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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.

Not complaining.

decath
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No. of Recommendations: 6
Tell us how you’ve made out the past 10 years, how you’ve made adjustments, the disappointments, the victories etc…

When I started thinking about FIRE, I had two spreadsheets- the "moderate growth" spreadsheet and the "aggressive growth" spreadsheet.

The moderate growth spreadsheet had a rate of return of around 7.8% on investments. The aggressive growth spreadsheet had a rate of return of 15% on investments.

I stopped comparing the assets to the aggressive growth spreadsheet by 2004.

Our actual net worth compared to the moderate growth spreadsheet was doing extraordinarily well in September of 2007. We were about 6 quarters ahead of where we should have been.

Then, we started slipping backwards (but still ahead) until at the end of Dec 2008 we were official behind target by 3 quarters. Wow, that is quite a change of 9 quarters over a short time frame! Of course, there was a major stock market crash in the middle of that.

A high savings rate and decent returns of investment brought us back to being on track of March 2010, and today we have slipped "behind the curve" by about a month due to more conservative investing strategy and reduced savings to some degree. However, it is pretty amazing that we are within a month of the original target goal considering it is almost ten years later.

I am not optimistic we will "keep up with the curve". I am more conservative investing (a lot of money is in cash) and there have been unexpected curveballs. Serious illnesses with both the spouse and myself. The kids are more expensive than I expected with camps.

We paid off our house early rather than dump the money in the market, which turned out to be a stunningly good move, but also meant the expected yield was more like 5% rather than the demanded 7%. (which would have possibly been negative if it had actually gone in the stock market)

We have slipped off our tight budget. The wife's income is going to drop substantially soon. Thus, the expected savings rate will probably be lower than originally planned.

A really strong question in my mind is- what is the upcoming strategy? Should we be more aggressive in investing since we are so young and can afford more risk- giving at least a chance at "keeping up with the curve", or should we be more conservative given the poor economic outlook? I don't know, this question flips around in my head constantly- how much risk to have?

We may buy a new property with the accruing cash. This would both generate cash flow, and also serve as an inflation protection vehicle. It probably would not yield the 7.8% demanded by this spreadsheet. However, am I actually going to make any life decisions based on a spreadsheet of demanded yield? Please! Please?

Also, I have gotten raises larger than I anticipated, so to be honest, I am not sure how our savings compares with the projections of the spreadsheet, this would be good to figure out.

The spreadsheet figured on 2.5% inflation a year which is actually pretty close to what CPI has been over this time frame.

What was the original FIRE date? I was never clear on this to begin with.. would it be as soon as we were clearing $40k a year on a 4% yield along with the house paid off and colleges paid for (around the year 2018) or more than this, or less?

I think aiming for FIRE though has been a great exercise in eliminating wasted cash, thinking about what is valuable, and making choices.

Along the way I was offered a substantial pay raise for a LOT more hours. Having thought so carefully about what my money was for, and what I was saving for- I said no. I would rather chill out and relax with the kids than make a lot of money and pull in the date a year or two. I feel like I can make decisions like this more clearly with a clear goal of what the money is being saved for, where the money goes, and what money is about.

So my expectation is my future yield will be lower and the variance will be higher than I originally anticipated. I expect some more major losses in stocks or other investments, along with the tenacity to make up for lost ground here and there with substantial savings. Major stock losses are not as scary to me as they once were, because we are so diversified, and the asset base has grown so significantly. To be honest if half the money vanished we would still be better off than many many closer to retirement age people, so a few beans spilled here and there won't be the end of the world.
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This decade has been a wild ride... since I was pretty much starting at zero in 2000, I could only go up.

Now in 2010 I have 2 young children (2 and 5), I've gone through 3 promotions from a lowly R&D engineer, to now managing 11 R&D engineers. A little over 2X increase in gross income from 2000 to 2010.

But raising children is expensive... both in private school. And SAHW.

We have a net worth about 4.5X my current annual base salary, so I feel like we've come a long way. If I can keep my job for another 10 years, I should be able to retire in 2020 at age 46. But realistically would keep working until my kids are through undergrad college. 2030? age 56. Maybe taking a pause somewhere in there.

--
whyohwhyoh
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Over the last 10 years, I've hit my investment target 4 times, however, I didn't know I has hit it until the third time. Over this time, my retirement age went from 66+ down to 60, the earliest I'd have health insurance without paying extra. The main reasons for reducing my retirement age are that my retirement income sources and retirement expense projections have firmed up. That is, I know within a few $$ what my DB and SS income will be and being within 3 years of retirement, I'm fairly certain of my expenses.

My investment target went from $1 million, when I didn't have any idea of what I would need, down to around $250k about 2 years ago. Retirement age was based on how long it would take to reach that target, so as the target reduced, so did the age. Likewise, my projected return varied as the target reduced, so I set up my spreadsheet to show returns from 3-18%. The idea was to determine what would be the smallest return that would get me to my target and invest accordingly.

I also copied the above spreadsheet page to predict the draw down on investments during retirement. The interesting thing here was that a 2% return would allow the portfolio to last for 35 years (my projected period), so anything better will leave an inheritance. I kept the inflation rate at 3% for expenses and 2% for income sources, mainly because a portion of expenses will have no inflation, for instance, mortgage expense before it goes away 4 years into retirement, which can then be re-directed to inflation and reduced income needs.

So, I've come out okay over the last decade, but it's been a wild ride. I can say this because I recently hit my retirement target again for the fourth time.
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I averaged 6.8% for the lost decade, or around a total 94% return. If I can do that for the next decade, I'll have no need to work at 2020.

At that point I'll still have a 16 and 19 year old kid. So yeah, kids really screwed up my FIRE plans. But, I wanted to have them.

My SAHW has always worked as a contractor of some kind, so that has helped, she pretty much pays for the kids and all their stuff, I pay for the big stuff like a house, car, etc. No that the kids are in school she is able to work much more.

What really changed my thinking about this whole FIRE thing was one of my closer friends. Perfectly healthy guy on the cusp of retirement and boom - brain cancer. All of his retirement funds paid his hospice care until he died.

Enjoy life while you have it. The future may not get here.

That means I save less and go have more adventures now.
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That means I save less and go have more adventures now.

I hear you. But it's hard to reconcile that with a full time job. I don't know about you, but I "only" get 3 weeks of vacation a year (my understanding is that for the US, this is quite generous), which makes it difficult to do the kind of fun stuff I'd like. E.g. I enjoy traveling, but it's so expensive, time-consuming, and exhausting, that it's hard to justify going on a lengthy voyage just for one week of vacation.

I've also put off a lot of stuff that I thought I would do "when I have time later." For example, I enjoy rock climbing, but I've only been a few times. In fact I have a whole list of skills I'd like to learn, but don't have the time because work is pretty consuming. It's hard to muster enthusiasm for piano practice after working all day.

This is fundamentally the reason why I think of quitting before I'm really there in terms of funds. As I get older, I've experienced more health issues, and it seems likely things will only get worse in this respect. I may not have as much time to enjoy the things I always intended to do "later on, when I have time."

I wish I could find work that paid 1/2 what I make now, where I could work for half the year. I think I could make that compromise. But you never hear about that.

Rocannon
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Hello decath, yep I'm not dead, just not on TMF much... and not FIREd.

EOM November 2000:

Had saved up 31.8 months living expenses (avg trailing 12 months)

In between, moved to FL, bought a house, bought a truck, took up a few hobbies, got promoted, saved and invested, got married.....

EOM November 2010:

Have saved up 146.4 months living expenses. -My average expenses are now 2.6x what they were in 2000.

On the way to FIRE, but have a long way to go. DW and I are hoping to downsize a bit and hopefully move overseas for a few years before moving back to the States and "settling down." -Will see how that goes.

FoolNBlue
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But it's hard to reconcile that with a full time job. I don't know about you, but I "only" get 3 weeks of vacation a year (my understanding is that for the US, this is quite generous), which makes it difficult to do the kind of fun stuff I'd like. E.g. I enjoy traveling, but it's so expensive, time-consuming, and exhausting, that it's hard to justify going on a lengthy voyage just for one week of vacation.

Many employers will allow for time off without pay.

I guess I'm lucky... currently at 4.5 weeks/year, and in 2.5 years I'll reach 6 weeks/year. But I wouldn't hesitate to take time off without pay. I took off 3.5 months in 2008, most without pay and traveled all around with my family. I wouldn't hesitate to take another "sabbatical" without pay in the future to spend time with my kids, even if it pushes out retirement. Or just use more vacation time than allotted via unpaid days off.

And remember those last few months of work are taxed at the highest levels, so reducing your work year from 12 months to 9 months doesn't equate to a 25% reduction in pay since the government penalizes higher productivity.

--
whyohwhyoh
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whyohwhyoh,

Many employers will allow for time off without pay.

I've never had such an employer.

Last year I asked my current boss for time off in lieu of a raise, the answer was a firm no (but I did get a raise anyway). At my current place of work, there's a fixed amount of vacation: 15 days. You don't get increases for every year you stay there.

My only way out is finding another job which provides more vacation time, or quitting, or becoming a contractor. In my industry (software) 15 days seems to be standard. My impression is that contractors spend most of their off time looking for work, so that doesn't look like a great option. I also get the impression that people looking to take time off just quit, go do what they want for a while, and then look for employment after the break. That seems pretty risky to me. I'd much rather quit when I'm fairly sure I won't need employment again.

Rocannon
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FNB
On the way to FIRE, but have a long way to go. DW and I are hoping to downsize a bit and hopefully move overseas for a few years before moving back to the States and "settling down." -Will see how that goes.

FoolNBlue



Thanks for the responses from everyone so far.

On a related comment FNB's above, one option DW and I are considering is to do the following just before FIRE:

In the IT business, it seems like every 5 or 6 years, something happens with my job situation and I either leave my job on purpose or am laid-off. It always seems to happen unexpectedly.

So if the same occurs as I'm a few years out from FIRE'ing, I'll consider doing contract software development for short term assignments around the country wherever the pay is the highest and near areas I would consider moving.

Sell our home in TX; buy an RV and travel to the assignments and live in it; live cheaply, sock mega bucks into the FIRE assets, hopefully well above 50% a year; keep the house proceeds in a safe investment until we find the place to build ourretirement home.

In 2 1/2 years, the youngest will be in college so that option opens up at that point in time.

decath
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decath,

You seem way more optimistic about contracting than I am. Everything I hear from contractors these days is: the rates are bad, it's hard to find work.

Of course, it's all relative.

Have you examined this in any detail - looked at any particular cities?

When I learned the retire-early-extreme guy lives in an RV, I looked into RV living around the big city where I currently live. There's nothing very close, so if I moved into an RV I'd have a pretty bad commute. Still, it might work around other cities.

Rocannon
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When I learned the retire-early-extreme guy lives in an RV, I looked into RV living around the big city where I currently live. There's nothing very close, so if I moved into an RV I'd have a pretty bad commute.

You might be surprised how close you CAN be...

... if you are willing to pay the price. RV parks inside significant metropolitan areas are usually expensive. (Be sure to ask about MONTHLY rates - where available they are normally a significant discount on the daily rate.

On the other hand, some mobile-home parks have a few spaces available for RVs, with monthly rental being the minimum and norm rather than something you have to explicitly ask about. And cheaper than monthly rates at RV parks.

But really, the RV life is easier and cheaper *after* you retire.
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Sell our home in TX; buy an RV and travel...

DW and I thought about this option. But for the price we could live in resort hotels and not have to worry about up keep.

http://www.luxist.com/2006/08/29/luxury-rv-has-slideout-gara...

JLC
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Rocannon
You seem way more optimistic about contracting than I am. Everything I hear from contractors these days is: the rates are bad, it's hard to find work.

Of course, it's all relative.

Have you examined this in any detail - looked at any particular cities?


Last time I looked around the country for my particular software expertise was in 2006. At that time, there were plenty of opportunites aournd the country. That probably has changed somewhat in the current economy -- for the worse. But if you ar willing to go anywhere, I'm pretty sure you can find something. When you have gaps with no work, that's the fun part when you can goof off.

I do know the rates have gone down since then. Especially since the boom days before the tech wreck. I knew "Multivalue" developers getting over $100 an hour then. By 2005, the same work would bring in $50-$60 an hour.

When I learned the retire-early-extreme guy lives in an RV, I looked into RV living around the big city where I currently live. There's nothing very close, so if I moved into an RV I'd have a pretty bad commute. Still, it might work around other cities.




I have not researched that aspect of it yet. If your work is in large city downtown USA, then commuting would be a problem.

decath
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decath,

What do you mean by "Multivalue" developers?

Last couple of rates I got were around $60/h (this was 2007-08), for temp-to-perm positions though. I was always very open to contract jobs, but couldn't find them or the rates were awful. I liked the idea of contract work because I felt like it would expose me to a lot of different work environments and keep me from getting bored/annoyed.

I guess rates must vary a lot depending on your specialty and domain, too.

But if you ar willing to go anywhere, I'm pretty sure you can find something. When you have gaps with no work, that's the fun part when you can goof off.

I've always been willing to go anywhere, and have moved for almost every new job I've taken. It's a pain to move (hence the RV angle is attractive), but I like getting to try out new cities.

The problem with the gaps is that it has always taken me between 3-6 months of pretty active searching to find new employment. There's a certain amount of goofing off in the mix, but it was never hugely enjoyable because of the anxiety about how long I'd be unemployed. Are you really able to relax and have fun when unemployed? If so, you're lucky! :)

I've got to admit though, the last "gap" in '07 was a bit surreal. I kept expecting my net worth to slowly sink because the paychecks weren't coming in while I was still paying rent and COBRA, but instead it kept moving up, because of market trends. That was the point when I started to feel like I had made a lot of progress towards retirement.

Rocannon
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decath,

Now that we are almost done with the so-called “lost decade”

BTW this has not been a lost decade for me, by any means.

I came into 2000 with a net worth of something around $50K. I now have a net worth around $400K. I suppose it's a testament to my naivete and/or ego that I was hoping for better by now. But financially the last decade was very good to me, all things considered.

Rocannon
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I came into 2000 with a net worth of something around $50K. I now have a net worth around $400K

800%. Not bad. Do that again and your done in 5 years. My increase was 420%. Not lost for me either. I got lucky on a house.
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Rocannon
What do you mean by "Multivalue" developers?

That's the general term for the "technology" used in my particular field. It is mostly unknown by the larger microsoft/java world.

It is sometimes called "PICK", after it's founder Dick Pick back in the 1960's.

http://en.wikipedia.org/wiki/Pick_operating_system

I was introduced to it during college back in 1983, when I had a coop job, working my way through school. Since then, I've worked in small IT shops that have incorporated a Multivalue database somewhere in there system.

Most companies that have it, use it as their main backend database and access the data through some other winform or webform technology.

Back in the late 90's and early 2000's, I did a lot of classic ASP and Visual Basic development that accessed mutlivalue databases. Today, I do mostly direct development/maintenance on multvalue with a touch of .net (C#) here and there.


decath
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Rocannon,
BTW this has not been a lost decade for me, by any means.

I came into 2000 with a net worth of something around $50K. I now have a net worth around $400K. I suppose it's a testament to my naivete and/or ego that I was hoping for better by now. But financially the last decade was very good to me, all things considered.

Rocannon


The term "lost decade" is being thrown around by several financial media types, thus the reason why I used it.

I started out the decade with about 40k in assets and have around 350k now, so I'm not complaining either.

decath
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I've been meaning to respond, but had to organize the data. Still don't have it all, but . . .

The decade wasn't lost for me at all. I went from being in debt and having a small bit of money in the 401K to owning two houses, the 401K is healthy, a cash position that bothers me, and stock funds/stocks outside of the 401K.

The cash position bothers me because I'd rather have it in something that will generate more than 1.8% return. OTOH, I have a fairly good safety net. That is worth something. I'm still putting a bit more in cash each payday.

The only debt I have now is on the second house. We are renting it out now. So we have some return on the whole deal, but still have the mortgage that is being serviced. It shoud turn out to be a good deal in a few years.

Net worth is over the $500,000 mark and is growing steadily. I managed to invest almost 30% of my income for the last four or five years and have only dropped below that because of the house. Still doing over 20%. That will ramp up after the summer, if my job situation firms up.

FIRE is still likely, but not when I wanted it. I suspect I've had to add about two years to my plan.

fredinseoul
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BTW this has not been a lost decade for me, by any means.

Ditto.

In 2000 I graduated from college with $15,000 student loan debt.

In 2010 I have $270,000 in savings, and $140,000 in equity in my home (NYC co-op apartment). According to intercst's retire early calculator I could FIRE in four or five years, although I strongly doubt I will leave my job at that time as the habit of work is too strongly ingrained.

I seem to have a decent career path ahead of me, at least for the next 10 years or so. But it's nice to have options.
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I started out the decade with about 40k in assets and have around 350k now, so I'm not complaining either.

FWIW, we entered 2000 childless with $550k and left 2010 with over $2M in net worth and a beautiful 10 yo daughter!

I don't buy the "lost decade" either; people seem to fixate on gains and losses from highs or lows as if all their money was invested at the peak of the dot com bubble. The reality is that most invest their money over many years so the arbitrary peaks or valleys have little real meaning.

-murray
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@ fredinseoul,

"I managed to invest almost 30% of my income for the last four or five years and have only dropped below that because of the house."

It sounds like if your second home is rented out it is an investment. You mentioned that your savings has dropped because of the house. One could argue in your favor that the amount of money going toward principal on the investment is savings.

If it were your primary residence I would not make the suggestion.

Take care,

J
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I am a little late to the request but I will join in.

My lost decade recap:

In 2000 I quit my Job on an ambulance. Put everything in storage and set up jobs crewing on sail boats. I sailed from Oregon to Alaska and was getting ready for my next job when 911 happened. I did not think it would be a great idea to be sailing in international waters from Thailand to Italy. I was single, in my late 20's, no debt and had $15k of net-worth in a 401k.

Today I am in my late 30's. I have a career, a wife, a home and an investment property. Our net-worth is over $550k and growing. This is a conservative number because we do not put a dollar value on pensions for this exercise. We save 37% of our income.

I conservatively estimate a 4% growth rate for investments and a 3% rate of inflation. With such a short amount of time anything could happen with returns. Based on how much we live on we are projected to FIRE at the end of 2019. Part of our time will likely be spent on a sail boat!

Summary: There was no lost decade for me and my wife. It seems like it was a great time to build a FIRE.

Thanks for the thread,

Jason
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