Financial Independence Daily FI discussion thread - May 01, 2020 |
- Daily FI discussion thread - May 01, 2020
- One accountant’s journey to FIRE: 400k at 28
- T minus 100 until Trial FIRE
- Weekly FI Frugal Friday thread - May 01, 2020
- The downsides of aggressively pursuing FIRE and living extremely frugally.
| Daily FI discussion thread - May 01, 2020 Posted: 01 May 2020 01:09 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| One accountant’s journey to FIRE: 400k at 28 Posted: 01 May 2020 05:34 AM PDT Here we are again. Another year, another 100k, and in the middle of a pandemic to boot -_-. I've kept my previous post mainly intact but have made changes in bolded italics. All mentions of currency are in CAD. Side note: I'm definitely at the point where market volatility is very noticeable on my portfolio. Stay the course peeps! About me Hi! I'm a 28F CPA living in Toronto, Canada. I wanted to post this to show the non IT people in this sub that there are other careers where it's possible to increase net worth quickly despite not making 100k right out of school. I've always been a saver but I discovered MMM in December 2015 (when I was 24). The realization I could retire at 35 really lit a fire under my ass to save even more and actually invest it. I was working through my CPA at a big 4 accounting firm at the time and hated every second of it. To be honest, accounting is boring and a 'meh' career at best, but the money is good so I will most likely stay on this path until I feel FI enough, if not actual FIRE. I live in the most if not second most expensive city in Canada, sharing a small home with my SO that we purchased last year. I have no expensive hobbies other than travel and lead a pretty 'boring' life. I'm slowly getting healthier and into exercising but those things are harder for me than saving money. The privilege – My parents paid for 3 out of my 4 years of university. That's about 36k that I got for free which will never have to be repaid (I asked). That one year I paid for and for the 2 years I lived on campus I paid for myself through part time jobs before and during university. I also went back to live with my parents for one year rent free during my 7 years of working, which was a nice boost to my net worth during that time. Here are the numbers! The goals My spending goal in retirement for one person is $20,000-$30,000 per year (as part of a $40,000-$60,000 spend household). I expect my SO to pay their own way on this FIRE journey. The dream at the moment looks like one year on one year off long term slow travel, most likely for 5ish years of travel. On the off years, we could work, volunteer, whatever. These FIRE plans are not that defined because who knows what I'll feel like in 5-10 years. All else being equal (is it ever?) I expect to achieve the following net worth milestones at the following ages: Annual Spend (individual)
^the above does not account for market corrections/recessions. If one happens tomorrow obviously those ages will change. (BAHAHAHAHA COVID) My flair is based on the first goal - $500k for 20k of spending at 4%. Is that going to be the number I FIRE at? Probably not, given the expectation of a low growth environment in the near future and my young age at the expected time. But it's a number that I would feel comfortable about enough to shift into something more chill. It's possible and even likely that I'll experience the golden handcuffs phenom and stay for a while past that though to feather the nest and add security. Future plan/goals – I have no interest in having children, which enables my fast FIRE journey and long term travel plans. Currently we live in a small bungalow in Scarbs with a basement unit that pays rent. Looking forward to selling in the next few years and buying a teardown to re-build, no enjoying living in an old house. While Canada is great, it's also possible that I will be OK with living somewhere else with single payer health care long term (I hate winter). Income history and Net Worth I started my career at a big 4 accounting firm making 45k, then 50k the next year, then 60k the next. These are standard salaries for this job in my city – Toronto. During this time I was renting a place downtown with a roommate or SO. After leaving the firm my first job out was at 75k, and I moved to live with my parents for that year. Getting rid of rent was amazing for my net worth. Then I moved to a more interesting job that I thought I would love for 80k and started paying rent again. Then I got bored and moved to my current job, where I made 95k the first year and now 100k with very generous 20-30% bonuses. First year we (my SO and i) lived downtown paying rent, now paying down a mortgage. I do have access to a side hustle that I started participating in around 2016. It's very CPA specific and involves helping incoming CPAs get feedback for their practice exams in preparation for the qualification exams we have to write in this profession (PEP and CAP for those in the know). I think I made <$2000 the first year I did it, but it grew steadily and I made $33,000 last year from this. My net worth started at -$10,000 on the day I graduated university in the summer of 2013. That debt was owed to my parents for a lavish long trip I took that summer which I repaid in my first year of working. No regrets. After I started working and saving, it began steadily going up. My records are spotty in the beginning, since I was just saving to save. Jul/2014 $10,000.00 Sep/2014 $16,108.48 Nov/2014 $21,146.27 Jan/2015 $26,275.45 Mar/2015 $30,587.78 Jun/2015 $41,766.89 Sep/2015 $48,129.09 Dec/2015 $54,127.60 Mar/2016 $66,790.00 Jun/2016 $82,387.42 Sep/2016 $93,851.37 I reached the 100k milestone sometime in November 2016 at 24 years old, 3 years and 2 months after my first day of work. Dec/2016 $108,566.61 Mar/2017 $124,818.16 Jun/2017 $137,332.79 Sep/2017 $159,339.43 Dec/2017 $184,239.82 Mar/2018 $196,280.12 Apr/2018 $204,157.49 I reached the 200k milestone sometime in April 2018 at 26 years old, 1 year and 5 months after 100k (4 years, 7 months after my first day of work). It definitely gets faster (especially if you have year of not paying rent!). All else equal and barring a downturn, I hope to achieve the 300k milestone around winter 2019. Depending on the side hustle this year and with my increased income, here's hoping for Dec 2018 instead of March 2019. Well that didn't work out, but that was mainly because of saving up for the house during the low market in the 2018 winter and the closing costs. Jun/2018 $211,046.07 Sep/2018 $228,258.78 Dec/2018 $235,142.81 Mar/2019 $278,189.27 Apr/2019 $300,030.50 Why the big jumps toward the end there? Bonuses and side hustle money coming through (it comes in large chunks) and the tenant providing first and last helped as well. The 300k milestone was reached at the very end of April 2019, one year after 200k. It's definitely getting easier and easier to amass more money as my income grows and the growth compounds due to the nest egg size. I'm hoping 400k comes around the same time next year. Side hustle should be around the same this year but we're planning a lavish vacation and some minor renovations. Jun//2019 $307,811.29 Sep//2019 $341,536.98 Dec//2019 $376,130.50 Jan//2020 $397,007.64 Feb//2020 $381,471.98 Mar//2020 $361,550.87 Apr//2020 $408,911.06 More lines than usual because I wanted to show the COVID drops. It took my bonus and a side hustle payment to get me to crossing the 400k line, along with a minor market recovery. The 400k milestone was reached at the very end of April 2020, one year after 300k. 500k is less than a year away should my plans for 2020 work out. More on that in the next update if it works out ^_^ Monthly expenses Here are the 2019 expenses and 2020 so far. Expenses have definitely increased slightly since we are now homeowners which comes with all kinds of costs. For a millennial living in a huge high COL city, I don't spend a lot of money. This has enabled me to save a ton of money even on my previously medium salaries. 2019 expenses
2019 was a mix of renting and owning, so the housing related costs are a bit lopsided on a monthly basis. I took the subway to work, phone was paid for by my employer, and health/dental over and above work insurance goes into Misc (Netflix is in there too). 2020 expenses to date (4 months)
Variable mortgages are great during times like this, April was our first reduced month. Renovations are about halfway done; hopefully we'll finish in a few months. We pay insurance in a lump sum payment, my work pays for my phone, and any medication/dental not covered by work health insurance is in misc. I've worked from home for majority of March and all of April so transportation costs are not normal. Unfortunately it looks like vacation is out of the question this year so we'll save a few thousand there in the overall figures. Please keep in mind that these expenses are for myself only. My SO and I split household expenses and spend our own money on items like clothes or video games. I don't foresee our essentials spending increasing above what it currently is and the tenant is very helpful in reducing those costs to a level where it is cheaper to live in the house than our previous condo rental without taking into account future selling prices, etc. We did consult a rent vs buy calculator before purchasing and the house was still in the buy zone which is rare for Toronto. I foresee us staying here for around 2-5 years before flipping into a newer home. Investments My tax advantaged accounts are maxed out and self-managed through a DIY brokerage. My taxable contributions are split evenly between the same self-managed DIY brokerage and a robo advisor for shits and giggles. The robo advisor is winning at the moment, because I view my DIY brokerage holdings as a whole unit so my taxable account gets the brunt of the bonds (low rate environment). The DIY Portfolio is as follows: Cash: 0.6% (preference is 0%), everything is in the market J Bonds: 1.9% (preference is 5%), sold it all in March to buy more ETFs. REITs: 2.3% (preference is 2.5%), VRE mostly. Also meh about this allocation. Canadian dividend stocks: 4.1% (preference is 2%, my investing strategy used to be dividend based so this is a remaining position from then), CDZ. Canadian Market: 1.7% (preference is 2.5%),VCN US Market – hedged to CAD: 24.6% (preference is 25.5%),VUS/VSP US Market – unhedged: 26.9% (preference is 25.5%), VUN/VTI(n USD) International (both developed and developing) – unhedged: 37.9% (preference is 36.5%) XEF+XEC/VXUS(in USD) My robo advisor has split my investments as follows: Cash: 6% Bonds: $9% Low carbon global stocks: 30% Canadian stocks: 24% Global stocks: 16% Cleantech stocks: 15% I finally called them to change my risk level from 8 to 9. I'd love any advice on my allocations. I rebalance when I invest so it's a bit slow. Is there anything else you want to know? If this post is well received and the community feels it's useful, I'll make another one when I get to $500k. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 01 May 2020 01:04 AM PDT In about 100 days I will be free of work obligations, having been granted leave of absence (unpaid) for at least a year. I'm a bit nervous, but also excited at the same time. It will be a test of what life would be like down the line, and I have plenty of ideas on how to fill my days. For those of you who have done something similar, what are some things you wish you did or considered before untethering yourself from work, even if temporary? Any unforeseen hiccups? Also interested in any tips for ultimate return and readjustment to work for those of you who decided to go back. Thanks! [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weekly FI Frugal Friday thread - May 01, 2020 Posted: 01 May 2020 01:09 AM PDT Please use this thread to discuss how amazingly cheap you are. How do you keep your costs low? How do become frugal without taking it to the extremes of frupidity? What costs have you realized could be cut from your life without pain? Use this weekly post to discuss Frugality in general. While the Rules for posting questions on the basics of personal finance/investing topics are more relaxed here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The downsides of aggressively pursuing FIRE and living extremely frugally. Posted: 01 May 2020 04:26 AM PDT Let me first start by saying I have followed this community for a while and implemented some of the good advice that is given. I generally think there are many positive aspects of reducing consumerism and having a healthy financial situation. I want to share some experiences I have with real life FIRE cases that has raised some eyebrows for me, and I want to start a discussion. Also pardon my non-native English! I have recently come across some people who have taken the road to FIRE to the extreme to the point where they appear to have basically zero quality of life and acting in a way that puts them at odds with most people they meet. One such coworker is a male in his mid 30s. He lives alone in a tiny appartment and has no car. This appartment is near a care home so he can eat the food that is delivered from there for a very cheap price (dont ask me how he made this agreement, I have never heard of something similar). At his job he goes to extreme lengths to steal clients from others, and them he bills them very aggressively. This has landed him in hot water several times and he had to pay back money for overbilling. He always have to be forced to take vacation. He doesnt seem to have any friends and spend every minute working or following his investments. He spends 0 time on continous training, which is mandatory in our field of work, he just refuse to spend time on anything that is not making him money. He never ever brings cake for lunch for the secretaries but always eats more than anyone else when someone brings free food. This is particularily offputting because he is the highest earner in the office. Basically this has made him a paria among coworkers. Recently the tax officed notified him that he is being investigated and he has to hand over his papers. There is suspicion that a previous intern reported him after seeing inconsistensies in his work. This whole situation has made me think a bit more critically about high earners that live extremely frugally. My coworker was probably a quite normal guy a few years ago. But making money became so enticing that he lost his moral compass. His behaviour has made him lose the respect of his coworkers and also put him at odds with the law. I seriously think he might end up in jail at some point. And it's really sad that he is among the only ones who have mentioned FIRE to me IRL. What are your thoughts on this? Is it a common phenomenon in this community? Does anyone feel some aspects of this is justifiable? Edit: I see there are alot of people saying this isnt FIRE, just greed. I tend to agree. On the other hand perhaps it's a delusion to think that people with very high saving rate, who think of themselves as part of the movement dont have some of these issues. One example that I think Is more common than people are willing to admit is being seen as cheap by coworkers for never bringing anything for work lunch even though you are a high earner. And based on some other posts on this subreddit quite a few have experienced that partners have left them because of extreme frugality. [link] [comments]  |
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