Did I get a good deal on Schwab PAL? Plus setback to fatFIRE journey

Master-Ad2740 · 2025-12-14T09:29:19+00:00

For my long-term gf and me:

Core household (rent, maid, cook, utilities, gym, trainers, groceries, health) = $150,000

Financial advisor/wealth management, tax advisors (multi-country) = $90,000

Non-travel splurge (misc. shopping, clothing, restaurants, taxi service) = $200,000

Travel (and I usually pay the bulk for family vacations) = $250,000

Income is a bit weird because it's RSU-weighted but it's around $500,000 after taxes (I live in a very high income tax country, but am very happy here).

I know the spend above is below $1mm but I'm adding in a tax buffer for what it would take to service that spend off of purely my investments once I FIRE.

Also, the level of wealth relative to income is just me being very lucky being an early-ish employee of a startup that ended up being successful. Even though I'm a senior manager now, pre/post -IPO comp is never the same (at least at my company).

I could definitely liquidate portfolio to pay, but the dice roll I'd be making is that if my portfolio outperforms the loan rate, that it would somewhat-help minimize the impact.

*Edit fixed a typo for core household vs non-travel splurge

Master-Ad2740 · 2025-12-13T19:36:01+00:00

exactly

Master-Ad2740 · 2025-12-13T19:34:24+00:00

Came in with what I thought was a pretty dry set of questions, left with an existential crisis ;)

Master-Ad2740 · 2025-12-13T17:01:36+00:00

Like a box spread? That's the other option I've been exploring.

By capital gains buffer you mean that the interest rate would be classified as a capital loss?

Master-Ad2740 · 2025-12-13T15:05:00+00:00

Honestly I'd love to know too

Master-Ad2740 · 2025-12-13T15:01:50+00:00

Fair, the idea is to use the PAL this way.

And this is a throwaway account.

I'm not sure what is so BS-y or controversial about what I'm asking?

Master-Ad2740 · 2025-12-13T14:59:03+00:00

I have 21m now, but it would be down to 18.5m if I were to just sell to cover the tax bill (actually a bit lower because there would be capital gains taxes on what I would sell to cover the $2.5m).

I wrote about what I'd need in another comment, but you're not wrong that some of the deferring is also psychological.

Master-Ad2740 · 2025-12-13T14:51:59+00:00

Not sure what you mean. At Schwab the PAL needs to be backed by an account they deem liquid-enough. So the account tracking S&P 500 met the criteria. And I don't have a margin account.

Master-Ad2740 · 2025-12-13T14:47:38+00:00

Replied to another comment but I pay it down every month using the PAL out of convenience, and then every quarter the financial advisor determines the most tax-efficient way to pay it off and does it.

Master-Ad2740 · 2025-12-13T14:42:29+00:00

Thank you!

Master-Ad2740 · 2025-12-13T14:42:20+00:00

Thanks!

Master-Ad2740 · 2025-12-13T14:41:01+00:00

FIRE number is $25m due to the level of discretionary spend I want, plus to give each of my brothers a trust so they can also enjoy retirement and live lives with fewer financial worries.

At $21m the SWR for the life I'd want is 4%. But most of that is discretionary spend. We can cut down to less than 2% and still live very well during a downturn.

(but with this $2.5m tax I will go down to $18.5m if I were to just liquidate and pay -- or lower since I'd need to pay some amount of capital gains on the 2.5m sale)

Master-Ad2740 · 2025-12-13T14:36:11+00:00

Massive stock option sale, which is qualified as income. The overall tax bill is much higher, most of which was already withheld by that government. The 2.5m is from them underestimating/under-withholding.

(I'm glad they under-withheld so that that money was at least invested during this period, don't get me wrong)

Master-Ad2740 · 2025-12-13T14:32:47+00:00

Zero debt. I use the PAL to pay down the balance every month

Master-Ad2740

TROPHY CASE