Financial Independence My entire reasoning for wanting to FIRE is because I hate working. |
- My entire reasoning for wanting to FIRE is because I hate working.
- The struggle to break away from the multigenerational wealth accumulation failure cycle. . .
- $400k loans gone in just under 10 years!!! Debt free jig in four months!!!
- Daily FI discussion thread - September 07, 2018
- Help a cycling enthusiast find his RE happy place
- Mega Backdoor Roth eligible 401k plans
- Weekly FI Frugal Friday thread - September 07, 2018
- Roth IRA Conversion/Distribution Tax in EU/Europe
- Stop contributing to tax-deferred because of possibility of someday moving abroad?
- Paid off Mortgage, Saved up 300k in one of the most expensive burbs in Seattle
- Side hustle or 9-5 - path to FI
- Airport flight cost as location choice factor. Any tips?
- What is your Net Worth : Earned Wages ratio’s historical trajectory?
- Company's stock sees high returns every year, should I pull money out of 401k and put it there?
- [US, 32, male] Can I contribute max to both traditional/Roth 401k with two separate plans?
- Two Rental properties, sell one and pay the other one off ASAP?
- Starting FIRE in college
- If you won the Lottery on your path to FIRE...
| My entire reasoning for wanting to FIRE is because I hate working. Posted: 07 Sep 2018 10:47 AM PDT It's not because I want to live life to the fullest, or explore the world, or to become a better person. ITS BECAUSE I HATE EVERY JOB IVE EVER HAD. Im very similar to the guy from Office Space. Just thought I should share my FIRE testimony. [link] [comments]  |
| The struggle to break away from the multigenerational wealth accumulation failure cycle. . . Posted: 06 Sep 2018 10:38 PM PDT I was 5 when my parents divorced. My mother raised me for about a year after that, before losing custody because she is mentally unstable. My mom is now 54 years old. She hasn't held a job for longer than a year or two and she always spent every penny as soon as it hit her bank account. These days, she lives with a physically abusive often-unemployed husband, in a dilapidated house he recently inherited from his mother. They scrape by on my mom's disability checks. My maternal grandmother lived in a small apartment with no savings, scraping by on social security until she died of cancer. My father raised me. Like my mother, he has always been a low wage worker. Making matters worse, we live in a pretty HCOL area. Despite that, he squandered most of the money he earned. He remarried when I was 9. His new wife was also a low wage worker and a big spender. In my final 9 years of childhood, I watched my dad buy a new vehicle, new computers, video games, a new TV, PPV wrestling events, and hundreds of worthless trinkets. When I became a young adult, not much had changed. My dad bought another brand new car. He continued buying worthless trinkets they set on their shelves to never look at again until it's time to dust them off once in a while. He began getting hooked on Facebook games with micro transactions. At one point, he confessed to me that he spent over $4,000 on one Facebook game over the course of four or five years. Fast forward. My dad is now 51 years old. About five years ago, his wife was diagnosed with multiple sclerosis. A year or two after that, her employer was tired of accommodating her inability to stay on her feet, so she was let go. They went to apply for disability but they were denied. A lawyer began assisting them with the process. About a year ago, his wife needed multiple surgeries due to complications from the MS. Down to one insurance and one job, the medical bills piled up. Months ago, he confessed to me that he was going to lose his house to foreclosure and his life was falling apart. I was compassionate. They moved into an apartment and continue to spend money on unnecessary things like fast food and big car payments. He has 70k in retirement. Now to me. I was raised watching such frivolous spending, so a budget was pretty much foreign to me. I joined the military out of high school and lived paycheck to paycheck. I got married and bought a house at my duty station about two years before the housing market collapsed. The collapse coincided with my honorable discharge, and I returned to my home state with a house on the market that wasn't getting any bites. With no savings, I couldn't afford to lower the price or to keep paying the payments, and I lost the house to foreclosure. I began civilian life with a very low paying job, but I used my GI bill to get an undergraduate degree. As graduation neared, I divorced and began dating my best friend I've known since childhood. Soon after graduating, I got married and I moved into a townhouse she purchased from her mother years prior. We decided to sell that to move into a small home. That was fine until I landed a new job out of town that paid a little more. So, we moved out there while renting out the other house. That was fine until my wife got pregnant and she wanted to live closer to family. So we rented out the second house as well, and bought a house with the in-laws. My MIL became our child's full-time nanny while we worked. We had to subsidize my MIL's early retirement because she, too, was terrible with money and had virtually zero dollars in retirement at age 55. I landed a job that paid even more. Our two rental properties are older and began having problems, causing us to rack up credit card debt. That's on top of older debt from remodeling a portion of one of the homes to make it more likely to attract renters. Here I am at 31 years of age with about $100k in retirement (between my wife and I) and a -$900k net worth. $48k is a debt consolidation loan that slightly reduced our interest rate. $16k is credit card debt from repairs to get the rentals in selling condition. $11k is a car loan. $3k is another car loan. The rest... three mortgages. I posted on here a while back but I had too much shame to admit we actually had TWO rentals with our completely dumpster fire finances. But we took the criticism to heart and we're selling both rentals, aggressively paying down debt, and then saving for retirement at a savings rate of about 50% ($50,000/yr). We really don't want to repeat the mistakes of our parents and grandparents, and so we won't. A little over a year ago, I knew very little about retirement investments. Thanks to FI blogs and this subreddit, I have a very good grasp on the basics. It's surprisingly simple and I now know the path to retiring wealthy by our early 50s. We are making nearly $100k/yr net now. We should be making $20k-40k from our rental sales, which can knock out a lot of our debt. We expect to have our debt paid off no later than 2020 and potentially before the end of 2019, at which point we can really ramp up our savings. With each raise, we'll throw more into investments, eventually increasing our savings rate to 60-70%. We will teach our kids the value of saving... and they'll learn by our example. I just wanted to share my story of breaking away from the cycle (I haven't yet but I'm sure on the right track). And I wanted to thank those of you whom I have learned from as I lurk this sub almost every day. Thanks for the learning moments and the laughs, and more importantly, thanks for the tough love in my previous FI post. I'll give another update in a year or two, perhaps. TL;DR - our families never saved a dime as we grew up and neither did their parents . . . We began making the same errors in life but we are finally breaking the cycle thanks in part to this sub and informative FI blogs. Edit: Grammar and spelling corrections. [link] [comments]  |
| $400k loans gone in just under 10 years!!! Debt free jig in four months!!! Posted: 06 Sep 2018 10:19 PM PDT I need to celebrate this milestone!!! Started from my first job aiming to be able to live a life of financial independence and I feel like im just that bit closer!!! In another four months, no longer will I be tied to a mortgage!!! Live in a medium to high cost of living area. I worked full time in a low paying job while did university to keep student loans as low as possible. Was able to finish with only $14k student loans and saved for most of the house deposit at the same time. Following graduating I was able to get a better paying job, increased income and savings then purchased a really awful house nine years ago in a good area for $399K with a 5% deposit (gamble on the LVR which did add borrowing costs but I was young and they were willing to lend), did extensive renos when the spare cash built up. Rented out rooms until I couldn't live with renters anymore! Extra repayments where I could, tax refunds went straight on the loan etc. Moved out to rent it out fully and house shared for six months. Purchased a condo with equity from the first property in another suburb for $395k three years ago. Married two years ago and husband and combined finances then but he currently stays at home with our son and has been for 12months now for lifestyle reasons. No big deposits or cash saving into the loan were possible with combining incomes. Two cars between us due to need and no loans outstanding (neither were new cars but are reliable and safe) Paid off the $15k gap between deposit and purchase. No credit card debt outstanding - used for points programs only for food, petrol etc. No student loans outstanding Sold the house this year with a reasonable profit and used it to pay down the loan on the condo. Along the way one $10k inheritance recieved but otherwise blood, sweat, tears, strict budget and the few financial decisions that swung in my favour! In perspective, I have only just cracked $100k gross in wages this last year! It wasn't all smooth sailing. Bumps in the road happened, holidays, medical bills and an occassional loan to cover unforseen emergencies that emergency savings didn't cover were required and paid down and out as quickly as possible. Next steps will be a bit slower as we are currently only one income but by Xmas will be mortgage free!!! I cant begin to tell you how excited I am at getting here!!! [link] [comments]  |
| Daily FI discussion thread - September 07, 2018 Posted: 07 Sep 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]  |
| Help a cycling enthusiast find his RE happy place Posted: 07 Sep 2018 02:44 PM PDT Hi everyone, I'm fortunate enough to be a year out from my FIRE date, with an SO who's on board. All that's missing is… well, the place to RE. (I know, kind of a big puzzle piece!) Right now we live in a very HCOL area (coastal CA) and would like to live somewhere that's still considered LCOL, though I realize that's hard to define. (In comparison to coastal CA, pretty much anywhere will be cheaper, so I guess there's that.) Setting aside the financial aspect, here's what matters to us in a city/town.
At the moment, we're considering Greenville SC, Raleigh-Durham NC, St. Petersburg FL, and Loudoun County VA (exurban DC), all of which have bike-friendly bona fides, though they don't tick every box. Where else should we be looking? Appreciate your insights! [link] [comments]  |
| Mega Backdoor Roth eligible 401k plans Posted: 07 Sep 2018 10:13 AM PDT I own a small business (4 employees, myself included) and would love to setup a company 401k that can handle the so-called Mega Backdoor Roth. I understand there are a variety of requirements, but the two major pieces most 401k plans don't support are: 1) Allows after-tax contributions 2) Allows in-service distributions OR in-plan Roth conversions Also due to Highly-Compensated Employee rules, the plan likely needs to be a Safe Harbor 401k. We're going to do matching contributions anyway, so might as well go for a Safe Harbor plan to avoid potential headaches based on participation rates etc. I've contacted a number of companies but so far Vanguard is the only one that will let me setup such a plan. Their flat fee rate is steep for 4 employees with their enterprise-grade 401k offerings. Their orders-of-magnitude cheaper small business plans don't support the fancy shenanigans needed. I did some searching but was unable to find any lists of 401k providers that can offer eligible plans. If you participate in one, let me know and I'll compile a list here. TL;DR: looking for mega backdoor roth eligible 401k providers [link] [comments]  |
| Weekly FI Frugal Friday thread - September 07, 2018 Posted: 07 Sep 2018 04:09 AM PDT Please use this thread to discuss how amazingly cheap you are. How do you keep your costs low? How do become frugal without taking it to the extremes of frupidity? What costs have you realized could be cut from your life without pain? Use this weekly post to discuss Frugality in general. While the Rules for posting questions on the basics of personal finance/investing topics are more relaxed here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! 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]  |
| Roth IRA Conversion/Distribution Tax in EU/Europe Posted: 07 Sep 2018 04:03 PM PDT I am a US citizen who recently applied for recognition of Italian citizenship through family ancestry. My partner and I would eventually like to RE in the EU, and I'm trying to calculate our FIRE number for several cities around the Mediterranean. Based on what I'm reading here and elsewhere in the FI community, it looks like we should maximize our tax-deferred savings and then create a Roth IRA conversion ladder to minimize our US tax liability. I'm having trouble finding tax rates for Roth IRA conversions and distributions in EU countries. We're most interested in Italy, Malta, Spain, Croatia, and Portugal, but I ideally would love to find a full list of tax rates for Roth IRA-based FIRE in the EU so that I can consider all our options. Are there any guides out there for this? Thanks in advance for your help! [link] [comments]  |
| Stop contributing to tax-deferred because of possibility of someday moving abroad? Posted: 07 Sep 2018 10:16 AM PDT I have a somewhat unusual situation, and need some help with the strategy. My wife and I (47) are considering "leanFIRE'ing" or more like semiFIRE'ing by summer '19. This year, we have been aggressively putting earnings into retirement accounts: my wife maxed out both a 403(b) and a governmental 457(b), put another $10k into a state pension fund, I'll probably max out my 457(b), and we both did our 2018 tIRA contributions to the max. So we'll have put something like $76,500 into tax-deferred retirement accounts. I had also been planning (but see below) to put another perhaps $10-20k into an individual 401(k) for my freelance work, which I am just opening this week (the paperwork is pending on their end). All told, it could be pushing $97k in tax-deferred contributions this year. Sounds good, right? My concern, though, has to do with two issues:
Point (1) makes me want to consider moving there, possibly during our senior years, since even though healthcare is supposed to be "free" for seniors in the U.S. through Medicare, in reality there are estimates ranging from $2,000 to $14,000/year in costs for older Americans (which we've discussed here and on r/leanfire). Taking even a $2k bite out of our yearly budget means needing another $50-66k in investments (assuming a 3-4% SWR), but a $14k/yr bite would require another $350k saved, which would mean working years longer. But point (2) means I could have converted 10 years into Roth ($24k * 10 = $240k) which, in the U.S. would be 100% tax free--and in Spain it would all be taxed at about 25%. In fact, if the RMDs plus Social Security benefits (also fully taxable in Spain) got fairly big, the highest marginal tax rate (if an RMD were over $70k, which, at 7% growth, it would get to eventually) would be, at current rates, 47%. My decision now is whether to contribute anything to my 2018 solo 401(k). I have $9k ready to go, but just want to make sure I'm not putting it in to save paying 12% on it this year only to someday have to pay 25% on it in Spain. But we don't know we would actually move there. I was also thinking that 20 years of tax deferred compounded growth might somewhat make up for the 25% tax hit at the end? Thoughts? [link] [comments]  |
| Paid off Mortgage, Saved up 300k in one of the most expensive burbs in Seattle Posted: 07 Sep 2018 01:32 PM PDT FIRED myself from all the debt at the age of 42 including the mortgage and mba loans. Fired myself from the blood sucking software companies at the age of 45. Simply by saving and getting rid of the debt. Still drive my 18 year old mercedes with 158K miles (yes bought it when i was young and stupid), fix everything around the house myself. [link] [comments]  |
| Side hustle or 9-5 - path to FI Posted: 07 Sep 2018 01:28 PM PDT Thought this post provided an interesting take on our life energy, side hustles, passions and where/we should spend our time. What's your take? Makes me wonder - am I spending too much time focusing on side hustle? [link] [comments]  |
| Airport flight cost as location choice factor. Any tips? Posted: 07 Sep 2018 01:19 PM PDT We're about 9-10 months out from a possible FIRE-associated move, and we hope to move to an area in which we can minimize unnecessary costs in support of a lean FIRE or semi-FIRE. One of our substantial costs are international flights, in our case from the U.S. to Madrid. Last night, we spent some time on Kayak trying out the same travel dates for candidate airports on the east coast, and found they could vary by as much as about $800/flight--and this was for mostly off-season, from early March to early May. I found that surprising! My wife ideally takes two trips a year there, and would like me to join her every time if we could. If the difference really is $800/flight on average, that could mean as much as 4 x $800 = $3,200/year more if flying from Location X rather than Location Y each time. That will eat into our yearly budget and on a conservative 3% SWR (at least until we can get less lean, say), that would require an additional $105k in savings. Plus, some areas have many direct flights, whereas other ones have only 1-stop or 2-stop options, which is way less pleasant if you do a transatlantic flight often like this. A good airport for us is a value. So, has the "airport factor" played into your own location choices? Do you know of any ways to search this efficiently in the U.S., or should I just doggedly plug in a bunch of mock trips to Kayak and make my own spreadsheet? Last, are there other subreddits you would recommend to ask about this on? [link] [comments]  |
| What is your Net Worth : Earned Wages ratio’s historical trajectory? Posted: 07 Sep 2018 01:17 PM PDT I calculated this for each year since I started working using wages from which I paid SS. I am using My Social Security's history of my earned income. I'm not sure if this works or not if you earn greater than the limit for Social Security. It obviously doesn't work if you have significant under the table income. I started working full time in 2014. The net worth is as of Dec 31. 2018 is projected but should be correct barring a major market movement downwards. 2019 is obviously speculative. To be clear, I am dividing my net worth by the amount of money I have ever earned, for Dec 31 each year. Age/Year/Ratio 23 / 2014 / 24% 24 / 2015 / 29% 25 / 2016 / 31% 26 / 2017 / 40% 27 / 2018 / 45% 28 / 2019 / 51% I find this a fun and interesting FIRE metric since obviously investments' earnings don't pay Social Security. So you could cross 100%. [link] [comments]  |
| Company's stock sees high returns every year, should I pull money out of 401k and put it there? Posted: 07 Sep 2018 03:22 PM PDT So my company is employee owned and allows an annual stock purchase. We've been around for 52 years and only lost money the first year we were open. I have a decent faith in the company and the returns on the stock are in the 10-20% range annually. They also match 6% towards our 401k but I contribute 20% of my salary. My question is should I reduce my contribution to my 401k down to around what they match and use the difference to buy stock in the company? Edit: I shouldnt not have worded the title as pulling money from my 401k. I meant reducing my contribution. Sorry! [link] [comments]  |
| [US, 32, male] Can I contribute max to both traditional/Roth 401k with two separate plans? Posted: 07 Sep 2018 01:27 PM PDT I have two jobs, each with their own 401k: Vanguard and TSP. In tax year 2017, I maxed my contribution to Vanguard traditional 401k at $18.5k. I accidentally contributed about $2,000 to a Roth TSP account. When I realized I over-contributed in Apr 2018, it already passed the date to withdraw the money so I had no choice but to take the penalty (according to TSP's policy). When I payed my taxes this year in Jun 2018 (I received an extension because of overseas service), the IRS didn't increase my taxes and gave me the full amount of what I put on my form 1040. I always believed that one could only contribute a max of $18.5k (for 2017) across all plans and all types. I know about megabackdoor Roths, but what I did doesn't match the criteria of a MBDR. QUESTION: Am I allowed to contribute $18.5k on a Roth 401k and another $18.5k on a different company's traditional 401k? If not, when would the IRS find out and penalize me? ^ I'm assuming yes because the IRS presumably knows I contributed to both in 2017, but didn't adjust my taxes. I appreciate it. I couldn't find anything on Google about this. [link] [comments]  |
| Two Rental properties, sell one and pay the other one off ASAP? Posted: 07 Sep 2018 08:03 AM PDT Sorry if this is a re-post, I didn't really see something completely similar in other posts on this sub-Reddit. Here's my current situation: I have two rental properties that I got in 2015, they are in Las Vegas and right now the market is pretty hot. I put 25% down on each property (one purchased for $225k, one for $250k) so each month I'm making about $350 per house. I've recently heard from some people that it would make more sense to have one property paid off and then use that equity to acquire a different rental and pay it off ASAP and keep the ball rolling to try to acquire more rentals in a shorter time. If I sold the higher valued rental (they both rent for nearly the same price) I would take home about $100k after capital gains tax and that would pay down the mortgage on the other rental to about $59k. If my math is right I could put extra towards the principal and have it paid off by December 2022. With the market being hot right now would that make sense? Would it make sense overall? This is my first time being a landlord and after having these rentals it has made me think that I would've been better off putting the money in to one rental instead of splitting it between two and getting more money in my pocket every month (which I would probably just put towards the principal anyway). Looking for some advice and opinions. Thanks! [link] [comments]  |
| Posted: 07 Sep 2018 05:17 AM PDT After discovering FIRE a couple months ago I set out a goal to increase my income and get my financial information in order. I'm currently 19 and I would love to get started on this path. My main question is what's the best way to start besides 401K and Roth IRA if you have little to no expenses? (More down below). What other ways could you put your money to work? Is investing in the stock market risky? Debt My current debt is $11,400 ($6800 in car loan). I currently only pay interest on my car (6.25%), the other credit cards have promotional no interest that will be paid off before interest starts. I don't have any plans of taking student loans. Income I have full time class and a full time job making around $32,000 / yr. I also get around $6,000 - $8,000 in scholarship refunds a year. I have around $3000 in my 401K that I started when I turned 18 with a company 3% match and 50% @ 3-5%. I currently contribute 6% per paycheck (bi weekly). I have an emergency fund of $5,000 as well. Expenses Currently I only have $315 / month of bills (car insurance, phone, etc). I don't pay rent (live with parents). I dedicate around $800 - $1000 / month in paying off my debt and use some of my scholarship money to pay it off faster as well. The rest is used for savings, gas, etc. I could try to increase my saving percent or debt payment. According to my snowball spreadsheet I will be debt free anywhere between August 2019 - September 2019. After which I will start dedicating 15% of my monthly income to a Roth IRA and potentially increase my 401K contribution to 10% per paycheck. My main concern is that am I going about this correctly? Is becoming FIRE just saving income, 401k, Roth IRA? What other ways can I utilize my spare income? After becoming debt free in a ~year I will have around $1500 / month in "unused" income. [link] [comments]  |
| If you won the Lottery on your path to FIRE... Posted: 07 Sep 2018 09:51 AM PDT My wife and I often dream of winning the lottery and talk about what we would do. Interestingly, it fits with the same path we are going down, just accelerated. I know we'd spend money this year on the following: replacing our dilapidated fence, fixing our pool, remodeling our kitchen, new landscaping, pay off the mortgage, and replacing our two older vehicles (still with something used, but nicer). really, what attracts us to winning a lottery is the freedom it'd provide. I'd "work" as a stay at home dad and be the baseball team coach. I'd probably anonymously sponsor the team. I don't see us taking a crazy trip to Europe or getting on the waiting list to have Elon Musk send us to outer space. A difficult thing is that I wouldn't want a lottery to hinder relationships. So part of me would almost rather win a $2M lottery (after taxes) so I can continue our life as planned without having expectations of handouts all the time, like if we won $150M lottery. maybe just enough to do the above things...and enough to have our spending stay the same as it is now (so more budget for fun since we don't have a mortgage). How about all of you...do you dream of winning the lottery? Has your path to FIRE changed your perspective on what you'd do? [link] [comments]  |
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