September Update

I posted my updated end of September numbers up on NetworthIQ, but I haven't had a lot of time to analyze them yet. Overall, I'm happy with the progress, but this weekend is devoted to my wife because it's her birthday (happy wife, happy life, you know). Anyway, I'll do some more analysis and post a round up on Monday.

Career crossroads...

I've been thinking about this for the past 6 months or so. Although I've recently moved on to a new project at work, I can't help but feel less than passionate about it. Additionally, my entrepenurial leanings are showing themselves again and my feet are getting itchy! From that perspective, I'm thinking about leaving my current company for a web startup environment. Since I'm already in high-tech, this isn't a stretch for me, but I am carefully considering the risks, especially with respect to the early retirement plan. It could accelerate my plan or put a large dent in it.

On one hand, I am leaving a significant portion of yet-to-be-vested options on the table as well as a good salary, great benefits and the security of a larger tech company. On the other hand, I should be able to match my salary and benefits, and hope to get a significant equity deal in the new company to help offset some of the money left on the table. The risk is obvious -- money waiting to vest vs. a hard to realize amount of company equity. There are obviously a lot of other dimensions to the decision, but from a retirement perspective, these are the key financial aspects. I really believe in the mission and founders of the the company I want to work for and it has significant funding, a great product and a lot of buzz. For me, that helps mitigate some of the risk, but it doesn't alleviate it entirely.

Has anyone gone from a large tech company to a startup in the last year or so? If so, I'd love to hear some thoughts...

Home value tracking

I have been a fan of Zillow.com for some time and I used the service to help in selling my house earlier this year. One complaint I've always had is that I wanted to be able to update the horribly wrong details of my home as maintained by the county. It was a 100 year old home that had been remodeled several times and the value was close, but not close enough (about 18% off). Now, every home owner with a home listed on Zillow.com can update the details of their home and come up with an "owner valuation". This is GREAT. Check out the details here.

In the context of retirement and trying to get there early, it's obviously beneficial to understand where your real estate holding(s) fit into the overall picture. Should you sell, downsize and pocket the cash, or should you hold and reverse mortgage if you get into trouble 40 years from now? Who knows, but at least you'll have the data to make a better decision.

Craig's List Experiment

I already mentioned that I've recently moved into a new house. With that usually comes a series of extra expense like new furniture, new window coverings, landscaping and a variety of other little things. The biggest issue that I have right now is that I moved into a smaller place than I used to have and fitting my old furniture into the new space is problematic. (...and yes, downsizing is a GREAT way to prepare for retirement.)

With this challenge in mind, I'm going to try something that I'm not sure will be successful, but it sure will be interesting. My goal is to sell all of my current furniture on Craig's List in order to entirely fund new furniture for the new place. To give myself a little bit of leeway, I'll agree to spend up to 25% more of what I sell the current stuff for to help fund the new stuff. (ie. if the current stuff sells for $1000, i'll spend up to $1250 for the new stuff.) That seems somewhat reasonable.

To answer the question about why I would downsize my house only to buy all new furniture, let me offer the following: The new place is considerably smaller and some of the furniture doesn't even fit through the door! Other pieces of furniture are ok, but they take up way too much space. And again, the goal is to try to fund the new stuff by selling the old stuff. Lets see how we do. Ok, Craig's List, here I come...

Lifecycle Funds for retirement -- Careful!

TheStreet.com has a good reminder piece about "Lifecycle Funds", funds that are supposed to help less investment-savvy folks get to a happy retirement with no fuss investing. One of the most important aspecsts of the funds are that they are standalone offerings that maintain an appropriate asset allocation over time. Also, although you can invest in these funds outside of retirement accounts (401(k), IRA, etc), the piece mentions that the funds are gaining traction in retirement plans. Therein lies the rub, however. If you invest your retirement account nest egg in one of these funds and the funds are already allocated across the right assets, how do you allocate the rest of your non-retirement funds?

Other suggestions they provide:

1. Own only ONE Lifecycle fund. (owning more than one doesn't make sense to most people)
2. Make sure expenses are much less than 1% (Vanguard is .25%)
3. Since not all funds have the same asset allocation or rebalancing strategy, choose one from a fund family that matches your risk tolerance. Some might be more aggressive, some less.

UPDATE: I should note that I personally would never consider one of these because I enjoy managing my money too much. They may be a reasonable option for conservative / risk adverse and/or folks that do not understand investing, asset allocations, rebalancing and the like.

Should you include your home in your net worth?

I admit it.

From a retirement perspective, I find it hard to include my home in my overall net worth. Granted, it is an asset with appreciable value and strictly from an accounting perspective, it should be includced. Also, I guess if I really needed the funds, I could liquidate it with a reverse mortgage, but I'm still having a hard time with it.

Perhaps it's the fact that I'm looking to retire early and will need to draw on my liquid funds much more than people retiring in their 60's. I'm not sure. Either way, if you look at a number of the profiles on NetworthIQ, you easily find a lot of profiles where the majority of the net worth is due to a large real estate holding (sometimes with a minimal mortgage, but still).

With my home included, my net worth is $832k, without it, it drops to $461k. In terms of retiring early, I want to make sure the latter number is as high as possible and it's just not there yet.

What do other people think about including your home in networth, as it relates to retiring early?