Financial Independence Daily FI discussion thread - October 07, 2020 |
- Daily FI discussion thread - October 07, 2020
- Just because your path to FI/RE isn't straight and smooth, doesn't mean you shouldn't take that path. Here's my story:
- My Research on great 401k company matching
- Trusting the calculators--Too afraid to pull the trigger
- At peace in time of struggle
- Who else wants to FIRE because there's nothing to spend your money on?
- 21 years old, small portfolio but optimistic!
- Is it possible to live a very minimal life while just doing a job for 20 hours a week?
- Weekly Self-Promotion Thread - October 07, 2020
- Hobbies
- Personal Capital as an alternative to Mint
- Stick with Index funds (per MMM), or get more sophisticated?
- Down payment for a mortgage — how to think about the math in FI?
- How does a college student move towards FI?
- Pay off student loans or invest?
| Daily FI discussion thread - October 07, 2020 Posted: 07 Oct 2020 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]  |
| Posted: 07 Oct 2020 12:03 PM PDT Here on /r/financialindependence I read a lot of stories of many people's rather smooth transition from high school to a good college and into an immediately well paying career path that will set them up for life with little worry. Some of us however have taken more unconventional paths. Here's a summarization of my adult working life: Straight up - I was very unsuccessful financially for the first decade of my adult life. In college I was not a hard worker, most of my spare change went to beer, and a serious bout of depression almost flunked me out and took me several extra years to get my grades back up. I had grown up with helicopter parents that severely limited my social life, so I viewed college as an escape from their grasp and as an excuse to have fun more than a way to get educated and set up my future. I ended up barely graduated in 2011 with a degree that had been completely neutered by the 2008 financial crisis (Urban Planning). I had worked intermittently in college during my breaks and also on an on-campus job and was able to pay cash for my first car (a used Toyota Corolla) that I still drive today. Other than that, I was broke when I graduated. I didn't get a job straight out of college. I had an internship opportunity through a family friend that had been rescinded due to slashed budgets. I had to move back home with my parents to a VLCOL small town where there was no work to be had; I couldn't even land a 3rd shift gas station attendant job. After 10 months of unemployment and lots of boredom and depression, a chance encounter actually landed me an entry level job in my field: $11/hr conducting surveys for the local planning commission in a MCOL city; a far cry from the standard starting salary of $50k/yr that career path would have afforded me had I been just a few years older but hey, it was a job. Over the next year I did everything I could to be as frugal as I possible: I lived in a friend's partially finished attic for $100/mo, I biked over driving every chance I could, grocery shopping was only done at Aldi and Walmart, I limited my recreational activities to free events and sports, and my only vacations were either to my parent's house or to visit my sister in another city two hours away. I managed to save up $4000 that first year and opened up my first Roth IRA. Very exciting! The problem is that I realized that I hated my field of work. The education I received didn't properly set me up to work in this new post-2008 financial and political world. I didn't like the prospects of my future career, the culture of the workforce, and the fact that our work was continuously blown up by politicians routinely making poor decisions. I realized that my dream of making utopian cities would never come true. I grew to hate the city I lived in and the people I interacted with. I needed a change. In late 2013 I quit my job on a Friday and by Monday I had packed my car and was off to a new VHCOL city to start over with $3500 in my pocket and no job prospects. A friend there had offered to let me sleep on the couch and I took him up on it. Would I ever recommend anyone does this? No, but in a way I was desperate and still pretty young so I chanced it. Unfortunately, this VHCOL city also had almost no job prospects in my field, and for the next year I desperately applied to every job I could while taking little side jobs here and there to generate some cash flow. By October of 2014, I once again was broke. Here I was, 26 years old, college educated, and I was sleeping on a couch with no money, no job, no girlfriend, no prospects in life, etc. I hadn't contributed to my Roth IRA at all in the past two years. My parents sent me $400 to get gas and an oil change so I could move back home. The local factory had picked up and they had job openings; my future as a assembly line worker was being solidified. On a stroke of sheer luck, I found my drunk neighbor outside one night; he had lost his keys at a bar and was locked out of his home. I called for a locksmith to come, and I stayed with my neighbor while he waited. We got to talking and I told him the story I just told above. He very drunkenly took sympathy and offered me a temporary job in the warehouse he managed for $10/hr. He was clear that the work would suck and many people didn't last long, but I didn't care. I was elated and took him up on it immediately. I busted my ass for the next month working every moment I could and saving every penny. The company liked me so much that they decided to keep me around. Within two months I was off the couch and was moving in with a friend....into his sunroom. But it wasn't the couch and it was only $250/mo! I was able to open up a new bank account with $1000. I was going places! The next several years were still tough: I only received small increases in pay, I was passed over for promotions by other more well connected people, and I was still living quite literally in a closet. Through overtime I was barely crossing the $30k per year mark. And hanging over all of this was that I was still living in a VHCOL city, so that income did not take me very far. At the beginning of 2017, the promotion finally came. My income increased 50% and I was able to move out of the closet and into my own bedroom. I was able to now start saving money at a good tick. The problem was that I was so scared of returning to my old financial situation that I kept all of my money in cash. 2008 and all that it did to me and others still scared the fuck out of me. I had worked so hard for that cash and I was not going to lose it. 2018 comes and my pay increased another 25%, and then that summer I decided to log in to my Vanguard account for the first time in years. What I found was that I had totally forgotten to invest that $4000 that I had deposited in 2012 and had been sitting in a settlement fund. The growth over the years meant that that $4000 had turned into $11000, which is great, but I did some calculations and found that had I put it in VTSAX, it would have become ~ $30,000. I was pissed! From that day forward, I have been very focused about saving and investing my money. I found a pretty cheap little apartment for my area ($1000/mo with all utilities included) and I save about 50% of my take home earnings. Last year (2019) I crossed the $70k income threshold for the first time and I payed off the last of my student loans. My emergency fund grew to be big enough to cover a full year of expenses which has removed a ton of stress. I have a separate CD fund set up that will allow me to buy a car either for cash or with the help of a small loan once my trusty Corolla finally dies. I have been very lucky through the pandemic and have not only maintained my employment but also picked up a side gig. I expect to cross at least the $85k income threshold this year (2020). It's still not a ton of money living in a VHCOL city, but I've found little ways to stretch my money further than it should. Purchasing a home is nowhere in my near future unfortunately, but that's just the way it is right now when the cheapest housing unit of any kind for sale is +$600K. But what I'm most proud of financially is that for the first time in my life I recently crossed the $100,000 net worth level at the age of 32. It's hard to believe how far I've come in the last 5 or 6 years from when I was straight up broke. Index funds are absolute wonders! At my current pace I expect to become a millionaire by the time I'm 43. I've faced a lot of failures both internal and external so the prospect of this to me is elating. I took risks that few would advise, and was willing to take on jobs that many would consider beneath themselves. I share my experiences because I'm sure like many others I see the stories posted here about the full scholarship magna cum laude software developer that immediately gets a job at Google and will be able to retire at 35 and this can be very discouraging for us more "average" folk. The path isn't easy for most of us, but it is worth it. Luck can and does play a big role for us all; don't try to hide or avoid it, just embrace it and take advantage of the opportunities that come your way. I don't know if I will ever fully achieve the Retirement Early part of FIRE, but I am damn proud that I can see the Financial Independence part in my future. [link] [comments]  |
| My Research on great 401k company matching Posted: 07 Oct 2020 09:16 AM PDT A while back I started doing research in finding better companies with good benefits as the one I am at now is pretty abysmal. That got me to wonder what exactly is a bad, good, great benefits package etc. So I began with 401k match because I don't have one and I'm on the fire path so it's a big problem for me. Here's what I found analyzing many companies in the SP500, as well as other companies that I've found from online articles and online forum testimonials. The Standard match appears to be 100% match up to 3%, then 50% match up to 2, so essentially 4%. From https://20somethingfinance.com/401k-match/ :According to the Bureau of Labor Statistics, the typical or average 401K matchnets out to 3.5%. Their National Compensation Survey found that of the 56% of employers who offer a 401K plan (a sad statistic in itself):
This is consistent with what I found, a lot of big companies offer 100% up to 6%. Best 401k companies A lot of this data came straight from the 2019 or 2020 pdf of company benefits website, I.e. straight from the source, but others I had to look at reviews on Glassdoor, indeed, and other sites which for some reason accounts were varied on some, but I entered the most common answer. I ranked them based on total potential salary contribution, meaning how much they will contribute plus what you have to contribute to to receive max contribution. Some of the top 5 have unique matches, so I ranked them separately. for instance, Conoco only requires a 1% employee contribution to get their 6% contribution, so it's unique and could be better for someone who can't contribute a lot fo their salary but can still get a good match.
(Suspending Match )Exxon mobile - "Currently, the company matches a 6 percent minimum employee contribution with 7 percent of the participant's pay." I'm still modifying this list, but thought I'd share it in case any one might it find in interesting, useful or something. Please give feedback and critique this list, and what you think in general! have a good week folks [link] [comments]  |
| Trusting the calculators--Too afraid to pull the trigger Posted: 07 Oct 2020 10:49 AM PDT According to the calculators (FIRECalc, CFIREsim), at age 53 I have enough to stop working. That and SS at 62 will provide an income that is greater than what I spend now, and that I could happily live on (at 90% success). I've been waiting for this. But I can't do it. I can't stop working. I'm frankly, scared that somehow it won't work. I've never seen anyone do it, and everyone I have ever known has worked until they were 65. I can't go from being a saver to drawing down my savings, and the thought of no longer contributing scares me. I've got a paid off house ($1MM), $1.25MM in retirement (more than half of it in Roth), and yet I still feel like it just can't be possible that I could stop working. How do people get over this hurdle? [link] [comments]  |
| Posted: 07 Oct 2020 01:14 PM PDT TL;DR: Unexpected life changing event happened yesterday. Thanks to FI/RE, we will be ok. I found out yesterday I am medically disqualified from my current job (USN). Scene setter: I had orders to move in a month across the country to the location my wife currently lives and works. I am BEYOND excited to be with her again after months apart (it's a great career). She has bought another house for us in that location. Every decision in my life has revolved around making my current job, a life long career. -Insert monkey wrench (medical DQ)- I have several options I can take career-wise. I can laterally transfer to another job, try and fight the medical disqualification, or get out of the Navy and pursue a civilian career. Bonus points cuz it's 2020: I lose out on roughly $600/mo in pay starting immediately, I lose my $40,000 bonus in December, and I have to repay roughly $6,000 in pro-rated bonus monies. All around the holidays and a cross country move. Moral of this sad, stupid story? THANK YOU FIRE! If it were not for the lessons learned here in this community and others it has led me to, I would be royally F@$*ED right now. Instead, I am inconvenienced (still mad AF) with all the sudden change. Our FI/RE plans may be delayed a year or two now, but overall, the momentum we have built up will continue to propel us towards our goals. Save for that rainy day folks. It never comes when or how you expect it. V/R, Some Bubblehead [link] [comments]  |
| Who else wants to FIRE because there's nothing to spend your money on? Posted: 07 Oct 2020 12:15 PM PDT My partner and I are interested in FIRE because we don't spend much money beyond food and housing. None of our interests require much money. We love hiking, but that's pretty much free. Sports are also mostly free. I play a lot of games. Gaming is very cheap these days when you can get a AAA game from Steam for under $10. It makes sense for us to FIRE since we're spending so little money now, we might as well FIRE and continue our current lifestyle without worrying about running out of money. [link] [comments]  |
| 21 years old, small portfolio but optimistic! Posted: 07 Oct 2020 03:22 PM PDT Hello everyone. I'm 21 and I started thinking seriously about retirement back in February. I invested a few hundred dollars right before the crash and continued investing a little bit more in March and April. I've sold and bought a few time since then and currently all my funds, roughly $1100, are in a Roth IRA: https://docs.google.com/spreadsheets/d/1hsMADEZQgdrTnz-YQBcezdzoRvCS-Pv62EamOXbKZEw/edit?usp=sharing I've returned to college and hope to get some high paying degree, but just not sure what yet. My investment strategy is focused on dividends, but I'm open to different types as well. Please let me know what you think and feel free to offer advice too. [link] [comments]  |
| Is it possible to live a very minimal life while just doing a job for 20 hours a week? Posted: 07 Oct 2020 03:20 PM PDT I know this might sound crazy, but I really have no passion or desires, besides just living a quiet life with no one around. I don't want kids or travel, I just need shelter, food, and the internet, and as much time as possible to myself. So I was curious, is it possible in America, to just do work for 20 hours a week, and live off that? All I'd need is a cheap apartment, and I barely spend money so it should be doable right? [link] [comments]  |
| Weekly Self-Promotion Thread - October 07, 2020 Posted: 07 Oct 2020 01:08 AM PDT Self-promotion (ie posting about projects/businesses that you operate and can profit from) is typically a practice that is discouraged in /r/financialindependence, and these posts are removed through moderation. This is a thread where those rules do not apply. However, please do not post referral links in this thread. Use this thread to talk about your blog, talk about your business, ask for feedback, etc. If the self-promotion starts to leak outside of this thread, we will once again return to a time where 100% of self-promotion posts are banned. Please use this space wisely. Link-only posts will be removed. Put some effort into it. [link] [comments]  |
| Posted: 07 Oct 2020 12:56 PM PDT Thought I'd throw this out there. I'm working towards my FIRE number, its not that far away now, and I've realized that I'm actually wanting to get AWAY from work more than TOWARDS something else. Not dealing with angry clients, no more meetings, sleeping in on days where I feel like it, that kind of thing But other than hitting the gym every day, yoga, running and swimming I don't have much on my list. I'm 40 with a wife and 2 school age kids and naturally with COVID world trips are off for now. What else do you guys expect to fill your day? What gets you going? [link] [comments]  |
| Personal Capital as an alternative to Mint Posted: 07 Oct 2020 12:53 PM PDT I've been using Mint since 2009 to budget our family's monthly expenses. And I'm not a fan - I wish I could find something, anything that can do what Mint can do and better. I was googling replacements and came across Personal Capital and while it does some things much much better than Mint - it really seems to lack some really obvious month to month budgeting tools. For one thing, it can't seem to figure out transfers to save it's life. It records half of my transfer as income and half as expense, muddying the picture for both categories. Also, it doesn't seem to have a built in way to handle "one timers". You can mark them as duplicates, I guess. Also I have all my kids' accounts technically "owned" by me but I don't want to count any of that money or those transactions as mine. There are other issues but I'll stop there. Is this app being actively worked on or is what we see kinda what we get? I really like Personal Capital's use of screen real estate far better than Mint but the way it categorizes my transactions... that's just not going to work. [link] [comments]  |
| Stick with Index funds (per MMM), or get more sophisticated? Posted: 07 Oct 2020 12:49 PM PDT My investments are simple - pretty much 80% in stock index funds, 20% in bonds. I'm not savvy enough on investing to get fancier than this. Is this strategy adequate, or am I missing out? How could I make my investing more sophisticated? Any books to read that would explain better strategies? Thanks EDIT: thank you all for your feedback! [link] [comments]  |
| Down payment for a mortgage — how to think about the math in FI? Posted: 06 Oct 2020 10:35 PM PDT My wife and I planning to buy a home in the next couple of years in a very high cost-of-living area. We have family in town, like living here despite the high COL, and intend to settle for the long term. While it's probably the better financial decision to rent, the permanence of living in our own home and the ability to tailor it to our needs is appealing. I started thinking about whether it would be better to go with a smaller vs. larger down payment, assuming we had the cash to cover in any case. On one hand, a smaller down payment keeps more of our net worth liquid, increasing the amount of income we can withdraw based on the safe withdrawal rate. On the other hand, a larger down payment would reduce our mortgage bill, which means we'd need less income to cover our other expenses. Since the SWR assumes your money is kept in a balanced portfolio, and conventional wisdom is that market returns tend to be higher in the long run than the current low interest rates we're seeing, my intuition suggested a smaller down payment that keeps more money invested in the market would clearly be better. I ended up doing the math, and was surprised by what I found. I made the following assumptions: (to keep things simple, I ignored taxes, closing costs on the home, etc.)
My math showed that each 100K increase in the down payment reduces the mortgage payment by ~$435/mo, whereas it only reduces income based on the SWR by ~$292/mo (100000*0.035/12). Here's a spreadsheet with my math, if anyone wants to check it out: https://docs.google.com/spreadsheets/d/1VqP9vwXkfY6CQ0sPtu1NQ5m3FKWrd7O6i5Gp1evnAvA/copy Even stranger, it isn't until the interest rate is an impossibly low 0.35% that the monthly mortgage payment reduction from the higher down payments roughly evens out with the reduction in income. Something about this seemed counterintuitive, so I figured I'd post here in case anyone else sees something obvious that I'm missing. For those of you who faced a similar decision in the past, what did you do? [link] [comments]  |
| How does a college student move towards FI? Posted: 07 Oct 2020 02:44 PM PDT Hi! I am a 19 year old college freshman. I am very much looking forward to becoming financially independent and want to hear any advice you guys/girls have for me. First some facts about my current financial status:
With all that being said, I feel uncomfortable spending money and feeling like I'm not doing anything to make it back. I plan on configuring my schedule next to semester in a way that will allow me to work on weeknights. My big question for all of you is what can I do to move myself further down the line to FI? My primary focus is my studies of course and I realize that's an investment in its own right but I'm looking to do anything I can. Any and all advice is appreciated. Thank you! [link] [comments]  |
| Pay off student loans or invest? Posted: 07 Oct 2020 01:02 PM PDT I've recently been able to refinance my student loans due to the much lower interest rates currently, but I am unable to decide where to put my surplus from my budget (about ~5k after expenses). I was originally throwing the surplus at the loans when the interest rate was higher, but now I'm not too sure. I have an IRA, but no access to 401k. (I am W2 so don't qualify for any of the individual 401k, SEP IRA, etc) The only additional avenue I can invest in is a taxable brokerage, which I already have. Accounts: Student loans - $185,000 @ 2.35% ($2600/month ~ 7 years) "HY" Savings - $22,000 Trad IRA - $14,000 (maxed for 2020) Taxable Brokerage - $7500 Do I continue to payoff student loans or go with the taxable account? Any advice is appreciated! [link] [comments]  |
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