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    Wednesday, January 3, 2018

    Financial Independence I accomplished a New Year's Resolution for the first time. Maxed out 401k and Roth this year.

    Financial Independence I accomplished a New Year's Resolution for the first time. Maxed out 401k and Roth this year.


    I accomplished a New Year's Resolution for the first time. Maxed out 401k and Roth this year.

    Posted: 03 Jan 2018 08:11 AM PST

    Not only did I max my two tax advantaged savings accounts, but I also bolstered my emergency fund as well. I could get fired tomorrow and be fine for about a year.

    I know its not as aggressive of savings as a lot of you, but for me it was a huge step. I'm not really sure what my goal is for this year, but I think its going to be maxing out both, and adding 10k in vanguard funds (probably VYM).

    Oh and one of the great things I did was get my company to take a hard look at our 401k, and realize we were paying too much in fees, and got them to change. We changed to something that offered Vanguard funds, something our previous plan did not.

    What were some of yall's financial resolutions last year? Did you complete them or fall short? Anything planned for this year?

    submitted by /u/taelor
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    UPDATE: Retirement achieved.

    Posted: 03 Jan 2018 09:44 AM PST

    Hi All,

    Just an update to my previous post four months ago: Plan to retire this December at the age of 41/m ($1.15m). Upon submitting my original post, I was surprised by the responses from some in the subreddit community. Though I was expecting (and welcome) critique, I found some of the comments to be deconstructive and lacking any purpose other than to provoke. I've addressed some of the negative themes at the end of this post:

    FINAL Numbers:

    OUR ASSETS ($1.31m):

    • Home (fully paid for): $700k
    • VTSAX: $189k
    • Company Stock: $167k
    • Stock/Bond portfolio: $115k
    • Pension funds: $110k
    • Cash: $50k
    • Rough totals: $581k generating passive income; $750k for the rest

    OUR CURRENT EXPENSES (Monthly/Annually):

    • Utilities (elec/gas/internet/etc): $150 / $1.8k
    • Home fees/taxes/insurance: $200 / $2.4k
    • Food & Entertainment & New Stuff: $1.5k / $18k
    • Travel: $500 / $6k
    • Rough totals: $2.35k per month; $28.2k per year

    ADDED COLOR PER RESPONSES TO ORIGINAL POST

    1. "You're a stay-at-home partner, not FI" - My SO continues to work as a personal preference and not out of necessity. She does not desire an early retirement situation and LOVES her career. Her income brings in an additional $5k net monthly and why we decide to have higher monthly expenses (though we've lowered them since my original post). Rather than withdrawing money from our investments and depositing her income, we simply use her income to cover our expenses while padding our investments/savings. I realise that our 4% SWR number is slightly lower than our expenses however if we were to break everything down, my portion of our expenses is well below 2% of our SWR. I say the math is in my favor when it comes to what label to use...however I'm not too keen on debating nomenclature much further.
    2. The American Perspective - I think it is important to consider that we do not live in America and thus we have different challenges/opportunities/benefits/etc. For example, I can imagine the costs associated with living in a $700k home in the middle of suburban America; however this does not equate to the same costs with living in a $700k flat in an European city. America's Heathcare system does not equal Nationalized Healthcare.
    3. "What's the deal with the home?" - Yeah, I get it. The majority of our assets [whether a home is an asset or expense is another debate :)] is tied up in the home, and this was a conscious decision on our part. Right now, we have $581k in our investment portfolio, and I expect to have this above $700k by EOY 2018 barring any significant market downturns. There was some good feedback from redditors in my original post and we are looking into how to optimize our situation by repurposing our home and we may go in that direction as well.

    Sorry for the long post.

    submitted by /u/MeWantFIRE
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    I'm so close I can taste it.

    Posted: 02 Jan 2018 07:47 PM PST

    For 2017 the stock market plus my own savings contributions brought my total to $990,000. I also bought my father a 20k car, so actually without that I'd be over the 1 mil mark. I'm 49.5 right now, so I'm 12.5 years away from even minimal social security, and 15.5 years away from Medicare. I have zero debt.

    Anyway, now I'm on that edge. I have a job I don't particularly like, but it's paying the bills and comes with decent medical. After some computations I figured out that my annual expenses are around 50K; I live in a relatively high COL area. If I left my job I'd be on the hook for medical insurance, so that would be an additional expense.

    I rent where I live right now, but I also own a house (outright) in a different area - I can't afford to buy anywhere near where I work right now. The home I rent out offsets the repairs, so it's kind of a wash there. If I quit my job and moved back into my house, I MIGHT be OK, but I'd have to leave the job market where my skills are more in demand. And I'd have to leave the sweetie behind, because there's no way in hell he's leaving his cush high paying gig. We're not married, but we have a cat together. A very wonderful, handsome cat.

    Logically I know I should wait a year or two to get that sweet sweet cushion, but I can just taste the freedom NOW. And it's making me crazy. I can't stop compulsively running numbers on my calculator, trying to see how conservatively I could invest and still be able to stop working, then how cheaply I could live, etc. My life has turned into a set of spreadsheets that I conjure up when I am distracted. Then I head over to firecalc and friends and go even nuttier running simulations.

    I just had to get that off my chest. I'm not sure what to do about it; I figure there must be a few folks here who also went a little loopy when they got CLOSE but weren't quite there yet.

    submitted by /u/throwaway_buhahahaha
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    One of my big issues I've had since becoming FI at 38 is that no other friends of mine are retired

    Posted: 02 Jan 2018 09:46 PM PST

    My wife and I are both mostly retired and have been since November 2009. We have no other friends that are within 10 years of retiring (and probably closer to 20). We have a strong marriage and spend a lot of time with our still at home children, which helps pass the time. We have both focused on our health over the last 7 years, which helps fill up time.

    Anyone else in a similar situation? Any advice to us? We've talked about volunteering, and my wife works retail about 10 hours a week, as she is very social and enjoys getting out of the house. Thanks!

    submitted by /u/OU_Sooners
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    Daily FI discussion thread - January 03, 2018

    Posted: 03 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.

    submitted by /u/AutoModerator
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    31 and thinking of coasting to FI

    Posted: 03 Jan 2018 12:19 PM PST

    Hey Everyone,

    I feel like I'm in a unique situation. I love the idea of Financial Independence and if I stuck it out with my current job I could easily reach it fairly quickly. The problem is I actually do enjoy working and don't see myself stopping anytime soon but I absolutely hate my current job.

    I'm an office guy in the oil and gas industry and I'm scheduled to work 72 hour weeks (Monday through Saturday 12 Hour shifts) for months on end and often need to work late nights or Sundays. I'm always away from "Home" and working in remote parts of the country. There is no social life and no chance of holding down a relationship.

    I just turned 31 and my current NW is 820K. In 2017 my salary was over $300K (Including rental income) and I should easily hit $1 Million by December 2018 if I stick with this job for the rest of the year.

    I completely understand that this salary is amazing. I'm incredibly fortunate and many people would say I'm stupid for thinking of walking away from it. However, I live a frugal life to the point that I walk into a mall and there is nothing that I want. I could easily survive on a normal salary.

    I've also had Cancer within the last 5 years and it was always a goal to reach $1 Million NW by 30. Unfortunately, I didn't get there because I had to take a year off from work to beat it. I have no doubt I'll get it before I turn 32. I do live in Canada so health care is covered.

    Once I hit 1 Million NW I'm considering walking away from this type of life and slowing life down a lot. Using my free time to play sports, work out, hang out with friends/family and actually enjoy life. I will pick up a low stress 35-40 hour a week job that I actually enjoy which would feel like part-time compared to what I do now and use that salary to pay for all of my expenses.

    I feel like if I did that and just invested the $1 Million and lived off my salary by the time I'm 40-50 I will be generating enough interest too FAT FIRE. Essentially I'm thinking of Coasting to FAT FIRE instead of killing myself in this job for a few more years.

    Has anyone else done something similar? Or have any advise?

    submitted by /u/falconfan86
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    Bloomberg View article: "Land is underrated as a source of wealth"

    Posted: 03 Jan 2018 08:54 AM PST

    https://www.bloomberg.com/view/articles/2018-01-02/land-is-underrated-as-a-source-of-wealth

    I know the majority opinion here (myself included) is that on a pure numbers basis, stocks tend to outperform real estate over the long run. I found it interesting to see an alternative viewpoint backed up with data.

    submitted by /u/DoritosDewItRight
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    Vanguard 401k after tax rollover

    Posted: 03 Jan 2018 09:14 AM PST

    Has anyone had experience doing a in service rollover of after tax 401k contributions in vanguard? My plan allows it but I'm having some serious customer service issues getting it to go through. It seems like the issue is I have a "brokerage" Roth IRA and not a legacy IRA. For some reason the rollover can only be done to a legacy IRA. They're sending me paperwork to open this legacy account.

    Anybody run into similar issues and get it to finally work?

    submitted by /u/PurplePango
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    Were you forced to retire much earlier than you expected due to job loss?

    Posted: 03 Jan 2018 03:03 AM PST

    The media tells us that people are retiring much later than in years past. In fact, there are tons of stories online about the glories of retiring well past 70 years old. Early retirement is now frowned at by the media and financial experts.

    Trouble is that most people I know who are in their 60s and 70s were not even allowed to work past 60 years old, at least in their chosen full-time career making good money. Instead, they were the first choice when megacorp decided to cut costs. All attempts at getting back on the treadmill and get back into the rat race at age 60+ were shot down by the 25-year-old gatekeepers in Human Resources.

    How about you? Were you pushed out of the work world due to age discrimination and corporate cutbacks before you were really financially independent and ready emotionally to retire?

    submitted by /u/KillingTime56
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    Weekly Self-Promotion Thread - January 03, 2018

    Posted: 03 Jan 2018 03:08 AM PST

    Self-promotion (ie posting about projects/businesses that you operate and can profit from) is typically a practice that is discouraged in /r/financialindependence, and these posts are removed through moderation. This is a thread where those rules do not apply. However, please do not post referral links in this thread.

    Use this thread to talk about your blog, talk about your business, ask for feedback, etc. If the self-promotion starts to leak outside of this thread, we will once again return to a time where 100% of self-promotion posts are banned. Please use this space wisely.

    Link-only posts will be removed. Put some effort into it.

    submitted by /u/AutoModerator
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    How did you decide whether to tell people close to you about FIRE plans?

    Posted: 03 Jan 2018 02:55 PM PST

    So today I was talking to my parents, who are in their early/mid 60s, when Bitcoin came up. I mentioned that I was thinking about putting $500 into it as speculative play-money, so if I lose it all, then oh well.

    Now my parents are people who have pit 10% into retirement for a long time, so it's not like they don't save (and they'll retire fine), but take-home pay had always been money to be spent. They always tease me saving as "cheapness.". This generally rolls off my back.

    Anyway, my mom immediately sits up and says "Oh, you have $500 to just throw away? Must be nice." I keep running that back in my head and I'm pretty sure this means I can never ever tell her about FIRE, even though she and I are really close.

    I guess I'm posting because I figured you all would sympathize, share your stories?

    EDIT (preemptive): I know y'all hate Bitcoin, and I don't like it as an investment either (though I think blockchain is cool). The mini-position is for amusement only.

    submitted by /u/Barben319
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    Vanguard to offer new line of "factor ETFs"

    Posted: 02 Jan 2018 08:20 PM PST

    https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/NewsInstInfo112817

    What are your thoughts on these funds? I am not quite sure how "value factor" differs from a normal value fund, and how "momentum factor" differs from a normal growth fund, but these new funds seem a little interesting.

    submitted by /u/archerinwood2
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    Renting out Townhomes? Taking profit and dumping into VTSAX?

    Posted: 03 Jan 2018 02:14 PM PST

    Hey guys, newly graduated pharmacist here, frugal lifestyle living off $35k post tax, saving $50k a year, currently have 40k saved up in savings account. Was looking at townhomes around 150-200k w/ cheap hoa fees in decent areas and thinking of putting 20% down w/ average mortgage of $800 bucks. They can rent for 1300-1500 down. Was thinking of buying a property a year and dumping profits into VTSAX along with my own separate contributions of $40k a year. Is this a good idea and good way for Financial independence. I just read Set for Life and this is what popped in my head. Thanks

    submitted by /u/corey407woc
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    Husband got laid off yesterday...

    Posted: 03 Jan 2018 09:37 AM PST

    And we didn't lose any sleep over it. The layoff came as a shock to both of us as her company seemed to be doing fine financially and there haven't been any previous layoffs there over the past year. Luckily, because we've been working towards FI, the only real impact is that our savings rate is going to drop from 50% to around 25% until she finds work again. I make enough to cover all of our monthly bills and debt obligations, and we don't carry any CC debt, so we shouldn't even have to dip into our emergency fund. Therefore, no immediate change in lifestyle for us.

    We are not FI yet and won't be for many years (I posted last month about how we finally just hit a NW of $0), but even if we never RE, I think the freedom from financial stress is the real reward of following the FI mindset. Not so many people are lucky enough (or good enough at saving) that they could lose 30% of their household earnings overnight and be OK.

    So in short, thank you to this great community for reminding us daily why living below your means is so important!

    submitted by /u/FountainPenCollector
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    Data Scientist Looking to FIRE: Need Budget Advice!

    Posted: 03 Jan 2018 11:49 AM PST

    Hi all,

    I'm finishing up grad school in computer science at UC Santa Barbara and have accepted an offer with a VC-funded startup in SF. I'm creating a tentative financial plan / budget now but, since I'm new to FIRE, wanted to see how it could be improved!

    FWIW, I currently have $3,900 saved for my emergency fund.

    After all relevant taxes are taken out, I'll be netting $6,500 / month. Startup does a 50% match up to a 4% employee contribution. I'm most focused on max'ing my 401K and building an emergency fund.

    Rent: $1,700/month with roommate (2BR/1BA)

    Food: $1,500/month

    Health Insurance: $250/month

    Transportation: $130/month

    Gym: $100/month

    Miscellaneous (Laundry, toiletries, etc.): $300/month

    401K Contribution: $1,000/month

    Emergency Fund: $1,520/month (remainder of paycheck)

    This means a 6 month emergency fund of $24K would take me a full 16 months to build up from scratch. Given I already have close to $4K in my emergency fund, it'll take 22 months to get to $24K.

    Any advice on how I can improve my budget? I've basically never cooked so I wanted to err on the side of caution when estimating food expenses. Health insurance, gym, and miscellaneous seem impossible / not worth it to cut down on. E.g. I gym 5 days / week so trying to save $100/month by cutting that isn't something I'm willing to do.

    Thanks in advance!

    submitted by /u/DataScience100
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    Share your (short) story

    Posted: 03 Jan 2018 10:14 AM PST

    I like reading the monthly updates from some of the users here on how things have been going since they pulled the plug and I'd really like to hear some highlights from more of the community. I'm interested to hear from those who are significantly into their journey or have successfully FIRE'd:

    • How long was your journey from beginning to end? At what age did you start?

    • How much were you making/saving on average?

    • As you became more savvy, did you realize that this was easier or harder than you initially anticipated?

    • Feel free to share any lessons/struggles you encountered along the way.

    My fiancé and I are in the early stages of FIRE. We're both 24 and, although FIRE is mostly just discussion for us at this point, our future is still wide open. I'd like to learn more about the average guy/gal's FIRE journey so we can better anticipate what lies ahead.

    submitted by /u/McBroha
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    How mutual funds, asset allocations, and fees affect FIRE

    Posted: 02 Jan 2018 07:21 PM PST

    I began working towards FIRE in 2017 after having believed the "standard retirement" that they teach.

    I'm not looking for specific advice, more at a macro-level. I could be mistaken, but the majority of what I've seen by those in FIRE, has been: -Index funds -Low fees -90+% Stock

    I've previously been in Target date funds for when i turn 65. I started to examine other options and am a bit confused. Conventional wisdom is that you should have a conservative portfolio if you have a short timeline. To counter that, to FIRE you need solid growth, which means more risk.

    These seem to contradict each other. Where have I missed the mark?

    submitted by /u/Mern12
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    To those who plan to work after FI: Why?

    Posted: 03 Jan 2018 09:51 AM PST

    I sometimes hear of people saying they want to work after FI despite not needing to any more and I have never understood why. Few questions:

    1. Do you enjoy your job? If so, is your job the thing you would most enjoy doing of all things you could possibly be doing during the times you work? There's nothing else that makes you happier or is more important to you that you can be spending your time on instead?

    2. Because you're FI, you don't need the money from the job. Regardless, does money play a factor? If you had to choose between continuing to work with no benefits at all vs doing something else with your time, which would you choose?

    3. For those who said they'd work for #2 above, how do you feel about accepting money from your employer for work that you would willingly do for free anyway?

    4. For those who said money still attracts them to work for #2 above, why? What do you plan to do with the money? Is it worth the time you're losing by working?

    submitted by /u/Jephta
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    529 plan or Federal Aid for schooling?

    Posted: 03 Jan 2018 07:37 AM PST

    If I wanted to go back to school after reaching FI/RE, would it be wise for me to have a 529 account set-up or would this shoot me in the foot regarding financial aid? Would federal/state financial aid take into account the typical assets you have/need to reach FI? For those who want to go back to school, how do you pan to pay for it?

    submitted by /u/Danium23
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    Has anyone gained interest in class distinctions since pursuing FI?

    Posted: 02 Jan 2018 10:17 PM PST

    I've recently found Class by Paul Fussell (1992) fascinating. Some content may be a bit outdated but much of it seems to ring true. To those unfamiliar with the book, he divides American society into the upper, middle, and proletarian with further subdivisions within each one. He describes how each class is different, not just in the obvious way (money) but in the arcane subtleties that escape our awareness until we see them printed by this witty and knowledgeable journalist. Since most FI'ers are drawn toward self improvement, financially, and often physically (r/fitfi), I feel like class climbing is a natural complementary topic of interest and personal goal for this community. You may be more middle class or even a prole, but you don't have to be your entire life.

    submitted by /u/fi990
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    Pay Off Mortgage OR Pursue Investing Aggressively?

    Posted: 03 Jan 2018 06:00 AM PST

    Hi everyone,

    My husband and I are new to the FI community! We are diving into the journey of becoming FI and are hoping for some advice in terms of our next steps. My husband and I have lots of goals:

    (1) purchase a second home (around $1M) and use the first home as income property,

    (2) be FI (no determined time YET...), and

    (3) finance a yearlong round-the-world trip (est. $60k for both of us) by 2028.

    Questions: Is it better to pay off our mortgage first OR work towards being FI? Which method will achieve our goals more efficiently? Contextual Information:

    • My husband (28 YO) and I (27 YO) are both teachers in a HCOL area. He makes about $66k and I make $75k, both gross. We have zero debt, with the exception of our mortgage (described below).

    • We purchased our first home last year. Fortunately, we were able to make the down payment without PMI, so our mortgage comes out to $2000/month. /EDIT: I failed to mention that our interest rate is 3.75% for a 30-year fixed.

    • We rent out 2 of the rooms in our house, so the rental income pays for the mortgage, and my husband and I double it to pay down the principal (extra $2000/month). Property taxes come out to about $8000/year. In 2017, we paid $70k in principal and we have about $350k remaining on the mortgage. Market value for our house has estimated to have gone up $100k since we purchased it.

    ASSETS:

    • Roth IRA: $50k

    • Teachers Pension: $23k

    • Individual Cash & MM: $5k

    • 457(B): $12k

    • Cash in Savings: $37k

    My husband and I do not know anything about investing money or where to put our money to make the money work for us... Is it better for us to pay off our mortgage or to pursue investing aggressively?

    So whatever advice/recommendations you all have would be really appreciated!

    submitted by /u/booksandtravel
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