Financial Independence Daily FI discussion thread - November 02, 2019 |
- Daily FI discussion thread - November 02, 2019
- Survival FI (Milestone 1 of 4)
- What are the ways you cut costs?
- Is my FIRE journey being delegitimized?
- What is the point of life when money is no longer a problem?
- There's a big difference between being FIRE and being rich
| Daily FI discussion thread - November 02, 2019 Posted: 02 Nov 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. [link] [comments]  |
| Survival FI (Milestone 1 of 4) Posted: 02 Nov 2019 07:53 AM PDT Note: I made this post a few days ago, before accidentally deleting it 20 minutes later because BaconReader's UI is annoying. Just wanted to repost it, so there would be a record of part 1 before I post parts 2, 3, and 4 in the future. TL;DR: From Spendypants to Survival FI in 2.5 years, on track for fat FIRE in another 4. The BackgroundAs I try to prevent myself from discussing FI topics with my friends, I'd like to share a series of four posts with the community over time. I plan to make these posts every time I hit a big milestone. It's a bit of show and tell, but also a log of what I was thinking at each snapshot in time. Just for the record, I am aware that I come from a position of extreme privilege. I am a relatively-young, extremely quantitative, high-income Asian male working in the finance industry. I probably underweight the role that luck has influenced my journey. That being said, my path since college has been one of single-minded, relentless optimization to maximize my income. Since discovering FIRE, the objective function has evolved to maximize savings instead of just income. Nearly every decision made along my journey has been one that has been evaluated against my objective function, for better or for worse. That said, this is my journey so far. When I first started on the FIRE path, I set our four critical levels, based on levels of estimated expenditure:
From my estimates of expenditure, I found the level of productive assets necessary to sustain the required income (using the 4% rule), then added the value of non-productive assets I have (equity value of my intended primary residence that my sister currently lives at) to form the net worth required. For added margin of safety, I added on the value of my locked in retirement fund assets to form safe net worth (They would form a buffer in case the safe withdrawal rate is lower than anticipated). These calculations resulted in four levels that can be seen from chart below. I've been lucky enough to dig through all my tax returns since I turned 18, which gave me reasonable estimates of my income and expenses all through college until now. From that and various bank statements, I was able to get an idea of my net worth over time. You can see big inflection points in the growth of my net worth when I leave college and enter the workforce, then more recently when I decided to take FI more seriously. It's FI Way or the HighwayOn New Years Day 2017, I started keeping much better track of my income and expenses, and created the first version of my budgeting worksheet. This led me to realize that despite my many pay raises, I was barely saving anything. I went ham on cost cutting and desperately looked to increase income. This was a very stressful year for multiple reasons:
Frustrated with my situation, I knew I was significantly underpaid for my role and experience. I started interviewing for similar roles all across the street. It was an eight month drought, but when it rains, it pours. All of a sudden, with multiple job offers in hand, a three way bidding war developed, and I was able to double my base compensation, more than double my bonus, and move out of an investing role into a more fulfilling and less stressful role. My conclusion at the end of 2017 was twofold:
Moving into 2018, my sanity was starting to crack after living in a a room smaller than an standard American prison cell for most of a year, and I ended up moving into a slightly larger, but still tiny coliving (dorm room-like) space. It was inconveniently located with a fairly long commute, but there was a bunk bed, space for a desk, and my own washroom. What else could I want? Until the black mould started growing all over the walls and ceiling, it was paradise. Eventually, my health started to suffer, and completely fed up, I moved into a nice, new apartment costing almost three times as much. This slammed my savings rate, but the quality of life increased significantly. Life has been relatively quiet since then. I've manage to maintain discipline better this year, with less volatility in my savings rate. As of the first of the month (Nov 2019), I've hit my first milestone: Survival FI. Based on my countdown to FI, I estimate about 17 months until my next milestone at my current income and expenditure rates. Just because everyone loves Sankeymatic diagrams: So You Hit Survival FI. Now What?Head down, breathing focused and counting down to my next dopamine hit. I expect to hit Lean FI in 17 months. In the meantime:
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| What are the ways you cut costs? Posted: 02 Nov 2019 03:26 PM PDT Here's some of what I do. It's a bit austere for most, but I'm trying to pay off my house in under 10 years:
What other ideas do you have? [link] [comments]  |
| Is my FIRE journey being delegitimized? Posted: 02 Nov 2019 08:46 AM PDT I'm frugal, not to an extreme, but I don't buy things just to have things. My family doesn't accept that and typically will buy me things, despite me not needing it. One example would be, "oh you don't have a lamp in your living room, so I bought you one!" Whereas, I was quite happy and doing well without one. At what point does my FIRE journey become delegitimized because others are helping me without being prompted? Edit: to clarify, I'm not of the appearance of a charity case or anything. I have nice things, but I own specifically what I need. I have a dining room with a table & chairs. I don't have a dining room with a multi leafed table and chandelier, and a China case. If that makes sense? I have an overbearing family [link] [comments]  |
| What is the point of life when money is no longer a problem? Posted: 02 Nov 2019 08:16 AM PDT Money is modern day survival. Earning money becomes your purpose when you don't have enough to sustain yourself. What is the point of life when you have enough money to sustain yourself? Is it simply making happy brain chemicals? Its a serious question. Im not rich myself, but working on it [link] [comments]  |
| There's a big difference between being FIRE and being rich Posted: 01 Nov 2019 04:40 PM PDT I feel that a lot of people trying to achieve FIRE that compare themselves or investments to what richer people are doing. Rich people are not financially independent and likely won't retire early or ever. Things that work for them won't work well for those trying to become FIRE. A coworker of mine comes from a rich family. She gives me and my co workers the most insane advice sometimes. Like telling us to pay as little as possible on our mortgage or refinance and use the equity for investing. She cant grasp the idea of wanting to be debt free and thinks equity in a primary home is a terrible thing. Despite her family being worth 10s of millions, they are in no way financially independent when they work 24 hours being responsible for their companies and investment properties. Rich people are highly reliant on debt and businesses/investments that are at the whim of the market. It's very difficult for them to pack up and retire. This is literally the opposite of FIRE. It's one of the reasons I don't like real estate despite how much money you can make leveraging. Being dependant on a bank for the next 20 years is not financially independent no matter how much my net worth may be. [link] [comments]  |
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