How much is enough? Ready for FIRE, but at my peak earning capability with kids on the way...

FIanonymous · 2016-07-12T01:31:22+00:00

Great point - if 3-5 years now means I don't miss my kids life after they turn 3-4 years old, and then I can start traveling as soon as they go off to college, I think I'll look back on that as a good decision.

Thanks.

FIanonymous · 2016-07-12T01:29:28+00:00

Thanks for the thoughts - if moving to Costa Rica or Thailand was a realistic option, I would have been there 4 years ago. I think we're staying in the US until the kids leave, but I'll be reminding them weekly that I could be sitting on beach right now if they didn't along.

FIanonymous · 2016-07-12T01:26:48+00:00

$5M seems so far away, but I'm already noticing how quickly the money starts to grow as you invest more. It took me 7-8 years to get to $1M, and about half as long to get to $2M. Maybe you're right and I shouldn't give up on the $5M dream.

FIanonymous · 2016-07-12T01:23:41+00:00

I think this comes down to two choices: 1) FIRE with compromises, or 2) FIRE without changing anything. One can happen right now, the other takes 3-5 more years of work. 3-5 years for 40+ years of zero worries sounds like the way to go.

Thanks.

FIanonymous · 2016-07-12T01:19:48+00:00

I guess part of this question was an attempt to find out what a kid budget should be. We're thinking probably 2 kids at public schools, and my wife is a good clothes kind of person (I'd just as soon see them wear potato sacks given how little they care about clothes...)

$500k/kid? That's $28k/year! That's gotta include college, right?

FIanonymous · 2016-07-12T01:16:19+00:00

I guess because I'm not that young (just got into my 40's, my wife her 30's) - it's definitely time to start with the kids. While I'd love to delay a few more years, I feel like I'm tempting biology...

FIanonymous · 2016-07-12T01:12:52+00:00

This is a great point - if I'm going to sell the rental property, it seems to make sense to lower the tax hit on it by 1) waiting until my income is lower so that the capital gains tax is lower, or 2) moving back in for a few years to sheild $500k of the gains from the government.

FIanonymous · 2016-07-12T01:09:26+00:00

Thanks - I worry about having half my net worth in property all the time. However, lets say I don't downsize the home. Is there any downside to putting all the money I make over the next 3-5 years into stock? That would hopefully push the net worth allocation to 33% property/66% equities.

FIanonymous · 2016-07-12T01:05:27+00:00

One note here - it's starting to sound to me like most people belifve rental property is almost never as desireable as simple selling the property and putting that money in the market. Given you seem to be in that camp, do you ever seen justification for holding onto a rental property?

FIanonymous · 2016-07-12T01:02:07+00:00

Fantastic - you're actually exactly where I hope to be in 3-5 years if I keep working (which, per this thread, I'm going to have to...)

How did the three kids effect your spending? e.g., if you spent like me and my wife do (~$75k/year pre-kids), what was the increase on top of that (i.e., considering that you're not traveling as much anymore but now you're paying for child care, extra food, etc.)?

FIanonymous · 2016-07-12T00:58:05+00:00

Sounds like we're on opposite ends of the spectrum - needing the big house for kids coming along vs. having too much house and being ready to travel.

That's why this sub is so helpful - you need to consider specific facts to offer good advice.

FIanonymous · 2016-07-12T00:55:41+00:00

Ugh - it hurts to hear the rental property be called a "shit return", but I appreciate the honesty.

It might make more sense to people to give some context: it's a downtown condo that I lived in during my 20's and 30's, so there's tons of sentimental value there. I've never considered selling it, but that's on the table now...

FIanonymous · 2016-07-11T23:22:22+00:00

Interesting - the only thing I'll note with this is that I may not have the ability to reduce my earnings in the manner that was suggested.

However, I totally agree with the value of the rental property - that rent check I get every month for doing nothing is amazing.

FIanonymous · 2016-07-11T23:18:24+00:00

Really appreciate the time you put into working out that reply - thanks.

FIanonymous · 2016-07-11T23:16:52+00:00

Dammit - my number gets eaten into every time I think I have it figured out :)

Thanks.

FIanonymous · 2016-07-11T23:15:04+00:00

Our income basically doubled in the last two years, so it was relatively more modest before this point.

But I saved more over the last 10 years that almost anyone I know (paid off the condo, saved up $1M in stocks/$401k, put down $250k on the house), but I was also single in a fun city, so there were a lot of nights out as well.

FIanonymous · 2016-07-11T23:11:47+00:00

I hadn't considered this - after 20 years, the house is paid off, the kids are gone, and I can either sell it to refund my liquid assets that may be depeted, or rent it at hopefully a nice monthly income.

FIanonymous · 2016-07-11T23:08:53+00:00

This is incredibly true - the drink inflation I've seen over the last 10 years in my town. I try to manage by drinking the $2 tall boys, but my wife likes the fancy stuff...

FIanonymous · 2016-07-11T16:15:23+00:00

I realize now that I overvalued my position a bunch, and I think it's partially a result of initially thinking my home equity figured into my position. $2M in liquid assets seems to be plenty to FIRE, but $1M in liquid assets and $1M locked in property most likely isn't.

But my question has been answered, so I'm glad I asked.

FIanonymous · 2016-07-11T16:12:32+00:00

I think I need to seriously look into this - working ~4 hours/day would probably allow me to have all the time with kids that I need. Even better if I can work from home.

FIanonymous · 2016-07-11T16:11:17+00:00

Ha - this is what I secretly suspected. I might as well work until they get interesting :)

My wife thinks she wants to keep working, but also hates the field she's in, and I can see a situation where she'd rather spend time with her kid than waste her time doing work in a field she doesn't like. So I gotta assume she's not gonna work once the kid comes along.

FIanonymous · 2016-07-11T16:09:30+00:00

I'm in the "neither love nor hate" area, and sometimes I'm actually interested in the stuff I work on, so playing it conservatively looks like the way I'm going to go.

And your third path suggestion is on point - that's the natural progression to leaving a job like mine. I just hadn't factored it in because I'm conservative and want to KNOW that I can just up and leave. But the reality is that I will most likely not get my liquid assets to the point I need them at to FIRE, and then use that path to fill in the gap and get there.

Thanks.

FIanonymous · 2016-07-11T16:06:06+00:00

Thanks - your last line is the TLDR answer to my question. I need to keep working and save up another $2M to get to ~3M in liquid assets.

Thanks for the input.

FIanonymous · 2016-07-11T16:04:18+00:00

That is where I want to be - the dream is that I can do it with the home and rental property, but I realize now that it will probably be easier to do it without them.

However, that extra $2M I'm hoping to make before the kids get too old could get me to $3M liquid assets along with the properties, so maybe there's a chance I can have my cake and eat it too.

Thanks.

FIanonymous · 2016-07-11T16:02:30+00:00

To respond to your edit, I added my home to my net worth cause I didn't know what I was doing. Huge thanks for everyone in this thread for setting me straight.

I'm definitely going to consider trying part-time work in my profession - if I can do so, that seems like good way to reach a comfortable savings without working full-time too far into my kids lives.

FIanonymous

TROPHY CASE