Financial Independence Daily FI discussion thread - Thursday, September 16, 2021 |
- Daily FI discussion thread - Thursday, September 16, 2021
- Pulled the trigger yesterday. Early 40’s, gave notice at my dream job
- FI and Involuntary Retirement
- FI As a Tool to Build a Lifestyle
- Bill to Eliminate ETF Tax Advantages Could Affect Investors at Any Income Level
| Daily FI discussion thread - Thursday, September 16, 2021 Posted: 16 Sep 2021 02:02 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]  |
| Pulled the trigger yesterday. Early 40’s, gave notice at my dream job Posted: 15 Sep 2021 10:56 PM PDT I've been mostly happily employed in a field that really suits me for 19 years. I make 50k. I get to go outside, do interesting projects and have light supervision. But the budget has been increasingly tightened. I can't hire and retain adequate staff and most importantly I have regularly worked 50 hours and occasionally 80+. Work demands are weirdly flexible. Go home at 3? No problem. Something breaks- 24 hour shift, mandatory. Lots of weekends. But doing things I like. Yesterday I gave notice to my employer. 30 days notice but I have 6 months of vacation in the bank. So I might work 5 more days total. My real estate portfolio cash flows enough to cover my expenses and my partner makes a whole lot more than me making my w2 income pretty meaningless. That 1099 income probably won't continue too much longer, but it doesn't need to. She is a top producing agent, but I really don't think fat city can continue forever. She is tracking for 10mm in sales this year. I am heavily involved in her business and more help should easily cover my salary by boosting sales. It really boils down to time. I don't want to have the job with fixed obligations. My job had the lowest return on time. Age lower 40s Annual household spend: 60k Minimum spend: 35k Public Pension at 65: 20k annually Social security: unknown bonus Kids: 3 College funds: as loaded as I want them to be. 401k: zero (partner has significant 401) IRA: nearly zero Real estate portfolio: 1.7 million equity, shared. Rental Cash flow: 60k Cash: 200k (used as a house flip fund) Home equity- not really relevant. other investments: 10k crypto, 10k brokerage, some beanie babies and 1 gold coin. It isn't really traditional. I know some of you would argue it isn't 'real' retirement if I still manage rentals. But I don't care. I'll flip an occasional house for the next 5 years and make my withdrawal rate zero. I'll actually contribute to retirement accounts now and build a more traditional portfolio since the pension is not an option. If the market holds we will probably start divesting property and lean into index funds more. If not we will weather one more cycle. How will I spend my time: Spend 20 hours a week plus with kids and partner plus … September: move into new house, prep old house for rental. October: 6 day raft trip, Vegas trip, start kitchen remodel, kids' first hunting trip. November: 12 day Mexico vacation, finish flip #1 (mostly contractors) December-January flip house #2 Jan-March. Ski 2x a week March-June coach soccer, kayak, fish. Find flip #3. Summer 2022: raft, run, backpack, climb. Find a fall flip. Short term outdoor goals: climb pingora, 10 day backpacking trip, fill freezer with elk, back in marathon shape. Medium term outdoor goals: PCT or CDT, kayak Grand Canyon, big Alaska hunt, maybe archery. Short term financial: flips fund life. Savings rate stays above 80%. Another year of 10mm sales. Build the moat. Medium financial goals: Reduce property exposure by half. Give each kid a duplex. Outsource management. 2mm index funds. Go fully passive. So yeah, I cheated. Partner makes bank. But largely because of the business we built. Extra clarity edit: Not married, but close enough for us. Not the suggested legal arrangement for safety, but We are happy. We spend 60k She makes 200+ as a real estate agent. She contributes 60k to the household account. She keeps the rest for taxes and her personal retirement accounts. Up to this point I have contributed significantly to her agent endeavors and counted the household contribution as adequate compensation. But going forward I am somewhat likely to draw a salary from her agent llc, and some from our rental llc. This would allow me access to 401k and employer contributions to help the tax situation. I make 60k flipping houses part time. it goes to the household account, I pay the taxes out of my salary. The rental cash flow is also about 60k. We haven't been spending it. Just paying down mortgages to de-lever. And until the last couple years that was the source of down payments. This is newly available money. Things were tight during expansion. We put the extra 60k into a flip fund or pay down mortgages if we have enough. The flip fund finally has about what we need, freeing up significant money. 'Finishing' expansion of the portfolio and declaring the flip fund full is what frees up the money for me to end my salaries w2 job. Yes she makes amazing money, and I am very fortunate to have access to a good chunk of it. But if it dries up tomorrow we are still covered for household expenses in 2 other ways. Flips and cash flow. But these investments are HIGHLY CORRELATED RISKS. So we are still stacking money away in more traditional ways. Cash flow rises every month. For the next 30 years will will add about 500 a month to cash flow every year via mortgage pay down/ pay off. The business is built to be increasingly lucrative, allowing it to go more passive. Her income is stored away out of my reach. I'm sure she would bail me out if things got rough, but I have no intention of needing it. It is just another layer of security for her as she is super risk averse. I'd have her mostly retire in about 2 years if I had my choice. She is younger than me though and has a very long retirement to look forward to. The actuarial tables say 46 years! It was hard to convince her to lever up. The mortgages still freak her out. So her having a nice personal cushion is totally fine with me. From my point of view there is plenty of money. I want for nothing. So I have no reason to further lean on her income. She works hard. She deserves it. She can stack another million if she wants. I don't need or want it. But it is nice to know it is there! [link] [comments]  |
| Posted: 16 Sep 2021 07:57 AM PDT I found myself accidentally FIRE'ing in my mid 50s after my (previously very good) work situation deteriorated. I've become aware that involuntary retirement, or being forced into worse job fit or less pay, is quite common (TLDR: More than half of older U.S. workers are pushed out of longtime jobs before they choose to retire, suffering financial damage that is often irreversible). In my case, being at the tail end of a FIRE trajectory provided a cushion that protected me from a potentially unpleasant scramble. Are some of you using FIRE planning as a hedge against involuntary job downturns? It seems this might well be an important selling point for the approach, even for those who love their jobs and want to keep at them for a long time. [link] [comments]  |
| FI As a Tool to Build a Lifestyle Posted: 16 Sep 2021 11:25 AM PDT Over the past year, I have made a series of choices that have been largely enabled by the amount I have saved and invested; all of these choices will ultimately push back any feasible FIRE date, but my thinking at this point is that the tradeoff is worth it. I'm sharing this because I've realized that a big part of the value of the FIRE mentality is not only early retirement per se, but also simply being able to buy yourself options well in advance of retirement. I work in a field that pays decently but not particularly well relative to many FIRE-optimal occupations. Just a normal middle class salary. I have for many years had little passion for it and find it alienating; the thought of being tied to this industry for the rest of my life makes me depressed, but it's the only professional experience I have. On the plus side, financially speaking, several years ago I was fortunate enough to receive a windfall from a one-off event in my work. I've always been an instinctive saver, long before I encountered the concept of FIRE, but this was a big jump in net worth. Nothing like a multi-million dollar tech exit, but a few hundred thousand dollars—a big chunk by normal person standards, certainly mine. It also came with a massively increased salary which allowed an aggressive savings rate. The higher salary didn't change my underlying dissatisfaction. But the golden handcuff psychology is real, so I stuck it out for a while. It was a unique and non-replicable situation and I knew I'd never make that kind of money again. But the pandemic threw things into relief, I think. Eventually I decided to quit and move to a new place I've wanted to live in for a long time. It's VHCOL, but so is everywhere else I've lived during my career, so that feels basically normal. I knew I could get by for a while without needing to worry about work. I wasn't at a FIRE-ready NW for VHCOL, but certainly there were no immediate concerns if I didn't earn for a while. There's no way I would have had the confidence for any element of this (quitting, moving, no job lined up) without intentionally saving for many years and having a big chunk invested. Obviously the windfall helped, but and I'm aware of how fortunate that was, but the more fundamental thing was the long-term saving and compounding. Eventually I did find a new job, but (again, due to that level of confidence) I was able to negotiate a flexible reduced work schedule for a lower salary. It's incredible what a difference it makes. I'm now never more than two days away from a day off, and psychologically that's huge. Yes, honestly, I'd rather not have to work in this field at all. And I'm making a fraction of the salary I was making before. But now I'm at least doing this job while physically in a place I love, rather than a place I have to be; and it's consuming a much smaller amount of my life. I can use the rest of my time on speculative projects or simply doing things I enjoy. If I had waited for a "real" FIRE, I could have gotten there sooner than I will now. But I would have spent all of those intervening years in a place I didn't particularly value, devoting much more of my time and energy to something my heart wasn't in. I'm sure this particular route isn't right for everyone. But I'm increasingly confident it's right for me. Basically, the thing I want to get across is that there might be ways you can leverage the security and confidence afforded by even an incomplete FIRE NW, to help build a lifestyle that will increase your overall satisfaction with your life, even in advance of full FIRE. [link] [comments]  |
| Bill to Eliminate ETF Tax Advantages Could Affect Investors at Any Income Level Posted: 16 Sep 2021 03:13 PM PDT https://www.ft.com/content/61b34fb9-f0a3-44de-9ab6-4cc417c19382 As part of the $3.5 Trillion budget package, one of the provisions is to require ETFs to pass on capital gains in the same way mutual funds are required to. How this could affect FIRE plans:
ETFs with high turnover will be affected more than ETFs with low turnover. However, even passive ETFs like VOO still experience turnover as the S&P500 index changes, and the fund grows/shrinks. [link] [comments]  |
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