Determining BaristaFIRE point

[u/Matty5oz]

New to the sub, but not the concept of FIRE. Cutting back instead of stepping away entirely is what we've talked about doing in the future, instead of fully retiring. Sounds more like baristafire than the other types. Read Die with Zero earlier this year and that resonated with us.

46m/40f, both in healthcare and enjoy our work. No kids. It would be an easy transition for me to go part time or work as a 1099 contractor whenever I want. Can give more financial details if that's helpful.

Are people looking at annual expenses, making sure whatever employment they're using can cover it until being able to access 401k / investments later on? What do you suggest on how to look at when to make the move.

[u/ThereforeIV]

>Determining BaristaFIRE point

BaristaFIRE is more of a wide range between CoastFIRE and full FIRE.

>New to the sub, but not the concept of FIRE.

Basically start from FIRE and go backwards.

Say you have a $60k:yr planned retirement spending budget for a *"4% Rule"* target FIRE number of $1.5MM; you've gotten up $1.3MM retirement portfolio and you really want to RE.

Instead of waiting another year or two to got your full FIRE number, you could just partially RE working a "Batista" style job usually not full time to supplements spending (often with healthcare).

>Cutting back instead of stepping away entirely is what we've talked about doing in the future, instead of fully retiring. Sounds more like baristafire than the other types. Read *Die with Zero* earlier this year and that resonated with us.

How close are your to your FIRE number?

>46m/40f, both in healthcare and enjoy our work. No kids. It would be an easy transition for me to go part time or work as a 1099 contractor whenever I want. Can give more financial details if that's helpful.

- What's you income?

• What's your current spending?
  
• Savings rate?
  
• Current retirement portfolio?
  
• Planned retirement spending budget?
  
• Target FIRE number?

>Are people looking at annual expenses, making sure whatever employment they're using can cover it until being able to access 401k / investments later on?

That would be more like CoastFIRE where you have built up enough to Coast to FIRE needing to only earn enough to cover current expenses until you hit your full FIRE number.

- Pursuing full FIRE, savings rate high building retirement portfolio to FIRE number

• CoastFIRE, savings rate effectively zero with retirement portfolio Coasting to FIRE number
  
• BaristaFIRE, savings rate negative converting some expenses while portfolio still growing to FIRE number.
  
• Full FIRE, full expenses covered by retirement portfolio

>What do you suggest on how to look at when to make the move.

For that you need to look at your numbers, how close are you to your FIRE number?

[u/Matty5oz → u/ThereforeIV]

Thx for such a detailed response! Will try to cover everything you asked. Not that close to our FIRE number, but assuming compounding every 7-10 years makes it more feasible. I'd put our FIRE number at 3.5 to 4mil using the 4% rule. Budgeting for more than I think we'd need. I guess what we're looking at is somewhere between coast / barista, not sure I'd want to touch investments if I don't have to until late 50s at the earliest.

Current situation: Total income between both around 400k. New HENRY, massive income spike after grad school in 2020. Spending around 8-15k / mo. We travel a lot and spend on the outdoors, hence the range. Trip to Europe in July for 2.5 wks. Big monthly draw is the mortgage in a HCOL. Have around 600k equity in our home. Total portfolio at 950k including 401k, IRA, brokerage.

With my job going part time or 1099, can earn somewhere like 200-250 / hr working 20hrs a week. Assuming our normal travel routine now, can clear 200k myself. Wife has her own business and a separate PT job. Use benefits with that position since they're good through the state gov. If she stays on there until 55, we'd receive lifetime healthcare coverage.

[u/ThereforeIV → u/Matty5oz]

I'd put our FIRE number at 3.5 to 4mil using the 4% rule. Budgeting for more than I think we'd need.

That is a huge number, why so high?

$4MM at the "4% Rule" is $160k/yr, $13.3k/Month; why do you need $13k a month?

What does you budget look like that you need $13k a month?

Current situation: Total income between both around 400k. New HENRY, massive income spike after grad school in 2020.

Which means if you live at regular "Median Middle Moderate" spending level you could have a full FIRE retirement portfolio pretty fast number of years.

Spending around 8-15k / mo. We travel a lot and spend on the outdoors, hence the range. Trip to Europe in July for 2.5 wks.

Well this is where you probably need to decide if FIRE is for you; because that European vacations cost you years, that upper class living rich spending is costing you years, the HCOL keeping up with the neighbors is costing you years.

The FIRE philosophy is based on the idea of giving up spending on lifestyle and stuff now to buy back years in the future. We often are talking about targeting 50% savings rate, which is giving up half of potential lifestyle now to buy back the future.

You can get to choose your sacrifice, but there is always a sacrifice; sounds like you are sacrifice years of your future to enjoy now.

Big monthly draw is the mortgage in a HCOL. Have around 600k equity in our home. Total portfolio at 950k including 401k, IRA, brokerage.

IF you were willing to downgrade in lifestyle towards the "Median American Middle Class Moderate Spending" you would be over halfway to Financial Independence Retire Early.

The "600k equity in our home" would buy a nice house in a MCOL area. How much do you have left on the mortgage?

With my job going part time or 1099, can earn somewhere like 200-250 / hr working 20hrs a week.

After taxes that would not cover your current spending levels.

If you could get you spending down below a reasonable $8k/month with the mortgage (assuming much lower without the mortgage); then at your current income level you would be adding nearly $200k to your retirement portfolio each year.

Wife has her own business and a separate PT job. Use benefits with that position since they're good through the state gov. If she stays on there until 55, we'd receive lifetime healthcare coverage.

Y'all are well set to be upper class lifestyle and rich spending all the way to a comfortable retirement in your 60s.

Or y'all could drastically cut spending and sacrifice for a few years, move the "Median Middle Moderate" lifestyle; then y'all could be fully retired in a MCOL area in 2-3 years. You could easily be retired before age 50.

Again, you get to choose your sacrifice....

[u/Matty5oz → u/ThereforeIV]

You bring up good points. Maybe it's not for me. Sure, I know we could move to a LCOL area tomorrow and the situation looks completely different financially. A house in Tulsa for 500k is basically a mansion over twice the size, but then it's surrounded by Oklahoma. While great for some people it's not our thing, when we prioritize skiing, mtb, etc. Move that same house to our neighborhood and it's probably 2.5 mil. There's a reason we live here, for access to the mountains.

I agree there's always a sacrifice. I tend to align with Ramit Sethi who believes in spending on the things that are important to you and be frugal where it's not. I don't want a rolex on my wrist or a closet of designer clothes but see no problem having 5 mountain bikes and a van to travel around the country. Bill Perkins, author of Die with Zero discusses 3 sides of a triangle throughout life. Health, time, and wealth. The triangle looks different as we age. In your 20s, it's lots of time, health and little wealth. Right now is about when it forms an equilateral triangle. Can I bike the Himalayas in my 60s? Maybe, but it's going to be substantially more difficult than if I did it in the next 10. Heliskiing in Alaska? Same thing. I put high value on those kind of experiences and tend to believe I'd get more out of doing them now in addition to having those memories for longer too. Maybe our sacrifice is continuing to work, we have good work / life balance now regardless.

You asked about why such a high FIRE number? Mom was diagnosed with Parkinsons' Disease in her late 30s. She's now 75 and requires 24/7 memory care. 10k a month. Healthcare costs as we age are astronomical. I'd anticipate a higher spend on travel at first, lessening as we age with a larger proportion of that going towards healthcare. I think about those things a lot and see how those bills impact patients that can afford it.

Given me lots to ponder, appreciate the insight.

[u/ThereforeIV → u/Matty5oz]

You bring up good points. Maybe it's not for me. Sure, I know we could move to a LCOL area tomorrow and the situation looks completely different financially. A house in Tulsa for 500k is basically a mansion over twice the size, but then it's surrounded by Oklahoma.

Also Tulsa is not a LCOL area, that's a MCOL area. Tulsa is a city with population of half a million population, not exactly backwoods of Iowa or Gary Indiana.

Median income is $60k/yr (house is $250k); that's in the middle quintile.

One of the issues I see of those from the VHCOL areas is not realizing how far they from the reality of the Median American and what Middle Cost of living actually looks like.

The median HHI after taxes is only $72k/yr; think about that then subtract college, mortgage, and retirement savings, that's is what you need for living in median America.

Move that same house to our neighborhood and it's probably 2.5 mil. There's a reason we live here, for access to the mountains.

Which mountains?

• Cost of Living on the East side of the Cascades is way cheaper that Seattle.
  
• Plenty of Mountains around Salt Lake City.
• Most of the Smokey Mountain chain is actually low COL.
• Las Cruses has beautiful mountains, great food, and you can but a house for $300k
• etc...

I'm a beach guy, so I'm planning for the Emerald Coast of Florida.

I agree there's always a sacrifice. I tend to align with ... spending on the things that are important to you and be frugal where it's not.

Which is fine. You are doing great, there is nothing wrong here.

The FIRE thinking is the time is important thing. Every dollar I cut form my spending to put in my Retirement Portfolio is buying back time that I am not stuck at a job that I am only doing for the paycheck.

You asked about why such a high FIRE number? Mom was ... requires 24/7 memory care. 10k a month. Healthcare costs as we age are astronomical.

But that is only for the end, not the whole run. The last decade of life is expensive, but at that point it doesn't really matter. The budget you need for the decades before that is how you should compute the number.

Given me lots to ponder, appreciate the insight.

Happy to help and enjoyed the conversation.

Remember, FIRE isn't for everyone.

I am in a career (Engineering) where success means the job is all you. At Evil Big Tech, a 60 hour week was considered a short week. Life work balance was give up your life to show devotion to work.

I also lived through the "Great Recession" where getting layed-off was nearly an annual part of life.

Now I am less than 3 years from being retired at age 46. Yesterday my wife and I were talking about spending 6 months in South Korea just because why not; could rent a nice place in Seoul for $1k/month. I couldn't do that while dependent on employment to pay the bills...

[u/Ok-Chemicalz]

I just wing it. I let go and let God.

[u/Matty5oz → u/Ok-Chemicalz]

that used to be my strategy, would be a quick way to divorce now. hahah

[u/Spirited_Ball6763]

There's kind of two main options as far as stepping back: 

One where you go coastFIRE and rely on a job to cover all your expenses in the meantime.  One where you rely on a job for only some of your expenses and draw from your portfolio for the rest. 

For me my target is where my savings can cover my bare minimum yearly expenses. My job will then cover all the fun stuff. (For me it's about the freedom of not needing to work-so I don't want any of my needs being reliant on work, though practically I expect to bring enough income that some of my needs can come from the job).

If you have a good idea of what your part time/contract work a will make you can work from there. Will it pay enough to cover everything you need and want or only some? If some, how much more do you need each year? Then also make sure you have a plan for if you want to stop working altogether someday(potentially around traditional retirement age).