Financial Independence Daily FI discussion thread - Saturday, May 08, 2021 |
- Daily FI discussion thread - Saturday, May 08, 2021
- My husband and I are going to put a house on family land. We don't ever plan to move or sell. What type of mortgage would be best?
- From ZERO net-worth at 30 to ~$1.4M in 4.5 years (yeh tech), lessons learned & financial life story
| Daily FI discussion thread - Saturday, May 08, 2021 Posted: 08 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: 07 May 2021 11:50 PM PDT So as I said my husband(32m) and I(32f) are putting a home down on family land and plan on living their forever. We are trying to put as much into retirement as possible and are wondering what our best options would be for a mortgage. We have no debt but 3k on our car. We both have excellent credit (over 800), good amount of savings(6 months), etc We're wondering what would be our best option for a mortgage since we're trying to retire as early as possible. Should we go with the lowest interest rate, longest pay off period, lowest monthly payment? I know everyone says to put money into retirement investments since it would make more than what it would save us on interest if we paid off our mortgage early. Since were going with investments instead of paying off the mortgage early then shouldn't we go with what allows us to put the most into investments (hence the lowest monthly payments option would be best)? Or should we choose a different option? Just looking for some friendly advice from some people who may be in/have been in similar situations. We've never bought a home and since this will be the only one we ever do, I want to make sure we do it right and get as much info as possible from lots of sources. Thanks in advance for any info. [link] [comments]  |
| From ZERO net-worth at 30 to ~$1.4M in 4.5 years (yeh tech), lessons learned & financial life story Posted: 08 May 2021 08:11 AM PDT TL;DR: From August of 2016 when I lived at the mercy of friends on their couches & floors to February 2021, from the age of 30 to 35, my net worth increased from 0 to $1.6M (now down to ~$1.4M, as I'm all stocks it sometimes fluctuates +/- ~$50-100K+ weekly, good mental training to withstand volatility!) through a well-compensated work in tech with wild share price growth, great saving habits without being overly frugal, and so-so investment habits that are steadily improving. Sharing my journey from past to present below, what I look forward to in the future (for future reference/accountability) & what I learned along the way that may or may not resonate with you and help with your own financial journey. Part Zero. 11 Lessons Learned After going from 0 to $1.4M in 4½ years, I wanted to share a quick summary of what I learned upfront in case that can help someone/anyone: Mindset
Decision-making
Pure luck
Struggles & Challenges
Heads up: Long post & (financial) life story ahead! Part I. The Past: In the summer of 2016, freshly graduated from a Master's Degree at 30 & without a job, I spent nearly 2 months crashing different friend's couches and floors, with my inflatable camping mat as a trusted companion. My NW was close to 0 and I spent $500 surviving in SF over this period(!), mainly on food & transport (having a bike helped keep it low). I recall going out for a dinner with my fellow graduates who all have lined up or started their high-flying jobs, with the conversation very much centered around their shiny new careers, I felt a slight embarrassment and a deep pressure, especially as I grew up in an immigrant household with long term unemployed parents due to language & integration barriers. Through my early 20s, I frequently took sabbaticals to pursuit my passion for travels & exploration, while also working around the world as a consultant within the mining & metal industry (early to mid-2010s boom years). My total income was around $90K annually during those years, solid enough to allow me to save despite all the travels, which to be fair were of the low-cost backpacking & outdoors adventures variety, when it wasn't a work sponsored trip. It also allowed me to invest in an apartment back in 2011 in my MCOL home town when the housing prices were still quite depressed. Back in 2013, having worked for nearly 3 years, I couldn't ignore the feeling that my role & output was mostly BS, and that I sadly actually have very little interest in the industry that employed & paid me, I decided to make a jump towards something of more daily use & interest, which for me was a product role in the tech industry. With zero technical background I felt a Master's Program would offer me the best chance to pivot. With applications submitted and admission secured by the end of 2013, I quit and took another half year sabbatical traveling around Asia pre-program start during first half of 2014. Long story slightly shorter, I had the time of my life through the 2 years at school, fantastic learning & life experiences, wonderful friendships formed, it all came at a steep financial cost though, the $210K for program tuition + living & traveling expenses over 2 years, instantly ate away everything I had accumulated until the age of 28:
While I can count my blessings not to be dragged down by student loans, I also graduated with a completely reset Net Worth of zero, and worst of all I graduated without a job (I had a full time offer during final semester that was rescinded due to a company restructuring right before graduation that wiped out the team I was supposed to join), time to hustle! I managed to spend $320 in total to pack and move homes from coast to coast, shipping most of my belongings in 3 boxes with bus freight for $120 and took an AA plane with a Philly stopover from east coast to SFO (ok add another $10 for a Philly cheese-steak sandwich during transit). Back to that dinner with classmates, the bill of ~$40 per person was not a big deal for anybody working, but it was about half of my weekly food "allowance" (thank god for $3 meals at Trader Joe's!). During those fateful weeks, I interviewed for a handful of jobs, went through 3 final rounds, and secured 2 offers, which allowed me to negotiate a reasonable salary & a solid sign-on bonus. From the fall of 2016, I could restart the growth of my career & NW. Part II. The Present Fast forward 4.5 years and I'm still at the same job with the e-commerce company that employed me in 2016, 2 promotions since but hitting a career growth ceiling over the past year, friends who hopped around between jobs usually ended up a couple of steps further. Was going to quit a year ago and do my sabbatical + travel thing again but COVID hit and there were nowhere to go, and my company ended up soaring due to the pandemic. I've always struggled with being a bit too risk averse on the stock market (due to losing all savings, however small it was back then, during the 2008 crash by taking too much risk on things I didn't understand). During the lockdown boredom, like so many else, I double downed on properly correcting my investment mindset to be more automated & consistent vs emotional & fear/greed driven, and it has mostly worked out since. During last fall I discovered the FIRE subreddit and enjoyed lurking here and reading about everyone's FIRE journey immensely, I also realized that I somehow was living a lifestyle with high FIRE potential without knowing it:
Back in February, my stock broker account passed $1.6M, only to draw back to $1.35M, now it got back up & stayed steady for a couple of weeks between $1.4-1.5M. I have all my NW in stocks through the broker account, plus 401K, and company stocks. How did I reach this milestone? I had to do a bit forensics to understand the full picture myself, for the longest time I was really good at budgeting my spending and dedicated lots of energy on saving a dollar here and a dollar there, but I also had the tendency to feel anxiousness/dread around investing, hence I only mustered the energy to invest a couple of times a year, and not tracking those accounts too closely. (Note I netted out taxes from the below calculations in a spreadsheet for simplicity)
Overall $360K (~24%) from savings & $660K (~44%) from company stocks (which was worth less than $200K when granted, $450K were sold prematurely in 2019 but at least protected now by diversifying back into the market belatedly and $380 up to $480K (~27-32% due to market fluctuations) from investment returns. It is clear when I list it like this that the stock grants contribution has been immense, and once again I totally acknowledge the luck of being at the right place at the right time. I also try to frequently mentally prepare that if the market drops -30%, then all my investment gains would be wiped out and I try to be ok with it in order to avod Part III. The Future The answer to the ultimate question of Life, the Universe and Everything? 42! While $1.4M is already good enough for me to single-FIRE, I do hope to move into the next stage of life soon, which means forming a family with kids by around 40. Goal is to obtain a theoretical FIRE option at around $5M in a decade by my mid-40s, with a current annual spend rate of $40K for myself, I figure I need about $160K for a family of 4. 3.2% of $5M would return that $160K annually, the % also happens to fall right between the 4% rule and a more prudent 2.5% withdrawal rate. My hope and dream, which I look forward to track & update in this subreddit every few years, is to reach a FIRE milestone in ~7 years at 42, with a NW realistically hovering around $4M, after which I can either Coast-FIRE or Purpose-FIRE up until 50 (and beyond if it still feels meaningful). E.g., either coasting along within tech in a well-compensated role that is not too stressful and allows for quality time with family and plenty of vacation days for my remote escapades; or find a riskier & more intense challenge that also feels more purposeful than being a replaceable cog at big tech. I'll leave that decision to my future self to make, he will hopefully be wiser 😉 In the end, I leave you with this simple quote that I really enjoyed, found in a random newspaper column commentary section: "For happiness, three things are required. Something enjoyable to do. Someone to love who loves you back. Something to look forward to. " For me money is one of the tools & enabler of happiness, not one of the three "things" above/end goals in & by itself (easier said than done sometimes to uncouple self-worth from net-worth!). FIRE is a philosophy on how to obtain & maximize the use of money as a tool towards true fulfillment. I aim to check in here and write follow up posts every couple of years with updates on whether I have progressed further along with both my FIRE goal & happiness/life fulfillment goals. PS: please ask me anything, I'm happy to help! Note that I left out hometown, school & employer names to stay anonymous, I've not shared my NW with anyone except a rough number to my mum in real life [link] [comments]  |
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