Tag Archives: early retirement

Two Roads To Nowhere and Everywhere: Stay at Home Mom vs Working Mom

I’m sure people reading my blog think I’m crazy with now over $2M in net worth not feeling comfortable leaving work for a while… a few months… a year or two… to spend with my young children. Maybe I am crazy. I’ll tell you what I feel. I feel no different than I did five years ago when my net worth was $500k or 10 years ago when it was $150k.

I am struggling with the concept of time and the time of time. 10 years passes in a blink and yet was it all that fast? I don’t know. 10 years ago with $150k net worth I was just starting my first job in this series of jobs after another series of jobs. I was making $100k. At the time that was such a huge salary I thought I would never earn more. Who would pay me more than $100k for anything?

10 years ago I was 27 going on 28. Approaching my 30s. A far different mindset than approaching one’s 40s. Pre children. Pre marriage. Living with roommates and dating my now husband and struggling with enough depression and self-hatred to push myself to keep going to prove that I could survive. Don’t believe me? It’s all here in this blog. All the years that have sprinted by. The failures. The successes. Three firings later. Day after day of waking up feeling not good enough. Not knowing what I’m doing. Trying to make it work. Trying to fit in. Having good moments. And many bad ones. Ten years later.

What will my life be 10 years from now? I’ll be 47 going on 48. What then? Will this decade feel over in a blink as well? How can I slow it down and make sure it lasts as long as possible – savor every second of it? I don’t know if one can at this age. Time just speeds up. And so there’s time and there’s money. It’s the race of both. You can spend less money. You can’t actually stop time. But to afford to leave the workforce you need a lot of money– and even then the system is rigged against you. That money in the stock market. Sure it will likely keep going up over time. That’s what they tell you. It has in the past. But the past is no indication of what will happen in the future. Though the only way to actually afford the future is to take what you’ve earned and bet on something that likely will go up but really who knows.

I’m too heavy in equities. Too heavy in individual stocks, although mostly in index funds. If the whole market crashes, how much does it matter? Does this mystical, mythical $2M disappear overnight? It doesn’t feel real if it’s not spent and if it’s spent then it isn’t real anymore at all. So it sits there, notated in an overly complex google spreadsheet that I look at each morning to see what it all looks like on that day. I open my computer and start trying to do work for my job that is fulfilling only in when I can help other people do their jobs that I’m uncertain if they find fulfilling or just acceptable in order to earn their own mystical, mythical money. I don’t know. I sit in meetings with senior executives who go off on some rant about something that at best doesn’t matter in the grand scheme of the betterment of the world and at worst are stained with sociopathy and that sly smile in passive aggressive attack that only someone with way more money in the bank can slide across their face so damn effortlessly. Everyone is trying to prove to everyone else that they are needed for those ahead of them to win and so even with the best of intentions it becomes this sick game that I’m not cut out to play.

10 years. My father was still alive. Still diagnosed with cancer. Still dying. But alive. Still yelling at my mother. An artist of arrogance. We were all so much younger then. I try to tell myself. 10 years is a long time. 10 years from now my oldest will be 13. Thirteen. My youngest, either 11 or 9 depending if I have another. I’ll hopefully be alive, but 10 years is also a long time for one’s body to attack itself, for health to slowly… or rapidly fail. For my husband to be here or to be ill or not here at all. For my mother to make it to 78 or pass away in her 70s, at an age that no longer inspires those who hear of passing to gasp noting “she was so young” in their condolences. It seems at 70 or maybe 75 it becomes acceptable to die. In ones 80s no one would feel pity over an early death. And 90 is when one feels pity that the person is still living. How fast the years go. Especially if you don’t make the greatest effort to slow them down.

And how can you slow them down? How can I? Well, I feel like there is a choice here. A fork in the road. Like in Squid Game — everyone chooses to play, even after they see what is at stake. Here I am and I see ahead of me 10 years of my children aging from babies to teens and I wonder how much of those 10 years is worth trading for days of panic attacks and feeling horrible at my job and to tired to be much of a mother.

Quit now and move somewhere affordable seems both like an impossible movie plot and an actual life story that could be mine. If only I wanted it enough. And then my husband agreed to it as well. Which would be quite difficult, but if I really knew in my heart it was the right decision — I don’t know — maybe I could convince him we need to leave this place. In a year sell our house. Get away from the rat race. The rat jungle. The rat infestation and bro culture and imposter syndrome and open office spaces and egos and people do don’t have time to connect or build community or they want you to pay a lot to buy in to a community you’ll never be a part of anyway.

If I quit here and stayed here I’d surely eat into my savings quickly. I’d want to do things during the day and going for walks to local parks would get boring after a while, wouldn’t it? There is much to sign up for if you’re a stay at home mom but then you need the money to fund it. Writing is free, at least. But what about my kid’s activities? How do I make sure I have enough to support their lives? I feel that I owe them the upper middle class life I was raised into. I didn’t know how to provide that but somehow through luck and determination here I am. Upper middle class. I guess. It doesn’t feel it. Not like my parent’s generation. One working parent and a nice house with decently nice everything. I’m certainly well off now in most of the world. I certainly don’t feel it.

But I do feel I owe my kids a life at least as good as the one I had growing up. My sister, who makes $14 an hour, refuses to have children because she says she can’t afford them. Yet many people have kids with low incomes — it’s just we were raised into a certain style of childhood and life and we feel our kids deserve at least that. I don’t want my kids to be spoiled. I don’t think I was either. Not horribly so. A little. But not enough to sit on my ass and do nothing. My sister has an incredible work ethic but no belief in herself or her ability to do better. I have random spurts of energy and a character flaw that is my need above all else to prove that I can survive and fit in and thrive in a world that may not be worth surviving.

What if — one year from now — I’m sitting somewhere, some nondescript down maybe — watching waves of a lake-ocean-river-sea crash to shore. Maybe it’s thundering. Or drizzling. Or pouring.  And I’m soaked and running in puddles with my children who are still children. And they don’t remember mom everyday at her laptop working or avoiding working and looking at social media only to be working later when she shouldn’t be because she can’t focus or get anything done. They wouldn’t remember the mess of a house or limited meals but instead clean floors and nutritious fresh food. We’d go on playdates and maybe get to know some people. Really get to know them as friends and build a community, though that’s wishful thinking as being a stay-at-home mom doesn’t suddenly turn me into Miss Popular. But still. What kind of life would that be? One where I am watching my account balances shrink each month instead of grow. I’d be terrified.

That fear is what drives me. But I don’t want to get to 2031 and look back on the last 10 years and say I traded moments for money. I let myself fall into the trap of worrying every single fucking day and waking up each morning feeling sick to my stomach because I know I’ll never do a consistently good enough job at work. Because I’m always on the verge of losing my job and having to admit failure yet again. To pick myself up again. And spend months trying to prove myself. A few victories here and there but nothing enough to stick. And so on. 10 years of that. I don’t know if I can take 10 more years of that.

See, 10 years ago seems like a long time ago. But 4 years ago seems like practically no time at all. Sure, in that time I’ve had two kids and both have grown quite a bit, but that time is all a blur and it doesn’t feel like 4 years it feels like 3 months. Though there is so much of it that I don’t remember. That skips time. And I’m afraid the next 10 years will be that but even faster. So I desperately want to slow the time down. To be present with my family. To take time to be a mom, not a mom who is thinking about the 10 meetings she has the next week while assisting her sons onto an amusement park ride.

I should be grateful that I have the money I do have. It does provide some options. It’s enough to tease me with those options but not enough for the options to be all that real. It’s enough, earned fast enough, to throw in my face that if I leave the workforce I’m not only going to be digging into my savings, but I’m also giving up the opportunity to really get to a place of financial independence for a lifestyle I want to have for my family. Why not a few more months? A few more years? Why not just keep holding my breath until my bank account ticks up to the next hundred thousand? I’m thinking $2.5M before leaving this job, but why not stick around until $3? Why not find another job to take me to $4 or $5M? $5M is the ultimate goal, $200k a year of income from the growth. Maybe then. Maybe then I’ll feel like I can slow down. But when will then be? Will my mind be complete mush by then? It’s hard to say. I just know I’m tired. I’m so tired. I’m tired mentally and physically and I need to sleep. So I’ll sleep now and wonder more about how people make decisions and how I can make decisions and if I’m even allowed to since now I’m a mom and a breadwinner and a home owner and I don’t get to just pick up and change things if they get too hard. This is real adulting. And it better be because I’m fucking old now.

From Now to Rich in 3 Years.

What does “rich” mean? There was a huge debate on if having $1M makes you rich in one of my Facebook groups the other week. My argument was — no, $1M does not make you rich. It certainly doesn’t make you poor either, but it’s not what I’d consider wealthy.

Wealth, to me, is having enough in savings that with reasonable diversification and YoY growth, you never have to save another dime to support your future lifestyle. Your income, which can be passive or active if you feel confident you can maintain active employment and want to maintain active employment, should cover all of your bills and expenses until you age into one of your retirement buckets. You may only have one retirement bucket (i.e. age 67) or you may have multiple buckets (I have an early retirement bucket set for age 45, and another bucket at normal retirement age.

Wealth, to me, is being able to buy things like… a minivan… new… and a trip to Hawaii with a stay at a non-budget hotel… without worrying about it impacting my retirement goals. It’s flying my sister and mom to Hawaii and getting them their own room at the hotel for a week. It’s being able to pay to get my mother an in-home aide (or at least contribute to it) when she needs it, maybe even moving her across the country when she’s older, to be closer to us so she isn’t alone (if that’s what she wants.) It’s being able to spend like my father did–always offering to pay for meals for friends and family and tipping generously–but with the actual life savings that can withstand such spending, a life savings that accounts for potential fluctuations of the market and future healthcare and long-term care costs.

While I could do a better job honing these estimates, I feel good about my FAT Fire number. It seems to align with what I’ve seen others say — around $10M — to really reach the kind of wealth where your money continuously works for you. I figure if I ever get to $5M that’s when I can start dabbling in more complex investments like real estate. For now, it’s heads down with (mostly) index funds and a few individual stocks. This year is really the make-or-break year for my plan (though there may be future make-or-break years, but it will be difficult to encounter one in the near future where I have the chance to earn close to $1M in income for the year.)

Below, is a table on my current estimates per savings bucket. I am estimating a 6% YoY growth over time, which may be too high or too low, but as I get closer to retirement I can adjust down for more safety once I see how the years go. The current value column is approximately how much was saved in each bucket at the end of 2020. With 6% YoY until each bucket is accessed, I note the GAP in total amount needed for my final goal (ie retirement goal is $5M, if I didn’t touch my money at all and got 6% YoY now, I’d be $1.6M short. The cool thing is I’d have $3.3M, which doesn’t account for my taxable funds, and also is at age 65-ish, which doesn’t account for additional growth after age 65 since I won’t pull all the money out up front and will hopefully live much longer.

My “pre retirement” FIRE bucket is more or less my “Coast FIRE” bucket, which gets me to career freedom by 45. if I have $3M by 45 I can move into a lower-paid career (and/or take a few years off) and maintain the lifestyle I would like to have. If growth is stronger than 6% year over year we can also invest in building on to our current home, or move to a city that I prefer that we couldn’t currently afford.

2020 Goal Yrs Current Value Growth Rate “Real Value” GAP
Retirement $5,000,000 28 $651,000 1.06 $3,327,708 $1,672,292
Pre-Retirement $3,000,000 13 $833,074 1.06 $1,776,887 $1,223,113
College $600,000 17 $133,607 1.06 $359,773 $240,227
Home $2,000,000 28 $195,483 1.03 $447,251 $1,552,749
$1,813,164 total: $5,911,619 $4,688,381

2021, which is now THIS YEAR, represents a huge opportunity to get much closer to my goals. Even if I have failed to tap into the actual earnings potential I should have had at this company (my raises and refreshes have not kept up with my market value or initial grant offer), I’m still in a very, very good place if I can just hold out and remain employed until the end of this year. While anything can happen, and my mental health post baby may get the best of me, I’m really focused on surviving this year. (*note, the above doesn’t count total home value, which would be higher in 28 years since the mortgage would mostly be paid off then.)

This is why:

2021 Goal Yrs 2021 Value Growth Rate “Real Value” GAP
Retirement $5,000,000 27 $786,060 1.06 $3,790,653 $1,209,347
Pre-Retirement $3,000,000 12 $1,140,598 1.06 $2,295,108 $704,892
College $600,000 16 $261,623 1.06 $664,615 -$64,615
Home $2,000,000 27 $231,212 1.03 $513,589 $1,486,411
$2,419,494 total: $7,263,966 $3,336,034

 

By the end of 2021, if I can keep my job, and the stock markets don’t tank (ie we don’t have a civil war this year), I get much closer to my goals. Not 100%, but close enough that I really am already approaching Fat FIRE territory if I didn’t have such aggressive savings plans.

2022 I plan to switch jobs, so my income will go down quite a bit. At the moment I’m thinking I will try my best to stay until I get get the full $58k into my retirement for the year as well as max out the first ESPP period for the year, which ends in March. I’ll have to leave some money on the table at some point (unless I leave in March/April which is probably the ideal time to move to a new role), but I’m now looking at a transition around June. This assumes I make $200k total in 2022, including expected bonus that comes in February before I leave my current job. I’m kind of considering this part of 2021 plan, but since the actual receipt of income falls in 2022 it hits my 2022 goal plan:

2022 Goal Yrs 2022 Value Growth Rate Value GAP
Retirement $5,000,000 26 $929,224 1.06 $4,227,394 $772,606
Pre-Retirement $3,000,000 11 $1,314,116 1.06 $2,494,584 $505,416
College $600,000 15 $277,321 1.06 $664,615 -$64,615
Home $2,000,000 26 $269,085 1.03 $580,306 $1,419,694
$2,789,745 $7,966,899 $2,633,101

As you can see from the numbers above, with 6% YoY return expected, by the end of 2022 I’m SO CLOSE to my FIRE goals. I’m close enough that if I needed to I could stop working and probably be fine.

If I adjust to 10% YoY returns (unlikely but an easy switch in my spreadsheet), things start looking pretty crazy good. Fun to dream, right? If 10% YoY is in the cards, by 2022 I’m set.

2022 Goal Yrs 2022 Value Growth Rate Value GAP
Retirement $5,000,000 26 $989,310 1.10 $11,790,771 -$6,790,771
Pre-Retirement $3,000,000 11 $1,396,395 1.10 $3,984,077 -$984,077
College $600,000 15 $293,664 1.10 $1,226,709 -$626,709
Home $2,000,000 26 $286,934 1.03 $618,800 $1,381,200
$2,966,304 $17,620,358 -$7,020,358

 

Actually, things look really good already… with 10% YoY the total value of my current assets is $13.3M at time of use. Not bad.

2020 Goal Yrs Current Value Growth Rate Value GAP
Retirement $5,000,000 28 $651,000 1.10 $9,388,067 -$4,388,067
Pre-Retirement $3,000,000 13 $833,074 1.10 $2,875,997 $124,003
College $600,000 17 $133,607 1.10 $675,313 -$75,313
Home $2,000,000 28 $195,483 1.03 $447,251 $1,552,749
$1,813,164 $13,386,628 -$2,786,628

 

Of course I’m not going to bank on seeing 10% YoY. I probably should stick to 4-5% to be conservative and leave room for unexpected growth, versus the other way around. Either way, I’m really getting excited about these next 14 months. The next 14 months to a whole different level of living. I’m not going to change my spending immediately, and I don’t plan to ever actually stop working, but I can stop forcing myself into roles that aren’t a fit and that make me miserable. I can maybe start my own company or work for a non-profit or just do work that matters.

Even with 4% YoY growth the numbers don’t look horrible in 2022 if I hold fort. Sure, I don’t have $5M in retirement or $3M in pre-retirement at 45, but I’m at $1.9M in pre-retirement and $2.5M in retirement and nearly $500k in college for my kids. So this is all great news, if I can just survive a year with two kids, including a newborn and given lack of sleep, and a company that seems to want to set me up to fail and to get rid of me. 

2022 Goal Yrs 2022 Value Growth Rate Value GAP
Retirement $5,000,000 26 $899,962 1.04 $2,495,116 $2,504,884
Pre-Retirement $3,000,000 11 $1,273,976 1.04 $1,961,227 $1,038,773
College $600,000 15 $269,309 1.04 $485,011 $114,989
Home $2,000,000 26 $260,394 1.03 $561,564 $1,438,436
$2,703,641 $5,502,919 $5,097,081

This year is everything.

2021 Net Worth Goals by Bucket ($2.5M Total)

Next year COULD be a really big year for us. I’m estimating we can take our net worth from $2.2M to $2.75M by the end of the year. I would love to see us go to $3M, but I think $2.5M-$3M is within striking distance if I keep my job until Jan 1, 2022.

If you haven’t been following — the majority of this expected growth is from company stock which has increased a lot since I started the job. I am in my final year of vesting and each quarter I should get a chunk of change (and then some) which is the only reason I’m able to save so much next year. If I lose my job all bets are off. I’m trying really really hard to not lose my job.

These net worth goals are now family net worth goals. I continue to track my “own” net worth for comparison to my numbers since I started blogging in 2006, but the numbers presented here are family net worth numbers. When I refer to my “own” numbers I consider cash in my personal checking account, my IRA/401k, the full value of 529 (since I fund this directly), and half of the value of home on sale (even though I pay a larger percentage of the mortgage.)

I’ll be blogging my $500k-$1M net worth growth over the next year, so if you’re interested in seeing if we can hit these goals follow me at @everycentcounts on Twitter.

Numbers Below = [2020][2021]

  • Emergency Fund (Cash) [$65k][$72k]
  • FIRE Bucket 1 (2030) [$1.1M][$1.4M]
  • FIRE Bucket 2 (2050) [$428k][$746k]
  • 529 (2-3 Kids) [$99k][$249k]
  • Home Value (On Sale*) [$493k][$505k]

Total Networth (Pre Tax):

  • 2020: $2.2M ($4.4M age of use value**)
  • 2021: $2.7M ($5.2M age of use value)

* house value on sale = value of house – 10% of house value (realtor and fixing up fees) – what is owed to bank – any taxes owed (actual cash in hand estimate after sale)
**age of use value = I focus on “age of use value” in my net worth calculations, which is the value of each bucket * 5% YoY interest growth for my interest-earnings accounts and 3% for home value, for expected length of ownership. Ie the 529 accounts are considered 17 yr average investments (and each year that goes down a year.)

The day we surpassed $2M in networth. Can I buy a Roomba now?

Holy hell. Personal capital shows our family networth crossed the $2M threshold. This was my goal for 2020, yet it felt so far away earlier this year. A bump in my company stock was really all it took, but it was far from guaranteed. Even with deducting $100k from the cost to sell our home (which I have set up as a liability in personal capital) we’re across that $2M mark. Insane!

2 million networth

It feels especially weird given the state of the world, with so many people struggling. While living in a HCOL area with 2 kids and hopes for one more, I can’t start throwing heaps of money at charity as I’d like to yet, I’m looking into doing a donor-advised fund next year, as well as where we can help locally at food banks and such. I’m a little nervous about next year as the breadwinner of the family who happens to be about to go into labor any day now (and who has to hold down a $7k a month Bay Area mortgage), so want to be smart about giving strategies, but it’s time to think seriously about that. I just feel overwhelmed as so many people need help right now. I feel guilty for having “so much money” and yet, so many people have a lot more $ here too. And many are struggling to put food on the table. I feel weird being one of the people benefiting from the state of the world as I have a lot of stock, but at the same time proud of myself for being frugal and investing in my 20s, and also landing this job and seeing the potential in this company a few years ago.

Sure, the stock market could crash overnight or my company could go belly up — and at this point I’m holding way too much stock in my company despite selling along the way. It’s about 25% of our net worth, which is way too risky. But I also want to hold off on cap gains until AFTER next year, since I’ll likely go back to a normal income once I vest my final year of my initial grant. But that’s super risky. Yes,  I can and should sell my new RSU vest now, and I probably will (it’s down a bit so holding until 2021 to either take a loss next year to offset potential short term gains later in the year or just take a gain if it goes up again.) I’ve held on to most of my ESPP against the wisdom of finance professionals everywhere, which has proven to be quite a lucrative bet. Those get taxed at a mix of income and cap gains, and my cap gains right now in CA is basically the same as my income tax rate, so it feels prudent to hold just a year longer even if they could end up being worth nothing. I’ve decided that in order to build wealth there is some truth to needing to do stupid things and take risks that aren’t wise. Men do this often. Many of my male colleagues haven’t sold one share of their stock even though they know it’s super risky and you know what, they’ve made a fortune in holding. Sure, they could lose it all as well, but so far I know some of my coworkers are set to retire tomorrow, all because they are men who take on too much risk.

Maybe risk is ok. The more money you have, the more risk you can take. It’s not quite putting it all on red. But I would not have $2M now if I hadn’t ignored my CFP’s advice and sold all of my ESPP up front. Instead, I have over 1000 shares I’m holding now, with the total value hovering around $500k. Is that stupid? Maybe. They say don’t hold your company shares as you have too much riding on the success of your company already just with your employment. That’s probably true. And RSU has no reason to hold since they’re taxed as income on vest and you should treat as a bonus (and you likely wouldn’t go and buy your company stock with a bonus – also true.) ESPP is a little more complicated. In typical slow-growth companies these give you the benefit when you make a purchase, a small 15% discount on shares, plus any growth within a lock back period. But holding you can pay cap gains tax on any growth, which can be substantial in a fast-growth company. So I’m holding. Maybe I’ll regret it. So far, doing this has catapulted us to our $2M net worth goal.

Looking ahead to next year, I see $3M as a possibility. It’s unlikely we can go from $2M to $3M, but it could happen. Right now I’m estimating about $2.5M-$2.75M by the end of next year if the market holds. If it goes up, we could get to 3. There is something about that $3M number… it’s equal to about $1M in 1981.. so hitting $3M, esp in a HCOL area, is when you actually feel like a “millionaire.” It seems like a shit ton of money (and it is) but when you have $3M in net worth, I think your world changes a bit. It definitely changed for me at $100k and $500k and $1M, but $3M is the beginning of a new chapter. It’s when you cross the threshold from upper middle class to entry-level wealthy. At least in the Bay Area — $1M, $2M, $3M, $5M, $10M are these levels of wealth. $5M is realistic for a family with 2 tech workers who are each making $250k a year. Since my family is 1 tech worker, it’s still possible if I can have a few home runs with RSUs (ie make 500k-1M per year a few times in my lifetime.) If you don’t work in tech, or settle for whatever a company decides your level is worth without convincing them you’re worth more, then it’s really hard to get there.

I still have my eyes on the prize ($5M net worth) but when we get to $3M, I’ll loosen up a bit. I’ll fly my mom out twice a year and put her up in an AirBnB for a few weeks so she can spend time with her grandkids. I’ll send my sister that TV and other random gifts she keeps asking for (actually maybe I will do that this year.) I’ll take my family on some nice vacations and pay for my kids to take enrichment classes that cost too much but it won’t actually hurt our retirement goals so why not? And I’ll seriously look at how to build the donor-advised fund I’m going to likely start next year so we can be quite generous with charity in the years ahead, which I haven’t made a priority in the past.

I’ll do a full recount of 2020 networth once the year is over as there are still a few paychecks coming in and expenses going out. I’ve spent way too much on fixing up my new house and it isn’t done yet. Next year I’ll prob spend too much buying furniture for the house (to be fair, we’ve moved from an 800 sq ft one bedroom where we were still using mostly craigslist furniture or IKEA stuff I bought when I was 22) to a nearly 2000 sq ft house… we don’t even have a kitchen table right now or any place to sit outside in our yard except our camping chairs. So I’m going to splurge because life is now and we are in a good place to buy things to increase our quality of life without going overboard. I’m not talking luxury items but thing that will make us happy because we spend most of our time in this house (well pretty much all of our time now) so…

My boss’s boss (my former boss) even liked a small project I did this week, which made me quite happy. I know I’ll never be able to be good enough for this company, but if I can keep turning in quality work I can survive through the end of next year, which means $3M net worth is no longer a pipe dream. And once you hit $3M, theoretically you can make 10% on that YoY and get to $5M in 6 years. Yea, 10% YoY gains six years in a row after a bull market is quite unlikely (might see 6% YoY losses) but being this close of striking range to the $5M net worth goal is… just… well, I don’t even know what to think about it. If I can get to $5M by age 40, that would be a whole other level of crazy. And if I’m going to do it, that’s on me. My husband brings in a stable $90k a year, and that certainly helps, but I’ve got to lean into the crazy that is RSU growth in Silicon Valley’s top-performing companies, negotiate well for my next gig, and just hold on for dear life. I have no interest in being a VP anymore — I just want to FAT FIRE (well FIOR – financial independence, optional retirement.) $3M gets us close. $5M gets us all the way. Can I get to $5M by 40? Even by my calculations that’s highly unlikely. But a few years ago $2M by 37 was also very unlikely. So anything is possible. And when I set my mind to something, well, either I ADHD space out and it never happens. Or I ADHD super focus on it and I get there.

To my readers out there, thanks for your support along the way. I hope it is as fun for you to watch my nutty progress as it is to live it on my end. Right now my biggest focus is on NOT getting coronavirus, surviving childbirth, having a healthy baby, and getting myself healthy in the year ahead. It’s ALL possible. The world SUCKS right now and it’s hard to stay positive, but at least for me, good things are happening. I don’t deserve these good things any more or less than the next person. I am grateful and in awe of how the world works in such mysterious ways.

And I like that my couch fits so nicely in my family room. And I want a kitchen table.

My New Buckets FIRE Retirement Strategy

This will be a short post — but just documenting as I figure out my family’s goals for Fat FIRE / Coast FIRE using a new buckets retirement strategy. I really like this model as it helps me understand how much money I need to earn and how much I need my existing savings to grow in order to live the life I want. Since these are “Fat FIRE” goals they are a bit aggressive, but I like aiming for aggressive goals. I know if I hit them, then I’ll be in a really good place. If I don’t, then we’ll still probably be ok!

I’m now including my husband’s savings in a total Fat FIRE goal–he’s note exactly on the Fat FIRE train, but he’s naturally frugal and has agreed to maxing out his solo 401k annually, so I’m looking at all our money together for our net worth goals. At the end of the day, it is “our” money since if either of us get sick and need care, our funds will go to that.

  • Goal 1: 7M in retirement accounts by age 65 (by 2048 – to last 35 years)
    • Current: 514,000 (est 2M in 28 years at 5% YoY)
    • Gap: 5M (1.3M in today’s value before returns)
    • (*at 10% YoY value is 7.4M and I don’t need to save a dime more today to hit goal!!!!)
  • Goal 2: 3M in taxable accounts by age 50 (by 2033 – to last 15 years)
    • Current: 757,076 (est 1.4M in 13 years at 5% YoY)
    • Gap: 1.6M (750k in today’s value before returns)
    • (*at 10% YoY value is 2.6M and I only need 125k more saved today to hit goal – riskier since 10% YoY over 13 years is shorter time horizon, but not impossible)
  • Goal 3: 150k per child 529 before they turn 3
    • Current Kid 1: 35k (Plan – superfund 75-150k next year)
    • Current Kid 2: 35k (Plan – superfund 75-150k next year)
    • Current (Future) Kid 3: 18k

Since I am unable to save more than allowed in tax-advantaged accounts for retirement, what is likely to happen in that some of my 7M retirement goal will be in taxable accounts once I save the 750k additional to hit 3M at age 50. And, of course, the above does not into consideration that my accounts may perform well about 5% YoY, especially with dividends reinvested! But for now, I think these are really good goals. Some may say they are crazy goals (do I really need that much) but at least they are clear goals I can aim for, to help guide spending choices over the coming years.

The above also does not include emergency fund, home equity (I would like to own house outright on top of the amounts above.)

I am doing this all pre tax because I’m too lazy to calculate it post tax and I think if I can get to 3M + 7M pre tax buckets I’m still in good shape!

What do you think? Is this strategy too aggressive?

My Journey to $2,000,000 — A Quick FIRE Check-In

2020 is weird. Remember when our stocks dropped about 30%, then bounced right back? I made some not-so-wise money when the market was down, but also made a few good ones. And maybe the bad ones weren’t so bad after all.

My asset allocation is all out of whack. Still. It’s worse, because I admit I’m a wee lil addicted to individual stock buying and those individual stocks are primarily US tech stocks. I do not recommend this to anyone, this is me being dumb and seeing investing as a hobby outside of my actual diversified index fund investments. It was fun when I had about $50k in my old Sharebuilder account and I could see if I could beat the market, for kicks. Now I have about $300k in that account (moved to another broker but nonetheless), it’s getting a little, well, scary.

Right now, my networth (after tax*) looks like this:

  • Cash: $318,937 (downpayment fund + emergency fund)
  • US Large Cap: $546,150 (65.5%, target 43%)
  • US Small Cap: $31,810 (3.8%, target 5%)
  • International Developed: $183,258 (21.9%, target 27%)
  • Emerging Markets: $28,546 (3.4%, target 5%)
  • US Bonds: $0(0%, target 12%)
  • Int Bonds: $45,142 (5.4%, target 8%)

TOTAL: $1,154,954

(*why after tax? I count my networth based on after tax value, not including any penalties or fines for early withdrawals, so I have a full picture of my actual savings and asset allocation)

As you can see above, I’m wayyyy overweight in US Large Cap.

This doesn’t tell the whole picture, because:

  • it doesn’t include my husband’s savings or investments (~$200k which help the diversification but not much, total ratios look like 65/3.9/21.8/3.7/.4/5.3 %)
  • it has $0 in bonds because I sold US bonds for downpayment, and need to rebuild my bond fund
  • the above does not include my potential RSU earnings in the next 16 months, which after tax = ~ $536,896 if I can keep this job for another 16 months, which I hope I can! (total networth including 16 month RSU vested and taxed = $1,691,850)

At this point, for my goal of $2M after tax networth by 40 (solo, not including husband’s savings/investments), I think I’m making good progress. The next 16 months will be key. If the stock market crashes, given how heavily I am invested in stocks, the $2M goal could be far off. If it goes up, then I could be closer than I think.

$2M isn’t a substantial goal for me. I won’t feel good about my personal finance progress until I get to $5M. I want to do that by the time I’m 50, so I have enough money to raise a family in a very HCOL area and help my mother and sister out, so they don’t have to worry. My mother will be 76 then, and I expect that to be the age she is running out of money. When I hit $5M, I plan to pay her back for my college education and wedding (if she really needs the money before then, I will definitely help her out and I already pay for her trips to visit my family, etc.)

$5M seems like a long way off, but if I can find another company growing at anywhere near a similar rate to my current company and get an equivalent or larger RSU grant, maybe 2-3 more times, it’s somewhat possible.  I didn’t think $100k was possible just 15 years ago, so who is to say adding $3.5M in 10 years isn’t possible? With my current funds growing at 5% a year, that will add about $1M in 10 years, so I just have to makeup for $2.5M, which is saving $250k a year. That’s going to be rough, maybe impossible. It depends what kind of salary and total comp growth I see in the next 10 years. It’s probably impossible… but I always pick impossible targets, why not this one?

 

Congrats to 1500 Days to Freedom on Early Retirement…

I’m kind of sort of part of the personal finance blog community. Kind of sort of as I write way more about my mental illness and its intersection with my finances than specific and actionable financial advice for others. When I started writing this blog in 2007, just a little under 10 years ago, there were a handful of personal finance blogger types who had a strong following, and a lot of folks who had a handful of readers and intended to stay that way. Today, it’s kind of crazy how the personal finance blogging community has picked up and become quite the business.

One segment of the community is the “early retirement” folks — the ones that blog about saving money and investing in order to retire, usually in their 30s or, more realistically, 40s, in order to live life on their terms. This week, blogger 1500 Days to Freedom left his FT job with $1.4M in networth. I guess between his family’s frugal living, gains on his portfolio and the lower cost of living in Colorado where he’s based, $1.4M will last him and his family a lifetime. it’s a significant accomplishment, especially at age 40. Strange as it is, I’m only 6.5 years away from 40, and it’s highly unlikely that I will have $1.4M, even collectively with my husband at the time… Continue reading Congrats to 1500 Days to Freedom on Early Retirement…