The Intersection of FIRE and Disney

[Mome Rath]

Like I said, mortgages are a philosophical disagreement area (not merely financial), I don't like debt of any kind, hence, that would change the equation for me if I was trying to decide when and how to retire. I (me specifically) just would not retire as long as I had any debt, YMMV because you have your own philosophy and approach.

 

[Sjm9911]

I get it. I did get a deal on a house and picked the market , area and timed it wisely. Well half lucky. Lol. Its an investment, just takes a bit longer to get the rewards. Intrest rate was 2.5 and i can get more on the money in the market. So i took out morgage. House went up in value about 40 percent in 3 years. It will recide a bit , probably to about 20 percent, but thats still good use of money. For me anyway. When i do sell it will be a decent amout to get the downsized home somewhere cheaper and bank a bit. At least thats the theory. I do get the no debt stuff. I do pay it down a bit when i can.

 

[Sjm9911]

I also still have 5 uears lwft to work to get to 55. I think i could also do some damage to the payments. Thats kinda why i just asked. Nothing is nessassarly wrong, but its good to see it diffrent ways also.

 

[Starport Seven-Five]

I have the money to pay off the house , but if im making more investing it, why bother paying off the house? It dosent change the money im getting monthly, i didnt include it. I also under stated the amount i will get. I just said 80 k a year. I can eaither pay off the house or not, i will still get the 80 k a year. I have the money to pay it off. It dosent effect the pension in any way.

Yeah, in that situation I'd likely carry the mortgage as well. Interest rates are low and you have a substantial guaranteed income in retirement from your pension.

Our personal situation is different (due to the lack of a pension) and we believe there will be tax advantages to entering retirement without a mortgage. We're not paying extra on the mortgage though, just pooling extra funds in a post-tax account for the purpose of a lump sum payoff. If the tax advantages disappear... we'll carry the mortgage.

 

[BridgetBordeaux]

Today was a great day for all of our portfolios.

Record high close with lots of things increasing in value........not just a few stocks that impacted the indexes, but a broad rally.

Looking forward to some vaccine related freedom in 2021.

 

[KEK1]

Ok here is a WWYD situation, Would love to hear money smart people's thoughts.
We are about to receive an (unexpected) inheritance of around 200k (for which we are VERY grateful!). Our mortgage is 300k (property value 800k). I have 130k in my super and 16k in a outside share portfolio. I contribute $300/week to my super (before tax) and my employer contributes around $100. I am 36 and we can't access super until we are 65. My husband has only around 25k in his (was self employed) and contributes $300/fortnight and his employer another $250/fortnight. Hes 46. We don't have kids. We are lowish earners.
WWYD with the inheritance? We are leaving towards paying down the mortgage, due to that being guaranteed but would be curious if people would do anything else.
TIA!

 

[Mome Rath]

No other debt I take it?

Without the inheritance (meaning, for this question act as though you didn't get it), when would you anticipate having the mortgage paid off, and is that the house you want to stay in for the foreseeable future?

Edit to ask: Do you have an emergency fund as well?

 

[Sjm9911]

Ill say slow and steady is the way to save. I get paying off the mortgage or taking a chunk out of it is satisfying. As stated, get rid of any high interest loans. Then see what you home loan is. If its low , you may make better returns in something else. Or you can play ot slow and steady and split it. Pay off some of the principle on the morgage and invest some. Split the risk. Plus its always good to have some cash you can use, just incase. A house is an investment, and sometimes needs fixing.

 

[BridgetBordeaux]

Rate on mortgage?
Rate on all other loans?
Balances on credit cards and rates?

If have no other high interest debt.......and you have a low mortgage rate.......do not pay it off early.

The money historically will do better if invested in 70/30 (or 60/40 if you are skittish) balanced mutual funds over an 8-15 year period.

I posted elsewhere recently........this is a time when paying a few hundred dollars for a fee based planner to look over all your data and provide suggestions should be a good move.

Sometimes the people that manage your investments may also provide a free service for people that invest with them.

 

[SouthFayetteFan]

Ok here is a WWYD situation, Would love to hear money smart people's thoughts.
We are about to receive an (unexpected) inheritance of around 200k (for which we are VERY grateful!). Our mortgage is 300k (property value 800k). I have 130k in my super and 16k in a outside share portfolio. I contribute $300/week to my super (before tax) and my employer contributes around $100. I am 36 and we can't access super until we are 65. My husband has only around 25k in his (was self employed) and contributes $300/fortnight and his employer another $250/fortnight. Hes 46. We don't have kids. We are lowish earners.
WWYD with the inheritance? We are leaving towards paying down the mortgage, due to that being guaranteed but would be curious if people would do anything else.
TIA!

If you're leaning towards paying down the mortgage then that might be the right answer for you. There really isn't a wrong answer to this one in my opinion. Some people will say invest it, others will say pay-down the mortgage... I could gladly right paragraphs defending why each one is correct using math even, haha.

In fact, right here on the thread we have people implementing strategies on each side of the fence of this one right this very minute, and none of them are wrong. Do what you feel is best and don't look back or regret your decision! That's the most crucial part IMO!

 

[KEK1]

No other debt I take it?

Without the inheritance (meaning, for this question act as though you didn't get it), when would you anticipate having the mortgage paid off, and is that the house you want to stay in for the foreseeable future?

Edit to ask: Do you have an emergency fund as well?

No other debt apart from my HECS (uni fees) of around 28kish but that comes out of my tax and so I don't see it. No credit card debt.
Interest rate is currently 2.44%, will be going down to 2.29% mid Dec.
Yes this is our forever property (It's acerage), next move probably 15years away.
It would probably take us another 15yrs to pay off without inheritance, with it probably 2-3.
Don't really have an emergency fund but there is around 10ishk available in offset.

 

[SouthFayetteFan]

No other debt apart from my HECS (uni fees) of around 28kish but that comes out of my tax and so I don't see it. No credit card debt.
Interest rate is currently 2.44%, will be going down to 2.29% mid Dec.
Yes this is our forever property (It's acerage), next move probably 15years away.
It would probably take us another 15yrs to pay off without inheritance, with it probably 2-3.
Don't really have an emergency fund but there is around 10ishk available in offset.

You might want to seek advice more specific to your location. The terms you’re using seem to indicate you aren’t in the US and for most of us, our advice would be grounded in our understanding of a US tax situation, etc.

 

[KEK1]

You might want to seek advice more specific to your location. The terms you’re using seem to indicate you aren’t in the US and for most of us, our advice would be grounded in our understanding of a US tax situation, etc.

Yes, I'm in Australia.
I suppose I have been a bit underwhelmed with how my shares have done. I bought 8k in 2007 and it has taken nearly 15 years for them to double.

 

[SouthFayetteFan]

Yes, I'm in Australia.
I suppose I have been a bit underwhelmed with how my shares have done. I bought 8k in 2007 and it has taken nearly 15 years for them to double.

You definitely have a super low interest rate on that mortgage so there could be an argument for investing here since that return could (and should) be higher - and others have definitely indicated that viewpoint. But paying down the mortgage offers a guaranteed return and also prevents any temptation to spend the money elsewhere and protects against poor investing decisions. Lots to consider!

 

[Sjm9911]

Thats why i said split it. You get some benefits of both. No law says put it all here all there , its up to you. And yes i will say i have had my share of lemon investments. Not my fault nessassarly, but when i got into stocks and such it was at the height of a market bwfore a fall. So my money is not where others are at, but it recovers and its better then nothing. Did you double the shares or the money? If its rhe money i would be happy with that.

 

[KEK1]

Thats why i said split it. You get some benefits of both. No law says put it all here all there , its up to you. And yes i will say i have had my share of lemon investments. Not my fault nessassarly, but when i got into stocks and such it was at the height of a market bwfore a fall. So my money is not where others are at, but it recovers and its better then nothing. Did you double the shares or the money? If its rhe money i would be happy with that.

The money.
Thanks for everyone's thoughts!

 

[Mome Rath]

Yeah, I agree with everyone else. The only thing I may do different is add to my emergency fund (which is put in a readily accessible account, not treated as investment) somewhere around 6 months of expenses. If you were here in the states, I would pay off the student loan as well, but as others have pointed out, all of that is handled differently depending on what country you are in.

 

[Hoosier John]

Using @SouthFayetteFan's method of calculating Personal Savings Rate, I have calculated my 2019 Savings rate to have been 39%.
Maybe not terribly impressive, but this was before I ever heard of FIRE, and 2020 won't be much better because I just started reading here late in 2020.
I did have to modify SFF's calculation to fit what I think is correct when considering other factors, so feel free to critique my calculation:

Savings Rate = Savings / Income = 39%

Savings = 401k Contributions + 401k Employer Match + IRA Contributions + Net HSA Contributions (net of disbursements for the year) + HSA Employer Contributions + Liquid Investment contributions + Mortgage Principal Payments (home & rental) + The net result of my bank balances for the year (minus if negative) + Pension Plan Contributions (me & employer) + 401k Loan Repayment

. . . The bolded items I added and question if they belong here

Income = "Take Home Pay" (i.e. the total of all our paychecks throughout the year) + 401k Contributions + 401k Employer Match + Medical/Dental Withheld (an added expense) + HSA Contributions + HSA Employer Contributions + Net Income taxes refunded or owed for the the year + Pension Plan Contribution (me & employer) + Net Rental Income (income less expenses) + Life Insurance Withheld

 

[SouthFayetteFan]

Using @SouthFayetteFan's method of calculating Personal Savings Rate, I have calculated my 2019 Savings rate to have been 39%.
Maybe not terribly impressive, but this was before I ever heard of FIRE, and 2020 won't be much better because I just started reading here late in 2020.
I did have to modify SFF's calculation to fit what I think is correct when considering other factors, so feel free to critique my calculation:

Savings Rate = Savings / Income = 39%

Savings = 401k Contributions + 401k Employer Match + IRA Contributions + Net HSA Contributions (net of disbursements for the year) + HSA Employer Contributions + Liquid Investment contributions + Mortgage Principal Payments (home & rental) + The net result of my bank balances for the year (minus if negative) + Pension Plan Contributions (me & employer) + 401k Loan Repayment

. . . The bolded items I added and question if they belong here

Income = "Take Home Pay" (i.e. the total of all our paychecks throughout the year) + 401k Contributions + 401k Employer Match + Medical/Dental Withheld (an added expense) + HSA Contributions + HSA Employer Contributions + Net Income taxes refunded or owed for the the year + Pension Plan Contribution (me & employer) + Net Rental Income (income less expenses) + Life Insurance Withheld

I'm impressed that you linked my comment from almost 2 years ago - glad that it was helpful! I would be hesitant to critique anybody's calculation method because I've long maintained that consistency is of greater importance than formula when measuring savings rate.

When I say that I value consistency over formula, what I mean is that most people are tracking their savings rate in an effort to compare one year to the next. Often people are attempting to find ways to boost their savings rate, or to monitor their rate to make sure that lifestyle creep isn't eroding potential savings. But if you change the rules from year to year, the number loses all meaning. So if you find a formula that you feel fairly and consistently captures your savings efforts as a percentage of your income, then go with it!

As far as your 39% goes - I would be really proud of that. Especially given that you perhaps weren't even focused on it during 2019. Prior to finding FIRE, we were sort of already on that path with savings rates in the low 30s in 2013 and 2014. In the last five years that we've been "officially" chasing FIRE our rates have been 37.0%; 53.5%; 45.7%; 58.7%; 52.8%. That's an average of right around 50% which is my target. This year we have the potential to top 65% which would be an all-time record for us so I'm pretty excited about that.

All that said, I feel it's not worthwhile to compare your savings rate to somebody else's considering that (a) formulas may vary greatly and (b) financial situations can be vastly different. Since nobody's family/financial situation is the same, savings rate is essentially a competition with yourself. And I think you sir, deserve a pat on the back for what you've achieved and the effort you've put forth to track and measure your progress!

 

[SouthFayetteFan]

...I've long thought a recession would hit around Q1 2020....mild nonetheless.

Also - @Hoosier John reminding us of this comment... Seriously, @GlamMistress - this is like the most epic comment of the entire thread!!