's "yer own two feet" time for them!

HFWR: I have 2 Gibson ES335s, an old yamaha acoustic, a little travel Martin, a Les Paul (just an Epiphone), 2 electric basses, a beautiful Taylor CE714, an American-made Strat, a mando, a custom-made Gretsch, a National electric solid-body (once owned by John Fogerty), a couple of keyboards and lots of percussion toys.... but I agree... you can't have too many...

Martha: I understand about the responses of some folk. No problem, though...happy to hear all perspectives. Overall, this board is extremely helpful and insightful.

Thanks to all of you for your thoughts. We'll continue studying, reading this group and learning to Live Below Our Means.

T&K
Hill Country Flying Monkey Ranch

 

[just_hatched]

HFWR: I have 2 Gibson ES335s, an old yamaha acoustic, a little travel Martin, a Les Paul (just an Epiphone), 2 electric basses, a beautiful Taylor CE714, an American-made Strat, a mando, a custom-made Gretsch, a National electric solid-body (once owned by John Fogerty), a couple of keyboards and lots of percussion toys.... but I agree... you can't have too many...

Record a hit song, make your millions.
Done.

 

[bluehero]

The ratio of rich musicians to starving ones very small. However the ratio of happy starving musicians to happy corporate dweebs is quite large.

GAS (gear acquisition syndrome) is something that you must face and defeat for successful ER (although I also tend agree you can't have too many guitars). One way of dealing with this is switching from GAS to GRS (gear rotation syndrome) so you get a new toy every so often, but one has to go before another one comes in.

 

[HCFMR Studios]

Bluehero: I second your ratio estimates. I've already commenced with GRS. No new toys 'til I offload less used old toys.

Just_hatched: Good idea, but that was "Plan A" 30 years ago. See Bluehero's ratios....

 

[eridanus]

4) design and build a small (1500 sqft) 'green' modular home;

www.earthship.org

Pretty inexpensive. Buy a lot in NM and get some used tires.

 

[JonnyM]

GAS

Guitars are like Potato Chips...

Actually I've been thinking since I recently crossed over, that I should get out of GAS and into GRS mode. It's just so hard. I have enough different examples to keep it interesting, i.e. I rotate within my own herd, and different favorites rise and fall with the tides.

It's just I keep coveting the next one and don't have all that many that I would consider trading/selling away. I've figured in a reasonable Toy budget which should equal a few grand a year for musical instruments. That really should be enough, it's more storage and efficient utilization that has become the problem. The "studio" has become so crowed with cases I've got nowhere left to stand and play 'em. Not my worst nightmare of a problem. If and when I get fully decompressed and stop sleeping most of the day away, I'll get in there and find out what I really have! I'm sure I'll have a "I forgot I had that one" moment.

Not crying or complaining, just observing that there is no cure for G.A.S.

Blue, you really should send me that green Vintage Strat, and HStudio, you don't really need TWO 335's, help an old Dog out... :

 

[HFWR]

Hang mine on the wall... Sorry, no pic, I'm at w***...

 

[HCFMR Studios]

JonnyM: I'm thinking of setting the 2000 Natural 335 free, and holding onto the Tobacco 1967 335 'PRO'. Whay am I bid?  :

 

[bluehero]

Sorry Jonny, the '63 Strat is my musical soul mate(they really are that good) followed closely by my '63 ES-355 and newly acquired '60 Telecaster Custom.

A small confession is in order on the GAS to GRS advice. Jonny is correct that GAS is known to be incurable and the GRS is merely a delaying action. I myself haved GRSed myself into a corner, in addition to the above mentioned the rest of my herd includes a beautful gold '57 Fender Custom shop strat, a Martin OM-28V, a 1965 Fender Super Reverb, a 1968 Deluxe Reverb, and a 1966 Princeton Reverb.

So the next time I get the shakes passing a Music store, exactyl what am I supposed to trade in to maintain commitment to the GRS path?

 

[Nords]

Sorry Jonny, the '63 Strat is my musical soul mate(they really are that good) followed closely by my '63 ES-355 and newly acquired '60 Telecaster Custom. 
A small confession is in order on the GAS to GRS advice. Jonny is correct that GAS is known to be incurable and the GRS is merely a delaying action.   I myself haved GRSed myself into a corner, in addition to the above mentioned the rest of my herd includes a beautful gold '57 Fender Custom shop strat, a Martin OM-28V, a 1965 Fender Super Reverb, a 1968 Deluxe Reverb, and a 1966 Princeton Reverb.   
So the next time I get the shakes passing a Music store, exactyl what am I supposed to trade in to maintain commitment to the GRS path? 

Guys, kindly forgive the incautious questioning of a musical Luddite.

But as I understand the continuing series of guitar posts, it appears that electric guitar technology screeched to a halt about the same time as Jimi Hendrix.

Why is that? With all the technological advances in electronics, acoustic analysis, and materials sciences over the last 35 years, why are the old guitars deemed better than anything new?

 

[bluehero]

But as I understand the continuing series of guitar posts, it appears that electric guitar technology screeched to a halt about the same time as Jimi Hendrix.

Why is that? With all the technological advances in electronics, acoustic analysis, and materials sciences over the last 35 years, why are the old guitars deemed better than anything new?

To keep this as short as possible the big differences are materials and construction methods. Not all old guitars are great, and not all new guitars are poor. In fact there has been a resurgence in the luthiers art and there are some very fine instruments being built today.

In the '50s and '60s there was ample supply of the very best woods, there was plenty of time for the woods to be properly cured and prepared for manufacture, they were produced in small volume by skilled craftspersons who knew their art. Magnets and wire for pickups were hand selected and hand wound giving each pickup it's own "magic" no two sounded exactly the same.
Also as wood and manetic pickups ages their tonal characteristics matures. As they mature the wood begins to "breathe" and resonates more and instrument comes to life.

In the late 60's big corporations purchased most of the original guitar manuafctuers and changed to cheaper materials and introduced their productivity enhancements and increased production dramatically. That turned the luthiers art into a mass production commodity. This plunged guitars into the dark ages of the '70s and 80's where very few great guitars were built.

A resurgence began to occur in the 1990's when most manufacturers freed themselves from the bondage of MegaCorp(not enough profit in it). The creation of the Fender and Gibson Custom Shops and many smaller Boutique guitarmakers have revived the luthiers art and many outstanding instruments are being built today. As good as the new guitars are, they will still be better intstruments in 20 years as the wood matures.

Building great guitars is more art than science.

 

[JonnyM]

I would add there is a strong nostalgia factor involved as well. As the Baby Boomers aged and came into money, they tended to go for the fantasy of their youth, much like American Muscle Cars go for amazing prices now compared to new in the 60s and 70s. The value of that 63 Strat today, based on it's limited numbers and high desireability to people like us would equate to multiple new Custom Shop level Axes of extremely high quality.

You can't dimiss the wow factor of an old guitar that has potentially many stories to tell. And there are "unfortunately" some who collect just to collect and don't really even play them. So Sad, but some get put on the wall as contemp art! That said, on the other side of the coin, now is a true golden age for new guitars, playable, great sounding instruments in all price ranges. For comparison: My pride and joy is a 1955 Les Paul Jr (built same year as myself), in it's day the student model, and when I purchased it many years ago for $230 just an old used guitar. It is now worth many times that figure, far more than inflation would cover, and it is a great guitar, fun to play with lots of history, and just way-cool. Personally I would never pay NOW what it is worth to collectors. I recently purchased an SG Jr from the same Gibson company for about $500. Similar pickup and lightweight design, it satisfied my GAS, giving me a fun, playable, great sounding guitar for not much relative money. It will likely never be collectible or go up in value in my lifetime, yet I got great bang for the buck.

Go into the Acoustic relm and you see the same thing. DW and I attend the Healdsburg Guitar Festival, a gathering of all the finest luthiers in the world. There were amazing highest quality hand-made instruments from $2k and up that would rival a Vintage Martin, but try and buy that old Martin today! Big Bucks, some would say made of unaffordium.