Financial Independence Daily FI discussion thread - October 08, 2019 |
- Daily FI discussion thread - October 08, 2019
- Update: Five Years Down, Five To Go: My half-way to FI/RE!
- Has anyone used their FI status to push for workplace changes?
- Should I buy my dream home or retire super early?
- First Year of Brista-FI, Questions About Roth IRA Conversion Ladder
- Why Michael Burry’s "index fund bubble" prediction doesn’t matter
- leanFIRE now, or stick it out a bit longer, feedback would be appreciated.
- Just told his manager, intent to Retire
- Wait to invest tax-deffered next year
- Half FIRE
| Daily FI discussion thread - October 08, 2019 Posted: 08 Oct 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]  | |||||||||||||||
| Update: Five Years Down, Five To Go: My half-way to FI/RE! Posted: 08 Oct 2019 06:40 AM PDT Hey everyone! It recently occurred to me that my first post about my FI/RE plan was just over five years ago. I really haven't posted an in-depth update since then (though I've posted charts and graphs occasionally, but never a full-depth review). My FI/RE number and dates jump around a lot, but most of them agree that 2024, give or take a year, is about when I'll be ready for retirement. That means that if I've been seriously saving for five years, and I have five more to go, that I'm chronologically half-way to FI/RE. That's certainly variable - closer to my FI/RE date, I may decide I want to stick it out a little longer to increase my expenses in retirement. Of course, a market crash between now and then could also impact my timeframe. However, I'm a person of principle, so I'm just going to stay the course. Regarding my situation: A lot's changed in five years, but a lot has stayed the same, too. My SO and I are now married, we bought the house we'd been thinking about. We still want to FI/RE as soon as possible, but our expenses have increased a decent amount in the meantime. This is largely due to two factors: Basic lifestyle inflation, and an emphasis on gifting (we're, by a large margin, the most financially fortunate of our friends. Thus, we treat our friends to dinner/drinks and pay more than our share on group vacations and trips quite often). Fortunately, our income has grown faster than our expenses have.
Monthly Expenses Graph Income My income has increased considerably in the past five years, and makes up the majority of our combined household income. (I am a software engineer, spouse is a teacher) However, I feel that I'm reaching a plateau in my field - further raises are contingent upon promotions, which are contingent upon performing better than I believe I am capable of. I think it is thus likely reasonable to assume my income will remain nearly flat for the next five years. thisisfine.png My spouse has been kicking around the idea of quitting their teaching job and working their second job more hours. Their second job pays much better per hour, but is far more variable in availability. It's possible they would have no work for months at a time, or it's possible they'd end up with more work than they could do. Their income is only a small (~20%) chunk of our total combined income, so it would certainly be possible to absorb this sort of decrease, if this is what ends up happening. Expenses If you look at the expenses graph provided, you'll see some large spikes in 2017 and 2018. These correspond to large individual purchases (paying for a wedding, honeymoon, new furniture for our house, and tricking out my gaming lounge). Because of the spikes, our expenses reached a high of $88,000 in 2017. However, we're on track for total expenses of only $62,000 in 2019, so I think assuming about $66,000 is reasonable going forward. In my flair, I reference "ChubbyFi", which I would equate to approximately an $80,000 annual spend/$2.4M target. I don't actually treat this as my target, though I may change my tune as the date approaches. FI Savings We max out all of our tax-advantaged accounts (401k, 403b, Mega backdoor, both regular backdoors) and do tax loss harvesting in taxable accounts. We're using pretty standard three-fund portfolios, with relatively basic allocations, rebalanced occasionally. Nothing exciting or special here. Our Plan There's two large variables at play here, and that's my spouse's work arrangement and my dream of buying land for a homestead/commune. Each of these could impact our plans and numbers somewhat substantially (but likely no more than 20% in any one direction, so no major shifts, just some pull-in/push-out). I've always wanted to be a little closer to nature, and having the land to start an orchard/apiary/vineyard/hop farm would be my dream come true - I'd spend my days growing, brewing and making all manner of beverages (gardening and homebrewing are hobbies of mine now - I'd love to scale them up). A handful of my friends have suggested this is their dream as well, so we've discussed the possibility of this being a communal getaway/living arrangement. This whole idea is still quite ethereal, however. I don't have the time/energy at the end of the work day to implement this just yet, my work takes too much out of me. Post-FI I've not really talked about healthcare. Because it's such a huge variable (5-10 years from now it could either be free or incredibly expensive), I've chosen to ignore it. There's nothing I can do about it right now, so I'm going to wait until closer to retirement before worrying about it. If it turns out that the current trend (dismantling of the ACA and increasing of costs for non-working people) continues, this will of course delay my FI plans. So be it. I'll deal with it when I need to. Closing [link] [comments]  | |||||||||||||||
| Has anyone used their FI status to push for workplace changes? Posted: 08 Oct 2019 10:40 AM PDT My core assumption here is that people who need that next paycheck have to worry about being perceived as a "problem," making them less likely to speak up when they see something wrong at their workplace. Has anyone here become a rabble-rouser after hitting their number? For example, organizing a union or calling out workplace harassment. If you already have your FU money, it seems like a perfect time to make things better for people. [link] [comments]  | |||||||||||||||
| Should I buy my dream home or retire super early? Posted: 07 Oct 2019 09:41 PM PDT I've been a lurker for a long time. First time poster. I need advise. I'm frugal and have been saving money for a long time. I live in Hawaii. Married. One child. No plans for another. I have no credit card debt, no student loans, no car payments. I do have a mortgage of $720,000. The home is worth $1.1 million. I could have my current home paid off in 3-4 years. I own my own company and pull in close to $45,000 a month. I expect that to increase to $65,000 a month by the end of next year. I love my current home. It's walking distance to town and nice, but the homeless problem has gotten bad. I had a meth head pass out on my porch recently and that was the last straw for me. I've just found my dream home. Waterfront but not in the flood zone (small hill), mostly turnkey (probably $75-100k worth of changes needed), in the best school district in the state, and it will cost $2 million. I can afford 20% down. And the house has a rental that pulls in ~$2,300/month. I'm stuck and have two choices. 1) Pay off my current home in 3-4 years, completely debt free. Semi-retire to around 30 hrs/week (I like to work). I would be 37-38. 2) Move into my dream home. Pay off the home in 8-10 years. Semi-retire to around 30 hrs/week. I would be 42-44. Is this just lifestyle creep? Am I being reactionary? Being completely debt free at 44 latest isn't that bad, but I just need a gut check. Thanks. Edit 1: I am in tech. [link] [comments]  | |||||||||||||||
| First Year of Brista-FI, Questions About Roth IRA Conversion Ladder Posted: 07 Oct 2019 06:00 PM PDT Hello, this has been my first year of Barista-FI. I have been taking on gigs that interest me such as working concession stand at Electric Forest but these gigs are pretty much minimum wage stuff so even with some investment incomes I made this year (such as going from $4000->$10000 on half a bitcoin), I'm not really sure if I will reach the standard deduction limit of $12,200 this year. So here is the question. If I do not reach the standard deduction limit, I could fill that 0% tax space with a 401k distribution to do a Roth IRA conversion ladder correct? Also, what is the deadline for performing the 401k to Roth IRA conversion for this year's taxes? Is it April 15, 2020? How long does the roll over process usually take? I know you have to convert it 60 days after distribution so, it shouldn't take more than 2 months right? Sorry for alot of questions. I've read through the root of good and money under 30's guide but these were some of things that was not really clear to me. Thanks for any help! [link] [comments]  | |||||||||||||||
| Why Michael Burry’s "index fund bubble" prediction doesn’t matter Posted: 08 Oct 2019 03:05 PM PDT Michael Burry is the guy who famously predicted the real estate collapse in 2007 and was depicted in the movie "The Big Short". He's recently come out predicting a new bubble that's about to pop: Index funds. I know many or most in the FI/RE community are big into index funds. So we should be worried, right? I don't think so. Here's why. Got it right once syndromeThe media LOVES to overweight the opinion of the person who famously called the last market crash correctly. This is amplified even further by the fact that Burry was played by Hollywood hunk Christian Bale in a blockbuster movie. But those things don't make him the all knowing source for what's going to happen in the future. A Random Walk Down Wall Street does a great job marching through the history of successful market doomsday predictors. For every crash, there was a brilliant predictor who called it correctly. The media coronates them as the king or queen of knowing the future and happily publishes their next big predictions as front page news. Then, without fail, they're never right again. Is Michael Burry going to be the one to change that track record? I doubt it. Michael Burry says a lot of stuffIn addition to betting against subprime mortgages, in 2015 he talked about water as the next great investment, in 2018 he opened a fund to invest in Asia stocks, in 2019 he said GameStop is a good investment, and despite saying there is a large cap bubble, in 2019 his fund Scion Asset Management invests in a lot of large cap stocks, like Google, FedEx and Western Digital. I don't mean to imply Burry isn't a smart guy. He definitely is. And he's out there in the market competing against lots of other really smart people. The price of assets is being set based on where all those smart people are trading with each other. I don't think doing everything Burry says is a good recipe to consistently beat the market. His own prediction says he invests in small cap stocksAnd you know where small cap stocks are? In total stock market index funds. So you already own them if you own a fund like VTSAX or a target date index fund from Vanguard, Fidelity or Schwab. So what if it does crash?Burry famously called the 2007 housing crash. But even KNOWING WHAT WE KNOW NOW, if you went back in time and did the WORST POSSIBLE THING, you bought a home the DAY of the peak of the market in June of 2006, and simply held the property until today, your investment would be UP by 14.6%. And Burry didn't call the day exactly. He was a few years off (so you would be up by even more). And he certainly doesn't know the day of the next one. And even he did, market crashes are temporary, then the market rebounds. Instead of trying to time them, simply buy and hold and ignore the temporary changes in price. So what to doDo what rich people do: Live below your means. Invest early and often. Buy and hold. Ignore the news. [link] [comments]  | |||||||||||||||
| leanFIRE now, or stick it out a bit longer, feedback would be appreciated. Posted: 08 Oct 2019 03:05 PM PDT So, today I was let go from my job. I was in manufacturing and demand has been going down and people have been getting cut so it wasn't a huge surprise, and to be fair I was not putting in 100% of my effort, just doing what needed to be done and that was about it. So, with that behind me, I'm trying to figure out whether it's worth getting another full time job. I was initially planning on working for another 4-5 years or so so I could FIRE comfortably, but I consider myself leanFIRE right now and am wondering whether I should just pull the trigger now. Here are my numbers for analysis: Liquid net worth: Taxable Index funds: $543k (75% stocks, 25% bonds) Roth IRA: $140k TSP + Roth 401k: $108k Cash: $10k Total: $801k Other considerations: Single, no dependents No Debt Own a car but no house free healthcare through the VA for being a disabled Vet Income: $13,356 annually in military disability. 3% SWR from my net worth is $24,000 a year Total income at 3% SWR: $37,356 a year. Spending for the last year: Rent: $9,600 (just moved into a new apartment that is cheaper so the next year will be $8,640) Transportation: $800 Groceries: $2600 Restaurants/Take out: $1700 (ouch, can definitely cut back on that) Shopping/entertainment: $6500 Insurance: $900 Travel: $1300 Misc: $2400 (this is cash, checks, moving costs and other that stuff I didn't properly record). Total: $25,800 If I do decide to leanFIRE now, I can easily get a house in a nearby low cost of living area near the VA health center which I use. I can get a small house or townhouse there for anywhere from $100k-$150k depending on what quality I'm looking for. I can either us a VA homeloan which I'm already approved for, or I could pay it off in cash, which would significantly reduce my annual expenses, but also reduce my net worth. I have taken part in a number of online part time jobs in the past such as resume writing, survey taking, and other stuff that could provide a small stream of supplementary income as well. So, just wanted to get people's general thoughts on where I stand. I'm honestly losing motivation to go back to another full time corporate job, and would love to just stay at home doing a number of fun side gigs. But getting some external input would be really helpful. [link] [comments]  | |||||||||||||||
| Just told his manager, intent to Retire Posted: 08 Oct 2019 11:26 AM PDT After reaching a financial goal, hitting my career goals, and approaching an age that I'd like to not be working, I finally told my manager my intent to retire by the end of the year. No firm or hard dates, just that I'd like to be out by the time it starts getting cold. Also told him if he needs me out of here sooner, I could do that too. He's a really cool manager and we can talk freely. Was thinking of this over the last 2 years. Now that I got it off my back, I feel a bit scared. Feel kind of like I showed my poker hand. How about health benefits? What do I do with my free time? Briefly researched it and is it about 7k per year for a person in their 40's in good health? [link] [comments]  | |||||||||||||||
| Wait to invest tax-deffered next year Posted: 08 Oct 2019 04:46 PM PDT Hi FI, I have been steadily putting money away like many of you but i was wondering if i should start holding money id be putting in index funds and the like in order to max out my roth 401k deffered early next year? [link] [comments]  | |||||||||||||||
| Posted: 08 Oct 2019 11:29 AM PDT I'd love to hear some stories/experiences from those who have achieved FIRE while their S/O continues to work (or vice versa). A little background: both ~30 yo w/ 1 small child. My income: $125k as an engineer, her income: $50k as an artist. At the rate we are saving (33% of gross income), we should be able to retire in our mid 40s but would probably wait until at least 50 when our son would graduate from college (if that's the path he chooses). My wife doesn't have the same drive that I do to retire early as she gets a lot more from her job than I do. I enjoy my work just fine, but given the choice, I would absolutely not do it. If I were to retire at 50 (assuming the numbers make sense) while she continues to work, I'd spend my time working on projects at home, playing video games, fishing, playing rec sports, and anything else I may be in to at the time. My concern is that this traditional work imbalance would create some resentment at home since she'd still be working and I'd be doing whatever interests me at the time (within our set budget of course). Obviously nobody will understand the nuances of our relationship so I'm more just looking for stories/advice from people who have gone through something similar. [link] [comments]  |
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