Financial Independence Daily FI discussion thread - October 03, 2019 |
- Daily FI discussion thread - October 03, 2019
- I became FI!! Story and details...
- Review of NYTimes review of 4 "Typical" Middle Class Families
- Creative Tips for low earners about how to achieve FI?
- Millionaire Next Door - PWA Formula
| Daily FI discussion thread - October 03, 2019 Posted: 03 Oct 2019 01:06 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| I became FI!! Story and details... Posted: 03 Oct 2019 09:18 AM PDT TLDR: reached FI through combination of hard work and luck. FI ain't everything. Trigger warning: lots of humblebragging ahead! I've been running after financial security since I was a wee lad. I figured I had no inheritance (not a wealthy but a hardworking family). I grew up in India, and nepotism was a reliable strategy there to get to a better station in life – and I didn't have those connections either. I wasn't poor and certainly didn't feel poor, but might be considered such by western standards (family income was less than $500/month – which is actually not that bad in 80s India!). Anyway, I thought my only ticket to a comfortable life was to work harder than others around me. The wheels to FI were set in motion when I became a teenager. I got serious about studies and went from near-last in class to first in one year. I remember studying by candlelight (my town had chronic electricity issues), and picking my skin to point of blood in order to stay awake. I would mark the pages I knew by heart by little smudges of my blood (I know, gross, but I gotta paint a picture here!). There is no-one besides my wife that knows this crazy stuff. Didn't let up on the gas and ultimately got a full scholarship to a US college. I owe a lot to US colleges investing in foreign students. About 5 years ago I sat down and thought seriously about FI. Didn't know about this community or the fire movement then, but I've dreamt of "financial independence" at least since I entered the workforce in my very early 20s. I just hated depending on 'the man'. Based on no math whatsoever, I figured my goal was to get to $4M by age 40, and then I'd feel financially secure. I think there is a tendency to overshoot when SWR math is not known, and I was certainly guilty of it. Plus the symmetry between 4-M and 4-0 seemed pleasing, so it must be the right number! I hit the financial goal I had for age 40 years ahead of schedule! This deserves some explanation. I didn't get here by IPO, crypto, tech route. If you think I'm envious of those – I am. If I could get here by less suffering, I would have. After college I worked in management consulting (think MBB). I lived extremely frugally and saved money. However, I did save it wrong (traditional savings account earning 0.0x%…ouch!). Growing up I was told stock markets were 'gambling'…my dad lost money in the Indian exchanges. It took me until my early 30s to deprogram that shit and start investing. I carried the blood-letting studying ethic into my working years. Spent (misspent?) my 20s on work. Like Forest Gump, I gumped my way to long hours year after year trying to get to the top of my field. I never stopped running. I was so afraid of failing. A lonely and scared immigrant pretending to live a normal life. Working 18 hours days...and going back in the wee hours of the night to my 300 sq.ft apartment. I did this for years. A decade in fact. However, I didn't get to my goal just by saving my salary (which is great, but not that great). I got there by creating a solution for old industries to modernize by leveraging advanced analytics – winning huge contracts and getting rapidly promoted to profit-sharing role. What they say is true, in many scenarios not including hi-tech/medicine – W2 comp alone is not going to get you to the very high numbers. Speaking of numbers. I discussed with my SO and we figured that we need around $130k pre-tax to account for our foreseeable annual expenses. What precipitated this post is that I realized that I am expecting my dividend & investment income (100% passive) to be a little above $130k in 2020! Here is how that is generated:
Now, for the final part. Having gotten to "FI", I realize that it's not everything. Don't get me wrong, it is awesome to not stress about money. It is incredible to have FU money and so I don't stress about work either. It's just that goals change. There are some things I want to work on now. These are health, cultivating new friendships, and if I'm being brutally honest - rediscovering who the fuck I am after years of chasing financial security. What am I interested in? How do I want to live my life? How do I want to contribute (without running a concurrent analysis of the $ I'm getting in return)? No regrets though. My journey made me who I am. I am looking forward to who I become and incredibly grateful to have the FI tailwind in my sail. I was lucky, I worked hard, I fucked up but then got up. Edit#1: More (useless?) practical details: I use Schwab as my main brokerage. Love their customer service and low cost. I was using Robinhood too, but for various reasons just ported that account over to Schwab (can explain my decision if you ask). I'm trying to make sure all my index funds have gross expense ratios much smaller than 0.1% (my biggest holding is SCHB with 0.03%). In terms of money market funds, vanguard has some really good ones such as VUSXX (no state taxes, good for states with high taxes and for high-income years) and VMMXX. They pay similar to Ally, which is my HYSA. I keep FDIC-covered about $250-300k in Ally, rest cash in these money market funds. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Review of NYTimes review of 4 "Typical" Middle Class Families Posted: 03 Oct 2019 12:58 PM PDT This NYT article seems aimed at showing the range of middle class incomes and how seemingly minor things can make a normal life feel impossible. I pulled in all the numbers from the article (some were combined so comparisons could be made between families). A few things jump out quickly. In terms of expenses:
None of this is particularly surprising, especially in an article designed to make a point, but it seems like each family has a major thing they can fix:
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| Creative Tips for low earners about how to achieve FI? Posted: 03 Oct 2019 02:38 PM PDT Hi guys, I just stumbled upon this sub and am so happy I did. I literally think about how to be FI like all day every day. But I also have pretty much everything working against me too. THE BAD -Self employed with around 40k-ish salary. -Living just outside NYC where rents are insane. My rent is 1200 / month and my monthly expenses are around $2000 so in order to meet those expenses I try to bill 4-5 days a month at 600/ day - Parents are middle class immigrants of modest means. They preached the whole work hard etc thing but I feel like a lot of their financial advice is totally outdated to back when times were simpler...Pretty sure they never even heard of FI or anything of that nature. THE GOOD -Debt free -70k in savings/ 15k in IRAs / 3k Stock portfolio (idk i just started ) -Car paid off. -Know how to be thrifty.. Rn I work a few days out of the month to meet all my bills... My plan was to buy a house and rent out all the rooms so that my roommates / tenants would pay my mortgage. But does that count as FI? TLDR: Artist in NY obsessed with FI. Does anyone have any creative tips for low earners on how to achieve FI? UPDATED WITH SPECIFICS FOR THOSE WHO ARE CONFUSED Thanks [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Millionaire Next Door - PWA Formula Posted: 03 Oct 2019 02:16 PM PDT How many of you have heard of the PAW (prodigious accumulator of wealth) formula, from the Millionaire Next Door book, and believe in it as either a goal or a bogie for your target wealth? It struck & has stayed with me since I heard about it as I've earned >100k for ~5-6 years now and am only like 35% of my PAW number. It really gave me a wake up call. Take your Age/10 * Your Salary. If you don't have that amount in net worth, the book says you've not done a great job of accumulating wealth compared to your potential. I've actually structured my savings % rate to target by age 40 that I am at my PAW number. My FIRE # isn't my PAW number. My Fire # is ~3x my PAW number, but its certainly my goal # to hit within the next 6-7 years. [link] [comments]  |
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