Reader Case: Trapped in Success

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Hi y’all! Can you believe it 2019 is almost over? Wow. It’s been another crazy year. So, before the year comes to a close, I’m going to tackle a reader case or two. Without further ado, here we go!


“Your gross/net annual family income:

Wife (Software Dev.): $120k gross
Me (Accountant self-employed): $399k gross (pre-expenses)
Total Gross: $295k
Net: $238k (Doesn’t feel like that much!)

Your monthly family spending: $21k

For any debts you have, please include:

  • Primary Residence
    • The interest rate: 2.75% 7/1 ARM
    • Your minimum monthly payment: $5,150
    • The outstanding balance: $997k
  • No student or consumer debt

Any fixed assets you have (house, car, etc.)

  • House Value: $2.2M
  • 2 classic cars and dirt bikes: $125k
  • Furniture and art: $35k

Any investments or savings you have (cash, bonds, stocks, etc.)

  • Roth and 401(k)’s: $520k in your recommended ETF allocation (for the most part). About $20k of this is in cash that I am DCAing into the portfolios.

Now that we got the data out of the way, let me tell you about our story and where you and FIRE came into our lives…My wife and I, 39 and 40 respectively, have been trying to retire early since we graduated college in ’03. We thought the best way to do so was through real estate while also contributing to our 401(k)’s and Roth IRA’s along the way for good measure. So we would buy a fixer-uper, live in it as our primary residence for 2 years, then rent it out. Our plan was to keep doing this until we owned enough properties to have them cash flow our retirement.

It didn’t quite work out that way. While we were fortunate to have good tenants for the most part, we kept running out of cash for the down payments on the next project. As we would fix these houses up, we would do so without piling up debt and put a lot of sweat equity into them. Eventually, we decided to sell them all and buy a lot to build our “dream home”. This dream home is in the mountains of Park City, Utah, overlooking a spectacular lake. Mind you, the plan all along was to eventually sell this house and build the next one mortgage free while getting into the short-term rental game. I applied for a HELOC on our home to put our equity to use, but in the best of cases, we could only access a total of 80% equity, leaving 20% doing nothing for us…then we read your book.

I stumbled upon Quit Like A Millionaire in September of this year and it has completely changed what we thought was possible. I have a degree in Finance, a successful bookkeeping business and I have never seen the methodology you discuss in that book. After skeptically crunching numbers via, we realized that if we sold our house for the current market value (around $2.2M), we would net around $1MM. That combined with our retirement accounts, we would have just over $1.5MM to carry us through the estimated 57 years of retirement, especially if using geographic arbitrage.

Right now, we have plans to spend a month in Mexico in January and a month in Costa Rica this coming March as a trial run, then we put the house up for sale in April, which leads me to my questions and why I reached out…

While your book does cover what do with funds over the allowed annual contribution allowance for 401(k) and Roth IRA’s, it doesn’t specifically mention what to do in a case like ours where we will receive a bulk amount of cash at once, at the start of retirement.

  • Should we take some of the $1MM proceeds from the sale of our house and max out the 401(k)s and Roth IRA’s for 2020 and put the rest into a non-tax advantaged brokerage account?
  •  I plan on keeping my business going remotely for at least a few years, so we won’t need fixed dividend income for the first few years. Do you still recommend a 60/40 equity/bond split even though those dividends will create additional taxes?
  • What do you recommend for rebalancing a non tax-advantaged brokerage account? Wouldn’t we potentially realize gains, causing a taxable event? If rebalancing is still recommended, how often?
  • Regarding dividends, VYM is an ETF with a 5* Morningstar rating and below average risk/above average returns. It has a .06% Net Expense Ratio and a 3.13% distribution yield. Is this a viable option for fixed income over some of the equity or bond allocation of your recommended portfolio? If so, how much do you think? If not, what argument do you have against it?
  • With a one-time payout of $1MM, how long do you recommend DCA into the market? Mind you, we will not need any of this to produce income for at least 2 years as I plan on earning income from my business still.
  • Your Investment Workshop does not include any Gold or REIT’s. Do you think there is a place for these in a FIRE portfolio? I assume no, or you would have included them, but I am curious as to why.

If this email doesn’t earn a reply or a case study on your website, I want to at least tell you that I appreciate your contributions to the FIRE community. You have already changed the way my wife and I look at things and I have already had a younger sibling read your book and while in his 20’s, started to work towards FIRE. Thanks again and best wishes.

Self-employed Accountant


Okay, first of all, I did a double-take at the words “I stumbled upon Quit Like A Millionaire in September of this year and it has completely changed what we thought was possible. I have a degree in Finance, a successful bookkeeping business and I have never seen the methodology you discuss in that book.”

Wow. We managed to surprise a finance nerd? Someone who not only has a degree in Finance but also their own successful bookkeeping business? That’s quite the compliment. *blush*

Anyway, let’s get to SEA’s numbers. As we always say on this blog, it’s time to…MATH SHIT UP!

Family Income (net):$238,000/year
Spending:$21,000/month or $21,000 *12 = $252,000/year
Debt:-$997k (mortgage)
Total Assets:($2,200,000 – $997,000) * 0.95 (house) + $125,000 (vehicles) + $35,000 (furniture and art) + $520,000 (investments) = $1,822,850
Investible Assets:$520,000

So, SEA is kicking ass when it comes to income, but crapping the bed when it comes to spending. Which is probably why he said “doesn’t feel like that much” about a combined family income that dwarfs what Wanderer and I made as two engineers!

Their spending $21,000/month or $252,000/year?! What the Hell? Are you snorting cocaine off gold-covered lobsters or something? Even with that substantial yearly salary, their cash flow is still in the red by $14,000 each year.

With that kind of spending, by the 4% rule, they’ll need at least $252,000/year * 25 = $6.3 Million before they can even think about retiring.

At their current savings rate of -$14,000/year, they’ll be able to retire in…hmmm…let me see…carry the one…oh right!


You cannot retire with a negative savings rate. That’s not how anything works.

This is actually fairly common in careers where the person’s perceived “status” is really important to their success. I’m talking doctors, lawyers, accountants, etc. They need to drive the fancy cars and thousand-dollar suits because it helps them be taken seriously and gain more clients, which in turn means more money, which in turn means more “status” spending.

Engineers are the opposite. We make good money (though not finance industry money), but we just bike everywhere while wearing crocs and ripped t-shirts because nobody gives a fuck what we look like.

BUT, if our reader decides to pull the rip cord and retire, guess what? They don’t have to care about impressing people with their status spending.

Why? Well, if they were to sell all their assets and turn it all a giant investment portfolio, that investment portfolio would be worth $1,822,850. And $1,822,850 x 4% = $72, 914/year. That’s more than enough to retire comfortably in most places in the U.S, given that the median family income is only $63,179. And of course, if you use geographic arbitrage it becomes an insane amount of money that you’ll be searching for ways to spend it in places like Mexico or Costa Rica.

So, the choice is pretty simple. Sell your shit, stop spraying money all over the place to impress jerks you don’t even like and retire comfortably now, or work forever and die at your desk for said jerks.

Now, that we’ve got that out of the way, let’s answer SEA’s questions.

Sell the house, max out 401K and Roth IRAs for 2020, and put the rest into brokerage account?

Yes. You may need to pay some tax on the capital gains, but after that shovel as much as you can into your tax-sheltered accounts.

Will I need dividend income for the first few years if I continue working?

No. Since you plan to keep working, you won’t need the yield to live on, so the Yield Shield is not necessary for you. You can also tolerate a more aggressive equity allocation for the same reason.

How often should I rebalance a non-tax advantaged account?

Once a year.

Should I invest in VYM?

*shrug* I can’t recommend individual funds because I’m not a licensed financial advisor and I don’t want to get sued. All I can tell people is what ETFs I personally own, and I don’t own that one.

How should I DCA a large chunk of money (ie $1 Million) into the market? I won’t need this money for the first few years of retirement.

For an amount that large, I’d do my DCA over a year. Maybe $100k a month for 10 months to make the math easy.

What about Gold or REITs?

We own REITs using the ETF XRE at around 5% of our portfolio. As for gold, we don’t own it directly because gold doesn’t produce anything, and our investing strategy is to own assets that pay us. We prefer to own gold COMPANIES via the index instead.


So there you have it.

What do you all think? Do you think SEA should be able to retire? Do you agree that $238K doesn’t feel like that much?

Note: With Christmas coming up, if there’s someone you care about you want to share with gift of FIRE, consider gifting them “Quit Like a Millionaire” . The response we’ve been getting from people, like the reader above, about how QLM has changed their lives has completely floored us and made us so grateful. Thank you!


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67 thoughts on “Reader Case: Trapped in Success”

  1. Happy holidays everyone! On the trial run of early retirement, they should track every dollar they spend a la Vicky Robin YMOYL, and see where it goes. Can they give up the massive spending? Time and tracking will tell 😊

    1. Happy holidays, TM! I agree, tracking definitely helps. Just like when you’re trying to get fit, knowing what you’re eating makes a big difference, instead of just mindlessly eating.

  2. Love FIRECracker straight shooting and sincere chided at a well deserved case study.

    Now that he has come and bowed at Tiger Mom – let’s give him TE’s compassion to make sure he will make it pass the Financial Independence mile marker without losing his mind.

    Data – 40 years old (take the older of the two), $238k net income, $1,800k investable asset, $21k current expense.

    DO NOT, I repeat DO NOT sell your home and run off to some lofty destination and try to live on $6k per year ((1,800,000 x 0.04)/12) – you will be miserable.

    The fact that you plan to keep his business for few more years implied he is in distress but is capable to keep it under control.

    Here is a 10-year plan –
    1. Down side the home and diligently invest into the market as much as possible. Get a condo since you have to live somewhere.
    2. Maintain the income of $238k after tax income per year
    3. Train yourself to live on $167k per year ($13k per month) and invest the additional 71k of saving into the market.
    4. At the end of 5 years (45 years old), you will have $3,196k of investable asset that can generate 167k of passive income.
    5. Sell the business to add additional safety margin.

    Here is a 5-year plan –
    1. Down side the home and diligently invest into the market as much as possible. Get a condo since you have to live somewhere.
    2. Maintain the income of $238k after tax income per year
    3. Train yourself to live on $127k per year ($13k per month) and invest the additional 111k of saving into the market.
    4. At the end of 5 years (45 years old), you will have $3,196k of investable asset that can generate 127k of passive income.
    5. Sell the business to add additional safety margin.

    Both of the plans is tailored made for your specific circumstance – your strength in making money and your weakness in delay gratification. Do not swing the pendulum to the opposite direction and try to live on $6k from $21k.

    Mother Tiger is correct $6k is plenty to have a wonderful life in most places in the US – but, you will need to ease your way to it.

    Due to the random and unpredictable nature of the market, the 10-year plan will yield better outcome.

    In both plans – the FI target has 90% success probability in any Monte Carlos simulation for 30 years.

  3. I can see how living on $238K a year could be ‘difficult’ in a way. Our net is around there as well, living in YVR. Looking around us, living in a ‘decent’ neighbourhood, there’s lots of doctors, lawyers, etc around. At a certain point it’s very easy to feel frustrated at people who own large multi million dollar homes and spend every winter weekend in Whistler (with their kids!) at a cost of probably $500-1000 per weekend. Even though I know that most of this stuff is debt-funded. Even though I know that our family income is definitely in the top 95%, it’s still frustrating to see all of the ‘normals’ around living it up.

      1. Sure. Good advice in general. Doesn’t remove the fact that kids go to school with other kids and they’re constantly comparing who has what toys, how many etc.

        In case it wasn’t clear, I’m not suggesting I’m ‘worrying’ about other people. I’m suggesting that if you live in a world where people view things this way, it’s more effort than not. In the same sense that I have to teach my kids that they’re not the same as people who don’t have enough money (to house, cloth or feed themselves), I also have to teach them that they’re not the same as the other part of the population that spends every dime they make and then some. It’s *much* easier to just go with the flow and fall into one of the social groupings that is more outwardly similar.

    1. It’s easy to get sucked into that lifestyle when you’re surrounded by others doing the same thing. Being a contrarian is hard. But it’s worth it in the long run 😀

  4. $238k/yr doesn’t sound like much? Seriously? Take a drive in South Chicago or anywhere in Baltimore or in some Rust Belt town that’s been decimated by some corrupt company folding, you privileged twat. Kids are going without Christmas presents and old people are struggling to pay the heating bill and sick people are dying because health insurance costs too much and $238k/yr doesn’t seem like a lot? Cry me a river.

    You know what? F*ck this guy. If he’s the bees knees like he says and has read your book and STILL spends that much a month…he just doesn’t get it or doesn’t want to. Either that or his whole point in sending the message was to brag.

    Sorry, had to be done.

    1. I completely agree. IT IT HURTFUL to others to brag about making and spending that much money a month. I am enraged. I earn 12k/year. I am in poverty. My family is one slip away from ruin. For people like me, its not about comparing toys- my decision is between going hungry OR doing the laundry…
      I mean, congratulations on people who are doing well. But also think about being conscious.
      Its hurtful to talk about how much fun you’re having traveling and how wonderful your meals are eating out, and your beautiful dream home thats worth 2MM.
      To the asker- rethink your question. You don’t really need help.

      I’ve been following this blog for years and right now the majority of your recent posts are about your book, your vacation, and Chautauqua… Could you space this out with some real financial articles? I used to like reading your stuff but right now I feel very alienated.

      1. I didn’t realize that the rest of the world was responsible for catering to your emotional (and financial) fragility.

        Hurtful? That someone is more successful than you and is out of touch with the fact that he possesses great wealth while others are struggling to get by? Do you live under a rock? His is just the sort of tone-deaf, rich-guy bullshit that regular adults (are there any left?) just brush off. Dry your eyes and move on; jeez.

    2. @SMH: I had those same thoughts initially, and after thinking more about the reader’s situation for a day, I came to the conclusion that my initial thoughts were correct! Thank you SMH

    3. I was just saying to myself, “I could really use a steaming pile of moralizing horse shit to make my day suck a little worse.” Thanks for making my wish come true, brah!

  5. Wow, that amount of spending is obscene! SEA and his wife might want to examine why they need to spend so much to be “happy.” Or are they supporting two dozen foster children? I have a similar net worth and spend around 1/5th. of what they are spending. Granted, I probably live in a slightly lower cost of living area, but I also help my two under 25 year old adult children significantly.

    Before they do ANYTHING else, they need to get that spending under control IMHO.

    1. I think it’s a symptom of being in finance. Success is projected via possessions and style of dress. When you’re surrounded by people like that, it ends up sucking you in. Hence the title “trapped in success”. I’m realizing more and more as life goes on, how much your peers affect your spending patterns and life decisions. That’s why the FIRE community is so important. We need to support each other and be contrarians together.

  6. “$238k doesn’t sound like much”. Lols and I feel sorry for them. I live in a major East coast city on less than 10% of that. I eat 80% organic/local food, eat out couple times a week, at least weekend getaway if not longer trip every month, work 3-4 days a week at a job that’s flexible enough for my side gig as a musician, easy commute on subway or uber/lyft if I’m feeling really lazy (or bike when it’s nice) rent a cheap but good location studio apartment, take occasional yoga classes/massage etc. Yeah I don’t own a monster house or cars but I’m saving ~50% of my income.

    In a non-judgemental way, I just literally have no idea how people can spend this much money. Y’all, sell that house and git retired, and git to Real Living!

    1. Is this case a spoof?

      That level of family income in Utah puts them in the top 3%. 97% of the households in the rest of the state have a lower income. More than 910,000 of his state neighbors are worse off. Complaining about this shows a significant lack of self awareness.

      To then also spend more than their income (unless there is some special reason they haven’t divulged), while one is (very, very ironically) an accountant, is more than a little dumb.

      As others have said, they have to wean themselves off that level of spending before doing anything else. Otherwise whatever else they try is doomed to fail.

      They should also consider volunteering at an organization that helps underprivileged people in order to get some perspective.

      1. “they have to wean themselves off that level of spending before doing anything else”

        Agree. The spending is the issue here. It’s an emotional problem, not a financial one.

  7. Social comparison is proven to make you unhappy, so I would suggest to stop comparing yourself to your “rich” neighbours, and instead read up some books like The Happiness Equation, and get a solid understanding of concepts like the ‘Hedonic Treadmill’, Minimalism, and Simple Living. These concepts will get you to explore a life of contribution and creation, not one of consumption. For some perspective, I own a small 500 square foot condo in downtown Toronto, and am trying to live off $3k a month to hit FI in 15 years. It ain’t easy, but it’s certainly easier for you guys given you are DINKs (Dual Income No Kids), and make a ton of $$$$$$!! Hope that encourages you to make the sacrifices needed to hit FI, and start living the dream!

    1. “I own a small 500 square foot condo in downtown Toronto, and am trying to live off $3k a month to hit FI in 15 years. ”

      Nice. Rooting for you on your FI journey!

    2. Amazing! I think it’s totally do-able for you! I’m renting in Toronto but my budget is also around 3k a month and I’m aiming for 15 times my living expenses before relocating to a lower cost of living and switching to a less stressful job to then follow slow-FI until I’m fully FI. Best of luck!

  8. the scary part is he’s an accountant

    dunno, i almost cant believe it, did you make this up?….does he have a loose screw?

    if true, id NEVER use this guy as my accountant. Talk about ridiculous!!

  9. Interesting case study! I think the big challenge for this couple is not financial at all (surprise, surprise) but rather behavioural. There is NO WAY they will transition from a burn rate of >$230k per year to a fraction of that. They also said that they have been trying to move toward FIRE for quite a while.

    Alternate approach:
    1. Immediately begin tracking expenses (YNAB, spreadsheet, birch bark and charcoal);

    2. Set a target spending rate that is 1/2 of current crazy burn rate (which would still allow carrying the house);

    3. Invest the difference (the “gap”);

    4. Lather, rinse and repeat until this is a consistent habit (2-4 years), including another halving of the burn rate (at least)!

    Then make bigger moves.

    Oh, consider shitcanning a car and the “art” to help set the mood!

  10. It sounds like you and your family are unsatisfied with your current lifestyle and looking to make a change, but may I respectfully suggest that, rather than upend your entire lives trying something completely different based on a new idea that you only discovered three months ago that you start with a smaller change?

    I’d start with examining your lifestyle and going through your expenses with a fine toothed comb. Look for any low-hanging fruit that is money you spend that’s not adding any value to your lives and get yourselves living within your income, to start. I won’t make specific suggestions about what to cut because I can’t tell you what’s worth it to you and what isn’t, but with the spending you’re describing, I suspect you can shave at least $14k (bringing you to zero) off of your yearly expenses. Zero is Step One.

    That’ll give you breathing room to spend the next year actually figuring out what you want to do, which is Step Two. You mentioned that you and your wife built your dream home in Park City (gorgeous place to live, btw!) After having built it and lived in it, is it still your dream home? If it is, keep it and figure out how to get it paid off ASAP.

    If your dream has become a nightmare, sell it and downsize into a rental while you figure things out. Stick the proceeds of the sale into your various investment vehicles discussed in your letter and let them sit for a year.

    I’d also spend the next year with both you and your wife keeping a journal of your spending – not the exact figures, you can put those into an Excel sheet and analyze them later. This journal is for how your spending is making you feel, day to day. Think of it a little bit like a food diary; in a week, do you remember how, say, a cupcake tasted? Was it the best cupcake you’ve ever had? If so, then that’s an amazing cupcake and you’ll want to make room for it. If not, it’s easier to look at future cupcakes and say, “You know what? Not worth it.” It’ll be the same with your spending. Look at every expense in your life and ask yourselves, “Does it pass the cupcake test?”

    It’s been said before, but FIRE is as much about controlling your expenses as it is having enough income to live off of. Controlling expenses, at the end of the day, is really about knowing what you value. Give it a year. Run the numbers, and then run them again. Examine your lives and whether you’re just frustrated because you’re living above your means or if you’re truly unhappy with where you are and what you do. Let the shiny wear off and if you and your family still want to sell your house and make this drastic change, you’ll be in a better position to do so.

    Good luck!

      1. “Wonderful, non-judgmental and helpful reply.” I thought that too, but knowing how bad it is at the other end of the spectrum for many families, sadly, my feelings are not so generous.

        Still, I hope they realize just how fortunate they are, and that they make some changes and find happiness and freedom in having less.

    1. Good tips, CJ! You’ve echoed what other readers have said, which is that it’s a behavioural/emotional issue, not financial. Staging the changes and testing out the waters sounds like a good plan.

      1. I’m also concerned about the speed at which this reader wants to move. They just found FIRE in September, but they’re ready to upend their entire lives already? Their spending is out of control, but for all we know they like where they live and what they do, but are feeling the strain of living outside their means. One red flag that’s going off to me is, do they want to travel to places like Mexico and Costa Rica because they actually want to travel, or do they think they’ll be able to maintain their current lifestyle for cheap?

        If it’s the latter, then that puts this couple in danger, because if their impulse control is this underdeveloped, then I promise they’ll be able to expand their spending to whatever environment they find themselves in. It won’t kill them to wait a year, work on the behavioral/emotional issues and making sure that this is what they want – because once they pull this cord, if they don’t have the behaviors under control that got them to this point, then there’s a LOT less room for error.

  11. Wow some of ya’ll need to calm down on these folks and stop hating. They haven’t been foolish with their money nor are they deadbeats; no debt, property owners and business owners – a lot of you could be so lucky/determined. The vitriolic response that some of the commentators on this thread have left is not only disgusting; it is beneath this website and the movement. “Sorry, had to be done.” Haters gonna hate I guess.

    Tough love is one thing, shitting on others is another. Know and recognize the difference.

    Now, I find that level of spending to be totally ridiculous b/c it means that they are not even treading water. I agree with the first few posters, don’t sell the house – you need to get ready to live on less than $20k a month before you make a ton of changes “hoping” it will work out. Give it a year or 2 to make the shift.

    1. Very good and positive input. While we should ALL be checking our privilege regularly and figuring out how we can partner with those who have less, modeling that behavior is the most powerful encouragement to others. And the FIRE movement is full of helpers.

    2. ‘haters going to hate’?

      good grief, don’t be so presumptuous and thin-skinned.

      No one is ‘shitting’ on anyone. Rather sharing an opinion just as YOU are.

      1. Come on Sam. Do you really think my response is the same guy above who literally wrote “You know what? F*ck this guy.”

        My skin isn’t thin nor am I the guy asking for the advice. I gave my 2 cents but I wasn’t a jerk about it. What I take issue is people being a$$holes as they state their opinions. There’s no need for that. An honestly, I think it comes from a place of envy or jealousy about SEA’s situation.

      2. Yep, haters are going to hate.

        There’s a big difference in feel from the various parts of the FIRE community and some folks really hate FatFIRE folks. $2.5M is around the minimum target for a FatFIRE…so he’s around $1M short…and he still needs to cut spending in half.

        I’m sorta in the same boat as SEA…I bumped into Quit Like a Millionaire over the holidays, we make around the same amount of money as SEA (about $50K less) and have been stuck in just one more decade mode for a little while and was looking at working another 8 years when I hit 62.5.

        But I had a heart attack in July (at my desk) and now have have a fervent desire not to die at my desk and looking at the same sorta options as SEA. Cash in everything, try to keep working remotely and geoarbitrage the hell out of retirement.

        But you know…we could save another mil just to be safe…if $1.5M is okay then $2.5M will be better…and, of course, the truly FatFIRE folks like Financial Samurai will tell you that $5M is “barely” enough to retire on for a family…

        My kids are kinda screwed I think. They aren’t going to be prodigious savers. That asian immigrant mega-saver gene is only good for a couple generations before you revert to mean. I guess they’ll have to become millionaires the old fashioned way and inherit it…

    3. They would do well to watch the movie “Playing with FIRE: The Documentary”. It’s a fantastic companion to “Quit Like a Millionaire”, the book. Perhaps there’s a movie coming soon!

      The book mostly covers the practical and mathematical side of achieving FIRE, while the movie covers the emotional side of making the change. Both are excellent.

  12. Something about QLM resonated with you, SEA. Before making any big decisions, have a good long talk with your partner (to make sure they’re on board too!) and find out what exactly it is about retiring early that appeals to you. Only then will you be able to take a good look at your spending and find out what can go so that the cash you’ll free up in the sale of your house will be able to generate enough income to sustain you in early retirement. Best of luck to you!

    1. Good point, bjrigs. Getting their partner on board is definitely important–as we’ve seen with Scott and Taylor in the FIRE documentary.

  13. Very sensible advice FireCracker, but I truly wonder if someone living in a fancy $2m house that owns classic cars and fun toys like dirt bikes could really pair back and sell it all.

    It might seem like a huge step backwards in their lifestyle. That’s a big mental shift to take.

    You cover the math pretty well, but the mental aspects I believe is where the biggest challenges lie for these folks.

    1. Yup, I agree. Mr. Tako. They need to sort out their priorities and be both on board. It’s an emotional fix, not a financial fix.

  14. “You cannot retire with a negative savings rate. That’s not how anything works.”

    This – even if they do nothing else at all they need to work on getting their cashflow back to black otherwise they’re ultimately heading for disaster.

    There are season of life where cashflow might temporarily be negative in the hope of a larger payoff down the line, e.g. studying for a degree or investing in a fledgling business, but OP’s letter makes it sound like the deficit spending has become their normal way of life.


  15. Why do you own a gold stock index and how do you integrate it into your broader portfolio with rebalancing to take advantage of the highs and lows? I ask this because I also own a gold stock index, and a lot of people do not. I’m curious why others choose to, and since you have such an objective take to these things, I’m curious why you have chosen to purchase a gold stock ETF. Thanks!

    1. I’m not referring to specific gold ETFs. I’m referring to ETFs that track the S&P 500 and TSX–which contain gold companies.

  16. The $21k/month includes savings right? I mean you don’t -$14k/year your way into a $520k retirement account without non-housing debt. But really I’d like to see a breakdown of the monthly expenses as I’ve long run out of things to spend it on by about $10k.

    The capper to all this is that $252k/year only needs $6.3 million per the 4% rule of thumb.

  17. I agree with what others have said about looking at the psychological aspect of their spending first and to look at a staged approach. Maybe sign up for some mentoring with our FI community member

    Also regarding dollar cost averaging, as they will be working for another two years, wouldn’t it be better to do a lump sum? Great article on the case against DCA here

    Essentially time IN the market is better than TIMING the market.

    Other interesting stats about the market: (courtesy of

    Markets go up more often than they go down
    Not only do markets rise more frequently, but they tend to increase in higher magnitude than the drops.

    Over the last 90 years:

    Markets have gone up 73.9% of the time
    Markets have gone down 26.1% of the time
    The market gained more than 20% in 33% of the time
    The market lost more than 20% in 4.5% of the time
    The gains in positive years produce more than double the losses in the negative years
    (This data is based on calendar year returns of the TSX from 1920 to 2010).

    In addition (courtesy of Rob Carrick of the Globe and Mail),

    In 34 of the 37 corrections of 10%+ since 1950, the stock market was up 12 months later by 26.8% on average.
    Average decline for the 37 market plunges of 10%+ since 1950 is 19.7% or almost one every 20 months.

    1. Lump sum is better mathematically, but for someone who’s never invested before, DCA let’s them wade into the market rather than plunge into the deep end. The key is to not panic sell the first time you hit a market downturn. When you have money on the sidelines to put into the market during the dips, it’ll prevent you from freaking out and hitting “sell sell sell”.

      Agree that this is more of an emotional issue, not a financial issue.

  18. Long time reader first time commentor and the vitriol for the people in this case study is astonishing. Why would someone lambast a person who has exposed their personal information not to gloat but to point out that they have sucked in the past, recognized it only after reading a life changing book, and are looking to turn their lives in a different direction? I hope the vast majority of the readers can look past their own presumptions and just see these people do understand they are privileged, they realized they made poor choices in the past based on their own values, and are merely looking for advice to change course.

    I doubt the couple in the case study got to their positions in life with thin skin (much like most of us have) and can handle these critiques. Yet this level of ridicule and cynicism is not helpful. Who cares if it is “your opinion?” These FIRE blogs are centers for bouncing ideas off others who care about the same things and places where people should not feel mocked for their mistakes or hesitant to share their stories. This openness is what makes the FIRE movement (this website along with others) special for me. I am disappointed that others feel it is their right or place to step on others who are being open and honest and just trying to make a change for the better. Be helpful, not hurtful. Its pretty easy to do that respectfully and still have your own opinion.

    1. As they say “opinions are like assholes, everyone has one” 😉

      When there’s a strong reaction, it usually is about the person having the reaction rather than the person it’s directed towards. Seems like this reader case has hit a nerve.

      The reader didn’t intent to offend anyone, but ended up doing so (welcome to the life of every FIRE person who goes into the media spotlight;P). But such is life. You can’t control how other people think or perceive you, you can only control how you react to it.

  19. FIRECracker – kudos to you for your non-judgmental advice!

    I think some posters are angry because this couple does well for income, but the husband seems dismissive as to where it goes; he says “it doesn’t feel like that much”. Coupled with their arguably frivolous assets, his overall attitude (on paper) smacks of privilege and cluelessness. It’s a less extreme version of a multimillionaire income earner whining about his/her inability to retire due to spending on countless houses and exotic cars.

    That being said, good on them for aiming to FIRE. I completely agree that one big step is making the mental shift to lower spending. They need to confront why they spend so much each month such that they can never retire. I recommend “Worry Free Money” by Shannon Lee Simmons to help this process. Good luck to them.

    1. In this case the phrase “doesn’t feel like much” is the triggering phrase. I can see both points of view. It doesn’t feel like much when you’re in a bubble of big spenders and big earners, but that would touch a nerve for people who are struggling.

      Anyway, you can’t control how people perceive you, you can only control how you react. And if the reaction is to track their finances and figure out how they can go from red to black, they’ll be fine.

  20. Wife (Software Dev.): $120k gross
    Me (Accountant self-employed): $399k gross
    Total Gross: $295k


    How does $120k + $399k = $295k ??

    1. My understanding of it is that $399K gross is before expenses. SEA owns his own business–you have pay employers, rent office building, those kind of things. After you subtract the expenses, combined with his wife’s salary, then you get the total gross.

  21. Wow, their spend level is very high. They need to figure out what they want. FIRE might not be the right thing for them. If they can’t live more frugally, then it’s best to focus on making more money and increase that saving rate.
    We need rich productive people to keep the economy going.

    Anyway, they need to figure out what they want. They seem kind of aimless.

    1. Yup. It’s an emotional issue, not a financial one. Figuring out their priorities and working towards that to get from negative savings rate to positive will help.

  22. Hi – I’m with the camp that says to:
    1) discuss with spouse – you’re going nowhere without both of you

    2) Keep your eyes OPEN…kudos on seeing the possibilities!!! That is a huge step that likely nobody around you has done. Most especially at your income level, where any cuts are basically discretionary (i.e. you true NEEDS are met with a tiny % of your income), this is wonderful to have realized you have a choice.

    3) If you and spouse decide it’s a GO – Start with reducing spending to see (remember??) what a “lesser” lifestyle is like. I’m a rip-the-bandaid-off person. Get over the shock. Get away from the Life of spend-it-all-and-wonder-why-there-isnt-more… and splash the cold water of ***freedom*** on your face. So for me, the house toys and art are toast, especially if any of it is status-related and not a true love affair.

    Good luck, whatever you decide.

    1. You’re right. Getting the spouse on board is vital. You can’t go anywhere if you’re rowing in opposite directions.

  23. I don’t even know the way I stopped up here, however I assumed this put up used
    to be great. I do not recognise who you might be however certainly you’re going to a famous blogger if you happen to aren’t already.

  24. Sadly I believe this case study. People spend an obscene amount of money when they earn it. I work in banking and review these types of cases all the time – people want to borrow $100k for jewellery, earn salaries of $750k-$1MM, have multiple Mercedes (on credit), live in multi million $ homes, etc. I’ve seen monthly minimum payments as high as $40k. It is absolutely ridiculous. Meanwhile, I am so frugal it is laughable. No car, house without luxuries like a clothes dryer, dishwasher, etc. Family of 4 living comfortably in an expensive city (Toronto) for $50k/year. Kids are the biggest drain, without that, we could easily live for $30k as a couple. Honestly, I just don’t get it. There is an expectation that people “deserve” these luxuries and without them they’d be unhappy. I am the opposite, I would be unhappy if I had their minimum payments and watched all that money go down the drain.

    I don’t think they can do it unless they practice living on a lot less. They will burn through their savings and be back at the grind.

  25. I believe their spending of $238K per year. I have a close friend. She is a successful real estate agent. Her husband is a financial guy for a casino. I don’t know how much they make, but I know how much they spend per month i.e. $20,000/month. You can say they have it all. A nice house, 2 brand new Tesla, private schools for 2 kids. Tennis, piano lessons, international travels, eating out, etc. Easily $20K per month but they will have to work till 65 or 70 while I can semi-retire at 40.

  26. I hear the term “dream house” all the time. You should be working toward a “dream life” that is about experiences.

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