[ Follow up post to “The Fight That Made Me A Better Wife” ]
So here we both are, after a fight, hanging out on our Craigslist sofa that came with a mysterious orange stain. It’s already pitch black outside because Jared spent another 12 hour day at work again. I’m thinking about our exit strategy after Jared’s not-so-great week at work. The incident had a big impact on me. I didn’t like the angry and stressed out husband I met that day and I definitely don’t care to see Mr. Hyde again. The phone-throwing incident had a huge impact on me. But thanks to that, I got to have the best conversation so few lucky people get to have.
We started talking about the different levels of financial independence and what we needed to do in order for each plan to work for us.
I love to talk financial independence (FI) plans but the husband is only going along with me with more vigor than usual because he feels guilty about the phone-throwing incident. He does not want to leave his job but he does want to alleviate the other stressors that aren’t writing him a paycheck.
“So you don’t want to leave yet?” I asked.
“We don’t have enough saved yet.”
“Yes, I know that, I mean, when we do.”
[Several awkward minutes of blinking at each other passes]
“Do you like your job?” I asked.
“Ummmm, yes…it’s good honey. For the money, it’s good and I like it. It just requires a lot of attention so I get burned out with everything else like the house and rental that needs my attention too. I don’t want to retire early unless we definitely have enough.”
“Well I’m not happy with how stressed you are, we have to do something about that.”
It took a cumulative of few hours of discussion (on and off) on the sofa to hash through everything. We were able to look deep within ourselves and pick out what has brought us the most happiness. For Jared, it was just to feel relaxed and hang out with me without 13 chores waiting for him. I told you he’s a total kid. For me, I…wanted to spend my life eating tacos and maybe write a few books to be remembered.😁
We expanded upon why that would bring us happiness and how we could achieve them on our journey through the various levels of financial independence/retiring early (FIRE).
We started out trying to envision our ideal life by scribbling what we wanted on a sheet of blank paper. It didn’t matter how trivial any of it was. My goal was to find items that had common ground in between both of our lists. The simple prompt was just a list of things we wanted to accomplish before turning 80. I found my ideal FIRE ridiculously exciting that I couldn’t stop grinning or peeping at hubby’s sheet.
The exercise took 30 minutes. After that, it was clear that to properly capture the seconds of precious life and expand upon each second for maximum happiness we needed to sacrifice some things.
Big decisions were proposed that day and they solidified throughout the course of the days following:
1) We agreed to sell our rental. 2) Push having children to a later date. 3) Lessen hubby’s commute time to under 15 minutes (crazy ambitious.)
The greatest thing about the 3 things above is how possible everything seems so far. There’s no sugarcoating that money opens doors and we’re extremely lucky.
LILY’S IDEAL FIRE
Gallivant around the Earth for food and YouTubing it.
Start 3 successful businesses.
Being able to afford dance lessons, summer trips, carriage rides through Central Park and dining at Red Lobster besides only on birthdays.
Assure generational wealth.
Make history / Wikipedia page.
Do some cocaine on the last day of my life (just curious).
HUBBY’S IDEAL FIRE
Be a stay-at-home parent.
Be with family.
Netflix and video games all day.
Learn things and read books.
Never worry about money.
We agree with most of each other’s lists but I have more ambitious/crazy goals than he does. His ideal FIRE life resembles a regular a carefree retirement whereas mine is…more epic! 😎
LEVELS OF F.I.R.E
FIRE Level 1
ETA @ 2020
That’s just 3 years away! Our family currently live on under $30,000 so going the lean route wouldn’t be much different or a crazy stretch. An annual return of $40K at 4% would mean a clean seven-figure net worth of liquid assets. The biggest pro is how quickly 3 years can fly by. We would definitely be able to optimize the most time with family but we wouldn’t be able to hit much of anything else on the ideal FIRE list. Going this lean would likely make us child-free unless some miraculous reform happened to our health care system. Healthcare is a huge expense. The cost of children is a luxury. Having just one child would cost us $1,000 in potential loss income every month just for room & board.
The markets are also inflated right now. We might continue to see 3+ years of climbs. My husband believes those aiming for FI/RE would need a market correction first to feel out of the woods. Things would be a little tight for a household larger than 3 on $40,000. It worries me what will happen 20 years, 30 years from now if all that’s covering our bottoms is $40,000 a year. What if property taxes continue to skyrocket? Not to mention the future of healthcare? Hyperinflation? What happens after the baby boomers retire? To the economy? To market returns? It’s all theoretical to bet on $40,000 a year. These 8% market returns and 4% withdrawal rates are historical averages and they do not predict the future. It’s too much uncertainty for my tummy.
No way, Jose!
FIRE Level 2
ETA @ 2023
This was our original baseline FI number and it is sufficient for a family in a large metro city. Our savings rate should catch up to this goal in 4 to 5 years time. This is as far as we know in terms of job security. Raising a family on $60,000 a year is our emergency eject button if my husband ever wanted to dig his eyes out instead of going to work one day. Thankfully, hubby doesn’t hate his job that much (right now) so that makes things less time sensitive.
The other good news is we are optimistic about our growing savings rate and hubby’s career prospects. After his employment contract ends, Jared can choose to stay with his current employer or move on to something less stressful. I’ve egged him to take on the role of a public servant but the pride he ties to his corporate work makes me think that he will likely stay with his current employer. Even though it is stressful, he enjoys his coworkers and he likes his company.
I’m not sure if $60,000 would be able to support the habit of gallivanting the Earth for food but it would be sufficient for us to be a normal, middle-class family. There will be no private school nor impromptu summer trips to Paris but we would still have it all because we’ll have each other.💑
Not preferred but doable.
FIRE Level 3
By this point, we talked about what we wanted to do with the rest of our lives. Interestingly, I noticed we were no longer having a discussion about money or “but can we afford it?” I also noticed my mood sifted from uncertainty to a fun tone. $40K a year would not buy my ideal without clipping some coupons and adjust the till for unforeseen sacrifices but $80,000 sounds just about right. Hypothetically, our very rough estimate of expenses would look something like this…
Food – $15,000
Kid – $15,000
Mortgage – $15,000
Healthcare – $15,000
Everything Else – $20,000
I want to budget for dance lessons, college tuition, new roofs, water heaters, summer vacations, dining out, carriage rides through Central Park. This $80,000 would grant us a terrific cushion for almost all things. With traveling and other expenses, $80K won’t last too long but I believe it’s enough. Unfortunately, this is a long 10 years off in the future if we hack it right.
“Would tech talent still be in demand? I’ll ease up but I won’t quit.”
“Wait, really? You still want to work even if you have a $2 million dollar investment portfolio?”
“If my talent’s still in demand, we would be saying no to a lot of money. $80,000 a year isn’t that much if you have kids.”
“What about spending time with the kids? Having dinner with a family?
“We can buy a condo closer to work and I’ll walk home if you’re just worried about family time. We still come out way ahead if I worked.”
“Hmmm…oh that’s true…”
I found Jared’s answer very surprising. He values security, I knew that, but with 2 million dollars in liquid assets, I’m certain we’ll be OK. I did give a speech about creating generational wealth right before our discussion because I wanted to make sure he knew that was something I was not willing to compromise on. I think my speech got him ramped up and competitive. That may have overclocked him…
FIRE Level 4
Draw the curtains please, I’m done. $3 million in liquidity would be THE goal. By this point, I want to devote full-time into family, making memories and some creative writing to keep me from boredom. Real wealth is being able to buy freedom without a strand of concern. I highly doubt our annual expenditures could even come close to $120,000 even if we tried. These are post-tax figures! I have a hard time spending $8 on salad (because it’s bloody salad…)
It just seems so far away though. I’ll be over 40 by then. If I don’t have 1/3 of the list of things on my ideals list done by 40 – this girl is going to be mad at herself! I’ve mentioned before I wanted to end up on Wikipedia by the time I’m lying in my coffin. I’m already 26 🙁 I’m not afraid to die, I just don’t want to die after a lifetime of achieving nothing especially after being so blessed in more ways than I could ever deserve.
“YES! Screw you guys, I’m goinggggg home.” (Jared actually said that! 😆)
We are so so so blessed to even have this discussion and entertain these crazy benchmarks. Look, momma, no benefactor!! I hope I’m not coming off ungrateful by earmarking the different levels of financial independence and rejecting them. That’s not my intent. This was just me and my husband’s discussion condensed. F.I. is doable but since everything in life is negotiable and relative, our numbers are different. People envision different goals for themselves within the realm of those possibilities, makes sense 🙂
Are you one of the lucky few to have had this conversation? What is your ideal life and income after FIRE? What is on your bucket list?