Financial Independence Daily FI discussion thread - June 27, 2019 |
- Daily FI discussion thread - June 27, 2019
- My path to $100k
- Anyone else in this sub interested in FIRE as a concept but not personally?
- "Is 4% Withdrawal Rate Still a Good Retirement Rule of Thumb?'
- A rant about American health care
- Any ideas for funds that pay zero (or almost zero) dividends?
- Work destroys meaning, or: why I want financial independence
- FIRE explained in 'respectable media; - sort of got it right
- To pay off the mortgage, or invest more?
- CNBC article about early retirement
- MBA worth it
- Westerners who have fired in developing countries - how accepting have the locals been of you?
- Feel like Net Worth has stalled out
- How do you figure out the "net worth" of a pension?
- Am I investing too much for a young person?
- Forbes on FIRE
- Let's not over-romanticise Barista-FIRE too much.
- Retired? What investments will you sell next time the stock market crashes?
| Daily FI discussion thread - June 27, 2019 Posted: 27 Jun 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]  |
| Posted: 27 Jun 2019 06:40 AM PDT tl;dr Through a series of fortunate events, I hit $100k at the age of 28 on a modest salary, SINK. I've always been decent with saving money, I attribute a lot of that to my parents. I didn't realize how frugal they were until I started making my own money. I graduated in 2014, with a degree in mechanical engineering and not a clue what I was going to do with it. Fortunate break #1: I was able to graduate debt free thanks to my parents and somehow didn't come out an entitled twat.
August 2014 - NW: $2.7k I started working at a consulting firm with a salary of $52k with overtime available. This is in a LCOL area which explains the average salary. Fortunate break #2: I was able to "house sit" a friends house who had relocated. I was living rent free and only paying for my internet. At the time I really didn't know much about personal finance, I just kept shoveling money into my savings account. I was a bit loose with my spending and ended up just shy of $25k after the first year of work.
August 2015 - NW: $24.7k I still had some wanderlust in me from college and left the company on a good note. I headed west to a very HCOL area give the big city life a try. I struggled to find work within my degree but stayed afloat with an interesting job none-the-less. I wasn't getting paid as much and participating in a hell of a lot more "experiences" than before. Ultimately it was a learning experience and a very fun hiatus.
August 2016 - NW: $18.4k Fortunate break #3: I get a call from my old boss, he's got a new position with my name on it. After some pro's and con's lists I take him up on the offer for $56k. Fortunate break #4: Friends house was still on the market, more "house sitting" and free living for me. This is when I took a deep dive into personal finance and discovered this sub. I started contributing a little to my 401k.
January 2017 - NW: $21.8k I made it a goal to really take advantage of my situation and over the course of the year I was able to max my 401k, open and max my Roth IRA as well as my HSA all on a $58k salary. This obviously wasn't sustainable but I'm proud I did it. The guilt finally started to hit from living the moocher lifestyle though. I started house hunting mid year as it was honestly a wash between a mortgage and rent. In December I finally found my "dream house" for $120k. Dealing with all the shit in the Midwest does have its perks.
January 2018 - NW: $47.4k I had to dial my 401k contributions back since I had a mortgage to pay for as well as all the other new fun expenses that come with an old home. I was still keeping a decently tight budget and still saved a good chunk of change and finally started to see noticeable gains/losses (thanks December) that weren't contributions.
January 2019 - NW: $73.7k Same old same old, salary at $62k, cut back 401k contributions a bit more as I plan on replacing my 15 year old vehicle within the next couple years and would like to beef up my Efund a bit before that.
June 2019 - NW: $101.3k The pretty chart everyone likes to see. Thanks to a solid market and a bonus, I hit my first major milestone. Some notes on my finances:
Personal stuff: My major hobby expenses are video games, although I'm hoping to not spend as much on my next computer upgrade. I don't plan on having kids, I'll leave that to my brother and just be the cool uncle. No idea when I want to retire, before 55 is the current goal. Next big target will be $250k, hopefully I'll get there in the next 3 years! I definitely wouldn't be here without the help of a lot of people and these subreddits. There was a thread earlier that mentioned how privileged a lot of us are here, and I realize I'm in that boat as well. Thanks all for reading, feel free to ask any questions. Edit: I track everything in google spreadsheets, used excel to create the chart as spreadsheets was a bit lacking in that department. Edit 2: My spreadsheet for those that asked. I cleaned up the values. I only enter data for the row titles highlighted in light blue. The rest is calculated. I'm pretty sure I pulled the basis of this spreadsheet from someone here a couple years ago. Getting the chart to work is a bit weird since I opted to enter the data in reverse. Also I made the chart in the post on Excel in order to place the data points. Should be able to create a similar one in spreadsheets though. [link] [comments]  |
| Anyone else in this sub interested in FIRE as a concept but not personally? Posted: 27 Jun 2019 07:10 AM PDT It makes me laugh that this is one of my favorite subs yet my wife and I only do a tiny sliver of the stuff peeps in here are supposed to do. We live well below our means in an effort to reduce our reliance on work and we save money and whatnot but we don't own a single bond or equity and don't have any plans to be FI or retire early. In fact, I wouldn't be surprised if I wind up working in some capacity well into my 70s or beyond. I don't mind work as long as I don't have to do it all year and mostly get to do it on my own terms. But yeah, so I am fascinated by the concept and really like the core idea of living below your means in order to buy freedom but the whole "bust your ass for 10 years and save like mad to retire forever" idea definitely isn't for me. I enjoy many of the discussions in here and I find it interesting from a sociological perspective to read about some of the alternative lifestyles people in this sub lead but I'm not truly FIRE-minded. My philosophy and lifestyle certainly parallels the FIRE mentality when compared to the herd but all up, in many respects I don't "belong" here. Clearly the FIRE concept runs along a spectrum but I'm just curious if there are other consistent users here who think FIRE is neat but not for them? [link] [comments]  |
| "Is 4% Withdrawal Rate Still a Good Retirement Rule of Thumb?' Posted: 26 Jun 2019 08:16 PM PDT Article, should anyone have missed it. "Is 4% Withdrawal Rate Still a Good Retirement Rule of Thumb?" [link] [comments]  |
| A rant about American health care Posted: 27 Jun 2019 01:57 PM PDT I'm young, recently started working as a software engineer. I have great benefits, great pay, saving a lot, life is good. Never had health issues, when I did, parents took care of everything. Didn't grow up poor, didn't grow up rich. I just want to preface that this is not some entitled whining post. This is me realizing that — holy shit my current financial position is probably 99% better than most early 20 year olds, and this experience still stings. And it's made me realize how much worse it would have been for so many other people without the privilege that's been given to me. I recently experienced something where my arms went numb and my face/jaw locked up. It went away, but fearing that it was some sort of minor stroke, I went to urgent care. The doctor at urgent care did some tests on me, said I was fine, but "highly recommended that I go to the ER to get an EKG and some blood work done". And my uninformed dumbass goes. At the ER, I spend 5 hours there, do a blood sample, take an EKG. Doctors diagnosis? Probably just hyperventilation. Final bill, 3.5k, 3k just from the act of going to the ER. My deductible was somewhere around 1.3k, my EKG somehow wasn't covered, total out of pocket was 1.5k. I paid via my HSA in which my employer contributed 500 to, and I contributed the rest. So at the end of it all, I paid about 1k pre-tax dollars of my money. But as I was leaving urgent care, I struck up a conversation with one of the ladies working the front desk. She told me her deductible was 3k. Fuck man, she would have had to pay the entire bill. For "probably hyperventilation". That's when it sunk in that my employer medical insurance is one of the better ones. As someone who never dealt with health scares before, I didn't have relative numbers to compare my deductible to. Now I know how fortunate I was. I paid out 1 grand. It's 10% of my net worth. As someone who just finished undergrad and never had more than a couple thousand to my name, it still stings. But I recognize how fortunate I am. Im one of the few people in my friends circle that is in this subreddit. I have saved up money. I don't have to go into debt. My employer covered part of the bill. I'm pissed off that this is our system. I'm probably never going to visit the ER again on a suggestion like this. Now I know why the urgent care doctor was so hesitant when making that suggestion. Now I know why the front desk lady told me her deductible number as I was complaining to her about potentially paying over 1k for this. Now I know why people skip ambulance rides to the ER, why people desperately avoid it. Now I know why there's so much medical debt. I don't even have a concluding point, I just wish I could do something to affect change here. Today was a really sobering realization for this one young guy who lucked the fuck out. [link] [comments]  |
| Any ideas for funds that pay zero (or almost zero) dividends? Posted: 27 Jun 2019 06:26 AM PDT I'm an early retiree living in Switzerland and because of my unusual tax situation, I pay a huge amount of effective marginal income tax (more than 50%). For personal reasons, I'm stuck in this situation for the foreseeable future. I also started a business and following the advice from my tax advisor I have moved everything that generates dividends or interest (eg. index funds, stocks) into that Ltd. Everything that doesn't generate dividends remains "personal property", eg. gold, cryptos, venture captial. But that is only around 10% of my wealth, and I would like to increase that share. Putting more money into cryptos and VC is too risky. I am looking for funds, ETFs, any vehicle really, that is maximally diversified AND achieves capital gains AND pays zero (or almost zero) dividends. Oh, and funds that reinvest the dividends don't count. They still count as dividends from a tax perspective even if reinvested. Here is an example of the kind of thing I'm looking for: Thoughs? Ideas? Feedback? PS. I case you're wondering why I'm asking this on reddit and don't go see a financial advisor, I have in fact seen two financial advisors, but my experience with financial advisors is that they have trouble "thinking outside the box" and their advice is too conventional for my unusual situation. So it would be nice to hear some unconventional tips too. [link] [comments]  |
| Work destroys meaning, or: why I want financial independence Posted: 26 Jun 2019 08:00 PM PDT I saw this linked over on r/philosophy and I thought it apropos to the philosophy that most people have here: we want to spend our lives doing things that have meaning to us, without being caught in a situation of "total work". https://aeon.co/ideas/if-work-dominated-your-every-moment-would-life-be-worth-living If you can, have a listen to the narrated version as well, it's really nice to just listen to... I like to build things. I would, if I had more time, describe myself as a maker. But I'm thoroughly entrenched on the treadmill and have approximately zero time per week to spend planning and building things. It is the great lie of the efficiency gains of the modern workplace. Output is increasing for our work, but at the cost of a lower output of our personal lives. [link] [comments]  |
| FIRE explained in 'respectable media; - sort of got it right Posted: 27 Jun 2019 06:21 AM PDT https://www.bloomberg.com/news/videos/2019-06-25/how-to-retire-early-or-ever-video Nothing new for us, but definitely nice to see outside of yellow press. [link] [comments]  |
| To pay off the mortgage, or invest more? Posted: 27 Jun 2019 03:57 PM PDT 46yo 1 domestic partner + 3 kids $900k combined in 401ks and IRAs Owe $220k on my mortgage Lucky enough to have a high income where I can save $50k or more per year. The twist is, my profession is highly unstable and that could come to an end at any moment. So... I'm trying to decide between doing the mega backdoor IRA (I already max out my regular 401k) or if I should just use those funds to pay down the mortgage. Thoughts? [link] [comments]  |
| CNBC article about early retirement Posted: 27 Jun 2019 02:31 PM PDT There's an article on CNBC.com about how to figure out how much money you need to retire early. It mentions this subreddit and interviews a few FIRE bloggers and links to the sidebar fire calculator from engaging data. [link] [comments]  |
| Posted: 27 Jun 2019 02:00 PM PDT Hey everyone, so here's my situation. I have a bachelor's degree, and I've been in the workforce for a little over a year. I work for a (not particularly prestigious or well know) fortune 500 company (and I like my job/company so far). Coming out of college, I planned on this being a temporary stop for me to get the 3-5 years of experience I'd need for a shot at getting into a good MBA program. My stats are such that I think I'd be competitive for a top 20 program or so and maybe an outside shot at a top 10. I've been recently thinking about it and doing the math on what it would cost to get the MBA (in the neighborhood of 200k assuming no scholarships), and that combined with my pursuit of financial independence would mean that I'd most likely be REing right around the time in a career (15-20 years in) that a degree like an MBA would likely start making the biggest difference. In addition, even with the salary bump from an MBA, FI would likely be set back by 5 years or even more. The point is, I've kinda been questioning the path recently. The way I see it, the choices look like this: goal: maximize lifetime earnings (no RE) -> MBA goal: minimize time FI -> No MBA, continue working goal: maximize long term net worth -> ? I guess it would depend on how much of a total compensation difference the MBA made over time and how long it would take to catch up with the continue working option while paying down debt. Anyway, I'm just kinda wondering if anyone here has done an MBA, and do you think it was worth it? What would you do in my situation? I realize the answers here will probably be biased since this is the FI sub. Maybe I should make a similar post over in the MBA sub edit: I posted over in the MBA sub as well https://www.reddit.com/r/MBA/comments/c6azyt/mba_in_light_of_pursuing_fire/ [link] [comments]  |
| Westerners who have fired in developing countries - how accepting have the locals been of you? Posted: 26 Jun 2019 06:40 PM PDT |
| Feel like Net Worth has stalled out Posted: 27 Jun 2019 08:25 AM PDT Hi all, First time poster in this sub-reddit. I am 32 and my wife is 30. We have a Net Worth of around 360k but I feel like it has stalled out and is not growing quick enough. We have 2 car payments that will be completed in about 1-1.5 years and other than that we have no debt (minus the mortgage). We both max out our 401k's and I max out my HSA. I want to work towards FAT FIRE. I don't want to work forever but I also am not planning to retire at 45. We plan on having kids so realistically I would probably be aiming more towards ~55 to retire if possible but sooner would be great if possible. I feel like our Net Worth has stalled out. Whenever I go into Personal Capital it feels like it isn't really growing. With the way the market has been I feel like this shouldn't be the case. Are we even close to on track to be able to hit this goal? When I look at our 401k balance I feel like it isn't growing fast enough to support our goals. (Heads up I am also new to FIRE so please take it easy on me) [link] [comments]  |
| How do you figure out the "net worth" of a pension? Posted: 27 Jun 2019 09:05 AM PDT I get a state pension (in place of social security. I dont pay into SS) in addition to a 401k. To make things simple, let's say if I work 25years and then retire, I get 50% of my income at retirement from 62 until I die. How does that contribute to my "net worth"? [link] [comments]  |
| Am I investing too much for a young person? Posted: 27 Jun 2019 06:52 AM PDT So I'm 23 y/o, I have a pretty solid NW right now and my 401k provider just gave me approval for mega backdoor rIRA contributions which is rad. My rIRA is already capped for the year and I'm wondering how much I should start putting in through the back door. I've recently been told that I'm holding too much in savings (~$25k) when I'm only spending $1600/mo and pulling $65k/yr. My accounting situation is kind of hectic at the moment because I'm in the process of moving and also selling a ton of shit. When the dust settles in a month or so, I should probably have about $32k in savings. But shortly thereafter I will have to front $10k for grad school tuition until my employer reimburses me at the end of the semester. So if I backdoor say $12k, that puts me down to $10k in savings, after tuition, which is OK I suppose. However it has me thinking more long term-- I've been investing extremely aggressively this year, and I'm wondering if it's too much for someone my age, considering I will probably have to buy a house eventually and I will need a significant down payment. I really don't plan on buying a house for several (6+) years, but you never know, it could happen sooner, and I'm worried that I will not have enough liquitable cash when that happens. So I'm basically just wondering if it would be a good idea to stick with more NW in savings while I am young and volatile, or if I should go ahead and just dump everything into backdoor? [link] [comments]  |
| Posted: 27 Jun 2019 07:15 AM PDT |
| Let's not over-romanticise Barista-FIRE too much. Posted: 27 Jun 2019 04:30 AM PDT This is the kind of stuff you might have to put up with in service jobs - https://www.youtube.com/watch?v=qpF53oPOL3g&feature=youtu.be [link] [comments]  |
| Retired? What investments will you sell next time the stock market crashes? Posted: 27 Jun 2019 02:25 AM PDT If you are living on investment withdrawals, will you sell your stock market investments during the next stock market crash? Or do you sell your bond funds or have 3-5 years in cash (Money Market or CD's) to use for withdrawals during bear markets? The reason I ask is most people I know have all their money in target funds or balanced funds that have a mixture of stocks and bond index funds. (So they will be selling off investments that are losing value quickly. [link] [comments]  |
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