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Fire Cash

Including Financial Independence and Retiring Early (FIRE)
JohnB
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Re: Fire Cash

#407048

Postby JohnB » April 26th, 2021, 11:28 am

Like all conversations, this may have moved away from the OP's original intent, but not too far, and it has remained useful and civil. I see no reason why the complete thread should be deleted. If it is deleted then other threads will just be hijacked in the same way, as people clearly want to express their opinions on this subject.

Darka
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Re: Fire Cash

#407055

Postby Darka » April 26th, 2021, 11:38 am

Moderator Message:
Darka, I have deleted the off topic posts now. I did not comply with the original request so had already ignored it, apart from deleting one of your own posts. Redsturgeon

Itsallaguess
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Re: Fire Cash

#407069

Postby Itsallaguess » April 26th, 2021, 12:03 pm

Darka wrote:
I am tempted to up the cash a little so might get closer to 3 years in total, which would be:

1 year income float
1 year reserve (hopefully never touch in premium bonds)
1 year sporadic spending reserve, new kitchen/bathroom, etc. (some cash, some premium bonds)


Another thing I meant to offer up in my earlier reply is that I think it's very important to have a good feel for our own short, medium, and long-term spending, as it's likely that improved FIRE situations can be delivered when they're based on our own personal situations, rather than what might otherwise simply be well-intended 'estimates'.

The problem with well-intended 'original estimates' is that when we then start to add our own safety-margins on top of them, they might turn out to be well away from any margin-capable situation that's actually appropriate for our own personal needs...

I've got 14-years worth of Microsoft Money records available to me, that precisely tracks all income and expenditure that has been processed through my wages and various accounts over those years, and I'm confident that I've got a relatively good handle on both short, medium and long-term requirements and trends, and I fully expect those figures to feed very well into what will turn out to be my margin-enhanced final cash and income-requirements.

Without those 14-year figures being available though, the whole exercise would turn into so much of a 'finger-in-the-air' job that I'd quickly lose confidence in the whole situation, and either end up working for longer than I need to, or end up piling additional margin onto crude-estimates in a way that would paint me into a corner of excess-cash relatively quickly, I imagine, so I did want to mention that as with all these types of situations, having a good foundation of long-term personal financial history available in a flexible and easy-analysed form (Microsoft Money data can easily be exported to spreadsheets for downstream investigation...) is highly likely to reward downstream tasks like the ones we're discussing on this thread...

I was a late convert to MS Money, but incorporating it into my financial processes has both saved me a huge amount of time over the years, by removing what was previously a rather crude paper-based process of account-consolidation, and also helped to provide the ongoing source of all that useful financial history then being available in a fantastic granular form, and ready for some spread-sheet inspection whenever it's required...

Cheers,

Itsallaguess

Darka
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Re: Fire Cash

#407077

Postby Darka » April 26th, 2021, 12:25 pm

Itsallaguess wrote:Another thing I meant to offer up in my earlier reply is that I think it's very important to have a good feel for our own short, medium, and long-term spending, as it's likely that improved FIRE situations can be delivered when they're based on our own personal situations, rather than what might otherwise simply be well-intended 'estimates'.

Cheers,

Itsallaguess


Agreed, although I used to use Microsoft Money, I moved on to a custom spreadsheet and later have been using YNAB for budgeting over the last 5 years or so.

I've got a pretty good handle on our spending, but feel the need to have a little more "confidence inducing" cash than my original plan before pulling the trigger.

regards,
Darka

JuanDB
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Re: Fire Cash

#407121

Postby JuanDB » April 26th, 2021, 2:47 pm

Another Microsoft Money user here. I have records of every penny of income, expense and investments going back to 1997. Probably thousands of hours spent inputting analysing all that data. The benefit is an ironclad belief that my target numbers for monthly and annual expenses are highly accurate.

My current and future selves thank my past self. Even if he did have no idea why he was doing what he was doing when he started.

vrdiver
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Re: Fire Cash

#407161

Postby vrdiver » April 26th, 2021, 4:31 pm

A comment on "years of cash"; apologies if it's obvious...

When working, my expenditure was very different to after I retired. "Cost of working" items obviously fell out of the monthly expenses, but all that free time created new opportunities to do things, some of which required spending, both as initial capital and as ongoing costs.

If you are trying to model your post-work budget, you may want to think about the activities you plan on taking up/spending more time on and drafting an appropriate budget. It may be that some things you outsource now will be brought back into your own activities, so reducing costs, offsetting some of that extra spending!

The point is, that your current 3x annual expenditure figure may or may not be relevant come retirement.

Lots of FIRE sites will extol the virtues of spending as little as possible whilst working, as this increases savings rates and also reduces the "pot" required to retire on, but usually misses the point that retirement is an opportunity to do more than watch daytime TV...

In short, knowing your current annual expenditure, in detail, is a start, as it will help you understand the base-line of what it costs just to keep the roof over your head and food on the table, so to speak, but all the other expenditure items should be challenged as to how they will change after retirement.

The good thing is that you are thinking about it, so have time to consider what you really want to do and what (if any) compromises you will have to make, whether that's in terms of extra years of work, or pacing your retirement plans according to a more acceptable budget. The budget, its real-world sturdiness and the associated cash pot that supports it will no doubt be modelled, cogitated on and tweaked quite a few times before it gets rolled out for real!

VRD

jonesa1
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Re: Fire Cash

#407290

Postby jonesa1 » April 27th, 2021, 9:01 am

It's also worth thinking about the reliability of any income when planning the size of any float & reserve. For example, a DB pension, state pension or annuity can be expected to keep paying (there's a safety net even if a DB pension fund dries up), unlike income from investments where you have to contend with market valuations and may have to reduce extraction in order to safeguard the long-term viability (unless you're in the fortunate position of far more assets than required to provide your preferred income).

stevensfo
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Re: Fire Cash

#407391

Postby stevensfo » April 27th, 2021, 4:26 pm

I gave up on the commercial software and simply used Excel. Over ten years of expenses. The most expensive were without doubt involving the kids at school, uni, etc. With Excel, I can send to my laptop, or anywhere with LibreOffice, MS Office etc.

Since Microsoft decided to introduce their Office 365, I tend to use LibreOffice for anything important. Just try using MS365 when there's no internet!!

Steve

jonesa1
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Re: Fire Cash

#407404

Postby jonesa1 » April 27th, 2021, 5:29 pm

stevensfo wrote:Since Microsoft decided to introduce their Office 365, I tend to use LibreOffice for anything important. Just try using MS365 when there's no internet!!


I have an Office 365 subscription and it includes the ability to download the Office applications, no need to work online.

stevensfo
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Re: Fire Cash

#407424

Postby stevensfo » April 27th, 2021, 6:34 pm

jonesa1 wrote:
stevensfo wrote:Since Microsoft decided to introduce their Office 365, I tend to use LibreOffice for anything important. Just try using MS365 when there's no internet!!


I have an Office 365 subscription and it includes the ability to download the Office applications, no need to work online.


Maybe you're correct, but I was once in an airport where I desperately needed to open a word doc, and it wouldn't let me without an internet connection. Since then, I've heard that you have to open and re-save the doc before leaving an internet connection.

But I still prefer to keep LibreOffice as my main tool on the laptop. So easy to use. As long as I save in .doc format, I can open it anywhere.


Steve


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