Financial Independence Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - June 07, 2021 |
- Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice - June 07, 2021
- Daily FI discussion thread - Monday, June 07, 2021
- Can I afford this large one-off purchase?
- Military Couple: 3 years from FIRE Goal (Update)
- (36) Got a late start in life at 30 and more recently found FIRE. My backstory & journey so far to $1 million
- Weekly FI Monday Milestone thread - June 07, 2021
- Congress to hold hearing on FIRE
| Posted: 07 Jun 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, June 07, 2021 Posted: 07 Jun 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Can I afford this large one-off purchase? Posted: 07 Jun 2021 08:48 AM PDT Edit: Hey. So I've amended the image to more accurately say annual SAVINGS instead of annual salary, but the thumbnail on reddit isn't updating. I've also included interest cost for a more realistic excess spending. You can see the charts for recurring expenses and one-off expenses here. Something on this post got me thinking about what framework would be able to determine whether we could afford something. The post is meant to be light-hearted, but OP mentioned that at a net worth of $1 million, he would consider getting a Tesla. I got to wondering and created this 2-way table. In short, it tells you what the effect of a one-off purchase would be on your net worth in 20 years. It's a little interesting for me to see how inelastic your long-term net worth is if the purchase is either a very small portion of your annual savings, or if it's a very small portion of your invested assets. If something is 2% of your net invested assets, it doesn't really matter that it's 100x your annual savings. That's probably not that surprising, but for intersections in the middle, like an expense that's 50% of your current net worth and 50% of your current annual savings, the effect on future net worth is probably not as intuitive. Personally, I'm thinking that if a one-off purchase decreases your long-term net worth by less than 3% and is something you do very infrequently, then you can afford it. Any thoughts on that? I suppose if your investable assets are scheduled to be well above what you need for a livable 4% in 20 years, you can make a purchase that haircuts you a bit more. Edit: Got some good feedback and I'll edit to make it more realistic and take into account interest cost as one cannot simply buy something for 50x income and annual savings. Additionally, I added a second chart to the 2-way table link which instead of a one-off purchase, shows the effect of a recurring annual expense through a 20 year period. Interestingly enough, we can sort of see the 4% rule appearing here. If you go to the bottom row, a ratio of spending being 100x income is effectively no income at all, kind of like retirement. And we can see that as long as this spending is less than 6% of the individual's investable assets, they still have money left over (the difference in net worth is not worse than -100% which is presumably a wipeout). Granted, 6% is higher than the famed 4% SWR, but the period I looked at was for only 20 years and doesn't take into account the sequence of return risk. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Military Couple: 3 years from FIRE Goal (Update) Posted: 06 Jun 2021 06:52 PM PDT It's been a year so it's time for an update post as FIRE continues to get closer. I've met my initial goal net worth goal (originally $2m, currently at $2.47m). Now we just need to wait 3 more years until we're retirement eligible from the military. You can read previous annual updates here by clicking this link and then continuing to follow the previous links. I've been working towards FIRE for about 15 years and have been making progress updates on reddit for 5 years. For this year update, I shifted towards a focus on retirement projections instead of just saving. This really put a focus on trying to figure out what we want in retirement to answer the question as to whether all this planning will work out. The goal we've had is simple: maintain the same quality of life we've been enjoying, without having to go to work. The methodology I used was to look at our 2020 spending (slightly off due to COVID-19), then, consider whether each of our current expenses would remain in retirement, and if so, whether it would go up or down. I wanted to be conservative with my estimates, so we estimated on the high side if there was any doubt. Current Ages:
Income:
Savings: We max out our tax advantaged savings accounts (TSP and Roth IRAs). We're still eligible for Roth IRAs due to $58k our income being non-taxable housing/subsistence allowances and by maxing our traditional ($39k) TSP contributions and taking the standard deduction. We're adding approx $128k/yr to various savings/retirement accounts. Pretty much all saving stops after we FIRE. Current balances:
Life insurance: No changes. Expenses: Annual 2020 Expense breakdown.
Historical Actual Net Worth and Debt: Current Net Worth: $2.47m
Current Total Debt: $397k
Retirement plan: Military pensions are equal to 2.5% * yrs of service * high 3 base pay avg. So, 20 years = 50% of your base pay. Based on our expected rank at retirement, this would be $56.8k each. That is in today's money and since this is tied to inflation it'd be slightly higher and would continue to grow each year in retirement since increases are based on the employment cost index and then in retirement it's tied to the CPI. Assumptions:
Retirement income (pre-tax): $183,578.32/yr. I estimate we'd pay $31k in taxes (most places we're looking at don't tax military retirement income). Retirement income (post-tax): $152,370.01/yr We plan to sell both rental houses prior to retirement and net $534k in equity after fees/commissions. I'm using valuations from last year, not the inflated COVID-19 prices which may or may not last. The idea here was that we kept these houses a hedge against a housing bubble.. which seems to be working perfectly. Retirement house purchase scenario:
The biggest unknown we have is still not knowing where we want to buy a house and live. We've narrowed it down to a handful of states and have a house budget target of $400-700k. I overhauled my excel spreadsheet to easily make retirement projection calculations, so I can plug in house purchase prices, interest rates, taxes, insurance, etc., how much cash out I want. I also added projections based on my months to retirement for future contributions to our financial accounts. I've also considered using the VA loan benefit and not put anything down if rates stay super low and just invest all that rental house equity. One important consideration is getting the loan figured out prior to retirement. It seems mortgage lenders aren't as interested in lending money if you aren't working. My spouse will be working one year more than me and we should qualify on just that income. Worst case scenario we just buy a house outright and don't get a mortgage. Current Expenses (that carry over into retirement):
Additional Retirement Expenses:
Overall that's $152,370.01 income and $138,171.02 expenses for a cushion of an extra $1,183.25/mo. I'm pretty comfortable with that knowing my estimates are pretty conservative. Common questions:
tl;dr Net worth is now $2.47m. Plan is to retire in 3 years at the age of 43 with military pensions worth $113k/yr while using a 3.5% SWR to generate an additional $70k for a combined total of $183k/yr retirement income. [link] [comments]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 06 Jun 2021 04:10 PM PDT Hi everyone - I'm not to my FIRE number because of cost of living but well on my way now. This subreddit along with a couple others over the last year have been an amazing help! Single, 36, HCOL area (Seattle/Bellevue). Neither of my parents were very financially savvy or really instilled that in me. In my preteen days I grew up lower class, going to the food bank with my mom regularly to eat and we lived in an extended families basement. Later went to live with my dad and his new wife and was more lower-middle class. I got a "late start" in life by graduating with my Bachelors and getting my career/corporate job going at the age of 30. Worked retail for 10+ years before that and was more focused on living in the moment until I was in car accident at 24 that made me re-think what I was doing. Socializing, partying, drugs (not hardcore), spending what I made (which wasn't much) and saving just a little to a basic savings account. I was on disability from work for ~1 year and physical/occupational therapy for ~2 until I started my program at 26. My outlook changed drastically and I really wanted more out of life and to create goals and have ambitions. By crazy advice from a friend, I took the majority of money I had saved in my bank account (almost $10k) and put it into Amazon stock during my 1st year of school. I ended up getting a full scholarship during my 1st year as well but continued working my retail job to pay for living and avoid taking loans. Got a paid internship my senior year making more than my retail job which was awesome. $20 an hour! Secured another internship for the 2nd part of the year making similar. This company offered me a full time job at the end just months before graduation. Started at $48k + $5k bonus. After graduating and working almost 1 year, I was tired of commuting from Federal Way to Seattle/Bellevue. I also noticed the housing market was really picking up and read how that was a great investment vehicle. End of 2015, I cashed out my Amazon stock which provided me a down payment on my 1st condo thanks to it growing 500%+ over those years. Purchased that in downtown Bellevue and from then to now the property has doubled in value and less than 10 years left to be paid off. I was promoted 2x within the initial 3 years at my 1st company which helped me to save more and push money to my 401k which I had never had. In 2018 I had saved up enough and did a little more investing in single tech stocks to purchase a bigger home in Bellevue. Ended up getting a new construction townhome during the time of bidding frenzies in late 2018. From then to now the property has gone up in value 35%+ and that's being conservative based on my neighbor that just sold. Moved to another company beginning of 2019 and took a 80% increase in pay from my last position which has really put me in a better spot to keep saving. I don't work in big tech and am not a software engineer :) I have been renting out my downtown condo since purchasing my townhome and plan to keep that until at least 2023. It is located 2 blocks from an incoming light rail station at that time as well as a 1 million square foot Amazon building one block away full of tech workers that will highly likely increase costs in the area. As of late 2019 since not being in a relationship I have rented out 2 of the bedrooms in my townhome which has been great as a temporary extra couple $thousand per month in income to save/apply toward mortgage. Total net worth now = ~$1.03 million
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| Weekly FI Monday Milestone thread - June 07, 2021 Posted: 07 Jun 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]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Congress to hold hearing on FIRE Posted: 07 Jun 2021 04:17 PM PDT Here it is: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407958 I doubt this will be exactly about FIRE as we understand it but I thought it was pretty interesting the way they've framed it. I work in crypto government policy and have an avid interest in FIRE, so it's worlds colliding for me and I thought you'd all appreciate. [link] [comments]  |
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