Financial Independence Besides business owners, what jobs actually pull in $1,000,000+ a year? |
- Besides business owners, what jobs actually pull in $1,000,000+ a year?
- Daily FI discussion thread - January 05, 2018
- Should I Quit My $250K+ job and FIRE?
- Interesting WSJ article on people that have "sat out" the rally in the stock market
- Weekly FI Frugal Friday thread - January 05, 2018
- Close to FIRE (please check my plan)
- Roth or Traditional 457?
- The 10% rule: For youth and those hesitant to give up their spending/saving extremes
- 'Balanced' approach to the 'Pay off the house or invest' debate.
- FIRE (or fatFIRE) At 35
- Could financial independence be more of a philosophy than a number?
- FIRE vs joining an early startup
- Advice for unused 529?
- Curious how many others are looking for FI but not necessarily ER?
- Is the “Maximum 30% of take home pay should be spent on rent” rule too extreme?
- Any value in Backdoor Roth over taxable account if RE capital gains rate is expected to be 0%?
- NYC FI/RE Meetup - January 9 @7PM
- Marginal Value of Time Off
- Automatic rebalancing
- Which providers allow for Mega Backdoor Roth using a solo 401k?
| Besides business owners, what jobs actually pull in $1,000,000+ a year? Posted: 05 Jan 2018 10:20 AM PST |
| Daily FI discussion thread - January 05, 2018 Posted: 05 Jan 2018 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]  |
| Should I Quit My $250K+ job and FIRE? Posted: 04 Jan 2018 09:23 PM PST Hello, I'm a 30 year old guy, married, 2 kids. In 2017, I made close to $300K not including investments (another $30K or so) in my finance job. Most of it is bonus which is variable, and I stand to make a few million possibly if everything works out over the next 5 years, or fall into depression due to stress and overwork. The thing is, I hate working there and the toxic environment is getting to me. I know few people feel sympathy for me, but I'm really not the stereotypical finance guy as I live extremely simply and am not arrogant / smug. My income wasn't this high before and I paid for my wife's graduate studies so my savings are modest relative to my income. I have about $300K in liqudity, and another $350 in non-liquid assets (home equity, 401k). My wife is a teacher so not making much and I have some business ideas that may or may not work out. We both enjoy living a simple life with walks in nature and playing with the children. I'm increasingly interested in spiritual studies (Buddhism in particular). The thing is, I grew up really poor and have insecurities about money. Worked hard in school and got that high paying, competitive job I've been gunning for. Its just feels really hard to let go at this moment, although I'm aware of the absurdities of chasing money in a toxic environment. I know I must make the decision for myself, ultimately. But if you are in my shoes, what would you do? "Suck it up" for 5 more years for a chance to earn a few million but take on an extreme amount of stress, or quit and embrace freedom? Edit 0: Forgot to mention my expenses. I live in a medium cost of living city (big diff vs. Manhattan and the Bay Area where my salary is more typical). My expenses are very low at around $50K (tops) mostly spent on the kids (I don't have much mortgage, no vices to speak of, my favorite thing is to borrow and read books from the library and anonymously publish free research online to educate people on investing), so my wife's salary + any side gig I pick up (probably consulting, research) would easily cover it. Edit 1: The "FIRE" I have in mind is more of a Mr. Money Mustache fake FIRE. I.e. he still running businesses and generating income, just not working for anyone else. (Sorry, new to the FIRE concept, and to Reddit for that matter) Edit 2: Thanks everyone for your advice! I agree with most of them. I think I will grind it out a few more years. I recently went through a storm at work that was pyschologically extreme difficult and I almost quit on the spot, but I think the storm is abating. Every year there will be a few storms (of smaller magnitute — this is by far the biggest) that will test me. Again, very much appreciate your perceptive responses. [link] [comments]  |
| Interesting WSJ article on people that have "sat out" the rally in the stock market Posted: 05 Jan 2018 12:42 PM PST Article is https://www.wsj.com/articles/as-dow-tops-25000-individual-investors-sit-it-out-1515099703. Interesting quote: "The Dow Jones Industrial Average closed above 25000 for the first time on Thursday, punctuating a record-setting period nearly unmatched in U.S. history. Yet throughout the nearly nine-year surge in share prices, individual investors have continued to yank money out of funds that own U.S. stocks. Nearly $1 trillion has been pulled from retail-investor mutual funds that target U.S. stocks since the start of 2012, according to EPFR Global, a fund-tracking firm. Over that same period through Wednesday, the S&P 500 soared 116% and, along with the Dow Industrials and Nasdaq Composite Index, rose to 190 all-time highs." The article interviews various people of all ages who have "sat out". . most/all are variations on "2008 was so bad that I am afraid to get back in". [link] [comments]  |
| Weekly FI Frugal Friday thread - January 05, 2018 Posted: 05 Jan 2018 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]  |
| Close to FIRE (please check my plan) Posted: 05 Jan 2018 12:57 PM PST I'm very new to the FIRE concept and have been reading tons of blogs to educate myself. I'm actually very close to being able to FIRE now, but want to wait a big longer to have a bigger cushion and see what happens with healthcare in the US. About us
Assets:
Liabilities:
Net worth: $3.2MM When we retire in 2-3 years, we'd sell the place in the Bay Area and buy a home in the new location in the $400k range. If we did that today, we'd have about $2.8MM left for retirement (expecting to have that money last for at least 40 years). We've come up with a pretty generous budget for ourselves (maybe it's Fat FIRE) of $110k/yr. Actually, the big unknown in that budget is what healthcare is going to cost us. I penciled in $17k/yr for healthcare based on some rough quotes on ACA plans. Since we're retiring before 59.5, the current plan is to draw from the investment accounts until that age. Then start pulling from the IRA and 401(k). Many people are doing Roth conversions to IRAs to get their pre-tax money earlier, but I don't think that makes sense for us since we've got a big chunk of money in the taxable investment account. It's similar to what Big ERN is planning. As far as the actual withdrawal plans, I think I'm sold on using CAPE-based rules rather than a fixed percentage. Comments, feedback and constructive critique is welcome. [link] [comments]  |
| Posted: 05 Jan 2018 01:36 PM PST I've read and agonized over how I should be handling my 457 and have done nothing but get myself confused and exhausted. Hoping for some clarity from you guys. Here are the basics:
I typically max out my Roth IRA, 457, and 403(b) each year and am expecting to have a pension when I retire (anywhere between 40-80k, depending on how long I work). I'm hoping to retire at 55, which should put my pension in the ~$45k/yr range. My understanding is that this would eat up a good portion of my space in the lowest tax brackets. I switched over to the Roth 457 when that option became available a few years ago. I was raised with the idea that Roth anything is a no-brainer and that you should do as much Roth as you possibly can. After stumbling upon and reading up on the FI perspective this year, I've been considering the possibility of switching my 457 back to pre-tax traditional, given that I hope to be able to retire on the early side. In my reading, I've come across a few different perspectives on this issue: 1) Roth 401k/457 blows. You're overpaying on taxes if you pay them while you're working (assuming that your marginal tax rate is at least 20-something). You'd have to be very rich to reach the 24-25% brackets in retirement. Go traditional, invest the tax savings, and use various tax shenanigans to keep as much of the money as possible. 2) Roth it up, if you have the option. Taxes are likely to rise over time and rules can change. 3) No one knows WTF is going to happen in the future. Tax diversification at least gives you some options with which you might be able to defend yourself. I think most of the talk falls under those 3 themes. It's all left me not knowing what to do. My gut tells me that my pension will fill up a lot of my space in the lowest tax brackets and that, assuming that the tax code doesn't change too much, that it all might end up being a wash (or at least close). Any ideas/input/suggestions? Thanks in advance :) [link] [comments]  |
| The 10% rule: For youth and those hesitant to give up their spending/saving extremes Posted: 05 Jan 2018 03:40 PM PST We are generally assumed to understand the basic logic of the 4% rule, meaning you need your expenses to be equal or less than 4% of your targeted retirement index portfolio. Or in other words, if you spend $20,000 you need 25x which results in a retirement figure of $500,000. This assumes a 5%+ real rate of return. Now what is the 10% rule? This rule is for people who are young or have a spending itch. It is really simple: every dollar you put into paying your future self, you can spend 10% on a guilt-free purchase, trip, or item. No worries! You did the hard part (paying your future self) and now can feel more at ease and relaxed. And so if you contribute the max to an IRA, that's $550 guilt-free monies to spend with any "extra" paychecks for that year. Or later down the line you are maxing both the IRA and 401k and "gift" your a $2400 budget on guilt-free purchases. Is it perfect? No, but it really does help change the viewpoints of those who spend or those who save too extremely. And it is critically important for teenagers since their prefrontal cortex isn't fully developed, making (in general) long-term decision making a physically painful process unless there is this cookie jar bonus that is relatable and understandable. Take for example my sister. When she was growing up, from the ages of 6 to 14, she spent every single dollar and started to regret those purchases. This especially compounded after the whole "Santa Clause" fabrication was found out. She went from being a saver to a hoarder, literally hiding money in her room and sometimes losing it. Then at 16 I helped her get her first part time job but her anxiety over the money still remained. Her savings account increased more and more but she kept freaking out over little purchases like chew gum, dates, and spending money with friends. But she did manage to put $1,000 in a Roth IRA after many analogies and descriptions (by me) to help her visualize the process of slow, long-term, investing. Now at 18 she has her first full-time job and I, again, suggested she start to place some into her Roth IRA. I would state things like a farmer planting seeds, an RTS game building up the economy passive resource rate, or like instead of grinding experience points you are gaining a passive return (up/down) each day when just simply logging in to the game's servers. These made sense and they clicked for her, but that sensation of anxiety still remained. I will say that my own explanations made her more leery of spending at the time, but that was also due to my observations of her guilt with every purchase. However I do remember her age and how painful it is to think strictly long-term, so I purposed the 10% rule! And just like that, over a few weeks, her attitude immediately started improving. Not only has she maxed out her 2017 Roth IRA but she went to me this year without any hesitation to max out 2018 IRA. Plus she gave wonderfully thoughtful Christmas gifts to her friends and family. She might have still felt guilt spending the money if the 10% rule was not a motivator! So, let me know what you think and if you have any other little "cookie jars" to motivate those that are trying to go from 0 to 1000 in terms of understanding, habit change, and overall life style behavior overhaul. Disclaimers/notes (because I know they will get referenced):
[link] [comments]  |
| 'Balanced' approach to the 'Pay off the house or invest' debate. Posted: 04 Jan 2018 09:15 PM PST I personally understand that the 'best' financial decision assuming you can earn greater than your interest rate is to invest rather than pay off the house. I also understand the rationality of those who enjoy the thought of not having a mortgage for emotional/security reasons. I do not often hear of people offering balanced approaches to this issue, so I thought I'd ask about a particular approach I'm considering taking. I'd like to pay down my mortgage as low as I can before refinancing to a 30 year loan. I believe this means paying down my mortgage to 50,000 (because much lower means larger companies won't offer a mortgage anymore) and then refinancing to a low rate 30 year mortgage. The idea is that you have the 'security' of the lowest mortgage payment you can find just in case you lose your job. Even a minimum wage job could pay for the mortgage once you get it this low. From the investing side you'll begin investing as soon as possible once you have 'reasonable assurance' that you can't lose your house. Is this already an idea others have offered in the past and I'm not aware of it? Are there hindrances I'm not aware of to this path? Have others considered this, but decided it was not worth the effort? Thanks for any input. [link] [comments]  |
| Posted: 05 Jan 2018 09:53 AM PST I am currently a Junior in college studying both Mechanical Engineering and Computer Science, and just began investing last year, and am investing about 60% of the earnings I make in my internships during the summer/winter (which is arguably small compared to what I will make after graduating). That said, I am 20 years old now, and while that may not particularly seem all that old to most, I cannot fight the feeling that I'm running out of time to make FIRE a possibility while still relatively young. For those of you who have FIRE'd (preferably fatFIRE'd) before 35 years old, or will FIRE before 35, what is/has been your career path? [link] [comments]  |
| Could financial independence be more of a philosophy than a number? Posted: 05 Jan 2018 06:16 AM PST I'm re-reading "Your money or your life" and a passage stood out to me: "Financial Independence is an experience of freedom at a psychological level. You are free from the slavery to unconsciously held assumptions about money, and free of the guilt, resentment, envy, frustration and despair you may have felt about money issues." I struggle with the idea of working extremely hard now to attain a financial goal (concrete number) in 10+ years. I've heard and seen examples of people working so hard that they can't enjoy wealth later, or miss valuable time with those that are important to them, etc. For example, I see my mother is aging and in a little over 10 years may be sick or too old for us to really enjoy life together. Shouldn't I work less, adventure more and enjoy more time with her now? I feel as though those situations apply to the average "9-5 until 65" or FIRE'r. Could Financial Independence, instead of a far-off goal (for many of us), be more of a here and now philosophy or mindset? If I automate my finances to reach a high savings rate, prioritize my spending to reflect my values but otherwise try to live my best life and not think about money, have I not reached Financial Independence? [link] [comments]  |
| FIRE vs joining an early startup Posted: 04 Jan 2018 11:33 PM PST I work in tech and have a comfortable job that pays 260k a year. There is an opportunity to join an early startup as the first hire. The cash salary is significantly lower (~100k) with a significant percentage of equity that may or may not turn into cash. The startup project feels quite interesting and the idealistic side of me always wanted to take a risky ride. However, I can also milk my current job as long as possible for early FIRE, so here I am, a bit conflicted about what choices to make. My current career path in big corporates seem like a sure and stable way to get to FIRE, and the startup is a more exciting path that could bring faster FIRE or more likely slows me down. I wonder if someone here faced similar choices and how did you end up doing? A bit more about me and my wife: she also works in tech and makes 80k a year. She thinks we can live well even if I join the startup: we have no kids and a small townhouse to pay off. We are both 37 and both spent a long time as dirty poor graduate students, so we have a pretty frugal lifestyle. Travelling is our only big expenditure and we save over 120k per year(max out two 401k accounts and invest the rest after tax). Our net worth is now at 900k (500k index funds + 400k equity in the house). Finally, I like working in the tech industry. Even if I achieve FI, I'd still imagine myself working perhaps as consultant or freelancer. I grew up in poverty and always felt insecure about money. Getting to FI felt like is more about my insecurity other than getting tired of my job. I wonder if there is something else I should consider. Please share your thoughts and experiences. [link] [comments]  |
| Posted: 05 Jan 2018 09:03 AM PST Hi everyone, happy new year! Have learned a lot (I think!) in reading this sub for about a year now, and was wondering if you all might be able to give me some thoughts on what you might do in this situation. So I'm a year out of grad school, in my first year in the working world (26F, TX, NW ~50k, gross income ~120k/yr). My parents saved for my schooling in a 529 when I was younger, however I was fortunate to receive some scholarships that resulted in us leaving the 529 untouched. They've told me that the savings there are mine to manage as I see fit, and I've been facing some decision paralysis as to what to do with it. Let's say there's currently about 35k, of which about 25k are earnings, sitting there in a pretty conservative fund (something like 80/20 bonds/equities) with an ER of around 0.4. My target asset allocation is 80/20 stocks/bonds, I'm maxing my tax-advantaged space, and I'm not saving for a house or anything in the short-term. My intention is to transfer the funds around to match my desired asset allocation, however I'm lost on whether I should withdraw the funds to a taxable account or keep them in the 529. If I keep the funds in the 529 and switch the funds to a stock index and bonds index, I would lower the ER to about 0.13. Upon withdrawal the earnings would be taxed as income, unless used for some kind of educational expense, and could be hit with a 10% penalty if the scholarship exemption didn't apply for some reason (I'm not totally clear on this point). I don't have any plans for continued education myself, and while I'd like to have kids, I'm currently single, so not sure it makes sense to bet on that possibility. I've estimated with 20 years averaging a 7% return that I would net after-tax 93-103k depending on whether or not the 10% penalty applies. If used for education and withdrawn tax-free, the balance could be around 131k. If I withdraw the funds to a taxable account, I would be hit with income tax on the earnings (although now does seem like decent timing to take that hit, given the current tax climate and the potential for my income to increase in the future), but I shouldn't have to deal the the 10% penalty. My understanding is that upon withdrawal from the taxable account, I would pay capital gains on any earnings. I've estimated with 20 years averaging a 7% return that I could net after-tax about 99k. My thoughts are that it seems like the better option to withdraw the funds to a taxable account because the potential for slightly higher growth doesn't seem worth the lack of flexibility. On the other hand if I were to use the 529 for some kind of educational expense down the road, I could be missing out on tens of thousands of dollars. Any idea on what you might do in this situation? See anything I'm completely missing? Thanks in advance for any insights/advice, and thanks to the FI community for just being generally awesome! :) [link] [comments]  |
| Curious how many others are looking for FI but not necessarily ER? Posted: 05 Jan 2018 03:31 PM PST Hi all, as the title states, I am curious how many of you are pursuing FI but not necessarily for ER? I currently work as a hardware engineer (yes, we still exist...someone has to develop what the software runs on) and love my job. I would enjoy doing what I do for as long as I am able. I also enjoy traveling, but I get ample time off to travel as I desire. I am curious if anyone else is in a similar situation? Perhaps I feel this way due to the fact that I am still fairly early in my career and I am not "burned out" yet. Or maybe I am fortunate enough to do what I like and also get paid for it? If I were to retire I would likely tinker around with computer hardware anyway, and for less income. Anyone else in a similar situation. [link] [comments]  |
| Is the “Maximum 30% of take home pay should be spent on rent” rule too extreme? Posted: 05 Jan 2018 03:23 PM PST I mean, if you live in a super low cost of living area it would be very doable but that is a big if. Plus there is so many variables that can affect this like car loans/student loans/cc debt. My take home pay is around 2300 per month, and following this rule i would pnly be able to spend 690 on rent MAX which seems pretty low to me. I live in an area where the cheapest studio you can find is 1100 utilities included. I have calculated monthly expenses at 500/month(I have zero debt). So spending slightly around half of my income on rent and I would still be able to save 700/month. Am I missing something? Seems like the 30% is too conservative or just assumes that people have debt to pay. Obviously It would be better financially for me to rent with roommates but I dont want to do that for personal reasons. 700 a month savings is more than enough for me given that Im just starting out in my career. [link] [comments]  |
| Any value in Backdoor Roth over taxable account if RE capital gains rate is expected to be 0%? Posted: 05 Jan 2018 02:52 PM PST I'm trying to wrap my head around whether there is any value in doing a Backdoor Roth IRA. My wife and I have an AGI around ~250k and therefore do not qualify for a normal Roth IRA nor would our contributions to a Traditional IRA be tax deductible. We plan to FIRE in 5-7 years with ~$1.2MM and live off a ~3.5% swr. Roughly evenly split between 401k and taxable brokerage, all index funds/ETFs and allocated for tax efficiency. Initially we will live off the taxable account, taking advantage of 0% capital gains, while doing a Roth conversion ladder. This should keep our tax liability extremely low. Given this scenario, what do we gain by doing a Backdoor Roth rather than continuing to contribute to a taxable account expecting 0% capital gains? [link] [comments]  |
| NYC FI/RE Meetup - January 9 @7PM Posted: 05 Jan 2018 02:09 PM PST https://www.meetup.com/NYC-FI-RE-meetup/events/246413953/ Request to join and/or PM me to RSVP. And yes, it's still $2.... [link] [comments]  |
| Posted: 04 Jan 2018 09:59 PM PST You might have heard of the marginal value of money, that for example, $100k will have more impact on someone without much money than someone who already has a lot of money. This concept can also be applied to taking time off. In FIRE, you try to save money (FI) so that you have more time off (RE). So for example, so for example you could save 55% of your income and after working for 15 years and have enough to early retire. (google: shockingly simple math of early retirement). This is very appealing, but maybe there are other ways to structure the time off. During those 15 years of working, you might work at a company that only gives you 2 weeks of vacation. During that time, one more week off a year would be 50% improvement, thats a big deal. On the other hand, after you have been retired for a few years, had lots of time to unwind and do all those this you always wanted to do, yet another week of time off doesn't have that much impact. Therefore it would be better to shift things around, instead of waiting 15 years, go ahead and start taking time off sooner rather than later. Plan 1: Graduate at age 22, work 15 years, retire at age 37. Take the next 48 years off (assume you live to 85). Plan 2: Graduate at age 22, work 2.5 years, take 1.5 years off, then repeat. After 6 rounds, you have worked the same 15 years to earn enough money to RE, then retire at age 44. Take the next 41 years off (assume you live to 85). With plan 2, instead of having 48 years of contiuous time off, you take spread that time off between different life stages. Why not go travel the world in your 20's and early 30's, or what ever you want to do? Why wait until later in life to have grand adventures? If you are going to have decades of retirement anyway, won't you get more value from your time off by taking some of it earlier in life? For plan 2, there are also some other considerations. This is very much career dependent, but for some careers, people tend to change jobs every 2-3 years, which fits with well with that plan. Often job changes help you get promotions or find more interesting projects or negociate a raise or simply move to a company with better prospects. The period of time off between jobs, 1.5 years, is long enough for most advetures you might want to under take, and probably long enough that you might be ready for a change and go back to work after that. But 1.5 years off isn't so long that your skills get rusty or that you start losing contact with people. This plan also has you working into your 40s, which typically are higher income years, and that might still be valid even with the time off. Also if you like to travel or do some other activity that helps you grow, your experiences might make you more effective at your job. This is the plan I would take if I had to do it all over again. What are your thoughts? [link] [comments]  |
| Posted: 04 Jan 2018 07:53 PM PST I currently have most of investments in Vanguard funds, but I only have it set so that a fixed amount goes into each fund each month. Then at the end of the year I have to sell the big gainers and buy the losers. I'd love to set an asset allocation and have my monthly investments be automatically allocated to any lagging investments. Does anyone offer the ability to allocate investments to maintain a given balance, rather than preset fund investment dollar amounts? [link] [comments]  |
| Which providers allow for Mega Backdoor Roth using a solo 401k? Posted: 04 Jan 2018 04:06 PM PST It doesn't seem that Charles Schwab allows it when I spoke to the retirement specialist. Does anyone here have any input? [link] [comments]  |
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