Financial Independence Wife and I quit our jobs to travel the world for a year! Pressing pause on FIRE |
- Wife and I quit our jobs to travel the world for a year! Pressing pause on FIRE
- The Mystery of the Millionaire Hermit
- Greenbelt, MD is an incredible LCOL community near DC
- How open to be about FIRE status
- Vanguard Drops The Hammer In ETF Fee War With 21 Price Cuts
- The Clever Market Timing Withdrawal Strategy - an alternative to traditional withdrawal strategies
- Daily FI discussion thread - April 29, 2019
- Weekly FI Monday Milestone thread - April 29, 2019
- My 4% withdraw rate gives only 85% success rate on Firecalc. Who should I listen to?
- Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice. - April 29, 2019
- 5.5 years rental property vs VTSAX
- How do RMD's work and where to park the money?
- Strategy to take house profit?
- Maximum tolerable commute
- Does "savings" include my employers contribution to my 401k/HSA when calculating savings rate?
- How many of you tilt your asset allocation in post-FIRE to particularly high yield/income equities?
- Vanguard personal advisor services
- Mega Backdoor Roth - In Service Distribution
- I have low patience, I want to do it NOW
| Wife and I quit our jobs to travel the world for a year! Pressing pause on FIRE Posted: 28 Apr 2019 06:53 PM PDT My wife and I are getting ready to embark on a one year journey across 40 countries. Below is our story of how we got to this point and why we're doing this now. Since many in this community love pursuing multi-year goals and travel, I hope you find this helpful if you're in the middle of your pursuit. Two years ago (age 28 then), after our trip to Asia, my wife and I decided that we wanted to travel the world for a year. A year before that travel conversation, I had been feeling unfulfilled at my job. I'm a creator and entrepreneur at heart, so I decided to build my own e-commerce startup to fill the void outside of my full time job. Given I'm pretty risk averse, I built my small startup on weekends, early mornings and late nights. A few months after launching my startup, I got promoted to Sr. Dir. at the corporation I worked for. Fast forward a year, and I'm getting burned out trying to lead a team and grow a small business outside of my FT career. Not to mention, I'm still not fulfilled at my full time job. So, we took a 2 week vacation to Asia to getaway and unwind. Once we got back home, we couldn't stop talking about how much fun we had and that we wished we could travel for a much longer period of time. We talked about it and thought "why wait until we're in our 60's and retired?" Personally, I grew up in poverty and lived through some bad situations I won't get into here. I've been working since I was 10. My mom passed away suddenly when I was 15 (she was early 40s). Her parents passed away when they were in their early 40s as well. And, my dad's in rough shape in his early 60s...My brother (1.5 years older than me) joined the Army after high school and did a couple tours in Iraq. I constantly wondered if he'd come home...Thankfully, he did. *Thank you to all of you who have or are serving in the armed forces or as a first responder. I chose to go to college and pursue a business degree. My career has been good to me, but boy have I put in some hours... Long story short, it's been a tough past 15-20 years where I've been going 100mph to try and be successful, create wealth and simply enjoy life. Problem is, I've been so focused on being successful that I've rarely allocated time to enjoy life. To truly live with child-like wonder without worrying about a constant income... Given my background, I understand that tomorrow is not guaranteed. We may not live to be 60. And, if we do, we may not have the health to travel the way we want to at that age. So, we decided now is the best time for us to take a sabbatical. We don't have children and we're still young. The world is our playground. With our minds set on traveling, we asked each other "what needs to be true for us to travel the world for one year?" Below was our list.
In order to achieve 1-4 above, we sacrificed a lot of normal things. Below is what we did to payoff our debt, save and invest for retirement.
Basically, we took the FIRE path and maintained a very high savings rate with a great income. I'm proud to say that we achieved all of our goals. And, after resigning, I've officially been unemployed for over a week. Yes, it's a wonderful feeling to be able to spend your days doing exactly what you want. Now, we're getting ready to take off on our Adventure Year in less than 2 weeks! I cannot explain the excitement or feeling, but I wish everyone could experience this at least once in their life. The last 2 years of working towards our big goal have definitely been worth it. We will pick up FIRE when we get back home. If there are big things you want to do that bring you joy, then set a goal, make a plan and work hard to achieve it. You will have to make some sacrifices and likely dedicate years on your journey, but it's all worth it. You deserve happiness. We all do. [link] [comments]  |
| The Mystery of the Millionaire Hermit Posted: 29 Apr 2019 06:14 AM PDT Thought this would be an interesting article to share, points out why you might want a will if you plan on retiring with a lot of assets
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| Greenbelt, MD is an incredible LCOL community near DC Posted: 29 Apr 2019 01:21 PM PDT After living in Washington, DC for several years, my husband and I moved just outside the city to a cooperative community called Greenbelt, MD. We went from spending $3,200/month renting a 912 sq/ft apartment to about $1,300/month total (mortgage + coop fees & property taxes) on 1150 sq/ft townhouse. I loved the idea of saving an additional $2,000 every month toward our FI/RE goal. Having been here a while I can say that the community is really pretty incredible. Its woody and safe. There is a huge aquatics center, credit union, and a slew of other public amenities. The central shopping area called the Roosevelt Center contains the Greenbelt Co-op Supermarket and Pharmacy, the wonderful Old Greenbelt Theater (excellent film selection) and the New Deal Cafe -- all of which are non-profit cooperative businesses. Living in a non-profit community is awesome. Anybody who is pursuing FIRE in the Washington, DC area should really check out Greenbelt. Its a hidden gem. Are there other high-quality of living / LCOL options out there for people who live in generally HCOL areas? [link] [comments]  |
| How open to be about FIRE status Posted: 29 Apr 2019 01:22 PM PDT I'm wondering if other people here have issues about how transparent they are about their FIRE status to people around them? Especially if you live in an area where most people are working class and can't even conceive of someone in her 40s not needing to work. I feel more comfortable telling people I do freelance work from home rather than saying I'm "retired" or that I don't work. Sometimes the resentment is palpable towards people "with money" in abstract/ hypothetical conversations. Now I've met someone who wants to get to know me better, who I like and enjoy his company, who keeps trying to dig deeper into my employment/ livelihood. I tend to keep it vague but I think he wants to seriously date me and I don't want to totally shut that down because I do like him... to a certain extent. [link] [comments]  |
| Vanguard Drops The Hammer In ETF Fee War With 21 Price Cuts Posted: 28 Apr 2019 07:34 PM PDT I saw this on Yahoo Finance today and I didn't see it posted here. It may be relevant for those who are invested in Vanguard ETFs: https://finance.yahoo.com/news/vanguard-drops-hammer-etf-fee-143705599.html [link] [comments]  |
| The Clever Market Timing Withdrawal Strategy - an alternative to traditional withdrawal strategies Posted: 29 Apr 2019 02:02 AM PDT Plenty has been written about withdrawal strategies. Yet, one dimension has been, in my opinion, under-explored: market timing. And believe me, I've read more or less everything ERN has written on the topic. Yes, I can hear it from over here: you can't time the market! Which is true, but not really. Hear me out before getting the pitchforks. The main cause of failure of the 4% rule for almost any asset allocation is Sequence of Risk: right after you decide to retire, the market plunges by 20, 30, or 60% over the course of months or a few years. My question is: why would anyone in this situation sell shares? The answer is usually: well, I have to sell something, and I have to keep my allocation constant. Hmmm... but why do you have to keep your asset allocation constant? Why can't you only sell shares when things go well and only sell bonds or gold or use a cash cushion when things go bad, while you wait for your shares to recover? I have developed a simple set of rules (which constitute the Clever Market Timing Withdrawal Strategy) and back tested them using the data present in ERN's Toolbox: the monthly inflation adjusted returns of stocks, bonds, cash, and gold since 1871. I've (poorly) programmed them in Python. The results are quite good: this strategy provides 0%, 2%, and about 5% failure rates for 30, 40, and 50 years retirement respectively, for a 4% withdrawal rate. It considers inflation and does not reduce the withdrawals in any circumstances. The withdrawals are actually increased in good times leading to a median total withdrawal equal to 2.27 times the value of the original portfolio, for 50 years retirement (neglecting the failed portfolios). Only in 10% of the surviving cases are the withdrawals strictly nominal (2 times original portfolio value for 50 years retirement). The value of the surviving portfolio after 50 years is larger than the original value in 75% of the simulations and only lower than 40% of the original value in 5% of the cases (again, only considering the surviving portfolios for 50 years retirement). The median value is around 1.9 times the original portfolio value after 50 years. August 1929 almost makes it to 40 years while September 1929 survives almost 49 years. The longest stretch of time during which the strategy fails before 50 years is almost 2 years (from February 1905 to January 1907). The worst month to retire with this strategy would have been September 1906 (failure after 34.67 years). Higher SWR don't produce terrible results either: 12% failure for 4.25% and 17% failure for 4.5% over 50 years if you renounce the increase of withdrawals in good times. The original asset allocation is: 2 years worth of withdrawals in bonds, 2 years in cash, and 2 years in gold (for a 4% SWR, that's 8% each) and the rest in stocks (76% for a 4% SWR). I don't like cash or gold as "investments" but boy do they do well in terrible sequences... The main idea is to withdraw from stocks only, unless the value of your stock portfolio drops below 90% of its original value adjusted for inflation. You then sell other assets until the value of your stock portfolio goes back to its original value, adjusted for inflation. Assuming that at the beginning of your retirement, you have $1m, you would sell 40k worth of stocks, leaving bonds, cash, and gold untouched. That's assuming yearly withdrawals but I have used monthly withdrawals in my simulations. So here are the rules:
What I'm actually looking for is someone to check this algorithm because I can't be 100% sure that I've not made a mistake somewhere, especially since it seems a bit too good to be true. I don't want someone to check my code, rather, someone to program these rules independently and perform the same simulations to compare results. Honestly, I'm expecting someone to point out something obvious that I've missed... Thanks a lot for your support! [link] [comments]  |
| Daily FI discussion thread - April 29, 2019 Posted: 29 Apr 2019 01:11 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]  |
| Weekly FI Monday Milestone thread - April 29, 2019 Posted: 29 Apr 2019 01:11 AM PDT 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]  |
| My 4% withdraw rate gives only 85% success rate on Firecalc. Who should I listen to? Posted: 28 Apr 2019 08:11 PM PDT The conventional wisdom on this sub is to hit 25X which gives 4% withdraw rate. I plugged the numbers on FireCalc, If assuming 30 years, I have a 95% success rate. But since I expect to live to 90 like every other family member, I used 40 years in my calculation assuming I would retire at age 50. Well, my success rate plummeted to 85%. When you define your target number, what formula you use to figure out THE number? [link] [comments]  |
| Posted: 28 Apr 2019 11:09 PM PDT Need help applying broader FIRE principles to your own situation? We're here for you! Post your detailed personal "case study" and ask as many questions as you like, or help others who've done the same. Not sure if your questions pertain? Post them anyway…you might be surprised. It'll be helpful to use our suggested format. Simply copy/paste/fill in/etc. But since everybody's situation is different, feel free to tailor your layout to your needs. -Introduce yourself -Age / Industry / Location -General goals -Target FIRE Age / Amount / Withdrawal Rate / Location -Educational background and plans -Career situation and plans -Current and future income breakdown, including one-time events -Budget breakdown -Asset breakdown, including home, cars, etc. -Debt breakdown -Health concerns -Family: current situation / future plans / special needs / elderly parents -Other info -Questions? [link] [comments]  |
| 5.5 years rental property vs VTSAX Posted: 29 Apr 2019 09:22 AM PDT My ongoing procrastination task is "what if" scenarios via google sheets. Five and a half years ago I purchased our first rental property, out of state, in a location where I have immediate family. The plan was 25% down + closing costs with a 30-year conventional loan. Working through the underwriting process I was experiencing an endless stream of requests for more financial information. I was a self-employed independent contractor and my previous year taxes were in extension. I think the underwriters were convinced I was hiding something sinister. So, after multiple weeks of underwriting delay, I bailed on the lender and purchased with cash. Available cash was in a brokerage account invested in VTSAX. What if I had maintained the market position vs the wonderful pain of becoming a rental property owner? Single family 4 bed 2 bath. Purchase price 165k. Rents Nov 2013 - present. 1,500 - 1,750 / mo, current tenant 1600. Vacancy, 50 days over 5.5 years. 1600 mo rent, cash flow 866 / mo Total cashflow = 57k Equity / Appreciation = 165k + 70k Market value + cashflow = 292,156 Does not include my time, closing costs to return to cash, depreciation/taxes. EDITED: return rate per replies. VTSAX October 2013 - present +96%. VTSAX 165,000 position, +158,400 = 323,400 I was thinking it would have been a stronger position to stay in the stock market. But the next downturn may affect stocks more than home value and vacancy. [link] [comments]  |
| How do RMD's work and where to park the money? Posted: 29 Apr 2019 11:45 AM PDT For example let's say you start with 1M and your 70yo. Since distribution factor is 27.4 at this age you would have to withdraw 1M/27.4 Next year distribution factor is 26.5. Do you withdraw 1M/26.5? Or do you withdraw (balance next year)/26.5? Lastly, once you withdraw what do you do with the money assuming you don't spend most of it? Do you just put it back in a brokerage? [link] [comments]  |
| Strategy to take house profit? Posted: 29 Apr 2019 02:18 PM PDT We are a little behind where I would like to be to be with regular retirement savings I have managed (more by luck and circumstance) to be sitting on 1.3 million in house equity by buying a house in Seattle in the 90s. I'm just turning 50 and trying to plan out the next 10 years and have realised we can only take 500k tax free in house profit if we down sized and moved to a LCOL area... So what's a good tactic here if I want to consider this equity as part of my net worth? How do I structure selling and moving to maximize the tax free profit? Do I sell and buy a house $500k cheaper, then repeat every 2 years? I'm already digging through my hoarder pile of paperwork for money I have spent on the house to offset the profit. I wish I had realised earlier to keep this. [link] [comments]  |
| Posted: 29 Apr 2019 12:49 PM PDT I'm graduating this year and my first postgrad job will be roughly 50hrs per week and 70 miles away from where I currently live which is in my family home (very typical in my culture), My question is this: should I move right next to where I'll be working (for the next 2 years) or should I commute 70 miles (1hr15-1hr30) each way per day given that I wouldn't need to pay for housing or food as my parents stubbornly won't accept any payment. I should also add that my family want me to stay and that feeling is mutual with myself (the statistic that 80% of your time that you'd EVER spend with your parents is over by the time you move out for university scares me). Also, I'd leave my home about 06:30 for a 9am start to go to the gym right next to my workplace before work and avoid a lot of the traffic since it'll be quieter that early. What are people's thoughts regarding our FI mindset? [link] [comments]  |
| Does "savings" include my employers contribution to my 401k/HSA when calculating savings rate? Posted: 29 Apr 2019 12:05 PM PDT The way I laid out my spreadsheet is my income less contributions to 401k, HSA, TRIP to arrive at taxable/gross income. Then I factor out taxes to get my net income and everything below that is my budgeted expenses. I then took (leftover amount available for savings) / ( Net Income). I didn't add back in my or my employers contributions to 401k/HSA in this calculation because I feel like the tax benefits of those contributions quickly skews the savings rate. When I add just the 401k contributions to my savings it results in a 10% greater savings rate. So I am wondering what is the right way to do it? I want to know what other people are including in their savings when they talk about their savings rate. [link] [comments]  |
| How many of you tilt your asset allocation in post-FIRE to particularly high yield/income equities? Posted: 29 Apr 2019 10:11 AM PDT While my 401k and taxable brokerage are in broad market ETFs, most my tax-advantaged holdings are in buy-write ETFs (QYLD, etc), and 5+% yielding REITs/stocks. Preemptively: Yes, I know 95% of people here are overwhelmingly committed to a traditional "3-fund" approach. Yes, I know about "dividend traps", yes I know "equities decrease in value proportional to dividend distributions". I'm just curious to what extent a yield/income tilt is being used to achieve a higher SWR, and what overall percentage this comprises for current post-FIRE portfolios. [link] [comments]  |
| Vanguard personal advisor services Posted: 29 Apr 2019 05:45 AM PDT Folks - I have been having vanguard funds for more than 10 years and over the last two years signed up for their personal advisor services at 0.3%. They sit with you for your goals and then rebalance your portfolio quarterly. No matter what I put in, the goal always shows I will not meet my target. If I ask a question I get told it's Monte Carlo simulation. I am a bit skeptical. If all that the advisor is doing is rebalancing portfolio among agreed upon funds following a glide path, is it worth having the service and am I right in being skeptical about goal projections? The following is the allocations they have me under today. Adds up to 99.6% due to some rounding but that is not material.
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| Mega Backdoor Roth - In Service Distribution Posted: 29 Apr 2019 07:08 AM PDT Just curious for those that have experience on this. The articles typically refer to an in service distribution to a Roth IRA. Does this go to the Roth 401k, or must this go to a Roth IRA? I get confused, since it states in service (in plan?), which is typically comprised only of 401ks, but the language always says Roth IRA. [link] [comments]  |
| I have low patience, I want to do it NOW Posted: 29 Apr 2019 08:08 AM PDT Not sure if anyone else feels this way. But I get frustrated at myself when I realize how much money I used to spend. I could have saved it and paid off more of my student loans. I wish I could have all the money back and pay off my debt right now. My patience is low, I need to get more money somehow and finish off these student loans so I can become FI. Im not going to ever stop the path to FI, but I just wish I could do it all different and just wish I had the money now to be FI. U have low patience with such an aggressive attitude towards achieving FI now. [link] [comments]  |
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