Financial Independence six months into early retirement |
- six months into early retirement
- What areas of "lifestyle creep" have you consciously allowed to happen because it's hugely enjoyable, or adds enough to your quality of life to be worth the expense?
- What is the largest debt you've heard of a FIer overcome?
- Daily FI discussion thread - December 01, 2017
- Fire with the goal of outdoor pursuits
- How might inheritance impact FIRE
- Will I need to move to achieve early retirement goals? Did you ever have to move to achieve yours?
- What are some things you'd like to add to your bucket list?
- Weekly FI Frugal Friday thread - December 01, 2017
- From -$30k NW to $11.5K NW in 11 months on a $45k Salary in first year of work.
- Does FIRE require you to invest differently than most?
| six months into early retirement Posted: 01 Dec 2017 05:04 AM PST Introduction: This post is part of an ongoing monthly early-retirement series that will continue indefinitely, provided that the voting reflects the view that it is still seen as relevant to the community. I suppose that this is my way of giving back to a movement that helped me tremendously on my journey. A background summary is offered in the final section and repeated every month. Please check there to find answers to potential questions. Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772 with a withdrawal rate of no more than 3% ($30,773 per year in 2017 dollars). I have decided to recalculate a new 3% withdrawal rate maximum value at the end of each year based on the new year-end balance, provided that the portfolio remains above $1M. Should the portfolio drop below $1M, I will lock back into a maximum $30k/yr withdrawal until the market recovers. I realize that this is not how your holy Trinity works, but since 3% is well within historically safe territory for indefinite portfolio survival, and since our withdrawal rate has actually averaged below 2% thus far due to additional income, we have some flexibility. Side Question: Does this spending model already exist, or am I required to name it as its creator? Spending: Living expenses for the month ($4092) were $1528 over the 2017 monthly targeted amount of $2564. Our spending was 59.5% over budget for the month, now 16.2% over for the year. We generated $792 of income from my wife's part-time fun job at the library and some of my old book royalties. Our investment withdrawal was $3300 this month, thus our pro-rated annual withdrawal rate is 3.66% for the month and 2.19% for the year. Without the additional income stream, our pro-rated annual withdrawal rate would have been 4.79% for the month and 3.49% for the year. Investments: The portfolio went from $1,080,121 to $1,101,683 (a 1.99% increase for the month), which dropped down to a new total of (drum-roll) $1,098,383 after paying the bills. This is a 7.1% increase from the original starting balance of $1,025,772, even after withdrawals of $11,601 for living expenses over six months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $80.97/hr of labor income. VTSAX (60% AA) went up 3.0% this month; VFWAX (21% AA) went up 0.4%; VWLUX (19% AA) did what it was supposed to do. Reflections: Our investments are once again at an all-time high, smashing the $1.1M mark ($1.5M net worth) yesterday and tempting me once more to ease out of the domestic stock market. Spending was up quite considerably due to xmas shopping (some of which will be reimbursed since the in-laws have this weird tradition of buying your own presents and getting money back), marathon entry, two massages, a spike in charitable giving this past Tuesday, a $300 pair of Nike Zoom Vaporfly 4% shoes, and $1000 in Home Depot charges for the cabin lumber. This was not at all a typical spending month, and finalizing the decision to adjust our withdrawal amounts based on new year-end values makes the spending seem inconsequential (unless the market corrects 10% in December). Experiences: A harmless hillbilly opiate junkie showed up on my porch in a drunken state while I was decorating Walden Cabin. I held him at gunpoint (because I could) with the shotgun until officers arrived. Someone requested a picture of the cabin last month; I do not have any pictures of the junkie. Incidentally, this is the fourth time in seven years that we've had to call law enforcement due to trespassing (two intoxicated junkies, one panhandling con-artist, and one drunken hunter) in addition to another complaint against a driver who tried to make us think he was going to run us over while jogging. This is the cost of LCOL in the South. The total bill on the cabin was just under $1000 ($700 PT lumber, $100 shingles, $100 stain, $100 brackets/screws). Someone also asked for a picture of the house we built (seven years old, looks different now). In the discussion section of the previous month, we were talking about the phenomenon of having dreams about forgetting to go to class even though we graduated years ago, and I had one the very next night. Marathon training hit its peak with runs of 20 and 21 miles. I planned two vacations upcoming in 2018 (Middle America and Japan). I played Final Fantasy V (PS1) and read Tale of Genji, but I abandoned both due to a lack of interest. I'm currently playing Chrono Cross (PS1) but don't know how much further I'll continue. I renewed our healthcare policy through the exchange and received over $13,000 to pay for subsidies (see below). Upcoming: The full marathon is December 9. My secret lifetime goal made almost five years ago was to run one in under three hours. All of my preparation efforts suggest that 3:01-3:02 is a best case scenario, but we'll see. If I can manage a sub-three, I've considered becoming a volunteer running mentor for people who are just starting. I'll be spending a lot of time in theaters because good movies are actually released this time of year. There are two more PS1 games (Xenogears and Dragon Warrior VI) that I would love to play before the end of the year. We'll be making a trip to the tree nursery and getting a lot of stuff to plant once everything goes dormant in a few days. I have some xmas shopping and tax planning to tackle. I'd like to inactivate my facebook account as well. I'll also be doing whatever the fuck I want. Background: I am former retail pharmacist who hated his profession for the following reasons: unacceptable amounts of stress, lack of civility from the general public, fundamental disagreement with the overuse of pharmacotherapy as an answer for underlying health issues, and a severe opiate crisis that few have yet to appreciate. I attended college for eight years to earn a bachelors and doctorate before joining the workforce for nearly twelve years, entirely with CVS. $150k in education costs were covered by academic scholarships ($25k), employment during college ($20k), prior savings from high school employment ($5k), revenue from an eBay business while in college ($10k), and massive help from my parents ($90k). I retired at the age of 38 on June 6, 2017, the day before the twentieth anniversary of my high school graduation. I am married with no kids and generated over 95% of the family income while employed. We live in LCOL rural TN. Our asset allocation is 60% VTSAX (total US stock market) / 20% VFWAX (total INTL stock market) / 20% VWLUX (US municipal bonds). We also hold roughly $400k in house, land, and belongings not included in the portfolio. My model places no dependence upon supplemental income (future employment?), social security ($10k/yr?), inheritance ($500k?), house equity (no heirs), universal health care (probable?), or universal basic income (possible?). The final balance will be left to charities and worthy causes. Our healthcare premiums are covered entirely by ACA subsidies. I do not care what you think of this. The law requires me to have a policy, and I answered all of the questions on the exchange website honestly. My former employer and I paid over $100,000 for health coverage during my career, and we used less than 5% of that. Insurance in the US is no longer a system of protection against unforeseeable, unpreventable circumstances. If it were, I would refuse the subsidies out of principle. The vast majority of healthcare costs are a direct result of a large portion of the population being self-centered irresponsible gluttons without the discipline to maintain a healthy lifestyle. These same individuals want the most expensive care possible and expect the cost to be spread to everyone else on their policies. I find this to be the equivalent of a mandatory insurance program for homeowners in which a large number of policy holders are pyromaniacs trying to burn their own houses down. I will be attempting to recoup my previous losses on health insurance for as long as the ACA exists. I am bored to tears with most discussions on SWR, COL, UBI, ACA, SSI, Trinity, insurance, what-if scenarios, financial doomsday preppers, crystal balls, investment strategies, side hustles, lifestyle inflation, market corrections, frugality tips, tax avoidance, my former life as a pharmacist, and even the acronym FIRE. When you're new to the topic of early retirement, all of that stuff is very exciting. When you've run the race and crossed the line, not so much. This is a public forum, and I'll likely read what you have to say, but please don't expect much in the way of a response if it's a question that I or someone else has answered a million times, especially if you're just offering an unsubstantiated claim about my personal situation that demonstrates willful stupidity. It happens every month. I am however willing to clarify anything and discuss topics that I find to be of more interest. I genuinely appreciate all the congratulations and well-wishers. [link] [comments]  |
| Posted: 01 Dec 2017 10:53 AM PST The wife and I previously rationed ourselves to one "big" holiday a year, and by "big", we meant one £3,000 ($4,000) trip all in. We booked a trip to a specialist resort in Jamaica this year, and had started planning a trip to South America for next year. However, the trip to Jamaica was so incredible and we had such an amazing time that we've decided to make it an annual thing. However while normally we'd make that our "big trip", we also enjoy the travelling the "big trip" budget allowed us, and we don't want to lose that in exchange for the Jamaica trips, so we've decided to up our travel budget and go to Jamaica each year while sticking with the previous travel budget we had. Sure it costs more, but we had such a fantastic time there (the reasons why are probably best for another thread so as not to distract, but it was very "us", shall we say) that the additional cost, and therefore pushout of FI, is worth it. So for you all, is there a thing, hobby, activity or anything that is expensive and generally considered anti-FI that you do, because you feel the benefit or enjoyment is worth the expense? A fancy car? Nice holidays? Big house etc? [link] [comments]  |
| What is the largest debt you've heard of a FIer overcome? Posted: 01 Dec 2017 12:35 AM PST I have massive student debt that I need to get out from under - 200k [link] [comments]  |
| Daily FI discussion thread - December 01, 2017 Posted: 01 Dec 2017 03:10 AM PST Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked. Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts. [link] [comments]  |
| Fire with the goal of outdoor pursuits Posted: 30 Nov 2017 09:43 PM PST I hope to reach FIRE before I turn 38 so that I can achieve my life goals of : mountaineering, rock climbing, ice climbing, etc before my body calls it quits. Living the weekend warrior lifestyle isn't enough for me, there is still so many mountains and rocks I haven't seen in this world! Anyone else in the pursuit of FIRE for the sake of strenuous outdoor activities? (i.e. extreme kayaking, base jumping, motorcross, etc?). What is your outdoor sports passion and "extreme sports" goal when you do? [link] [comments]  |
| How might inheritance impact FIRE Posted: 01 Dec 2017 11:49 AM PST I was originally considering posting this on a throwaway account not because I fear becoming identified but mainly I am slightly embarrassed about my privilege and this is a pretty dark question that relies on deaths in the family. Anyway, so my wife and I both come from moderately well off backgrounds. Have fairly well paying upper middle class jobs earning about 160k Canadian Dollars a year together. We're both in our mid-30s. We have a mortgage on our home (the value of the home has doubled the value we purchased it for) and no other debts. Our folks grew up poor, came as immigrants but subsequently amassed quite a bit of wealth over their lifetimes. I have come to realize that either one of our shares of inheritance will be enough to comfortably retire on the instant we receive it. Neither of our of parents plan to spend all the money in their lifetimes either but are unwilling to hand any of it to us now. In essence, we don't explicitly need to save for old age retirement but still need to pay for our daily expenses. So here's the actual question or the TLDR: If you didn't need to worry about saving for a retirement in your later life, would your investment strategy change? I see that most people here take the index fund route, would that still form the bulk of your portfolio? Would you supplement it with high yield riskier investments? If so, what? Edit: I should clarify this is purely hypothetical. I am grateful that everyone here is giving sound careful advice. Perhaps if the source of late life income was a trust or defined benefit pension, or hell lottery winnings that mysteriously don't show up until you're 65. Would that change your answer? [link] [comments]  |
| Will I need to move to achieve early retirement goals? Did you ever have to move to achieve yours? Posted: 30 Nov 2017 08:24 PM PST Age - 24 , Gender - Male , City - Seattle, WA , Career - Computer Technician Supervisor , Monthly expenses - $1,910 / mo. , Gross Income (after taxes) = $2,548 / mo. ($3,625 before) , Total Savings = $638 / mo. (17.6%) , Current net worth = $47,800 Of my current net worth I have 13% in emergency savings, 79% in stocks, mutual funds, index funds, 3% in bitcoin / crypto currency, 6% in possessions like my car, etc. Largest monthly expense is rent at $745 followed by food at $280. I know a lot of extreme early retirement experts recommend saving 50% or more of your income to achieve early retirement. The only way I see to change my savings percentage is to move to a lower cost of living place where I could secure a really cheap mortgage and that has lower food costs, etc. I am only making 56% ($43,500) of the median wage of Seattle ($75,000) so I think by moving to a place where I'm earning a higher percentage of the median wage it would instantly go to savings. Did any of you early retirees / FI achievers have to move to achieve your financial goals? I'm starting to wonder if it is possible for me here, if you think it is possible for me to stay and succeed, tell me what you think! I would like financial independence in 10 years ideally. By age 35. Might seem like a pipe dream, but it's my pipe dream and I'll keep it, thank you very much! [link] [comments]  |
| What are some things you'd like to add to your bucket list? Posted: 01 Dec 2017 07:16 AM PST I'm interested in what some like minded people have on their bucket list. [link] [comments]  |
| Weekly FI Frugal Friday thread - December 01, 2017 Posted: 01 Dec 2017 03:10 AM PST Please use this thread to discuss how amazingly cheap you are. How do you keep your costs low? How do become frugal without taking it to the extremes of frupidity? What costs have you realized could be cut from your life without pain? Use this weekly post to discuss Frugality in general. While the Rules for posting questions on the basics of personal finance/investing topics are more relaxed here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts. [link] [comments]  |
| From -$30k NW to $11.5K NW in 11 months on a $45k Salary in first year of work. Posted: 01 Dec 2017 03:51 AM PST TL:DR answers for the 'how is that possible?' question you may be thinking:
22M, Finance major. Big 4 employee (not an accountant!) It being the 1st of December, I now have 12 months of net worth data for 2017. I know by waiting until Jan 1st 2018 it would actually be a year, but this seems like a good enough time to assess where I'm at. First of all, I don't intend for this post to be anything other than me telling my story. I do not think I can repeat this sort of outcome indefinitely, and I do acknowledge that I have taken risks far beyond what a lot of people in this sub either can, or would be willing to take. This is due to my own personal circumstances (young, low living costs, no dependencies) and my individual risk appetite for investments. I started the year with ~$5000 already invested from money I had save during college. I really only started work in February, so I have taken home approximately $27,000 after tax so far this year. The vast majority of this I have invested into several companies. I have focused my investments and research into a single industry (not cryptocurrency!!), which reduces the amount of work I have to do in terms of finding investment opportunities, but also greatly increases my risk and the amount of eggs I have in the one basket, so to speak. I am confident in the industry's continued performance into 2018/19, but of course, many confident people have lost a lot of money in the past. At my age, I am willing to take this level of risk as any potential losses will be recouped more rapidly as my career (and pay) progresses. I started the year with a portion of my salary going into index funds, but have since ceased that in order to focus more on my other, more risky investments. My debt consists of a ~$40k student loan which is (thankfully) interest free. I have also taken on additional debt in order to purchase more shares. I imagine this will be wildly unpopular, but as with everything else I have done, I am willing to take the risk, and even if my portfolio dropped to $0, I could afford to meet my repayments comfortably. As a more sort of general FI commentary, I have found it really easy to save as much as I have. Obviously my living situation favors this, but at the beginning of this year I thought I would struggle to hit 50% SR. In reality I have found that I can often go an entire working week without spending a single dollar, and then just doing the necessary spending on weekends on fuel/meal prep/ social activities. I would hope I can sustain this as my pay increases, and I don't think I'll 'burn out' anytime soon and go on a massive spending spree… This graph shows the progression of my net worth throughout the year. The months leading up until September were reasonably quiet. Here I was simply accumulating shares at low prices in a handful of companies, who all happened to take off around September. It hasn't all been smooth sailing however. I made a stupid stock pick in October and took a 5-figure loss. This has mostly been recouped by my other shares doing well, however. Into 2018 I intend to ease off my high risk investing and start putting more money into index funds. If anything, this year has provided me with a good starting point and a chunk of profit that I can now leverage into lower risk investments. I have a feeling this post just comes across as "young guy gets lucky and thinks he's Warren Buffett" but I certainly don't intend for that to be the case. I don't consider myself any sort of authority on investing. I feel I have gotten incredibly lucky and have leveraged my living situation to my advantage, but I fully acknowledge that it could all blow up in my face next year and I can then look back on this post and laugh (or cry...). [link] [comments]  |
| Does FIRE require you to invest differently than most? Posted: 01 Dec 2017 05:35 AM PST I'm pretty active on the other financial threads and it seems like the community agrees that low cost index funds are the go to place for your money. What do people on here do? Does everyone just open up a Vanguard account and put their money on 2-3 funds? Do you ever pick stocks? Do you try other investment options like REITs or P2P Loans? I'm early in my journey to FI but I'm start to accumulate enough money to start building a portfolio so I wanted to here from some of the more experienced people. [link] [comments]  |
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