Financial Independence "When your backup plan is being well off in a safe engineering position, than you really shouldnt break a sweat" - My FI friend |
- "When your backup plan is being well off in a safe engineering position, than you really shouldnt break a sweat" - My FI friend
- What are you doing DIFFERENT from the formula FIRE path, and why is it a good choice given your circumstance for reaching FIRE?
- Daily FI discussion thread - February 28, 2018
- Fire out of necessity?
- Should I go for Public Service Loan Forgiveness?
- How do I accelerate growth in net worth, beyond employment income?
- Am I being smart about cash savings?
- Weekly Self-Promotion Thread - February 28, 2018
- Golden phase of FI?
- Find your Money Mind - Interesting quiz referenced in the FT today
- How much of the "traditional" advice applies to students/very low income groups?
- Is it possible to retire and move to Israel with $1m us in assets and live a nice life? Or is it too HCOL? Anyone with any experience?
- How much risk should we take?
| Posted: 28 Feb 2018 07:55 AM PST Recently, I was griping about how difficult it truly is to reach FI at an early age, and how many years of intense discipline I had to go. I just turned 26, am closing on my third property, write my PMP this weekend and have a NW close to 200k. I am comfortable with my standard of living, and love my work. My friends comment (he also follows FIRE) was a bit of a wakeup call because he's so right...if we fail at FIRE but work hard to try and get there, we still end up in a PHENOMENAL spot. Still want that FIRE, but its always nice having a gentle reminder that even TRYING is more than most do. [link] [comments]  |
| Posted: 28 Feb 2018 09:21 AM PST I live in Eastern Canada, and income property is a no brainer here because of the price of multi-units in comparison to rent. I also save lots of money by being 26 and still having several roommates. Do you have any non-standard tips for FI to share? EDIT: Im referring to the flowchart that is commonly circulated in PF and sometimes FIRE, with a step by step guide of where to put money (Retirement savings plans, tax free accounts, emergency funds etc.) [link] [comments]  |
| Daily FI discussion thread - February 28, 2018 Posted: 28 Feb 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]  |
| Posted: 28 Feb 2018 02:13 PM PST I read a lot of posts here about FIRE as a means to enjoy life & escape a job that ties you down and prevents you from doing the things that you feel are most important to you. I also read posts about FIRE as a means to explore alternative revenue streams that may be more 'risky', and having attained FIRE already allowing people to pursue such ventures without having to worry about the financial aspect of not having a guaranteed paycheck. However I do not read as many posts about FIRE as a necessity, and I am curious to read your thoughts. We live in a world where automation is rampant, and in the next couple of decades, many of the careers that we currently work in simply won't exist, or nowhere near the same capacity as right now. As a 20-something with (in the traditional view) about 40 years left until retirement, I have absolutely no confidence that my skillset will be valid in 40 years, or many related skillsets for that matter. The operational analyses that I perform on a daily basis will become less and less relevant as software with AI/Machine learning capabilities is released to a mass audience, allowing easy and labor-free ways to do what I already do now. It is with this in mind that I pursue FIRE. I want the safety of knowing that even if our society becomes run by robots in the decades to come, I have a financial safety net in a diversified portfolio that will put me in a good position when this day inevitably comes (or rather, when it approaches, as it will not happen in 1 fell swoop). Further, I believe that at some point in my lifetime our society in the USA will probably move to some sort of universal basic income model, as is inevitable when the demand for labor is so much lower than the working population. Any UBI model likely has a UBI of basic subsistence/poverty level. Which means that those with wealth going into this sort of society are the ones that will remain wealthy and the ones that will live well. Do you all think I am crazy and a 'prepper'? Or do you think my thoughts have some merit? I welcome discussion. [link] [comments]  |
| Should I go for Public Service Loan Forgiveness? Posted: 28 Feb 2018 01:38 PM PST My wife and I have about $180k in Federal Student Loans (mine is $100k, hers $80k) and I have another $10k in private loans. My wife's been shooting for Public Service Loan Forgiveness for the past couple years and I recently decided to plan for PSLF for myself too and I would love the feedback of this sub in terms of that decision in light of our plans for FI in 10-15 years. You can see our numbers in another post I recently made, here. I know that the conventional wisdom among FIers, especially the more Mustachian types, is that debt is a toxic emergency and should be paid off as aggressively as humanly possible. And indeed, our interest rates on the loans are awful (6.5-7.5%). However, because we both work in PSLF-eligible employment, I've decided that PSLF might save me more money in the long run. Do you agree? I'm not sure how to perfectly run the numbers. It just seems to me that if I can keep my payments "low" at around $700-800 per month all the while maxing out retirement accounts and saving another $10k per year on top of that, and have a HUGE chunk of the loan forgiven (ballpark, $100,000) in 8-9 years, I'm better off. Keep in mind, I think this needs to be an all-or-nothing decision because when both spouses have eligible loans on the type of Income Drive Repayment plan we're on, their monthly payments are calculated taking into account one another's loans, which yields much lower payments (they essentially each make a payment corresponding to their share of the combined loan balance, and the combined payment of both spouses cannot exceed 10% of their AGI). Furthermore, because the monthly payments are based on AGI, I can keep our AGI a lot lower by maxing out pre-tax 401k and so pay less on the loans. So I think we should either both plan for PSLF or both pay off loans asap. I think at the most aggressive we could maybe pay off the loans in 3-4 years, including with a little Loan Repayment Assistance from my university (which I'm not eligible for if I'm on an income-drive plan pursuing PSLF). But that would include not paying a dime to retirement accounts and potentially even liquidating principal in existing Roth IRAs. So in 4 years I would be debt free but not have a penny in savings, other than a few thousand in pre-tax 401k and Roth earnings. Versus 8-9 years of dragging debt that sucks and hurts our cash flow by $8,500 or more per year, but all the while allowing us to bulk up tax-advantaged contributions and then some, including saving for a home purchase or real estate investment. And it kills me to have paid $100,000 that would have otherwise been forgiven, albeit in a longer timeframe. What is the smart move if FI is the goal? [link] [comments]  |
| How do I accelerate growth in net worth, beyond employment income? Posted: 28 Feb 2018 06:36 AM PST 27 M. Spent my early to mid twenties in grad school and law school, finishing at 25. I have always been frugal and prudent, and through very aggressive saving, managed to pay off all school debt by 26. Since then I have been building positive NW. I've chosen to work in a very demanding job (60-90 hours/week, erratic schedule) as it pays me about double what I could make in a regular 9-5 job at my level. I'm prioritizing saving while enjoying my lifestyle a little bit (occasional travel, eating out 2x a week). At current income of 190k, I am managing to save about 90k after expenses, and am maximizing tax strategies. Current NW is around 100k, but I'm hoping to stay in this job for another 2-3 years, allowing me to reach a NW of 350-400k by the time I'm 30. However, I can't sustain working in a job like this - the toll on my personal life is too great - and in my field, once I leave my salary will drop substantially. I hope to still earn at least 120k, which is not insubstantial but, as I plan to get married and have kids in the 30-35 time frame, I know I won't be able to save as much (and my SO does not make much). I also am in a HCOL area, and can't change that, so 120k does not go as far as it might in other cities. I'm already familiar with prudent saving and investing techniques; I invest my savings in a variety of low-cost index funds and rebalance every few months as necessary. However, looking at many of the people on this sub who have found ways to increase their returns - perhaps through well-informed focus on strong securities, investment in a business, real estate, etc. - I can't help but feel that there are more steps I can take to accelerate my progress. Obviously there are risks inherent in any high-return investments, but despite being risk-averse, I'm willing to take on a little more uncertainty to pursue more aggressive returns. I have decided not to pursue real estate for the coming few years, as I very well may move from my current city within a couple of years (and not return), and as my city is too expensive for me to purchase even one property with my savings. Hence, I'd appreciate your recommendations as to strategies I could pursue! Thanks in advance. [link] [comments]  |
| Am I being smart about cash savings? Posted: 28 Feb 2018 08:47 AM PST I am fairly new to the FI world but I am embracing it as much as I can (read: as much as my wife will tolerate). We've been using YNAB for several months and take it very seriously and we've cut down our expenses considerably so far. We also live in a very HCOL area (NYC), but are reluctant to stray too far because both our families are here and we are all very close, plus my wife and I have a young child who is our first. I am trying to decide how to invest cash savings and whether to fully max out our retirement accounts vs. saving more for down payment/real estate. OUR NUMBERS: Ages: I'm 32, my wife is 30. We have 1 baby and 1 dog. FI Plan: I would love to be FI in 10-15 years. Combined income: $160,000/year gross (this may go up by $5-15k if my wife gets a raise, which we will find out over the next few months). Although we are both in PSLF-eligible jobs, neither of us gets a true pension (Defined Benefit Plan). Retirement Savings (401k, 457, IRAs): $50,000 Cash Savings: $50,000 earning about 3.5% (combination of high-yield savings, checking, and CDs). Combined Student Loan Debt: $180,000 however, we are now both planning for PSLF, which should take effect in about 8.5 years. No other debt 1 car, fully owned Monthly expenses: $7,800 up until now, but see below. Big-ticket items are Rent, Childcare, and Student Loans. Current rent: $1,700/month Anticipated rent beginning this summer: $2,000/month (we are struggling as it is with 1 child in a small 1-bedroom and we will likely have another kid in the next couple of years, so we want a 2-bedroom). Childcare: $1,560/month (this will likely decrease over the next few months since we are planning to move and will start a hopefully cheaper childcare arrangement). Student Loans: $1,560/month but which will be reduced to about $710/month beginning in March as a result of PSLF plans. CURRENT STATUS: At the moment, I feel very behind on a 10-15 year FI plan and I'd like to fully max out IRAs ($11,000/year) and 401ks ($37,000/year). If we do that, we can maybe save $10,000 additional each year in cash with our current/planned expenses. However, we'd like to buy a house at some point. Could be next year. Could be 3-4 years from now. Could be longer. We don't know where yet, but if we stay close to family I doubt we will find anything for less than $400,000 that will fit our full family. I am hoping to put at least 20% down on a primary residence. I would also love to adhere to the rule I learned from The Millionaire Next Door which is not to take on a mortgage greater than double our take-home pay. Again, anywhere near NYC this may be a stretch. Even a $300,000 mortgage would be well above that threshold. Obviously, this all depends on when we buy and how much more we've saved by then for a down payment. Alternatively, if we don't buy a house for a few years, I'd like to look into investing in residential real estate. Or maybe we accomplish both and get a multi-family dwelling and live in one unit, rent out another. I'm not sure how doable that is in the tri-state area considering the cost of real estate, but maybe it's possible. HERE ARE MY TWO BIG QUESTIONS: 1) Is it foolish to be sitting on the cash and not investing it in an index fund until we're ready to use it? If I keep it in the bank, I don't think I will be able to earn 3.5% above $50,000, so the next dollar I put in will probably earn 1.5% (at least at current interest rates). Of course I know returns are way better in the market long term, but what if I invest it and the bubble bursts and I lose half at the exact time that I want to buy a house or a great real estate opportunity comes along? Is my investment timeframe too short to rely on the market to even out? 2) My wife would like to put less toward retirement and save up more for a house/real estate investment. She would like to at least have the option of buying a home or making a real estate investment sooner (1-2 years) rather than later (3+ years). From an FI perspective, is this a bad idea? If I want to be FI in 10-15 years, is it foolish to miss out on tax-advantaged savings for the sake of uncertain real estate plans? Thanks in advance and I'm happy to provide further details. [link] [comments]  |
| Weekly Self-Promotion Thread - February 28, 2018 Posted: 28 Feb 2018 03:09 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. [link] [comments]  |
| Posted: 28 Feb 2018 12:20 PM PST Basically I feel like I won't care about FI after I graduate and after I set my savings on auto. My situation is I'm graduating with about 11k in debt as I have been working well paying internships since my 2nd year. I have been preparing my budget daily and basically going through different scenarios which I actually enjoy (weird right?). I got a good paying job that only has a good outlook. What do I do after I am done budgeting and maxing my savings? Basically I have already calculated I can max my 401k & IRA and still accrue a good amount of flexible savings after I pay off my loans. Those of you who did that what did you save/invest into? I feel like if I don't set more goals I will just waste my money or worse, time not retiring. [link] [comments]  |
| Find your Money Mind - Interesting quiz referenced in the FT today Posted: 28 Feb 2018 04:00 AM PST Hi All, I was reading the FT today about the impact of finances on relationships and they linked to this following quiz which took me 5 minutes. I imagine you will all get the result you expect (mine was eerily accurate) but thought people would find it interesting to post here: http://www.unitedcp.com/how-we-help/financial-life-management/money-mind. Obviously it needs to be taken with a pinch of salt but is interesting. I got "Fear Focus - The Protector." My ratios were: Fear: 57%, Happiness 0% (:O) and Commitment: 43%. The 0% in Happiness is probably a bit extreme as I definitely spend lots on going out and just dropped a months salary on two holidays but it also rings true - for example after moving for a job I am living in shit accommodation below my means. I'm only now just looking to upgrade as it has affected my happiness despite being in this situation for a year Literally every major point was bang on, but the most eye opening ones were: Overview
Financial Mistakes
You can improve by:
You guys should try it and share some of your outcomes. It also lets you view other "personalities" which are interesting for me to read back when reflecting on some of my past partners (I'm only 26 though so my history of sharing finances is incredibly limited and mainly on just holidays, meals and drinks etc) [link] [comments]  |
| How much of the "traditional" advice applies to students/very low income groups? Posted: 28 Feb 2018 09:57 AM PST Hello! I'm a mechanical engineering student in Denmark. Denmark is kind of notoriously known (at least among the danish FI communities I've seen) as a really difficult place to FIRE because of really high taxes. At the same time, there are a few unique perks: for example, I'm currently given an approximately $800 dollar stipend after tax every month to live on while I'm studying, and there's no tuition, so the only debt I might have is if I take out student loans (up to about $450 a month with 4% interest, dropping to about 1% when I finish my studies and with a 7 year payback period). My current living expenses in Copenhagen are about $400 for rent, probably about $125 for food, $110 for transport and then probably $15 phone bill and a few other small tickets. I'm also working a few hours here and there are a local electronics development company, earning about $11 an hour after taxes - about 7 hours a week on average. I've been following FIRE for quite a long time, and since I'm only 21 and one of the popular bits of advice is "START EARLY", it seems I should really try to plan around FIRE already at this point. I feel like I'm living fairly frugally, but still managing to spend a bit of that money left over on various things, trips to visit my parents, a new pc monitor or some engineering project. Can anyone offer some advice? Should I try to put, say a $100 dollars a month in a savings account already at this point? Or $250? Should I use it to buy stuff for engineering related projects to further my skills? Should I just spend it and enjoy it? It seems that $100 a month is negligible compared to the expected after-tax income of say $2500 that I'll hopefully be able to make in a few years when I'm done studying. Also, about the student loans: is it stupid to take out these loans that seem really cheap and saving the money for a down payment on a car or something later on? It seems it would save me money in the long run and also give me a bit of a buffer in case some emergency comes up. I do have a bit of money saved as well, but only $1200 at the moment or so. [link] [comments]  |
| Posted: 27 Feb 2018 06:53 PM PST Edit: husband and wife, net income currently ~$80k, mortgage paid off, no debt. Probably $3k/month social security in 6 years, $1k/mo pension. Like a comfy modern life, but very frugal. [link] [comments]  |
| Posted: 27 Feb 2018 06:31 PM PST My wife and I turn 30 this year and are making a combined income of 640k annually (we're both physicians halfway through our first year as an attending). Back of the napkin FIRE math had us thinking: If we spend 90k a year (we have been spending 60k/year thus far) and expect to also do so in retirement, then 600k minus taxes and the 90k for living equals roughly 300k of savings a year. Let's say we want to retire at 45. If we put all the savings in a simple bank account, we end up with 300k x 15 = 4.5 million. At 2% withdrawal rate that's 90k a year for 50 years! Now I see the standard path to FIRE here is to dump every penny of savings into buy and hold index funds and pray your returns are high enough to allow FIRE on time while hoping to avoid any protracted bear market. But... why should we take on any stock market risk when we could just conservatively save money, even unprotected against current levels of inflation, and still FIRE? Again it's back of the napkin math - lots of details left out, such as if we have kids and one of us works fewer hours and we instead end up making combined 400k for a period of time, or if we get lifestyle inflation and end up getting used to spending much more -but the idea isn't so crazy...right? [link] [comments]  |
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