Financial Independence 35, $1.1M - Luck, Stumbles, Dedication, and Thrift - An 11 Year Journey to FI |
- 35, $1.1M - Luck, Stumbles, Dedication, and Thrift - An 11 Year Journey to FI
- I am curious how others split/combine money with their spouses?
- Daily FI discussion thread - January 07, 2019
- Weekly FI Monday Milestone thread - January 07, 2019
- Relationship in the retirement
- early 50's , looking to retire away from NJ, need suggestions on warm part of US where soon-to-be FIRE retiree can enjoy reasonable cost of living and nice climate.
- OPERS? (Or other state pensions?)
- Question about trust funds.
- For people in stressful jobs working toward FIRE - did you stay or did you go?
- Help getting started with 30k savings
- Factoring dividends while monitoring MAGI to avoid Obamacare cliffs
| 35, $1.1M - Luck, Stumbles, Dedication, and Thrift - An 11 Year Journey to FI Posted: 07 Jan 2019 07:59 AM PST Goal of this PostI want this post to share my story on how I achieved FI. I don't want to focus on the individual line items in my budget or my investment allocation, because this is covered in so many other posts, but what I want to do is describe various aspect of my journey, filled with excitement, failure, and all sorts of unknown. I hope that I can help some people who are at various stages of their journey gain some tips and get reassurances that you can and will fail, but you can pick yourselves up and succeed. I've broken up the post into my background and four themes of Luck/Chance, Stumbles, Dedication, and Thrift to outline how each of these affected my path to FIRE. Background35, renter living in near a HCOL US city, SINK, and don't plan to ever have any kids. I'm a 2nd generation immigrant raised in a middle to upper middle class lifestyle. I have not received any inheritances and did not have any trust funds, but I certainly grew up in a household with good parenting and financial stability. As of January 1st, 2019 my NW is $1.1M and I plan to live off a ~3% withdrawal rate - I'm a bit risk averse, so I want a lower rate in case costs go up, stock market goes down, etc. Disclaimers: I have worked very hard, but 100% acknowledge that I've been very privileged with my upbringing and support I've had from friends and family in additional to many lucky circumstances I've had. In fact, in my first section, you'll see all of the ways that I my FI journey has been filled with chance/luck that helped me get to where I am today. LuckLuck Definition - I know there was a recent thread that generated a lot of discussion about luck and I'd like to address what I mean by luck. To me, luck is any factor that is 100% out of your control including, but not limited to, genetics, socio/economic environment, or simply crazy things that happen in life. Yes, everyone will have various lucky and unlucky things in life, but I think it is a disservice to assume that people are dealt an equal hand and their success is simply built upon their dedication and hard work. Born in the USA - Both my parents were independently able to escape the same war-torn, third world country and successfully immigrate to the US. I can't do each of their stories justice in this post, but it's safe to say that either could have died or never it made over to the US. As an adult, I visited their home country and saw the staggering amount of poverty and it made me realize how different my life would have been if my parents didn't make it out and I was born there. My first stroke of luck in life was simply the fact of winning the birth lottery and being born in the USA. In my DNA - My parents have always commented that I've been a saver ever since I was a kid. There is a great home video of me at 5 years old getting a $20 bill and I was super excited to put it into my piggy bank - saving just came naturally to me. Where many of my friends' families would go out to eat and go on yearly trips to Hawaii/Disneyland, I was also raised with a modest lifestyle with home-cooked dinners almost every night and our summer trips would be road/camping trips at nearby State/National parks. College Rejection - I was rejected from all 3 of my "reach" schools - Harvey Mudd, MIT, and CalTech and ended up going to my safety school, a solid top 50 national public university an hour drive from home. At the time I was upset, but in retrospect getting rejected was probably one of the best things to ever happen to me. With part time jobs, lots of merit and need based financial aid, and the fact that the school tuition was only $5K/year (compared to $35K for MIT), I was able to graduate with no debt. Parents Divorcing - This was very sad at the time, but ultimately what was best for my both parents and my siblings. An unexpected benefit of the divorce was that my college costs got reduced significantly. Through the divorce, my mom got a house which was fully paid off. Because of the illness that she had at the time, she wasn't working which meant no income outside of alimony/child support. The way FAFSA rules were written, my financial aid numbers ended up looking crazy bad (good) and I got a significant amount of need based financial aid even though she was relatively secure. I obviously wouldn't want anyone's family to get divorced, or so sick that they couldn't work, but it was a stroke of chance that all those things coalesced which resulted in me getting huge amounts of need based financial aid on top of my merit based financial aid. Falling into my Job - I've been at my current (and only post-college) job for 11+ years and I was literally within an hour to not even applying. I had applied to a number of places but didn't apply to this company because I literally didn't want to write a cover letter. My friend who wanted me to apply, asked me in the computer lab 45 minutes before the application was due to apply because he really thought I would be a good fit for the role, so I wrote the cover letter in 15 minutes, submitted the application and after a series of interviews, I ended up getting the job! It's crazy to think that without my friend or being 45 minutes later, I could have had a MUCH different outcome. Also I was tremendously lucky on where I ended up taking my job. I had grown up and went to school in the same area, so I really wanted to move somewhere else for a change of pace. After receiving my offer, I asked to be staffed in "a large coastal city" which had work in the resources/energy industries and they ended up offering me the current city that I live in. I didn't know what I wanted at the time, but looking back, I feel very fortunate that the recruiter picked the city I'm now living in. It really happened to match what I value also is a HCOL city that I could get a high base pay and have a high savings rate. Stumbles"The Talk" - After some generic training I go to work with a client in an area I really had zero experience. For fresh collge graduates, work at my company is pretty much all "trial by fire". After a few weeks of work, my supervisors pulled me aside and had a private conversation that can be summarized with "hungn3, we brought you onto this role because we thought that you can do the work, but so far you haven't demonstrated that you are able to do it". SHIT. I already felt like I had imposter syndrome, but now they validated that I wasn't doing a good job. This was the first time in my life that I was not successful in something that I did and it was a rough hit to my ego. But I buckled up, worked extra hard, was very meticulous with my work, asked for help from my peers/supervisors, and eventually made it through that project successfully. I wasn't going to get ranked at the top of my peer group that first year or two, but I kept my job through the Great Recession in 2008/2009 when people were getting fired left and right. Betting Against the Market - I was convinced the world was going to end in 2008/2009 after reading all sorts of doom/gloom blogs and kept on reading more stuff to confirm my position. I "invested" $25K in an ETF with a ticker of SDS. For those unfamiliar, SDS is a ETF that is a derivative and attempts to track 2X the INVERSE of the S&P500. I bought it in 2009 in the $80-$115 range and didn't sell it off until 2012 when it was around $12. I felt stupid, especially since I had literally read "The Bogleheads Guide to Investing" less than a year earlier. I thought I was smarter than everyone else and could beat what was shown to be statistically/empirically better. Fear of investing - After losing money by making terrible investment decisions, I basically went into turtle mode and decided not to invest in anything outside of my 401K and my discounted company stock purchases for over 3 years. I ended up with over $200K in cash sitting in a savings account making less than 0.5% before I finally pulled the trigger to put it back into the stock market. I missed out on tons of growth opportunity because I was scarred from making terrible individual stock choices. DedicationThe Corporate Ladder Grind - I've only worked at one company in the 11 years since graduating and work in the IT industry but am not a software developer. I didn't have a typical 9-5 job and often put in nights and weekends during critical phases of the project sacrificing a lot of the "life" in the work/life balance equation. At one point on a large project, I was on a call with India at 7AM-8AM, worked at the office from 8AM-10PM, got on call with India from 11PM-midnight and then went directly to bed. This was repeated every day over multiple weeks and wore me down. Since then, I've found that I've been able to enforce boundaries better and ensure that I have a better work-life balance, but my job is still a lot of work and stress. Within 9 years, got 3 major promotions, saw my salary increase from $66K to $182K, and I went from someone who struggled to provide quality deliverables to a person who people seek out for their specific industry/software expertise. The Travel Grind - In my job, I'm required to travel 100% of the time and I have travelled for work for over 10 years, which means flying out and being at the client site from Monday through Thursday. Several sacrifices include not seeing friends/family as often, missing midweek events, and also spending so much of my life on a plane/airport/hotel. The George Clooney movie "Up in the Air" really resonated with me and I knew that I couldn't do this life forever and needed to downshift at some point before burning out and turning into Ryan Bingham I'm both a data and airplane nerd, so I've tracked every flight in my life which you can see at this link: https://openflights.org/user/hungn3 My Fun Flying Facts:
ThriftIntentional "Homelessness" - I got an offer to work on a project in NYC for a year. For most people, that would mean flying coast to coast twice a week. Instead of paying rent despite being so home so seldomly, I instantly decided that instead of paying for more expensive hotels and flying back/forth every week, I would save my company money and myself a ton of money by living in a paid corporate apartment in Midtown Manhattan. I got to explore NYC for an entire year, trying new food, meeting new people, and seeing new things. After that project, I ended up continuing my "homeless" lifestyle by doing one of the following:
I stayed "homeless" for about 5 1/2 years, so I got to save a hefty amount by not paying a much rent during that time. Note - I use the word "homeless" in jest, and do not want to imply that I was anywhere remotely close to experiencing what real homeless people or those living with housing insecurity do. Flex Trips - One of the biggest perks of my job was that I was able to take flex trips to other destinations as long as the cost of the trip was less than or equal to flying home with any excess paid out of my pocket. I'd have a "Go-Bag" packed under my desk at my client site that I could grab if I wanted to go do a weekend trip. I'd take buses, trains, or even plans to explore places for a weekend. One of my crazier trips was to take a long weekend trip to Belgium and being right back at work on Monday morning. I haven't taken advantage of this much in recent years because I want to re-focus on family/friends, but earlier in my career, I took full use of this perk by traveling all over the US and the world with heavily subsidized flights. Miles and Hotel Points - With all the travel for work, I've accumulated a very nice stash of both airline and hotel points. Where many of my colleagues would use points on business class flights, I couldn't justify that when I could get 2X the number of flights flying economy. When I did book flights with points, I was able to find great flight plans to maximize my points. One example of "hacking" a United Airlines award ticket by using open jaw flights, a stopover, a layover, and careful planning. I got the following flight itinerary all for 80K points + $150 in taxes which on paper is worth about $1000, but I got way more than $1000 value out of it:
Per Diems - As a perk for being on the road, I get a post-tax per diem and can pocket anything I don't use. I would maximize my savings by eating breakfast at the hotel and doing things like meal prep and/or eating frugally while travelling on the road. My per diem varied between $32-$52 per day depending on my travel location. The approximate benefit ends up being ~$8000/year in post-tax dollars or $13,000 in pre-tax dollars. I absolutely would have spent less on food if I didn't travel, but for people who eat simple food and can figure out other frugal food options, you can pocket a bunch of the per diems. No Car and Modest Housing - To get around, I walk, bike, use mass transit (trains, busses), and will do Lyft/Uber for anything else which the other options don't easily allow. I also will occasionally get a rental car for a long weekend to do a road trip, but that is infrequent. As for my housing, I live in an older (1970's) 2BR apartment that I share with someone. Would I love a nice new layout with new hardwood floors, in unit laundry, and updated countertops? 100%! But with what I'm paying, I've determined that getting all those extra items fall into the "luxury" category and my space is very functional and large enough to host many friends over for various get-togethers and the location of my place is very walkable to most of the things I need. I was recently at home with my mom and watching shows like Property Brothers and House Hunters, and I couldn't help but laugh at what people deem as "mandatory features" for their home. One thing that I'd like to comment that people often get wrong about HCOL cities is focusing so heavily on the cost of housing. Of course you want to minimize costs where possible, but it should be to reach a global minimum, not a local minimum. The point I'd like to make is that you really need to factor in the total cost of transportation and housing when deciding where to live, especially since most HCOL areas have relatively good mass transit options. If you can pay an extra $300/month for a better located apartment/house, it might cost you less when you factor in your time, the costs of owning cars, paying for transit etc. Also, it is possible to have access to most of the benefits of a HCOL city, without actually living directly in that city. In my case I'm about a 30 minute train ride into the city and will often go to meet up with friends, get dinner, etc., but pay significantly less rent than those who live in the city. TL;DR: Life is complicated and there is no "one" path to success, nor are any of the paths clear. I had a lot of luck, stumbled along the way, dedicated a lot of my time towards achieving FI via my career, and found many ways to save money. I hope you enjoyed, and please leave a reply if you have any comments/questions! [link] [comments]  |
| I am curious how others split/combine money with their spouses? Posted: 07 Jan 2019 01:21 PM PST Currently my wife and I each put a defined amount of money in a joint account each month, and then use that money to pay our Morgage, bills, food, etc... We then each retain a personal account we use to buy personal stuff (clothes, gifts, car payments, etc) but I also know a lot of people who don't even have their own account... everything is joint with their husband/wife.... Curious what systems other people use [link] [comments]  |
| Daily FI discussion thread - January 07, 2019 Posted: 07 Jan 2019 03:09 AM PST Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked. Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts. [link] [comments]  |
| Weekly FI Monday Milestone thread - January 07, 2019 Posted: 07 Jan 2019 03:09 AM PST Please use this thread to post your milestones, humblebrags and status updates 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! 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]  |
| Relationship in the retirement Posted: 07 Jan 2019 01:39 PM PST I am sure that many folks have thought about this or have a first-hand experience. I have been married for 31 years, and our marriage has been a blessing. We have two awesome kids, enjoy doing things together, have a dinner ritual every night, etc, etc. My wife is retired; I plan to retire this year. Yet, I have a worry. My question is, what happens when spouses start spending significantly more time together, and not just the evening hours. Would it be too much of a good thing? This is like when someone likes a chocolate desert after dinner, but starts having it after every meal during the day -- some stomach upset may follow. Any thoughts or experiences to share? [link] [comments]  |
| Posted: 06 Jan 2019 07:41 PM PST So the short of it is I'm early 50's , kids raised, me and the wife mostly are completing out FIRE plan have just over $1.2mln and want to retire in the next year or two , will move away from NJ , but need some ideas for a nice warm, sunny and preferably (water-accessible) location in the US where a recent FIRE retiree can live a comfortable life. [link] [comments]  |
| OPERS? (Or other state pensions?) Posted: 07 Jan 2019 02:22 PM PST Hello- I've just started an state employee job, and I couldn't find anything about this on here. Does anyone have any experience with OPERS (the ohio pension plan) or other pension plans? It takes 5 years to be vested, and after 30 is fully done, so that at retirement age you get 2/3rds of your final salary as long as you live, plus your savings. But I'm 22, and I have no idea what I'll be doing in 30 years, much less 5. We can get an ARP (403b or 457b, which I also need to learn about.....) Or do a non-pension OPERS that depends on your own investments, which seems risky given my ignorance. Does anyone have experience with this, or general advice? Maybe there's an obvious answer for someone like me, but even not knowing if I'll get married and move or something eventually, that pension is tempting! [link] [comments]  |
| Posted: 07 Jan 2019 02:10 PM PST Is it possible to set up something where I have a large central trust that creates new trusts when a child/grandchild is born. If i'm not explaining it correctly say I have a central trust of $100 billion and I write that each heir gets a trust of $1 million from the central trust and the central trust itself remains untouched other than the initial creation of the individual trust. idk if that makes sense [link] [comments]  |
| For people in stressful jobs working toward FIRE - did you stay or did you go? Posted: 07 Jan 2019 09:49 AM PST My situation:
My goal: between my RRSP, TFSA, and non-registered accounts, save $500,000 by the age of 50 (hopefully split evenly across RRSP and TFSA), and then either take part-time/seasonal work or retire. My problem: My job has become very stressful over the past year, and I'm not sure if it's going to be letting up. It's always been a stressful job in some ways, but we used to have more resources to do a good job, and there was always a good balance between being challenging and having time to recover. Now, we have become saddled with too much work. This is leading to projects being rushed, longer hours, and clients getting levels of service that we aren't proud of. My coworkers are great people, but are in the same boat as me and we don't know what the future holds for our company/our office. I'm at a loss for what to do. From a FIRE standpoint, I'm 100% on track. For what it's worth, my boss is happy with my performance. I could easily just stick around, keep my head down, do whatever I can do, and see what happens. If I got let go, there would likely be decent severance and good job prospects. But, it's hard dealing with the stress of not being able to do as good a job as I used to. I used to like my job, and now I feel overwhelmed. It's not the company I worry about letting down, but clients. They rely on us and it is hard to not be able to do a good job, not to mention that it potentially puts my future career in a weaker position. I'm not the most ambitious person in the world - I don't care if I ever earn $100K annually - but I certainly don't want to do poor quality work or sacrifice my career. My situation is one where I could easily switch jobs - the journey toward FIRE has given me a lot of flexibility. It wouldn't be a big deal if I didn't have income for a year, or even two. But, there is the fear of the unknown. What if I have a lower salary for a time before getting my career back on-track again? What if I just encounter this problem at a new workplace (because let's face it, the economy isn't doing as well in Canada right now as it is in the US, and a lot of employers are feeling the squeeze). What if it interferes with my FIRE plans - will I be able to get my savings back on track? What if the change doesn't make me any happier? And if I do make a change, what the heck SHOULD I do? I have so many options in some ways that I feel overwhelmed at the thought that I could really do anything else if I wanted. My spouse is supportive but is also afraid of the unknown - my job has always been a source of financial stability and theirs has a more variable income. While we could get by a while without me working or with me making less, we're definitely conservative with respect to my earnings, and we're both nervous about any change. My question: For people working toward FIRE who have encountered stressful job situations, in jobs that otherwise worked for you - how did you handle it? If you decided to stick it out and just do your best, was it worth it? If you decided to take a break or change jobs, how did it impact you? If you were not able to save as much after taking a new job, did you find it was worth it sticking around in the workplace longer? Or did you find that it ended up? What would you do in my shoes? Thanks - any input is appreciated. I know the fact that I'm working toward FIRE helps me immensely, but I feel stuck. I'm an anxious person and I can't tell whether I'm anxious over nothing, or whether a change would actually help with my feelings of anxiety. [link] [comments]  |
| Help getting started with 30k savings Posted: 07 Jan 2019 03:23 PM PST I am about to graduate college in a few months. I currently have about 30k sitting in a savings account. I already have an emergency fund of 3k. How should I invest my 30k for long term gains. It seems that VTSAX is the go to choice should I just stick all my cash into it? Which brokerage should I use? Shouldn't I also have some money in real estate and foreign stocks? [link] [comments]  |
| Factoring dividends while monitoring MAGI to avoid Obamacare cliffs Posted: 06 Jan 2019 08:49 PM PST How do retirees dependent on ACA/Obamacare keep their MAGI (Modified Adjusted Gross Income) under check? Specifically with regards to Dividend income that is unpredictable. A few thoughts explaining my question in more detail:
[link] [comments]  |
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