Financial Independence Daily FI discussion thread - Sunday, October 31, 2021 |
- Daily FI discussion thread - Sunday, October 31, 2021
- I reworked my spreadsheet. Turns out I can't quite retire, but I can afford to only work 6-9 months out of the year.
- What are your mortgage choices AFTER you're FIRE?
- Time millionaires: meet the people pursuing the pleasure of leisure
- Using margin loan to fund retirement
- What to do with a sudden windfall?
- Is a Roth 401k rollover ladder possible?
- Philosophical questions: Are all Scandinavians FI?
- Home value net worth double counting
| Daily FI discussion thread - Sunday, October 31, 2021 Posted: 31 Oct 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: 31 Oct 2021 01:21 PM PDT 34M, $1.1MM in assets, HCOL City. $110k Salary Under the 4% rule, my monthly budget is $3600/mo. But my rent+utilites runs me $2,000/mo. A bit over half, and home ownership is a bit out of my price range. I'm unmarried, and have no kids, but am open to that someday. So a full on retirement right now would be a bit too lean for my taste. I spoke to my boss a few days ago and told him that I'd like the ability to take 3-6 months of unpaid time off a year moving forward. This would allow me to have the ability to enjoy life while I still have some youth left in me, and let me easily come back to a full time role if the marriage/kids lifestyle starts to happen. I do actually enjoy a lot of what my job has to offer, and having the flexibility to take a loooooong break after a project is completed would greatly help my work life balance. Currently when a project is finished and we're all exhausted....a new one comes in the next day and we have to go full steam ahead without any downtime. Gross. [link] [comments]  |
| What are your mortgage choices AFTER you're FIRE? Posted: 30 Oct 2021 05:42 PM PDT If you FIRE as a renter, and then later on in life decide that you may want to get a house, what options do you have for mortgage? From everything I've read it looks like almost nobody's going to give you any loans if you don't have actual income. Yet, I don't see this mentioned often or at all in this sub. Do people here know something about this situation? [link] [comments]  |
| Time millionaires: meet the people pursuing the pleasure of leisure Posted: 31 Oct 2021 04:38 PM PDT "The fact that we carry our offices around in our pockets has made being always 'on' a moral imperative," says Pang. As a result, leisure has become a dirty word. Any time we scrounge away from work is to be filled with efficient blasts of high-intensity exercise, or other improving activities, such as meditation or prepping nutritionally balanced meals. Our hobbies are monetised side hustles; our homes informal hotels; our cars are repurposed for ride-sharing apps. We holiday with the solemn purpose of returning recharged, ready for ever-more punishing overwork. Doing nothing – simply savouring the miracle of our existence in this world – is a luxury afforded only to the respectably retired, or children. [link] [comments]  |
| Using margin loan to fund retirement Posted: 30 Oct 2021 07:36 PM PDT I keep reading about how the wealthy use margin loans to not just buy expensive things but to fund their lifestyle. My understanding is if they take the loan and say it is 100k at 3%, they get that money and are paying monthly on that interest but their stocks should be averaging 7% so even though they used the 100k they are still making 4% on it after they used it. Is this correct? So how can this be maximized for plain old FIRE? Using the same 100k a year for traditional FIRE I would be looking at 2.5 mil. So if 25% is in brokerage 25% in Roth and 50% in traditional is utilizing margin feasible or is the value of the brokerage in this case not worth it because the value is so low? I guess to make sure this promotes furthering the fire discussion, at what point do you consider wealthy enough to be considering living from margin? I always consider 2.5 mil in the above example wealthy but is that not in relation to living off margin? Am I just wrong in my understanding of using margin? Also do you just never pay off these loans? [link] [comments]  |
| What to do with a sudden windfall? Posted: 31 Oct 2021 04:12 PM PDT Hello fellow FI people, I'd like your advice on behalf of a former roommate and friend of mine. He is a minimum wage restaurant worker, a real hard worker, but survives thanks to SNAP and other benefits programs now. I know that he lives month-to-month and has no extra cash. He has suddenly inherited $88,000 and wants to make a plan of how to use it to gain financial independence and a good investment payout. He knows he still has to work for a while while it builds in value. And he knows the danger of it drizzling away, especially living in NYC, so does not want it to sit in any easily accessed account. He asked me for advice because he knows all about our FI strategy, and I want to run it by all of you because my priorities and privileges are very different from his and I want to do right by him. What I immediately suggested was to retain ~$5k in cash for small pleasures and emergencies this year, for example he is going to install a washer dryer. 40k to invest in the S&P or whatever the right diversified portfolio should be (I don't know about the market at all so I'm telling him to ask someone else about that) and 40k to invest in real estate. Which, he could do what I did and buy a big apartment in a cheap neighborhood and get roommates in to pay his rent & maintenance, and just enjoy the rising real estate values. He could put down 20% and still have budget for small upgrades & repairs in a Bronx neighborhood like mine, and it would still appreciate in value. (Or, he could do as I did again with the savings from the first apt and buy a duplex for 3% down and live in the basement, collect rents from the top 2, use the profits for emergencies and enjoy the increase in equity over time. Which is higher risk, higher reward, but I have a better capacity to handle that than he does.) If you were standing in my position to advise my friend, what would you say to him? [link] [comments]  |
| Is a Roth 401k rollover ladder possible? Posted: 31 Oct 2021 03:59 PM PDT Hi. Lots of people here probably know about Roth IRA conversion ladders, but I haven't seen anyone discuss I have never seen anyone discuss options for people with a Roth 401k. I have 100k in my company Roth 401k. I recently quit and started a new job. Does it make sense to leave the Roth 401k where it is (Fidelity) and let it continue to grow as a 401k, and wait to roll it over into my Roth IRA? Say I want to retire in 15 years at age 50. In 10 years would I be able to create a Roth IRA rollover ladder? Similar to a Roth IRA conversion ladder except it is a rollover since the funds are already Roth. Any advice on the topic would be greatly appreciated! [link] [comments]  |
| Philosophical questions: Are all Scandinavians FI? Posted: 31 Oct 2021 01:35 PM PDT In Scandinavian countries, there are generous benefits, even for those who do not work. For example, in Denmark individuals who can't (or won't) support themselves get 11.698 DKK/month in cash (1,818 USD). In addition, they can get a housing subsidy, which varies depending on the type of housing and situation. Of course health insurance is covered by the state. Copenhagen has really high prices, but there are many parts of Denmark outside of Copenhagen with lower COL. Does this mean that every Dane is FI at birth? [link] [comments]  |
| Home value net worth double counting Posted: 31 Oct 2021 01:42 PM PDT Summary: If you count your home equity in your net worth, you should also add imputed rent to your spending estimate. The question sometimes comes up of whether to include the value of your home (net the remaining mortgage) in your net worth calculation. It makes sense to do so, as it is indeed part of your net worth. But be careful when then calculating your withdrawal rate using that net worth number, because accessing the wealth in your home has costs. Namely, the imputed rent: if you sell your house, you then will need to pay rent somewhere else. (Or you can use a reverse mortgage or home equity line of credit, which also incur costs.) Say your net worth is $1M, with $200k of that being your paid off house. You anticipate spending 4% of your net worth ($40k) annually in retirement. The home equity portion of your net worth is generating $8000 of the $40k spending. But in the case that you want to start spending some of that $200k, you'd sell your home and need to rent instead. Rent might cost $6-12k annually, so you should add that expected cost to your retirement spending. So I'd either not include my home value in my net worth when I calculate my investment income (and use my current spending as a metric) or count my home value, but add expected rent to my spending expectations. [link] [comments]  |
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