Update to draw down strategy – Mar 2018

After going through the health care analysis earlier, I (like so many others) have had to adjust my retirement plans and drawdown strategy to account for Obamacare and changes to it. Like so many others, as well, I will have to continually monitor the situation and make changes. In addition, Mrs. 39 Months looks like she wants to continue to work after we hit FI, but her job probably wouldn’t provide benefits.

The key issue is the provision for subsidies for individuals that do not make more than 4X the poverty level (the poverty level was around $16,000 for 2017). Thus, if your income, before deductions, is $64K or less, you can be eligible for subsidies. This may mean the difference between paying $1,400 a month and $600 a month for the same level of healthcare. Needless to say, if the situation remains the same, I’ll either need to make $64K, or $74K (the $10K necessary to pay the additional medical). I know many folks in the FIRE community knew this, but I thought it was $64K after deductions, not before.

Our initial budget post-retirement, was going to be about $72K, in order to pay for everything, including medical. This would provide for all bills, some travel, and $1K a month each for Mrs. 39 Months and myself in “fun money”/personal expenses. That would push us over the $64K figure. In addition, if Mrs. 39 Months works (earning around $24K), it adds a level of complexity. So how do I “square this circle?”

When we hit FI (27 months from now), we should have the following amounts.

  • Savings: $132K (can spend without having to pay taxes)
  • Deferred Income from work: $179K (when paid out, have to pay taxes on it)
  • Brokerage Account: $94K (can spend about $60K of it without paying taxes. The rest, will be taxable.
  • Inherited IRA from my father: $137K (taxable when we take it out)
  • 401K/IRAs: $546K (taxable + penalty)
  • Roth IRAs: $257K (non-taxable)
  • Total: $1,345K liquid assets
  • House: $298K (not depending on it unless absolutely necessary, i.e. no reverse mortgage)


  • Mrs. 39 Months making $24K/year. Have to start from there
  • Inherited IRA will force us to take around $6K a year
  • When I leave company, I have to start taking my deferred amount. I believe I get to stretch it over 5 years, but that still winds up as a minimum of $36K a year

As you can see, I’m already up to $60K, without the ability to alter it. How do I get to $72K of income, without going over the $64K of taxable income?


  1. Use the money in my brokerage account by selling some of the stocks there. I would only have to pay for any capital gains on it. Since it looks like about 2/3 of money in it will be basis money, I could take out $12K, and it would only show as $4K of income.
  2. Use some of my Roth IRA money, which is not taxable, to make up for the shortage. Even though I would only be 56 when I hit FIRE, I can still withdraw the money I put in, tax free. However, I am loathe to do this.
  3. Get myself a side gig/part time job to keep myself from going crazy from retirement boredom and pay for the additional medical costs. We will have to see about that.

What is my current plan? I’m going to plan for option 1, and if I get really bored in retirement, I’ll probably shoot for #3, with the understanding that I will be working half of my time just to pay for medical. Like so many others in the US, medical is driving the train!

Of course, all this could change over the next 27 months as we move forward.

So, any changes to your drawdown plans, folks?



Mr 39 Months

Great chart at “Four Pillars” on how long it will take to reach FI at certain income and spending levels   

I think the chart below is excellent. Its from FourPillarFreedom.com (a blog I’ve got to start reading now) that was linked to by The Simple Dollar. It shows, at certain income and spending levels, how many years it will take you to reach FI (assuming the 4% rule and a 5% interest after inflation). I believe it also takes into account taxes, etc. in the annual spending (i.e. your annual spend should include your taxes)

Many folks find it difficult to explain to people why they should save so much, and how it takes effort and sacrifice to reach our financial goals. This chart makes it a little easier to explain to people how long they would have to work in order to retire/reach FI.

Four Pillars has a lot of other tools (listed under his “Visuals” area) that help to show many of the FI concepts.

Check him out.


Mr. 39 Months

Interesting philosophical question on Root of Good…

What do you do if you have reached FI, but are scared to “pull the trigger.”

What do you do when you’ve been diagnosed with a terminal disease that might mean your death in the next 5 – 10 years – but you are still scared of leaving the workforce?

Should you retire early if you only have five years to live?

I think this is close to many FIRE folks big nightmare. They work and scrimp and save, only to have something come up right as they are heading out to their new life.

I hope your thoughts and lives are doing better than this!

Mr. 39 Months

Dealing with depressive thoughts as you close in on FIRE

Sorry the posting has been a little late. I’ve been on the road traveling (11 hours in the car on Wed, 7 hours yesterday) so it was a little difficult to get posting up.

I’m traveling down to North Carolina to take a woodworking class (You’ve got to have hobbies!) and took the opportunity to stop off and see family in Knoxville TN on the way (Mom, Brother, other folks). It’s always great to have the opportunity to see family, especially when you are living 11 hours away by car.

Family has always been important to me, or at least I think so – but you couldn’t tell by my life choices. Mrs. 39 Months had a mother who wasn’t in the best of health, so we ended up moving to a place a little closer to her (3 hours) than my family. Even then, we would see her side maybe twice a year. Mine I would see, if I was lucky, about once a year. We always complained that nobody came to visit us, that we always had to be the ones traveling – but we also didn’t have any children to draw the grandparents to us.

Visiting my old homestead, where I lived for 18 years and was formed (and which I still feel is my home state) brings up a lot of memories. I see the choices I made growing up, and think about what could have been, had I made a different decision. I see places I enjoyed as a youth, and it brings back memories of old friends, lots of fun, and sadness at the passing of time. I have a tendency to be morbid about the past at times (something that Mrs. 39 Months chastises me about), but its part of my character. It doesn’t last very long, and typically I return to my usual upbeat self after only a short time.

That is why I have embraced stoicism with some vigor. The teaching help me deal with these feelings, as they show that what is past is gone, never to return. The decisions made then have gotten you to where you are now, but all you can control are your decisions now. It is useless to spend time and emotion on something you can no longer control. I know the logic behind it, but still have moments.

I also have been reflecting on what I’m going to do once I hit FI. I believe this is a topic that many folks explore vaguely, or in their first couple of years. They do all the things they have wanted to do all their lives (travel, hobbies, etc.). Then they look in the mirror, after a decade of pushing like crazy to reach FI, and see that they no longer need to push. They have to alter their personality, and it’s tough. That is probably why some of my favorite blogs to follow are those folks who have reached FI, and what they are doing now – years afterward.

I am still working that out.


Mr. 39 Months

Post where I disagree with Ric Edelman

Many folks know of Rick Edelman. Noted financial advisor, owner of Edelman Financial, author of numerous books on finance (investing, saving, homes, etc.), he runs seminars all over the US, and hosts a weekly 2-hour radio talk show. His book “The Truth about Money” has been a bible for many people in the US, as they seek to decipher the labyrinth of their money. For many folks, Ric is the voice of financial planning.

Like most financial advice, it is difficult to get too general in the rules of finance, and you often need to get a lot of an individual’s specific details to give accurate advice (something that Ric and his team say many times on their radio shows). Still, in his book, Ric does offer some advice that, while it might work for most folks in the world, does not match what I think works (and I think many in our FI community would agree).

In the real estate section of the book (that I was reading last night), Ric calls for you to:

  • Pay as low a down payment as possible on your home and get as large a mortgage as you can(leave your remaining cash for investment)
  • Go for the longest mortgage period possible (30 years+)
  • Don’t  make extra mortgage payments or pay bi-weekly, i.e. don’t pay your debt off sooner
  • Don’t work on becoming debt free with no mortgage (rates are low, invest that money, use mortgage deduction to reduce taxes).

Some of his points to this are that if you pay your house off, it’s not liquid; you can’t sell portions of it to pay bills. You also don’t have flexibility if you want to move – you’ll have to sell the house (or rent it out, which can be a pain). Home price increases often merely track inflation, so you won’t gain there. Finally, a home will continue to cost you money (repairs, decorating, etc.). It is not an investment, and should not be considered one.

I have the same problem with him here that I do with folks that criticize Dave Ramsey’s debt snowball (“you should be paying off the highest rate credit card, not the one with the lowest balance”) – while the numbers are correct and make complete sense, it doesn’t take into account human psychology.  We are emotional beings, not Mr. Spock, so we need to understand how keeping a mortgage forces us to behave & think, versus being debt free.

For many folks in the FI community, the path to financial independence is reached by keeping a close eye on their expenses, and finding ways to reduce these costs. Once we get our spending under control, we work to hit that 25X / 4% amount in order to achieve our freedom. Since Ric’s books says that 40% of a person’s spending is going into their home (mortgage, rent, taxes, utilities, furniture, etc.), by reducing this number, it suddenly opens up a big lead in our race to FI.

It wasn’t until Mrs. 39 Months and I paid off mortgage that I caught the FIRE bug. It suddenly seemed possible. When Mrs. 39 Months lost her job, we were just finishing up paying off the mortgage. She told me she felt much less stress about her job loss, knowing that we had the home paid off.

We all saw the possible disaster that could befall you if you followed Ric’s advice completely. We suffered a major crash (2008/2009) with job losses and a dramatic drop in home prices. There are a lot of folks with the huge mortgage that is “smart” that, when the market’s crashed 50% and they lost their job, were in a terrible spot. Don’t tell us “this could never happen” – we saw it happen.

For most folks who are ok being on the treadmill, who are fine with getting the large mortgage and house and paying it off over 30 years while saving for a retirement in their 60s, Ric’s ideas work. For those of us in the FIRE community, who want to get our independence early, the idea of tying ourselves down to a huge mortgage for the next 30 years really doesn’t look that “smart.”



Mr. 39 Months

Does pursuing FI mean a life of deprivation and extreme frugality?

One of the questions you often see from folks who just start is how far they should take their journey to financial independence. Most folks end up very quickly on Mr. Money Mustache or Early Retirement Extreme, and see a type of frugality that can be almost frightening. Getting by on $25,000/year (MMM) or $10,000/year (ERE) seems to be almost impossible for some folks, especially folks who come to us with a lot of debt (student loan, credit card, etc.).

In addition, many folks don’t get as energized by the idea of extreme frugality that some FIRE folks really enjoy. Let’s face it, some of the people in our community definitely take a “more frugal than thou” attitude, and compete for ways to show how frugal they are being.

Still, what I like about our community is the wide variety of options, of people, of circumstances, and of goals that are demonstrated by the various blogs. You can find single people, married people, young & old, folks with kids & with just pets, extreme frugality and “fat FI” people who like to spend. It won’t take you long searching on Rockstar Finance to find someone (or many someone’s) whose circumstances come close to your own. You can then settle in for some good reading, good ideas, and excellent motivation.

For Mrs. 39 Months and myself, we’ve been long on this journey, and only really got a push once we paid off our home mortgage and became debt free. That was when the numbers all suddenly came together, and we could take a good look at how long it would be to obtain FI.

What caused me to write about this topic today? Well, it’s a little cold & rainy here in Southern NJ today (Feb 24) – like it is in a lot of the country. Mrs. 39 Months decided we should go out and have a traditional English Tea (scones & the works) at a local restaurant that caters to British food. While Mr. Money Mustache might laugh at us for this (“make the scones & tea yourself at home – and here is a great recipe”) we are making the decision to go out and patronize a local establishment.

Many folks in the FIRE community talk about intentional living, making decisions based on your wants and needs. If you feel the money spent provides you value, then go and spend it. I happen to agree with this, and going for scones and tea looks like it will provide value today.


What is worth spending funds on for you?


Mr. 39 Months

Are FI people just parasites?

I have been “binge listening” to Choose FI podcasts, trying to get caught up (currently on episode 50 out of 62). I highly recommend them.

Recently finished what turned out to be one of their most controversial, episode 47 with Millennial Revolution, a young couple from Canada who achieved FI in their 20s. They lived in Toronto, and were seeking to purchase a home there. After saving up $500K Canadian to purchase, they realized the home prices were insane, and chose to hold off and rent.  They never purchased a home.

Once they achieved FI, they realized they could travel the world and spend $40K a year (or less) which they had the funds to support. For the last 2+ years, they have been traveling the world, visiting sites, and having a great time – certainly a goal of many FIRE folks.

One of the things they really push is that buying a home is a stupid/foolish move, the numbers just don’t add up. As I listened, I had numerous questions on things they didn’t seem to be taking into account. While I can agree that your own home should never be purchased for an “investment,” I still believe they didn’t account for a lot of rental costs, and didn’t give sufficient credit for a fully paid off home. Apparently I wasn’t the only one, because the episode ended up being one of the most commented on for the show, and the two hosts of Choose FI, in episode 50, apologized to the audience that they hadn’t asked the Millennial Revolution couple the hard questions on their math.

What struck me, during the discussion (and on many conversations about travel and other FIRE folks before and after) is how much FI folks depend on non-FI folks in order to live and enjoy their lives. For those traveling and enjoying low-cost living, they all depend on pilots, service personnel, restaurant owners, etc. to get homes, live in place, and do the 9-5 for most of their lives. Without a large percentage of the population dedicated to regular lives (home, kids, work, etc.)  the FI folks wouldn’t be able to do half the stuff we do, once we achieve FI.

Don’t get me wrong – the tenets of financial independence (frugality, intentional living, etc.) can easily be adopted by most folks and can lead to a more enjoyable, less stressful life. Just don’t get on your “high horse” about how much more superior you are to other folks. If we all really believe in intentional living, these folks have made their choice, and many times, we benefit off that.

I don’t think FI folks are “parasites” – we have just chosen to prioritize other things. We can happily co-exist with folks who have made different choices.


Mr. 39 Months

Well that was unexpected – Not!

All you heard on the news last night and this morning was the “gigantic” drop in the investment market yesterday. Some are already calling it “Black Monday.” I personally had about $20,000 erased in one day. Ouch!

From Marketwatch

 How did the main benchmarks perform?

 The S&P 500 SPX, -4.10% dropped 113.19 points, or 4.1%, to 2,648.94. The large-cap index is now off more than 5% from its all-time intraday high of 2,872.87 on Jan. 26. The S&P 500 had gone 406 sessions without such a decline, marking the longest period without a 5% pullback in 20 years.

 The Dow Jones Industrial Average DJIA, -4.60% slumped 1,175.21 points, or 4.6%, to 24,345.75, not up all its 2018 gains. The S&P 500’s percentage drop was the largest since Aug. 18, 2011, while the Dow’s drop was the biggest since Aug. 10, 2011. The S&P 500 and Dow both turned negative for the year.

So what is the FIRE community doing this morning? My bet is that, like me, they are going about their business and not sweating it. Folks in our community invest for the long haul, have a long-term outlook on investments, and understand that the market is going to jump at times. Heck, in January it was up almost 6%, so if anything, we are still up for the year. In 2017, it was up 19% (versus its long-term average of around 10%). So why “work ourselves up into a lather” about it.

Besides, I rebalanced at the beginning of the year, so I took some of those gains off the table (buying low cost “losers” and selling high cost “winners”). One of the reasons to do that.

My plan continues. I will contribute funds every paycheck on a regular basis, with the same allocation as before. I expect to hit my FI goal in 29 months, and nothing I see here makes me think any different.

Similar sentiments:


Mr. 39 Months

Financial Independence and Stoicism

Some things are in our control, while others are not. We control our opinion, choice, desire, aversion, and in a word, everything of our own doing. We don’t control our body, property, reputation, position, and, in a word, everything not of our own doing. Even more, the things in our control are by nature free, unhindered, and unobstructed, while those not in our control are weak, slavish, can be hindered, and are not our own.” Epictetus

Anyone who has read some of Tim Ferris’ work or listen to some of his podcasts know that he is a big fan of stoicism, and often goes over the benefits that can be gained by studying and following the tenets of the philosophy. I have been reading about stoicism for the last year and find that I greatly enjoy and benefit from the readings and practice of it. Contrary to many folks opinion, stoics don’t turn away from the world, the philosophy demands that they engage in it. However, it also asks them to realize how little control they have over events and other people, and to recognize that the only power they have is to control their own actions and emotions. It is here where people get their ideas about folks “behaving stoically.” Stoics can be sad, angry, etc. – but they are taught to recognize the emotions and not act on them without thinking.

I believe the stoic attitude definitely helps with frugality, because stoics are taught to recognize that all of these items are fleeting, and that they really don’t determine a person’s happiness. One of the key stoic exercises is to spend a period of time without something you believe necessary for your life (good food, a smart phone, nice home) so that you can see that, in the grand scheme of things, you can live without most of this stuff. It can make life easier, but it isn’t absolutely necessary.

This month, I chose to give up on sugar for the month (which is really hard, Mr. 39 Months has a definite sweet tooth). I’m on day 3 so far, and I am adapting. I have survived 72 hours without a sugary snack – and I’m not dead.

For those interested, I’d suggest a book titled “A guide to the good life” by William Irvine. It’s an excellent introduction to stoicism.

Mr. 39 Months