The FIRE is Still Burning

Reading the retirement issue of the New York Times Magazine this weekend reminded me that I still have things to say on these topics, despite the lack of posting! The "FIRE" acronym has been around for years, but now, beyond just "Financial Independence Retire Early," there are subgroups like Fat-FIRE for people who retire early and have luxurious lifestyles, and Lean-FIRE for people who are managing their early retirement by being extremely frugal. Coast-FIRE means you save a lot early on so you can kick back later. Barista-FIRE means you are sort of retired but working part time in some sort of job to get health insurance.

Now I feel like I'm at the supermarket looking at all the different types of yogurt. I guess it wouldn't be America if we didn't figure out a way to expand every concept into a million different flavors!

I guess my FIRE flavor is a bit of a smorgasbord. I'm probably least aligned with the Lean people. While I have always valued fragility and spent many years trying to live well below my means, I've never felt really hard core about that approach, as I allowed myself plenty of little splurges. Coast sounds a lot like me: I wouldn't be in my current financial position if I hadn't saved big chunks of my earnings starting in my 20s and 30s. Barista doesn't seem like quite the right word for my current work status, but I do feel like I'm off the career track, working rather lightly so I can feel productive and get benefits. 

How about Fat? I've never felt particularly fat. But now there's that pandemic and perimenopausal weight gain that has forced me to buy more new clothes than usual in the last few years. I'm NOT enjoying THAT kind of fat. But I'm feeling a little chubby in the other way too, in terms of living well. In the last couple of years, I've felt secure enough to start spending more money. Some of those new clothes were at price ranges I never would have even imagined before. If I told my 35-year old self I'd someday spend $350 on a scarf, she'd have been horrified. But I did, and it's a gorgeous and unique scarf that goes with everything and elevates any outfit and I wear it a lot and feel like it's worth every penny for how happy it makes me. Maybe it even makes me look thinner??? 

And Sweetie and I have decided that when we do our next big trip, hopefully to Asia sometime next year, we're going to stop torturing our bodies and fly business class. We're also going to upgrade one of our cars sometime soon-- not to a Maserati or anything, but something with more comfortable, power-adjustable seats for both driver and passenger. It's shocking how hard it is to find a sub-compact SUV with a power-adjustable passenger seat-- many brands just don't offer it, even in the top-level models. So it looks like an Audi, BMW, Lexus or Volvo is in our future, for probably somewhere between $40,000-50,000. This feels so splurgy to me, but then I found out that my sister and her husband have two new (bigger) cars that have each cost more than that, all while they have two kids in college who will be graduating with some big debts, it sounds like. Auntie X will try to reserve some funds to help the kiddos out, of course, but I'm prioritizing my spinal health for the moment! Being able to do this feels like true luxury to me. But I don't think I'll ever quite fit in with the true Fat-FIRE adherents, as they seem to mainly be Silicon Valley entrepreneur types who cash out of a start-up and have more extreme lifestyle goals. (Or else, as one person in the NY Times article points out, they are people who are raising kids in expensive places like San Francisco, and therefore have huge budgets for lifestyles that might seem not that fancy elsewhere.) I still have a lot of Lean moments of watching for what's on sale in the supermarket, using coupons, and picking up coins whenever I spot them!

Anyway, that is my little flicker of FIRE for today! I haven't posted in forever but life is good! I continually resolve to dump all my money thoughts in this blog where they belong, so maybe one of these days I'll start posting more again. Thank you to those of you who still stop by and leave comments!

A Whirlwind of Volatility

I'm not just talking about the stock market these last few days-- I'm talking about the last few months of my life.
You would think I'd have spent more time blogging lately, given that I quit my job and at least in theory have plenty of time on my hands. But the end of 2017 got a little crazy as we had to do a lot of work to put our apartment on the market, and then we sold it so quickly, it was a hustle to get ourselves packed up and moved out by the beginning of January!
I think we had pretty great timing, actually. We hit the market at a point when there weren't a lot of comparable listings in our price range. Within days we had multiple offers and a bidding war, and ended up with an all-cash buyer at above our original asking price. Seeing what's been going on with the tax bill and now the gyrations in the stock market, I'm very glad we weren't trying to sell now or later this spring.
The buyers wanted to close fairly quickly, but luckily we had also managed to find a house in an area that we liked, so we knew we'd have someplace to go-- sort of, anyway. The timing didn't totally work out and we couldn't move in right away, so our stuff (what's left of it after purging and donating and selling a lot) had to go into storage for a little while, but beyond that, the closing on our house went pretty smoothly too, since we were also paying cash. We also had good timing in that during our storage limbo, we decided to get away for a little mini-vacation in January when it got so cold and nasty in the Northeast, and not move into our new house til later in the month when it was better weather. And now we (by which I really mean Sweetie, whose apartment it was) are sitting on a big chunk of cash that we luckily didn't invest right before this stock market correction.

So we are just now settling down to the next phase of this new life, but still feeling a little at sea. Our expenses are going to be so much lower, it's kind of blowing my mind. Our HOA fee is a fraction of the maintenance on the apartment. The car insurance is cheaper, and parking is free. Even joining the local gym, which we did today, is going to be about half what we used to pay in NYC. The local grocery stores tend to have somewhat lower prices than in the city. Our utility bills may end up higher since we have electric baseboard heating. And at some point we may need to get a second car, depending on what we end up doing with ourselves in terms of jobs or other activities. So far, our main activities have been unpacking, exploring the area, and marveling at how beautiful and quiet it is here.
We'll see how it goes. I do miss the urban vibe of being in Brooklyn and going into Manhattan almost daily-- we drove back into the city for the first time the other day and ended up in a neighborhood I didn't know well and I kept thinking how nice it seemed and wondering what it would be like to live there if we someday decide we want and can afford a pied a terre. I kind of miss just watching people on the subway. It's weird to have to drive everywhere. But life also feels very peaceful now, and all the stresses of our former apartment, former jobs, and former expenses have just-- poof! -- gone away.

More Thinking About Early Retirement

On the last post, bethh commented:

"I'm curious how you decided to set whatever goal it is that you have for retirement - is it salary times x, or spending times 30 years, or what? I feel pretty sure that if I were in your shoes I'd be retired already!" 

This kind of got me thinking about whether I could indeed be retired already. With about $1.2 million in assets and no debt, I already have a lot more money than many people do when they retire. But I'm still under 50, so I have a long window of time that money has to cover. At some point years ago, I had a somewhat arbitrary number of $2 million as my retirement savings goal, which I guess I had calculated would cover what I thought would be my desired retirement lifestyle. I can't remember exactly what math I did at the time-- maybe I should search my own blog archives to help my memory!
Some people use the rule of having at least 25x what your annual spending will be, on the theory that you can safely withdraw about 4% of your savings each year without eating into it too much, since it would hopefully have investment gains of more than 4% each year.
You also have to think about what "retirement" really means-- does it mean you don't work at all? Are you going to want to fill all that spare time with expensive hobbies and travel? Or are you willing to downshift to some other sort of work that will bring in some income, even if it's not much?
I've played around with lots of scenarios in a retirement calculator-- retiring now, retiring later, having a low income now and retiring in a few years, etc. I always felt like I was more or less on track but retiring early never seemed comfortably within reach based on my current lifestyle.
But here's something that I never added to the scenario: Sweetie.
One night when I was noodling around with all this, Sweetie said "does it let you input another person? You know, we're in this together..."
It's not that I didn't think we were in it together, but actually running the numbers this way made a huge difference. Sweetie owns real estate, and has savings, and a small mortgage. After being unemployed for a couple of years, Sweetie got a job that pays a low salary that covers some of our expenses. More importantly, at age 65, Sweetie will get a good old-fashioned defined benefit pension. And someday, Sweetie will most likely inherit a few hundred thousand dollars unless the family circumstances drastically change.
Plug all that in, and boom, we can both retire now.
Of course, this does not make me totally comfortable. We've talked about getting married at some point, but we aren't yet. Our finances are totally separate except for a token joint checking account with $2000 in it. And I just have this independence thing ingrained in me somehow-- the idea of being supported by someone else is just bizarre! But given how miserable I've been at my job, this is now making me think A LOT about quitting.  That may not be "retirement" just yet, but it's pretty amazing to realize that I may have the freedom to just walk away and not worry too much about what my next source of income is. I could try a new career, try doing consulting work, or just step back into a lower level job with way less responsibility. I haven't had more than a 2 week vacation since I was 22, and the idea of just having some time off is very appealing. Once you get this kind of thing in your head, it's hard to stop thinking about it...
So much in the world is uncertain right now-- would it be insane to just walk away from a secure six-figure job??

How to Invest My Cash

For the last few months, I have had a very pleasant problem: approximately $150,000 in cash sitting in my savings account. Most of this is from the proceeds of selling my condo, plus a little growth from savings and interest. I have been holding off on any big investment decisions for a while, partly out of pure laziness and partly because there are some possibilities floating around for how to use the money. 

One thing I might do is buy all or part of some real estate Sweetie owns, as since Sweetie isn't working and I am, there could be some tax benefit to me being the one with the mortgage. 

Another possibility is going into business with some friends who want to invest in rental real estate upstate. There are some college towns where the investment return on properties is quite attractive. Though I didn't want to be an active, hands-on landlord, I don't mind doing some occasional work and otherwise being a passive investor, and trust the friends involved, one of whom has hands-on experience as a real estate agent and property manager.

And then there's just the stock market. I just bought $20,000 more in mutual funds to add to my E*Trade portfolio. I am tempted to put even more in, figuring I could sell some of my earlier investments if I need to free up cash later. 

There's no easy answers, but again, this is a good problem that I am glad to have!

Update on Mom's Finances

I haven't written much about my mom over the last 5 years or so since my Dad died. To make a long story short, it's been too painful and stressful to even think too much about her finances. She didn't want to take any of my advice on how to manage her money and I knew things would go badly.

Now I know just how badly they've gone.

After my dad died, my mother would have had about $350,000 in various bank accounts-- CDs, mostly. This was what was left of my dad's 401k and a life insurance payment. She also owned her house, with no mortgage.
Now, according to what my mom told me yesterday, she has about $30,000 in a bank account. She still has the house, and no mortgage. Her monthly income from my father's pension and Social Security totals a little under $3,000. She's only 70 years old.

Somehow in 5 years, she managed to blow through over $450k. I'm still reeling at trying to do the math. I know she did various renovations on the house, and some redecorating. She gave away perfectly good furniture and bought new pieces. She hired people to help her move stuff around and do painting and other minor repairs. But it's not like she gut-renovated the whole house. It's hard for me to get my head around how much all that cost, but I would guess maybe $75,000. Maybe $100,000. Her other major expense has been keeping my grandparents in a nursing home. Although they are quite poor, with no assets other than a small house and a coffee can full of small bills that my mother and her 3 siblings already spent, they'd apparently run into roadblocks in qualifying for Medicaid or any other benefits. (They live in Puerto Rico, where the laws are a bit different.) Just recently it looked like they might actually start getting some coverage due to Veteran's benefits, but for several years, my mother and her siblings have been footing the bill on their own. What's worse is that not all the siblings are contributing equally-- the one who actually has the most money has been delinquent in sending checks and arguing all the way over what kind of care my grandparents should get. Meanwhile the other siblings are dealing with disabled children or spouses with cancer and various other dramas, so my mom feels that she has to step in and do more than her share.
On top of all that, one of the siblings asked my mother for a loan of several thousand dollars to help pay for her daughter's baby shower, which is apparently going to be a rather grand affair practically on the scale of a wedding reception. That sibling will hopefully pay my mom back after a court case she's involved in is over, if the lawyers who have been working on it for years don't take all the proceeds of the settlement first.

Is that enough f**'d up drama for you? But wait, there will be more. My mom wants to sell her house and move down to Puerto Rico to my grandparents', where she can live more cheaply and take care of some of their needs herself. She insists that she will be able to live on her current income if she does this. She also insists that my father intended for my sister and me to have an inheritance, therefore she has been talking to a lawyer about how the proceeds of the house should go into some kind of irrevocable trust that my sister and I will manage, because she got it into her head that her biggest priority right now is to qualify for Medicaid when she goes into a nursing home herself. (She does have some health issues, but I don't see her needing a nursing home anytime soon, though I guess you never know.) The proceeds from the house sale could end up being about $500,000 after all the fees and taxes, perhaps a bit more.
I told my mother that the idea of us getting that kind of inheritance was insane in her circumstances, and that all my father ever wanted was for my mother to be taken care of and not stupidly bankrupt herself. She said that my sister and I could give her whatever she needed from the interest from the investment earnings of the trust, which of course we are willing to do, but if the principal is locked up for some period of time, I just know we'll end up having to dip into our own savings for other things my mother needs or wants. That is theoretically fine if we get paid back from the trust principal at some later time, but I'm not even sure my sister has savings to dip into in the meantime, and she has two kids to put through college in a few years. And even if we're just managing Mom's money to keep her from making bad decisions, that means we're going to end up butting heads whenever she wants to do something we disagree with. I don't know what's worse, the idea of my mother uncontrollably burning through half a million dollars and then being really truly broke, or the prospect of years of nasty arguments. Right now she's acting all saintly about it, saying she knows we'll take care of the money and do right by her and that this is really what she wants to do, but I can see her bitterly regretting it later if she thinks her daughters are denying her needs and forcing her to live like a pauper. The idea of her happily living on $35k a year when she's been averaging over $90k a year lately is just one more indication that my mother has no sense of financial reality. Even without the expenses of the house, I just don't see that working. Either way, she has to sell the house as it's just too expensive for her to manage, but she's already talking about all the work she'll have to do on my grandparents' house to make it a comfortable place for her to live-- like replacing the entire line connecting it to the sewer system because apparently you can't flush the least scrap of toilet paper without flooding the bathroom, which is indeed gross, but could be coped with in other less expensive ways, as they do in entire countries in other parts of the world!

So nothing has been acted on just yet, but that's what's up with me lately! Fun times ahead!