Financial Independence Daily FI discussion thread - November 01, 2020 |
- Daily FI discussion thread - November 01, 2020
- Financial independence on low-mid income (moved from /investing)
- My Boring Story - 6 Year Journey to 28 w/ NW $300,000 with "Average" Income.
- Thinking of taking a 6 month career break / mini-FIRE, but scared in these times
- Has anyone here ever been audited after starting their FIRE journey?
| Daily FI discussion thread - November 01, 2020 Posted: 01 Nov 2020 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]  | ||||||||||||||||||||||||||||||||
| Financial independence on low-mid income (moved from /investing) Posted: 01 Nov 2020 05:37 AM PST I've been having some deep moments lately and need to share! There will be a TL:DR at the bottom. I'm 31 now and discovered that I only really need 3 major objectives in life.
In exactly this order of priority. For these key things, I really like the idea of minimalism but I don't really identify with the Kondo approach because it deals heavily with what's in your past, where as I like to see that there's nothing I can do about my past except change my future habits. so throwing away or selling everything seems ridiculous to me. So I've been trying to achieve the same outcome but through a different means. By keeping my stuff, lol. I know I lose some 'opportunity cost' by not selling current possessions but I can and do still use my current possessions to achieve objective 3 above so I see the point as mute. I've pretty much given up on all expectations of career progression or being an entrepreneur. My job is entry-level. It's about $30AUD/hr working at 20hrs/week or more** in a liquor store (including weekend rates). In the last few years I've been casual and achieve 35k/pa just from work income with some years at 45k. I really don't have the focus to achieve much more than than a general managerial position. I've held full time work before at low level management for 6 years and hated everything about it, while my entry level job right now is totally stress-free. So I've learnt that my personality type hates stressful jobs, they take their toll and extract energy from me in the form of $$, recreational drugs/alcohol and emotional outbursts. Not good for my mental/physical/financial health. So how am I supposed to achieve goal number 2? My lifestyle solves this problem. It doesn't appeal to the masses but I guarantee that if you're in the same situation it works. First of all I identify each and every expense that comes my way and decide if I actually need it. Going out and spending $100 on drinks is definitely out of the question. I did that in my 20's. It was fun at the time and I'm sure but I don't remember 99% of it. How much do I actually need to spend to achieve objective 1 above? $6 per meal. Australian. Shopping at Coles. You could probably get the same result at Woolworths or international equivalent if you look for value. This includes meat, vegetables and seasonings. You need to eat every day and this is by far the biggest and easiest expense to change. I can cook and make amazing food for really cheap. No way am I a chef, just some YouTube inspiration. I love Adam Ragusea's videos. https://www.youtube.com/channel/UC9_p50tH3WmMslWRWKnM7dQ I'm extremely careful about digital subscriptions services.. I donate $12USD to the humble bundle each month and that's about it. They provide me with a range of mostly terrible and sometimes great games to waste my afternoons on. No Netflix. No Stan. No World of Warcraft. My rent is cheap, I chose a very 'value' option living in a cheap suburb in Melbourne. I search for value with the only mandatory expenses I need; Gas, Water, Electricity, Phone, Internet. Every plan I have I evaluate carefully.. no 24 month contracts please! Only options I can leave if there's a better offer with no expense, which I frequently take advantage of. I've solved objective 1. Objective 2 takes more discipline, what do I do now with all the extra $$ that I'm not spending on cupcakes or the latest marvel game? Invest everything. Emergency cash fund, the ASX, vanguard ETF's, cryptocurrency, property market (brickX). Every week I devote a certain % to each of these projects, some can go in straight away while others require a bit of savings first. So I plan ahead and decide weeks or months before what that particular paycheck is going to be spent on. My emergency fund takes care of uncertainty and I can top it up anytime. I even rent my car out to a car sharing platform because I hate paying for insurance and fuel. My customers do that for me. So now I've achieved objective 1 and 2. What about objective 3, entertaining my present self while maintaining objective 2? Most of the time, you can do this for FREE Thanks to my wasteful 20's, I have a steam collection of over 500 games and a great home entertainment setup. TV and movies are free if you know where to look and hanging out with my friends or dog doesn't have to involve money. Objective 3 is easily achievable. If you are 20 and reading this, you should take away from this that you only need to spend money on things that are semi-permanent. No subscriptions! Game keys that last forever! Thanks to my lifestyle choices I've believe that I've actually managed to achieve a reasonable future on an entry level position if i can maintain for 10-15 years. Early retirement is actually possible. After 2-3 years on this plan I've already managed to go from a savings account of $2,000 to an investment portfolio of about $60,000. This is mostly through dumping as much of my income as possible into investment opportunities every single paycheck. You don't need a lambo to be successful, you just need to be happy with what you can actually achieve and work on that. Kudos to the 1% of you that can be ahead of the curve or get lucky and make a million bucks on one idea. But that is definitely not the majority of us. PS. I don't ever want marriage or kids in my future. Sorry if you don't feel the same. I'm lucky enough to have a partner that feels the same way (and to live in Australia where I get the above opportunities). TL;DR I found out that I don't need to make 80k+ a year to be financially free. I've changed my spending habits to fit my financial goals and so far it appears to be working. I'm now stress-free and living a very easy and satisfying life on a 35-45k/year position with no worries for my future. Change your spending habits! Edit: mass confusing regarding my state of poverty, changed my earnings above. Also please don't assume I'm a pirate. So many free games and access to media or books available legally. Removal of a controversial financial product. [link] [comments]  | ||||||||||||||||||||||||||||||||
| My Boring Story - 6 Year Journey to 28 w/ NW $300,000 with "Average" Income. Posted: 01 Nov 2020 12:34 PM PST TLDR: Work 2014-Present living frugally in "VHCOL". Over the last 6 years post tax income has changed from $50,000-$64,000 (Engineer, but not one of those cool engineers.) NW from ~18k to ~330k at present. Average savings rate of 60%. "Wall Chart" Graph (Shows NW, Income/Expenses) [Side note: Over the 6 years on this chart, I received a few windfalls, totaling $33,000, due to the passing of a relative. If it makes you feel more comfortable, feel free to remove these from my NW, as they were out of my control. Note, my income #s include the windfalls, I was too lazy to separate them.] Why I'm posting I see mild, good natured complaints in the comments every time there's a "My Story" post with someone with a 200k yearly income, so thought I would share my story so far as an "average" earner whose income and expenses haven't changed too drastically over the years shown. "Okay cut the shit, what is 'Average'?" Grabbed "Average" from this Source (dqydj) which shows Median income of ~$43,000 (50th percentile) and Average income of ~$62,000 (~65.5th percentile), which is just above my average gross job income over the years shown. Here's my Post Tax In/Out
[*See Windfall side note in TLDR above] Lifestyle/Expenses I am a "low maintenance person", so I have a fairly cheap ($750/mo) room rented with housemates (edit: After 6 years, I am finally starting to getting sick of this. Time for an upgrade soon...). No car, bike to work, bus if I'm going somewhere I don't want to bike. Gracious friends help for rides if I'm going somewhere I can't bus or bike to (and then I treat them to lunch, if they'll let me). Food cost ~$380/mo. I do most of my cooking/bring lunch to work, but don't consciously try to penny pinch at the grocery store. I get the good ice-cream. Food is expensive where I live. The rest of the expenses are small, but add up to ~$1,800-1,900/mo. Happy to share more info about expenses etc. if you have any questions. Strategy Basically, Index funds buy & hold. Nothing too complicated here. I mostly follow the FIRE investing meme hivemind. Reflecting/Looking Forward I definitely realize the market has been an absolute beast for helping me reach this milestone. I'm not sure I expect it to work quite so hard for me in the future (either way, it doesn't affect my approach to investing/FI). Currently planning for a conservativeish 3.75% withdrawal rate, and have just reached ~50% of my average expenses, ~25% to my arbitrary FI number, which I'm sure will increase. Current planned FI number allows for just over 2x my current expenses. Slow and steady wins the race. Take care and happy belated Halloween everyone :) - TreeFiddy (Maybe I shoulda waited til 350k...) [link] [comments]  | ||||||||||||||||||||||||||||||||
| Thinking of taking a 6 month career break / mini-FIRE, but scared in these times Posted: 01 Nov 2020 10:06 AM PST I have enough liquid savings to cover my current lifestyle for 1.5 to 2 years including health insurance. I'm a tech product manager and been experiencing major burnout/stress since Feb of this year. I started seeing a therapist in July who has helped me manage my mental health during the pandemic and other personal stressors in my life. He's fantastic and helped me get through a lot of shit outside of work. Now, work is really the only stressor in my life. I've been job searching for almost 6 months as well. I'm exhausted and drained in both my job search and my work. I find myself longing for the weekends and weeknights, where I can do things that fulfill me more. I don't like feeling this way. I'm the type of person that wants to enjoy their work, so I'm considering taking a 6 month career break or mini-FIRE to do that. My goal with FIRE is not to stop work entirely, but to have the freedom to work on anything I want to w/o worrying about the money. I'd want to volunteer my tech skills to charities and spend more time with family/friends and on my hobbies. The grass sounds greener on the other side, but I'm scared of taking the jump because of COVID. I have a handful of friends who have been unemployed since the pandemic started and they've been job searching since then. I also worry that it'll be 5X harder to get a job after my 6 month break, especially during these times. I feel many people will say to me that "I should be grateful that I even have a job" and I get very mixed feelings hearing that. I'd rather not have this job and I would gladly give this job away to someone else who desperately needs it. Any thoughts or advice people can give? I was unemployed for 5 months before although I was job searching the entire time. This time, I'd want to treat it as a mini-FIRE, so I'd stop the job search entirely to focus on how I'd live my life as if I achieved FIRE. FINANCIALS:
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| Has anyone here ever been audited after starting their FIRE journey? Posted: 31 Oct 2020 10:15 PM PDT I'm just wondering what the odds are for being audited with a FIRE type optimization of taxes. Particularly, I'm interested in hearing from anyone who's "Lower" income, like in the $40-50k range where it's very easy to achieve a 0% tax rate with FIRE level savings. I know it's perfectly allowable within the guidelines, but I know looking at my taxes it looks weird to me. One year I'm paying like "normal," then all of a sudden I have all these deductible contributions seemingly "out of nowhere" without a large increase in income and suddenly I'm paying $0. Am I over thinking this? Or is going from ~$2,600 in tax to $0 the next year, and the year after, and again, going to raise a flag? Has anyone here been audited after starting on the FIRE path? [link] [comments]  |
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