Financial Independence Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - May 31, 2021 |
- Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - May 31, 2021
- Daily FI discussion thread - Monday, May 31, 2021
- 5 Year FIRE Journey as Engineer in the Midwest w/ 200K NW
- Why noone talks how focusing on staying healthy improves your chances at retiring early?
- Weekly FI Monday Milestone thread - May 31, 2021
- Selling covered calls covered calls once FIRE to supplemental income and SWR.
- Reducing debt to keep annual income low / reduce tax impacts
- Daily FI discussion thread - Sunday, May 30, 2021
- When to Deviate From Popular Rules of Thumb
- FOUR YEARS into early retirement from retail pharmacy
- Another $100k Invested Case Study
- Lifestyle Inflation Financial Independence
- Daily FI discussion thread - Saturday, May 29, 2021
| Posted: 31 May 2021 02:01 AM PDT Need help applying broader FIRE principles to your own situation? We're here for you! Post your detailed personal "case study" and ask as many questions as you like, or help others who've done the same. Not sure if your questions pertain? Post them anyway…you might be surprised. It'll be helpful to use our suggested format. Simply copy/paste/fill in/etc. But since everybody's situation is different, feel free to tailor your layout to your needs. -Introduce yourself -Age / Industry / Location -General goals -Target FIRE Age / Amount / Withdrawal Rate / Location -Educational background and plans -Career situation and plans -Current and future income breakdown, including one-time events -Budget breakdown -Asset breakdown, including home, cars, etc. -Debt breakdown -Health concerns -Family: current situation / future plans / special needs / elderly parents -Other info -Questions? [link] [comments]  |
| Daily FI discussion thread - Monday, May 31, 2021 Posted: 31 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]  |
| 5 Year FIRE Journey as Engineer in the Midwest w/ 200K NW Posted: 31 May 2021 10:23 AM PDT I would just like to share my entire journey as I tracked my entire financial journey religiously for the past 5 years. In addition, I would also like to share my background to give everyone the how my upbringing shaped me as a person regarding regarding the focus on finances and such. TL;DR: Born in China and immigrated to Canada when I was 5, where I lived for 12 years and then immigrated to US w/ my family and went to school for petroleum engineering. Graduated right at the crash of the oil industry, so went back for PhD in mechanical, but left early to work for a manufacturing company in the Midwest US by graduating with MS. 26 years old (turning 27 this October), single, in MCL in Midwest. I will list my income numbers, net worth by end of each year and job titles below. Annual Income / Net Worth / Job Title
What I learned throughout my journey:
My upbringing: I was born in China to a fairly upper middle class family. My dad was a Chemical Engineer and my mom was an accountant. However, my family thought that competition in China was way too fierce, so they decided to immigrate to Canada. (US at that time was too difficult) Even now, most students in China study about 6 hours/day outside of school starting from grade 1. He finished a PhD in Chemistry in Canada. During this time, we moved about every 3-4 years, basically every time my dad got a new job. During this time, my family was definitely poor. My dad's annual salary during the beginning was about $22,000 CAD for a family of three. All the money saved in China was still nothing compared to COL in Canada, so it was struggle. Basically, I grew up wearing patched up socks, not asking for any gifts. I still remember that for my birthday presents, I would ask to to go to a restaurant so that I could let my family have an excuse to spend some time to enjoy good food. It was really just a struggle until I went to HS, where I noticed that we were not renting anymore and lived in a condominium in the penthouse. Eventually, my dad moved to the US, since the competition in Canada was too fierce due to the constant influx of high skilled immigrants. He got a 40% raise, so my family later moved there with him after he built a house with a contractor. I went to the average state university in the town, since the better college that I did get accepted into costs about $20k more in tuition + I had to pay another $10k for room and board. I decided to live at home and save money. I didn't really have much of a life during university, since I studied full time and did chores at home to live for free. Fortunately, my family helped with tuition and paid about $22k, so that I would graduate with no debt. In addition, my parents gifted me a free car (worth about ~$12k) when I started grad school. Before everyone says wow, the agreement I have to 10% of my after-tax income until I have a family and then 3-5% indefinitely. For reference, I have already paid back $21k. Eventually, when I finished grad school, I moved out. Present: I now WFH since of Covid-19. I prefer a hybrid approach, since my commute is only ~20 minutes and the office was newly renovated just 3 years ago. I don't really spend a lot of money each month, since I am fairly frugal. The only major expenses that I recently did start is Betterhelp for Therapy. Once I formally join my company, I expect to find another therapist that could be covered by insurance, so I don't pay $288/month for it. I invest about 50% of my after-tax income now. I am also preparing to start a part-time MS in CS this fall, so hopefully that will go well. Current Monthly Budget Breakdown:
Job Progression: During college, I was not very good at applying to internships. Due to the oil crash post 2014, I could not get an internship. Therefore, I only worked a part-time job as a cashier in an home improvement store since it was the only job I could get at the time. When started grad school, I basically worked in an emissions research lab, which provided valuable experience. I managed to get a contract system engineer job right out of college. It had no benefits, vacations, but since I was only 23 at the time, I could still stay on my parents insurance. During this time, I worked 3 different positions in 3 years. I was a W2, so the company did pay the taxes. Eventually, my client in the large company suggested the idea of conversion and since I turned 26, I had to pay for insurance, which was fairly expensive for catastrophic short term plan. I used this to negotiate a raise, which I did receive in addition to benefits. The new company also offer tuition reimbursement, so that should also help me. Next Steps: I am hoping to finish the MS in CS in 5 years, since I don't think I can juggle more than one class/semester and workload. This is more of an insurance policy after getting burned in the O&G industry. Perhaps, it is also the time to spend more time finding a SO, but that is outside the scope of this post. Edit 2: Thank you everyone who gave me awards. [link] [comments]  |
| Why noone talks how focusing on staying healthy improves your chances at retiring early? Posted: 30 May 2021 02:55 PM PDT I mean a lot of people focus on cost-cutting, investing, focusing on career to increase your net worth faster. When people talk about cost-cutting they all usually focus on things like cars, vacations, clothes etc. I am just amazed that I almost never see anyone taking into consideration how much staying healthy can save and how having health problems can cost. It can be a number one expense for some people. I am 24M and I am still young and don't have that many health problems yet. But as I am growing up, I notice some of my friends having certain small health issues. I have an obese friend who has spend 10s of thousands on his health problems. 2 other friends, including me have recently had some teeth problems. I also have a friend with inherited heart illnesses and he had do a lot of treatments. Now when I think about it, these things can be very very expensive. I myself now had to spend a lot of money for my teeth treatments recently. It ate a bit of my net worth and it was my biggest expense over last 3 years. If I had taken more care of it I would have saved these costs. Now this applies to every part of our body (heart, lungs, brain, skin, general fitness etc.). I really think there is a strong correlation between Health + General Fitness AND Net Worth by Age correlation. [link] [comments]  |
| Weekly FI Monday Milestone thread - May 31, 2021 Posted: 31 May 2021 02:00 AM PDT Please use this thread to post your milestones, humblebrags and status updates 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! 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]  |
| Selling covered calls covered calls once FIRE to supplemental income and SWR. Posted: 30 May 2021 08:16 AM PDT I've been reflecting on this strategy over the weekend and was curious to get some feedback. Is selling covered calls in retirement a way to generate supplemental income and offset your SWR? In addition, it protects against some of the downside of a stagnant or declining market. I do understand it does cap the upside in a case your shares were to be called away. For a few examples I was looking at June 17th 2022 options for SPY and TSLA that expire in just over 1 year from now. SPY $420 and TSLA $625 at time of examples.
To expand using the first example, if I have 2,000 shares of SPY ($840k capital) I can generate $4,580 ($382/mo) by selling covered calls against it. Not a lot but not insignificant by any means. If the market decreases, stays flat, or increases less than 20%, I pocket the 0.5% premium and it helps offset any withdrawals I otherwise would have had to pull from principal. If the calls ever become in the money, the shares would have increased over 20% and net me $168k anyway. I included TSLA as many here (including myself), have found ourselves overweight in TSLA or similar stocks over the last year due to their performance. These obviously have much higher premiums due to volatility. I don't want to pay the cap gains taxes while still generating a high income, so my focus has turned to covered calls as a way to have some downside protection which led me to this post's line of thinking. There is obviously a ton more that goes into selling options, but wanted to get other's feedback that are much smarter than me or have tried out this strategy in retirement. Thanks! [link] [comments]  |
| Reducing debt to keep annual income low / reduce tax impacts Posted: 30 May 2021 06:29 PM PDT I see a lot of people post asking if they should pay off debt like a low rate mortgage etc and often people mention if the rate is very low (<4%), its better to keep the "cheap debt" as long as you can and invest it. I've subscribed to this myself for a long time and pushed any extra money into investments/qualified accounts. It occurred to me, the lower amount of income I need during retirement, the lower my taxation will be - especially when I have to use non-qual investments. So question I pose to our quorum of FIRE peeps, wouldn't it be better to drive out any debt like a mortgage/car loan etc to allow for significantly lower annual expense to mitigate tax impacts? Thus making "more" out of each penny long term since taxation is avoided or at lower levels? Love to hear what people think about this to help balance pro/cons etc. [link] [comments]  |
| Daily FI discussion thread - Sunday, May 30, 2021 Posted: 30 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]  |
| When to Deviate From Popular Rules of Thumb Posted: 31 May 2021 04:32 AM PDT So I've been seeing a few rules of thumb float around, some of them well backed and researched - but surely these rules have their limitations.
There are many reasons to possibly deviate from the above rules. Maybe you have a longer than average retirement, maybe you don't want to die with 0, already have a sizeable net worth, are starting very late with your savings... etc. Anyway, I tried to quantify the reasons for deviation in this spreadsheet. Pretty much functions as:
In the entered example, that person who wants to spend $10,000 a month during their 50-year retirement needs to be savings $8000 a month from now until retirement in 20 years starting from $0 in the portfolio right now. I'm curious to know what the limitations are of this approach. I primarily just used time-value of money calculations on sheets to find this. So obviously it's no Monte-Carlo simulation using historical market data, you just input your rate of return in a field, but I'm hoping for (a) advice on how to help my thinking of how much to save for retirement (b) this can help people contextualize rules of thumb to their specific circumstances. [link] [comments]  |
| FOUR YEARS into early retirement from retail pharmacy Posted: 28 May 2021 11:45 PM PDT FINANCES: I'm going to phone it in this year with the update. Check prior contributions to see more history if you don't know what this is about. Spending "budget" was $43,866 (based on 2% of net worth at EOY 2020). Actual spending was $47,384 but with $11,133 passive income (stimulus checks and ebay sales), withdrawal was only $36,251. Our estimated net worth went from $1,333,772 (year zero) to $1,471,164 (year one) to $1,488,092 (year two) to $2,010,995 (year three) to $2,534,758 (current). Huge bump in year three was from being pre-gifted an inheritance worth $200k. Huge bump in year four was from the massive explosion in local real estate prices and strong stock performance – both are up 30% this year. I'm basically 50/50 in VTSAX and real estate at the moment. I plan to make some moves into bonds and commodities to help mitigate asteroid risk. YEAR FOUR: I stayed at home a lot over the past year due to the pandemic and followed politics closely. Wife and I have been volunteering with the Cornell University nest watch and bird feeder watch programs. I got back into running but not racing (except helping to pace friends on their own races). I do about 90 miles per week @ 7:15/mi, staying tired but pain free. I cycled for a little bit but grew tired of it. I spend more time with my wife just sitting and talking on the porch while we watch the birds. Most of my non-fiction reading has been on natural selection (Darwin, Dawkins, Coyne, Gould, etc.) and quantum mechanics (Susskind, Friedman, Feynman, Einstein, etc.) My fiction reading has been heavy on classic sci-fi (Asimov, Verne, Herbert, Heinlein, etc.) I've spent a lot of time collecting vintage Nintendo stuff, especially Nintendo Power magazines (I'm searching for my last one – the newsstand variant of issue 152 if you have it!). As for gaming, Diablo II, Persona 5 Strikers, and Ghost of Tsushima took most of my time. I watched the new Cosmos season and re-watched the Marx Brothers filmography recently. I made my first ever trip to the ER due to a kidney stone (thought I was dying). Our dog had to be put down. She was the closest thing I'll ever have to a child. YEAR FIVE: I want to do less internet. I still want to learn to swim and move to triathlon. I want to volunteer more, listen to my multi-channel hi-res audio more, and make better use of my Criterion Channel subscription. We're definitely making up for lost traveling. Second trip to Hawaii combined with third trip to Japan should be as soon as Japan will let us in. I'll be picking up a Ford Transit Connect XL van (or something similar) soon for some cross-country driving, including a long-delayed three week trip thru California. I'd like to pick up some more acreage further out in the middle of nowhere and build an off-the-grid cabin with solar because the noise is starting to pick up with everyone moving to Middle TN. Just something simple to have as a getaway. I also see heavier philanthropy in the future if the market wants to stay this irrational. And yes, whatever the fuck I want. Ha ha. Okay, bye. [link] [comments]  |
| Another $100k Invested Case Study Posted: 29 May 2021 05:16 AM PDT Hello! I was inspired by the update on the front page yesterday, so thought I'd give this a go. I've been tracking my net worth since I started working in 2017 and thought I'd give a yearly breakdown of my income, spending, and investments. We all like to see case studies here. M, 26, SE-US in mid-COL area Timeline 2012 - Had a child as a teenager in high school. Started working minimum wage jobs before graduation and entered the local community college. My state guarantees first two years of CC. Knocked out gen eds for a BS degree. Living with parents with GF and son. 2014 - entered local university for Chemical Engineering. Must make money in short amount of time, figured this route would min-max that goal. GF has been working nearly full time, parents help out with son once in a while when schedules don't line up. Got interested in bitcoin, but didn't have money to risk. 2017 - Graduated college debt free due to scholarships and grants. Had been living on our own (scraping by, both working and parents would occasionally babysit) and qualified as independent during university. Had interned a few times for junk pay at a chemical plant, but made an impression on coworkers. I was hired on full time a month after graduation! Once I heard my salary, I vomited from excitement. On cloud 9. I vividly remember spending my first paycheck to get Ikea furniture. A bed frame, sheets, decorations, and desperately needed dressers. Spent $700! We were just used to being without, or asking for hand me downs. It was so empowering. Started my 401k with the match. NW - $6,000. EOY 1, June 2018 - Major workplace stressors. Main plant exploded and shutdown for repairs. Working on my own small projects at another plant, but uncertain whether I would be kept on staff as the youngest in the group. Got a dog before all this happened... With this in mind, I started researching how to be more secure financially, found Mr. Money Mustache and became totally inspired to make a plan. Followed a rough savings plan. Focused on a safety fund goal of $15k. That was tough, took almost a year. The work I had completed exceeded expectations, and I continued to take on more. GF continued to work as well, still part time. NW - ~$44,000. EOY 2 (electric boogaloo), June 2019 - Plant back online, assigned first real major project to manage at $3M. Still concerned about place in group, but company spending is high, and there's too much work to go around. New title as Project Engineer 1! Got another "exceeds expectations", continue to feel like a fuck up and stumble through the job, but they think I'm doing great! Married GF! Proud dad, son is growing up fast. Happy I get the chance to spend time with him. Surprise! We get custody of wife's preteen siblings. Apartment is getting small... NW - ~$68,500. EOY 3, June 2020 - Got any more fucking curveballs for me? Covid brought back job security concerns. Had gotten a bump up to Engineer 2 before lockdowns, I transitioned into a more desirable focus away from process engineering. Trying to manage projects remotely is tough, but not unthinkable. First major project is coming to a close, in budget, but behind schedule. I'm traveling all the time up until lockdowns. New boss takes over the group. Everyone expects an axeman. Then he axes someone. Happy days. One thing to note up til now, I've been scared to death about the job. My anxiety has been through the roof, ulcers, depression, began becoming complacent to work. Alcohol use went up. Some suicidal ideation. Even more desperate than ever to get out of the industry, maybe out of engineering. I still deal with all these feelings. Felt I was given too much responsibility to not fuck up if those way more experienced and way smarter can fuck up as bad as blowing a plant up. Unhappy with myself, unhappy with the job, just unhappy. It's taking a toll on my mental health and relationship. With all these feelings, I still felt a responsibility to make a comforting and nurturing home for all the kids. I bought a house to give them their own space. The kids are all just wonderful. I love them. We cook, we take small trips, we hike, we do what we can. We thought they'd eventually be back with their mom, but that is no longer an option. Opioids make people inhuman. Wife surprised everyone with a puppy. I really did not want to take care of a puppy and asked her to get rid of it. She did not. That little shit has been a nightmare, but now he's a protective family member. NW (gets a little funky due to home) - $290,000. Coming on EOY 4 - Where did the year go? Where is my mind? Investments broke $100k 🎉 and are downright booming Not much has changed. Assigned bigger projects. First dog died. More stress. Just tired. Very tired. Don't think I'll last another year here. I've applied and gotten offers at multiple places, but it just seemed like more of the same, so I stayed. Pay isn't much better elsewhere either. Asshole boss takes a liking to my work, gives multiple bonuses and raises. He begins to chill out some, not a bad guy. Probably had his own shit to deal with at the time. He did get us through a rough budgetary phase. Kids are happy, and I'm proud of them all. Wife is working full time while I work full time from home. Kids have been all online, which helped a lot. Laundry piles up, dishes, junk. But we persist. Over the last year wife and I fought a lot over covid, school, work. She didn't want to take major precautions like I proposed. I said things I shouldn't have. It caused a rift between us that hasn't healed completely. Some days we just avoid each other. It hurts. I still love her, but we just don't get along all the time. Maybe everyone goes through this after ten years together. Spending is up, it's almost become a coping mechanism, ick. Stopped drinking, no desire to start again. No drugs, except a major coffee habit. My reading habit has gone away. Last book I remember reading was East of Eden. I feel almost one dimensional without books. I used to write stories. Not anymore, though. I injured my back in the gym, which compounded the emotional turbulence the past year. Caused me to put on the most weight I've ever had. Vaccinated, so at least I can join the gym again. Every bit of my family survived covid and are vaccinated except for the loonies like my dad, but I'm thankful they're ok. I feel for those who lost family members in this difficult time. I'm majorly concerned over inflation and the institutions like Citadel and Morgan Stanley destroying the stock market for their own gain. I felt crypto could have been the solution, but it's just as susceptible to major players, so it's not the perfect response. NW - $381,000. Edit Forgot to mention, of course I have a goals and tracking spreadsheet! With the current investment portfolio, I am: 14% leanest-FI (projected LeanFI target $925k @ 4% with projected goal met at EOY 20 (2037) with assumed 7%YoY growth). 10.5% FI (projected target $1,085,000, 4% vs 7% growth, goal met in 2040). 6% FatFI (projected target $2,140,000, 4% vs 7% growth, goal met in 2047). 56% CoastFI (reach FI target in 25 years post reaching $200,000 invested compounded 7%). Well, there we have it. Tried to stay consistent. I don't really think I shared anything I wouldn't share if asked directly. We'll see what surprises we're in for next year! [link] [comments]  |
| Lifestyle Inflation Financial Independence Posted: 30 May 2021 07:21 AM PDT The flavor of FI I'd be chasing if I either were single or got my significant other on board is something I haven't heard of before, but makes a lot of sense to me. For convenience I'm going to call it Lifestyle Inflation Financial Independence, or LIFI. The setup is twofold. LIFI-1 starts looking similar to skinny FIRE, attempting to aggressively minimize costs and maximize savings, until reaching your (relatively low) number. The second step is to not retire, but instead transition to LIFI-2, where you give yourself permission to experience lifestyle inflation at the rate your safe withdrawal amount increases, not at the rate your income increases. In LIFI-2 you experience controlled lifestyle acceleration to whatever degree of Fat FIRE you want before fully retiring. Logistically, I would manage this by having 100% of income go directly into investments, and setting up periodic sells to fund expenses. In LIFI-1, the most important thing is that the sells are less than your income, the bigger the disparity the faster it will obviously grow. Once you arrive at your calculation of Skinny FIRE, you transition to LIFI-2. In LIFI-2, you control your own raises in living stipends, either automatically based on a safe withdrawal rate, or slower if you are satisfied with a lower rate of lifestyle inflation. This allows you to get financially independent as fast as possible, but without a permanent compromise to lifestyle. In LIFI-2 your income is entirely discretionary. You view your salary in terms of how much it increases your safe withdrawal rate per year instead of how much you can spend in a year, and you can opt out of receiving it whenever you get to a point where what you do to earn it isn't worth the increase it gives you. Because at this point you are financially independent, you can switch back and forth between LIFI-2 and FIRE whenever you want as well, either going back to work for a tempered boost (don't use the earned income directly to avoid developing a taste for an unsustainable lifestyle) or dabbling in other careers you wouldn't want to risk relying on. Is this something that already exists and I missed it? What are your thoughts on it? Edit: re: tax efficiency, use a cash equivalent buffer (such as a money market account 1-2x your self-stipend) to avoid inefficiently churning sales. I originally left this out to focus on the broader idea, the logistics are less interesting to me than the general LIFI idea, perhaps I should have cut that section entirely, but tax optimization is getting a lot of attention [link] [comments]  |
| Daily FI discussion thread - Saturday, May 29, 2021 Posted: 29 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]  |
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