Financial Independence How I retired at 36. A visual journey. |
- How I retired at 36. A visual journey.
- Biggest mistakes you made in your twenties/thirties?
- Four Year Update
- Cost-of-Living Anecdote Mega Thread
- Sailor was FIRE at 36, sailed the world for 20 years
- Daily FI discussion thread - March 22, 2019
- Taxable vs Retirement Accounts for FIRE
- Weekly FI Frugal Friday thread - March 22, 2019
- Does my math work out right for this real estate investment?
- Variable SWR: withdrawing more in good years, less and bad years. Good idea or bad idea?
- At 50, I am a FI/RE detractor
- An Undervalued Advantage of Savings and Frugality
- Got lucky, now have a house, how can I best use this asset and the opportunity of less monthly outgoings?
- Old school father FIRE status
- Is it possible to achieve financial independence without college?
- Why FIRE is all about how much money you make
- What are your tips to prevent lifestyle creep?
- how to calculate the best way to sell ESPP shares?
- Investing in property as a way to secure retirements
- Dollar Converted to Time Calculator??
| How I retired at 36. A visual journey. Posted: 21 Mar 2019 10:58 PM PDT Hey guys, I'm a long time follower/lover of this subreddit and the FI/RE movement. I happened to have retired at 36, though maybe not via the totally traditional route. I shared my story on my instagram page and it struck a chord so i thought you guys might want to see it here. The imgur link below has the story! This really isn't supposed to be a "see how easy it is" or "anyone can do it the way I did" post. I fully acknowledge I had a huge amount of privilege and unfair advantages. Graduating from college debt free thanks mostly to my parents is something that was simply gifted to me and allowed me to start a company. And living below my means and buying and holding index funds didn't get me here alone. That said, I did grow my net worth to over $100K on $36K/year living in high cost of living San Diego, and was well on my way to millionaire status within another decade or two. Also, had I taken that Microsoft job and lived at a similar level and invested, I'd be almost where I am today. So, just because I had a windfall, don't write off the most likely and efficient way to build wealth: Live below your means and buy and hold index funds. For you track fans, I ran the 400 and 800 in 46.8 and 1:49.8 Hope some of you might find this interesting! I'm happy to answer any questions if you have them! :) Edit: A lot of have asked what I'm up to now. Feel free to check out my instagram. I'm not selling anything, make no money from it, etc. If linking to this is too self-promotey I'll happily take it down. :) [link] [comments]  |
| Biggest mistakes you made in your twenties/thirties? Posted: 22 Mar 2019 03:12 PM PDT Hey everyone, I'm in my upper twenties and my recent birthday lit a fire in me to get more serious about my financial future. I graduated from college nearly debt free in my early twenties but did not have a good job with benefits until recently. This led to me feeling like I am behind the curve of where I should have been had I gotten a good full time job straight out of college. I do have two rentals and a 401k (investing enough to get full company match) and pension (will be vested after 5 years) but I still feel as though I wasted ten of the most important years of my life in terms of financial investments go. I want to make up lost ground in my thirties and I want to avoid pitfalls that you may have encountered. What mistakes did you make that you would tell other about? What do you recommend for people like me who are late to the game that could help me make up ground? Appreciate your advice. [link] [comments]  |
| Posted: 22 Mar 2019 05:56 AM PDT Edit: Hit character limit - see comment below for rest of the post! I've been posting my family's net worth updates annually for the past few years (see 2015, 2016, 2017, and 2018 updates); I find sharing my plans and progress to be helpful for giving myself a heading check, and hope this community finds my inputs to be helpful. I realized recently that we're way past Coast FIRE, so at this point, we're just pulling our financial independence date to the left. Current ages: 33 and 32. We have two kids and have been paying about ~$15k per year in childcare; fortunately, the older one is about to enter preschool, so we're seeing the light at the end of the tunnel and expect that cost to start coming down soon. We reduce those costs somewhat using a dependent care FSA and by going fairly deep down the churning rabbit hole, since our daycare takes credit cards. Combined pre-tax income: About $185k (~6.3% increase). I'm a civil servant who works as an electrical engineer and team lead; my wife is a Senior Manager for a regional accounting firm. That kind of combined pay for those kinds of positions probably sound a bit low to a lot of you who live in big metros. It's not - we live in a LCOL area in the Deep South and make like 4x the median household income for our area. We established a rough goal of ~$200k household income by 2020 - and it looks like we're pretty much on track! Assets: Cash/emergency fund: ~$40k (20% decrease). This went down a bit, because we finished the home renovation (described in detail under "Home" below). We've actually beefed up our emergency fund a bit compared to where it was before the home renovation started, to account for inflation and increased assets and risks overall. Tax advantaged Retirement/HSA accounts: ~$430k (17% increase). Not a great year really; we put in >$50k into tax advantaged accounts this year, but the total balance didn't grow much more than that. I thought we'd end up in a negative return (not counting new contributions) due to how the markets were performing late last year, but they've recovered since then to make us a bit positive. 529 accounts: ~$32k (28% increase). We're contributing about $3k/year for each of our children - our plan is to cover ~75% of the total cost of a public university in our state, including housing and food. When I did my original projections when they were born, I thought we would have to ramp this up quite a bit over time - but tuition at public universities in our state has barely budged since then! Will keep an eye on this and bump up contributions if necessary, but maybe college costs are finally turning the corner after decades of unsustainable growth. Taxable investments: ~$12k (insignificant ). No new contributions here and the overall market barely moved. We're close to maxing out tax advantaged accounts, so eventually we'll have good cause to start investing more here. For now it's just kinda a third tier of emergency savings beyond the cash stockpile, but eventually this will help with easy access funds if we decide to stop working really early. Vehicles: $36.5k KBB value of three cars (74% increase). We had been holding out on waiting for the EV market to mature...but then GM had to go and discontinue the Chevy Volt, right as the $7500 tax credit for GM was expiring, which led to dealers slashing prices and us finding new Volts listed at under $30k, *before* the tax credit. So we traded in the extra beater car and got a Volt, which is now my wife's daily commuter. I think I'm keeping the Miata forever y'all. Home: Using MSA home index, our home value is now ~$522k (6.1% increase), using Zillow estimate is currently $585k (12.9% increase). . My wife's sister has lived with us and paid rent for the past decade, but now that we have a couple little munchkins running around, we wanted to give her a more peaceful/private space from the craziness, and give each of our kids their own rooms. So, we took out a $50k home equity loan (shown below), and converted a 1000 square foot detached garage/workshop into an apartment for my sister-in-law. It's given our home way more flexibility; definitely worth every penny we put into it. The work was legally permitted and the extra bedroom and bathroom now show up in Zillow and the County Property Appraiser. [link] [comments]  |
| Cost-of-Living Anecdote Mega Thread Posted: 22 Mar 2019 07:20 AM PDT Hi all, I thought it might be a good idea to make a megathread where we can post cities as parent comments, and individuals can respond with what they live on per year, and how. I feel like this might give us good insight on region-specific ways we can save money, or see if we are living below our means. This isn't a cost of living calculator. This is for finding unique insights about ways to save/spend/make money that only individuals living in the area would recognize. I'm not looking for averages of a city. Many different people live in many different ways and it's useful to hear how they do so. [link] [comments]  |
| Sailor was FIRE at 36, sailed the world for 20 years Posted: 22 Mar 2019 12:04 PM PDT Like the title says. Clark retired at 36 and sailed the world for 20 years. [link] [comments]  |
| Daily FI discussion thread - March 22, 2019 Posted: 22 Mar 2019 01:08 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. [link] [comments]  |
| Taxable vs Retirement Accounts for FIRE Posted: 22 Mar 2019 03:52 PM PDT >Be me >25 year old Head of Household living with GF and our almost 3 year old Currently have a 401K saving 8% ROTH contributions and 12% Pretax. I chose this for diversification and to reduce my taxable income at the end of the year because i opt to have 4 allowances not withheld from my checks. I also have a ROTH IRA i max out yearly. In addition to my retirement savings i put $100 per check into a Taxable account investing in REITS for monthly dividends. My question is if i want to retire earlier than 59 1/2 than am i wasting time and resources contributing heavily into tax sheltered accounts and not concentrating on my regular brokerage? [link] [comments]  |
| Weekly FI Frugal Friday thread - March 22, 2019 Posted: 22 Mar 2019 01:08 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]  |
| Does my math work out right for this real estate investment? Posted: 22 Mar 2019 12:02 PM PDT Here's where I'm at.... I live in my modest home, I paid off the mortgage 2 years ago. It is worth about $500K and can realistically rent for $2500/month. I am single, no kids, and it's too much house for one person. I'd like to move out into something smaller since it's just me, but the math doesn't work out well for buying a condo. So I'm looking at something bigger.... I'm eyeballing a SFR home with a granny flat. It is a very nice SFR in a very nice neighborhood, in a HCOL area (Southern California). It's going for just over $1M. I can realistically rent out my current home (we'll call this home #1) and live in the granny flat on the $1M home (we'll call this home #2). Here's how my numbers are working out. It seems like with my $250K down payment on home #2, I would be better off by approx $18K per year, for a cap rate on my investment of approx 7%. Is my math working out correctly? Go ahead and tear this to shreds! I know that I could buy these cheap $50K homes in Indiana and such, but that seems too risky to me right now. I have a full time job and I don't have time to go out there and shop. I make $150-250K a year depending on my bonuses. In summary: Rent house #1 Rent house #2 and live on that property in the granny flat. My net change in cash flow will be -$645/month if I stay in house #1, vs $1517.50 if my math is correct. A difference of $2162 per month. So with my $250K investment (down payment), I'm netting $2K per month in my pocket. 10% return???? What's risky is that this $250K in cash is pretty much ALL of my cash. I'll barely have $30k left in the bank in cash once I complete the purchase of this "house #2". If the house #2 goes vacant for a long time, I'm burning through a extra $3500/month. Here's a screenshot of the numbers breakdown. Thanks in advance!! [link] [comments]  |
| Variable SWR: withdrawing more in good years, less and bad years. Good idea or bad idea? Posted: 22 Mar 2019 09:31 AM PDT If someone has already modeled this method of withdrawal please post a link. We start with the 4% rule as a given. Instead of withdrawing the same (inflation adjusted) amount every year, what if a person withdraws X% more when the market is above the S&P historical average in order to reduce the number of shares sold during down years? The thinking being that the market tends to revert to the mean over time so we take advantage of this. Example (ignoring inflation for simplicity): Suppose a person had a $1MM portfolio at the time of FIRE. They withdrawal $40k on 1/1. On 12/31 the S&P is 5% above the historical average so they withdrawal 1.05 x $40k = $42k. The extra $2k isn't spent the next year, it is banked. If the S&P is even or below the historical average at the end of the following year they withdrawal only $38k and use the $2k that is in the bank. Positives: The net result is total withdrawals would skew toward selling shares at a higher price compared to a flat withdrawal scenario. You're selling more shares above the markets mean historical average. Negatives: Inflation will eat away at the extra $$ withdrawn during good years and that money is not in the market so it cannot grow if the market performs well that year. Other: An upper-limit would likely have to be established to prevent cash from piling up in your bank account during a long bull market run. Taxes would also have to be considered. [link] [comments]  |
| Posted: 22 Mar 2019 02:57 PM PDT Although I very much like the idea of saving a lot and living well within your means, there are some aspects of FI/RE that I think are misguided. The biggest problem is that people end up in an adversarial relationship with their employment: they gut it out at some high-paying job they dislike in order to build their retirement kitty, then they retire early to a life of leisure and hobbies. Frankly, this seems misguided. For most of us, our occupation is the Big Thing we do with our lives. We train for it and become real experts at it. Why would you squander this for a bigger paycheck? Why not make your Big Thing something that you enjoy, even if it doesn't pay as much? I'm 50 now, and I would do what I do (if I could) even if I didn't get paid for it. I have not been a FI/RE devotee, but I have lived well within my means, avoided debt outside of a mortgage, maxed out the 401(k), etc. I have also eaten out a lot, traveled, and not fretted about what stuff costs. I spent a lot of years in graduate school that paid peanuts -- the opportunity cost was tremendous, but I really enjoyed it. (And I did learn how to live cheaply for sure.) Now I could retire, but my hobbies seem pretty frivolous compared to the work I do (biotech). So I guess that's the thesis here: doing something you love is worth having to do it longer. [link] [comments]  |
| An Undervalued Advantage of Savings and Frugality Posted: 22 Mar 2019 07:33 AM PDT I often read about the advantages of frugality and saving from a "risk-management" perspective: "I lost my job/got sick/totaled my car…thank god for my savings!". That's certainly important, but I just recently realized how it's also really important in terms of capturing opportunities when they arise. I've been saving around 40% of my salary for the past three years. I recently came across a great investment opportunity – a real estate startup which I think has immense potential – and was able to invest in it thanks to my savings. I know this doesn't seem like much, but the ability to just seize an opportunity thanks to previous wise financial decisions and frugality is something I don't think is brought up enough, and I figured I'd share it with y'all :-) [link] [comments]  |
| Posted: 22 Mar 2019 01:42 PM PDT Essentially a £250k pump in the form of bricks and motor into my personal finances. Have been playing with the idea to take a loan out on the house and invest into the crypto market. (I guess I have a high tolerance for risk?) Another idea is sell it and use the money to purchase two houses/flats. Live in one and rent the other. Perhaps equally foolish I have aspirations to start a business in the crypto space that I've already dedicated a number of months to. There will be only bills to pay which are £300 monthly, saving on extortionate rent costs and no mortgage payments to speak of. I currently do contract work as a design engineer and make good money when I do choose to work. I'm hoping to not have to do this much longer so I can persue this idea of mine and live my life so to speak. I'm young at 28 and have the energy and hunger to never have to work again, although I'm acutely aware of living costs still. Any advice (from UK people especially) is much appreciated. [link] [comments]  |
| Posted: 22 Mar 2019 08:58 AM PDT As the title suggests my father, 63, recently retired and I was asked to take a look at his financials. I would appreciate any suggestions on how to best ensure a steady stream of income. He does not even have a brokerage account and still uses paper bills so I'm thinking going the route of a fee only financial advisor is best b/c there's absolutely no way he'll want to manage his money using the internet. Current position Pension 1. 1,400 (monthly) Pension 2. 600 (non taxable) (monthly) Pension 3. 1,300 (monthly) SS. 2,028 (monthly) Investments: Fidelity 401k. 450,000 Stock Certs. 40,000 Annuity thing. 22,000 Cash. 336,000 House. 450,000 in equity *plans to downsize and purchase newer smaller house in cash so potential for no mortgage in future I lurk this community and am confident with my own money managing skills but being young with essentially nothing to my name is different than taking the responsibility of my father's portfolio which I don't want to mess up. Thank you in advance for any feedback or suggestions. [link] [comments]  |
| Is it possible to achieve financial independence without college? Posted: 22 Mar 2019 10:31 AM PDT |
| Why FIRE is all about how much money you make Posted: 22 Mar 2019 12:17 PM PDT Person A makes $30,000 per year after taxes, lives on $25,000 per year, and saves $5000 per year. Person B makes $150,000 per year after taxes, lives on $25,000 per year, and saves $125,000 per year. Person B, despite making "only" 5 times what person A makes, is able to save in 1 year what would take person A 25 years to save. Of course person B can retire early! But isn't it all about what you save and not about what you earn? Of course it is, but person A can't save much of anything, unless he's willing to live in a cardboard box and eat out of dumpsters. But he's not, he expects to live in a home and he needs a car to get to work and he wants to be able to have a cell phone and internet access and medical and dental care. Meanwhile, person B has figured out that if he just lives the way every low income person lives, he can save an enormous pile of money and retire young. FIRE is about making way more than the average person while spending like the average person, although it's quicker if you can spend even less. But if you don't make way more than average, you can't spend much less. Unless you're ready to move into that cardboard box in the alley and eat that dumpster food, in which case you can retire any time since you will have no expenses. 25 X 0 = 0 [link] [comments]  |
| What are your tips to prevent lifestyle creep? Posted: 22 Mar 2019 06:41 AM PDT I'm relatively okay at my budget, but lately I've noticed lifestyle creep where I'm eating out more or ordering Uber eats more. What are some good tips to prevent this kind of lifestyle creep and either catching it before it becomes a thing, or fixing it after the fact? [link] [comments]  |
| how to calculate the best way to sell ESPP shares? Posted: 22 Mar 2019 06:34 AM PDT I debated whether to put this in /r/personalfinace or /r/financialindependence, and opted here because I do plan to have a drastically reduced income in the near-ish future. Here's the scenario: My previous employer's stock has had an upward trajectory since I joined, and analysts predict the same in the future. But of course it's possible they'll level out, or maybe they'll have some kind of FB scandal; so I try to keep a certain % of my portfolio in this stock and not let it get too big. To do this, I sell some shares about once a year to bring the % back to where it should be. As I get closer to "retiring" (probably working but huge pay cut compared to what I have now) I plan to keep a smaller % of my portfolio in this stock. So now the main question. I've heard different advice on whether to sell the most recently acquired shares (less gains, but I've held them less than 1 yr) or to sell the oldest shares (more than 2 years, but huge gains). How exactly do I calculate this math to do an accurate comparison? What's the formula, what variables do I need to figure out? I have an idea of some factors based on reading/researching, but it would really help to know something like "calculate gains * your estimated income tax...." etc. What throws a little wrench in this is that some shares were bonus/awards, so they weren't 'purchased' as the ESPP discount. Thanks! Hope you guys can help me figure this out. Edit: found this and will try it out! https://espp-calculator.com/ [link] [comments]  |
| Investing in property as a way to secure retirements Posted: 22 Mar 2019 12:11 AM PDT Life Situation: 29 F here working in IT in Czech Republic. My SO and I want to secure our future retirement and also speed it up to FIRE at 60 or sooner. No kids yet. Yearly Savings Amounts: we are using every possible way to get as much from government saving programs as possible, not relevant due to country specifics. Specific question below Initial plan is: buy 3-4 small flats in Prague that we would rent out, flats would be bought with mortgage that would be paid off by rent for 25 years, then the rent would be the income needed for FIRE and also our future kids would inherit it at some point. Also, the mortgage on the flat we live in now will be paid off in 28 years or sooner (very low interest 1,79%) and we could sell it and get 2 smaller flats instead. The investment would be approx 1 000 000 CZK to buy a flat and prepare it for renting. We need at least 12 000 000 CZK to fire at 60. Each flat would give us a 1/3 if needed monthly income. That means we would only need to invest 4 000 000 now in order to FIRE in 30 years, am I correct? (We should be able to buy one flat every 2 years with current rate of saving money) What is find extremely hard is planning lifelong of finances BEFORE having kids. I cannot estimate how much will they cost and how much we'll be able to earn with kids and if crisis hits. I don't see many of you investing in rentals and I'm concerned why is that? Is it because of tax specifics in US or is there another reason? Thanks in advance! [link] [comments]  |
| Dollar Converted to Time Calculator?? Posted: 22 Mar 2019 07:29 AM PDT Hey all! If I spend 500 dollars now, how long does that extend my time to reach FIRE? Does anybody know of a calculator that achieves this calculation? Thank you! [link] [comments]  |
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