Financial Independence Request to consolidate all "Fresh out of college" and "I'm 20 years old without a career yet" posts to a weekly thread.

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• Request to consolidate all "Fresh out of college" and "I'm 20 years old without a career yet" posts to a weekly thread.
• Google employees using F-you money
• Dealing with feelings of inadequacy
• Daily FI discussion thread - June 07, 2018
• Taking a random day off work to see what early retirement is like!
• (Advice Req) I Have an Undeveloped Plot of Land in a Residential Golf Course Neighborhood
• Alternative housing ideas to progress towards FIRE in HCOL area (LA) with kid.
• A pretty significant milestone, and no idea where to go from here
• W2 Vs Real Estate Investment Income Taxes (Napkin Math Example)
• Getting a mortgage with FIRE
• Joining a startup with no 401k or health care... recommendations?
• What constitutes as separation of service with regards to sole proprietors being able to roll over their solo 401k employee deferrals prior to turning 59.5?
• [Philosophy] Start mentally thinking wealthy. Time for a 21-day makeover (summary)
• Pension lump-sum vs Annuity + Questions on allocation (non-US)

Request to consolidate all "Fresh out of college" and "I'm 20 years old without a career yet" posts to a weekly thread. Posted: 07 Jun 2018 05:38 AM PDT I opened up my front page to see these, all within the past 2 days: https://www.reddit.com/r/financialindependence/comments/8p6act/help_me_convince_my_girlfriend_that_financial/ https://www.reddit.com/r/financialindependence/comments/8p287e/young_and_unsure_if_i_want_to_retire_early_should/ https://www.reddit.com/r/financialindependence/comments/8os1vi/im_21_years_old_struggling_with_now_vs_later_do_i/ https://www.reddit.com/r/financialindependence/comments/8oojrr/advice_for_a_21_year_old/ https://www.reddit.com/r/financialindependence/comments/8ong3l/pursuing_a_software_engineer_degree_or_pursue/ https://www.reddit.com/r/financialindependence/comments/8oox7e/help_me_with_my_10year_plan_to_reach_fi_new_grads/ I think it's great that some young bucks are out there thinking about FI early on. But personally, seeing the same threads / requests for information on a daily basis is exhausting and kind of defeats the purpose of this sub. We're dangerously close to r/personalfinance at this point. submitted by /u/Big_Gay_Mike [link] [comments]

Google employees using F-you money Posted: 07 Jun 2018 07:59 AM PDT From this article: http://www.collaborativefund.com/blog/careful-what-you-wish-for/ "When Snap went public last month, its investor documents contained a warning that has become common in tech companies: We have many current employees whose equity awards are fully vested and will be entitled to receive substantial amounts of our capital stock shortly after our initial public offering. As a result, it may be difficult for us to continue to retain and motivate these employees, and this wealth could affect their decision about whether they continue to work for us. Google is facing this too. Its self-driving car program is suffering an exodus of talent. Bloomberg recently explained why: Early staffers had an unusual compensation system that awarded supersized payouts based on the project's value. By late 2015, the numbers were so big that several veteran members didn't need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. Two people called it "F-you money."" submitted by /u/danzadelalluvia [link] [comments]

Dealing with feelings of inadequacy Posted: 07 Jun 2018 06:44 AM PDT I am on track to RE in about 4 years. We are an early 40's couple. My wife loves her job and is at the peak of her career. I highly doubt she is going to quit or stop working, atleast for another 15 years. We have discussed the benefits of FIRE extensively but I think she thinks its all a fairy tale. Any discussions of finance makes her sleepy, but she is also a very high earner., currently making 2.5x what I make. My issue is that I don't want to be seen as mooching off her. Other than my wife I haven't discussed our FI plans with anyone. I highly doubt anyone would openly question why I am not working while she works. But I feel like there would be a perception, especially among her very large, tight knit, and traditional family, that I am making her work to support my lazy lifestyle. To be sure, they are all awesome people but very traditional and conservative. We also live very close to them and hang out with them a lot. Moving away is not an option. I realize it is no one else's business and this is about my ego. Also maybe nothing would happen and I am overthinking this. Has anyone dealt with anything like this? submitted by /u/azfanboy [link] [comments]

Daily FI discussion thread - June 07, 2018 Posted: 07 Jun 2018 04:08 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. submitted by /u/AutoModerator [link] [comments]

Taking a random day off work to see what early retirement is like! Posted: 07 Jun 2018 07:49 AM PDT It's mid morning and I'm laying on my bed after taking a completely random but scheduled and unplanned day off work to capitulate. It's incredible. No rush hour crazed stress fest to get to a corporate office really does start the day on the right path. After going for a nice 2 hours at the gym and then a nice steam room visit I had a glorious shower and now I'm clean and feeling great. The day just keeps getting better. The birds are chirping and the sun is shining as all the workers are at the offices scrambling for their piece of the pie while I've already got mine. I'm in my upper 30s so still getting to the prime of my earning years but early retirement simply sounds like heaven on earth. I'm going to walk outside and tend to my garden for awhile and then pursue additional food and relaxation. I highly recommend a completely random day to capitulate and taste what early retirement feels like. Not filled with airports and travel arrangements like my normal vacation days, this staycation early retirement taste is truly amazing. submitted by /u/ultrasuperthrowaway [link] [comments]

(Advice Req) I Have an Undeveloped Plot of Land in a Residential Golf Course Neighborhood Posted: 07 Jun 2018 03:51 PM PDT It's in a suburb in TN, and I don't have anywhere near the financial backing to develop it. And on top of that, I live in a different state. So for now, this 1/3 acre is just sitting. Selling it as is wouldn't net what I paid for it, and the property taxes each year are inconsequential, but I feel like I should be looking for SOMETHING to do with it instead of just waiting and hoping I, someday, can build a house or sell it for a profit. Suggestions on paths to look into would be welcome. submitted by /u/TheGoodRevE [link] [comments]

Alternative housing ideas to progress towards FIRE in HCOL area (LA) with kid. Posted: 07 Jun 2018 03:43 PM PDT I'm looking for any alternative ideas to the standard financial advice given to me. The cost of housing is extremely burdensome and limiting on a long-term plan to reach FI. In general, most of the [awesome] people/blogs/podcasts I follow who have achieved great success were either single, didn't have kids, lived somewhere with a low-cost of living, bought a house when the market was low, or make gobs of money. (I don't mean this in a negative way what-so-ever, I just think my situation is fairly different than most of the FI bloggers and podcasters) So the housing part of typical described path to FI doesn't seem possible for me. I'm 26 and live in a northern suburb of LA, married with a 6 mo. old son. Moving to somewhere cheaper is not currently an option with family nearby and the wife wanting to stay local. Also, doing a home-share would be difficult with a 6 month old baby. I've looked into "house-hacking" but there are hardly any duplexes in our area, and they sell for an insane amount when they do pop-up. As of now, we are planning to buy a small condo in an area with a good school that needs some TLC and accept that we won't be able to do any housing "tricks" to gain ground on achieving FI (from a housing point of view). My general solution is to leave lalaland but that is much easier said than done. Especially having family on both sides nearby to watch the kid. Does anyone have any alternative ideas to save on housing in the LA-area? I'm just looking for ideas and experiences that aren't "buy a duplex and rent out half". I love the community and appreciate any feedback or thoughts! submitted by /u/hammertime9909 [link] [comments]

A pretty significant milestone, and no idea where to go from here Posted: 06 Jun 2018 11:50 PM PDT I know from reading this sub that this is a pretty typical story, but since I have no sympathetic friends I can share this with, this is my best outlet. I hit a pretty big financial milestone in the last couple of days. Usually I share on here when I reach nice round numbers, but this one is a little different. For the first time, when I input into cfiresim my desired spending amount with some other reasonable parameters*, I'm getting a 100% success rate based on the assets I have right now. (*For the curious, those parameters are an asset allocation of 80% stock/19% bond/1% cash, living from now until 2065 [age 85], with NO other assumed income at any point in the future -- including social security or inheritance -- and no accounting for home equity in my primary residence.) As happens to many people as they near or reach this point, I've come to realize that I'm not ready to call it quits from work. I don't particularly like my current job, and I've been looking for similar roles for the last 6 months or so but nothing has panned out. That's been a very humbling experience, since I've always considered myself to be good at what I do and thought making a lateral move would be easy. Nevertheless, the process has at least made me realize that I actually want to work, as I've been excited and ultimately disappointed at several opportunities that didn't work out. I'm not really sure where to go from here. Do I stay in a job I don't like when money really isn't a factor anymore? Part of my problem finding something new has been that I've been trying to limit myself only to positions that pay similarly. Do I take a significant, or even massive, paycut since I now can? I know there probably isn't much that anyone can offer here, but any advice or thoughts are still appreciated. submitted by /u/fi_ta23 [link] [comments]

W2 Vs Real Estate Investment Income Taxes (Napkin Math Example) Posted: 07 Jun 2018 10:04 AM PDT I realize I am preaching in the wrong church here but I was having a discussion with a family member about rental property and he was surprised most by the tax benefits. I decided to make a quick example of a W2 worker vs a real estate investor making $125,000 per year filing jointly. I am using the Kentucky tax rate (5.8%) for this example because that is what I pay. Please let me know if you see any errors. It is also worth considering that property depreciation is only deferring tax. However, if I die my children would inherit the property on a stepped-up bases and not pay any recapture taxes on the depreciation. Also, retirement accounts would be available for either person so they were not included in this example. This is merely an example and every situation is different. I am not trying to convert anyone from index funds, just thought it was worth sharing The W2 worker pays $28,162 in Fed, State, Local Tax, SS, & Medicare - Giving them an annual take-home of $96,839 The real estate investor pays $5,049 in Fed, State taxes - Giving them an annual take-home of $119,951 The difference comes to $23,113 or nearly 24% more take home pay for the real estate investor Edit: Just for clarity, the $125,000 rental income is net after all associated expenses Screenshot Here is a link to the excel document. https://www.dropbox.com/s/ad8ozl7ai7yxhug/W2%20VS%20Real%20Estate%20Investor%20Taxes.xlsx?dl=0 submitted by /u/ChasinThatChicken [link] [comments]

Getting a mortgage with FIRE Posted: 07 Jun 2018 06:40 AM PDT We want to semi retire-keep my 30k freelance biz and sell our house to move to a lower cost area. Not sure how we can get a mortgage with no jobs. Deets: 55 & 57 years old 650 investments. 1/2 in 401ks and IRA 400k house equity. New house would run 350-400k 30k freelance. Would be happy to earn more but not easy to get steady retouching work. In 10 - 12 years 46k in Social Security Thinking 30% or so down payment Anyone been in this situation and been able to get a mortgage? submitted by /u/my_house_is_an_ATM [link] [comments]

Joining a startup with no 401k or health care... recommendations? Posted: 07 Jun 2018 03:48 AM PDT I'm planning on joining a start up in the DC area, but the startup is currently a one man shop. As of right now, the founder doesn't have a 401k plan or any healthcare options. The founder is able to maintain being covered by health insurance due to his spouse. Factors for joining the start up: My salary would nearly double and I have a cushion to take on the risk. Factors I'm hesitant about: 1) I'm single and in my later 20s, so I wouldn't be able to ride on a spouse's healthcare plan 2) I want to keep maintaining my goal of reaching FI, yet how can I keep setting aside retirement money if there is no 401k options? At my previous job I was maxing out my 401k and IRA, as well as putting a few thousand away into stocks each month. submitted by /u/DMV202 [link] [comments]

What constitutes as separation of service with regards to sole proprietors being able to roll over their solo 401k employee deferrals prior to turning 59.5? Posted: 06 Jun 2018 04:48 PM PDT I'd like to use a solo 401k in the future both for rolling in pre-tax funds to aid with future backdoor Roth contributions, as well make additional employee deferrals if I end up making a profit and don't have a job at that point with a 401k. This would play a big part in early retirement plan. So for sole proprietors, what's the deal on being eligible to rollover out of a solo 401k the amount you contributed as an employee prior to turning 59.5? I know that, generally, after-tax employee contributions and funds that were initially rolled in can be rolled over in-service, and also that employer contributions can be rolled over in-service if you've participated in the plan for at least five years. I also know that turning 59.5 will make you eligible to do an in-service rollover of pre-tax/Roth employee contributions, but is there a way to do so before turning 59.5 (or having a hardship)? Everything I read says you can when you separate from service, but how can a sole proprietor ever separate from service given that, by definition, you and your business are the same? Is there a better IRS definition of separating from service for sole proprietors? Perhaps you can just decide to shut down that solo 401k account and do direct rollovers to IRAs? I plan to open a solo 401k down the road regardless of any side income I may or may not have (obviously I need to at least attempt to have a profitable business), where it will be used to store pre-tax funds for avoiding the pro-rata rule for backdoor Roth IRA contributions. I know that since those would rolled-in funds, I could roll them out at any time, but I would like to know about my options for employee deferrals in case I do eventually have a profitable business. Having this extra tax-advantaged space available could be a major part of my early retirement plan. submitted by /u/barchueetadonai [link] [comments]

[Philosophy] Start mentally thinking wealthy. Time for a 21-day makeover (summary) Posted: 07 Jun 2018 04:19 AM PDT The middle class trades currency for liabilities. The wealthy trades currency for assets. It is much easier to go from nothing to producing than it is to remove the liabilities incurred from a middle class lifestyle - Jacob Lund Fisker, paraphrasing. You are in a great position to change/alter/rewire your perspective and principles towards money, wealth, and even retirement. But in-order to change, you need to establish new routines. On the blog "early retirement extreme" is more of a philosophical approach/guideline. This individual managed to live on $7000 (2008) per year and retire with a $200,000 "nest egg" within 5 years. His income never exceeded more than $45,000, which is more obtainable than a lot of retirement advice using six figure incomes. The principles are what I am stressing. Humans only are able to control a limited amount of items, but these items have immediate impact. Taking personal responsibility towards behaviors can often feel like a scary but liberating process. Day 1: Finding a Place to Live - http://earlyretirementextreme.com/day-1-finding-a-place-to-live.html Highlights: A home is basically only a place where you sleep and keep your stuff An extra bedroom might add $200 a month to the rent. This extra amount requires $60000 and $80000 in total assets to become sustainable. How many years will it take you to save this much more money? Three basic values for a home: Location relative to your work, location relative to your grocery outlet, cost. If you ever purchase a home, do not think it is a good idea to consider the house you live in an "investment" In summary, if you had the option of living somewhere close, cheap (per person), and within a walking/bike distance towards your work and grocery outlet, this is the favorable route even on minimum wage ($14,500 per year). We are cultivating a budget around $8,000 per year. Additionally it takes around one month to move, but this is compounded within the second point. Day 2: Decluttering and Managing Stuff: http://earlyretirementextreme.com/day-2-decluttering-and-managing-stuf.html The cumulative mountain of unused stuff is a symptom of economic inefficiency Inefficiency is what will slow you and everyone else down from early retirement or even prevent it. More likely than not, you probably do not have much stuff. And this is a good mentality to keep. Additionally, if you are able to free up your time, you can "exploit" those who have too much stuff by purchasing it cheap at garage sales or thrift shops. Minimize your total items and maximize your returns (check eBay's sold listings for a complete guide to pricing). But the idea is that you are getting out of one lifestyle and into another, do not fall into the stuff trap! If you have things you need but are limited in funds, do not worry. There are programs and many others out there. The blog recommends: freecycle.org which has people giving out free items to those who need it instead of tossing them away into a landfill. You can pick up furniture, bikes, electronics, and other items depending on the availability within your city/town/location. Day 3: Grocery Shopping - http://earlyretirementextreme.com/day-3-grocery-shopping.html So many people are clueless about nutrition so if experts recommend eating a little bit of everything, chances are that nobody will develop any nutritional deficiencies — well other than eating too much. During my first 3 years, I ate mostly lentil soup (lentils, onion, garlic, cheese, rice, carrots) and tuna sandwiches with lettuce or kale. (Editor note, but the idea is that most "meals" can be constructed cheaply around three staples of rice, beans, onions) Avoid preprocessed food. Personally I draw the line at canned tomatoes and bread. I would never buy sauces, powders, or frozen ready meals. Highly recommend flipping the standard western idea of basing all meals on milk and meat around. Consider going vegetarian.It is much less expensive both in terms of food cost but also in terms of reduced medical costs (cholesterol and all that). Also it is very hard to stay overweight on a vegetarian diet. Additionally, consider meat a treat. Besides, leftovers without meat tend to store longer. (Editor note, basically meat and fruits are your new "junk food" addictions. Treat them sparingly as they are addictive and pricey. I gave up on the whole milk idea when I moved away from home. The idea of picking up a milk every six days was too inconvenient. Food limit: Depending on where you live: $50-75/person/month. My budget is similar to his recommended. Very small amount of meat (1/8th of a pound) grass fed beef, beef stock, and lots of veggies including onions, beans, carrots, kale, spinach, and potatoes. Meal prep and freeze your meals to last longer and save time. Each one meal per day for optimal health and time efficiency. Day 4: Drop the Cell Phone Plan - http://earlyretirementextreme.com/day-4-drop-the-cell-phone-pla.html There was a time, a simpler time, perhaps a few years ago(*editor note, 20 years ago), when people were able to make detailed advanced plans to meet their appointment to do a certain thing at a certain time. Today, cell phones have replaced these skills. In fact cell phones are now considered a need and have even begun to replace basic parenting as some parents are beginning to use cell phone tracking to keep track of their kids. Regardless, cell phones are not really needed. In fact phones are not really needed. For years I relied on email (I did have access to a public phone in the hall in case of emergencies) and now I have skype for talking. Is your cell phone worth it? This is easy to answer. Multiply your monthly bill with 300. Then divide this with your monthly savings rate. This is the number of months, that your cell phone is keeping you from retiring e.g. If your bill is $50 and your monthly savings is $500, then your cell phone is delaying your retirement by 50×300/500=30 months or almost three years. This is true. Most smartphones and even cellphones are not "needs" and have replaced the skills that actually allowed for survival within plans in the past. Additionally (from what I recall), ALL cell phones even if not activated with a paying plan are required to dial out to an emergency number in the USA. A charged but inactive phone can be a good preventative measure for dire situations. Day 5: Find a Free Hobby - http://earlyretirementextreme.com/day-5-find-a-free-hobb.html Hobbies are broken down into three categories (according the the blog): Spending on equipment, activities, or the like (in other words, costing money). In the end we all have the same to show for it: Nothing. We have been entertained, but I honestly put the value of the entertainment I received 5 years ago close to nothing. "Free" hobbies There are also hobbies that cost nothing or are in a sense close to price neutral. Learn Ancient Greek, play chess, start a vegetable garden (the costs are cancelled out by not having to buy the vegetables) It is not hard to find free hobbies and in general it is possible to develop an interest in almost anything. The reason is that things are mostly uninteresting simply due to a lack of understanding of the hobby. Productive "giving back" hobbies Engage with other people. The author's free hobby interest (point number two) in system administration meant that [he] got to run the department servers where [he] worked Day 6: Clothes - http://earlyretirementextreme.com/day-6-clothes.html The most effective option to save money on clothing clearly is not to buy any, hence this is what I would recommend. This strategy can work for several years because most people, myself included, simply have way too much clothing e.g. more than what we can wear at one time. If you have clothes you can not wear at all, get rid of it. Someone else can probably use it. Now, your average piece of clothing should survive the laundry cycle about 100 times, maybe even 200. If you have 10 shirts, that's 1000 cycles. Even if you only wear them once before you wash them, that's three years. Thrift shops, second-hand, clothing repair skills, freecycle, hand washing (or cold washed, line dried) for longevity are all your friends Day 7: Going Car Free - http://earlyretirementextreme.com/day-7-going-car-free.html Everyone needs to live somewhere, but not everyone needs to drive somewhere, especially not those that found a place to live that is close to work on day 1. Next to housing cost, transportation costs are the second biggest source of expenses. The average American spends 18% on his income on transportation. That is 0.18×12=2.1 months a year of work. That is a lot of time that could conceivably be used for something better. Assume he also spends an hour daily in his car commuting, then that is 250 hours a year, assuming 250 working days. That is 1/8 of the working day on top of the working day. Hence, that is 12/8 = 1.5 month in addition. In other words almost 3 months a year goes into being able to drive back and forth from work. Hence if you would otherwise calculate 6 years until retirement, then if you own a car, you will only be able to save 9/12 as much, so your time until retirement would extend by 12/9*6=8 years or two additional years. Correspondingly, if you calculate 12 years until retirement, then you are really looking at 16, or four more years. Not owning a car is therefore an extremely helpful measure towards early retirement. If you want to retire extremely early, it is almost a prerequisite. Day 8: Get Engaged - http://earlyretirementextreme.com/day-8-get-engaged.html No I'm not talking about getting married. I'm talking about finding something that motivates you: Perhaps your calling I found that once I found a free hobby, the more I focused on it, the less money I spent. The problem with our society is that we have basically been conditioned and programmed by marketeers to equate often pointless consumption with rewards or entitlements after hard work. To pay it off consumers go to work the next day to manufacture stuff for the next consumer that comes along and needs to feel good. This is the very definition of a consumer driven economy. It has little other purpose than building things for people to buy things so they will keep working. The conclusion is obvious. If you want to stop working, stop behaving like a consumer. Start finding something you can identify instead of work. This is psychologically very important and it is one of the things that took me the longest to find out myself. Day 9: Budgeting - http://earlyretirementextreme.com/day-9-budgeting.html I see no need for detailed budgets or tracking expenses. In my world there are basically two categories: Money spent and money kept Money I keep, therefore, represents freedom. I value this very highly. To compare this to the spending category, I estimate the monthly cost of spending on some item, and then multiply it by 300 (more calculations in the blog). It is quite possibly that it is this enormous multiplier, the factor 300, that discourages people from saving for passive income. Saving $30000, after all, "only" results in 100 bucks a month and saving $30000 can take years or even decades when one is not aggressive about it. In that sense not-saving creates a double-whammy. Hence, if I want to purchase something that will cost me $5 a month, I do not see a $5 price tag. I see that category 2 needs to be boosted by $1500. Suddenly $5 does not seem so trivial anymore. On the other hand, paying $4000 for something that I can sell for $3500 and that will last for 15 years … that is only $2.7 a month. This means that price tags become irrelevant. All that matters is monthly expenses and the size of the principal. I always try to decrease the former and increase the latter. When they meet, you have arrived (retirement). Day 10: Calculating Your Net Worth - http://earlyretirementextreme.com/day-10-calculating-net-worth.html It seems that everybody calculates net worth differently. For extreme early retirement or financial independence, there is only one way to do it. The only thing that matters to your net worth are assets that can easily generate income (All savings accounts and checking accounts, all brokerage accounts, all real estate you own that you rent out. If any are mortgaged, subtract the debt). Do not include the following: Any kind of tax-deferred/locked retirement account (unless you are older than 55), the house you live in, cars, boats, airplanes, or other big ticket items (unless you rent them out), Bling-bling. Calculate your annual expenses. Multiply this by 25. Is it lower than your net worth? If yes, congratulations, you are financially independent and historically speaking you can go for a few decades without a job. Now multiply your expenses by 35. Do you still qualify? If yes, then historically, you could go on forever. If either is a no, then you still have work to do, literally. Work hard to maximize your networth while minimizing your expenses. For most people the latter is far easier since the leverage factor is in the hundreds e.g. $100 saved per month translates into $30000 less in retirement requirements. Day 11: Connecting Your Stuff with Your Neighbors, building communities - http://earlyretirementextreme.com/day-11-connecting-your-stuff-with-your-neighbors.html On day 2, I recommended getting rid of a lot of your unused stuff, that is, stuff you haven't used for the past 1 months (books and DVDs were allowed a slightly longer half-life, about a year). The point of that operation was to make it easy to move into smaller housing and thus remove the main cost of having too much stuff namely, indirect housing costs. It is possible to go further than that. Whereas the above may be thought of as an inventory reduction, the next step is to take inventory management to the next step, to something akin to the Japanese Just-In-Time except what we're going to do here is to store some or our things "off-site". I suppose you're familiar with the idea of borrowing things from your neighbors. But have you ever systematically done so? Set up a system so that each person (who is interested) provides a list of what they have but do not use every day. This could be tools, kitchen utensils, DVDs, and even bicycles. Rules of borrowing: If you break it, you replace it. Return it in a better or as good as condition as you got it in. It goes without saying that the first and the last method requires some upstanding friends. Normally this will develop automatically. People who do not respect the system and other people's things will eventually get excluded from the system Day 12: Establishing a Savings Account - http://earlyretirementextreme.com/day-12-establishing-a-savings-account.html It is vital to the early retirement plan to be able to access savings in your retirement. For those younger than 55, saving in plans, which presume that people should retirement no sooner than age 59-67 (depending on your country), is thus of little use. Having implemented all changes of the makeover so far, it should be possible to save at least $500/month… more if you're making more than minimum wage ($12000/year). Those ambitious enough to retire extremely early should be able to save more as well as earn more. Initially, it is important to stay motivated. I wrote a post last year — one of my first — on how to compare your savings to big ticket items on a regular basis to stay motivated. To wit, being able to buy something worth $10,000 makes one happy on a daily basis, or at least as often as one thinks about it, whereas buying it will only create happiness for a few weeks. It matters very little whether your saving is done in a savings account, a checking account, a money market, or even under the mattress. As long as your cash position is less than $10,000, the difference in interest rates is minute. Besides, keeping a non-working cash position is useless for early retirement. The so-called emergency fund is only useful for workers who live above or close to their means, but for extreme early retirement you live at less than half your means In a short while we'll start building a position in a brokerage account. This will be accessible to be liquidated in case of any "emergency". Day 13: Insurance - http://earlyretirementextreme.com/day-13-insurance.html An emergency fund is essentially a form of unemployment insurance where you self-insure. This idea can easily be taken further. Consider for a moment what else could be self-insured? Your house? Your bicycle? Your stuff? Think of insurance as a money transfer from people who get into accidents less often to people who get into accidents more often with insurance companies taking a cut (this is called the combined ratio) of typically 10% to arrange this transfer. Would you voluntarily take this offer? Only if you are more risk prone than average (say you eat 5 double cheese burgers a day, smoke, and have an annual car accident) or you can not afford to cover the loss if the event happens to you or both. For instance, due to the prevalence of frivolous lawsuits we carry liability insurance. You never know if someone is going to stumble on your door step and then decide that their clumsiness was your fault. We do however not insure our stuff as this can easily be replaced many many times in case it gets destroyed For my health insurance, I carry a HDHP, which has very low fees, because I carry all risk from $0 to $3500/year after which the insurance pays the rest. Thus I'm protected from catastrophic loss but I have a fairly large economical stake in my health. The money to cover this comes from a HSA which can be increased tax-free by $3050 per year. (Editor note, before the ACA). This is all relative to say having your health insurance through your job and worrying about getting so sick that you eventually get laid off unable to work after 1.5 years thus losing your nice corporate health care, and then what? Day 14: Investing for Early Retirement, part 1 - http://earlyretirementextreme.com/day-14-investing-for-early-retiremen.html If you plan to retire early, you are eventually going to become a "professional" money manager as in a sense you will be managing your money for money. You will, of course, be operating on a much smaller scale and so you will have a much easier job than a real professional who is subject to regulations and other restrictions. One size does not fit all! You need to be sufficiently wise to acknowledge whether you are informed or uninformed. If you believe you are an informed investor but you actually are an uninformed investor, you will lose money to informed investors. If you believe you are an uninformed investor but actually are an informed investor, you will lose opportunity cost. You must realistically determine this for yourself. Learning to manage your own investments is not easy and you will have to spend considerable time educating yourself. (Editor note: the vast majority of individuals should stick with index funds, but like their nutrition, they might be overeating due to lack of understanding). Detailed investments are covered on the Wiki: https://wiki.earlyretirementextreme.com/w/index.php?title=Investments Day 15: The First Two Weeks of the Makeover (The personal quiz) - http://earlyretirementextreme.com/day-15-the-first-two-weeks-of-the-make-over.html The first two weeks of the makeover covered the most important aspects of the ERE strategy. Out of those 14 items, the most important are housing (day 1), transportation (day 7), and food (day 3). Ignoring those and focusing on the rest will only bring about cosmetic changes. In fact, if I were to create a quiz, and actually I am, housing would be worth 30 points, transportation would be worth 20 points, food 10 points and the other 11 subjects about 4-5 points each. Day 16: The Stuff You Actually Keep and Use - http://earlyretirementextreme.com/day-16-the-stuff-you-actually-keep-and-use.html One of my core philosophies is to maximize the quality of things I spend a lot of time with/in/on and minimize the quantity of things I do not spend a lot of time with/in/on. This way the reduction in quantity pays for the more expensive quality. This works well because in our society, quality is often underpriced and quantity is overvalued. What I mean by this is that it is easy to earn enough to afford high quality because wages are so set so as to be allow one to afford enormous quantities. Quality is also cheap because people do not put value on it. One example: Six pairs of shoes at $20 that last 2 years each vs one pair of $120 shoes that last 12 years. Which is better? Obviously the latter. The cost is the same, but you are wearing something that is better constructed for a good many years. Other high quality items may command a substantial used price. For instance, a watch acquired for $200 new will have a used price of very little five years later. A watch acquired for $800 will probably sell for close to the same five years later. Which is less expensive? The three set strategy: Plan to keep everything you own forever(*), consider everything you own for sale at all times, minimize the use of resources. Over time (years), consequently, your stuff will increase in quality and decrease in quantity. Day 17: Maintaining and Repairing Things - http://earlyretirementextreme.com/day-17-maintaining-andrepairing-things.html As I have explained before, it mostly comes down to housing, transportation, and food. There are really no magic tricks other than discovering that you will be just as happy — but probably more motivated — if you spend 20% of what you're currently spending while saving the rest. Today, I'm going to talk about repairing and maintaining things. As a society of "use and throw away" these skills and habits have entirely fallen into disrepair. The challenge thus comes in two parts — and I can empathetically state that this is the area that I find to be the most challenging: You must acquire things that have been constructed to be repairable and You must learn to do some or most of these repairs yourself. For the first item, I'm not and I'm never suggesting that you toss a functional object just to buy another object. That is just wrong! You wouldn't toss a pet either just because you lost interest or found something cuter, right? Ownership implies responsibility: You were responsible for digging raw resources out of the ground and now you're responsible for getting the maximum use out of the object, so there If it's built of metal, wood, or natural fibers, it is typically repairable. For the second item, you must get in the habit of maintaining your stuff. This usually means cleaning after use, storing things well, and replacing or repairing breaking parts before they start breaking down other parts. Day 18: Join a Challenge - http://earlyretirementextreme.com/day-18-join-a-challeng.html Some people like challenges and if so, adopting a challenge is a good way to stay motivated. Just think of the 100 push up challenge, the buy nothing for a year challenge, the no-car challenge, the X dollar a month food challenge, the no impact challenge, and so on Finding a challenge is good, because it provides you with some rules and often there is much creativity and a greater sense of accomplishment involved with finding ways to solve problems under those restrictions rather than just using the traditional method of paying by credit card and arguing with a representative customer service until you get (or go) your way. For instance, if you take a packaging challenge e.g. having to store all packaging in your house, not only will you gain a real understanding of all the superfluous wrapping that consumer products ship with, but you will also find ways to avoid buying things that are excessively packaged. If you start weighing your outgoing garbage, maybe you will start composting to reduce that number. Most of those challenges are finite in time, typically a year. I don't know why that is? Possibly because it provides people with a way out? Or maybe it provides people with a goal or a finish line after which they can revert to their old habits. I think this completely defeats the purpose, unless you're only looking for a book deal which seems to be a dime a dozen on those kind of projects. So just ignore the deadline and adopt it as a lifestyle. Day 19: Getting Rid of Your TV - http://earlyretirementextreme.com/day-19-getting-rid-of-your-tv-addiction.html and computer games, apps, reddit, netflix, and any other consuming vegetable activity. While I can not prove this, I think not having a TV, or at least not watching it, is a big factor when it comes to choosing unconventional paths. Naturally, there's this popular idea that TV feeds the masses with certain values, but I believe this is exaggerated. Most programming offers fairly reticent opinions and is quite free of content. The great beauty of TV is therefore not so much that it acts as a form of active propaganda steering people towards certain goals, but that it keeps people from having goals in the first place. When TV was invented it was thought to be a great opportunity, a great teaching tool for quickly reaching the masses. However, ironically, it turned out that TV was much better employed to keep people from learning During the day, professionals attend to their jobs. During the evenings, they vegetate in front of their TVs, thereby preventing them from learning anything, and this effectively keeps them in their jobs. Retiring early is not just about saving enough money. It is also about learning things with the aim to save money as well as with the aim to find something with which to occupy yourself once you retire from employment. Watching TV prevents this development, that is: 1. It prevents you from developing a dissatisfaction with your current life. 2. It prevents you from developing new ideas. 3. It prevents you from learning anything that can change your life. In other words, it promotes the status quo; your status quo. In other words, if you want to stay where you are. Keep your TV, but if you want to change, maybe the first thing to do is to get rid of your TV. Day 20: Own Classics - http://earlyretirementextreme.com/day-20-own-classics.html When something stands the test of time, it becomes a classic. As far as I am concerned, everything else is "contemporary junk" items. I would strongly encourage anyone interested in living well on very little to "invest", that is, buy and own classics rather than cheap—frugal is sometimes used as a euphemism—junk. Another way that classics are cheap to own is that you will be able to pay the lower used price, which admittedly is close to the new price if it's still in production. However, should you decide to sell again a few years from now, you will be able to sell again at the same price or even perhaps slightly higher or at worst slightly lower. The difference can be thought of interest or rent depending on whether the return is positive or negative. Accumulating classics require slightly more knowledge than driving over to the mall and swiping the credit card, but it is really not that hard. Here's a short list to get started: shoes, fishing reel, binoculars, pocket knife, wristwatch, music instruments (non-electronic), clothes (filson, barbour, burberry, etc.), pens, furniture, silverware. Day 21: Investing for Early Retirement, part 2 - http://earlyretirementextreme.com/day-21-investing-for-early-retirement.html As mentioned in part 1, I am reluctant to give specific investment advice on this blog. The reason is that unlike frugality and personal finance, which anyone can learn in a couple of months (the difficult part is following through), investing properly takes at least a couple of years (here too, the difficult part is following through). I saved money for 4 years before I even began investing. I'm throwing this out there, because an extreme early retirement strategy does not rely on compound returns simply because there are not very many years during which it can compound. If the market is with you, you may reach your goal in 4.5 years instead of 5.5. (The article goes into specific methods related for his best interest) Yet as I said, investing is very individual. Do whatever makes you sleep well at night. submitted by /u/unemployed_for_life [link] [comments]

Pension lump-sum vs Annuity + Questions on allocation (non-US) Posted: 06 Jun 2018 05:25 PM PDT Hi everyone. I'm currently 52 and together with my wife we have a net worth of about 5M USD, consisting of: roughly 2.5M (50%) in real estate including our family home, my parents' home + 1 rental property 1M (20%) in cash, including 'investments' in foreign currencies and fixed deposits 1.5M (30%) in a variety of stocks, mostly ETFs or blue chips I am planning on retiring soon and for my pension (which won't be paid until I turn 60) I have the option of choosing between either: Annuity (75k adjusted yearly for inflation) or Annuity+cash lump sum (46k a year + 430k lump sum). So the annuity rate would be about 7% - this seems quite attractive but the fact that the annuity wouldn't be paid to my wife/kids after I die is making me slightly hesitant. In terms of tax implications we live in a low-tax jurisdiction so this wouldn't really be a factor when deciding between the two. Also, what are your opinions on our current asset allocation? Thanks in advance and sorry for the lengthy post! submitted by /u/throw_awayandaway64 [link] [comments]

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