Financial Independence Daily FI discussion thread - June 30, 2019 |
- Daily FI discussion thread - June 30, 2019
- What’s your plan for health insurance?
- $110k NW in 4 years with $25k salary
- Learned an easy way to explain FIRE: "Live off every other paycheck."
- "Half" FIRE for married couples
- Giving Up Great For Good
- Dummy check our FIRE plan
- How long until I am financially independent? 93k p/yr, living frugal in CA
- Please help us understand employer decision.
- Calculate investment returns formula
- MyMoneyDiaries - how other FIRE-seekers spend their pay
- Maximizing portfolio growth in retirement
- Anyone here from outside North America?
- Could (should) there be a separate retire(d)earily (RE) subreddit.
- At What Marginal Rate Should Municipal Bonds Be Considered?
- What do you think of our housing budget in a HCOL area?
- Rental Property vs Paying off mortgage
- Where do I find the definitions for all the acronyms used ob this site. I’m finding I’m lost on many!
- Do early retirees understand that the 4% rule doesn’t work as well for long retirements?
- Quest for a better tomorrow: scribbles on the thoughts of a pizzeria waiter in London.
- What does a resilient FIRE portfolio look like?
| Daily FI discussion thread - June 30, 2019 Posted: 30 Jun 2019 01:09 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]  |
| What’s your plan for health insurance? Posted: 30 Jun 2019 08:43 AM PDT If I quit my job, I'd lose health insurance. I'm from the U.S. , so its pretty expensive here. And I'm not so sure about the quality of the social med care programs. What plans do you all have? Am I wrong about the social programs? Is anyone taking out independent health insurance? EDIT: Has anyone looked into joining the military Reserves for their low cost health insurance? Once you retire from you day job, you can still be in the reserves to take advantage of their health care [link] [comments]  |
| $110k NW in 4 years with $25k salary Posted: 30 Jun 2019 10:27 AM PDT I (25M) have seen quite a few posts recently of people with lower incomes who are doing really well for themselves. I apologize if this is a bit of a brag post but I don't know who else to share this with. My wife and I just surpassed $100k NW a few months ago! We are both in school full time, work part time, and have never made more than $25k in a year. We have been both incredibly lucky and super frugal, so I wanted to just share what we did and hopefully inspire others who are still in school or have a lower salary. First, my schooling is covered with scholarships. In fact, I earn roughly $4000 per year to go to school. We use this money to help cover my wife's tuition, which is about $5k per year (cheap in-state public university). Monthly income is inconsistent, but hovers around $1500 to $2000. Expenses are also variable, but we keep them around $1200 per month. Expense breakdown: Rent + utilities: $800 Food: $200 Phones: $60 Internet: $30 Car insurance/gas: $60 Frugal tips: We only own one car. We bought it for $2000 and my wife drives it to work and school. School is close to our house so gas expenses are low, and we have liability only insurance. I ride a bicycle everywhere, even in the winter. We do not use AC or heat in our house. This saves us roughly $100 per month on utilities. In the winter we sleep with jackets on and like 5 blankets, but it works. We have to drip the pipes to make sure they don't freeze. Summer isn't too terribly hot here so we just sweat a little more than others. Our phones are paid off and several years old, and we use Google Fi and very little data to keep the monthly bill around $60. We don't eat out unless we have gift cards (which happens frequently thanks to my wife's boss) and we buy in bulk at the grocery store. Lastly, we did a little credit card churning and put most of our expenses on cards to redeem a few cents on the dollar and earn thousands in signup bonuses. This also helped us travel and have some fun without breaking the bank. Lucky stuff: We bought a townhome 4 years ago and then the market exploded. We had an FHA loan and only put down $3500 to buy the house, and then through natural appreciation alone it doubled in value in 4 years. We just sold the house and earned $60k, which went immediately into a HYSA. Despite working part time, my employer offered paid time off, health benefits, a 401k match (6%), and a HSA. This all helped tremendously and I recognize it was mostly luck. For the last 3 years, I maxed out my Roth IRA and maxed my wife's Roth IRA the last 2 years. We put all of our extra money each month either in our IRAs or HYSA. Even without the money from selling our house, we still managed to save about $50k in 4 years with our small salary. Total assets Roth/401k: $39k HYSA/checking: $70k HSA: $3k Tl;Dr - $25k salary. Saved $50k in 4 years with some major frugality. Got lucky in the housing market to earn another $60k after we sold our townhome. Edit: Our income was definitely closer to $2000 each month. We saved an average of $800 per month for 4 years = $38k. My employer paid $6k into my 401k and $3k into my HSA. So the $50k saved in 4 years may have been a little misleading Edit 2: I do not recommend anyone shutting off their AC/heater. We were just figuring out how to be a married couple and live together/save some money. Either way, we made some fun memories and the suffering is over since we sold the house and moved into a smaller studio apartment. [link] [comments]  |
| Learned an easy way to explain FIRE: "Live off every other paycheck." Posted: 30 Jun 2019 10:25 AM PDT Unlike many of you, I talk freely about FIRE with my peers because of my age (25M). Most people in their 20s have never heard about FIRE, so I like introducing them to a concept that can change their life. Older people simply write me off as an eccentric millennial, but I still like talking to them about it to see their response. Before I would tell people FIRE is about living frugally and having a savings rate over 50%, but that's where I'd lose them. I read somewhere that most people quit when it comes to fractions and percents (in the USA), so maybe that's why. I was listening to a podcast on my way home and somewhere in it the guy talks about another guy who decided early on that he would live off every other paycheck. I liked that phrase very much because it's succinct, easy to say, and doesn't mention numbers. I love it and simply wanted to share. [link] [comments]  |
| "Half" FIRE for married couples Posted: 30 Jun 2019 12:14 PM PDT I've been lurking here for quite a while and haven't seen anyone post on this topic. My [33m] wife [28f] and I are on the same page for the most part when it comes to finances generally and FIRE in particular, except for the fact that she loves to work. I 100% cannot relate but she genuinely seems to find meaning in going to her office, going to team meetings, interacting with clients, etc. She loves it all. And has told me that she never plans on retiring. For a bit more background, we live in a HCOL area and work in professional fields - I'm a corporate lawyer and she's an accountant, and we both work in large firms. Unlike my wife, I get absolutely no enjoyment from my job, and am only still doing it because it pays so damn well. My goal for the past several years has been to retire as soon as I possibly can - there's a lot I want to do to put my legal education to good use, but it just so happens that none of it pays very much. We just had our monthly budget meeting and I made the observation that as a technical matter, her income from her job plus our passive income (almost entirely from rental properties that we own) will cover all our expenses. In other words, we're kind of "half FIREd" - I could retire, and we'd be able to coast indefinitely with our current lifestyle (which we could even increase as she gets her annual raises). Now, I know this wouldn't be the most prudent course of action because obviously her job isn't guaranteed and if she loses it or decides she wants to stay home with the kids (unlikely), we'd be up shit creek and I'd have to get a real job again. But just wondering if anyone else navigated this sort of situation - have you "half FIREd", and if so, how is it working out? Would you recommend I keep slaving away in my soul-crushing job until we save enough to more or less be assured of our income, even if my wife also retired? [link] [comments]  |
| Posted: 29 Jun 2019 05:51 PM PDT Good people of r/financialindependence: On your slow and steady journey to FI, do you ever feel a tug to take a risk when you hear about someone who built a great company (or accomplished some other great feat) relatively early in their lives? I'm in my late 20s with a solid net worth, and am on my way to reaching financial independence in my 30s. For those curious, I'm a midlevel associate at a large law firm. While I think I can build a nice nest egg in this profession, and eventually FIRE in a MCOL area there are certainly times when I wonder if I am dreaming too small. We live in an exciting time when new and innovative ideas (including FIRE) are being introduced and I sometimes wonder if I will look back on my youth and wonder if I should have been more courageous and tried to find my passion or impact the world on a larger scale. In particular, I am concerned that by the time I am FI I will be too old to take a bigger risk and am settling for a good (but not great) life. For those of you who have felt this way, how have you dealt with those feelings? What would you tell someone in my position? I'm especially curious to hear from those of you who are a little older and farther along the journey to FIRE. Thanks! [link] [comments]  |
| Posted: 30 Jun 2019 04:01 PM PDT Hi there! I've been looking into the FIRE philosophy and reading this subreddit quite a bit recently. I shared it with my fiance and its become something we're both excited about and so we are trying to navigate our best path forward. We came up with a tentative plan with our current situation, and some cash we're going to be receiving, and would appreciate the community's feedback and thoughts. TLDR: We need advice on how to invest $80k in cash we having coming to us at the end of this year and what that investment timeline should look like in order to align our investments with a Fat FIRE philosophy. My fiance (29) and I (33) are getting married in late November of this year and will be combining our finances. We're both very open with each other and have good communication about our financial goals and they line up very well. The wedding is very generously being paid for by her parents. We live together in a condo in a MCOL area and the mortgage is the only real debt we have. I am an engineer and make about $80K/year + bonus, have $40K in taxable stocks through a management company and $50K in an IRA through same company, contributing to 401K, have an ESOP, and a couple thousand dollars in a checking and savings account. She is an operations manager also makes about $80K/year + bonus, has a Wealthfront account with about $17K (slated for future car purchase), a 401K, checking and savings accounts, and will be receiving $80K in cash after we are married. We already have a fully funded emergency fund. What we want to do is live off my salary and put her's towards short term savings and investments to prime ourselves for when she goes into "early retirement" when kids come along. Then we'll readjust and see how much I can contribute to savings and investments. We'll plan on staying in the condo until we out grow it which we're guessing will be 5+ years, and then hopefully rent it out as another investment. As you can see, we've gotten ourselves into a pretty good position and want to make sure we don't screw it up. The thing we're trying to figure out is what to do with the stocks I have and the cash that she'll be getting. I know for sure I'm dropping the management company because I ain't about those fees anymore. I'm planning on buying some low cost index funds to manage myself (still figuring out which to buy and what ratio of stocks to bonds, etc. (probably fodder for another post)) and we're thinking we will contribute her $80K in cash to the same. She really likes the idea of doing dollar cost averaging with the $80K cash over the next few years along with about 75% of her income for the investments. We don't want the rest of the cash to just sit on the sidelines, so we're thinking we could buy CDs that mature each year along the way so that its safe and the money is at least working for us a little bit. Does this make since to do? Should we be more aggressive with the cash or is it a personal preference kind of thing? I just want to make sure we're not missing out on being in the market. I'm still a good amount of time away from my own early retirement, but I want to make sure we're maximizing what we have now. It's helpful for me to just write this out, so thanks if you stuck with me the whole way. Let me know if you have and comments or thoughts. Thanks! [link] [comments]  |
| How long until I am financially independent? 93k p/yr, living frugal in CA Posted: 30 Jun 2019 04:00 PM PDT 28 years old, 93k p/yr + 10k yearly bonus. I would love some advice on how to maximize my current situation with the end goal of becoming financially independent! I have been in the engineering field for a little over a year now, and pretty much started saving this year (aside from having $7.5k in Roth before and $2,000 in checking). So far.. After taxes/healthcare/401k , paycheck - $2,300 every two weeks = $59,800 per year $13,500 in Roth IRA $6,800 in vested company stock, a remaining $18,000 unvested $15,000 in 401k (company match 125% up to 6% of pay, I contribute 6%) $11,500 in checking (rainy day fund... trying to grow to 15k) No debt, no car payment, no children (not for me), no house, not supporting anyone. 18 year old truck with 240,000 miles (Go Toyota!) Monthly expenses: Rent - $1100 renting room (CA) utilities incl. Gas - $200-250 Insurance/phone - $140 Spotify - $10 Food/groceries - $300-400 (I eat breakfast/lunch at work. Hate cooking so I spend more on food) Haircuts (2) - $45 Going out/camping/car repair/whatever else fun money - $300 (Sometimes I come in way under, sometimes I go way over if I splurge but not often.) Total monthly expenses - $2,100 - $2,400 [link] [comments]  |
| Please help us understand employer decision. Posted: 30 Jun 2019 01:50 PM PDT My SO's employer has always offered company stock within the 401(k) provider. However, we received a letter that company stock would no longer be provided or supported within the provider (no changes on the provider according to benefits dept). The letter stated that all shares would be liquidated right before Q2 earning announcement (funds would be placed in MM account until we direct it where to go). According to some brief research, it shows they have been killing in their industry (projection is 27% growth since Q1). The company has been doing exceptionally well (internal growth and capital investing) which has us really scratching our heads on this decision... When we asked HR benefits team the response was "We want to avoid anything like Enron..." 1st, thats some BS, 2nd... I don't think they realize what caused Enron collapse, and if they do... wow bad company. We are just looking for some valid reasons why this might be happening, or if anyone else experienced similar and can give us pointers. We do not appoint a heavy percentage of each check into this stock, but with the way the growth has been, it does have a very real impact on her 401k. Thank you. [link] [comments]  |
| Calculate investment returns formula Posted: 29 Jun 2019 09:00 PM PDT I have built a fairly robust Finance tracker in excel, but can't figure out how to calculate month by month investment returns when actively contributing. I currently track account growth, but obviously my current contributions inflate the number to not be actual returns. Any ideas? [link] [comments]  |
| MyMoneyDiaries - how other FIRE-seekers spend their pay Posted: 30 Jun 2019 03:37 PM PDT I have always found it interesting to see what other people spend their money on, and I think us as a community has a shared interest in what other FI-seekers and FIRED folks spend on. Similar to Refinery29's "Money Diaries" and CNBC's "Millennial Money", i have created the subreddit MyMoneyDiaries /r/MyMoneyDiaries to facilitate interesting discussion for people pursuing. The idea is to track expenses for a week, and make a post about "a week in the life of you", including details on each of your expenses for the week. In anticipation of this I have actually kept track of my last week's expenses, and you can see my first post there.. You can use my post as a template for your own. Hope this gains some traction! If not, oh well! [link] [comments]  |
| Maximizing portfolio growth in retirement Posted: 29 Jun 2019 10:31 PM PDT I have worked in engineering for a year, and plan to retire in 5-10 years... Currently unmarried for now, but don't plan on kids. Lately I have been thinking about working a low wage job after fire just to let my portfolio beef up a bit allowing me to fire quicker. I have thought about teaching, peace corps, WWOOF.... Just something fun/interesting to diversify my life. Anyone have stories to share about similar approaches? Edit: this also seems to have the nice benefit of getting to efficiently roll post tax accounts into a Roth [link] [comments]  |
| Anyone here from outside North America? Posted: 30 Jun 2019 01:18 PM PDT Most informations/tips I can gather about FI seem to be for/from people living in the US and/or Canada. I wondered, if there is anyone in this subreddit being from other continents or countries. Me: Central-European. Interested in FI more than in RE. Edit: typos [link] [comments]  |
| Could (should) there be a separate retire(d)earily (RE) subreddit. Posted: 30 Jun 2019 11:46 AM PDT Not knocking r/financialindependence its great! But is dominated by posts that trend towards the aspirational end of the FIRE. As newly FIREd I'm find the subreddit less relevant to my situation and my whole approach to finances is rapidly morphing. I would find it valuable to have a separate subreddit focused on Retired Early discussions and not have to wade though all the. How to I get my first 1M?, can I retire a 40? etc. Just not relevant to me having reached retirement. What do you think? [link] [comments]  |
| At What Marginal Rate Should Municipal Bonds Be Considered? Posted: 30 Jun 2019 07:17 AM PDT I need to keep a significant amount of money ($350K) in my taxable accounts in bond mutual funds. (Yes I know this is tax inefficient). My question is, at what marginal rate should I consider municipal bonds? My federal marginal rate is 24%, state is 3%, and local is 4%. Also if I keep this amount in taxable funds, I will also enter the Roth IRA phase out. Just another thing to keep in mind. [link] [comments]  |
| What do you think of our housing budget in a HCOL area? Posted: 30 Jun 2019 01:47 PM PDT Hello, we are currently at a very high savings percentage but are thinking of buying a place in a HCOL area. Will this kill our FIRE dreams? Incomes: SO - $140k with 30% bonus ($180k total) Me - $135k with 15% bonus ($157k total) Me also - Stock bonus at $35k a year for 4 years (I'm not counting it in my finances since it ends in 4 years and is inconsistent) Income combined: $275k salary, $337k with cash bonuses Current debt: None Current assets (not incl 401k): ~$400k Current rent: $1800 Housing interested in: $1.4MM Monthly payments with property tax: $6200 (Has a unit that can be rented for $2200 a month so this would be $4000 a month for us if we rent it) Is this crazy? I originally didn't want to spend over $700k on housing but that's basically impossible where we live. We're preapproved for this amount, but I always wanted to live below our means so we could FIRE early. Pls help! [link] [comments]  |
| Rental Property vs Paying off mortgage Posted: 30 Jun 2019 01:38 PM PDT Hey guys, I want some advice on a decision I'm thinking about. My wife and I have no kids, and working full time with good enough incomes from both sides, humbly. We have had a few months of us putting more money on our existing mortgage, about 3K every 2 months. We have approx $175K remaining on that with mortgage and property tax at about $900 a month. Where my curiosity lies, my brother has a rental property and is an Airbnb host and is making an absolute killing. Like he made 10K off his Airbnb in June so, yeah I'm interested. My question is whether to keep on the track I'm on, or look into a rental property. I am fully up for the work. I don't have much going on after work anyways. Do you think a rental property is more lucrative, and beneficial long term versus just paying off the mortgage and save? [link] [comments]  |
| Posted: 29 Jun 2019 09:41 PM PDT |
| Do early retirees understand that the 4% rule doesn’t work as well for long retirements? Posted: 30 Jun 2019 06:06 AM PDT I often read about people retiring in their 30s or 40s after hitting 25x expenses and/or advising other people to do the same. The Trinity Study looked at shorter, more traditional retirement windows and defined success as having at least a dollar on the day you die. The Early Retirement Now site wrote The Ultimate Guide to Safe Withdrawal Rates which (I believe) found that an early retiree needs to use the 3% rule to receive a similar degree of safety that a traditional retiree receives from the 4% rule. I always wonder about people who are using the 4% rule to retire early (or are planning to), do they understand that they're taking a larger risk than a superficial understanding of the Trinity Study might suggest? If not, should places like this subreddit be louder about putting that information out there or to each their own? Edit: I'm not talking about people who have built in all kinds of contingencies and fully understand the risks. I'm talking about the subset of folks who believe that 25x expenses is "proven" to fund a 50-70 year retirement. You may not be in that camp, but I know folks who not only believe 25x expenses isn't riskier for a longer retirement, but they believe there is no risk because a study said it was safe and the internet/bloggers said so. [link] [comments]  |
| Quest for a better tomorrow: scribbles on the thoughts of a pizzeria waiter in London. Posted: 30 Jun 2019 03:33 AM PDT This is my first post here. I have read the stories of many people who, like me, are longing for a better tomorrow. It is thanks to these stories that I feel compelled to join the community and, write mine. The number 25 lingers in the back of my mind. There is no escape from birthdays. I am confronting the fact that, so far, I have achieved a degree and a master thanks to the support of the my loved ones, but I am yet to start working the job everyone -even myself- expects me to work. As much as the though of the academic goals scored in the past is somewhat comforting, I feel a sense of urgency to INDEPENDENTLY accomplish something. I desire to build something for those that will come next. Business knowledge and financial acumen, so that I will be able pass onto my children the tools to find accomplishments in their own lives. Two days ago I started waiting at a local pizzeria: long shifts, but money will start to flow in. I have to find a better-paying job to save up in London. I plan to put more than a 20% of what will enter into my pockets into an actively-managed fund, something like JP Morgan Emerging Markets fund. The objective is dual. 1) The short term reduction of any non-essential expense to zero; 2)Long term, building a saving-pool that gains compounded interest to tap into after 40 years (2059 min). I believe that what I am doing is right, but I don't have any certainty because no such long term planning has ever been done in my family. The best I can hope for is that my actions will interest my younger brother to look into PF side-by-side the courses he wants to study. The Intelligent Investor by Graham is saved as a .pdf on my laptop. I want to get the hang of the shifts so I can read post work. [link] [comments]  |
| What does a resilient FIRE portfolio look like? Posted: 30 Jun 2019 06:43 AM PDT I'm not an economist, but I did sit through a macro course in 2008 / 2009 and thought there's a huge disconnect going on here. That started the rabbit hole and got me thinking a bit outside the msm media narratives, which also brought me to FIRE. So it doesn't look like we've learned very much since then those years. QE + Increased Debt + crazy multiples + all the other economic indicators that are pointing to trouble. And let's just pretend Climate Change is real. I mean somedays I look around and think the whole world has lost its goddamn mind... how do we think this story is going to end? My question: What should a resilient FIRE portfolio look like going forward in times like this? Vanguard Total World instead of VTSAX? No more bonds? Should there be a balance of cash flow generating assets vs. something like gold? More tangible assets like single family residential? What about a scenario like Cypress where retirement and savings accounts are used to "bail in" too big to fail banks that have gotten bigger? Thanks guys, this question has been keeping me up at night for the last year. Just can't seem to figure it out. [link] [comments]  |
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