Financial Independence Year-end milestone. Finally over $100k net worth at 28 y/o |
- Year-end milestone. Finally over $100k net worth at 28 y/o
- My FI progress, 2006 - 2017
- FIRE Health Insurance thru School why still working
- Daily FI discussion thread - December 29, 2017
- What do those who have retired early do for health insurance?
- Weekly FI Frugal Friday thread - December 29, 2017
- So what's the catch with municipal bonds?
- Changing from w-2 to K-1
- FIRE plans for SINK couple with major medical issues
- Backdoor Roth Question with Moving Traditional IRAs into 401(k)
- Advice to your younger self?
- Collecting capital gains at 0% when AGI is at the 15% bracket or lower.
- End of year review and 2018 goals
- Calculations and Assessments
- Seeing a trend...Software Engineers w/ no kids
- Should I put max money in 529 and IRA on Jan 1 or spread it out
- 700k at 26 years old
- Do you know of people who didn't save up for retirement but have still FIRED because they make adequate passive income?
- Do I need to purchase securities before doing a Backdoor Roth?
- Cut down on my spending but struggling to decide on how I should build my portfolio
| Year-end milestone. Finally over $100k net worth at 28 y/o Posted: 28 Dec 2017 09:04 PM PST I've been waiting patiently to get to this milestone. Funny thing is that now that I'm here, I don't really have anyone I can tell. I am more of the average Joe when it comes to the pursuit of FI. I'm not the software engineer, lucky cryptocurrency investor, or large inheritance person that is typically seen in this sub. I graduated college with $35k in student loan debt. I studied finance but I only made $32k salary at my first job out of college. I was fairly unmotivated during college and this showed in my GPA which is impacting my job finding ability to this day, even though generally speaking I am very intelligent and capable. By 25 y/o I was making about $52k and I paid off the student loan debt and had a net worth of about $20k I think. 2.5 years later at 28 y/o, I now have a net worth of about $105k. I am currently maxing my t401k and rIRA, along with a bit more being saved in a taxable account. I currently work as an investment analyst with a base salary of $85k, and a total comp of about $100k including retirement contributions and bonus. My money is invested 50/50 bonds/stocks right now. The high bond portion is a recent development because I may purchase a home soon. The stocks are value stock ETFs (VBR and QUAL) and the bonds are intermediate and long term corporate bonds (VCIT and VCLT). I also have $2k in crypto....just in case. Secrets to my success:
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| Posted: 29 Dec 2017 10:18 AM PST I'm doing some year-end calculations and thought it would be fun to make a graph this year. I hope it will serve as motivation for those of you a little earlier on in your journey. Things really do snowball! I tried to annotate a couple of things I anticipated as questions, but happy to answer others. I actually graduated from college in 2002 but didn't start recording my year-end balance until 2006. Wish I had kept better track. Of course my 2017 number is not yet finalized either, but I think it's close enough for illustration. [link] [comments]  |
| FIRE Health Insurance thru School why still working Posted: 29 Dec 2017 01:52 PM PST I have come up with the idea of permanently enrolling in college while still working, and taking a class per semester indefinitely. This would make me eligible for a college based gold level ACA plan for under $3000 a year - there is no govt subsidy on this so I wouldn't have to worry about my income level. Once I have this locked down I would ditch my employer based healthcare. At this point I have insurance covered and whenever I quit my job I just continue taking classes to retain affordable care. Am I missing something obvious here? Is there a reason I couldn't do this while: a) still employed, or b) after I quit work [link] [comments]  |
| Daily FI discussion thread - December 29, 2017 Posted: 29 Dec 2017 03:09 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]  |
| What do those who have retired early do for health insurance? Posted: 29 Dec 2017 06:21 AM PST I am on my way to early retirement, but health insurance is a big question mark for me. My wife and I are in our mid 30s and we have 2 year old twins. I've always had health insurance through my employer. What are those of you who have retired really doing for health insurance and what are your costs? [link] [comments]  |
| Weekly FI Frugal Friday thread - December 29, 2017 Posted: 29 Dec 2017 03:09 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]  |
| So what's the catch with municipal bonds? Posted: 29 Dec 2017 01:59 PM PST Hopefully this is the right subreddit for this, if not mods please redirect me! Anyways, I was looking at all the different ways to achieve passive income during retirement, and I came across municipal bonds. Now, I know everyone has heard of bonds before, but hear me out. You can buy fully diversified, indexed versions of these on Vanguard (Let's use the Vanguard Long-Term Tax Exempt Fund Admiral Shares (VWLUX)), which achieve a 3-5% return from dividends and are relatively cheap and risk free. What caught my eye, is apparently investing in a municipal bond fund such as this, you are free from paying any taxes on the gains! So my logic is, say your target retirement number is 3 million. You reach that and park it all in VWLUX. Now you basically receive around 120k a year tax free for the rest of your life? This just doesn't sound right to me. Like if this were true, why aren't more people talking about municipal bonds for their retirement portfolio? Or is there a major catch that I'm missing? Please help me understand what some of the potential downfalls of this strategy are, thank you! [link] [comments]  |
| Posted: 29 Dec 2017 10:04 AM PST Anyone gone through this transition? Other than the obvious "save to pay your quarterly estimated tax" issue, are there any other benefits or problems I should be aware of? I would love to find a way to tax shelter more income to advance my savings rate and knock a year or two off of my FI journey. My place of business still allows me to contribute to the work 401k so I do not believe I gain the higher limit for self employed 401k. More information as requested in the comments:. I am going from an employed attorney to a partner in a law firm. I'm not a tax lawyer if you couldn't tell. [link] [comments]  |
| FIRE plans for SINK couple with major medical issues Posted: 29 Dec 2017 07:51 AM PST Short and sweet of our situation... input/advice welcome. Wife and I are 40/43. She's medically retired with a small pension ($25k), I'm the primary income with my own small business (~$280k/year for now, but see below). No kids, no plans for them. Recently I was diagnosed with a rare type of cancer. Prognosis is decent, probably will live to a mostly-normal age, but I'm on a chemo/drug regimen that has a sticker price of about $150,000 a year, and this is likely going to last at least the next 3-4 years, possibly the rest of my life. Currently my insurance covers it 100%. But we live in constant fear of a letter showing up from the insurance company that we're being dropped, or major price hikes, etc. Business (one person LLC) is good but I've been seeing year-over-year declines of 5-10% for the last few years, and I expect that to continue. I've had it more or less on auto-pilot since I was diagnosed, and while I expect I'll devote more energy to it again in 2018 I'm not super optimistic that I can turn this trend around. I'm guessing 7% drop year-over-year is to be expected. I've thought about selling the business but it seems to make more sense just to keep running it until it completely dies out. House ($340k) and cars paid off. No debt. $150k in 1.4% online savings, about $900k in index funds. We max out both SEP-IRA for me and regular IRA for her, rest goes into taxable accounts. Annual spending is high at around $90,000, but we've downsized this year and I expect to trim $10-$15k off that number going forward. But I'm not looking to drop too much lower than that. Goal has always been $3M ($90k/year at 3%), and with the recent changes (health issues + declining business + tax changes) I'm wondering how to properly forecast a plan for the next 5/10/15 years on how to get there. If we consider my wife's pension, we only have to get $65k a year out of our nest egg to reach $90k... so I guess we really only need to hit 2.2M in investments? And I haven't even figured social security into that... SS says I'll get $1620/month at 62, or $2300/mo at 67. Not sure what my wife's numbers are. And then there's the question, is $90k a year enough considering now my wife and I both have serious medical conditions that potentially will incur hefty price tags down the line? How much is "enough" in our situation to feel insulated against potentially devastating medical bills? Any advice/input appreciated - thank you!!! [link] [comments]  |
| Backdoor Roth Question with Moving Traditional IRAs into 401(k) Posted: 29 Dec 2017 12:42 PM PST I am looking into doing a Backdoor Roth IRA conversion. The downside is that I have an existing Traditional IRA. So my plan is to:
My understanding is that I can use this approach (transferring the Traditional IRA to my 401(k)) to avoid having a large T-IRA and therefore having to realize some of those gains when doing the backdoor Roth. Here's my question - if I transfer the T-IRA to the 401(k) in early 2018, can I:
I am wondering if I can't do the Backdoor Roth the same year I transferred the T-IRA to the 401(k). Hope this makes sense. Thanks [link] [comments]  |
| Posted: 29 Dec 2017 04:03 PM PST I have recently turned 22 and am just starting on my FI journey. I begin my first full time job out of college in two weeks and have a $20k NW so far. I've been lurking on this sub for a while now and find it fascinating and inspiring. Do you have any advice for someone just starting out? What mistakes should I be wary of? Any advice that you believe would have helped you in the early days would be most welcome. Thank you! [link] [comments]  |
| Collecting capital gains at 0% when AGI is at the 15% bracket or lower. Posted: 29 Dec 2017 10:54 AM PST I am very fortunate to have inherited money through a trust this year (along with my sister). I am a student and don't have an income, I was planning on realizing some capital gains to step up the cost basis. The 0% federal capital gains applies for those in the the 15% tax bracket ($9,325 to $37,950) or lower for 2017 My two questions: 1) Can I also harvest capital losses and will these losses offset the gain so I can realize a greater gain. Ie) instead of harvesting 37k in gains, can I realize 10k in losses and 47k in gains, or would this exempt me from this mechanism? 2) Over the last year, the trust collected income (I believe around 20k). I would assume that income is split between my sister and myself (10k each), or does the trust keep that liability and nothing is passed on to me? The trust is a generation-skipping trust, for the record. It might be that this issue is too difficult to optimize without professional help. In that case, if I factor in the 1/2 the trust's income as my own, and just ignored the capital loss aspect, I can't see how I expose myself to any additional tax liability. Thanks for reading! [link] [comments]  |
| End of year review and 2018 goals Posted: 29 Dec 2017 10:28 AM PST I've been working on becoming debt free, minus the mortgage for right now, and today I paid off my vehicle! I thought I would post here to share! 28 years old, male, sales profession. My 2017 completed goals: 1) Pay off my vehicle which I did today! (24k in original loan, took 26 months to pay off). Goals for 2018: 1) Make over $100,000 dollars for the first time (international sales). Keep on going guys! This community is inspiring and helps me stay motivated. And so does Dave Ramsey lol! [link] [comments]  |
| Posted: 29 Dec 2017 07:48 AM PST What are some of your favorite calculators/calculations? I am compiling a list of calculators and calculations for a project and want to take the temp of the FIRE community. Some that interest me are the *Retirement Checkpoint calculator *Getting back to even after losses *Two Dimensional Risk Tolerance Assessment Are you using others that you gain value from? Thanks for the help. [link] [comments]  |
| Seeing a trend...Software Engineers w/ no kids Posted: 28 Dec 2017 09:04 PM PST Hats off to everyone that has achieved FIRE or working towards it. I've been seeing a trend that many (not all) success stories involve software developers that do an amazing job at cutting expenses and saving a ton to achieve FIRE at a young age. I personally work in software development myself but have two kids that cost me around $60k annually for their primary education and sports/clubs etc. I live in a HCOL area w/ $14k annually in municipal taxes alone...I'd live much smaller and in a different area of the USA if I didn't have kids. I also put away another $10k annually for my kids secondary education. All told my kids consume over 30% of my $200k income. Are there other people in this sub with a similar situation? Moving is not an option. Dropping my kids off at an orphanage is not an option either. [link] [comments]  |
| Should I put max money in 529 and IRA on Jan 1 or spread it out Posted: 29 Dec 2017 10:07 AM PST As the title suggest I have money to put max dollars(5000 dollars for 529 and 5500 for traditional IRA) on Jan 1. But I am not sure that is the best practice or I should spread it out thorough out the year? Basically is dollar costing better or having money in market ASAP more beneficial. [link] [comments]  |
| Posted: 29 Dec 2017 03:39 PM PST Reached a new milestone today, 700k in net worth! Went to a top public university on an academic scholarship, so I graduated with no student debt. Got a job as a software engineer at a Silicon Valley startup with a starting paycheck at 103k. Got promoted a year and a half in and ended my tenure there 2 and a half years later at 120K. They later went public and I got ~200k. Got a new job at 155k and two years + 1 promotion later I'm at 170k. Hoping to get to 180k-185k by June this year, otherwise I have a couple job offers at reputable companies that will pay that much and I may bounce. Bought my own place and I rent two rooms out. Recently bought a second place in Hawaii for vacation purposes. Also bought a software business that I run in addition to my day job. I have a VA in England that handles much of the day-to-day and I direct product/strategy directions + write code for enjoyment. Looking to add a software engineer to move faster too. Ironically, Trump's tax bill did me a huge solid and lowered my taxes... Total income per year is 305k/year right now. Target is 350k by end of year. 4 years of hard work and luck got me pretty far and I'm sitting on 700k net worth now. My goal this year is to get to 850k in net worth and get to 1.4M by age 30. Here are some of my takeaways. 1) Go to whichever school gives you a big scholarship. Don't start in the hole. 2) Optimize for time. If a job is 60k but takes 20 hours a week, that's 120-140k in a real job. Plus you'll have time to focus on side-hustles. 3) Invest in side hustles. If you have an entrepreneurial mindset, there's no better way to make money. 4) Be a good software engineer. People will literally rain money on you. Good way to get the cash you need to get started. P.S. I'm hiring, pm me. :) 5) Take on debt. If you need the extra 100 or 200k to finance a high-return venture, you gotta go find the cash. With interest rates where they are right now, that's free money. I only invest in items that will take 2 years max to return my initial investment. It's a good rule of thumb. 6) Think big. All of my wealthy self-made friends aren't worried about saving a dollar here or there or trying to budget every last dollar. End of the day, no matter how much you scrounge, 60k a year won't get you wealthy. Got to grow the top-line revenue number. The higher the number. The more you got to play with. 7) Be generous. A great way to make money is to hang out with other rich people. Rich people are looking for experiences and don't like to be bothered with petty things. If you try to nickel-and-dime your rich friends... you will soon have no rich friends. That said, don't let them take advantage of you. Once you meet some rich folks, you'll have a steady supply of people willing to lend you money, supply business/career advice, or hire you into their companies. You won't get any of these acting like the Grinch. Good luck! [link] [comments]  |
| Posted: 28 Dec 2017 06:26 PM PST |
| Do I need to purchase securities before doing a Backdoor Roth? Posted: 29 Dec 2017 08:20 AM PST I'm holding cash in a Non-Deductable IRA. Do I need to purchase securities before converting for a Backdoor Roth, or can I convert to the Roth and then purchase securities? Based on this article, it sounds like it simplifies my potential tax obligation if I wait to purchase securities until after the conversion. http://news.morningstar.com/articlenet/article.aspx?id=687449 [link] [comments]  |
| Cut down on my spending but struggling to decide on how I should build my portfolio Posted: 29 Dec 2017 08:01 AM PST I'm a 20 year old Icelandic lurker hoping to be FI in my 30s.
After finding this great sub I've cut down my spending and read books such as Rich Dad Poor Dad and The Richest Man In Babylon. I am currently struggling how I should build my portfolio and I feel overwhelmed. I've seen many portfolios such as:
Warren Buffett says that to put 90% in a S&P 500 index fund and 10% in Treasuries is probably good enough for most investors. I know that MMM's own retirement income comes from a simple asset allocation: a bunch of index funds at Vanguard and Betterment that pay him quarterly dividends. So it does not have to be complex to work. Personally I think that the VFIAX might be a good place to start. But I also like some international markets such as South America right now so I might put in a small stake there. I might be overthinking all of this a bit but it seems like a good idea to have a set plan in place that I can follow for years to come. I love this sub's ideology and just how supportive it is in general. Just hoping for some tips and guidance so I can become FI/RE within the next 20 years. [link] [comments]  |
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