The Intersection of FIRE and Disney

[trenty]

I never heard of FIRE before reading about it on the CC thread. But I do plane to RE at age 55 in a few years and be FI. DH will hopefully retire a few years after me. Having our mortgage paid off and my pension will help. College costs are not helping but won't derail my plans to RE. We did not actively live a FIRE lifestyle in our younger years but did save specifically for retirement.

 

[GlamMistress]

In other words, just make an extra payment each year...

Yes and the extra payment shortens the life of the loan = less interest paid. https://www.nerdwallet.com/blog/mortgages/should-you-make-biweekly-mortgage-payments/

My mortgage autodrafts the first of each month. On every Friday of the month I send an extra principal payment (no fee for me to do this). I unfortunately have a bigger mortgage than most it seems, so it is going to be awhile before the house is paid off. We only started the extra principal payments after everything else was paid off and every tax advantaged account fully maxed out. We need every tax break we can get at this point, which is probably a whole other thread!

Like @SouthFayetteFan said - every situation is different. I will say, though, that I highly doubt you will regret saving more in your retirement plan by the time old age rolls around. And if you have student loans, I'd suggest paying those off... and don't consider becoming a stay at home parent when there are still loans like that hanging around (I'm offering tough love today!)

 

[Happy814]

I'm confused about this too and would love for someone to explain. Our mortgage is just on autopay for the 1st of every month.

I haven't refreshed so someone may have answered this already. When you have a mortgage the interest accrues daily. When payments are made more frequently, you lower the principal and less daily interest is accrued. You will have a similar effect if you pay your mortgage a week or two earlier than when it is due.

 

[DisneyMandC]

Hmmm I suppose I need to call BB&T and investigate how to do this.

 

[shh]

I'm curious: any savers here who have been married a while and experienced the occasional bump in the road when it comes to seeing things the same way as your spouse financially?

While mine isn't a spendthrift by any means...and thankfully couldn't care less about tech, cars, other toys, he was always a bit more YOLO in spirit than me in our 20s/30s. I actually enjoyed seeing savings grow more than I enjoyed spending money! Left to his own devices, he probably would have gone out and traveled much more than me if we weren't together. So we had to work through that balance together.

We earned modest salaries, but we didn't live an extremely frugal life - we did go out, travel, etc, just less so than all his co workers or friends.

It didn't help that we came of age in the all flash, no substance '80s/90s when everyone was blowing every cent and cautious saving wasn't respected or valued much in U.S. at that time. It was the Wall Street glory days. (I sure wish we had the FIRE communities/resources to connect to that people have now!)

 

[QueenIsabella]

We generally agree on financial goals, etc. My DH doesn't handle money, much, but that's mostly because I have money anxiety, so I feel better handling it. Naturally, he has full access to both our money and the records (checkbook, statements, etc.)

It's kind of funny, though. I grew up what I'd call lower middle class--we owned a house, but not a nice one. We'd run out of food. If my dad went on strike, we'd go on food stamps. From age 12 or so, I paid for my own clothes and expenses--including contributing towards my HS tuition (Catholic school) starting when I was 16, paid for all my own college. Hence the money anxiety. OTOH, DH grew up in the richest town in MA. His dad held 3 engineering degrees, his mom was a teacher. But since the town was so rich, he was in the bottom 10%, so he felt "poor". His parents were also quite thrifty (fixed their own cars, shopped at K-Mart, etc.). And I get that he had much less material things than his classmates. But, you should hear his childhood complaints--"Everyone else got to travel both Feb. and April breaks, we only went away for one!" or, "Everyone else got a car for their 16th birthday, I wasn't bought a car until I turned 21!" Boo-frickin'-hoo! His dad didn't even fill out the financial aid forms for college--he didn't want anyone knowing how much he made, he just paid full freight.

On the good side, although our definitions of "poor" were vastly different, we're on the same page in terms of what our financial priorities are.

 

[Haley R]

I'm old enough to remember planning trips before the Internet which has made it so much easier. Back in the olden days, I would get brochures from various travel agencies, airlines and the "Mobil Travel Guide". I would then plan my own travel using those itineraries and hotels as a guide. I would have to write to hotels and places to get brochures and make reservations. We saved a lot doing things on our own and we continue to do this today. We are not adverse to using a good tour company for some destinations but the value has to be there before we go down that path. We would also need any organized tour to have a lot of free time so we can do some of the "off the beaten path" stuff that we enjoy. It's helpful that I love planning our travels.

I’ve had a lot of fun planning our trip so far! It’s a lot to take in though

 

[Haley R]

Paying $500 26 times a year instead of paying $1000 12 times a year

Ahhh that makes sense. I guess I didn’t realize that. I’ll have to ask Dh what he thinks

ETA: dh’s response was “Our loan has a lower rate because we didn't do bi-monthly and we’re still saving more than if we took that option”

 

[NY Pirate Princess]

Ah, the old "which bucket to shovel my money into" debate! It is highly personal and i agree with all pp that 1. No one should take advice from a message board and 2. We are all in better financial shape from thinking about these things than most Americans. Yay us!

I pay extra each month on our two debts, truck loan and mortgage. I save 10% of total gross income in my 457 b plan which i can start taking as early as 55. Contribute per pay check to 529 for only child. And just set up a roth at my local credit union for my cash bridge fund for retirement. Well, thats what i call it, but i should call it my Finally Buy DVC Fund.

For many years I shovelled into each bucket (new house fund, retirement fund, car loans, mortgage, dh student loan, retirement, savings, 529) and didn't feel any progress. If i had it to do over again i might have focused on one goal at a time.

 

[GlamMistress]

Hmmm I suppose I need to call BB&T and investigate how to do this.

That's who holds my mortgage. I just manually log in and do my extra payments. Under mortgage, select "payment" and then just either drop down to add another full one or select 0 and then add in the desired amount to the line and click "total deduction" and it will come out of the same checking you have set up for the auto draft. No fees.

 

[Judique]

Ahhh that makes sense. I guess I didn’t realize that. I’ll have to ask Dh what he thinks.

Usually there is no penalty for paying extra on your principal. But you guys are so young - is this your forever home? If it is a starter home and you expect to move up in 5 years, I wouldn't put extra into it. There are lots of ways to shorten a mortgage. Making an extra payment yearly has always been a popular option and can reduce a 30 year loan considerably.

But, I think your hubby has it backwards: usually the shorter the loan term, the lower the interest rate, and in addition, making 26 biweekly payments as opposed to making 12 monthly ones should shorten the loan term. If you can handle the payment, both are a win-win for someone trying to get rid of their mortgage.

I think most lenders initially play it safe by negotiating a loan amount with new buyers that is well within their ability to pay.

 

[Judique]

That's who holds my mortgage. I just manually log in and do my extra payments. Under mortgage, select "payment" and then just either drop down to add another full one or select 0 and then add in the desired amount to the line and click "total deduction" and it will come out of the same checking you have set up for the auto draft. No fees.

Mine has a line for extra principal or full balance.

 

[calypso726]

I’ll have to ask Dh what he thinks about bi-monthly. I guess I’m confused how that saves you money in interest?

Example: A 30 yr mortgage of $200K with an interest rate of 6.5%. Te mortgage is about $1,264.14. By using a bi-weekly payment plan, you would pay $632.07 every two weeks. Doing that cuts 6 years of payments off of the mortgage and saves you $58,747 off the total amount of the loan. A bi-weekly payment plan is also more effective sending one additional payment per year. Your loan balance accrues interest every day and reducing that principal balance every 14 days (26 half payments per year) saves more in interest charges than one full additional payment every 12 months.

 

[calypso726]

Sorry, forgot to add: for all you people who keep saying you want to travel with Adventures by Disney--there are better, nicer travel tours that you can take. We looked at ABD and found them to be lacking compared to others in their price range. Interestingly, they get mixed reviews right her on the DIS's ABD forum. As with anything, price it out, see who has what you're really looking for.

We are taking our 11th Adventures by Disney tour to Japan next year. Clearly, we have been beyond pleased with them. One tangible advantage of choosing ABD over another company in the same price range is that I can pay for it with Disney Gift Cards. I can purchase Disney gift cards for 5 points/miles on the dollar. Those points and miles in turn pay for my international flights in first class lie flat seats to my ABD or other random trip. I haven't seen any Tauck, A&K, NatGeo etc. gift cards that I can purchase for 5 miles on the dollar.

 

[mmmears]

We are taking our 11th Adventures by Disney tour to Japan next year. Clearly, we have been beyond pleased with them. One tangible advantage of choosing ABD over another company in the same price range is that I can pay for it with Disney Gift Cards. I can purchase Disney gift cards for 5 points/miles on the dollar. Those points and miles in turn pay for my international flights in first class lie flat seats to my ABD or other random trip. I haven't seen any Tauck, A&K, NatGeo etc. gift cards that I can purchase for 5 miles on the dollar.

That's a really good point. Thanks for sharing.

 

[Sleepy425]

I’m 34, my husband is 39. We max out our Roth IRAs (we slacked for a while on that. And my husband had no retirement savings at all when I met him ten years ago) and I contribute about $10k to my 401k, he contributes about $12k. We also put $100/month per kid (4 kids ages 5,5,6,8) into 529 plans. Two of our daughters qualify for college tuition up to what it costs to go to UConn, and that can be used at any school as long as they maintain decent grades (they are adopted through foster care). We have 13 years left on a 15 year mortgage.
I think we are doing pretty well, but nowhere near saving 50% of income. I work so I can travel often. We own DVC (just bought more points), and I take weekend trips to anywhere just to get away. That’s definitely my downfall.
In the next year I’m hoping to increase our 401k contributions and start paying extra to the mortgage. I want the mortgage paid off before my oldest graduates high school. We were on track with that, until we moved (I don’t regret the move - our larger home has allowed us to take in so many foster kids in addition to our 4 permanent kids, and we really do love getting to have them all here). I’m pretty confident we can still achieve that. I’m not willing to sacrifice my financial freedom for my kids’ college educations, but will help them a bit (I’m not so secretly hoping that if only two go to college it’s the two that get it paid by the state).
I’m going to use this thread to inspire me to really work towards my financial goals in 2019. I’ve been trying to pick up extra hours, and when I got a raise this month I upped the contribution accordingly. My husband sadly refuses to up his by more than 1% each year, even though his yearly raises have been 2+ percent. We need to work to get on the same page financially.

 

[DisneyMandC]

That's who holds my mortgage. I just manually log in and do my extra payments. Under mortgage, select "payment" and then just either drop down to add another full one or select 0 and then add in the desired amount to the line and click "total deduction" and it will come out of the same checking you have set up for the auto draft. No fees.

Do you adjust your due date for your loan or anything? I think ours is due the 5th. I'm thinking I could just take it off autodraft and pay the 1st and 15th or something like that.

 

[GlamMistress]

Do you adjust your due date for your loan or anything? I think ours is due the 5th. I'm thinking I could just take it off autodraft and pay the 1st and 15th or something like that.

I never touch the autodraft. I always let it pull on the first. I just log in every Friday morning and make an extra payment. I could schedule them all out if I felt like it.

 

[SouthFayetteFan]

FUN FRIDAY EXERCISE...

So we have a great group of folks who are focused on reaching the "FI" portion here. There was some discussion today about prioritizing debt paydowns and savings strategies. I think it could be an interest discussion topic. Below I've listed 4 major types of debt and 5 major savings vehicles in a RANDOM order. For this exercise, let's first assume you have an emergency fund and are covering all of your daily expenses (of course you could debate whether you'd fund an emergency fund before or after paying down CC debt, but let's not worry about that right now since I'd imagine none of us have that dilemma anyways). What do you do with your NEXT additional dollar? Once you've completed or achieved that step, what do you do next?

DEBTS

a) Pay Ahead on Auto Loan
b) Pay Ahead on Student Loans
c) Paydown Credit Card Debt
d) Make Extra Principal payments towards Mortgage (you could also argue this is a savings strategy since you're "paying yourself" but let's keep it here for this exercise, lol)​

SAVINGS

e) Liquid Investments (aka taxable)
f) Max out IRA (traditional or roth - no distinction necessary)
g) Contribute up to the full company match on 401k
h) Max out 401k (traditional or roth - no distinction necessary)
i) Max out HSA​

So give us your take on which order you would tackle these. Try to rank them all but if one of these is definitely not available to you and not something you even understand, then I get that you might leave it out. Try to give a brief explanation too on why you chose that order. I'll do mine in a separate comment too!

 

[SouthFayetteFan]

FUN FRIDAY EXERCISE...

OK here goes...(also this took a little more time than I thought so mad props to anybody who will devote 10 or so minutes to share their thoughts )

1) Paydown Credit Card Debt - this is a debt emergency. My pants are on fire and the only way to extinguish them is to get rid of CC debt

2) Contribute up to the full company match on 401k - I can't pass up free money!

3) Max out HSA - IMO it's the ultimate retirement account, it lessens my taxes, it avoids FICA taxes if auto-deducted, it is a dream scenario!

4) Max out 401k - It's automatic, it's easy, and we have some AWESOME Vanguard funds available in our 401k plan. I also love to avoid taxes today!

5) Max out IRA - We've mostly focused on a traditional IRA to focus on tax avoidance TODAY. I may alter that strategy with the new tax brackets BUT this would be a high priority regardless

6) Pay ahead on Student Loans - Full disclosure, we don't have any and haven't for over a decade so I'd struggle with where to put this. IF we had them I think I would want to get rid of them. The interest rates probably would be higher than our mortgage, the interest deduction on taxes wouldn't mean much to me. I'll stick this here but it easily could've gone as high as 4 or as low as 8.

7) Pay Ahead on Auto Loan - This would be smaller and easier to payoff completely than a mortgage. Also the interest is not tax deductible

8) Make Extra Principal payments towards Mortgage - I want to maximize everything else...but before I start hitting liquid savings, I want to be 100% debt free. Paying off my mortgage is a guaranteed 4% return and I just like that feeling.

9) Liquid Investments - We haven't reached THIS stage yet, but aren't too far away from starting to build a portfolio of VTSAX in a liquid (or taxable) investment account

Interested to see what others come up with