Financial Independence Daily FI discussion thread - July 06, 2019 |
- Daily FI discussion thread - July 06, 2019
- What are your experiences downsizing to accelerate FI?
- What were the most influential learning resources you found while discovering FIRE?
- Using a 12-Month Rolling Average for your YMOYL Wall Chart
- How did you parents teach you financial responsibility and how are you passing that onto your kids?
- Does climate matter less when you're retired?
- Volatility of the market
- Negotiate Salary - Cost of Living Adjustment
- I couldn't find a simple Swiss Army financial calculator so I made one. Behold the FI-84.
- Looking for a FIRE calculator that allows for complexity.
| Daily FI discussion thread - July 06, 2019 Posted: 06 Jul 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]  |
| What are your experiences downsizing to accelerate FI? Posted: 06 Jul 2019 06:13 AM PDT We recently sold our larger house and are in the process of downsizing as we will be empty nesting soon. I'm (mid-40's) curious what other folks experiences have been in downsizing. How did your cost saving plans work out? How much did it cost you to make the transition? What was your experience in adapting to a "smaller" lifestyle? Did you pay off the smaller house right away or did you invest? Currently I figure it will add about $1k more a month in cash flow to our bottom line, with most of it going to savings and some funding additional travel. However the transition costs are not insignificant in terms of moving, storage, time. House wise, we are going from ~$600k house and ~3200 sq ft to something like $350k and 2400 sq ft. Most of the money from the sale will be rolled into the down payment, however we are looking hard at pulling some out to invest elsewhere. We are in MCOL. [link] [comments]  |
| What were the most influential learning resources you found while discovering FIRE? Posted: 06 Jul 2019 01:33 PM PDT Hey everyone, I'm stuck in bed sick today so I figured it'd be a great opportunity to try and learn more about FIRE and related topics. Specifically, I'd like to learn more about taxes as well as real estate investing. I recently started listening to the ChooseFI podcast, but I was wondering what other resources you found useful during your journey. Thanks! [link] [comments]  |
| Using a 12-Month Rolling Average for your YMOYL Wall Chart Posted: 06 Jul 2019 05:40 AM PDT Hi All I'm posting this in r/FI because, while on the surface this looks like a budgeting technique, I feel that some foundational underpinnings are key to informing our progress. For many of us, the concepts from "Your Money or Your Life" by Vicki Robin form a foundation upon which we've built an understanding of FI as well as used techniques from the book. This post is around Vicki Robin's Wall Chart method. If preferred, I can re-post to PF. About 5 years ago, I read "Your Money or Your Life." At the time, I read about the wall chart she suggested and implemented it for about two years. I found it problematic for the following reasons:
See example chart "Actual Income and Expenses": Link Understandably, a person can't really, at a glance, get an accurate read on the trends in income or spending. Are you making more money than you spend? By how much, on average? How does this compare to 1-2 years ago? Using the data i've collected over the years, I gave the Wall Chart another shot. This time, I used a 12-month rolling average of both income and expenses. The result was much more satisfactory, using the same data ("Wall Chart - Rolling Average"): Link For some reason, this is a basic underpinning i've missed since starting to pursue financial independence for about 6-7 years. After a quick search, I couldn't find the 12-month rolling average concept with the Wall Chart on many FI blogs, either. If i'm mistaken, this is a cue for more informed members of our community to link it! Anyhow, I found this very helpful and it made Vicki Robin's Wall Chart idea work much better for my purposes, so I thought I would share. [link] [comments]  |
| How did you parents teach you financial responsibility and how are you passing that onto your kids? Posted: 05 Jul 2019 07:44 PM PDT Not sure if this is the right place to discuss, so forgive me if it's not. As I'm entering my mid 20s it's becoming more and more clear who was taught financial responsibility and who wasn't. It's crazy to me to see the spending habits of friends my age and the pure carelessness they have. They really are ruining their futures and it honesty hurts to watch sometimes. At this point in my life I couldn't be more grateful for the way my parents raised me and the valuable money management skills they've taught me (never carry a CC balance, never live above your means, take advantage of sales and coupons, save save save, 401k, IRA etc etc. ) This had me thinking.....I'm interested to hear what little things your parents did or taught you growing up, or how are you teaching your own kids to be financially responsible adults? [link] [comments]  |
| Does climate matter less when you're retired? Posted: 06 Jul 2019 01:24 PM PDT I live and work in Canada and I despise the cold winters. I go to work not long after sunrise, then I'm stuck indoors at work all day, then I come home when it's dark outside. If I were retired, I could go on walks during the day two or three times a week, when it's sunny, at the warmest time of the day, and get my dose of nature and sunshine. On the other hand, if I'm retired I might want to use my free time to do a lot of outdoors activities, and a cold climate would be very limiting. What do you think? Any retirees that can share their experience? [link] [comments]  |
| Posted: 06 Jul 2019 04:44 PM PDT Hi, I recently got interested in the FIRE lifestyle (~1 year ago) and have been trying to learn more about it as well as understand it on a very fundamental level. One of the most important points seems to be the idea of compound interest. E.g. assume you have a principle amount you invest, and it nets 7% yearly, you double your money every ~10 years. So in 30 years you can expect to have 2*2*2 = 8X what you started with (ignoring inflation). This compound growth is the basis for generating the $$ you need in order to retire early. I'm very interested in how volatility affects this growth. I graphed the growth as a time series assuming a constant 7% interest, and also growth of a 7% interest with a sine function added to it (mean of 7%) and found that there's no divergence over time. You just get a result that predictably swings over and under the constant interest graph. Everything is peachy. Sweet, as long as variation is well-behaved I'm satisfied that the average rule works well. The next thing I tried was getting a list of historical returns of the SP500, and calculating the standard deviation. I did this in a running manner both forwards and backwards (see if there are trends in how stable the market is over time). Forward deviation calculated as standard dev of 1928-1929, then 1928-1930, then 1928-1931 etc. Backwards in the same way (2019-2018, 2019-2017, 2019-2016, etc). A conservatively low estimate for the yearly standard deviation from this analysis was 16%, or 0.16. I then used the excel function "=NORMINV(RAND(),0.07,.16)" to generate yearly percent returns centered around 7% with this standard deviation. And compounded the return by year. The volatility is crazy. For a 10K principle investment, the standard 7% interest comes out to 81K after 30 years. But the min / max of 30yrs given this standard deviation is crazy, 10,000 ti 500,000$ ending amounts are normal. I can attach a sample picture or the raw code once I figure out how. My question is, am I doing something wrong, or is the the expected volatility of saving in 100% equities really this high? I understand as you get older conventional wisdom is to shift away from equities into bonds or other safer assets. But this still seems like a massive amount of variance. Can you point me to similar analyses done by other people? Is the SP500 standard deviation excessively far off from other indexes? What are your thoughts? Thanks! [link] [comments]  |
| Negotiate Salary - Cost of Living Adjustment Posted: 06 Jul 2019 02:48 PM PDT What are the best tools online to determine the true cost of living difference between two areas? Or does anyone have a manual way in which they calculate this - percentage above median income, for instance? Moving from an inexpensive area in the Mid Atlantic to Connecticut and already see a huge difference in costs - taxes and housing especially. I have found that the resources I find online vary greatly. A lot don't include property taxes, for instance. I want to start with that equal-footing number when I negotiate, so that my subsequent raise is 100% towards retirement. Any help is appreciated! [link] [comments]  |
| I couldn't find a simple Swiss Army financial calculator so I made one. Behold the FI-84. Posted: 06 Jul 2019 07:11 AM PDT Alright, comparing this google sheet to to a graphing calculator is a stretch, but it has everything I need (for now) to run "what if" numbers and plan realistically. I'm sure plenty of people have made much better calculators on this sub but it was a good way to kill some time and hopefully someone will get value out of it. If you have any suggestions for more accurate formulas or catch any mistakes I made let me know. This is my first crack at anything like this so i'm sure I made a few logic errors. A couple things to note:
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| Looking for a FIRE calculator that allows for complexity. Posted: 05 Jul 2019 06:16 PM PDT Hi, I'm 44 and new to FIRE and wanting to run different financial scenarios. I'm trying to find a calculator that accounts for all my assets including the ones I can access if I retire at 50/55 and what has to be deferred until I'm 62. I need to factor in available cash, government TSP (similar to a 401k), government pension (can't touch either until I'm 62), social security estimates and potent equity from my house in my VHCOL area. I recently purchased a rental house in a MCOL area which I'll move to once I'm ready to retire! I'd appreciate any recommendations on best ways to undertake scenario planning. I do have a financial advisor but we've been estimating my finances around the traditional retirement age of 62. I'd like to play around with the numbers myself and not sit in her office dreaming about early retirement! [link] [comments]  |
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