Financial Independence How does your spending compare to the average spender? |
- How does your spending compare to the average spender?
- Financial independence doesn't solve your life. The real path lies afterwards and it is equally difficult.
- 4% Rule for Y2K Retirees
- Daily FI discussion thread - January 09, 2018
- Advice about housing without an income?
- Missing biweekly paycheck?
- If I'm measuring real investment returns what deflator should I use?
- Unreasonable to FI?
- What assumptions do you make?
- What’s are realistic net worth numbers for FIRE and FatFIRE with a wife and two children?
- To pay off condo or not pay off condo? (30/m/canadian)
- Does one become better money manager after FIRE ?
- What do you guys plan to spend time on, when financially independent?
- Risk management during accumulation
| How does your spending compare to the average spender? Posted: 09 Jan 2018 05:05 AM PST I thought this piece was very interesting: https://www.bls.gov/cex/2016/combined/age.pdf It came from one of those click-bait articles about how much a set amount of money will last in retirement based on income needed for lifestyle upkeep. And we all know here that it's not about how much your income is, it's how much you spend. How do you compare? I'm only $4k beneath the average for my age group (I have some work to do!) [link] [comments]  |
| Posted: 09 Jan 2018 12:11 PM PST Hey fellow Redditors, Let me introduce you to my situation 6 years ago: no money bad high school degree (financially) abusive family member absolutely no network or valuable contacts whatsoever and nobody really cared about me no mentor / nobody to train or teach me not happy at all being alone for most of the time in a deep depression that lasted for years I guess I was not the only one in that situation. Well, let me say, it does not feel nice, but in the end you got to be honest: A lot of people sit there and think financial independence will finally give you everything you want - deep respect from people, complete freedom and a purpose. Except, it doesn't. But that's okay! Now it's 2018 and I am financially independent for a year now. For me, it was just the first step on the ladder and not the very top of it. Financial freedom is the point at which you can finally start working on all those things you wanted to - hapiness, family members, mentors, loneliness, etc. - without the soul crushing pressure of problems like paying rent or food. It is merely the first step of a long, long journey and to be quite honest: Taking this step will probably be the first point in time where you can actually see that there is a lot of journey left after the supposed "safe haven" that is having a lot of money. I am not writing this to discourage anybody. I actually highly encourage everybody to get financial independence, but I think it is important to manage your expecations. Too many people connect a lot of their life goals and personal problems with the fact of not having money or financial freedom. If you are in a bad relationship, it will still be bad with seven figures. If your grandfather is abusing your whole family, he will probably still do it even if you show him your bank statement. There is different solutions to the problems you so urgently seek. I've heard and read people say: "If I only had a million dollars, I would be set for life and happy and my relationship would be...". You can insert a dozen of very personal goals in there, but in the very end, people tend to be disappointed to see that financial freedom merely gives you the opportunity to reach the first step of the ladder and actually see above all the heads in the crowd - only to see that there is a bunch of more steps to go and actually a couple of more ladders to get to. It does not magically fix your life. You still have to work for all those other problems you want solved additionally to working for your financial freedom. It may sound obvious for some (definitely not for me back then), but a lot of people forget/don't see or even choose to ignore that. I would've loved to hear this very simple thing from somebody else earlier as it would've managed my expectations to a more productive level. As a matter of fact, I have seen people getting crushed by the fact that after decades of work and earning a lot of money, they found out that they didn't even start working on all those other problems yet. I don't know why exactly I am writing this, but I just wanted to share, since I still feel lost on my life journey, although I solved financial independence. EDIT: Corrected the number of years from 4 to 6. Sorry for the typo. EDIT 2: Check my "novel length" backstory in the comments if you are intersted. TL;DR: Creating and selling websites and creating other income streams as the base. Invested all earnings into my stock portfolio. Founded import/branding company. Bought and flipped some real estate. [link] [comments]  |
| Posted: 09 Jan 2018 01:02 PM PST Check it out: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=237334 Read through the thoughtful post -- the initial numbers/graphs are wrong (the OP double-accounted inflation); they are corrected as the thread goes on. [link] [comments]  |
| Daily FI discussion thread - January 09, 2018 Posted: 09 Jan 2018 03:08 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]  |
| Advice about housing without an income? Posted: 09 Jan 2018 04:26 AM PST I made some early investments in a cryptocurrency I strongly believe in back in 2013 and held out for quite a long time. Now those holdings are worth enough for me to retire early. I know this sub can be biased about crypto and I can assure you, I understand the risks, and my long term plan is to be 95% traditional investments for FIRE. I started liquidating in increments at the beginning of this year and I've received my first transfer into my bank account of about $75,000. I've lived modestly my entire life with the dream of someday becoming financially independent. It seems this dream has come true for me a bit sooner than I thought and I'm absolutely overjoyed, if a bit overwhelmed. I don't have any prior experience with significant amounts of money, but I do have a good grasp of personal finance and have studied this subreddit and other sources for years to learn as much as I can to feel comfortable making a plan going forward in general terms. One thing that I hadn't thought of was housing. I'm currently unemployed due to recovering from a surgery back in August but I had enough money saved up at the time that I was fine without an income for my recovery period. I was just about to start looking for work again before I realized I actually don't need to anymore. Now that things have changed I'm just a bit flummoxed about how to proceed with housing. I won't have passive income for a couple months while transfers come in and I get things squared away. My lease is up at my current place soon and I'd like to find something temporary that's a little nicer and closer to the nearest city and family while I figure out where I'd like to live more permanently. Does anyone have experience renting without income? I've read up on it a bit and understand it will vary from landlord to landlord, but I'm going to check out some potential apartments in the $800-1000 per month range in the next few weeks and I plan to start with an offer of 3 months paid in advance + deposit and go from there. Is that reasonable? I'd love to hear some personal experiences and advice about this as I'm a little lost. Thank you for reading all this! [link] [comments]  |
| Posted: 08 Jan 2018 10:47 PM PST For those who have fired and NOT actively earning income, how do y'all psychologically deal with not getting regular paychecks? [link] [comments]  |
| If I'm measuring real investment returns what deflator should I use? Posted: 09 Jan 2018 03:27 PM PST I've been thinking about this a bit, and to me it makes sense that if I'm trying to measure the real return on investment and I'm using AUD as a unit of account shouldn't I use M1 growth instead of CPI? The investment is relative to having cash in the bank, and that cash would shrink each year as a proportion of total cash in the system. However most people use CPI as the inflation measure. It makes a huge difference to me, since CPI in Australia is ~2% while AUD M1 growth is ~8%! edit: grammar [link] [comments]  |
| Posted: 09 Jan 2018 04:27 AM PST We are a single income family for the next year. 4 kids. Qualify for medicaid for the children and foodstamps. Is it ridiculous to start thinking abouy how we can begin to move towards FI in the future and what steps we can start taking now? In a year, I should be able to work as an RN and we will become a double income family. I dont know if we should just wait until then or start doing something now. Thoughts? [link] [comments]  |
| Posted: 09 Jan 2018 06:16 AM PST "Nobody Knows Nothing" - Jack Bogle
In our pursuits of FIRE and personal financial planning, we are required to make many assumptions in order for us to create our models and strategies. Of course, it is difficult business making even broad assumptions about the future.
Many variables will have profound effects on our wealth generating ability, including: asset returns, health care, real estate, social security, wages, taxes, childcare/college costs, AI/computer learning, longevity, etc.
It it imperative to be highly fluid with your assumptions, to be able and willing to make adjustments no matter what comes your way. When you are crunching numbers, it is often suggested to test out many different scenarios and adjust variables to determine the robustness of your planning.
With all that out of the way, I will start with some basic assumptions that I use in my personal plans and modeling. I have arrived at these figures by sourcing and averaging predictions from "experts", trend following and my own personal bias/theories.
Asset Returns (Real, long term): US Stock Market: 5% US Small Cap Value: 6% Total International: 5% Emerging Markets: 7% Total US Bond: 1.5% Intermediate Treasuries: 1% High Yeild Corporates: 3% Cash: -2% Real estate: 0% Gold: 0%
Taxes: Far too complicated to realistically guess, I project current tax law (federal, state, FICA, investment, SS, sales, etc) into the future, knowing that it will most likely change.
Social Security: 75% of current projected benefit. I have ran scenarios at 0% and 100% of current benefit as well. I know there is a lot of fear-mongering surrounding this subject, but the data shows solvency until 2035, at which point a shift to a 75% benefit will prolong solvency far into the future. That is without any changes to retirement age or increased taxes.
Health Care: Like taxes, this is way too variable, so I use current MarketPlace and Medicare pricing to model. Hopefully it will not be the case, but I find it prudent to also test scenarios where health care is 2-3 more expensive in real terms than what is available currently. This has huge negative impacts on discretionary spending. The possibility of single-payer greatly impacts these assumptions.
Childcare/College: For childcare, I use current prices, inflation adjusted. For college, I believe that in the 20 years higher education will look a lot different. In my opinion, the tuition increases seen over the last three decades are completely unsustainable. Utilization of more online courses, satellite campuses, improved for-profit options, accredited certificates, etc have a chance to make college comparatively more affordable than it is now. With that said, I usually use the current price of a 4 year, in-state tuition for 529 planning.
AI/Computer Learning: I believe that AI and automation is going to have massive effects over many different industries, but perhaps the widespread adoption will be slower than what many experts predict. A lot of careers/jobs will be in danger of partial or complete replacement (this is actually one of my driving factors for FIRE, I believe my line of work will be among those to go).
Longevity/Life Expectancy: It's important to realize that life expectancy may be higher (potentially much higher) in the future, with advancements in medicine and aging research. This is especially true if you are relatively wealthy and will be able to afford cutting edge treatments. Keep in mind that life expectancy is generally illustrated as a median or mean, implying that close to 50% will live longer by some degree. I use 95 for my own planning, but perhaps that may not be conservative enough.
I am curious to hear what figures and assumptions you all use when planning for your future?
Keep in mind that these are medians, I have done testing with higher and lower values of pretty much all of these figures [link] [comments]  |
| What’s are realistic net worth numbers for FIRE and FatFIRE with a wife and two children? Posted: 09 Jan 2018 04:30 PM PST This sub seems to skew towards younger people planning to LeanFIRE with around $600k. Totally cool, but what do you think are realistic net worth numbers for regular and fat FIRE in the USA, HCLA? Family of four, assuming you g kids (not yet born). Thank you for sharing your opinion! [link] [comments]  |
| To pay off condo or not pay off condo? (30/m/canadian) Posted: 09 Jan 2018 04:22 PM PST Hey guys, So I've recently acquired a bunch of money through my investments and I've cracked the 250k mark. I've been thinking about what to do with all this cash but am unsure how to go about it. I have the following that came to mind. 1) pay off my investment condo in full. 2) throw the 250k into multiple high risk index funds and accumulate ~10% annually. I currently live and work abroad so I'm renting currently but will be coming back to Canada. Any thoughts? Thank you! [link] [comments]  |
| Does one become better money manager after FIRE ? Posted: 08 Jan 2018 11:10 PM PST Does absence of regular monthly paychecks make one more disciplined towards investments and managing money ? With full time job, where most people spend 8-10 hrs, managing money and investments is always second/third priority in a day. That means, potentially less attention to managing & growing investments. Any thoughts? [link] [comments]  |
| What do you guys plan to spend time on, when financially independent? Posted: 09 Jan 2018 03:23 PM PST I do not mean to criticize, i dream of being finacially independent myself. I am genuinely curious on what you guys want to spend your time on, with all the spare time [link] [comments]  |
| Risk management during accumulation Posted: 08 Jan 2018 04:36 PM PST tldr; What kind of portfolio would you suggest to someone who is muscling through accumulation via high savings and hope to RE in a few years? I am considering a change in my investments and move from a long-term, risky position to a less risky position because I will rely on my savings and not compound interests to achieve FI, and then move back to a "more traditional", stock-market position for my retirement years and rely on long term gains after I hit my target. Details: I have a high-income, high-savings-ratio situation and I hope to achieve FI in the next 5 years, barring a major recession, job loss, etc. Currently, my NW is 30% of what I would require to call myself FI. Consequently, the major factor that will allow me to RE is the amount of money I save annually, rather than than the growth of my investments. My investment portfolio is stock index heavy (60% US stock, 20% Foreign stock, 15% bonds, etc.). I am 35 and I am OK with the idea of playing the long game during my retirement and not bothered by ups and downs of the market in the short term. I am less comfortable with the idea of postponing my retirement couple of years (e.g. 10, instead of 5) because of a recession or bear market that can happen between now and my target retirement date. With these considerations, I think it makes sense for someone in my shoes to put their investments in more conservative positions such as bonds until I hit my target, and then switch to stock market indices. I am wondering if there is something I am missing in this reasoning and I am curious about people's ideas. [link] [comments]  |
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