The Intersection of FIRE and Disney

[arminnie]

I wouldn’t count mortgage payments toward savings.

Oh I absolutely count the principal reduction as building equity.

DH and I have two homes that we go back and forth between every few weeks (no schedule). At some point we will pare down to one just because of age related issues. If it weren't for DH being willing to do all the driving (8 hours each way), loading and unloading the car, etc. we'd be down to one right now as I am in a wheelchair.

We will most likely sell the home that has a loan of only about 1/3 of the value. That will be a nice chunk of money to live off of if needed. It's a 3% loan so no hurry to pay it off. The principal reduction each month increases the cash that we will get when we sell.

We might even sell both homes and move into a luxury apartment complex for seniors. Having a paid for home still leaves hundreds of dollars of other expenses a month that do not go away - taxes, insurance, yard services, cleaning, repairs, gas, garbage and water utility bills (usually not required in an apartment).

 

[pillow]

Just chiming in . . . I think it does make sense to count principal payments as savings, simply because your home is an asset you could sell if necessary. I think most folks understand that it won't be usable savings unless you downsize in retirement (something we are considering). Honestly, I don't think it really matters as long as you calculate the same way every time. And I kinda question why we need to calculate savings rate to begin with. I pretty much know how much we'll need to retire, and how we'll get there. Knowing my savings rate doesn't really help me.

 

[SouthFayetteFan]

Simple example: If I receive a $10,000 bonus (after tax)...Regardless of whether I choose to make an additional principal payment OR invest it in a mutual fund OR put it into a money market or CD, by virtue of not spending that money on an expense - in my accounting spreadsheet, I have saved that money. That is why I treat principal as savings. (Any money that was not paid towards expenses during the calendar year)

This is definitely an interesting discussion.

 

[elaine amj]

I know there are arguments both ways...but I ended up treating my mortgage repayments as savings. Mostly for the psychological boost.

Also, I used savings rate to help figure out my expenses. At the end of the day, my numbers were never particularly accurate - our finances are too complicated...especially with manufactured spending for CC churnjng. The only number I felt I could count on was our net worth we would calculate every January.

In practice, the numbers that count are the ones you will use consistently.

 

[SouthFayetteFan]

You’re correct - I got some concept merge between the 5 year holding rule (ie you can’t withdrawal earnings I believe until 5 years from your initial contribution) and the 5 year rule on traditional conversions. Why do they have to both be 5 years lol! And then there’s some subtly differences between a Roth 401k and Roth IRA too I think. So much to keep straight haha.

At any rate - nobody should trust some random guy who created a FIRE thread on the DIS for this stuff. Trust a random blogger instead HAHA

Wow - I was going to attempt to type up a little resource on Roth 401k. vs Roth IRA vs. Traditional 401k vs. Traditional IRA and the various parameters and rules around early withdraws, taxable vs. non-taxable, penalties, 5-year rules, etc...

I've done a lot of reading on these topics and I have a decent understanding of them but attempting to put this all down on paper in a somewhat succinct format is near impossible. And the overlapping complexities are why comments like the one I made happen. The more you know, the more these concepts start to merge in your brain and then you're saying one thing but you potentially mean something else.

For those that are also interested in researching this topic, I find this Mad Fientist post (which I previously linked) to be particularly interesting:

• https://www.madfientist.com/traditional-ira-vs-roth-ira/

One of the difficult things about this whole topic is it is not one-size fits all. Even though you'd think most people "chasing FIRE" look fairly similar on the surface, the subtle (and not so subtle) differences in income, savings vehicles available, phase outs, tax rates, cost of living, etc. can make your situations VERY different. I'd be shocked that anybody could give good advice on an internet message board. It would be virtually impossible to provide enough detail in a comment here to get good advice. With lots of research though and knowledge of your own situation, you can come up with a great strategy around this stuff!

Of course, the simple fact that we are saving more than most normal folks puts us on this path alone. BUT if you're really looking to super-charge your savings, and completely optimize your strategies - more research is required

 

[trenty]

So...real estate that you own free and clear (equity in your house) is part of your net worth, but I personally would not consider it "savings." If you needed to access that "savings" you would have to sell your house or take out a HELOC which is debt.
Paying your mortgage is paying a debt. Once that mortgage debt is gone you own a valuable asset. If you intend to keep that asset the only way to access the equity is to go back in debt.

I can use my savings to pay my bills, unexpected expenses, for vacations, etc. I cannot use the equity in my house to do these things.

Just my 2 cents.

 

[SouthFayetteFan]

So...real estate that you own free and clear (equity in your house) is part of your net worth, but I personally would not consider it "savings." If you needed to access that "savings" you would have to sell your house or take out a HELOC which is debt.
Paying your mortgage is paying a debt. Once that mortgage debt is gone you own a valuable asset. If you intend to keep that asset the only way to access the equity is to go back in debt.

I can use my savings to pay my bills, unexpected expenses, for vacations, etc. I cannot use the equity in my house to do these things.

Just my 2 cents.

The problem here is that we are all talking different terminology.

Some people are referencing savings rate and expenses as a % of income. Some people are discussing emergency fund savings. Some people are discussing cash/stocks that can be used as part of your SWR. Some...well I have no idea what they mean lol.

But I think this article lays it out best when they say: Loan principal payments are savings. https://thefinancebuff.com/savings-rate-mortgage-loan-payments.html
(And they build a pretty clear case of why).

Now - whether you can use those savings the way everybody is attempting to describe here...maybe, maybe not. Depends on your strategy. But you cannot from an accounting sense argue that a loan principal payment is an expense.

 

[SouthFayetteFan]

We had this discussion about 4 months ago but a thread popped up on r/financialindependence and so I figured I'd share it here.

Fired because of FIRE!
My cubicle is right next to my boss's door and he and another manager discussed who to let go in a department that is slow. The guy to be let go was selected because he is "independently wealthy", "doesnt have a family to support", and "doesn't need the job".
I always had a feeling talking about your wealth or early retirement goals could put a target on your back, now I know for sure!
​

So for those of us on the thread actively chasing FIRE, does your boss know? Any of your co-workers?

 

[bernina]

We had this discussion about 4 months ago but a thread popped up on r/financialindependence and so I figured I'd share it here.

Fired because of FIRE!
My cubicle is right next to my boss's door and he and another manager discussed who to let go in a department that is slow. The guy to be let go was selected because he is "independently wealthy", "doesnt have a family to support", and "doesn't need the job".
I always had a feeling talking about your wealth or early retirement goals could put a target on your back, now I know for sure!
​

So for those of us on the thread actively chasing FIRE, does your boss know? Any of your co-workers?

Interesting! I was actually just up to the point of this conversation yesterday when trying to catch up on older posts on this thread.

I think it’s very dependent of the type and size of company you work for.

In my company of around 200K employees I think it’s less of a concern. Excluding performance based releases, when cuts come down they’re very formulaic. In fact we’re going through this exercise right now and have hired an outside consulting firm to guide us through who and where to cut. This isn’t because we can’t decide who to cut on our own, instead it’s to minimize our exposure to lawsuits based on perceived bias (age, race, gender, etc.). In a company this large, short of key executives, no one person has the power to pick who gets released (again, excluding performance reasons, the direct supervisor can make that decision if HR agrees it’s valid).

So for me it’s not something I worry about. It’s also not something that I personally talk about. Other than DH and these forums I don’t think anyone else knows much about our savings and retirement plans. I have had a few conversations with my SIL who is doing something similar using rental properties and flipping houses she buys at auction but it’s more theoretical than an actual status of where we are.

I have a handful of close colleagues that I consider friends, and while we do discuss retirement and pension strategies we stop short of specific number talk. It’s also very much based on age and years of service for us since in my age range and older we’re grandfathered into a pension.

I absolutely believe conversations such as the one quoted above can and do happen in companies that are smaller or even larger companies that are more regionally managed. I think it’s a shame but I also think it’s human nature to try to find a way to make yourself feel better about a negative action you have to take. That being said, it’s an excellent reminder to avoid placing a target on your back unnecessarily.

 

[SouthFayetteFan]

Interesting! I was actually just up to the point of this conversation yesterday when trying to catch up on older posts on this thread.

I think it’s very dependent of the type and size of company you work for.

In my company of around 200K employees I think it’s less of a concern. Excluding performance based releases, when cuts come down they’re very formulaic. In fact we’re going through this exercise right now and have hired an outside consulting firm to guide us through who and where to cut. This isn’t because we can’t decide who to cut on our own, instead it’s to minimize our exposure to lawsuits based on perceived bias (age, race, gender, etc.). In a company this large, short of key executives, no one person has the power to pick who gets released (again, excluding performance reasons, the direct supervisor can make that decision if HR agrees it’s valid).

So for me it’s not something I worry about. It’s also not something that I personally talk about. Other than DH and these forums I don’t think anyone else knows much about our savings and retirement plans. I have had a few conversations with my SIL who is doing something similar using rental properties and flipping houses she buys at auction but it’s more theoretical than an actual status of where we are.

I have a handful of close colleagues that I consider friends, and while we do discuss retirement and pension strategies we stop short of specific number talk. It’s also very much based on age and years of service for us since in my age range and older we’re grandfathered into a pension.

I absolutely believe conversations such as the one quoted above can and do happen in companies that are smaller or even larger companies that are more regionally managed. I think it’s a shame but I also think it’s human nature to try to find a way to make yourself feel better about a negative action you have to take. That being said, it’s an excellent reminder to avoid placing a target on your back unnecessarily.

I didn't want to be the first to comment on it, lol - so glad you weighed in! Thanks for sharing your thoughts, and I think you're spot on with your general assessment.

My personal thought is that I would never mention this desire to my boss. They can never "un-know" my goal! It really has nothing to do with getting fired BUT , psychologically, I don't think they could disregard it when raises and opportunities come around. As is the case with many FIRE chasers, I am known around the office as somebody who is very frugal. They also know my wife is a SAHM, whereas almost everybody around me is a dual income household. They know my travel comes from my "insane" hobby of credit card churning. Some may actually believe that I'm deep in debt as they struggle to understand what I do with CCs.

In summary...I think most people (and definitely my boss) assume that I am relatively poor (especially as compared to my peers at the bank). I am perfectly happy to allow that to be their reality for me. When raises and discretionary bonuses come around, I want my boss thinking that "I need it more than others" because of my family situation and perceived financial need. I will say that I think this has served me well throughout my career in banking.

 

[bernina]

I didn't want to be the first to comment on it, lol - so glad you weighed in! Thanks for sharing your thoughts, and I think you're spot on with your general assessment.

My personal thought is that I would never mention this desire to my boss. They can never "un-know" my goal! It really has nothing to do with getting fired BUT , psychologically, I don't think they could disregard it when raises and opportunities come around. As is the case with many FIRE chasers, I am known around the office as somebody who is very frugal. They also know my wife is a SAHM, whereas almost everybody around me is a dual income household. They know my travel comes from my "insane" hobby of credit card churning. Some may actually believe that I'm deep in debt as they struggle to understand what I do with CCs.

In summary...I think most people (and definitely my boss) assume that I am relatively poor (especially as compared to my peers at the bank). I am perfectly happy to allow that to be their reality for me. When raises and discretionary bonuses come around, I want my boss thinking that "I need it more than others" because of my family situation and perceived financial need. I will say that I think this has served me well throughout my career in banking.

Regarding bonuses and raises, that’s another area that is very formulaic for us. There’s a component on performance that is determined by your immediate manager, and depending on their personality, their perception of your status could definitely factor in (again, human nature), but the majority is driven by a set formula with little human oversight.

DH’s work sounds more similar to what you describe. The immediate manager is given a lump of money and it’s their responsibility to divvy it up to their direct employees how they see fit. I can definitely see where perception of status could play a role.

We haven’t talked promotions yet and that’s the one area I think would have the biggest impact where I work. If someone made it known they planned retire in less than 5 years I think they would definitely risk being passed over.

 

[trenty]

The problem here is that we are all talking different terminology.

Some people are referencing savings rate and expenses as a % of income. Some people are discussing emergency fund savings. Some people are discussing cash/stocks that can be used as part of your SWR. Some...well I have no idea what they mean lol.

But I think this article lays it out best when they say: Loan principal payments are savings. https://thefinancebuff.com/savings-rate-mortgage-loan-payments.html
(And they build a pretty clear case of why).

Now - whether you can use those savings the way everybody is attempting to describe here...maybe, maybe not. Depends on your strategy. But you cannot from an accounting sense argue that a loan principal payment is an expense.

I have to agree to disagree.

 

[RamblingMad]

So...real estate that you own free and clear (equity in your house) is part of your net worth, but I personally would not consider it "savings." If you needed to access that "savings" you would have to sell your house or take out a HELOC which is debt.
Paying your mortgage is paying a debt. Once that mortgage debt is gone you own a valuable asset. If you intend to keep that asset the only way to access the equity is to go back in debt.

I can use my savings to pay my bills, unexpected expenses, for vacations, etc. I cannot use the equity in my house to do these things.

Just my 2 cents.

I agree with this.

An exception would be a rental property that generates cash from rents. Once it’s paid off, that cash flow could be used to pay for stuff. However, real estate assets have to be maintained.

 

[elaine amj]

I was careful never to mention FIRE at work. They knew I was careful with money but I rarely discussed my financial situation other than to say I had no problems floating the money for business trips while waiting to be reimbursed (so awesome for hotel points and manufactured spending!)

I felt it wasn't a good idea in case due to raises/promotions, etc. Your boss can't unhear something like that.

When I finally FIREd, I didn't say I wanted to retire. Merely that it was best for me to stay home for the time as my family needed me.

 

[runwad]

I'm probably one of the ones with a target on my back! But I'm in a different situation than most as I work part time. Once I had kids I no longer had any desire to have a career. I've always been dogged for it, but my DH and I designed our life to make it on one income. I basically work to save in my 401k and any extras.

My boss thinks I'm working below my potential, I am, and was always harassing me to do more, not that he wanted to pay me anymore. So I basically told him if he needed someone in this position to work full time, to do what he had to do, as its business and I wouldn't take it personally. Finally that got him off my back!

Now if I may toot my own horn they'd be foolish to get rid of me. They have me cheap and don't give me medical benefits. I've been doing the same job for 19 years and it actually is a full time job that I can get done part time after doing so long and being ultra efficient! Go ahead get rid of me. I guarantee you'll be hiring a full time person to do the work and paying them benefits!

I could retire today and be fine! As long as they leave me alone and let me have my flexible schedule, I'll be working a long time.

That said, I don't let my coworkers know my financial situation, they are already jealous that I am able to work part time, so I don't want to add any more fuel to the fire.

 

[1st*toright]

We had this discussion about 4 months ago but a thread popped up on r/financialindependence and so I figured I'd share it here.

Fired because of FIRE!
My cubicle is right next to my boss's door and he and another manager discussed who to let go in a department that is slow. The guy to be let go was selected because he is "independently wealthy", "doesnt have a family to support", and "doesn't need the job".
I always had a feeling talking about your wealth or early retirement goals could put a target on your back, now I know for sure!
​

So for those of us on the thread actively chasing FIRE, does your boss know? Any of your co-workers?

I work at the HQ of a large company, and pretty much all of the senior execs who have been around for at least 10 years (a pretty large group) are multi-millionaires because of stock options. Most of my colleagues have non-working spouses, or spouses who work but make significantly less money. So my efforts to be frugal (bringing lunch every day, driving an old car) are just considered a quirk of my personality. Around here there are scads of people who have made it to the FI part and continue to work, so I don't have any worries about it raising my risk for a layoff - if anything, I'm behind most people in the savings department because I've only been with the company a little while, so I wasn't in on the "good" option years. I don't talk about FIRE. Some of us that talk about retirement strategy etc. One of my colleagues is constantly counting down to the year he can retire - so if that were a concern, he'd be on the block before me. I don't talk about credit card churning, either. My travel habits are not out of line with other people at my level, so no explanation is needed.

 

[DrFacilier]

Ok. So I have only read the first few pages of this thread but I am very intrigued by FIRE. We are currently paying off our car loan (last payment is December) and then will be debt free besides our mortgage which I am becoming interested in paying off early as well. We definitely have a lot we can cut back on (we eat out/ take out way too much so that is easy savings right there). My sudden shift in thinking is that DW is really not happy in her job and feels very stuck. We are both public school teachers in the same school and things in our area are not looking good. We don't really have much hope that they will get better in the years to come so we would like to look into (at least her) retiring early.

 

[elaine amj]

Ok. So I have only read the first few pages of this thread but I am very intrigued by FIRE. We are currently paying off our car loan (last payment is December) and then will be debt free besides our mortgage which I am becoming interested in paying off early as well. We definitely have a lot we can cut back on (we eat out/ take out way too much so that is easy savings right there). My sudden shift in thinking is that DW is really not happy in her job and feels very stuck. We are both public school teachers in the same school and things in our area are not looking good. We don't really have much hope that they will get better in the years to come so we would like to look into (at least her) retiring early.

It is certainly worth considering. And if nothing else, financial independence will give you options even if you guys decide not to retire early.

For me the goal was not to live a life of sacrifice while working towards FIRE. I chose to find ways to live awesome lives as cheaply as possible. And now in FIRE, it's more of the same. Sure I wouldn't mind more luxuries. I am not quite like MMM who is completely content with his low cost life. But the luxuries I gave up just didn't mean enough to us to worry about.

 

[piccolopat]

I think that for many people the "FI" is the more important and more attainable piece. Eliminating debt is a great start as it will free up money for long term investment. As someone who recently retired, I can tell you that controlling how much and what you decide to spend on is very important. It's better to reduce your spending while you are working so that the transition to retirement, early or not, is easier. We set a budget for retirement in advance, but I am using this first year to see if that was realistic. I already see some areas that can be adjusted (some up, some down). Once you are on a fixed income, expenses become key as that is something you can control. I don't think the "RE" piece is realistic for many people and they shouldn't feel bad about only tackling the "FI" piece. I also think that many people that retire very early (before 50) look at opportunities to earn a bit of money even if it is only to add some structure to their lives or to have access to employer subsidized health care until Medicare.

 

[DrFacilier]

It is certainly worth considering. And if nothing else, financial independence will give you options even if you guys decide not to retire early.

For me the goal was not to live a life of sacrifice while working towards FIRE. I chose to find ways to live awesome lives as cheaply as possible. And now in FIRE, it's more of the same. Sure I wouldn't mind more luxuries. I am not quite like MMM who is completely content with his low cost life. But the luxuries I gave up just didn't mean enough to us to worry about.

I think that for many people the "FI" is the more important and more attainable piece. Eliminating debt is a great start as it will free up money for long term investment. As someone who recently retired, I can tell you that controlling how much and what you decide to spend on is very important. It's better to reduce your spending while you are working so that the transition to retirement, early or not, is easier. We set a budget for retirement in advance, but I am using this first year to see if that was realistic. I already see some areas that can be adjusted (some up, some down). Once you are on a fixed income, expenses become key as that is something you can control. I don't think the "RE" piece is realistic for many people and they shouldn't feel bad about only tackling the "FI" piece. I also think that many people that retire very early (before 50) look at opportunities to earn a bit of money even if it is only to add some structure to their lives or to have access to employer subsidized health care until Medicare.

Financial Independence would be awesome. I am a part-time solo musician and make some decent money playing out. I also enjoy it more than my full-time job so I am happy to continue working (possibly expanding my work) in that field. DW loves dogs and would enjoy working with them or at least having a job where she can bring ours. The idea for us would be to limit the amount of years we have left as public school teachers and then work in an environment we enjoy more. We don’t need to golf or lay on the beach everyday but when we do hopefully CC rewards will help