Financial Independence Daily FI discussion thread - October 31, 2019 |
- Daily FI discussion thread - October 31, 2019
- FIRE Path: Net Worth Journey from 2012 to 2019
- FAQ refresh; would love opinions.
- Wage stagnation and FI goals
- How to account for increased yearly spending?
- What happens your FI plan real returns dip to 1-3%?
- My GF is terrible at finances
| Daily FI discussion thread - October 31, 2019 Posted: 31 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]  |
| FIRE Path: Net Worth Journey from 2012 to 2019 Posted: 31 Oct 2019 09:05 AM PDT I started tracking my net worth at age 22, when I was 3 months away from graduating from college. For a while I tracked the total amount every month, but starting halfway through 2016, I started tracking it every Monday. All of this is done manually in a Google Sheets document. - This helps me track the change on a macro level. I can tell the gain / losses on such a granular level that it helps me course correct if the week's dipped, and gain encouragement if the week's been good. - I can set macro goals and anticipate how much I will have by the end of a month, by a half year, by a whole year. - The historical aspect is useful for analysis and future projection. The DetailsIn Feb 2012, I had $92.91 to my name. My parents saved enough by being rather frugal people to cover most of the tuition for my college education. I worked while I was in college, but it was really only enough on a student wage to cover things like going to the movies, buying new clothes, and going to bars. When I graduated in May of 2012, I had only about $10,000.00 in student loans. I realize this is an incredible head-start for me, which I'll get into later. By December 2012, I had $2,419.75. I'd worked a low-paying summer job at a summer camp, making roughly $500 a week, because I didn't have a real job lined up after college -- my degree was in Film, and all my job searching in that field was a dead end. Luckily, a camp friend introduced me to his high-school classmates, who had also just graduated and were trying to kickstart their own business making apps. In 2012, app creation was still very much a burgeoning field, and I knew enough about software to be reasonably useful. I taught myself a lot as we all kind of mucked around and failed a bunch, learning through these setbacks. I gained enough while paying $400 per month in rent to save up to $8,607.68 by April 2013, at which point we called the company quits and went our separate ways, amicably. I joined a real startup making apps as an intern that same April, and was paid roughly $1,200.00 a month as an intern. I did this for three months, ending up with a total of $9,979.91 by the time the internship ended in July 2013. At this point, I was still living at home for free and commuting, with the majority of my earnings going into my student loans. I was hired on full time with a salary of $42,000.00 in July 2013. At this company, I worked about another year or so, saving up to $37,325.48 by November 2014, when I left. By then I'd finished paying off my student loans, had salary bumps to $65,000.00 and $72,000.00, and had moved out, paying $875 a month for a two-bedroom apartment that I shared with a roommate. I left the startup in November 2014 because I got recruited by one of the big tech companies, for mind-blowing salary of $160,000.00 a year. Unfortunately, I didn't love the culture of this company and only stayed about half a year. With that huge salary bump, though, I left with $70,301.21 in net worth by May 2015. My next gig was a great leadership opportunity and also fun, because I got to work with close friends, but it was a financial downgrade. It was a fledging startup that didn't have a 401k plan, and my salary was $100,000. While employed here until December 2016, I ended up with a net worth of $38,555.03. Now, that's 30k less than I started with a year and a half ago. Why? I loaned 30k to my significant other of 2 years so they could put it towards their $130,000 student loan debt. Fucking RISKY, I know! But we had been close friends for a while prior to dating, and I trusted them a great deal to pay me back. They had a high-paying job as a software engineer, and I also saw a future together. Prior to this loan, my partner had been pretty morose about their huge student loan -- their parents had really suffered from the financial crash of '08, and all the money they'd saved to help pay for college became needed to keep them afloat, leaving my partner responsible for 100% of their college tuition at an expensive but prestigious tech college. My partner felt for so long like they weren't making a dent in this tuition, and the 30k check I wrote (expecting to be paid back in full) honestly gave them the momentum they needed to really begin truly chipping away at that mountain of debt. At the end of 2016, my partner got recruited for a FAANG company, and we decided to both move to Silicon Valley. I too got a job offer from a few FAANG companies, and picked one, with a starting salary of $150,000 and $160,000 in RSU grants. By Jan 2018, I had a net worth of $97,088.89. We also bought a car together. By Jan 2019, I had $210,800.33, and as of now, Nov 2019, I have $294,527.88. My salary is currently at $180,000.00, with quarterly vesting dates and RSU renewals every half. My goal is to hit $315,000.00 by the end of 2019. The 30k loan to my partner has also been paid back in full, and their student loans are also completely paid off. Just StatsFeb 2012 - $92.91 The FutureWe are saving up to buy a home, hopefully by 2021. I'd like to retire by the time I'm 45 -- so in 16 years. I'm 29 now. Our vice is eating the occasional expensive meal, traveling out of the country together, and shopping (though we are cutting down on that). We also have a wedding to plan, although we hope to keep that rather economical, hopefully. We aren't sure if we want to have a child, although we lean more and more towards yes on that question as we get older, which is a strange feeling. Would love feedback on all of this, and hopefully this is inspirational to someone. I remember being super depressed as a new college grad feeling like I'd never get a job. To be honest, being a friendly person helped me out a lot -- people were willing to vouch for me so others would take a chance on me when I was rather unexperienced, and a lot of hard work and effort to get to the upper skill levels of my field has paid off, in terms of moving from job to job. Thanks for reading! . Edit: Some things I forgot to mention. I want to be able to move to a low cost of living country for a bit and work remotely as a freelancer, but I have two autoimmune conditions that would make this rather impossible, because of employer-based health insurance. I also support my mother 20% financially, since she makes very little (was a stay-at-home mom when my parents were together; they separated in 2012). (x-posted from /r/fire) [link] [comments]  |
| FAQ refresh; would love opinions. Posted: 31 Oct 2019 10:23 AM PDT I'd love to hear the sub's views on the goals of this sub's FAQ, which will then inform the actual topics covered. This section represents my personal perspective on FIRE. While it informs the topics I think should be covered in the FAQ it is not meant to represent the views of the subreddit as a whole. In general, I think of FIRE as being in the service of the following directive:
Pursuant to that goal, I think it is important to strive for financial independence so you can maximize your ability to engage in valuable life experiences. Early retirement may, but is not necessary for, allow for further maximization of those life experiences. I think of the financial execution of the above as involving the following steps:
Here are some goals for the FAQ of the top of my head:
One specific thing I want to mention is that I think the FAQ should seek to stand on its own whenever possible. What I mean by this is that if a topic or question can be explained or answered in a reasonable amount of space in the FAQ, we should provide that explanation/answer rather than just linking to another page (although sources with additional detail or nuance should be encouraged). Clear exceptions would be something like the /r/personalfinance FAQ and flowchart when discussing how to get started with managing basic personal finances. But I think a primer on how the backdoor Roth and mega backdoor Roth work and the limitations of the pro rata rule are fair game for our FAQ. I think the FAQ should cover some of the following (not exhaustive):
Edits made for formatting and to include recommendations based on comments as of around 14:00 PDT on Oct 31, 2019. [link] [comments]  |
| Posted: 30 Oct 2019 06:24 PM PDT 37M ~35%SR (28%SR was in error as it was based on pre-tax income) (Not sure how to set up flair from mobile, sorry) I'm seeing a lot of stories on here and wages that are all over the spectrum. But regardless of where you are, has wage stagnation impacted you? For reference I'm a chemical engineer with 17 years of professional experience in a supervisory role. I used to think I was paid pretty well, but between the wages I see here and wage stagnation, I'm strongly questioning that belief these days. I live in a LCOL area and make $130K with ~2-12% bonus potential, depending largely on company performance metrics. There is no stock issuance. My wage growth the past 5 years has been in the 2-4% range and is unlikely to improve much if I stay another 10. If wage stagnation has adversely impacted your FIRE goals, what have you done about it? EDIT: Thanks for all the feedback. I asked about wage stagnation, but the majority of the feedback was regarding savings rate, which is what I needed to hear the most, and also what needs the most attention. Thanks! [link] [comments]  |
| How to account for increased yearly spending? Posted: 30 Oct 2019 05:32 PM PDT Crossposted from r/FIRE Hello! My husband (35M) and I (30F) are planning to FIRE in 7-10 years. We know that typically when people evaluate the 4% rule they use an average yearly need to figure out what their nest egg needs to be. However, we are expecting to increase spending as the years go on (due to age, illness, etc.) and we know this can artificially inflate the early years of retirement's numbers. How are you accounting for this? Right now we are estimating a 1.5% compounding increase in what we take out every year, but we don't know if this number is realistic. For example- we plan to take out $55,200 our first year of retirement (before taxes). We are accounting for 15% tax rate, 1.5% compounding increase in spending every year after, and 2% inflation. With that math, we'd be taking out $145,000/year 65 years from now. This puts our average yearly need at $93,000, which is far higher than our first 36 years of retirement. So, what's a reasonable percent increase in spending a year, or how do you account for this? We're wondering if we can actually retire earlier.. [link] [comments]  |
| What happens your FI plan real returns dip to 1-3%? Posted: 31 Oct 2019 11:02 AM PDT Hi All! I'm a reporter with CNBC and I wanted to ask the community about their FI plans if real returns dip, on average, to 1-3% over the next 10 years. I've been writing on research that's showing that may be the trend and I want to know if that will affect the FI math for some folks. And if so, how do you plan to adjust? In that same vein, I also wanted to ask about the 4% withdrawal rate when, again, experts are saying we should be planning for about 2.8%. I'm exploring this topic for a potential article, so I may follow up to ask for more info. Also happy to chat offline if that's easier. Thanks again! Edit: Hi again, some of you asked what research I was citing. Here's a link to the Morningstar article that is a nice summary: https://www.morningstar.com/articles/907378/experts-forecast-long-term-stock-and-bond-returns-2019-edition Additionally, here's some academic research looking, among other things, at the affect of real returns on retirement. Sorry I don't have a better link, but I got a pdf of it sent to me! https://www.nber.org/papers/w19930 [link] [comments]  |
| Posted: 30 Oct 2019 06:46 PM PDT Hi guys, I'm looking to FIRE in 30 years, so I guess I'm just preparing early. My biggest worry right now is that if I propose to my girlfriend and marry her will I become financially ruined because of her poor spending habits? She is so bad at finances I'm hesitant to propose. Is anyone here married to someone who spends all their money, paycheck to paycheck. I have plenty of money because I don't spend it. But she spends all of her money and then goes into credit card debt. I'm just really confused by her lack of impulse control. I'm mostly concerned about financial retirement. I'm 35 now so I've got some time I've just started saving, it's better late than never. However my girlfriend is -20 K. I'm positive 20 K. We both have jobs, however hers is a little bit more unstable than mine. We both have college degrees and we are both very talented. I really love her. Her family is also fairly wealthy. Her mother owns four properties in a very expensive area each about $1 million. But her father he owns a bunch of business small shops and they're all failing and he is really struggling. So I don't really know what the future holds for us. My main concern is that she spends all of her money and somehow she will spend mine too if we get married. I won't give her access to my money but I also don't understand how finances work if we are married. Do we share equally everything we both own? What about a prenup if I sign up for a prenup and then she inherits one of these million dollar houses then am I out of that? I'm really just concerned with my financial independence my financial security and FIRE. She makes 50 K and I make 80 K per year. And like I said she spends all of her money and I save about half of mine. We are also going to be moving into a house together which cost $1500 a month in rent each. So our expenses are going up. How do I manage my money while having to rely on her to pay half the rent, when she may be going into credit card debt in order to pay rent. She's got a 780 credit score and I have a 750. So I know she won't flake, but if we get married is all that credit card debt mine? Best, Twinkle [link] [comments]  |
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