I didn’t choose the FIRE life, the FIRE life chose me!

Why I chose the FIRE life, why you need money early in life not in retirement, and how to change this trend. 

My daughter was born on August 15, 2017 in Ketchikan Alaska and changed my life forever.  Never had I had so much love and joy in my life as the day we got to meet her.  Now that I have two children with the third on the way, I have never been happier and want to spend more time with them each day. Children are an amazing and life changing gift.  When we took my daughter home from the hospital, and I had to return to work, I realized just how important the FIRE lifestyle was to me.

Due to things like POS’s and mortgage payments, I had to return to work just 2 weeks after my daughter was born.  Luckily, we had saved enough that my wife could take an entire 3 months off to spend with our daughter, but when I returned to work, I became somewhat depressed being away from my new little bundle of joy.  I knew I had to work to pay the bills, but I missed holding my daughter and spending every minute I could with her, even holding her while she slept.  Now as she sits beside me at age of 2 and a half, I look back at how fast time has passed, and how little time I get to spend with my daughter due to POS’s.  On an average workday, I get to spend 3 hours with my son, and 4 hours with my daughter, which is depressing.  That amounts to 12.5% of my day with my son and 17% of my day with my daughter.  Even then, I don’t get to devote that full time to my children as I also have to fix supper, mow the yard, do laundry, and the many other IADL’s that are necessary to live in todays society.  If it weren’t for my wife, I would have even less time as we split the household responsibilities.  So, I only get to devote about 5% of my day to actually playing with my children and spending time with my wife, and that is a depressing figure.  It means that 95% of my life on a daily basis is currently spent doing something other than what I would prefer to do. Does that sound like the American Dream, or more like an American Nightmare?

Unfortunately, this is only going to get worse.  As time progresses, my children will go to school where they will be assigned seemingly endless hours of homework to occupy the few waking hours I get to spend with them after work and school.  They will have homework assignments and projects such as science fair projects which will occupy many weekends, for projects they won’t remember in 6 months’ time. As they continue to age, more and more activities external to our immediate family, such as little league, dance classes, and spending time with friends will result in even less time available to spend as a family. And before we know it, we will be watching them graduate and leaving our home to start lives of their own. 

I genuinely believe that the way our society views lifestyle progression backwards. Currently, society teaches us to go to college, get a degree, get married, buy a home, have children, and then put what spare change we have left in a 401K for retirement in 40 years. Society teaches us that we need at least a million dollars in retirement and then even some nationally recognized news agencies report that a million dollars may not be enough. This train of thought is totally illogical and in complete contradiction to what modern families need. 

Repeat after me: “I do not need a million dollars or really any significant savings in retirement.” In fact, as you see in the LTC Medicaid chapter, having a significant nest egg over $2,000.00 is actually detrimental to your financial stability and heirs.  The first reason is, no matter how much someone has saved in individual retirement, most retirees will receive social security benefits, guaranteeing a monthly income. On top of this, for the first time in their lifetime, retirees will no longer be forced to pay for private health insurance but rather will have their health insurance covered by Medicare. Additionally, even if they took out a 30-year mortgage at the age of 35, their home would still be entirely paid for by the time they traditionally retired at 65. Since their children will be raised and moved out of the house, leading lives of their own, they will no longer have any financial responsibility for the care of their children.  Simply put, you don’t need a large nest egg in retirement because you won’t have any expenses. 

Instead, I think society should look something like the following: all working class Americans who contribute to society should be enrolled in the Medicaid program. This would allow them the freedom and flexibility to work and contribute to society while eliminating the possibility of bankruptcy due to medical bills.  This would need to be funded by a tax similar to Medicare tax, but this wouldn’t be a POS, since you get to benefit from the program now. Government benefits for daycare should also be extended to all working-class American families to both increase their take home pay and provide their children a safe place to play and learn while their parents contribute to society. The 28% rule as it pertains to mortgages, should be changed from 28% of gross monthly income to 28% of net monthly income. The 28% rule is a “rule” used by mortgage lenders nationwide to gauge your ability to buy a home and how much of a monthly mortgage payment you can “afford” based on your income.  As you have seen in my past articles, net income compared to gross income can be well less than half of your gross income thanks to POS’s. Let’s say for simplicity sake your gross monthly income is $1000.00.  According to the current 28% rule, you could in theory “afford” a monthly mortgage payment of $280.00.  However, as you have learned here due to the multitude of POS’s presented to the average American worker, their actual take home or net monthly pay is nearly 50%.  $280.00 represents 56% of the actual net monthly take home pay of $500.00. This means should the 28% rule be applied to net income, American home buyers would be much more likely to avoid foreclosure, pay their mortgage bill on time, eliminate their mortgage debt sooner, and save more money since mortgage debt is your second largest annual expenditure after taxes.  Having the 28% rule based on net income would better protect the home buyer, as the 28% figure would be based on the worst case and more likely scenario of a 56% loss of gross income, thanks to POS’s.  Regardless of your actual take home pay, I can guarantee you that when you account for all POS’s, the 28% rule using net income is more realistic than the 28% rule as its currently written, based on your gross income. 

In conclusion, you only have one life to live, so quit spending 95% of it doing something you don’t love, away from those you do love.  I believe the above figure is the part of the reason we have such an epidemic of depression in this country, but that necessitates its own article.  You don’t need a million dollars in retirement, you need a million dollars in your 30s, when you are working full time to build your home and family.  Although this may seem like a fairy tale, it could easily be achieved if changes were made to allow all working families access to free healthcare and child care benefits, as these are the two largest expenditures of the modern family, after taxes. Additionally, if only one word in the 28% rule was changed from “gross” to “net,” homebuyers would be protected from foreclosure, and better able to save money, allowing them to exit the rat race and spend more time with the people they love.  Remember, you only have one life here, don’t waste 95% of it doing something you don’t love.