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    Financial Independence Daily FI discussion thread - October 05, 2019

    October 05, 2019

    Financial Independence Daily FI discussion thread - October 05, 2019

    Daily FI discussion thread - October 05, 2019

    Posted: 05 Oct 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.

    submitted by /u/AutoModerator
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    FIRE @ 31 years old - 3 month update

    Posted: 04 Oct 2019 06:14 PM PDT

    TL;DR: Retired @ 31 - not as smooth as imagined, but still no regrets.

    I posted in one of the daily FI discussion threads on the actual day of my resignation about 3 months ago, but I've held off on posting a compete summary of financial stuff until now, mostly because I've been too busy with travel and relaxing on my own terms!

    Basic info:

    • Left work in June at the age of 31
    • IT industry
    • Wife and I have been saving aggressively for the past 7 years
    • "Retirement" coincided with an equity event where I converted approx. $500k company stock into cash

    So, most of you will be thinking "oh yeah well with a half million windfall anyone can retire early!". The only clarifying thing I'd like to offer here is that I stayed with the same company for far longer than most people in my field (loyalty bonus) and I also received well under a competitive salary for YEARS up until the payout. Still, I will admit it was a very lucky break to end up where I did. The only credit I'll give myself was having the courage to bail on some cushy corporate jobs and join a startup for less pay. In reality, it wasn't too courageous because I was dying of boredom at Initech.

    Current finances have us (wife and I) at 1.5M net worth, with a paid off house and no car loans, etc... About 1M is invested in various stock/bond funds with Vanguard. Our expenses tend to run between $40k and $60k/year. My wife is also still working part time & self employed, which tends to cover our expenses for the mean time, allowing our principal to grow. She is still considering early retirement, but the amount of flexibility she has is amazing, so it's hard to argue against the income stream.

    In the past few months since I've left my full time job, we have been traveling for about half of the time (7 weeks since end of June). Only domestic travel so far this year, but we love seeing other countries as well and the long term plan is to include some slow international travel as part of our lives. This has been really awesome and energizing.

    Now, the other side of it - I'm already bored when at home. I have seen, time and time again, the advice given to "build the life you want, then retire into it". I was never really sure what life I wanted, so it has been quite a mental struggle to figure out what my purpose is now. When I was in my early 20's, my purpose was just to make money to survive. In my mid 20's, after discovering FIRE, it was to save as much as possible. Now? Now, it's a bit of a challenge. Every day that I don't have something scheduled, I do struggle a bit to find something to do. I'm not ready to dive back into the software world yet, because that brings up too many stressors from the past 10 years. It's a constant challenge, but I think I'll figure it out in the next few months.

    Regardless of any misgivings I have now, I can with 100% certainty say this: Not having to go to work somewhere you dread every day IS FUCKING AWESOME!

    submitted by /u/FIThrowaway2018
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    High-Income Millennials Put Retirement Savings Ahead of Student Loans: Survey

    Posted: 05 Oct 2019 03:34 PM PDT

    A new Spectrem Group report on millennials focuses on income levels rather than net worth in an effort to discover how this generation of high earners is using its significant income to create a portfolio of investment and savings vehicles.

    Spectrem noted that the oldest millennials are approaching 40, and the way in which they invest their money has implications for the future of the advisory industry.

    "As America's largest generation, millennials have fully arrived as investors,'' Spectrem's president George Walper Jr. said in a statement. "They matter now to all financial advisors and providers who are paying attention to generational changes among investors."

    The research was restricted to millennials with minimum annual incomes of $100,000 for singles and $150,000 for couples. It was conducted between May and August, and involved 443 participants. Two-thirds of high-income millennials in the study had education-related debt, but only about half reported a personal financial effect from their student loans.

    This is in contrast to the situation millions of Americans burdened with student loan debt find themselves in.

    The Spectrem research found that high-income millennials placed a higher priority on saving for retirement than paying off student loans.

    At the same time, more than half agreed or strongly agreed that their education-related debt prevented them from contributing as much as they would like to their 401(k) or other employer-sponsored retirement program.

    The study shed light on how high-income millennials are saving or spending their money, and how they are allocating their investable assets.

    Among the findings, 53% of millennials defined success as the ability to afford leisure activities, while 45% said it was raising a family.

    About half purported to be more concerned about their aging parents' health than about their own, which could influence their investing decisions, Spectrem noted.

    Three in four millennials in the study said they planned to retire between the ages of 50 and 70. Spectrem said this indicated that few put themselves in the "I will never be able to retire" or "I don't plan to ever retire" categories.

    Slightly less than half of high-income millennials reported that they had a financial advisor, and a comparatively higher percentage of younger ones said they had found their advisor through advertisements rather than from referrals.

    submitted by /u/WifeKidsJob2
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    Any tips for starting to get FI when I’m still 14 yo?

    Posted: 05 Oct 2019 03:30 PM PDT

    I want to start early and already maybe do things for later that could help me.

    Or maybe just some thing you wish you would know when you were 14-16

    submitted by /u/The2AndOnly1
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    Solo 401k, SEP IRA, Simple IRA given side hustle income and regular employment

    Posted: 05 Oct 2019 08:45 AM PDT

    Thanks Fire Community for your help with this!

    ​

    Background: I am both regularly employed (ca. $170k annually) + have side hustle income (ca. $17k this year, will increase in the next years).

    Goal: Reduce taxes as much as possible.

    ​

    Employer Accounts I already have:

    - regular 401k with employer (maxed out $19k)

    - Roth IRA through mega-backdoor (maxed out $6k)

    ​

    Side Hustle accounts I want to contribute to:

    - Solo 401k (contributing only the employer portion, not the employee portion since I already maxed out the regular 401k through my main job)

    - SEP IRA (contributing only the employer portion, not the employee portion since I already maxed out the Roth IRA)

    - don't do Simple IRA (as far as I understand the SIMPLE IRA is no option since those contributions count together with regular IRAs which I'm also maxing out)

    ​

    I have two questions:

    1. Are my assumptions about the side hustle accounts correct? i.e. I should open a Solo 401k and SEP IRA but not a SIMPLE IRA.
    2. Can somebody please provide a concrete example for how to compute the max. contributions I can still make for the Solo 401k and SEP IRA as an employer (not employee)? Let's assume $50k for side hustle income. Would somebody be able to give me an example with step-by-step math on what to multiple and subtract given the FICA tax, self employment tax etc? I know employer contributions for Solo 401k is max. 20% of side hustle income and SEP IRA is max. 25% of side hustle income, but if I want to do both, do I have to subtract the contributions for the Solo 401k before I compute the percentage for the SEP?

    ​

    I'm doing this the first time and don't want to mess it up.

    All account are with Vanguard either personal or small biz accounts in case that helps.

    ​

    Thank you so much for your help!

    I discovered the FIRE movement earlier this year and it has made a tremendous difference in how I treat my finances.

    submitted by /u/septemberyear
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    SO does not get it and our relationship is on the rocks because of it.

    Posted: 05 Oct 2019 01:16 AM PDT

    My SO doesn't seem to get what FI means. She works ridiculous hours for the minimum wage even though I begged her to join me in business years ago which is now earning triple what she earns.

    It also throws up another problem. We have three children under 5 and because she is working so many hours (including weekends), I find myself alone with all three kids more often than I'd like for very long periods of time. Despite being the provider in the family, I'm still expected to be more flexible and have no down time.

    I love my kids, but I can't help but dream about moving on and partnering with someone who understands. Our money is completely separate at the moment, we have completely different views on how it should be invested.

    Any advice?

    Edit, so this has become a relationship advice thread. Apologies, this is a FIRE forum.

    submitted by /u/Sintech14
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