Mixing Maroons - Spend Less, Save More … Get Marooned!

Mr. Maroon

January 6, 2015

The Master Plan Revisited

Tags: , , , ,

2015.01.06_OnTheHook2So, Mrs. Maroon has put me on the hook for a post to describe our amendments to The Master Plan. In summary, our goals were simple:

  • Eliminate all debt
  • Accumulate a balance of $1,500,000 in cash and investments
  • Retire from corporate America

The deadline was August 2030 – the end of my 50th trip around the sun – and over FIFTEEN years from now! I’ll repeat that… FIFTEEN years!!

 

So, What Happened?

Quite frankly, I can’t wait to retire. There’s nothing I would rather do than wake up on the beach every morning and watch the sunrise with the comfort that whatever I choose to do that day, it will be fully my choice. Ladies and gentlemen, that is entirely too romantic to wait FIFTEEN YEARS for.

 

Given the efficacy of our new found frugality on our finances, I’ve decided to apply it to the concept of time. After all, the freedom to spend our time in a way that we prefer is ultimately what all of this frugal spending and investing is supposed to provide for us. In the same way that I discovered about a year ago we were spending too much money on stuff we didn’t need, this new perspective led me to declare that I was spending too much time on things I really don’t need – a job that I really am not passionate about, the associated work-related stress, being away from my family, and postponing hobbies that enrich my life, just to name a few. That was the revelation I needed to really trim the fat and get serious about early retirement.

 

Out with the Old

The $1,500,000 in the Master Plan really just came out of nowhere. Back then, I even wrote:

 

For us, annual spending of $40,000 works out to an investment balance of $1,000,000. My comfort level implores me to have a Factor of Safety of 1.5, so I’m shooting for an investment balance of $1,500,000. Theoretically, I could withdraw $60,000 annually and continue to grow the balance, but if I continue to strive for $40,000 spending annually (or less), then I effectively have a Two and Two-Thirds Percent Rule, which gives me a buffer of $20,000 per year to account for “Aww crap!” situations.

 

That $40,000 of an annual spending in retirement, if I recall correctly was what we in the engineering world call a WAG – a Wild Ass Guess. And, to make matters worse, I threw some engineering Factor of Safety nonsense in there to add unnecessary time to our retirement date.

 

At the time, we had no idea what that number would really be. And quite honestly, we still don’t. (Mrs. Maroon, we should really make that a resolution for 2015.) What we do know is that, in practice, we really don’t budget more than about $35,000 a year, sans childcare and our mortgage payment. In fact, our 2015 budget for normal living expenses is a whopping $27,195!  Budgeting for $35,000 a year, to include luxuries like vacations, birthday and Christmas presents, and those “Aww crap!” situations that we really don’t experience often, is pretty sufficient.  And while that budget doesn’t exactly mirror our expected post retirement spending, there is plenty of flexibility to spend less here and more there.

 

In with the New

So, taking the $35,000 proposed annual spending and multiplying by 25 in accordance with the 4% Rule, we have a grand total of $875,000. We’ve immediately trimmed $625,000 off of our required endowment. Assuming our 2014 endowment contribution rate of $52,500 and 7% annual growth, that’s 3,170 days of additional freedom. Now we’re talking!

 

Additionally, Mrs. Maroon and I want to retire, and soon, but we can’t imagine just sitting around doing nothing. We’re much too entrepreneurial for that! So, let’s say that, between the two of us, we can make a measly $5,000 a year in supplemental income (which is a lot of pizza peels…). That’s another $125,000-deduction from the endowment and another 806 days of additional freedom.

 

In terms I can better appreciate, instead of retiring at 50…I’m now retiring at 40!

 

Now then, if I can just figure out a way to shave off another five years… I’m ready now!

 

What is early retirement worth to you? Commit to supplemental income? Work another couple of years? Further let go of consumerism by deciding you don’t need quite as much spending money in retirement?

 

~ Mr. Maroon

A Glimpse Into Retirement
Look Back at 2014 and Ahead to 2015
  1. Comment by Robin @ The Thrifty Peach — January 6, 2015 @ 12:39 PM

    I’m desperately trying to let go of consumerism and, more importantly, trying to get my husband to join. He’s getting there, but I wish it was happening a little faster!
    Robin @ The Thrifty Peach recently posted…My Latest Obsession: Tiny Houses!My Profile

    Mr. Maroon Reply:

    I fully believe there is an Accumulation Phase of life and that it is much more ingrained in us men than our counterparts. I really struggled with letting go until it dawned on me that I was stuck in a vicious cycle – job leads to unhappiness, unhappiness leads to searching for happiness by buying stuff, buying stuff leads to needing money, and needing money leads to a job. No wonder Mrs. Maroon hardly recognized me when I finally passed that phase.

  2. Comment by Robin @ The Thrifty Peach — January 6, 2015 @ 1:44 PM

    Well I think I’ve already checked out of the Accumulation Phase, and it feels great! I wish I could get everyone else around me to get out, too.
    Robin @ The Thrifty Peach recently posted…My Latest Obsession: Tiny Houses!My Profile

  3. Comment by Mr. Captain Cash — January 6, 2015 @ 2:28 PM

    That is great to hear your dialed done your WAG. It will be that much more intense to watch your progress towards your FIRE date as it is now alot sooner.

    Impressive job only spending $27,000 throughout 2014. There is nothing easier to lower your FIRE date than decreasing your annual spending which by the looks of it you guys have a good handle on.

    Mr. Captain Cash
    Mr. Captain Cash recently posted…Why Your Programmable Thermostat Isn’t Saving You A Dime!My Profile

    Mr. Maroon Reply:

    We’re certainly anxious for retirement and are trying to optimize where we can. Reducing living expenses was much easier than we expected. Sure there are times where we feel a bit burdened by sticking to our budget, but the impending reward is considerably worth it.

  4. Comment by Elroy — January 6, 2015 @ 3:26 PM

    Early retirement is something I want, but at what expense? I’ve done a lot of research, enough to know that ejecting in your 40’s around 2.5% WR is about as high as I would go.

    I’ve also gone from saving too much, to saving less. And while the argument of “enjoy life before you die” comes into play a lot, it is also a shame to have died before you get to partake of the fruits of your labors. Where’s my balance point? I dunno, each year it is different. But I certainly hope you’ve found your’s!
    Elroy recently posted…Israel – IntroMy Profile

    Mr. Maroon Reply:

    Balancing the present with the future is very subjective for sure. That’s what I love most about the network of personal finance bloggers – there’s so much to learn and so many different perspectives to consider. At most, all we hope for is progress that we believe in.

  5. Comment by No Nonsense Landlord — January 6, 2015 @ 4:56 PM

    No one in the USA has to work. It all depends on what your goals are. When you are ready for others to make your decisions for you, quit. When you want to have the freedom that money gives you, keep accumulating.
    No Nonsense Landlord recently posted…What is the Meaning of Financial Independence?My Profile

    Mr. Maroon Reply:

    That is certainly true and without nonsense, as your name suggests. I think the FIRE breed differs from the welfare breed. FIREs want to work hard and fast first and then sit back and enjoy life at their own expense. Welfares want to enjoy life at everyone else’s expense. Our current policy, like it or not, encourages that. Thanks for stopping by!

  6. Comment by Kim@Eyesonthedollar — January 6, 2015 @ 8:18 PM

    I’m still shooting for age 50, but I am only working in the office about 3 days a week and usually do enjoy it. Now, if I had to go back to 5 or more days, I would poke my eyes out with forks. Congrats on being able to shorten your length of time until freedom.

    Mr. Maroon Reply:

    Thanks! We’ve talked about reducing our hours but just decided to get it over with as quickly as possible. Best wishes!

  7. Comment by Mr. SSC — January 6, 2015 @ 9:24 PM

    Haha, That’s awesome! We had a similar realization that may shave off a year. With the fact we will both have some side income money somehow, plus just wanting to get done with the Houston commute fun, we’re strategizing the same way. Good luck to you in your quest for less days at the office!
    Mr. SSC recently posted…Early retirement failMy Profile

    Mr. Maroon Reply:

    Man, if we were still combating that daily Houston commute, I’d probably be trying to retire tomorrow. It’s hell for a country boy used to the open two-lane road! Good luck in 2015!

  8. Comment by Taylor Lee — January 6, 2015 @ 11:20 PM

    Wow, that’s a great and ambitious plan for FI! I wish you the best in reaching it!

    For me, I’d like to have a paid off house, a couple hundred thousand in retirement accounts, a few tens of thousands in 529s for my kids, plus $200-300K extra before I’ll be ready to “retire”. Mostly likely, for me, that’ll mean going back for my PhD or starting a business with the SO. Really, the only constraint is to spend my waking hours doing labor I *want* to do rather than *have* to do.
    Taylor Lee recently posted…2015 Challenge: Cut My Food Spending By 30%My Profile

    Mr. Maroon Reply:

    Replacing have-to work with want-to work sure sounds nice, doesn’t it? Thanks for stopping by! Best of luck in 2015.

  9. Comment by Petrish @ Debt Free Martini — January 7, 2015 @ 4:20 AM

    First of all I am so impressed with how you have your finances broken down to the penny. Of course I have a budget but its basic, quick, and not so sophisticated as yours. I am getting ready to retire from the military and I have decided that I am going to try my best to never have another regular 9 to 5 job. Hopefully I can get my freelancing side hustle off the ground this year. Good luck with your 2015 goals.
    Petrish @ Debt Free Martini recently posted…5 Financial Myths to IgnoreMy Profile

    Mr. Maroon Reply:

    It’s just one burden of our engineering personalities – we thrive on both accuracy and precision. Straight up NERDS, we are! Never working a conventional job again sounds wonderful. Thank you for your military service and we wish you continued luck and safety in 2015!

  10. Comment by Shannon @ Financially Blonde — January 7, 2015 @ 8:48 PM

    I used to think I would never retire until I started pairing down my lifestyle and thinking about retirement in terms of financial freedom and now I realize that instead of never, it’s more like 48 or 49 and the biggest expense making that timeframe as long as it is is the fact that we are committed to paying for college for our son. Once he graduates, though, it’s off to the races in our home.
    Shannon @ Financially Blonde recently posted…15 Ways to Save Money in 2015My Profile

    Mr. Maroon Reply:

    My parents were not wise with their finances, but they did extend me the gift of paying for one of my college degrees, for which I am grateful. Way to go giving that to your son!

  11. Comment by Andrew@LivingRichCheaply — January 8, 2015 @ 8:25 AM

    Great master plan. We are the same age Mr. Maroon. I always thought that 2035/36 would be the latest retirement date when my pension kicks in. After reading a few blogs awhile back I started considering the possibility of making it earlier than that. I mean 20 years is a long ways away. We’ve always been relatively frugal but it’s tough living in a high cost area like NYC. I would definitely keep track with your progress and hopefully I’ll be able to get there around the same time.
    Andrew@LivingRichCheaply recently posted…Live For TodayMy Profile

    Mr. Maroon Reply:

    Twenty years is quite a ways off and I, for one, don’t want to look back twenty years from now and feel like the only thing I’ve accomplished is longevity in the workplace. There’s so much more to my life than that.

    Best of luck to you! I have a strict “never-gonna-happen” policy on me ever visiting NYC, but if you ever pretire and get out, we should grab a beer and bask in the glory of our pretirement.

  12. Comment by Harmony — January 8, 2015 @ 10:14 AM

    I just devoured all of your blog posts. It’s inspiring to read about others with similar goals, especially when you are making such great progress!

    Computing all of the numbers is on my do-list for 2015. However, it seems that we all should be able to cut back on the number of full-time working years if our plans include generating some type of income after “retirement.”

    Great job so far and best of luck!
    Harmony recently posted…Hunting For A Better Cell-Phone PlanMy Profile

    Mr. Maroon Reply:

    Welcome! We’re happy you found us and hope you’ll come back and contribute. The very best part about FIRE, for us, is developing relationships and learning from others.

    Good luck with your 2015 goals!

  13. Comment by Sir Salty — January 8, 2015 @ 8:54 PM

    Congratulations on resetting your goal.

    I’m constantly thinking through some of these same issues while I aim for FIRE. I still have the big margin you just cut out. I’ve been hung up on the scenario of walking away from a job with a good salary to try FIRE, then it not working out. Then I’d likely have to take a job with a lower salary.

    If I could get over that I could probably retire later this year. Otherwise, I probably need to wait 2-3 more years. How did you get over this concern?
    Sir Salty recently posted…Wilderness (Re)discoveredMy Profile

    Mr. Maroon Reply:

    Our FIRE lifestyle is made possible by the “work hard now, play hard later” approach. Being recent converts, though, I still have some residual “play now” behavior. I credit that to our rush for financial independence. Plus, I’m a moderately aggressive, but usually well-calculated, risk taker and more than willing to chance another having to develop an earned income stream later for the chance at FIRE sooner. If it works, great! If it doesn’t, I have several ideas brewing for supplemental income.

  14. Comment by Laurie @thefrugalfarmer — January 12, 2015 @ 7:46 AM

    SO cool that you guys are pushing your goal up, and by so many years too – way to go!!! We are getting on the fast track too this year. Can’t wait!!!!
    Laurie @thefrugalfarmer recently posted…What is Your 2015 Homesteading Plan?My Profile

    Mr. Maroon Reply:

    It’s amazing how our goals changed so quickly, simply from the hunger for freedom. When compared to spending much of my time at work, even the largest sacrifice seems worthwhile.

  15. Comment by Kirsten — January 13, 2015 @ 3:18 PM

    So glad you revisited that! What a relief that must have been to see that retirement is actually quite near. Maybe being able to taste it will help you find other ways to bring the date even closer!

    We’ve been thinking about this some in our household, but gosh.. We have so much debt, it feels like we are just dreaming. But we continue to maximize our contributions into the 401k and just let that ride off to the side. Once we pay off student loans and the house – you know what? We can basically save all that money for a few years and I’m betting we can retire not too long after that (depending on how our 401k’s fare in the meantime). My hope is to retire by 50, 15 years from now. But I’ll look at it more after all the debt is paid off!
    Kirsten recently posted…Yes, I’m Still Here: UpdatesMy Profile

    Mr. Maroon Reply:

    I really believe the most important component to retirement is now how much money you have but how much money you plan to spend. Getting out of debt is largely pertinent to early retirement because it directly relates to your cash outflow. Great job attacking yours!

  16. Comment by Jason — January 18, 2015 @ 4:59 PM

    That is fantastic. My goal is to possibly be in that position by the time we hit 50. Moneywise we would be fine, but unfortunately we have too much student loan debt. And our currently trying to have kids late in life, but it could happen! Congratulations on your amendments.
    Jason recently posted…Graduate School: You DON’T NEED STUDENT LOANS TO GO!My Profile

    Mr. Maroon Reply:

    If I’ve learned anything, its that there truly is a way if there is a will. Maybe, like us, FIRE is closer than you think. Keep after it!

  17. Comment by Our Next Life — April 23, 2015 @ 2:00 PM

    So glad to find your blog! Interesting to read your thinking and calculations! Maybe we can borrow some and shave a little more time off our late 2017 target…

  18. Comment by Amber tree — May 24, 2015 @ 1:15 AM

    Great article and perfect timing for me! I just finished doing the math on our retirement date and it is 14 years from now. At the end, i mace the reflection on how i could shorten that. Doing some side work, or even part time work was one of tbe ideas we had.

    I am happy to see that otners think the same way.

    One of the open points that i see is how the kids will impact the budget. I think it is not safe to assume that cost will stay the same. Bigger kids means more opportunities to go out together to eat, they need an allowance, they will want to have vacations with friends. Just curious to see how you think anout this.

    Amber tree

Leave a comment

RSS feed for comments on this post.

CommentLuv badge