Financial Independence Daily FI discussion thread - Thursday, September 09, 2021 |
- Daily FI discussion thread - Thursday, September 09, 2021
- My Journey to $1,000,000 Net worth on Household income range $47k to $123k over 14 years, 36 years old.
- Don't try to dissuade others from using "financial advisors." It's a waste of time.
- Those of you that moved to a high cost of living area, was it worth it?
- Published research also shows that you should get off my lawn
| Daily FI discussion thread - Thursday, September 09, 2021 Posted: 09 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]  |
| Posted: 09 Sep 2021 11:34 AM PDT Having just passed the huge millionaire net worth milestone I figured I'd share my journey to date, even though there's been several of these lately. Everyone's journey is unique. Simple Net Worth Graph HERE. Stacked category Net Worth Graph HERE. (PERSI is the state public employees pension and 401k fund.) Spending per month since married in 2015 graph HERE. 2007 I graduate from college at 22 years old with a civil engineering degree with $23k in student loans, and get a dream job working for a local government in a small town with wilderness around in idaho. I'm so lucky to have landed a stable job prior to 2008 crash, and that really set me up on a successful trajectory (Lucky Life Event #1). I start investing a lot of money into my 401k right away, knowing that I want to retire a millionaire at an early age and understanding the power of compound interest. 2008 I get married. We mostly kept our finances separate because she was still in school 3 hours away, so there's no changes reflected in my graphs because of this. 2009 Wife finished school and moves up to be with me, working odd jobs. Having saved up for a down payment on some empty property, and with the market prices at rock bottom, we take advantage of the first time home buyers tax credit ($8k the following year) to get 5 acres of forest for $35k and develop it into a livable parcel with a used single-wide manufactured home, the idea being that we can live in that while we work towards building a real house on the property. Total spent around $110,000 for property, manufactured home, utilities, driveway, permits, etc. 2010 My wife leaves in December suddenly after an incident and moves in with a family friend in another state. Mental illness playing a big role in her leaving. The details don't matter in the realm of this discussion but I'm emotionally and mentally devastated. 2011 Worst year of my life, trying to support a mentally struggling wife who is not living with me, she attempts suicide, cheats repeatedly, ends up in mental hospital, etc. I get cut back to part time employment because of changing political priorities and reduce my retirement savings down to minimums to continue making debt payments and never default. I get a roommate to help make ends meet. My food budget was $1 per meal. My dog gets hit by a car and killed. My other dog disappears into the woods and never returns. My old self-restored sports car, which is my biggest passion, is the victim of a hit and run and totalled. I hit a deer on my motorcycle and crash and it's totalled. The hits just keep on coming. Through all of this, I just keep telling myself that you can't keep a good dog down, and that I will overcome and come through this, and I do. The one good thing to come out of the year was that I passed my Professional Engineer exam and was now a PE instead of an EIT (engineer in training). No raise given, on account of them cutting me to part time instead. D'oh! 2012 I find a new job, in the same city, doing roughly the same thing (civil engineering for local government), for the same money I was making before being cut to part time. I finalize a divorce and keep the house that I've been making all the payments on the entire time. I don't go back to full on retirement savings, because I have some catching up to do on other necessities. 2013 Meet a new girl and start dating. She doesnt want kids, which opens me up to the DINK possibility for the first time in my life, which I'd never really considered prior to this. I just expected that every girl wanted kids and had never really asked myself if I did. Turns out, no, I didn't really want kids and I recognized all the signs once I looked for them. I Realize that my pickup truck is worth what I still owe on my student loans, and decide to sell the truck and payoff my loans in a lump sum. Go back to saving a lot towards retirement. 2014 Get engaged. Buy a house together a couple months before our wedding for $160k with a huge gift of $30k from her parents to use as a down payment. Her parents had received $60k from their parents in 1980ish to buy their first home, and they wanted to pay it forward by giving $30k to each of their 2 kids buying their first homes. This very generous gift was another huge lucky perk (#2) that helped us get a jump start, and I recognize how rare and valuable that gift was. Without it, we'd just be staying in my current place. Instead, I now sell my manufactured home and the 5 acres it sits on for $116k, getting about $40k of equity out of it. Get myself a new sports car, Subaru STI, largely financed... :/ 2015 Get married (small vertical jump on the net worth graph through combining the finances at this point). She also worked for a public entity and has pension and 401k through the same system as me, but has not been focused on accumulating wealth and so brings very little net worth into the marriage, but is very frugal and excited to start the FIRE journey with me. She's making $25k/year gross and I'm at $55k still. We go to Thailand for our honeymoon (the first big spending spike on our spending graph). 2016 Thankfully, just a normal year. Phew! 2017 Get the first real raise of my career up to $67k after nearly a decade of static wages and put all of it towards retirement savings. Surprise wife with self drive safari trip to Africa as a birthday present (already saved cash for that, not because of the raise). It was about this time that I learned about the FIRE movement, even though I'd been living many of the principles on my own. 2018 Vacation to Vietnam. Get another raise when I demonstrate to a new boss that I'm still woefully behind the market pay for civil engineers in government roles and put all of it towards retirement savings. 2019 Wife decides she wants to pursue a career change into working with data and enrolls in an online degree program. We cash flow tuition this time by reducing spending and slightly reducing retirement savings. She also switches employers (still public entity) and get a small bump in pay. Sports car is paid off finally. Now debt free except for mortgage. 2020 Ugh, school sucks. Can't wait for this to be over and get my wife back. Just in the boring middle as far as finances go. 2021 We decide to go gangbusters on the remaining $40k owed on our mortgage with the goal of paying off the house by Christmas to be totally debt free and secure in a paid off home. As of today, we owe $9k on the mortgage still, on track to accomplish that goal. The house value in this crazy hot real estate market in our area has risen from the $160k that we bought it for 7 years ago to $420k+ according to Redfin and $580k according to Zillow. (I'm using Redfin in these numbers). My wife finished school. Hooray! She also gets promoted with at her current employer for a $10k/year bump (not school related), and I get another raise as well when I demonstrate to my boss yet again that my wages are falling behind the market, bringing our household income to $123k, up from $89k in 2018. Most of the raise money goes toward retirement savings, with some going towards our mortgage gangbuster payments. Wife searching for a new entry level job to get her started in a data related career and capitalize on that new 2nd bachelors degree. As of September 2021, we finally crossed the million dollar net worth line that we've been skyrocketing towards, with $538k invested in various tax advantaged retirement accounts, including the value of our pension fund, which is considerable. A few years ago I didn't expect to cross this line until around 44 years old based on my projections, but the crazy market growth has accelerated that timeline, as many of you have experienced yourselves. Near term plans: pay off the house and use the freed up income to catch up on some deferred home maintenance, start replacing some vehicles, taking vacations again. After a few years of that, dumping most of what was going towards the mortgage towards retirement savings. Long term plans: Retire around 50 years old. Our FIRE number is $1.6M. At the very worst case scenario, I'll hit my rule of 90 at 56 years old and be able to start drawing a full pension at that time. I expect we'd be FAT FIRE if we worked until then, but there are never any market guarantees. I hope that helps to inspire someone in their own journey. There are ups and downs, luck and bad luck. Keep moving forward! It often feels so slow in the day to day growth but when you look back a few years at how far you've come, it's truly amazing! [link] [comments]  |
| Don't try to dissuade others from using "financial advisors." It's a waste of time. Posted: 09 Sep 2021 10:52 AM PDT This is a bit of a rant and advice for other people on the FI journey. I think it's worth sharing and discussing in this forum because we educate ourselves on investing and index funds, and naturally many of us want to talk about these subjects with others. I've had several people in recent years ask me for advice on how to invest. Inevitably, these people are using firms like Edward Jones or even smaller, no-name advisors who are friends of a friend. I've reviewed these accounts at their request and found the same things over and over: fees as high as 5%, front-loaded fees, and constant shifting of money from one "opportunity" to another to increase the number of transaction fees. And you know what else I've found? Educating these people is an utter waste of time. You can calculate and show them how much money they've paid in fees over the last several years. You can pull up PDFs of the prospectus and fee structures of VTSAX against whatever BS fund they're in. You can show how much of their money is taken before they even make a penny in returns. It. does. not. matter. Friends and family members, once in the clutches of a "financial advisor," have never changed or taken charge of their own finances, in my experience. These financial product salesmen use every tool at their disposal to keep customers in fear and confusion about how markets work. They make investing seem complicated in order to dissuade your loved ones from making the best choices. It is exhausting to combat this. I just got off the phone with a family member who called me for my opinion on "a new product" recommended by their financial advisor. When I recommended against it, they started listing all the reasons why it would be a good idea. It was not a good conversation. So please, learn from my example, and don't offer financial advice to loved ones. In the future, I should just have a ready response to politely shut down these types of conversations. Has anyone else experienced this, and what would you recommend? [link] [comments]  |
| Those of you that moved to a high cost of living area, was it worth it? Posted: 08 Sep 2021 08:16 PM PDT I ask because it seems a ton of people move either from one expensive city to another, or from a lower cost of living area to a higher one. I understand for certain tech/corporate/high finance/specialty careers it can definitely be worth it, if you're raking in the big bucks. Like if someone moved to the Bay Area for a six figure tech consulting job. But it also seems like people move to a big city because there's lots of things to do and see, and in their minds, it's easier to meet people. Those of you who moved to an expensive city, do you actually spend time at all of the attractions/entertainment activities/restaurants? Or are you doing everyday stuff like grabbing coffee or tea, going to the local park, walking the nearby hiking trail, etc, that can be done in even a smaller to mid sized city that's likely cheaper than where you are at. Is the job market significantly better where you are living? Do you feel you need to live where you are to meet people/make friends/date/settle down? [link] [comments]  |
| Published research also shows that you should get off my lawn Posted: 09 Sep 2021 03:27 PM PDT Now when people will ask you "Won't you get bored with all that free time?", they will have a research paper to cite https://www.apa.org/news/press/releases/2021/09/too-much-free-time [link] [comments]  |
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