Friday Reader Case: Reformed Debt-Junkie Wants to Retire with Kids

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FIRECracker

FIRECracker is Canada's youngest retiree. She used to live in one of the most expensive cities in Canada, but instead of drowning in debt, she rejected home ownership. What resulted was a 7-figure portfolio, which has allowed her and her husband to retire at 31 and travel the world. Their story has been featured on CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance. To date, it is the most shared story in CBC history and their viral video on CBC's On the Money has garnered 4.5 Million views.
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It’s Friday again and you know what that means!

Time for another Friday Reader Case. Dun. Dun. Dun. *cue ominous music”. No wait, scratch that.

*Cue rainbows and unicorns* because if you read this reader case, you’ll see exactly what I picked it. This person is so adorable, it’s hard to yell at them. I will if I need to, but it’s hard is what I’m saying.

 

“HELLLLOoOOOoOOoOooOoOOoo!!! (Mrs. Doubtfire-style)

Kicking things off: you and Wanderer are my unwitting spirit animals. We’re a Canadian/Irish couple living in Toronto—I’m a graphic designer, he’s just started as a web developer. Tragically, we’re around the same age as you guys and just finished getting out of debt, so we’re about a decade behind’ja. Hoping to avail of your excellent math’ing-shit-up abilities and wanted to see if you think we can be FI before we die. 😉

——————————–
Your gross/net annual family income: I make $85k, partner makes $40k gross (net take-home roughly $8k/month)
Your monthly family spending: Saving $4500/month, spending the rest
For any debts you have, please include: WE’RE DEBT FREEEEEEEEE!!!!! (Insert Dave Ramsey debt-free scream here)
Any fixed assets you have (house, car, etc.): Still renting, sold the car, it was eating me alive in TO parking tickets.
And investments or savings you have (cash, bonds, stocks, etc.) :
• $5k in an emergency fund, will be fully-funded to $10k by Dec 2017.
• $4,330 split between two RRSPs ($2,360 & $1,681) and a TFSA ($290). I understood next to nothing about investing when I opened these, I believe/assume this is all in actively managed high-fee mutual funds.
——————————–

The Story:
I started working at 15 years old, and regrettably have spent almost every cent I’ve ever made. I got into a bad credit card habit in university while simultaneously taking out a grand total of $30k in student loans (why, younger me, why!?). For years, I would run up $5-8k in credit card debt, panic, pay it all off, then let it build again. Rinse, repeat.

Finally, in Dec 2016 my partner and I got our shit together (thx Dave Ramsey) and tackled the (my) mess. In 2017 we killed the remaining $25k in student loans/credit cards and saved up an emergency fund. It’s the first time since I was 18 that I’ve owed nothing to anyone and had money on-hand.

Then we found you! (And MMM, ChooseFI, Mad FIentist and FI in general.) When I read your blog post about panic-vomits at your super stressful day job, I knew I was in the right place. I’m in the exact same boat right now. Less vomit, and more bursting into panic-tears 3x a week because I’m so overwhelmed/overworked, but… tomato, tomahto m’friend.

Before we found you, we were just about to start saving for a house downpayment (step 1: house, step 2: bébé, step 3: work ourselves to early deaths at 45, etc). But like you, we started realizing the caliber of housing we can realistically afford is brutal! Not to mention, my partner is from Ireland, so commuting from outside the GTA is untenable to him as his home country is the size of a thimble. And finally, buying a house in Canada felt upsettingly permanent to him.

Enter a new plan: FI.

Now… we’ve always wanted kid(s?) and intended to start around now, but our desire to pursue FI has got us delaying for 2 years so we can pile up/invest our first ever 6-figure stash! ($100k used to be a pipe dream, now it’s just the beginning!)

These days, I’m simultaneously FI-obsessed and counting down the days to baby time, which feels like the light at the end of a long tunnel of horrible living-to-work. However, maternity leave in Canada allegedly pays max $540 per week (wah!) and my employer doesn’t top it up, so we’re facing a huge FI-setback that year; I’m not sure how much we’ll be able to save. Maybe $1k/month?

After that year is up, we’re seriously considering moving to Dublin and in with his mother for 2-3 years. Since she doesn’t work and is desperate for a grandchild to mind, it could save us the $1900/month in daycare in TO and offer us cheap rent while making euros. And give my partner a few years back at home near friends and family, which is important to him since he’s been in Canada for almost 8 years (entirely for my sake).

In Dublin, I anticipate we could both easily land gigs making at least €30k apiece (€60k gross), €4000ish/month but with next to no rent or daycare costs (€800/month?), we could probably save at least €2500-€3000/month (currently $3700-$4450 CAD).

Then back to Canada, where we’ll likely be back to making/spending/saving roughly the same amount as we are now, maybe a bit less due to after-school childcare costs and a likely drop in income for me if I can’t get more than a $50k gig when I’ve got a kid and want nothing over a 40-hour work week. ($3500/monthish left to invest?)

Help me, I’m artsy. Math has never been my strong suit (I legit took art in school), so if you guys have time to “math this shit up,” and let us know how long you think our current plan might take it’d make my life! We want to hit flex-FI… where we can travel for weeks at a time (either when our phantom child is not in school or when we’ve somehow adopted this World Schooling thing…) and just take a few contract/freelance gigs a year to make some extra spending money.

Either way, you guys are awesome, the blog is fabulously entertaining, and I wish I’d gotten my shit together as early in life as you both did. Also, your recent Choose FI ep was great, I was thrilled that they had you guys on!

Sincerely,
Reformed Credit Card Dumbass”

 

“HELLLLOoOOOoOOoOooOoOOoo!!! (Mrs. Doubtfire-style) right back at cha, RCCD!

Now, I gotta say, in response to your mention of tragically discovering FI later and being “about a decade behind’ja”, here’s the thing: it makes no sense to compare your FI journey with ours because it’s useless and doesn’t move you forward.

A year from now, you will look back and see how far you’ve come rather than kick yourself for not having started this journey a decade ago. As my favourite Chinese proverb says: “The two best times to plant a tree are 20 years go and right now!”

Now, onward to the numbers! Let’s MATH THIS SHIT UP!

Summary:

Summary
Current Gross Income: $125,000/year
Approximate Net Income: $8000/month *12 = $96,000/year
Spending: ($8000-$4500) *12 = $42,000/year
Debt: 0 (YAY!)
Investable Assets: $10,000 + $4330 = $14,330.

Okay, so at first glance, they’re making a great salary, have zero debt, and are saving 56% of their salary! NOICE!

I must applaud you for getting rid of the expensive, parking ticket generating car. Great move!

Okay, so if you’re saving 56% of your salary and live on $42,000/year, assuming a conservative average 6% return over the long term, how long will it take you to retire?

Year Balance Savings Portfolio Growth Total
2017 $4,330 $54,000 $259 $58,589
2018 $58,589 $54,000 $3,515 $116,105
2019 $116,105 $54,000 $6,966 $177,071
2020 $177,071 $54,000 $10,624 $241,695
2021 $241,695 $54,000 $14,501 $310,197
2022 $310,197 $54,000 $18,611 $382,809
2023 $382,809 $54,000 $22,968 $459,777
2024 $459,777 $54,000 $27,586 $541,364
2025 $541,364 $54,000 $32,481 $627,846
2026 $627,846 $54,000 $37,670 $719,517
2027 $719,517 $54,000 $43,171 $816,688
2028 $816,688 $54,000 $49,001 $919,689
2029 $919,689 $54,000 $55,181 $1,028,871
2030 $1,028,871 $54,000 $61,732 $1,144,603

14 years! That’s not bad at all! And we’re not assuming any promotions here, so it could be less. So well done, RCCD!

BUT, you mentioned kids and moving to Ireland to save money by living with your mother-in-law. How does that change the math?

Moving to Ireland:

Say you end up getting jobs in Ireland for $60,000 Euros in combined gross income. In Dublin, after taxes, that should net you around €48,259/year  or €4000/month. BUT, since you won’t have to pay rent of childcare costs by staying with his mother, you’re estimating you’ll save around €2500-€3000/month, or €30,000 or €36,000/year.

Translated back to Canadian when you move back after 3 years, that would be an estimated €30,000 * 1.48 = $44,400 CAD/year by the current exchange rate.

If you were to stay in Canada for 2 years at your current savings rate, have kids, take 1 year maternity leave, and then move to Ireland for 3 years to save on rent and childcare, here’s how that would change your numbers:

Your salary drops from $85K down to $28K for that year and your husband pulls in $40K. That means your salary goes down to $68K gross. But now you’re in a lower tax bracket, so after taxes, you’d get $58K after taxes.

So during your mat year, your savings goes down from $54K to $16,000.

At the end of 6 years from now, you’d have a projected:

Year Starting Balance Annual Contribution Return Total
1 4,330.00 54,000.00 259.80 58,589.80
2 58,589.80 54,000.00 3,515.39 116,105.19
3 116,105.19 16,000.00 6,966.31 139,071.50
4 139,071.50 44,000.00 8,344.29 191,415.79
5 191,415.79 44,000.00 11,484.95 246,900.74
6 246,900.74 44,000.00 14,814.04 305,714.78

Around $300K! That’s pretty freaking amazing, considering how you’d have kids at this point and you were in debt just a few years ago.

Now, the beauty of this plan is that in utilizing your mother-in-law’s generosity to take care of the kid, you’re saving on the $1200 – $1800/month childcare costs you’d incur if you kept working and living in Toronto, plus saving on rent.

By doing this for 3 years, once you come back, the kid should be old enough for kindergarten, at which point your costs drop drastically from $1200-$1800 to just $400-$800/month for afterschool care.

So assuming that in 6 years, your costs increase by $600*12 = $7200 plus some additions costs for food, etc, your costs increase by $10,000 for 6 years until they are 10 years old. After that, the afterschool care costs can be put towards other costs for the child.

This means that your savings goes down by $10,000 during that time, so you’d put away $44,000 instead of $54,000.

But this also means, your expenses went up by $10,000/year, so you’ll now need a passive income of $52,000 instead of $42,000. Which means you’ll now need $1.3 Million to retire.

Let’s see what that does to your TTR:

Year Starting Balance Annual Contribution Return Total
1 4,330.00 54,000.00 259.80 58,589.80
2 58,589.80 54,000.00 3,515.39 116,105.19
3 116,105.19 16,000.00 6,966.31 139,071.50
4 139,071.50 44,000.00 8,344.29 191,415.79
5 191,415.79 44,000.00 11,484.95 246,900.74
6 246,900.74 44,000.00 14,814.04 305,714.78
7 305,714.78 44,000.00 18,342.89 368,057.67
8 368,057.67 44,000.00 22,083.46 434,141.13
9 434,141.13 44,000.00 26,048.47 504,189.60
10 504,189.60 44,000.00 30,251.38 578,440.97
11 578,440.97 44,000.00 34,706.46 657,147.43
12 657,147.43 44,000.00 39,428.85 740,576.28
13 740,576.28 44,000.00 44,434.58 829,010.85
14 829,010.85 44,000.00 49,740.65 922,751.50
15 922,751.50 44,000.00 55,365.09 1,022,116.59
16 1,022,116.59 44,000.00 61,327.00 1,127,443.59
17 1,127,443.59 44,000.00 67,646.62 1,239,090.20
18 1,239,090.20 44,000.00 74,345.41 1,357,435.62

So your TTR retirement would go up from 14 years to less than 18 years. Still not bad considering how that’s still around 15 whole years sooner than the normal retirement age of 67.

Now, you did mention that you have a very stressful job and have the similar stress-vomitting experience I had at my old job.

So what if you were to go down to part-time or switch to contract and generate an income in “semi-retirement” instead of full retirement?

Semi-Retirement

If you or your partner could generate just $10K each in retirement, that would bring the passive income in retirement down from $52,000 to $32,000, which means that you will only need a portfolio size of $800,000, which would take you:

Year Starting Balance Annual Contribution Return Total
1 4,330.00 54,000.00 259.80 58,589.80
2 58,589.80 54,000.00 3,515.39 116,105.19
3 116,105.19 16,000.00 6,966.31 139,071.50
4 139,071.50 44,000.00 8,344.29 191,415.79
5 191,415.79 44,000.00 11,484.95 246,900.74
6 246,900.74 44,000.00 14,814.04 305,714.78
7 305,714.78 44,000.00 18,342.89 368,057.67
8 368,057.67 44,000.00 22,083.46 434,141.13
9 434,141.13 44,000.00 26,048.47 504,189.60
10 504,189.60 44,000.00 30,251.38 578,440.97
11 578,440.97 44,000.00 34,706.46 657,147.43
12 657,147.43 44,000.00 39,428.85 740,576.28
13 740,576.28 44,000.00 44,434.58 829,010.85

Slightly less than 13 years.

You Retire. Partner Keeps Working.

OR alternatively, if your partner doesn’t mind his job, he could continue making $40K/year gross or $36,000/year net, which means you would only need $16,000 a year to cover the difference in order for you to quit your job, which would require a portfolio of $400,000, which would only take you:

Year Starting Balance Annual Contribution Return Total
1 4,330.00 54,000.00 259.80 58,589.80
2 58,589.80 54,000.00 3,515.39 116,105.19
3 116,105.19 16,000.00 6,966.31 139,071.50
4 139,071.50 44,000.00 8,344.29 191,415.79
5 191,415.79 44,000.00 11,484.95 246,900.74
6 246,900.74 44,000.00 14,814.04 305,714.78
7 305,714.78 44,000.00 18,342.89 368,057.67
8 368,057.67 44,000.00 22,083.46 434,141.13

Less than 8 years!

So since you have ZERO debt and a high savings rate, there’s lots of way to get out of your stressful job.

Option 1:

Keep at your current trajectory and you’ll retire in 14 years!

Option 2:

Have a kid, move to Dublin, make at least 60K Euros combined, and be able to retire in 18 years.

Option 3:

Work toward semi retirement with your partner, plan to make $10K each and retire together in 13 years after the kid.

Option 4:

If your partner likes his job, he keeps working while you retire in less than 8 years to do whatever you want, like take care of the kid, work on your hobbies, etc.

So there you go! Because you have no debt and decent salaries, even if you plan on having kids, you can still retire decades earlier than everyone else. How much you spend on kids varies from person to person, but if you subscribe to the notion that kids aren’t expensive, that parents MAKE them expensive, you have options!

What do you guys think? What would you do if you were RCCD? If you’re a parent, can you share the costs of raising your kid/kids in your area?

 

NOTE: By the way, for those of you who don’t know, our Friday Reader Cases are now a Podcast segment on @ChooseFI! Shout-out to Jason, one of our Chautauqua attendees for coming up with the idea: “Why don’t you make your Friday Reader Cases” a podcast? Thanks Jason! Wouldn’t have come up with the idea if it weren’t for you. That’s why Chautauquans are the best!

Here’s the segment if you want to listen:

047R |The Rule of 72

45 thoughts on “Friday Reader Case: Reformed Debt-Junkie Wants to Retire with Kids”

    1. Thanks, MR. Your comment reminded me of this Spanish show where they asked these kids what they wanted for Christmas. They thought all the kids would’ve said fancy toys or video games, but they all unanimously said one thing: time with their parents.

  1. Wow FireCracker my first take on this was: Someone just called them their spirit animals!!! “unwitting spirit animals” That’s awesome. You guys have a seriously cool following.

    I can think of one more scenario that would make sense for these guys: Her partner could become a stay at home dad. He makes half of what she makes now, it would only be logical for him to actually stay home with their children while they need it. This would probably help them maintain her skill level and therefore shorten their path to FI. What do you think?

    1. That’s a good suggestion, HM! The reason why I picked her to stay home and him to work is because she specifically mentioned “panic-vomits”. Not fun to have to stay at a job if you’re in that situation.

      1. Good point FireCracker. I also just noticed this line in their initial email “I’m a graphic designer, he’s just started as a web developer.” So this tells me that he probably is only beginning to scale his income potential. This is very good for them!

        Side note, I think you point this out in your “How we got here” series, but its not worth staying in shitty jobs. If I remember correctly you left one that was getting bad yourself! Maybe RCCD should try getting a better job in the run-up to FIRE. I’m not sure its worth it if you hate your life all the way through.

        1. “…he’s just started as a web developer.” So this tells me that he probably is only beginning to scale his income potential.

          Very astute observation, HM! I totally forgot about that.

          And yes, you’re right about the shitty jobs. If it’s THAT bad, it’s time to leave. There’s no such thing as the perfect job, but they have the potential to start out pretty good.

  2. Option 5: ‘Reformed Credit Card Dumbass’ starts a blog as a side hustle and kills it. Love her entertaining writing style, I’m sure there is a market for people just starting out in the FI journey. Love the reader case, hope for the best for them.

  3. We’re kind of in this predicament now, nearing the age most people have children (we’re 29). My wife is keen to have have a child in around 2 years and I’m concerned how it will affect our FI goal of being retired by 40. Child care is no joke here at about $1,400 per month, plus the year off work for maternity leave. Throw in needing a 2nd bedroom once the baby grows up and your rent might go up $1,000 too (In Vancouver at least). We figured our FI would be thrown off by at least 5 – 8 years just with one kid. Delaying children certainly helps, but then again most people don’t want to start having kids at 35, especially if they want more than one.

    As a note for the reader (and perhaps yourself), the mother doesn’t have to be the person taking maternity leave here in Canada. As in this case, since the mother is higher earner, she could continue to work while the father looks after the baby in the first year.

    1. Childcare costs here in YVR are probably closer to $1500-1600 on average, realistically.

      Also, you don’t really need a second bedroom until the kid is almost a year old – it really just depends on your overall situation. The additional cost really depends on where you already sit in the market too. Once you get past $3000 / month in rent, things don’t really appear to scale in the same way. The actual delay in FI also doesn’t scale symmetrically per child. eg: We needed a larger space when the first one was a year old, but realistically, once #2 hits one year old, the two kids will be able to share a bedroom for at least the next 5-6 years or so. A lot of large costs that folks often incur are also one time costs (eg: buying a stroller) that won’t apply to the second kid.

    2. You make a good point, VB, about splitting the leave or the Dad taking pat leave. And that would work, except she mentioned “panic-vomiting” from her job. So in her case, even though she’s the higher earner, the mat leave may make more sense for her since she want reprieve from her job.

    3. Vancouver Brit, I had my children at 35, it has been great, it grounded me and we never once thought about the financial issues. My wife stayed home, we rented a cheap house, and I worked. You do know if your spouse doesn’t have income, you claim his/her exemptions on your tax return, and will save $1440 a month on the daycare. For us, we were making money having her stay at home until cheaper daycare after potty training was over.

      Now we have 2 grown adult children, and even with my modest wage, and Mrs Spacemans secondary income, we think we have enough saved to retire in 5 years.

      PS any chance of tenting in your back yard for a month or 2 ? I call it Airy BNB…

      Vancouver is a very expensive city to live, but Victoria is not far behind, and catching up fast. Jump in with both feet, you will figure it out.

      cheers

      spaceman

      1. I think Id rather wait to 35 than bite the bullet at 31, that would provide much more comfort financially. The Mrs. isn’t the best at waiting around when she wants something though, so I suspect waiting to 35 would be a long shot haha.

        We’ll have to do the math, but my wife is the highest earner currently though I might catch her up somewhat in a few years. I don’t think we will be better off with one of us staying at home, we both earn above average wages (thankfully) so it’ll likely always be best for us to both be working.

        I might be mistaken but it sounds like financial independence wasn’t on your radar when having children? If it was, how far back did it push you? You must be a lot older now and retiring at a fairly normal age if your children are both grown adults. I’m not concerned if we can afford it at all (we can), but I am concerned how it will affect our pursuit of FIRE.

        You must be dreaming if you think I have a backyard in Vancouver. We rent a one bedroom apartment in downtown, and the rent is probably more than a 3 bedroom SFH in most of Canada.

        Thanks for your advice!

        1. FI was never on my radar, until I was married and had kids, then it all became clear, thats when I started saving, because I finally had a goal in mind. did it set me back? sure it did, but I smarted my ass up. We rented, saved, invested, and after 10 years had a down payment for a house. That has worked out ok for us, but we got lucky.

          I am 56, kids are 18 and 19, one in UVIC, and the other on his way, they will be done in 5 years. My hope is to reach FI at 60, yes a little more traditional, but thats ok. I actually like my job, and my home, for the most, but the plan is to live and Teach in Taiwan while I still can. Mrs Spaceman has family there.

          Sorry about the back yard, my cousin lives in Cloverdale, and did the commute to downtown for years. Now works closer to home in Langley.

          I think you will do just fine, as you have the right mind set, and the skills to go along with it.

          cheers

  4. Another thing they could consider to help things, at least while they are in Canada, though perhaps more for filling up an RESP for the kid is the Canada Child Benefit which is based on your previous year’s net income. it’s a non-taxable benefit.

    if my understanding of the language is right (been too lazy to double check), since it looks at the net income, the more you put in to your RRSP, the more you get in CCB payments.

    as others have said, Kids only cost as much as you want them to cost. Outside of food of course, for some reason they need food? man does our 2 year eat a lot. We help manage this/our cooking abilities by refusing to make kid specific food. it also helps them to eat more regular food. I’m happy I listened to the wife on this.

    P.S. I try not to include CCB numbers in my budget since it’s a government program, which could just as easily be removed or reduced, but you might as well use all of the things offered.

    P.P.S. I think this could be hilariously “abused” by people who have FIRE’d already. since their taxable income could be low, they could in theory get the max amount, which is something like $6,400 annually per kids under 6 and $5,400 aged 6-17. one of the reasons I wish I had found the FI community a long time ago.

    1. Thanks for mentioning the RESP and CCB , Kamouflage! That’s another area that can help with kids college/univ costs and covering kid costs. So if they factor that in, it could help reduce their TTR even more.

      That’s interesting at that you’re able to save on food by refusing to make specific food for one kid. How hard is it to not give in to that? Because I know a lot of people that get guilt-tripped into doing what the kid wants (also because there’s too much whining and they can’t deal with it).

      1. We went the route of not making special food initially for our own ease of not making 2 meals at meal time, but I’ve found this to help reduce unused food.

        We also lucked out with a kid that just loves food, so its actually been pretty easy for us.

        Here’s hoping our younger daughter (for those keeping track at home, yes we have 2 kids under 2) is just as excited about food.

        I wouldn’t go as far as them eating the same food all week like them (atleast at lunch) but for frugal parenting tips I highly recommend the frugal woods blog.

        Going backs to RESPs, for those who don’t know this:
        Our government matches 20% of contributions up to $500 per year per kid.
        You can set up a self managed account and invest it the same as your retirement. ie do the workshop but with smaller amounts. I do up to the government max match and stop. Get away from mutual fund fees… The main difference here is that the time until use is shorter, so you might want to be more conservative closer to 18 since you want it all in 4 to 5 years of school instead of the safe withdrawal rate.
        Set up a family plan, not a single kid plan. Saves headaches if only one goes to school since there are weird rules about withdrawals if no schooling is done. For some reason the government wants their money back. And then some more.

    1. You guys have a great arrangement and I like how you guys raise your kids 🙂 Would do the same if we had kids (with the exception of me working. No way I’d ever go back to my old job.)

      1. I think your job is this blog, you can put this on your Resume’

        – Babysitting thousands of people who don’t have a clue about financial anything…
        – Saving thousands from stupid mistakes…

    2. I can definitely see us taking the “Option 4” route down the line. I love my career field if not the job itself, so hopefully down the line I have the choice to work a job I love!

      (Also, welcome back from Japan! Visiting/partaking of the hairy monster slide in Taketori is now on my bucket list.)

  5. We are thinking of choosing option 4 also…Technically speaking we could retire now if we sold some of our real estate….We also receive rental income from that real estate and we need that for now….So it would be easy for me to take a lower stress option job for several years until are ready to sell it…I think you’re four options are quite valid and the other options suggested by readers are good to… From the far side of the planet CPO☺

      1. I am of view that one with the F-U money and no debt should continue to do so and maintain the status quo. Nothing beats the freedom of doing things one likes.

        Ben

    1. I feel ya. Not going to lie, Mr. RCCD was initially a tad disheartened (albeit unsurprised) to see the double digit projection on our number-of-years-to-FI.

      But we figure… why wallow when we can turn it into a game? The challenge is set! Now we hunt for new income, more places to save money and start trying to beat the clock. Ready, set… go!

      1. That’s the perfect attitude to have, RCCD! And think of it this way, reader HM picked out the point that Mr.RCCD started in a web development career. This has the potential to skyrocket in earnings in a few years, so you have lots of options. I’m assuming zero promotions ever and that’s pretty unlikely.

        I think you guys will do great and beat the timelines I’m predicting. And when you do, I want to hear all about it!

        1. RCCD, I am whats called a CCNP, my designation is valid anywhere in the world. I am a technical analyst, and never spent one day in University learning my trade.

          I would suggest Mr RCCD look into, Cisco, Juniper, Data Networking, Security, and or DevOps Agile Methodology, and GitHub. Web Developing is the tip of the iceberg, I would be glad to offer more advice offline but I don’t know how to exchange emails.

          good luck to both of you.

  6. Another quality post with four seriously good and optimistic options. Makes me want to submit my own finances for a case study!

    My advice would be to move to Ireland, it will please your husband and in laws and make your kids more cultured!!! Good luck!

    1. I’m with you on that, Lady Dividend, provided that they can make at least 60K Euros between them. Given that her hubby’s been in Canada for 8 years, that would be nice for him to see family again.

      1. Love that point – family connections and time cannot be replaced, mathing shit up doesn’t mean replacing the qualitative aspects – problem is too often people ignore the numbers to start!!!!

        We live downtown with no car (renting) and 2 kids in a 2 bedroom apartment – daycare is the killer cost from kids – food and “activities” not so much. We were the silly parents who for my sons birhday party asked for toonies/ one for my son and one for to donate – meant less crap in my place and meant less cost for his friends parents – a win win. – In Canada – if they can get a job with the federal government – they do top up which makes a huge difference for maternity/parental leave!

        1. That toonie idea is adorable! I love the idea of teaching your kids to donate early.

          Amen on those daycare costs. As an ignorant pre-parent, I propose we all shun daycare and just let the kids run wild in a large-scale Hunger Game. (Thoughts?)

          1. That’s hilarious – but I would also say quality daycare is awesome – where else would I have leant the amazing expression “you get what you get and you don’t get upset “ which can apply to so many parenting situations, Halloween candy, presents, desert, meals at other people’s houses…

            There are lots of less expensive activities if you take the time to seek them out and sometimes you can swap activities. My initial plan is in 2 years to have a group of kids to be able to pull out of after school care and swap before/after school care with a small group of their friends/parents.

            1. Ooooo, I’ve tucked that “you get what you get” badboy into my back pocket for my future parenting days! And possibly to pull out sassily when I make a meal Mr. RCCD isn’t into. 😉

              That shared pre-post-daycare idea is a great one!

              1. The shared before- and after- care is the norm back home and is great from an educational point. The kids all get used to shared responsibility and to interact with multiple adults. All my siblings raised their children like that, no one ever used before/after care.
                The only hard thing is to find those people who can dedicate a day a week to do this. On the basic level you need 5 dedicated parents, one each day (or less, if someone can do it more than once a week). Most families with 2 working parents can’t have a parent leave work early once every week. I actually do it for our class, I am the dedicated parent to pickup on time (my work is flexible enough that I can do it) and all the parents know that I am available to pick their kids up if they can’t make it in time.
                It is great that you are making yourself aware of those little details before even having kids, it will help you set it up when the time comes.

                1. That’s amazing that you’re so helpful to so many kids and parents! Such a phenomenal way to give back. I bet you’re a saviour to all of the parents whose jobs are more rigid.

  7. This is a great set of options that will undoubtedly help guide this family towards financial independence.

    I think it would be worth your case studies also highlighting the difference between real and nominal figures. If someone just tracked their investments along with the numbers in your tables they are going to be in for a shock. Maybe just showing an additional total column with the real numbers (say with a 2% compound inflation) would highlight the fact that the investment pot in 14 years (your first table) will actually be significantly higher in order to maintain the quality of life that a $45k income gives today.

    Also I think you should also consider the length of time that the people you do case studies for will actually be retired. The 4% rule came about following the analysis undertaken on all 30 year retirement cohorts since the beginning of stock market data. But the 4% “rule” that many people now quote, erroneously extrapolates the same withdrawal rate (4%) to any retirement duration. That 30 year limitation in the original analysis turns out to be pretty important because a significant number of those cohorts ran out of money at 30 years. So while a 30 year retirement would have been OK, a longer period would not.

    Lower SWRs are generally required for longer retirements. And further, the SWR for these longer retirements are significantly impacted by the early sequence of returns risk – in other words when you retire has a huge impact on the actual SWR you can take in order not to run out of money.

    All that is to say that I think you should create a model that uses SWRs based on the expected duration of retirement for the people in your case studies. And you should also highlight what the failure risk is even with that lower SWR – it is rarely 0.

  8. Nice post, I love the multi-synopsis analysis considering different options.

    A few comments/questions for RCCD:

    1) Why wait a year in Toronto before moving to Dublin after giving birth? why not move right away (a few weeks after birth) and lower your expenses right away? I don’t believe you have to physically be in Canada in order collect your maternity leave cheque. My wife is Canadian but I am not. When my first son was born we moved back home for the maternity leave year and I had a part time job while my wife was a stay-home mom, collecting her mat leave cheques.
    If you do chose this route, just be sure that you sort out your baby citizenship/residency and make sure s/he has health insurance in Ireland.

    2) Why come back after a few years? same thing: if you can save more by having a supporting grandparent around to help, use it. It is important for so many aspects of child-raising to have family around. There is the practical support (“can you pick him up? I’m running late”), the financial of course, but most important the family ties that are created with seeing grandparents/aunts/uncles/cousins on a regular basis. There is no mention of where the Canadian side of the family is, but if the are not in Toronto anyway, why come back to Toronto?

    3) I love FC saying that “kids aren’t expensive, parents MAKE them expensive”. I totally agree, but I must add that the social environment you put your kids in will have a strong influence on how expensive they are. If you choose to live in a place where all the other kids are from spendy families, you will have to face a lot of emotional pressure. Whether you will give in to this pressure is really unknown until you are there. You can be the most thrifty parent out there, until your kid is in tears daily about going to camp with all his friends or joining them to Canada’s Wonderland or what not. A big part of avoiding the consequence of “parents MAKE them expensive” is setting yourself up for success by placing yourself in a like-minded environment. This ties back to the previous point – place yourself close to family. Family-time is both more emotionally gratifying and cheaper.

    4) Practical note about expenses: don’t forget that expenses do actually go up again after a while, around age 8 or so… More after school classes, more expensive summer camps, more expensive entertainment etc. Especially if you place yourself in Toronto, where all those things cost more. When the time comes, if you end up living back in Toronto, consider sending the kids to spend summers with family in Ireland – it’s a great adventure for the kids, the grandparents usually love it, and it saves a ton on summer camps. We plan on trying it in a few years…

    5) It sounds like both your jobs are relatively mobile? Why not embrace the semi-nomadic/world schooling lifestyle? I don’t understand from the information provided what is the draw to come back to Toronto, one of the most expensive places you can chose to live.

    Good luck on the journey! sounds like you two have a great start already!

    1. Hey NewB!
      Thanks for digging into my case.. you asked some interesting Qs, so I wanted to reply!

      1. Why wait a year in Toronto after giving birth?:
      Honestly? Comfort. Mr. RCCD’s family lives in Ireland, but mine lives here. I’d love to have my own mother’s support here in Canada (and a touch of privacy in our own place) for the first year while I’m adjusting to becoming a mother.

      2. Why come back? And why to Toronto?:
      I’m not going to lie; things could change drastically in a few years. But the current Irish rental market is brutal. Their lack of rent regulations and resulting skyrocketing prices have caused so many young adults to move back home, it’s spawned actual TV specials (Google RTE’s “This Crowded House”).
      With regards to coming back: We’re both (currently) feeling like Canada might be where we want to ultimately raise our children due to a variety of factors, but I recognize that could change in a few years. If we come back, there’s a good chance we’d live outside of the GTA for the cheaper cost of living and to be closer to family— which is one of the reasons I cut my expected salary by $35k in the “coming back” scenario.

      3. On the benefits of local family:
      Such a great point. Wherever we land, whether Ireland or Canada, we definitely hope to be near friends and family.

      4. On the cost of kids:
      Also such an amazing point. Over thanksgiving I had a weary father of three (who I’d literally just met) darkly tell myself and Mr. RCCD not once, but FOUR TIMES that we “shouldn’t ever have kids.” He cited the cost of their hockey gear, and the time commitment of carting them around. I hope we’ll be able to find cheaper alternatives. Maybe they get my athletic skill, or lack thereof, and it’ll be a non-issue. 😉

      I definitely see the benefits to sending the kids to Ireland for summers instead of high-priced summer camps– if not going ourselves and taking them with us!

      5. Why not embrace the nomadic/freelance lifestyle?
      We’re DEFINITELY considering that. While we’re still at the outset of our journey and Mr. RCCD is in a new career field, abandoning full-time jobs still seems a bit too daunting to us. But I don’t doubt that in a few years time, that’ll seem like a genuine option!

  9. interesting read.

    but returns arent’s fixed. so say, in year 15 in your example, what if we get a 30% correction of the market? then what? postpone retirement? year 18, of course, would have significantly fewer monies

    thanks!!

    1. What you’re referring to here is what’s called the “sequence of returns” risk. We wrote about it here:
      https://www.millennial-revolution.com/invest/sequence-of-returns-how-not-to-fail-at-retiring-early/

      They can hedge this in 3 ways: 1) build up a cash cushion of 3 years of living expenses 2) live within the yield shield 3) live nomadically and use world schooling

      For 1) 3 years of living expenses doesn’t mean 3*42K = $126K since the 2% of dividends would be thrown off from the portfolio without having to sell anything, they would only need the difference: 3*21 = $63K. 2) Pivot towards more fixed assets that throw off a higher yield. If they can decrease their spending in the first year to be within this “yield shield” (eg 3% or $31,500) then they won’t deplete their portfolio even during a crash 3) live nomadically and home school so they’d only spend an amount that can be covered by the yield of the portfolio without having to sell anything.

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