Financial Independence Daily FI discussion thread - May 30, 2019 |
- Daily FI discussion thread - May 30, 2019
- The US slipped to third place in a ranking of most competitive economies
- My FIRE hobby, scrapping and scavenging
- Buying time promotes happiness
- End of life care planning
- Anyone here delaying fire because of recession fear?
- Real Estate Investing from an Expense-Reduction Perspective = Faster FI
- Is my backdoor Roth subject to pro rata rule if spouse owns Trad IRA?
- How can I get started?
- FIRE people from USA, How has insurance cost affected your decision towards becoming FIRE?
- Interesting take on FI/RE...
- “Playing with FIRE” Documentary playing in Albany NY on June 20th at the Spectrum Theatre
- Looking for some clarification regarding 4% SWR, early retirement, and Roth Conversion Ladder.
- Facing My First Ever Round Of Layoffs
- Playing with FIRE Documentary Coming to South Florida
- Slowing down FIRE: how's this plan? Am I obsessed with taxes?
- FIRE and Roth IRA vs Traditional IRA?
- On the RE side of FIRE....Gut Check on allocation for a 65 year old woman.
- Progress 10 months in and possible change of direction
| Daily FI discussion thread - May 30, 2019 Posted: 30 May 2019 01:07 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]  |
| The US slipped to third place in a ranking of most competitive economies Posted: 30 May 2019 05:19 AM PDT I post this in this thread because I know a lot of us speak of allocation and how much domestic vs foreign stock we should hold in order to reach FI as fast as possible. Thought this article was interesting and figured I'd share. I'd love to hear what everyone's current international allocation is and/or if news like this will influence future allocations. I know the US has been the dominant economy for awhile (I personally hold no international yet, just VTSAX—I've followed the JL Collins mindset) but as we all know, past performance doesn't dictate the future, either. For the first time in nine years, Singapore surpassed the United States and Hong Kong to clinch the title of the world's most competitive economy, according to IMD's 2019 World Competitiveness Rankings. The rankings go as follows:
The CNBC article stated
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| My FIRE hobby, scrapping and scavenging Posted: 30 May 2019 06:00 AM PDT Not fire'd yet or any time soon, but I have recently started scrapping metal and think its what I want to do full-time after I FIRE for income and a hobby. I have started driving around on trash day and picking up stuff I can find that is at the curb and metal, or looks like it could have resale/reuse value. It is a ton of fun, like treasure hunting almost. Then once I have it all back to my house I break it all down and separate it into the different metal/scrap types for max profit from the load. Thinking about getting a truck since there is tons of stuff I've passed every-time I've gone so far that I wanted to take but just couldn't fit in my sedan, stoves, dishwashers, grills, etc. I don't think this will be a very profitable thing, but finding the stuff and taking it apart is so much fun, I don't really care about the profitability. I could work OT and make 5x hourly what I would make hourly scrapping, but this is more fun.... Just thought I'd share an interesting hobby I've found since there is a lot of "what do I do after I fire" type posts on here a lot. Edit: It keeps a bunch of stuff out of the dump too, and gets more stuff reused/recycled! [link] [comments]  |
| Buying time promotes happiness Posted: 30 May 2019 03:41 PM PDT https://www.pnas.org/content/114/32/8523 Found a relatively recent article talking about how money can actually buy happiness, if used to by time. I thought it would reflect well with the values here, so thought I'd share in case anyone else would like to read. [link] [comments]  |
| Posted: 30 May 2019 12:58 PM PDT I see so many posts specifically about planning for rising insurance rates - but many of us on FIRE are childfree, so I'm curious about what types of plans people are developing for aging that go beyond the specifics of paying for health insurance/having lots of money. The money aspect might, in some ways, be easier to control than the aging part of FIRE. What I've been thinking about is more like - what plans are people putting in place if they are at a known risk for developing dementia/alzheimers and don't have a family support system to look after them/find them a nursing home. Getting to and from doctors appointments when you it's no longer safe for you to drive. Finding reputable services when physical ailments require some part-time in-home care or general assistance with grocery shopping. Strokes that would necessitate some sort of facility living for round-the-clock care. It would be difficult to find these services after you're already in a bad place, so early planning is necessary. And while many of us are childfree, there's no guarantee you're family will take care of these things for you. On a related note, there's also the risk of elder-abuse through stealing finances which can be done by family or POA. How are others planning for the logistics of these aspects of retirement once the money part is taken care of. (small edits, one to include this New Yorker article on Elder Financial Abuse that is terrifying) UPDATE: I'm really surprised at the number of people who go straight to the extreme end of care needed in aging. There's a vast spectrum of quality of life changes that will happen to us and a lot of different needs that will occur along the way. [link] [comments]  |
| Anyone here delaying fire because of recession fear? Posted: 29 May 2019 11:35 PM PDT You know, the inverted yield curve. 10 years since the last recession etc. [link] [comments]  |
| Real Estate Investing from an Expense-Reduction Perspective = Faster FI Posted: 30 May 2019 11:06 AM PDT My wife and I just bought a new house and I just wanted to share how the math works out for the effect on our journey to FI. Background: Currently we live in a duplex with 2-bed, 1-bath units worth around $275k. We live in one unit and rent the other. I like to put things in perspective for myself by calculating our housing expense in terms the "cash flow expense*", and "net worth expense*." The difference between the two is the net worth expense subtracts out the part of the mortgage payment that goes towards paying down loan principle. New Purchase: Our current home is nice enough, but we would prefer a little bit more space and a garage. In an effort to delay lifestyle creep, I proposed buying another, nicer, duplex as an intermediate step before really bumping up our expenses and buying an expensive single family home in a nicer school district where we might like to raise a family in a few years. We found a nicer, larger duplex with 2-bed, 1-bath units in a better location for $425k (which is reasonable based on my rent and expense projections.) We will move into our new home shortly. We found new renters for the unit we currently live in, and for the 2nd unit at the new place. The first duplex will cash flow nicely with both units rented, but the expenses are much higher on the new, more expensive property. Big Picture Effect of Purchase:
Bottom Line: It was an interesting exercise run these numbers and see the new home purchase (and housing upgrade) as a way of not just delaying even higher expenses or just for it's future prospects as a rental, but actually as a way of reducing housing's drag on our net worth now. It's also reassuring the numbers come out favorably from this perspective, as well as when looking at the investment prospects for what happens when we rent out both units. *When I discuss monthly housing expenses here, I'm not including the variable costs that you would have to pay whether you own or rent like the electricity, gas, and internet/cable bills. Edit: I am also accounting for 8% of rent going towards repairs/maintenance and a 5% vacancy rate. [link] [comments]  |
| Is my backdoor Roth subject to pro rata rule if spouse owns Trad IRA? Posted: 30 May 2019 01:49 PM PDT My wife owns a Traditional IRA with pre-tax funds, which she may not be able to roll-in to her 401k at work. We currently file married filing jointly - if I contribute my post-tax dollars to a IRA and perform a backdoor Roth, will I be subject to the pro-rata rule due to the fact that my spouse owns traditional IRA funds? Or will I be be exempt? [link] [comments]  |
| Posted: 30 May 2019 03:55 PM PDT Hi everyone. I am a 19 year old Australian uni (college) student. I have about A$20,000 saved up which I don't really need to touch for about 5 years. In two years time, I would have A$30,000 saved up. I want to become financially independent but I don't know where to begin. Obviously, the sum of money I have is too low to invest in property and I don't want to keep my money laying around in a bank where I get some shitty interest rate. I was thinking of investing in index funds where I reinvest all the dividends. Does anyone have any suggestions or advice? Thanks. [link] [comments]  |
| FIRE people from USA, How has insurance cost affected your decision towards becoming FIRE? Posted: 30 May 2019 11:57 AM PDT has insurance cost delayed you from becoming FI?, What have you done about it? [link] [comments]  |
| Posted: 30 May 2019 03:04 PM PDT For those not familiar, the Bahnsen Group has a great newsletter called "Thoughts on Money." This latest post was about FI/RE and some potential pit falls to consider along the way. Definitely worth giving some consideration... [link] [comments]  |
| “Playing with FIRE” Documentary playing in Albany NY on June 20th at the Spectrum Theatre Posted: 29 May 2019 08:53 PM PDT The is for any folks in the NY Capital district! Thought I'd share this opportunity to see this interesting documentary. Selfishly I want to see it, but it'll only get screened if they sell 70 tickets. I'm not sure if posting the link to where you buy tickets is against the rules of this sub, so I'll just say you can find it on Tugg. Please buy your own tickets and share so we can check out this movie! [link] [comments]  |
| Looking for some clarification regarding 4% SWR, early retirement, and Roth Conversion Ladder. Posted: 30 May 2019 09:21 AM PDT Hello! I am just beginning my journey of actively researching FIREing and all that it encompasses. I currently am thinking about continuing to max out my tradIRA, 401k, and then actively use a brokerage account. I understand that you can, in theory, withdraw your contributions early from an IRA by utilizing the Roth Conversion Ladder and slowly converting contributions from your tradIRA to Roth IRA (with a 5 year conversion period, etc), and I also am beginning to understand the 4% SWR. My question is, since the 4% SWR depends on withdrawing your gains each year, how does this work with retiring early? From my understanding, you cannot withdraw your gains before 59.5, regardless of whether you utilize the RCL, as you can only do an early withdraw of your contributions to your IRA. Therefore, I am confused on how you would, in theory, be able to withdraw your interest/gains each year in early retirement? i.e. - I have $1,000,000 in an IRA and plan on retiring by 45. I slowly begin to convert money from the tradIRA to rothIRA, waiting 5 years inbetween to withdraw money. If I have to wait another 14.5 years to be able to withdraw the gains/interest from the IRA, how can I possibly implement the 4% SWR? Any clarification would be super helpful and appreciated! [link] [comments]  |
| Facing My First Ever Round Of Layoffs Posted: 29 May 2019 07:05 PM PDT I just got wind of a round of layoffs from my awesome team. No specifics yet until Friday and I'm hit with a lot of worry and unease that I never thought I'd have to face so early. With the reality of budget cuts and being a productive yet expendable employee, I've developed a new appreciation and meaning to what it means to FIRE. I've gone from, "Can't wait until I retire in ten years and drink margaritas!" to " I want to have my finances squared over so that I'm not at the mercy of this turbulent job market". Thankfully, this FI community has helped me maximize my first "above-minimum wage" salary job to the point where I've maxed my 401k, IRA, and have saved thousands in taxes. Having an adult job straight out of grad school kick-started my desire to make my money work for me in case I got burnt out or laid off. It's a scary reality I didn't think I'd face as a healthcare professional but now I'm accepting that I am never immune to these forces. Come Friday, I'll know what my fate is, update my resume, and reconnect with people who have my back. In a lot of ways, I'm fortunate to have other companies to apply to and I gained a lot of life experience my first 10 months as a full time therapist. Anyways, I just wanted to write some words of gratitude for all the helpful posts and advice I've received from this group. It's been a great ride so far and more to come! [link] [comments]  |
| Playing with FIRE Documentary Coming to South Florida Posted: 30 May 2019 12:22 PM PDT Playing with FIRE Presented by ChooseFI South Florida Monday, July 8, 2019 7:30pm–9:16pm at Regal Oakwood Stadium 18 — 2800 Oakwood Blvd, Hollywood, FL, United States, 33020 [link] [comments]  |
| Slowing down FIRE: how's this plan? Am I obsessed with taxes? Posted: 30 May 2019 12:35 AM PDT I'm at the point where if I keep at my current pace with savings, I will likely overshoot my FIRE goals (and I really don't see the value of FatFire in terms of marginal benefit for effort) so I'm thinking I'll hold my current balances (still max 401k) and let them grow while I try to up my spending to "paycheck to paycheck" levels. I'm thinking every 5 years or so of work (I like working), take a 1 year travel break, cut expenses to backpacker style (which I enjoy) so that I can exploit the high threshold for 0% capital gains to convert LTCG assets to a higher basis. Rinse, repeat. [link] [comments]  |
| FIRE and Roth IRA vs Traditional IRA? Posted: 30 May 2019 05:51 AM PDT I was just listening to chooseFI podcast and they had someone recommend a traditional IRA over a Roth. But I couldn't really understand why. Looking it up further, blogs say a traditional if you make 71,000 or less and Roth for 125,000 or less. Personally, I'm going to most likely be over 71k/ in about a 2 - 4 years. Should I just stick with my Roth then? And I know the advantages of each, but how is a traditional IRA better for those retiring early and pursuing FI? [link] [comments]  |
| On the RE side of FIRE....Gut Check on allocation for a 65 year old woman. Posted: 30 May 2019 05:32 AM PDT Hi All- I'm hoping you can gut check something for me. My siblings and I have been looking at all of the good FIRE wisdom, including the 4% "rule". In that context, we're talking about overall allocation of a 65 year old woman's net worth. She is debating leaving her part time gig and going RE entirely. The question is what % of her resources should be in a total market index fund, versus what percentage should be in bonds? Her only fixed income is social security, and that's maybe 18-20k per year. She will *require* about 55k per year to live comfortably. (This is an overestimate, but I'm factoring in healthcare surprises.) She has a total net worth, outside her home, of 1million. She will need 35k per year from her investments to supplement social security, which is right around 3.5-4% of her net worth. Based on advice I've seen, I say she should be 65-70% in a broad market, low-cost index fund, with 35-30 in CDs or similar low risk holdings. Siblings are saying that's too aggressive, and she needs a 50-50 split. What say you? [link] [comments]  |
| Progress 10 months in and possible change of direction Posted: 29 May 2019 06:08 PM PDT So I've been saving like crazy for 10 months 78.2% of my paycheck ($28,035.89 of net pay of $35,861.60) but I still really don't consider myself on a path to FIRE... it's like I need to do it for a few years before I really convince myself I'm on the path. But I've started and I'm doing a lot of right things. I want to share how I did this and seek some advice/comments on what to do next/how to continue since I'm considering changing jobs. I'm a mechanic on ships or service technician. My company will fly me to different ports where I work on ships. I got lucky with this job and I knew the managing director. Previously I was considering trying to save money by driving truck, before that I actually worked in education teaching English overseas, worked as an adjunct, research assistant as a PhD student that I dropped out of. Anyway... quite the career change. It's actually kinda a crazy story. Anyway, I'm 39 turning 40 and there is a lot I like about this job. I've been to jobs on a ton of Caribbean islands, Singapore, Europe, Southeast Asia, Alaska so there is travel. There is a ton of opprotunity for overtime since we work long shifts, no days off on jobs, and paid travel time (when I'm in the airport or on a plane, taxi, etc) and per diem. My hourly rate is only $14 but we get double time on jobs. So it adds up. The work is fulfilling because we see real progress fixing boats, hydraulics, etc. It's also an extremely informal work environment of roughneck guys where you can joke and have fun. A ton of camaraderie on our crews since we travel, live and work together. Plus when I'm living on a ship I don't spend ANY money. I've gone 2 weeks without spending a cent (unlike a lot of the guys who spend money on booze, souvenirs, hookers, whatever else looks shiny). I'm also becoming more competent in this role so I feel more confident and more of a contributor. This job is also a good set up because I live with a family friend for $200 a month since I'm not in his house often. His kids are grown up and gone so he likes the company and I like the discount. I can also save because my parents gave me their old car and even have it listed in their name and pay the insurance on it. So my cost of living is ridiculously low and I'm stacking cash at a fast rate. The truth is I'm proud of my progress, when I was working in higher ed I was always somewhat dependent on my parents. I always worked but they would help me so I wouldn't have to take out loans and so I could focus on my studies and teaching. Never a lot of money since I had really low tuition since I was working for the university. I also did my part by not owning a car, shopping at the thrift store and things like that. But I didn't like how it made me feel. And since my PhD didn't work out I knew I had to get on better financial ground. I already feel better since while I've been saving I've also put $2200 in a 529 college fund for my infant niece. Point is that I obviously like being able to do this rather than taking money from my parents. Even though I do take their old car lol. The problems I face with this job is the risk of injury. I've already had severe elbow pain and moderate shoulder pain. I've been careful to stretch, use proper lifting technique, and be careful but this job comes with bumps and bruises. I feel strong enough to do it... but at almost 40 I need recovery time and when we work over a week consecutive there are no rest days. Unlike the gym where there are controlled lifts and rest days in a regimen... this is a get it done regimen and it's hard to bounce back day after day. Most of the guys are young bucks in their 20s, the older guys have more experience and lead the jobs and have less consistent exposure to the strenuous work. There is also the risk of much worse injury and even death but those are statistically unlikely and I'm more careful than most so I don't worry about these as much as I do the bumps and bruises. Point is that I don't want to have permanent elbow and shoulder problems. So I've considered leaving this job... but I'd really like to stay. My checking account balance is over 30k. I've been averaging 4k saved per month since Jan 1st. I want to invest some of this and if I stay around I'll double that easily within a year since my training period is over. But I'm also very realistic about the injury potential. My grad degree is in Spanish / Linguistics and I'm not sure what opportunities I have there since adjunct jobs don't pay very well. Since I like living overseas I've also considered just moving back overseas and teaching English where I can live frugally and save money... but realistically only save $500 a month. Since I've got the wind at my sails now I've also considered sales simply because there is potential to become a high earner. So this is my predicament... continue risking injury to save more. Right now my elbow pain isn't that bad so I sometimes just tell myself make the best of it for another year and I think I can get up to 75k+ in total savings. Then do something different. What do some of you think? I really like this sub for motivation. Even though I'm not really truly on my way to FIRE I'd like to be and admire people who are living and building this life. Should I just believe that I can go make money under different circumstances and try for another job? [link] [comments]  |
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