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I met someone at work who says he wants to hit FIRE as soon as possible. He married his wife recently, and they want to start a family fairly soon. Unfortunately, each of them has accumulated a bit of debt, and they haven’t really started saving for retirement.
Lofty Goals and Crazy Kids
However, he is adamant that his wife should be able to quit working and be a stay-at-home mom. In turn, he stated that he would like to retire shortly afterwards to spend time with his kids. Another co-worker snickered behind us and said, “Just wait. If your kids are as crazy as mine, you’ll be back in the workforce in no time. Staying at home with crazy kids is no way to live.”
We all had a good laugh about that. Jokes aside, I said a quick prayer in that moment, hoping that my kiddos wouldn’t end up that crazy. I can’t imagine choosing to work rather than spending time with my kids, but I guess it’s not all that uncommon!
Truthfully, I would love to do the same thing that my co-worker desires. At times, it is tough having to leave for work everyday when my son is wanting to play. It makes it even harder knowing he won’t always be in this stage. I want to take advantage of these moments while I still can.
My co-worker also wants to buy a house, as he is sure that he wants to stay in the area. Rental prices are creeping up. At times, the monthly mortgage payment for owning a house is roughly the same as renting. He briefly shared some quick back-of-the-envelope numbers with me. It showed that they were roughly spending $40,000 a year and had saved virtually nothing so far.
We talked through their expenses, to which he confidently told me their was no fat in his budget, so there was no way they’d be able to cut further. Many in the PF community suggest that there is always fat in a budget. If you are eating plain noodles and walking everywhere though, I’d hazard a guess that there may be no fat left.
Based on their current rent, they are looking to obtain a mortgage of roughly the same size. He asked me, “If I’m essentially starting at zero, how long will it take for me to reach FIRE?”
My wife tells me all the time that I have a terrible poker face, so I’m sure he saw my look of uneasiness as the numbers weren’t anywhere close to allowing him to achieve FIRE soon.
Years to Retirement and Savings
I put together a quick spreadsheet utilizing an 8% stock market return, based on historical averages, to show him how realistic it really was for him to hit FIRE and stay at home with his future kiddos.
Years to Retirement
Saving Per Year
Savings Per Month
His jaw hit the floor. All that he could do was sit and laugh afterwards. He admitted that he had no idea how difficult it was going to be to reach FIRE and that clearly something needed to change.
Even I was shocked by the numbers. Without a mortgage, my wife and I have similar expenses. Clearly, we need to re-evaluate our spending as well.
Over the past five years since my wife and I finished paying off our mortgage, we have been diligently saving as much as we can so that we can reach FIRE. Even so, the numbers are a little disheartening. While we have made tremendous progress over the years, we still have a ways to go.
Only So Much Fat to Trim
I know it’s really popular in the PF community to find any way to trim more fat from one’s budget. But as you can see from the numbers above, if you want to reach a million dollars, you still need to make some decent money in the meantime if you want to reach FIRE sooner rather than later.