Market Runup
The US and international stock markets have been on a great run following the lows seen following the tariff announcement. With new record highs I wanted to check in on our progress toward at-home FIRE. At the time we left on our international trip, we were at FIRE for international travel but not at home in our medium-high cost of living city. We were relatively close at 22 of the 25 required FUs, which makes this upturn interesting.
At-Home Budget
Below are our final numbers in our last month at home. Given they are only a month old the values should hold up for the most part. Also included in this budget sheet are:
- The investment amount that each monthly expense requires to support it
- The total of our expenses in monthly and annual terms
- The resulting FIRE number based on our expenses and our investment progress towards that number
Plugging in our most recent investment amounts, it appears we are at FIRE. While exciting, there is more analysis to do; this is not the whole picture.
Projecting Changes
There are certain budget categories that are pretty stable and unlikely to change. Others are very likely to change from the current numbers.
Health Insurance
Health insurance plans from the ACA marketplace will become more expensive in 2026. The enhanced subsidies are set to expire which means when we buy a plan, what I priced in previously will not be enough. From what I have seen, this may be as much as a 38% increase. I went to the Colorado ACA marketplace and got this new quote based on our family size and projected income including a Roth ladder conversion of 48K:
I also pulled a quote from Delta dental for basic dental insurance:
I will then take these numbers times 1.38 to project a 38% increase from here. I will plug that into an updated budget sheet shown below.
Vehicle Related
Seeing as how we sold our cars, we will need to get one or two cars when we return. We need to consider our strategy for this, as we have multiple possibilities.
One approach is that we can buy for the long term and get something brand new like a Toyota Camry. This is not a bad strategy. Getting a new car makes us the sole owners and we will take really good care of it. Most likely getting decades out of it. This is exactly what I did with the Corolla back in 2002. I had a negative net worth at the time (I was a 23 year old fresh college grad). The traditional financial advice would have been to buy a beater until I could afford something better. Instead I opted for what I calculated was a cheaper long term play. I bought what happened to be both one of the cheapest and most reliable cars on the market, the base Toyota Corolla. For a $15K purchase price I got a car which lasted 23 years with virtually no issues.
The other alternative is to focus on reducing up front vehicle costs to keep our investments up and our insurance down. We would just be rolling the dice a bit an the unknown history and problems of a heavily used vehicle. The odds are it would have some issues, but they would be minor enough to repair that it wouldn’t blow the numbers out of the water.
Neither strategy is right or wrong and I can get on board with the merits of either.
Auto Insurance
This category will definitely be subject to change unless we buy similarly old vehicles where we can get liability-only insurance.
As for the new vehicle option, JC called for an insurance quote for a combo of a new Model Y and a 20+ year old car. That’s a combo we might pursue in order to have a really reliable vehicle and a second vehicle for convenience. I’m not sure the Model Y is the poster child for longevity and reliability. For running the numbers we wanted something on the expensive end of the insurance spectrum. That quote raises our monthly auto escrow from $166.67 to $282.69, including full coverage on the Model Y.
Purchase Price
Cars are a compounding negative to the pursuit of FIRE. In addition to new cars having increased auto insurance costs, the purchase price is also higher. For example if we buy a new Model Y, it will cost something like $38K after the tax credit. That high purchase price then tempts us to purchase more expensive full coverage insurance. On top of that, the $38K has to come from somewhere. That somewhere of course is our investments. Reducing investments in turn reduces the expenses we can support on a safe withdrawal rate.
Taking 38K from investments reduces our monthly safe withdrawal amount by $126.67. With our insurance increasing by $116.02, that’s a $242.69 swing. Taking that times 300 we arrive at the full FIRE impact of that monthly cost, $72,807. In other words the car doesn’t cost 38K, it costs 72K.
Fire Analysis With Projected Changes
This is what the adjusted health insurance and new car strategy ends up looking like for FIRE. It reduces our iron-clad 100% success rate to 96.33%, and our investments are almost 60K under the FIRE number.
Is There A Middle Ground?
We might be able to find a compromise to balance the FIRE budget. From the car side of things, the answer might be as simple as repeating a proven strategy. We can still get a new base Corolla for about $25K. It saves $13K of investments and is low enough in value that we’re ok with liability-only insurance. This paired with a really old vehicle should restore our prior insurance rate. Does that get us back in the black?
This scenario is so close that we only need to find about $40/month of spending to reduce.
So Are We At FIRE?
Yes we’re at FIRE. As you can see there’s room to manipulate the situation, and that isn’t limited to cars. Taking our grocery budget for example, the $900 we spend there has plenty of room for savings. We could eat well on $600 but we would have to adjust the things we eat. We haven’t done that because we like what we eat now and have no motivation to change it. That’s just one example but there are others in the budget as well that are wants, not needs. I have run scenarios where we can get our FIRE number all the way down to $827K, so we can easily make this work.