Financial Independence Daily FI discussion thread - Saturday, May 01, 2021 |
- Daily FI discussion thread - Saturday, May 01, 2021
- Went to a "money musts" seminar recently and what the presenter said about saving for retirement really hit me
- 14 years: from disability to dos commas
- How I got to $500k NW at 30 as an accountant
- Convert Traditional IRA to Roth IRA?
- Fresh graduate European needs help with financial planning
- Vanguard LS60 and 80,makes sense to have both ?
- How do I (a virgin in investing) invest in a way that will really be helpful to me 10 years from now?
- Having Kids Without Increasing Your Budget Is Possible
- Was this couple the original FIRE? Good for them!
| Daily FI discussion thread - Saturday, May 01, 2021 Posted: 01 May 2021 02:00 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: 01 May 2021 01:36 PM PDT She said "you should always prioritize saving for retirement. Because anything else you save money for- a car, a house, an education- you can borrow money to get. But you cannot borrow money to retire" Not sure why I had never thought about it but its a really good point [link] [comments]  |
| 14 years: from disability to dos commas Posted: 01 May 2021 06:14 AM PDT About 4 years ago I wrote this post. If you ever needed evidence of the power of compounding, it took a decade to get to 500k, and only 4 years to get the next 500k and a paid off condo, which is insane when you consider that I've held a 50/50 stocks/bonds AA most of that time. Increased comp has done some of that work, but I'm still in the south east. We're not talking Bay Area pay :^). I started out on SSI and food stamps. If not for my degree, I'd still be there today. That shapes you. The biggest thing I wanted from FI was a sense of financial security. By any measure, I've achieved it, but 2020 taught me I was not entirely rational. Remember the food shortages at the start of the pandemic? Remember how staples were out of stock? That was enough to make me completely regress back to 'poverty mode' for a while. You know what was funny? I had a stable job and I made more from comp and stock trades than I ever had in my entire life, yet I found myself cooking and eating like I was surviving on $90 a month food budget again. I didn't snap out of it until I found myself inventorying pounds of dried beans in my pantry. Absolutely strange. I'm beyond FI for myself, but my ultimate goal is to be able to comfortably support a family at the median household income. My RE target is somewhere around 2M. I'd guess I'll hit that in my mid 40s. Between now and then, I've intended to purposefully my lifestyle in line with what my portfolio can support at 3%. The thing is? I'm finding it awfully hard to spend my 'fun budget'. Some of that has been down to the pandemic (and a good chunk has gone to charity), but some of it is me holding every purchase to a 'is this really worth it' analysis that helped me survive back in the day. It's a good problem to have I guess, and there aren't any budget police ready to swoop down from black helicopters if I don't spend it, but I hope it gets easier for me to find balance. I'm in my late 30's and I'll probably retire by my mid 40's. That leaves me 5-10 years left to really sort out all the non-financial aspects that I've neglected. Stuff like health, hobbies, friends and dating. If the pandemic taught me anything, I really have to put in the effort to get this squared away. My retirement experience will be a dreary grey experience otherwise. Hitting FI has evaporated so much of my work stress and worry that I can finally focus on what's important. I don't know how the next decade will turn out, but I think I'll be a better, more rounded person at the end of it. If I can do this, I think just about anyone can. Good luck and god speed. [link] [comments]  |
| How I got to $500k NW at 30 as an accountant Posted: 01 May 2021 10:10 AM PDT I dont own a house, I down make a ton of money, and I didn't start with a lot of money. I started working 6 years ago as an accountant and graduated from a cheap state school with modest debt. After graduating, I lived with 3 other roommates for 2 years and paid rent that was $400, or about 15% of my after tax monthly income. I then moved into a very cheap apt by myself for $650/month and that was about 15% of my salary at the time and lived there there 2 years. Finally, I moved in with my girlfriend and I pay her $700 rent which is still about 15% of my after tax income. I have always driven a cheap car. I've had a 2004 Toyota corolla with no car payment since graduating, and with that comes very cheap car insurance and maintenance. I graduated making $55k in 2015 and in 2021 I'm making $75k. Pretty linear progression in salary raises. I've kept my cash outflows low since graduating and maxed out my ROTH 401k my first year after graduating, along with maxing out my Roth IRA. I was very cash poor but could afford rent, food, gas and even vacations (with points ofc). Starting in 2017, I changed jobs started to put the same amount into my Roth 401k and into my Roth IRA ($6k each or $12k total). This was about $200/week into ROTH accounts. I only did passive investing in my 401k accounts. Not in my IRA, which I actively managed and tried to outperform the market. I very much disagree with the efficient market hypothesis and believe the only way to make outsized returns is to make concentrated, educated bets. My Roth IRA holds $150k in assets right now after 5 years of investing. My Roth 401k has $50k in assets. Also in 2017, I started putting $200 week into crypto such as bitcoin and litecoin, which has been a significant source of returns as well. I've put $200/week into crypto every week since April 2017, which is a reckless strategy but one I could afford because I kept my living expenses very low and maintained a stable job as an accountant. Following the recent surge in prices, I have $300k in crypto as of today. Obviously my net worth is volatile but I live a low risk lifestyle and can afford the risk. I have kept my expenses low and plowed all my excess cash into high risk high return assets. I think this is a good approach for people in my situation and is leagues ahead of just passive indexing until your 60s. [link] [comments]  |
| Convert Traditional IRA to Roth IRA? Posted: 01 May 2021 10:16 AM PDT I am wondering if the benefits outweigh the cons of converting a traditional IRA to a Roth IRA in my circumstances and could use the community's advice. IRA Amount $76,325 Rolled over from previous employers 401K it is a combination of Pre-tax contributions and employer matching no after-tax. My employer also enacted a Roth 401K option while I was there which I contributed to instead of Pre-Tax when it became available. My previous employer did not allow post-tax/backdoor as a policy while I was there. My income at the previous job was 87K and lived in the state of Iowa which has a pretty high-income tax at 8.5% at that income level I have moved to Washington state which has no state income tax. I am in the 22% income bracket at 152K a year I am 33 years old Married with 4 children. I am looking to retire at 59 or 60 at the latest. The Seattle area is quite expensive so I ended up with a mortgage of $3464, principle, interest, taxes, and insurance. The original purchase price of the home was $719K 30 year fixed rate at 2.25% I currently max everything out I can at work $19,500 into the company Roth 401K which they provide an additional match at 9%. $7,200 per year into the HSA. Everything is invested over $1000 dollar minimum in Vanguard mutual funds. $12,000 per year split in half between my and my wife's Roth IRAs. $800 per month goes into a taxable brokerage account. With all these considerations in mind and since the traditional IRA will end up making up a small portion of my portfolio by the time I retire, is it even worth it to convert it to a Roth IRA? Another worry/consideration is I think my income will rise above the AGI to contribute to Roth IRAs in the future and may consider a Back Door Roth conversion. Which having the traditional IRA would complicate things. I was also thinking of taking a step ladder approach such as cutting the value in 5 or 6 and converting over a 5 or 6 year period to spread out the tax bill. I know some will think it was unwise to transfer the 401K from my previous employer's plan but their options sucked and fees were high. Not to mention I have about 30 years till retirement. I expect my income to increase shifting me to a higher bracket and I also expect tax rates to go up as well I know the future cannot be predicted, but that is my best estimate of the future. Any suggestions would be welcomed thanks for your time and consideration! [link] [comments]  |
| Fresh graduate European needs help with financial planning Posted: 01 May 2021 12:00 PM PDT Alright, the numbers are probably much different here in Europe than in the US, so let's start with some quick facts: I'm [24M] a fresh engineer graduate, debt free, living hundreds of kilometers away from my family, renting an apartment with other young adults, I have a decent job. I started tracking my incomes and expenses in an excel table since I started working, so I can calculate average monthly numbers: Currently I earn ~1000$ monthly after taxes. Rent costs 150$/month. Groceries costs 200$/month. Other expenses are 200$/month. So I'm able to save/invest around 450$ monthly, which is huge for me. I was a typical broke student for years, living from month to month, it was really emotionally draining. Currently I live with 3 other people in an apartment, renting a small (~6m2) room, but I'm not exaggerating if I say I'm suffering. I'm an introverted guy, who needs his own space to be mentally healthy, so I'm planning to rent an apartment on my own. If I do so, rent will cost 400$, so based on previous numbers I'll spend around 800$ a month, only will be able to save/invest 200$ monthly. It cuts my saving in half compared to my current situation, but it is necessary for the peace of my mind. The question is, should I do it, or should I suffer for a bit more saving? What should I do with that little amount I'm able to save? Invest it in crypto? Or in S&P500 ETF-s? Or put it on #7 on roulette? I want to be financial independent to some degree as soon as possible, buy a car and a house (e.g. the price is around 70.000$ for an apartment, 150.000$ for a house, 2.000$ for an usable car, 10.000$ for a good car), and eventually with more experience and better salary I'll be able to save and invest more, but I just entered the real world, and I'm lost a bit. Thoughts? [link] [comments]  |
| Vanguard LS60 and 80,makes sense to have both ? Posted: 01 May 2021 12:12 PM PDT Pretty new to the thing,I'm 48. I've started buying a bunch of 60's and 80's (not distribution) but down the road I've been told it doesn't make much sense as the two products are pretty similar,so if I want to be more aggressive a 100% stock etf and then a LS 40 or 60 may make more sense. What you say ? [link] [comments]  |
| Posted: 01 May 2021 12:43 PM PDT Basically the title says it all, but one thing though, is that I live in a middle eastern country and ways of investment is a bit limited here, so I am looking for something that is international and accessible to anyone worldwide and is almost always a guaranteed profit. [link] [comments]  |
| Having Kids Without Increasing Your Budget Is Possible Posted: 01 May 2021 09:29 AM PDT Just throwing this out there, because kids are so often seen as something that delays or defeats financial independence. Obviously, money shouldn't be the primary motivation in having kids, but just as obviously, it factors in- I know a lot of people who stop at 2 who would have had 4, but had to think about the level of safety net they wanted to be able to provide their kids. Or who wait to have Kid #2 until the first is out of daycare. There are also a lot of people, particularly in FIRE, who have chosen not to have biological kids for ethical reasons. For those for whom this may be an option, because a lot of people aren't aware: consider adopting through foster care. Really learn about it first, because the bureaucracy is a nightmare, these kids are really vulnerable, and take a ton of patience, attention and care. But fostering has been the best, most worthwhile thing I've ever done. Not trying to paint it as the easier way by any means, or some "trick." But from a financial perspective, it's also a much easier proposition than having and raising a biological kid or going through private adoption. I have adopted four kids in three states. I receive $700 to $2000 monthly completeley tax free for each kid, until they're 18 or 21, depending on the state. All have free Medicaid until they are adults. One is entitled to free college by virtue of the state I adopted him from. All told, I receive $4300 per month tax free, plus free medical to be a mom. While they're in foster care, the state pays for their childcare. That's a lot of money. It's enabled me to fully fund my kids' college accounts, have them in private school, and know that if the bottom dropped out in our lives, I could downsize and still meet our basic needs. Other financial advantages? Adoptions are paid for by the state, you can count them as dependents even though the state pays their expenses, and when you adopt you get about a $15,000 tax credit even if no adoption expenses. You need to research. All children are entitled to foster care subsidies when in the system; most are entitled to them upon adoption, but there are different requirements for "hard to place" in each state (generally a non-white child, or one who is in foster care for a period of time (even if in your home) prior to adoption, one with a sibling if the parents are adopting both together, one who has a physical or mental disability would qualify). You also need to put tons and tons of research into parenting children with trauma backgrounds (which is a thing, even if kids entered your home right at birth and don't remember the trauma), and see if you're up for that. You also need to check any latent savior complex you have there- not a good reason to come into fostering. Not all costs are financial. There's so much about adopting through foster care that is harder (for me, the hardest part was loving these kids the way they needed to be loved, knowing that everything was precarious and uncertain and would be for years- that there's about a 30-50% chance they are going home- and you have to believe in the rightness of that, and actively work towards it.) But there are lots of kids out there who could use love and stability, whether temporarily or permanently. And fostering, and adopting through foster care- my amazing, incredible kids, have filled my heart with a type and degree of love I really never imagined possibile, all from a position of financial security. [link] [comments]  |
| Was this couple the original FIRE? Good for them! Posted: 01 May 2021 10:36 AM PDT This couple is doing it right. Retired at 38 with $500k. 30 years later this is them. https://www.youtube.com/watch?v=ZPUoNcLAg1g Here's a video of how you can make money online in the digital gig economy. Work is changing and morphing thanks to the internet. Opportunities are abound for those who venture. Of course, success won't come overnight. If you want it bad enough you will make it happen. Live your best life sooner than later. Cheers [link] [comments]  |
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