FatFIRE at 37 years old
Anyone is interested in fat fire? This is from Reddit.
https://www.reddit.com/r/fatFIRE/comments/rwwjn5/…
2021 Spending Breakdown
I thought a more detailed breakdown than the "What's your annual spending?" thread provided would be nice for the community so I cleaned mine up for you.
I'm married with kids, living in an HCOL area. I had no income in 2021, and my wife is working a 2/3 schedule in healthcare which provides us with a healthcare coverage option for which we pay roughly 50% of a comparable ACA plan (not represented in spend). My eldest started Kindergarten this year.
In terms of net worth, we have ~500k in our 2200sf, 1mm home, and 6.5mm diversified at 70/30. It depends on the week, but looking back over the past few months, we have another 15-25mm (post-tax) sitting in a concentrated position.
A few notes on spending:
- Taxes do not include the final '21 estimated payments, but do include '20 underpayment related to stock sales.
- Under shopping, "Other" includes Amazon purchases, many of which are Home Supplies. Those fancy sheets add up.
- IVF was covered roughly 60% by health insurance this year.
- For January - March, I summarized all of our spending at a higher level in Mint, which didn't look back far enough when I started using it in July. Therefore, sometimes a Breakdown is a bit generic looking (ex: Bills & Utilities under Bills & Utilities). Sorry about that!
- Numbers are rounded to the nearest 100 or 1000 (</> 10000).
In 2022, I'm hopeful we will increase our Travel and Dining spend, and decrease our Home Improvement spend. Our daycare spend will be lower. Our tax bill next year will be outrageous as we continue to diversify.
Category Breakdown
Gifts & Donations 179,000
Home 108,000
Home Improvement 44,000
Mortgage (P&I) 34,000
Furnishings 12,000
Lawn & Garden 6,200
Home Supplies 4,900
Home Services 4,900
Home Insurance 1,800
HOA 100
Taxes 89,000
Federal Estimated '21 37,000
State Estimated '21 18,000
Federal Tax Under-withholding 17,000
State Tax Under-withholding 9,800
Property Tax 8,100
Kids 46,000
Babysitter & Daycare 39,000
Other 5,500
Kids Doctor 1,000
Financial 39,000
Wealth Management 35,000
Other (CPA, Advice) 4,100
Health & Fitness 31,000
IVF 22,000
Therapy 6,200
Sports 1,200
Doctor 1,000
Pharmacy 400
Other 300
Food & Dining 26,000
Groceries 9,500
Restaurants 8,100
Food & Dining 5,100
Alcohol & Bars 1,700
Fast Food 900
Cheese 200
Coffee Shops 100
Shopping 23,000
Other 7,400
Sporting Goods 7,300
Electronics & Software 4,600
Clothing 3,800
Books 100
Travel 14,000
Hotel 7,300
Air Travel 2,600
Vacation 2,500
Travel 1,500
Rental Car & Taxi
Auto & Transport 14,000
Auto Payment 6,300
Auto & Transport 3,700
Auto Insurance 2,000
Gas & Fuel 1,000
Service & Parts 800
Parking 200
Bills & Utilities 7,000
Bills & Utilities 3,000
Utilities 2,400
Internet 700
Television 600
Mobile Phone 300
Pets 3,300
Uncategorized 1,700
Entertainment 1,200
Business Services 900
Education 500
Personal Care 400
Fees & Charges 300
Misc Expenses 9,500
Total 594,000
Total - Gifts 415,000
Yes. Fingers crossed…I’ll be able to Fat FIRE in the next 3 years
How old are you and how long have you been an MD?
2 years. Analyst promote. I’m 34. Benefitted from the aggressive bull run and crypto exposure. Also a seed investment I made years ago is near a liquidity event which alone would get me there and then some. *Fingers crossed*
Easy to fatfire, when you’re sitting on $40mm post tax.
Lmao seriously. I could understand if this guy had <$10mm and he was sharing some secrets to FATFire but with $40mm its honestly shocking if you aren't able to figure out how to FATFire at that point
I'm 22 fresh out of school and wanna be done in like two years I can't do the corporate life idk anyone else feel this way?
Yes. I felt that way when I was 22, and still do over 10 years later. There IS a way out, and it gets more bearable when you realize that. Pursue high paying jobs and save aggressively, and compounding will take care of the rest. With the right mindset, income, and a little luck, you can become financially independent in your 30's.
The alternative of course is to get a "non-corporate" job that you like and pays the bills, which may be easier said than done.
Wow I can't imagine another 10 years. I feel like life is too short you never know what will happen...also don't think I'll be able to just keep moving up the ladder in IB/PE. Man...
I can’t believe people fine this helpful. Typing out a full budget for someone with $30-40mm in the bank? Not that hard…
Also, if I end up with $40mm and am taking $2,500 vacations, then I’m going to hate my life. I know, personal preferences, but damn.
It's funny how having $40mm cash has become rebranded by the redditors as "NO MORE WORK!!! FINANCIALLY INDEPENDENT AND STICKING IT TO THE MAN!!!!"
Nah this dude is just fuckin rich. With that much cash you can do whatever tf you want and prob have a difficult time spending it if youre not a complete idiot. Wtf is this stupid pnl statement - $200 for parking? $100 for books? 200$ for cheese? So trivial lmao
You know you've made it when you spend more per year on cheese than books.
FIRE is a cool concept, however I have found that pretty much everyone in the reddit forums who circle jerk about FIRE are generally insufferable
The dude can most likely generate double his budget with the capital. IMO there is no reason to really save to much more after about $20m
I am a loyal follower of the FatFIRE reddit community. It's a fantastic resource. I don't necessarily plan to retire early, but I love the concept of living well below your means having a ton of cash invested in the market compounding over long periods of time. I'm 33 Y/O have about $3.5M fully invested (mostly SPY/ big tech), done through being super cheap and investing a LOT into tech. That could easily compound to 30/40/50M in today's dollars assuming the market performs. Is a nice feeling.
Serious question, what do you plan on doing with this?
I’m all for financial independence, but with balance. Again, asking seriously, but are you enjoying life by living “very cheaply”? Or mostly just planning on enjoying the future? I realize it sounds biased, as my view is different, but I’m trying to understand the other side
I also realize it can be hard to “balance”, especially if you have large saving goals and your income isn’t that high, but I’ve mostly found ways to enjoy today and save reasonably for tomorrow.
Well, the goal first is to get very rich, and then it's to decide what to do with the money. Sorry, $3.5M isn't rich, not even close. Our HHI is $800K per year and we spend about $200K per year. I would like to keep saving & investing fairly aggressively until we hit $10-$15MM, then start drawing and living a more lavish lifestyle (e.g. more clubs, second home, super expensive vacations), but we can figure that out later.
what platform do you use to invest and how do you get comfortable with the investments?
Lmao you don't need $40MM to "fatFIRE". This guy is just flexing. Depending on age and spending habits, $8MM-$10MM should be more than enough. The younger you are the better, because your money will have more time to compound throughout your life (assuming your networth is heavily tilted to equities).
"FatFIRE" and "FIRE" and "Financial Independence" is for the plebeians who lack foresight and vision to convert gold into a throne and steel to keep the throne.
It is for mere men who's life goal is the attainment of digits and commas on a screen of silicon within copper within glass.
I could have "FatFIRE'd" at birth with my trust fund that was ~£120MM (in 1981, when I was born).
I chose to pursuit a life of politics, attaining soft power within the ivory towers of Whitehall.
When did 40MM become a magic number? I think that only makes sense for people with bloated lives & expenses who can't seem to live cheaply. They rave about compound interest but don't blink twice about having a $250 bill from Comcast/TimeWarner/Whomever for fucking TV.
My magic number has always been 5MM. That should generate enough income for me to play golf and have a quiet lunch by a lake every day until the day I die. What else do you need in life?
I think the number is a function of geography and lifestyle choices, having a nice home in a Southeastern suburb is substantially less than a 2,000 square foot condo or coop. Also lifestyle plays a huge role everyone wants to travel but consider the cost differential between flying coach and staying at a mid-tier hotel (Hilton, Marriott) off-peak, flying first class and staying at a luxury hotel and finally flying GA and staying in a penthouse suite. Beyond a certain point lifestyle inflation adds less and less value.
Do you have kids?
seeing shit like this makes me glad I never created a reddit account
how to FIRE - live far below means, invest what you don't spend, make good returns
how to fatFIRE - see above, just do with big income
what I've seen many FIRE people miss out on is the delayed gratification. I also save a large % of my income, but I don't go without having fun today. I'll get immensely more enjoyment today out of a surf trip somewhere than I will turning that $3k into $X0k in X years to spend on a surf trip when I'm in my 60's. it's about balance kiddies, balance
also, read die with zero, I used to want to do FIRE, now I'm more of that mode
I'll admit my understanding of the "die with zero" principles is light, but based on what I've gathered it seems hinged on not leaving inheritance, giving away all of your money, etc. Do you not want to set your children and their children up if you strike it big? Why leave them at that disadvantage? No hate, just trying to understand more.
very very very fair question, addressed in chapter 5. I'll give you my take. since I work in PWM I see what inheritance literally looks like. sometimes, it makes their balance sheet bigger without changing their habits. sometimes it changes how the kids view money, they spend recklessly, and they're back in the same situation. and most of the time if a sudden death isn't involved, the kids get the $ at their own retirement age. in other words, inheritance accomplishes very little apart from passing down a business through a bloodline (but I'm talking liquid assets). also, if I ever become a parent, my goal will be to raise kids that can fend for themselves and make their own way in the world, and I'd rather dedicate resources when they're needed the most. I have no issue setting aside funds for education, down payments on a house, bootstrapping a business, medical care, graduate school, etc., but what good does a $1mm stock portfolio do them? OK, maybe it gives them a little more comfortable retirement, but wouldn't it have been better to have paid for big family vacations like an african safari when they were in their 40s, grandkids in teens, and rented beach houses for christmases? I'm sure the memories from that would be way more valuable. so in short, it's about dedicating resources when they're the most valuable (e.g. when my kids are young and maybe have young children of their own rather than at the end), rather than making them wait.
in practice, I likely won't die with zero, but the book definitely changed my mind from wealth accumulation with reckless abandonment to save what I need to meet my goals plus a cushion, and then ramp up my spending for doing really cool shit. this has other derivatives but that's the basic concept. I'd been head down working hard, limited vacation for years and this book gave me a swift kick in the dick to change.
Disagree with the black and white notion of this. Yes, I think there are people on the FIRE train who say you should live in a 1 bedroom with a roommate for $500 per month until you're 35 even while making $200k. But I don't think most are saying that and I don't think that's the point (I also think most of those people are not even out of college, don't realize what happens when you have kids, family, etc.). I think the point is not spending because you have the money / earnings. Instead spend on things you value. The difference between FIRE and non-FIRE to me is the equivalent of a second year analyst who gets a $80k bonus, has never been interested in watches but gets a $20k watch because hey, I just made a sick bonus in finance and I'm supposed to get a nice watch, right. Versus putting it away. Not saying as you make more lifestyle creep doesn't and shouldn't happen, but just the intentionality around it. I guess all I'm saying is I think the FIRE conversation is around the balance
This man has a cheese budget...If you can't figure out how to retire early on 30+ million then you can't be helped. Says he has no income earned for 2021, but has 40k in daycare expenses. I'd personally be spending time with my kids.
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