Financial Independence Daily FI discussion thread - December 07, 2019 |
- Daily FI discussion thread - December 07, 2019
- I’m sure many of you are more interested in FI but not necessarily RE. What are some rewarding but low stress jobs that are ideal for an FI person?
- Halfway to FIRE – Million $ Milestone (w/ Graph)
| Daily FI discussion thread - December 07, 2019 Posted: 07 Dec 2019 12:07 AM PST 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]  | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 07 Dec 2019 11:27 AM PST I'm currently a management consultant at a Big 4 firm and life is miserable (but at least my coworkers are truly wonderful and fun). I'm earning a lot and that is an important piece of getting to FIRE but I don't like this job. Thing is, I'm not sure I really want to RE. My goal is to get to FI at age 40 and transition to a low stress but rewarding job. The idea is that pay will not be an issue so I can take a job that I am passionate about. With that, what are some good FI jobs out there? My idea is to eventually go back to school for a Doctorate and become a college professor. Would love to hear from others who are currently FI but still working in a job they love. [link] [comments]  | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Halfway to FIRE – Million $ Milestone (w/ Graph) Posted: 07 Dec 2019 11:45 AM PST Hey FI, I've really enjoyed the major milestone posts, so I thought that I would share mine. I've been an FI follower for about 6 years, but this is my first time ever posting. Throwaway account so that I can be completely transparent, and because there is literally no one in real life that I can share this major milestone with. I thought this post was going to be in January, but with a little luck I just barely cross the $1Mil threshold this month. I am going to do my best to share the good and the bad of my FI journey, including how it has impacted me professionally as well as my personal life. I want to acknowledge that I have been very fortunate in winning the birth lottery. While I grew up very middle class, my parents heavily valued education, and with their support, some scholarships, and working I was able to graduate debt free and with a little bit of savings. From there, I have busted my ass to build my net worth and portfolio. I should probably also disclaimer that much of my success came from real estate, so if you are anti-real estate, feel free to skip this post. About me: 34MSingle (more on this later) W-2 Take home pay & expenses excluding real estate (in $1000):
Real Estate: I started investing in real estate in 2012, and have slowly grown a rental portfolio. I now own 12 single family homes with long term tenants. I didn't know it at the time, but I have done this by utilizing the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat). Almost all of these were purchased as destressed properties with value-add potential, so much of the real estate value has come from forced appreciation (renovations). The last decade has also been great for market appreciation, so the properties purchased early on have increased in value (and rental income) quite a bit. This has not been a passive strategy by any means, and spending so many nights and weekends focused on real estate has had an impact on a lot of things. Rental income: I don't include rental income in my regular income because I view it as a return on investment. Further, the rental income is all reinvested into more real estate, so I treat it more like a dividend that is reinvested for calculation purposes. I did some acquisitions this year, so I don't have 12 months of income data for the current portfolio. However, here are some conservative projections based on the current rental rates and expenses for all properties (in $):
Net Worth: Valuing real estate for net worth purposes seems to be a point of debate. I lean on the conservative side and only update real estate values when I've had an appraisal done (tax appraisal or refinance appraisal). Further, I take 20% off the top for what I refer to as transactional costs. This includes things like realtor commissions, seller concessions, repairs/updates, title expenses, taxes, and depreciation recapture. 20% isn't an exact science, but when spread across the entire portfolio, I believe it is quite conservative. I don't include cars, toys, or other personal property in net worth. I pay my credit cards off every month, so I don't have any liabilities other than real estate. Here is a breakdown of my net worth (in $1000):
Net Worth Graph: I started tracking my finances monthly in 2013, but I have a snapshot from a loan application in 2011 that is the initial data point. The increases in assets, and their corresponding increase in debt, are either cash-out refinances or real estate purchases with financing. Those transactions didn't have an impact on the Net, unless the new appraisal came in with a large change. Despite great stock market performance (401k is up 22%), this year has been mostly flat due a couple of different reasons. The largest impact is from some acquisitions this year that haven't been reappraised yet. The other impact is from some deferred maintenance expenses that were incurred this year. The good, the bad, and the Ugly: FI has definitely become a part of my core values, and as a result, it has had a significant impact on my life. Let's start with work. Being on the path to FI has given me a lot more freedom to pursue or not pursue opportunities professionally. I've always been a top performer by personality, so it hasn't had any impact on my individual performance. That said, it has certainly given me confidence to stand-up and even on one occasion indicate that I was willing to leave over a major issue that I wasn't willing to risk my professional reputation with the proposed (unethical) solution. In addition, it has given me the peace of mind to live through multiple restructures without the stress of worrying if I would have a job the next day. The one piece professionally that has been discouraging is that most people assume that if you own real estate that you must be rich. I certainly don't advertise the real estate stuff, but when people ask, I am transparent. Several have expressed that they want do something similar, but when I talk to them about it further, they want to skirt the years of hard work and just buy (finance) a bunch of real estate. They don't understand the amount of work and the amount of calculated risk associated. It seems that many are looking for instant gratification rather than deferred long term wealth. However, real estate has opened up quite a few personal and professional networking opportunities for me. That said, I have only met one other person who is on a similar tract, with whom I can have detailed conversations about finances. That person is now one of my closest friends, but we still don't discuss milestones. I have a few friends who are financially astute, but more in the Boglehead sort of way. I don't make a habit of bringing up financial conversations, but I am certainly happy to nerd out on investing strategy if someone else does. The hardest part of this to write is how FI has had an impact on my personal relationships, but I feel like it is important to share. I've learned that friendships really only blossom when they are nurtured. That is extremely had to do when you are working fulltime and pursing a second fulltime career in real estate on the nights and weekends. I have had several friendships fizzle out because I didn't make an effort to maintain them. The bigger impact was on a long-term romantic relationship with someone who wasn't on board with FI and didn't support the real estate business, despite her having so many other great qualities. Having that kind of disconnect creates a lot of issues with regards to communication, time prioritization, and overall support. While that isn't the only reason that relationship failed, it certainly played a large role. That ended a while ago, and I am still trying to figure out how to date in my 30s, as well as figuring out how to make time for it. So Reddit, that's my journey thus far. I am happy to answer any sincere questions. This sub seems to be on a bit of a witch hunt to prove people wrong or argue numbers here lately, so please don't be offended if I don't engage the trolls. TL:DR – Hit the $1Mil milestone through management career tract and long term real estate investing. Being a workaholic can have a negative impact on personal relationships. [link] [comments]  |
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