Financial Independence $1 Million Net Worth - Using Exact Advice Advocated on These Forums |
- $1 Million Net Worth - Using Exact Advice Advocated on These Forums
- ten months into early retirement
- DFW FIRE MEETUP TODAY
- Mathematics of living off savings
- Daily FI discussion thread - March 31, 2018
- A quick thank you.
- What are your goals?
- New to saving for FIRE, any advice how to cope with current best market?
- My jump from lurking on the site to understanding and participating in the FI(RE) process.
- Investment Pathway Advice
- How has FIRE changed your career decisions?
- FIRE and Child Support
- What are some good FIRE books for someone who knows a lot about finance?
- firecalc update?
- new to FIRE; starting new job
| $1 Million Net Worth - Using Exact Advice Advocated on These Forums Posted: 31 Mar 2018 10:35 AM PDT I hit a major FI milestone today - $1 million net worth ($1,010,261) - and wanted to share as encouragement for those like myself who constantly look at their projections, often daunted, wondering when they'll hit certain points along the way. I used to graph out projected FI milestones on a near daily basis at work. I would feel overwhelmed by how far out those dates seemed. Rest assured, that time passes faster than you expect! Some background: I grew up in a family that struggled financially, living paycheck to paycheck. I began teaching and performing music for income at a young age (14) and would contribute to household expenses. My father was unemployed the vast majority of the time and I decided early on I didn't want to have those same struggles over buying groceries later in life. I went to a fairly prestigious university - 95% covered through scholarship and work study. Thankfully didn't graduate with much debt. I graduated college in 2009, at the bottom of the recession, which helped further instill a frugal lifestyle. After reading books like Walden I realized I need very little to feel fulfilled and happy. I would view it as a game, taking backpacking trips through foreign countries, not spending a dime of my own $ and playing street music to pay for hostels and meals. In 2012, despite having a decent job with $63k salary, and ~$90k saved up, I decided to sublet my apartment for 4 months and squatted in an abandoned building next to where I worked (extreme, I know). Notably I had a great time doing this and it wasn't quite as destitute as it sounds. While on a high bike ride in a forest preserve one day (took a half day from work) I decided I wanted to have the option to bike, read, or travel whenever I wanted without the burden of day jobs. This is when I began aggressively formulating investment strategy and churning through the classic FI books and forums to reach that end-goal. MMM, MadFIentist, and Jlcollinsnh have been invaluable tools. It was so reassuring to hear about entire communities built around the FI concept. In 2013 I purchased a multi-unit apartment building that cash-flowed enough to cover all of my living expenses - with me living in the cheapest, basement unit. From that point on, 100% of every dollar I made could be invested. The Intelligent Investor and Four Pillars of Investing have been integral in shaping my portfolio over the years. From there it's just been a slow build to today. I'm mostly an index investor and my paychecks go straight to my Vanguard account. It feels great having F-you money, as Jim Collins says. I quit a soul-sucking job this past year and took 8 months to myself as a trial FIRE. It was amazing. I expect to pull the trigger and officially FIRE sometime within the next two years. If it were just me I'd have FIREd years ago. Now my primary concern is covering my mother's retirement in its entirety. If anyone has much experience in this area I'd love to hear it! TL;DR Surpassed $1 million net worth through extreme frugal living, a multi-family RE purchase to cover my living costs, and subsequent index investing. [link] [comments]  |
| ten months into early retirement Posted: 30 Mar 2018 04:52 PM PDT REPEATED INFO Introduction: This post is part of an ongoing monthly early-retirement series that will continue indefinitely, provided that the voting reflects the view that it is still seen as relevant to the community. I suppose that this is my way of giving back to a movement that helped me tremendously on my journey. As this post has become increasingly popular based on the number of views and comments, and as my desire to spend a great deal of the first day of every month on reddit has significantly waned, my responses might be limited. Career and background summaries are provided at the end and repeated every month. Please check those sections as well as the comments and posts from previous months to find answers to potential questions. I genuinely appreciate all the thanks and well-wishers, even if I don't take the time to say so individually. Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772. My maximum withdrawal rate is 3% of each year's starting balance, provided that the portfolio remains above $1M. Should the portfolio drop below $1M, I will lock back into a maximum $2500 per month ($30k per year) guardrail withdrawal until the market recovers. I realize that this is not the holy Trinity method, but consider these three factors that give us flexibility: a 3% withdrawal rate is below the 100% historically safe mark of 3.2% for fifty-year portfolio survival, the extended bull market peaked us nearly 20% above the original target amount (meaning that $30k annually is actually 2.5% instead of 3% if restarting from the peak); and our actual withdrawal rate has averaged less than 2% of the original portfolio balance thus far due to earning additional income. The budgeted withdrawal amount is $2773 per month for 2018. In 2017, it was $2564 ($2618 adjusted for inflation). Career: I am a former retail pharmacist who hated his profession for the following reasons: unacceptable amounts of stress, lack of civility from the general public, capitalism gone amok, fundamental disagreement with the overuse of pharmacotherapy as an answer for underlying health issues, and a severe opiate crisis that few have yet to appreciate. I attended college for eight years to earn a bachelors (1997-2001) and a doctorate (2001-2005) before joining the workforce for nearly twelve years (2005-2017, entirely with CVS). $150k in education costs were covered by academic scholarships ($25k), employment during college ($20k), prior savings from high school employment ($5k), revenue from an eBay business while in college ($10k), and massive help from my parents ($90k). My salary plus compensation went from $115k in 2005 to $150k in 2017. My savings rate was about 70%. Background: I retired at the age of 38 on June 6, 2017, the day before the twentieth anniversary of my high school graduation. I am married with no kids and generated over 95% of the family income while employed. We live in LCOL rural TN. Our asset allocation goal is approximately 60% VTSAX (total US stock market) / 20% VFWAX (total INTL stock market) / 20% VWLUX (US municipal bonds). We also hold roughly $400k in house, land, and belongings not included in the portfolio. My spending model places no dependence upon supplemental income (future employment?), social security ($10k/yr?), inheritance ($500k?), house equity (no heirs?), universal health care (probable?), or universal basic income (possible?). The final balance will be left to charities and worthy causes. UPDATED INFO Spending: Living expenses for the month came to $4628. This is $1855 over the 2018 monthly targeted amount of $2773. Our spending is 66.9% over budget for the month, 15.6% over for the year, and 18.4% over since retirement. We generated $30,804 of income this month from my wife wanting to work, some of my old book royalties, and an unexpected inheritance. Our investment withdrawal was -$26,176 this month (a $26,176 deposit), thus our pro-rated, annually-adjusted withdrawal rate is -28.32% for the month, -10.03% for the year, and -0.15% since retirement. Without the additional income stream, our pro-rated, annually-adjusted withdrawal rate would have been 5.01% for the month, 3.47% for the year, and 3.55% since retirement. Investments: The portfolio went from $1,117,315 to $1,103,975 (a 1.19% decrease for the month), which went up to a new total of (drum-roll) $1,130,151 after cashing the checks and paying the bills. This is a 10.18% increase from the original starting balance of $1,025,772, even after withdrawals of $16,977 for living expenses over ten months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $52.24/hr of labor income. To sustain the original portfolio balance, $17.95/hr is the pace needed for COL based on spending rate; $-7.98/hr is the pace needed for COL based on withdrawal rate. Ignoring possible dividends, VTSAX (61% AA) went down 2.3% this month (1.0% down for the year); VFWAX (20% AA) went down 1.0% (0.8% down for the year); VWLUX (19% AA) went up 0.2% (down 2.3% for the year). Reflections: I do not wish to get into details of the $30k inheritance that we received. I will only say that it was not expected, not from a death, and the person was well aware of our financial status (likely carried out due to perceived fairness and equality for all parties involved). Our receiving of that much money in a lump sum also comes close to invalidating the documentation behind the whole reason for this process. Spending was up due to dental work ($1000), vacation reservations ($500), and a decision to go crazy by blowing 3% of the inheritance ($1000). We bought a camera, running shoes, two race entries, two album reissues, and some clothes. The remaining 97% went straight to VWLUX. I almost feel guilty. Experiences: I put 61 hours into Final Fantasy XV over seven days, finishing the game and most of the side quests. I think it was fairly average by series standards. My marathon training peaked at 40mpw and is now tapering. I spent way too much time following recent political developments. Upcoming: The marathon state championship is April 7. I was poised to take the victory (based on the winning time in 2016 and 2017), but some guy who is on a mission to win 100 marathons is driving eight hours to do this one. His reputation in the running community couldn't possibly be any lower. He has a history of cherry picking small races nowhere near his home in order to get his numbers up. At some point this month, we'll be taking a driving vacation across flyover country to visit the states that my wife has not yet been to. This will bring her up to my current count of 49. I'll be trying for a victory in another local race on May 5. Afterwards, I plan on cutting back on running while I get some more experience with bicycling and swimming. Needless to say, I'll also be doing whatever the fuck I want. [link] [comments]  |
| Posted: 31 Mar 2018 08:55 AM PDT Just a reminder that there is a DFW meet up at the Buffalo Wild Wings in Grapevine TODAY at 2:00! Anyone know how we will recognize each other? (Also, upvote so we have some visibility! I couldn't find the old post to link to it) [link] [comments]  |
| Mathematics of living off savings Posted: 31 Mar 2018 12:13 PM PDT I've seen a couple of posts lately about projecting the probability of successfully living off savings during an extended retirement. These discussions tend to get reduced to simple numbers, and I think this obscures a lot of the interesting phenomena. I wanted to see what I could do to get a better intuitive handle on some of the simulations like FIREcalc and CFIREsim. It's really hard to condense into a pure-text reddit post, so I made a google paper. The shortest version is: I did my own simple Monte Carlo simulations based on S&P500 and 10-year treasury performance with a fixed withdrawal rate, found I needed 20,000 or so to get good visualizations. I think that mean and median portfolio values are a little misleading, and maybe this graph will illustrate why. After 30 years, the simulations that do well do really well, but the simulations that fail never do any worse than 0. They're just as likely to gain 8x as to lose 1x. The median performance of these simulations at 30 years was 2.4x the starting value, but the most likely outcome was 1.6x. The long tail on the gaining side obscures a large population on the losing side. I'm more of a math person than a finance person, and I assume this is well know to finance people. I'd be interested in reactions from other math people or if there are widely accepted ways to fairly communicate the non-normal statistics. [link] [comments]  |
| Daily FI discussion thread - March 31, 2018 Posted: 31 Mar 2018 04:09 AM PDT 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: 30 Mar 2018 05:23 PM PDT I used to lurk this subreddit in high school, fantasizing about the incredibly frugal life I would lead on the path to FIRE. Yet somehow, now that I'm earning my first paychecks as an 18 year old airman, I've found that exercising discipline and impulse control was much easier on paper and in my head than in real life. Now that I've rediscovered this subreddit, however, I've rekindled that burning desire for FIRE, and my SR has begun to climb and climb. Not that I'm putting too much away with my junior enlisted pay, but it's more about having regained that FIRE-mentality of maximizing savings and earnings that I'm glad about. So thank you, all. I love this community, and I'm so glad to be on the path forged by those who have FIREd before us, who are looking down now from their paid-off in full beach houses in the sky. Happy savings! [link] [comments]  |
| Posted: 31 Mar 2018 03:04 AM PDT Aloha friends, I am reading Tom Stanley's The Millionaire Next Door for the first time and came across a section that talked about a man whose main financial goal was to make a large salary but couldn't really express specifics. This made me realize that I really couldn't either. I'm only 22 now so I have some time to formulate but I wanted to ask the community, what are your goals? Other than the overarching, "Become financially secure", what are some good financial goals that I can adopt? I am graduating university next month debt free, and that has been my main goal the last four years and I've done it. What can I work towards next? [link] [comments]  |
| New to saving for FIRE, any advice how to cope with current best market? Posted: 31 Mar 2018 09:11 AM PDT Hey all, I'm an 28yr old employee and have been saving up for FIRE for about a year now, around eight more years to go. My current portfolio is about 80/20 index funds and bonds. In the middle of this year I'm expecting a tax return of about a month's pay. If the current trend on falling stocks continues, is it wiser to invest that money into more stocks because they are cheap oder better get more bonds? Thanks everyone and let me say this is a great community! [link] [comments]  |
| My jump from lurking on the site to understanding and participating in the FI(RE) process. Posted: 30 Mar 2018 05:33 PM PDT BLUF: For any lurkers out there, my recommendation is to head over to Mr. Money Mustache's website and start reading from the very beginning (the first blog listed on the right side of this subreddit). The fifth one (Early Retirement Extreme) is the first one I read. I've been lurking on this subreddit for quite some time. Sometimes I wouldn't really understand some of the acronyms or some of the ideas that were being mentioned. I also didn't understand how someone could have a savings rate of 75% (I do have a family of six, though). Then I read an article somewhere that reference "some guy that lives on $7000 per year" (Jacob Fisker from Early Retirement Extreme). I read the article and was very interested in the guy's philosophy - so much so that I decided to buy his book. Over the following days I read the first 40% of his book highlighting many sections and finding myself in great agreement. This led me to MMM's website, which I had seen years ago but had only read an article or two instead of reading from the beginning. Since then I've read the first 76 blog posts and already made some meaningful changes in my life: things like getting rid of the final non-LED bulbs, canceled YouTubeTV, decided to sell our van, opened a Vanguard account and funded it with a good chunk of change. Perhaps most important is I've had some great conversations with my wife as well as two of my teenage children. My older daughter is intrigued with the idea of a very high savings rate to achieve FI within several years, while my son isn't interested in giving up the toys he was planning to buy - even if it meant working his whole life. But my wife is on board with a less consumptive lifestyle. So, thanks for this thriving community here. Personally, I plan to retire in about 37 months at which point my wife and I will have enough to live on for the rest of my life. I have faith that my children have great things ahead of them, even professionally -- but I'm trying to teach my them how to avoid the high consumption and debt that is so common in the US so they can have a freer, more fulfilling life with greater flexibility. [link] [comments]  |
| Posted: 31 Mar 2018 07:21 AM PDT My state government offers a 457b plan with 3 investment options: 1.) Do it for me: Who prefer a less hands-on investing experience, Savings Plus offers Target Date Funds. (This is my first choice) 2.) Do it myself: Savings Plus allows you to build and manage a customized portfolio by using the Savings Plus core investment funds. Another available option is the Personal Choice Retirement Account (PCRA), which is a Self-Directed Brokerage Account (SDBA), administered by Charles Schwab & Co. 3.) Manage it for me: If you prefer to have a professional investment management firm actively managing your portfolio, you can elect to invest through Nationwide ProAccount My goal: I want to have 424K (after tax; including withdrawal rates) in my savings account in 20 years. Where else should I diversify my income. Would I have to contribute 25% of my take home income each month till the day I retire? How is the interest rate calculated? I look forward to your inputs. [link] [comments]  |
| How has FIRE changed your career decisions? Posted: 30 Mar 2018 04:30 PM PDT I'm curious how long-term FIRE goals have impacted your career decisions, where you may have played it differently without this end-game goal. Obviously at late career there's a significant impact with choosing when to leave, and maybe a change in mentality once you hit the FI phase. However, in the early-mid career phases, I'm really curious about any decisions and the reasoning. I know I'm approaching FIRE with this mindset - with machinations beyond just maximizing career income. A couple things I'm doing in my early 20's...
Personally, I think my FIRE goals have led me to explore all of these with a bit more urgency - and less tendency to get content with the status quo. Using my time now to future-proof myself as much as possible makes even more sense in a FIRE mindset than maybe an year ago before I'd bought in. Thoughts? Comments? [link] [comments]  |
| Posted: 30 Mar 2018 06:58 PM PDT Intro I am a software engineer that makes ~200K/yr. The reason I am interested in FIRE is that I want the freedom to make my own startup – take risks. I have ideas for app/products that I think would be really big, but almost all of my time is spent in my current job. Normally I am all for taking risks, but when you have the risk of running out of money and being put in prison – that's too much risk for me. Also, before people make snarky comments about how I 'decided' to have a child – the mother lied about birth control. US Child Support Basics Most people don't really understand what CS is (including people paying and receiving it), so I want to start by going over some facts about how it works, and some of its quirks (feel free to skip down to "FIRE Plan" if you already know about the CS system):
The whole system is a big confusing mess – each state has different rules – most of what I wrote above is true in general. Texas CS system:
FIRE plan As noted above, I can't just stop working and do my app idea – I would still be liable for CS based on my 200k job – yikes! Also, currently I am paying 650/month in CS. This could be raised to the Texas max of 1710/month. The mother knows that she could raise the child support, but she has not done so – I have no idea way not. My FIRE plan is to save about 600,000 giving me about 2,000/month to live off of. But I find the CS really part hard to factor in. If my X decides to raise it I would need ~180k extra (as of today), but if it is not raised it is more like 80k extra (as of today). Lets say she does not raise the CS, could I stop working when I have 600K + 80k? But at that point could she claim that I could be earning 200k/year and ask to set to raise it to the max? Also, if I stop working I have to also pay child's health insurance (included in the 80k/180k number above). It seems stupid to stop working and move to pay the health insurance too. Also, does it make sense to try to find a higher paying job (say 250k-300k) or to try to find a job with tech more related to what I want to build after I FIRE. I feel like after I FIRE and have time I can learn all mobile development stuff, and it would just be better to focus on reaching my FIRE number. I predict 2 years to reach my 600k number but I also need the extra 80k-180k for CS [link] [comments]  |
| What are some good FIRE books for someone who knows a lot about finance? Posted: 30 Mar 2018 07:37 PM PDT I studied math and finance in undergrad, and I'm getting my masters in finance and Economics. I have a pretty good grasp on a lot of financial theory. I know less about personal finance and retirement planning. Most of the books on this stuff I've seen are really simplistic. Are there any good books that already assumes you know a lot about finance? [link] [comments]  |
| Posted: 30 Mar 2018 09:43 PM PDT Does anyone know if firecalc will be updated soon? Last update was 5/2017. [link] [comments]  |
| Posted: 30 Mar 2018 06:13 PM PDT Hi I'm starting a new job in a couple of days; just learned about this and want to start off on a good foot. Need help reinvesting my assets. Stats: 23 yr old software engineer in San Francisco; single; no kids or pets Accounts:
Paid off my student loans. No car, house, or anything. Monthly living expense: ~1400 including rent, transportation, spending, etc Goals: Prefer a hands-off long term approach. Buy a 1 million dollar home in Oakland or SF and early retirement Income:160k Questions: Should I do a backdoor IRA? Should I contribute to a traditional 401k or Roth 401k? Please help!! [link] [comments]  |
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