After recently discovering your blog, I see you’ve gone to some pretty impressive extremes to secure financial independence. I love it. I only wish I’d found Early Retirement Extreme and Mr. Money Moustache years ago. I could have become SO – MUCH – MORE… Anyway, I haven’t done so bad, my husband is currently “retired” at age 44 and I hope to retire by age 49…maybe sooner. I noticed recently that you asked for submissions about those planning on early retirement and I thought, “Why not?”

This year, I’m approaching the big 4-0h. I’ve been married sixteen years and have three children ages 10, 11, and 12.

The first thing I did right was find a mate who was financially like-minded when in comes to money. I knew within the first month of dating that DH was a hard worker with no debt. As our relationship matured, we began stashing cash together – even before marriage. DH had been contributing the max to his 401k and me, a few hundred dollars per month into my 403b – plus a state pension.

Shortly after our one-year wedding anniversary we had $25,000 saved. I felt like a millionaire! We scraped up a bit more and put 20% down on a 3 bedroom 1.5. bath home in suburban Milwaukee. Purchase price: $133,000. There was a small park, baseball field and basketball courts directly across the street. It was a well appointed home in a quaint neighborhood complete with large, fenced-in backyard and deck. Well that was wayyy back in 1998. We’re now on our third home (purchased in 2010 for $350,000 – doh). You don’t know how many times I wish I still lived in our cozy, little first home. Sigh….

Regardless, that was then and this is now, and our present situation is this: last June my husband – age 44 – lost his job to outsourcing. At first we panicked, and automatic doomsday thoughts filled our hearts and minds. Then I remembered I’m cheap and so is my husband, and we’ve been saving close to 50% of our income since we were first married. Next, I recalled the happiest years of my life: the six years I was a stay at home mom, raising my babies and living comfortably off my husband’s salary alone. And finally, I thought, hey, maybe, just maybe my 44-year old husband who has already been gainfully employed for nearly 30 years has “enough” for financial independence. At this point, a new outlook and mindset began to take shape.

While our income has fallen from $150,000 to about $80,000 (gross) we’ve made very few adjustments to our lifestyle. As a matter of fact, in 2014 our adjusted gross income WILL be below $73,000 after accounting for retirement savings, insurance premiums, pension contributions, and flex dollars. $73,000 is the magic number because it places those who are married filing jointly in the 15% federal tax bracket vs 25%.

Current Spending Situation: Net take home $5000+ per month

Mortgage 1640
Property taxes & HOA Dues 550
Auto/Home/Boat Insurance Premiums 120
Electric / Gas / Water utilities 200
Home Maintenance 100
Three cell phones – smart phones 150
Cable & Internet 100
Groceries (mostly organic meat and produce) 500
Shoes/Clothing/Sundries (Target or Goodwill) 20
Girls activities: gymnastics and competitive cheerleading 100
Dog: Food, Vet, etc 20
Gas and Transportation 350
Restaurants/Family Entertainment 30
Misc. (school fees, field trips, hair cuts) 20
Total monthly payments/expenses $3900

Current debt: remaining mortgage amount of $80,000 (Home Value = $350,000)

Living Expenses: On the surface, my mortgage and taxes ($2200) seems like a huge amount of money – and it is; however $1440 of my $1640 mortgage payment goes towards principal. I think of this as a sort of “forced savings” as my mortgage balance of $80,000 will be paid off in four years at my current interest rate of 2.875%

Early retirement extreme? No, but we WILL downsize within 5-7 years. For now I’m ok with the fact that my net housing expenses are less than $1000 per month for a new home, in a family-friendly neighborhood, with a short commute.

Current Savings Situation:
Retirement Account Balances: $285,000
Cash/Stocks/Bonds/529 Plan: $95,000
Home Equity: $270,000

Monthly Savings Contributions:
$380 pension + $380 employer match
$400 403b
$250 529
$915 Roth IRAS

Annual Savings Rate/Retirement contributions: $28,000

My steps to ERE:
+Once my mortgage is paid off in four years, monthly expenses will be cut nearly in half.
+The home will have to be sold outright in the next 5 – 9 years. This will free up lots of ca$h.

If it were only me, I think I could Jacobize myself, living frugally on less than $10,000 per year. A family of five, however, is a different story. None of them, not even my husband, are as extreme as me. A reasonable amount of money necessary for comfortable early retirement living in today’s dollars is about $2500 per month or $30,000 per year. This amount includes my best estimations for annual travel expenses and high deductible health care costs.

+I will work at least part-time in retirement. My vocation is teaching, and I plan to find something worthwhile in the education field that fulfills me but also allows me the freedom to pursue other interests.

Thank you for reading my story. I’d appreciate honest feedback and suggestions from your wise readers.

Kindest regards,
Catherine Jean Rose