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Once you reach Financial Independence, What do you Want to Retire Early to?

Happy Financial Literacy Month to all of my FIRE community readers!

Much like the holiday season, this is our month to celebrate, renew and refresh our goals in pursuit of financial independence!

Today (while I wait for daughter number two to decide to join the rest of us outside of my womb- 40 weeks!) I want to take some time to dream a little and talk about what I want to do with my time after my husband and I reach FI.  Even since I started this blog our goal has shifted to a full FI plan, where we will not need his income even to pay the mortgage on our primary residence.  This pushes our FI date to about 3.5 years if I keep working full time, vs the year or so if we wanted to continue to depend on his income for our month to month mortgage expense.

That is disappointing when it comes to spending lots of time with our daughters while they are tiny, but the trade-off is that we can take adventures like spend a year as a family on a sailboat as they get older, or take a year for lan…

3 Ways to Manage Downside Risk in pursuit of Financial Independence

Since the FIRE movement has been growing it has garnered increasing amounts of media attention from mainstream finance talking heads, much of it negative.  For some reason, these folks who have professed for years that their only goal is to help people with their finances often react negatively to a movement to put the power of financial planning and analysis into the hands of the individual.  In some cases, like Suze Ormond, her initial reaction was that everyone needs at least a $5 million dollar net worth to retire, which she then tempered with a follow on article that was slightly less risk averse.

Some FIRE writers, such as Tanja Hester have discussed their techniques for downside risk mitigation in FIRE by modifying their planned withdrawal rate below 4% which implicitly increases their savings amount to reach FI.  I am here to talk about some other strategies that can be implemented as appropriate to mitigate downside risk in your pursuit of FIRE.

1) Don't pay off your mortg…

Parents on FIRE - Planning for our Children's Future 529 IRA

My husband and I have been having a discussion on and off for a few years now about how we want to financially support our children in their lives.  We started by putting a few thousand dollars into our daughter Peanut's 529, and a few hundred into a University of Alaska 529 (in case she wants to go there, or take summer classes with them).  Looking at my handy-dandy compound interest calculator with an assumed rate of return of 5%, that gives her $13,000 at age 18 to spend specifically on school.  Not very much, right?

Part of what has been stopping us from adding more to these accounts are our many questions around what college will look like in 15 years.  Will it be close to free for students by then, as it is in many other first world countries?  Or cheaper than the mortgage-level cost it has today?  To make this question more complex, many schools in the Anchorage School District are foreign language immersion.  The one closest to our house is French language immersion, the n…

Options for FI

In an earlier post I had mentioned that I was about 18 months away from achieving FI.  This is a limited FI option that would leave my husband and I with our mortgage still outstanding, but would be acceptable because he does not plan to RE (retire early).

However, using a spreadsheet that I got from the Mad Fientist's website I calculated that we both could be completely to FI if we maintained our current savings rate of 55% for about six years.  This would ultimately be more savings than we need, because our rental property is on track to be paid off in the next decade plus our home mortgage would eventually be paid off by our investment income as well.  This would leave us with an additional $500/month around the time our kids are middle school aged, and jump up to $1500/month by the time we approach our "second retirement".  Both of our mortgages are below 4% interest, so beyond lowering our monthly living expenses paying them off early is not our top savings goal (a…

Maternity Leave and Financial Independence

Maternity leave and financial independence can seem like a contradiction, but like with many other life events given the right circumstances and preparation maternity leave can be used to continue or even speed up the path to financial independence.

I am preparing to have another child in short order, so have had to determine my financial approach to maternity leave.  I am lucky with the timing, because my employer changed in the last year to include 6 weeks of paid short term disability (after a delay of one week to process the claim) and then six more weeks for paid parental leave in our benefits package.  This adds up to 12 weeks of leave at 65% pay, plus one week in which I will use my saved sick leave.

In addition to this employees can purchase supplemental short term disability at the rate of about $30/month.  This will pay for 45% of base pay regardless of any other pay being received during the 12 week FMLA period following childbirth.  Since my husband and I were trying to g…

FI and Alaska

How close am I to financial independence?

I am pretty close to financial independence for someone who stumbled onto the FIRE movement within the past year.  My estimate is that I'm 1.5-2 years (thanks stock market downturn!) to reaching my minimum viable goal.  My husband has a job that essentially functions how I would like mine to once I reach my goal; he is self-employed, so can take days off without a hassle, travel and work as it suits his client needs.  That makes achieving FI a little simpler, because it makes my goal to complete our second retirement savings and cover living expenses excluding our mortgage.  This would put us in a position of having excess income and the option of not depending completely on savings until we feel more comfortable with a FI lifestyle.  Since we live in a higher cost of living community, that amount of savings would let us move many places in the world or US if we decided to cash out of our primary residence.

So other than a high cost of liv…

Starting my FI Journey

Hello, I am a mom, professional and now blogger starting on my FI journey.  I first heard about the FIRE movement a couple of months ago, when my husband shared this New York Times article with me.  I have been a "saver" for most of my life, and he thought I would appreciate the community.  Boy was he right!

Ever since then I have been reading other FI blogs like Mr. Money Moustache and listening to podcasts such as Choose FI and the Mad Fientist.  This has not only let me know that I am not the only person in this crazy world who doesn't base their joy and self-esteem on consumption, but also taught me some tips and tricks that I otherwise would not have come across.  Right now I work at a non-profit, so I found this Millionaire Educator Mad Fientist podcast particularly helpful.  An interesting thing that I have encountered in the healthcare non-profit world is that not many people talk about money, whether it is their own benefits or their unit's budget.

I am also…