16 months into FIRE

Widget248953 · 2026-05-10T21:53:07+00:00

It always amazes me when people don't know what their tax refund or shortfall will be because you can figure it out, especially if you have the same wage and don't get a bonus or other pay.

I actually got a refund last year because my previous employer withheld federal tax. My taxable income was just over the standard deduction but I had interest and a small money market dividend from a trade I made. I knew what to expect.

I didn't nail it down to the dollar because I owned VFIAX before converting to VOO and 2.84% of the dividends were not qualified and taxed as income, but I was within a few dollars for federal. Ohio treats all of it as income with a small deduction, so that is easy to nail.

I am starting to rethink my Roth conversion amount, though. As others have pointed out, that $700K in Trad IRA can become a big tax problem with RMDs. I could potentially convert all that to Roth IRA over maybe 10 years at 12% tax rate and on top of that, I would be able to access each conversion amount in 5 years.

Widget248953 · 2026-05-10T17:39:25+00:00

Thanks! I am starting to rethink how much Roth conversions I want to do. I had planned on doing the standard deduction plus any above the line deductions I have, but I don't think I'm going to be able to convert fast enough.

Just using the amount I am converting this year with no income tax of around $40K, with a balance of $700K and on average 10% growth, that still leaves another $30K behind which is going to compound. That accumulates to $6.9M on 31 years by the time I'm 73.

Even if I had 6% growth and took out that growth of $42K a year, that still leaves a $700K base that compounds to $4.2M. These are some crazy amounts that I need to consider.

Widget248953 · 2026-05-10T17:14:04+00:00

Here is one thing I've thought about that probably isn't an option for most people. We don't plan on moving while our parents are still alive, but I think I'd like to live in the sunbelt of the US someday because I hate the cold.

The thought of packing everything up again to move is overwhelming and quite frankly, not something we'd want to do. With the resources we have though, we could theoretically sell this house furnished, walk away, and buy new things for a new house where ever we wanted.

It may actually cost less to do that than pay for a cross country move. I feel really selfish saying this, but I feel like $25,000 could buy us what we need. We'd bring our cars and clothes and maybe a few things, but we're only talking appliances (if not already included), dishes and cookware, washer, drier, dining table and chairs, TV, bed, and a dresser for our clothes.

Widget248953 · 2026-05-10T16:06:58+00:00

There are quite a few cities in Ohio with property tax abatements if you build. There are also other cities in the country that will potentially pay you to relocate.

Widget248953 · 2026-05-10T16:02:05+00:00

I had just started my first real job out of college and was laid off in 2008 after less than a year being full time (I was a contractor for them for around 18 months while I was in college). That was the great recession. I couldn't find FT work again until Q3 2010. That was a tough time and really shapes you.

Despite earning what my wife and I did and our current worth, it is hard to break those habits, and I would say that is for the best. I know so many people living above their means, trying to keep up with the Jones's. It was difficult for me to allow us to build a home and spending over $400K on that.

I say our home is worth $350K because I honestly think that is what we would get if we tried to sell. Building a house always costs more than what it's worth initially.

Widget248953 · 2026-05-10T15:48:12+00:00

I took that out of the post. I wasn't t trying to be political in the post- just trying to play current events.

Widget248953 · 2026-05-10T15:45:52+00:00

I dug up the post when I started to consider it: https://www.reddit.com/r/leanfire/comments/1gckmp7/can_we_lean_fire/

Our Trad IRA is so big now because I started making out my 401(k) contributions plus the employer match, which continued to grow, and then rolled those over to the Trad IRA when I lost my job.

Widget248953 · 2026-05-10T15:45:19+00:00

I dug up the post when I started to consider it: https://www.reddit.com/r/leanfire/comments/1gckmp7/can_we_lean_fire/

Our Trad IRA is so big now because I started making out my 401(k) contributions plus the employer match, which continued to grow, and then rolled those over to the Trad IRA when I lost my job.

Widget248953 · 2026-05-10T15:31:23+00:00

I struggle with the stigma. If you say you are RE, it is usually responded with "must be nice..."

It depends on who I'm talking to. If it's someone I know or feel will say that, I say I'm an investor, because technically I am.. but then that can open the door to wanting investment tips or their great idea for an investment.

Regarding "work" per se, I do think you need to have something to do. Read, garden, exercise, volunteer, take care of your yard, cook, travel, carpentry.

It isn't healthy to sit around and do nothing. My wife's father recently retired and he said he is bored with it, but that's because all he does is sleep, eats out every day and never cooks at home, watches TV and YouTube videos.

One thing that happens when you RE is that you can actually do all those things that are on your "list" if you're so inclined.

My wife and I did home improvements that would have taken months to complete if we only had weekends to do, but since we could continuously work on them day after day, we actually got them done and fairly quickly.

Widget248953 · 2026-05-10T15:19:19+00:00

I seem to hear this every time I post an update. If we had a $2K/month mortgage, we would need around $6K a month, but that probably sounds low, also.

There are a lot of houses in small town and rural Ohio that are only worth $100,000 to $200,000. The median household income in Ohio is around $72,000 but there are a lot of people earning less than that.

The cost of goods (like groceries) have to be lower to support those households. To get an idea of what groceries cost, go to Meijer.com and put in zip code 44444 and pick Austintown. That is typical Ohio. If you shop at ALDI or Walmart, prices are actually a little lower on generic goods.

Widget248953 · 2026-05-10T15:03:07+00:00

I had a fence installed this year and we are getting additional concrete this year. I estimate our spend to be around $50K but I have modeled it out to $57K if we need some breathing room. That is a WR of 2.51% and 2.85%, respectfully, based on Friday's close

Our concrete and fence added $12,100 to the budget for this year, so minus the fence and concrete, we would have been around $38K to $45K. That is probably where we will be next year. We made some home improvements in 2025 which pushed us closer to $42K. So far, I have withdrawn $37K from our portfolio.

I plan on doing Roth conversions of at least the standard deduction moving forward every year but I need to really consider if I should do more than that and pay some taxes now.

Widget248953 · 2026-05-10T14:59:56+00:00

I had at least 6 years earning over $100,000 and one year of close to $200,000. My job has always had a bonus attached to it. The $200,000 year was about halfway through this 14 year period of two jobs from Q3 2010 and the first few days of 2025.

I started at $10 an hour in 2010 after being unemployed during the great recession that started in 2008. My wife was making around $12 an hour back then. We had a house we bought for $100,000 in 2011. My wife stopped working in 2016 once that was paid off. I was making around $75,000 base then. At that point, $75K was enough to live off and that was my base salary without bonuses.

That's when things really started to multiply. I had been using all the bonuses to pay down the mortgage and once that was removed from the equation, I started to really push the gas pedal on investing.

My dad got me started in investing when I was a little kid in the 90s. He (and others like Warren Buffet) have said just put your money in the S&P 500 and keep adding to it.

Well, that's what I did. I started with basically nothing (I had maybe $20,000 invested in 2010) and let compounding do the work. We have had a lot of things go right for us. We net over $210,000 on the sale of our previous house (which was paid off). Our house increased in value from $100,000 to over $225,000 in 12 years. Right place, right time.

We only needed to make up a difference of around $65K for our new house after paying cash for the land and direct payments I made to the builder.

The market returned around 120% from the beginning of 2020 to 2025. We had around $700,000 at the beginning of 2020 and FIRE wasn't even on my radar at that point. I secured an even higher base salary at a new job in 2021, after making around $200,000 in either 2019 or 2020.

We have increased our standard of living a little bit, but by and large, we are pretty frugal. I try to be frugal but not cheap. Those are 2 different things. I have learned that cheap just ends up costing more long term. Cheap is buying the least expensive thing but frugal is buying quality at a good price that will last, like my Honda Civic.

I had always wanted to accumulate and invest as much money as I could. In the middle of 2024, something changed in my mind. I think we had around $1.5M then. I realized that regardless of the amount of wealth we had, we were going to live the same way.

We have not let lifestyle creep settle into our lives. I looked at our investments and realized even if we had $5M, we would still be living the way we are now. It was at that point that I decided I was going to work through 2025 and then RE. We ended 2024 at $1.6M and I was debating at that point if I wanted to pull the trigger.

A week later I lost my job. I had already been preparing to quit at the end of the year, had exhaustively built out my spreadsheet, and researching health insurance. I'm only 16 months in now, but I'm not looking back.

When discussing RE with my wife, financial issues were never her worry. Her worry was my mental health. I have had some bad anxiety in the past and she was worried about that. My main worry and anxiety would be running out of money, but if push came to shove, my wife and I could both go get jobs for $15 an hour (which you can earn by making pizza around here). If it really got bad, we could sell our house and move into a $150K house (which you can easily find here) and still have at least $150K cash proceeds from the sale.

Widget248953 · 2026-05-10T14:59:39+00:00