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|Subject: Lost Decade Recap||Date: 12/6/2010 2:38 PM|
|Author: decath||Number: 4905 of 5086|
Now that we are almost done with the so-called “lost decade”, I’m curious on where the FIRE wannabes are in their FIRE quest. Tell us how you’ve made out the past 10 years, how you’ve made adjustments, the disappointments, the victories etc…
Then let us know what you expect in the next decade based on your projections of income, inflation, investment returns etc…
Here’s a brief summary of where I’ve been where I want to been in 10 years.
I started out in decent financial shape in 2001. I was making good money, doing moonlight software programming on the side from my daytime job, debt free except my home and putting together a FIRE strategy to be out of the workforce by 2010ish.
My income projections for myself were a little off as all the moonlight gigs dried up by 2003. However, my full time income continued to grow and I’m pretty satisfied with that. My wife moved from SAHW to the workforce, reluctantly and slowly, bouncing from job to job. Part-time at 1st and finally full time by 2007. She still has not figured out “what she wants to do when she grows up”, as she puts it. So, it became pretty clear by 2008 I’d have to do my FIRE projections without her income. At best, she’s been able to take care of most of the daily expenses like food, eating out and the never ending expenses of child raising. That helps, but the days of dreaming/forecasting of an additional 40k-50k income that can be used for 401k/IRA/Stock investing never happened at may never. So, I planned accordingly and adjusted my FIRE spreadsheet.
Also, like most of the rest of us who probably used 8-12% forecast for investment returns, I received more like 5-6%.
Lastly, I greatly underestimated how much it would cost to raise my 3 children. I figured they would have jobs (like I did) at age 15 and handle a lot of their own expenses. NOT. Despite my best efforts, it did not happen except for an occasional summer job. The main reason is the high demand athletes now have to work-out and train year around, unlike when I was a kid, who played 5 HS sports. They only played 2 or 3 and it took up most of their time. But to be honest, kids today are NOT made of the “same stuff” me and my HS buddies were. I hung out with a group of 4 guys that worked about 20 hours a week, made straight A’s and were the star athletes in our school. In addition, we went to church, were active in youth groups and did our chores around the house. I thought my kids would be like that. Nope. Their decent kids, but evidently, I and my 4 friends were anomalies.
So those 3 factors: reduced income, high child raising expenses and low investment returns has caused me to change my FIRE age, originally at 48, to about 56. To be honest, this is more realistic. At age 54-55, I’ll have the mortgage paid off, the last kid will be done with college and I’ll expect to be able to draw about $50-60k from my portfolio by then.
On my FIRE spreadsheet, I still use 10% for my projected investment return but I've changed the inflation rate to 5% for the next decade.
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