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Chadzok
Apr 25, 2002

Ugly, greasy retard.

So a bunch of wussies in some other thread were daring each other to make this thread, and I beat them to it.

This thread is about Financial Independence, early retirement, or whatever else you like to call it.
The basic principle, as espoused by such blogs as Mr. Money Moustache and Early Retirement Extreme is that saving/investing a huge percentage of your yearly income will eventually gain you yearly returns large enough to live off.

A simple example may be this: say you earn $100,000 a year, but only really need to live off $30,000 a year, you can invest $70,000 per year at a 7% return, and a crude calculation approximates retirement (ie, yearly returns of $30,000) in... 6.1 years.

Can it be this easy?
No. Firstly, this simple calculation doesn't take into account taxes, inflation, where the hell do you get a consistent 7% return, withdrawal rate post-retirement and a thousand other problems. But the basic idea should be very interesting to anyone with a decent income, half a brain, and the desire for more free time. Calculators that you may find interesting are FireCalc and maybe this one. See also a great blog post by Mr. Money Moustache entitled "The Shockingly Simple Math Behind Early Retirement"

To be honest, I have a broader interpretation of the concept of financial independence than the blogs I've mentioned, perhaps owing to my current circumstances. I've got a side gig in addition to my full-time job which just so happens to earn me 2-3 times as much (in a few days per month). I'm interested in similar income 'hacks', self-employment opportunities etc and I see some crossover between this thread and the housebuying thread, passive income junkies (blogs for bucks) thread, etc.

I think what this thread might be useful for is outlining our financial projections/aspirations and getting some feedback, as well as general investment and business advice targeted towards generating passive incomes or significantly less time-consuming incomes than full-time employment.

To kick it off, my current dilemma is how long I should stay in my full-time job, which earns me about 1/3 of my total income, when I could be earning 2/3 of my current total from 5 days of work per month. The job is related to the side business and helps with my profit margins and I learn mechanical skills which do come in handy on occasion, plus I can reach my financial aspirations sooner - of course I could also look for a higher paying job in the same field, but it may not come with the same benefits. But then again.. not having to work ALL WEEK, would free up a lot of time to pursue other potential income streams.

Also I'm starting to build up my savings which I really need to start investing at higher long-term returns. I'm sitting on $50,000 at the moment though it's always going up. Part of it is locked away in government co-contribution schemes getting me some nice 21-22% returns on small deposits and savings returns are pretty decent at the moment in Australia (hovering around 4.5 - 5%) but if anyone has go-to investments that are reliable, give me a shout-out as I'm a total noob at this stuff.

More info - I'm currently savings about %153 of my full-time income per year owing to the side gig.. but probably about %50 of my total income. I could definitely be more frugal and I have a partner who could also be contributing (she currently doesn't work owing, again, to the side gig which she helps out on) but I'm happy with my savings (managing to keep at $1300 per week). If I WAS to stay in my job, and managed to bump my average returns up to 7%, I reckon I could safely knock the job off in 5-7 years, possibly much sooner considering I'm happy to continue the side-gig indefinitely.

I'd love to hear where other people are at with this, whether you're further down the road, prepping by clearing debt or you've already moved to Florida.
Go!

Chadzok fucked around with this message at Jul 17, 2013 around 13:15

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enraged_camel
Jul 4, 2007
Can't make ends meet in the US? Move to Australia! If you need to ask about things such as "economic feasibility" and "logistics" you're just lazy and entitled and better looking than I am

Chadzok posted:

So a bunch of wussies in some other thread were daring each other to make this thread, and I beat them to it.



quote:

To kick it off, my current dilemma is how long I should stay in my full-time job, which earns me about 1/3 of my total income, when I could be earning 2/3 of my current total from 5 days of work per month. The job is related to the side business and helps with my profit margins and I learn mechanical skills which do come in handy on occasion, plus I can reach my financial aspirations sooner - of course I could also look for a higher paying job in the same field, but it may not come with the same benefits. But then again.. not having to work ALL WEEK, would free up a lot of time to pursue other potential income streams.

It's hard to say without knowing exactly what the main job and the side job is and how exactly they are related. You say the main job is helps with profit margins - what do you mean? Could you quit it and still have the same level of income from the side job?

Honestly, if the side job earns you 2/3 of your total income in just 5 days of work per month, in reality it makes up a much higher percentage of your total income than 2/3. Then again the way you explain it is kind of unclear.

Sundae
Dec 1, 2005

Wheeeeeee!

Chadzok posted:

To kick it off, my current dilemma is how long I should stay in my full-time job, which earns me about 1/3 of my total income, when I could be earning 2/3 of my current total from 5 days of work per month. The job is related to the side business and helps with my profit margins and I learn mechanical skills which do come in handy on occasion, plus I can reach my financial aspirations sooner - of course I could also look for a higher paying job in the same field, but it may not come with the same benefits. But then again.. not having to work ALL WEEK, would free up a lot of time to pursue other potential income streams.

Two other questions about your side job:

#1 - Is it reliable income? As in, can you guarantee there will be five days of work in every month if you choose to pursue it?

#2 - If you so chose, could you work more than five days per month on your side job? (Or is it limited by necessity?)

#3 - This might work out better for you as an Australian than it would for those of us in the USA, but are your health concerns (present and future) still covered in the event that you fail to retain the primary day job? (AKA will you get hosed by lack of insurance, cost of private insurance, etc?)

If the answer to all three of those is yes, I'd be on the side-job in a heartbeat and trying to turn it into the primary job to massively multiply the income relative to your current job.

Chadzok
Apr 25, 2002

Ugly, greasy retard.

enraged_camel posted:

It's hard to say without knowing exactly what the main job and the side job is and how exactly they are related. You say the main job is helps with profit margins - what do you mean? Could you quit it and still have the same level of income from the side job?

Honestly, if the side job earns you 2/3 of your total income in just 5 days of work per month, in reality it makes up a much higher percentage of your total income than 2/3. Then again the way you explain it is kind of unclear.

I'm a coffee professional, fix machines, deliver coffee and generally hang out at cafes all week drinking mad ristrettos. The side job is a markets-based coffee stall. I get cheap(er) stock (eg coffee/chocolate etc) from my company, and I can use the company vehicle so I can essentially cut out vehicular expenses while I'm working there. The markets are on the weekends (5 days a month). I'm unsure exactly how leaving the job would affect my stall profits - it would definitely impact it but I'd still be making plenty of money. I'm currently in month 3 of a year-long process tracking incomings/outgoings to figure out exactly what the side business makes and costs.

Sundae posted:

Two other questions about your side job:

#1 - Is it reliable income? As in, can you guarantee there will be five days of work in every month if you choose to pursue it?

#2 - If you so chose, could you work more than five days per month on your side job? (Or is it limited by necessity?)

#3 - This might work out better for you as an Australian than it would for those of us in the USA, but are your health concerns (present and future) still covered in the event that you fail to retain the primary day job? (AKA will you get hosed by lack of insurance, cost of private insurance, etc?)

If the answer to all three of those is yes, I'd be on the side-job in a heartbeat and trying to turn it into the primary job to massively multiply the income relative to your current job.

Hmm..
1) Yes, it's reliable, although it is weather dependent. I tend to plan by 'averaged' earnings which take into account terrible days and abnormally good days.
2) Yes. I could also do larger/longer festivals with potentially higher earnings (although more risk) which I can't currently due to employment.
3) I don't currently have private health insurance and my job provides no benefit in this respect other than increasing income in order to afford it more easily.

I've definitely considered expanding the stalls to other markets/festivals. I know some people that treat it like a job and go to five markets a week. God knows how much they're making.
It's much harder to get into markets with coffee though, most of them have an established one already. We got into ours through a business partnership and another because the opposition was an rear end in a top hat who made poo poo coffee.

Chadzok fucked around with this message at Jul 17, 2013 around 13:05

tuyop
Sep 14, 2006

Every second that we're not growing BASIL is a second wasted


Chadzok posted:

I'm a coffee professional, fix machines, deliver coffee and generally hang out at cafes all week drinking mad ristrettos. The side job is a markets-based coffee stall. I get cheap(er) stock (eg coffee/chocolate etc) from my company, and I can use the company vehicle so I can essentially cut out vehicular expenses while I'm working there. The markets are on the weekends (5 days a month). I'm unsure exactly how leaving the job would affect my stall profits - it would definitely impact it but I'd still be making plenty of money. I'm currently in month 3 of a year-long process tracking incomings/outgoings to figure out exactly what the side business makes and costs.

Holy poo poo I want this side gig.

Chadzok
Apr 25, 2002

Ugly, greasy retard.

tuyop posted:

Holy poo poo I want this side gig.

Can you cook? Or can you pay people to cook for you?
Print a banner, buy a barbeque and a tent, and apply at any local markets and festivals.
Most of my mates in the 'industry' live off their food stalls. Coffee stalls don't make quite as much money, but they're less risk (less perishable stock) and less work.

Chadzok fucked around with this message at Jul 17, 2013 around 13:06

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

quote:

A simple example may be this: say you earn $100,000 a year, but only really need to live off $30,000 a year, you can invest $70,000 per year at a 7% return, and a crude calculation approximates retirement (ie, yearly returns of $30,000) in... 6.1 years.
Keep in mind this assumes that you'll continue living off of the same amount of money after FI that you have been before FI. An easy way to break this assumption in your favor is to simply move to a lower cost-of-living area once you have enough money. That's what I plan to do; all the good, high-paying software engineering jobs are in expensive metro areas (NYC, SF Bay, Seattle, etc.), so that's where I'll be when working a regular job, but I'm fine with moving to somewhere cheaper if it means endless free time.

shrike82
Jun 11, 2005
I HAVE NEVER CONTRIBUTED ANYTHING WORTHWHILE TO ANY DISCUSSION EVER. IF YOU ARE REPLYING TO ME YOU ARE WASTING EVEN AS PALTRY A RESOURCE AS INTERNET FORUM SPACE. PLEASE STOP ENGAGING ME FOR THE LOVE OF GOD, I'VE BEEN DOING THIS GIMMICK FOR YEARS.

Cicero posted:

Keep in mind this assumes that you'll continue living off of the same amount of money after FI that you have been before FI. An easy way to break this assumption in your favor is to simply move to a lower cost-of-living area once you have enough money. That's what I plan to do; all the good, high-paying software engineering jobs are in expensive metro areas (NYC, SF Bay, Seattle, etc.), so that's where I'll be when working a regular job, but I'm fine with moving to somewhere cheaper if it means endless free time.

I think the bigger issue is using average market returns for post-retirement asset returns.
Sequence of returns has a huge impact on your ability to draw down on your retirement assets without consuming them prior to death.

baquerd
Jul 2, 2007

Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!

shrike82 posted:

I think the bigger issue is using average market returns for post-retirement asset returns.
Sequence of returns has a huge impact on your ability to draw down on your retirement assets without consuming them prior to death.

With liquid savings, good diversification and the ability to choose which asset classes you are disbursing from, there's no reason you have to cash out unfavorably.

shrike82
Jun 11, 2005
I HAVE NEVER CONTRIBUTED ANYTHING WORTHWHILE TO ANY DISCUSSION EVER. IF YOU ARE REPLYING TO ME YOU ARE WASTING EVEN AS PALTRY A RESOURCE AS INTERNET FORUM SPACE. PLEASE STOP ENGAGING ME FOR THE LOVE OF GOD, I'VE BEEN DOING THIS GIMMICK FOR YEARS.

baquerd posted:

With liquid savings, good diversification and the ability to choose which asset classes you are disbursing from, there's no reason you have to cash out unfavorably.

We might be talking past each other but my point is independent of asset allocation.
Given any portfolio, even if it returns its historical average over the long-term, if it does poorly in the initial years, it curtails your ability to draw down on it.

baquerd
Jul 2, 2007

Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!

shrike82 posted:

We might be talking past each other but my point is independent of asset allocation.
Given any portfolio, even if it returns its historical average over the long-term, if it does poorly in the initial years, it curtails your ability to draw down on it.

I think I understand you now, but I'm not sure if I agree. You'd need an unprecedented stock market depression to really hurt your net compounding early on in your life. It's the later stage compounding towards retirement age that is the crucial point where a poorly diversified portfolio can wreck your retirement plans.

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

baquerd posted:

I think I understand you now, but I'm not sure if I agree. You'd need an unprecedented stock market depression to really hurt your net compounding early on in your life. It's the later stage compounding towards retirement age that is the crucial point where a poorly diversified portfolio can wreck your retirement plans.
We're talking about early retirement, though. A lot of people (well, the ones with high-paying jobs anyway) aim to be financially independent in, like, a decade from when they start saving.

baquerd
Jul 2, 2007

Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!

Cicero posted:

We're talking about early retirement, though. A lot of people (well, the ones with high-paying jobs anyway) aim to be financially independent in, like, a decade from when they start saving.

Ah, right. Is the prevailing opinion in early retirement focused on getting lucky or dealing with the lower average returns you can lock in pretty well with great diversification and hedging?

ntan1
Apr 29, 2009


baquerd posted:

I think I understand you now, but I'm not sure if I agree. You'd need an unprecedented stock market depression to really hurt your net compounding early on in your life. It's the later stage compounding towards retirement age that is the crucial point where a poorly diversified portfolio can wreck your retirement plans.

Correct. At a young age, you distinctly want the stocks to crash as hard as possible.

Ignoranceisbliss88
Jun 9, 2012

by Pipski


Question is, what the hell do you do with your time once you're retired at 30. Countless studies point out that working into your later years can keep you mentally sharp and even extend your life. Everyone thinks it'd be great to not have to go to work, but careers can be major motivators for people in life.

Chadzok
Apr 25, 2002

Ugly, greasy retard.

Ignoranceisbliss88 posted:

Question is, what the hell do you do with your time once you're retired at 30. Countless studies point out that working into your later years can keep you mentally sharp and even extend your life. Everyone thinks it'd be great to not have to go to work, but careers can be major motivators for people in life.

Once I leave my job I have a few businesses that I'd like to pursue (sure I could do them now, but not relying on them for my income would be awesome), there is a heck of a lot of travelling that I want to do (locally and overseas), have kids and actually spend time with them, education that I'd like to pursue but not for income purposes..

The point is, you're welcome to keep working if you like (the more you invest, the higher your base standard of living can be, if you want to look at it that way), and most people who've already 'retired' seem to keep working at least part-time. This is not about racing as fast as you can to sitting on your rear end all day. It's about financial awareness, conscious long-term financial decision making, and empowering yourself with a base income that does not rely on someone else's willingness to employ you.

Even if you don't want to retire early, how many people have actually sat down and calculated their own retirement requirements?
(possibly much higher than average in this forum)

Cicero posted:

We're talking about early retirement, though. A lot of people (well, the ones with high-paying jobs anyway) aim to be financially independent in, like, a decade from when they start saving.

Just to be clear, I am not highly paid in my full-time job. Actually, I make the exact current Australian median wage. I've pursued my side gig as a way of accelerating my own income in order to become financially independent sooner. So I don't just think this concept is for highly paid people. I'm aware you didn't say that, but I just want lurkers to be clear.

Chadzok fucked around with this message at Jul 17, 2013 around 23:19

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

Ignoranceisbliss88 posted:

Question is, what the hell do you do with your time once you're retired at 30. Countless studies point out that working into your later years can keep you mentally sharp and even extend your life. Everyone thinks it'd be great to not have to go to work, but careers can be major motivators for people in life.
Most people (basically everyone that I've read about) that aim for early financial independence don't just want to sit on their butt and play games or watch TV all day. The point of FI is that it frees you from the obligation of a regular (corporate) job so that you can do whatever else you want. This often seems to be part-time work, volunteer work, temporary gigs, working on that one business/startup you always wanted to, developing talents, hobbies like gardening, spending time with your family, staying in good shape, etc.

Here's a schedule that one guy posted of his current life on the financial independence subreddit:



Chadzok posted:

Just to be clear, I am not highly paid in my full-time job. Actually, I make the exact current Australian median wage. I've pursued my side gig as a way of accelerating my own income in order to become financially independent sooner. So I don't just think this concept is for highly paid people. I'm aware you didn't say that, but I just want lurkers to be clear.
Agreed.

edit2: To add another example, Mr. Money Mustache has stated that he's actually busier since he 'retired'. The major difference now is that

a) All his work is stuff he really wants to do, not whatever his employer assigns to him, and
b) Almost all of what he does has no fixed schedule, so if he wants to sleep in one morning or dick around for a day, it's no biggie.

Cicero fucked around with this message at Jul 18, 2013 around 00:05

tuyop
Sep 14, 2006

Every second that we're not growing BASIL is a second wasted


Ignoranceisbliss88 posted:

Question is, what the hell do you do with your time once you're retired at 30.

Pretty sure the answer is: Whatever you want.

If whatever you want is working your current job because you love it or whatever, then power to you. Chances are that you can still benefit from financial independence because that love will become the primary motivation for the work, rather than subsistence.

moana
Jun 18, 2005

one of the more intellectual satire communities on the web

I'd love to "retire" early but of course I'd still keep working on different things that would likely make me some income. I really just don't want to have to worry about keeping a job for a job's sake.

I feel like I'm doing well right now - I have 100k saved in retirement savings and my mortgage is 250k on a house worth 450k. My main priority is building my savings so that I have enough to pay off the house in full by drawing down on those reserves, although at only 2.75% (tax-deductible) interest, I think it's best to keep that debt around, both as a hedge against inflation and also because drat, 2.75%. If anyone disagrees, I'd be interested to know why.

Using the chart in the "shockingly simple math" article, I'm on track to retire in 10 years. That sounds great to me But it also doesn't take into account major life changes like having kids - what if I have a special needs child? What if my spouse becomes disabled and I need to support them? I'd hate to "retire" at 40 and at 50 have to get back into the workplace if something bad happened to a family member. How can you even begin to account for such things?

japlanet
Oct 15, 2012


I like the concept but in everything I've read all the calculations are done with >5% interest. I'm not sure that I'm willing to rely on such an assumption. What do people think is a 'safe' realistic rate of return over the next 10ish years!

zmcnulty
Jul 26, 2003



Screw early retirement, how about instant retirement?

I have enough savings right now that if I live as frugal as possible, I could sit on my rear end for about 5 years. But apparently early retirees don't actually do this -- instead I'll spend those 5 years trying to find jobs that I want to do, to the extent I want to do them. So long as my income from these ventures exceeds my expenses, based on definitions posted so far, I am thus retired at 28!

edit: MMM himself addresses this viewpoint in this post, basically saying the definition of retirement is loose

zmcnulty fucked around with this message at Jul 18, 2013 around 02:10

Ignoranceisbliss88
Jun 9, 2012

by Pipski


Cicero posted:

Most people (basically everyone that I've read about) that aim for early financial independence don't just want to sit on their butt and play games or watch TV all day. The point of FI is that it frees you from the obligation of a regular (corporate) job so that you can do whatever else you want. This often seems to be part-time work, volunteer work, temporary gigs, working on that one business/startup you always wanted to, developing talents, hobbies like gardening, spending time with your family, staying in good shape, etc.

Here's a schedule that one guy posted of his current life on the financial independence subreddit:



Agreed.

edit2: To add another example, Mr. Money Mustache has stated that he's actually busier since he 'retired'. The major difference now is that

a) All his work is stuff he really wants to do, not whatever his employer assigns to him, and
b) Almost all of what he does has no fixed schedule, so if he wants to sleep in one morning or dick around for a day, it's no biggie.

That's a pretty boring and mundane existence if you ask me. Hours gardening and "family time" everyday; Maybe if your 60 years old, but not at 35. I also imagine that much of that family time is just watching tv together, and "blogging" is surfing the internet for porn/fantasy football w/e. My point is that retirement can be dull and that many people get satisfaction out of the struggle to move up in their careers and may not even realize it. A lot of people find that the last half of their career is more satisfying than the first half because of added responsibility or time to find their niche. I think many of the people who buy into this concept are young and underemployed or just unhappy in their career and want it to go away. Maybe they should consider switching fields instead of leaving the workforce altogether.

That said, it is a cool concept and I'm not trying to criticize anyone who's really all about it. I'm just cautioning people that not having large overarching goals, which for many revolve around their careers, can leave an empty space in your life. I know personally that if someone offered me 75k a year for life under the condition I never entered the workforce again, I wouldn't do it. I want to really go out there and test myself and see what I can make happen.

I'm about to enter a very demanding but potentially lucrative field. I hope to work for 15-20 years while saving a significant amount of money, and then "retire" someplace very nice and get into teaching history (a passion of mine). At that stage I hope to have the financial independence that I'm not really working for the money (though any actuary can tell you of its importance) and a calmer more relaxed career that still keeps me "in the game" and not sitting around at home.

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

Ignoranceisbliss88 posted:

That's a pretty boring and mundane existence if you ask me. Hours gardening and "family time" everyday; Maybe if your 60 years old, but not at 35.
Yeah, screw spending time with your family!

Seriously though, it does bug me that I can only spend an hour or so (and that can be optimistic) every day directly interacting with my son, because, well, other stuff has to get done. I'd kill for a few more hours each day of that time. If spending time with your family is boring and mundane to you, you're either a terrible father/husband/mother/wife, or your family sucks.

quote:

I also imagine that much of that family time is just watching tv together, and "blogging" is surfing the internet for porn/fantasy football w/e.
Or...it's not? We don't even have a tv subscription here, and while my son does watch Backyardigans videos sometimes, this is usually because otherwise he'll get in our way when doing chores.

quote:

My point is that retirement can be dull and that many people get satisfaction out of the struggle to move up in their careers and may not even realize it.
It's dull if you make it dull, sure. The thing is, the kind of people who exert enough control over their lives and have enough foresight to retire very early are definitely not the sort to sit on their butts watching sports all day. If they were, they wouldn't have been able to muster the effort and self-discipline to retire quickly in the first place!

quote:

A lot of people find that the last half of their career is more satisfying than the first half because of added responsibility or time to find their niche. I think many of the people who buy into this concept are young and underemployed or just unhappy in their career and want it to go away. Maybe they should consider switching fields instead of leaving the workforce altogether.
It seems like most people who reach FI continue working in some form, they just get to be really picky. In fact, Jacob (from ERE, the 'original' well-known Early Retirement blog) un-retired because he got a job that was just that interesting to him (IIRC it was in finance).

quote:

That said, it is a cool concept and I'm not trying to criticize anyone who's really all about it. I'm just cautioning people that not having large overarching goals, which for many revolve around their careers, can leave an empty space in your life. I know personally that if someone offered me 75k a year for life under the condition I never entered the workforce again, I wouldn't do it. I want to really go out there and test myself and see what I can make happen.
Luckily, people who reach early retirement are under no such condition. See above.

quote:

I'm about to enter a very demanding but potentially lucrative field. I hope to work for 15-20 years while saving a significant amount of money, and then "retire" someplace very nice and get into teaching history (a passion of mine). At that stage I hope to have the financial independence that I'm not really working for the money (though any actuary can tell you of its importance) and a calmer more relaxed career that still keeps me "in the game" and not sitting around at home.
That's great, and this illustrates why people have started using the term financial independence rather than early retirement; the word retirement is just so loaded that it always spawns a bunch of discussion either about how retiring would be so boring, or that if you do anything for money after 'retiring' it doesn't count anymore, no matter how much you enjoyed the task or how little you needed the money.

zmcnulty
Jul 26, 2003



Cicero posted:

Seriously though, it does bug me that I can only spend an hour or so (and that can be optimistic) every day directly interacting with my son, because, well, other stuff has to get done. I'd kill for a few more hours each day of that time.

If that's your goal, have you put any effort into getting a better job (e.g. same salary, less hours or more salary, same hours)? Rather than cutting back on everything in the hopes that frugal living will one day pay off.

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

zmcnulty posted:

If that's your goal, have you put any effort into getting a better job (e.g. same salary, less hours or more salary, same hours)? Rather than cutting back on everything in the hopes that frugal living will one day pay off.
I'm definitely working on getting a better job that pays more to accelerate our journey to financial independence. Realistically my current job doesn't really require more time than a normal professional job, though. I work overtime only occasionally. I'm also interested in the idea of doing some side gigs, right now I'm working on some education/training towards that goal.

Cutting way back on income to spend more time with him wouldn't really work for me, mentally. Without either a large buffer of money or a high income, I would always feel on edge and insecure, worrying about future financial pitfalls (kind of like what moana mentioned). I think I inherited this trait from my dad, he's always been a safe/paranoid one.

For the most part, frugal living doesn't bother me. I like eating out and I like gadgets, but mostly doing without the former isn't too bad and I've come to acknowledge that most of the gadgets I get I don't make a ton of use of, so I've been paring down to 'core' purchases, and approaching them more intelligently (e.g. going for used when possible).

edit: The reason people who want FI often seem to focus so much on frugal living in online discussions, I think, is because of a few things:

1. It's more directly under your control. Getting a better job can be subject to the whims of the market and specific employers, but cutting out cable TV or starting a garden in your backyard is totally up to you.

2. It applies more broadly to people. How to get a better job/more income often comes down to the specific traits of your career or your skills and aptitude. Cutting out certain expenses (e.g. going from a 2 car household to a 1 car household) tend to be things that a large proportion of the population can do.

3. In order to be financially independent quickly, you have to be willing to live a relatively frugal lifestyle even after you've amassed a thick wad of cash.

Cicero fucked around with this message at Jul 18, 2013 around 05:09

Chadzok
Apr 25, 2002

Ugly, greasy retard.

moana posted:

Using the chart in the "shockingly simple math" article, I'm on track to retire in 10 years. That sounds great to me But it also doesn't take into account major life changes like having kids - what if I have a special needs child? What if my spouse becomes disabled and I need to support them? I'd hate to "retire" at 40 and at 50 have to get back into the workplace if something bad happened to a family member. How can you even begin to account for such things?

Here, have another MMM blogpost.
The basic message being that after early retirement it is possible and desirable to maintain a positive savings regime, if significantly lower than during the main savings years. The effect being that your net worth compounds and grows, rather than stagnating or slowly shrinking.

Using myself as an example, when I've saved enough necessary to deem it safe to 'retire', I will maintain my side income (because it's fun and and an essential part of my social life) and possibly add others, and I'm quite sure that I'll still be adding a few hundred a month (at the very least) to the stash. Would this be enough to cover all eventualities? Who knows. But then again, I could get struck by blue ice on the way the the gym tomorrow, but I'm not going to let that stop me from reaching my fitness goals.

Sundae
Dec 1, 2005

Wheeeeeee!

The one thing I've always run into while trying to sort this out is the near impossibility of paying for health insurance as a 'financial independent.' MMM's articles keep showing people with $15K-25K annual expenses. While I was self-employed, just covering the cost of health insurance for myself and my wife hit $20K a year, and we were both under 30 at the time. (Yay for PECs!)

This keeps me stuck in my day-job because it's the only way to ensure continued health care access.

baquerd
Jul 2, 2007

Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!

Sundae posted:

The one thing I've always run into while trying to sort this out is the near impossibility of paying for health insurance as a 'financial independent.' MMM's articles keep showing people with $15K-25K annual expenses. While I was self-employed, just covering the cost of health insurance for myself and my wife hit $20K a year, and we were both under 30 at the time. (Yay for PECs!)

This keeps me stuck in my day-job because it's the only way to ensure continued health care access.

The key is apparently to get health insurance of the traditional "catastrophic" variety, which means you'll basically never get any benefit from it unless you have major surgery or illness. This is because the deductible is going to be something like $10,000/yr.

https://www.uhone.com/Quote/QuoteCensus.mvc gives me a yearly cost of $1000-$2500 for 2, 27 year old healthy adults for plans like that.

moana
Jun 18, 2005

one of the more intellectual satire communities on the web

For someone planning to become pregnant in the next couple of years, though, that kind of insurance is a majorly bad idea. Hrm.

Ignoranceisbliss88 posted:

That's a pretty boring and mundane existence if you ask me. Hours gardening and "family time" everyday; Maybe if your 60 years old, but not at 35. I also imagine that much of that family time is just watching tv together, and "blogging" is surfing the internet for porn/fantasy football w/e.
Jesus, you are so loving pessimistic it hurts to read your posts. Yeah, man, who wants to spend time outside in nature and with their loved ones? BOOOOOOOO I bet that sucks!

Also, if you think teaching is a relaxing job I've got news for you!

tuyop
Sep 14, 2006

Every second that we're not growing BASIL is a second wasted



Office politics and spending all day pretending to be busy are the only legitimately rewarding uses of an adult's time ok?

Harry
Jun 13, 2003


He's a little too flippant with the healthcare costs I think. Once he gets in his 50s even those high deductible plans are going to be 1-2000 a month, and one post he had said he just wasn't going to get his kid braces. I'm not sure if he's expanded on it anymore though.

enraged_camel
Jul 4, 2007
Can't make ends meet in the US? Move to Australia! If you need to ask about things such as "economic feasibility" and "logistics" you're just lazy and entitled and better looking than I am

Ignoranceisbliss88 posted:

That's a pretty boring and mundane existence if you ask me.

As opposed to your average corporate job, which is some kind of exciting, blissful experience.

quote:

My point is that retirement can be dull and that many people get satisfaction out of the struggle to move up in their careers and may not even realize it. A lot of people find that the last half of their career is more satisfying than the first half because of added responsibility or time to find their niche. I think many of the people who buy into this concept are young and underemployed or just unhappy in their career and want it to go away. Maybe they should consider switching fields instead of leaving the workforce altogether.

I like my job a lot. But I would like it even more if I didn't have to worry about getting laid off.

Demented Guy
Apr 22, 2010

IF YOU ARE READING THIS IN AN NBA THREAD, LOOK TO YOUR RIGHT TO SEE MY EXPLETIVE RIDDEN, NONSENSICAL POST OF UTTER BULLSHIT


He's about to enter a very demanding and potentially lucrative job. Let's see if he holds the same opinion after being subjected to office politics, lovely bosses/coworkers, work-related stress and/or the fact that his potentially lucrative job may not be so lucrative/secure after all.

Also, retirement =/= doing nothing. I'm glad that the thread title emphasizes the term financial independence instead of the more loaded "retirement."

FrozenVent
May 1, 2009
a richer bytestage

Demented Guy posted:

Also, retirement =/= doing nothing.

Seriously, my father's been retired about two years now, and between his co-op's maintenance committee, the customers he kept (The ones whose projects he liked working on, basically) and taking care of my the boat, he's busier than he was before.

Much, much, much happier though. And my boat's never been in such good shape.

baquerd
Jul 2, 2007

Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!

moana posted:

For someone planning to become pregnant in the next couple of years, though, that kind of insurance is a majorly bad idea. Hrm.

You can specifically get maternity insurance, and if your birth goes perfectly it won't be that expensive to begin with, less than $5k.

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

Harry posted:

He's a little too flippant with the healthcare costs I think. Once he gets in his 50s even those high deductible plans are going to be 1-2000 a month,

quote:

I picked the best insurance plan I could find: one called United One that lets me pay my own little doctor bills (I usually visit once every five years or so, whether I need it or not) but limits my out-of-pocket expenses with a very manageable $10,000 deductible and 20% copay up to a $12k limit, in the very unlikely event that one of us gets extremely sick and needs multiple-day hospital care. Guess how much this was for our giant family of four?

$239.10 per month

If that one is too risky for me, I can go to a Cadillac health insurance plan called Humana One that has only a $7500 deductible and a 0% copay. But surely that would be, like, Infinity dollars per month for a family of four? Nope. Here is my quote for that program:

$318.52 per month

And finally, letís fast forward to age 63 when our real child (and the imaginary one) is all grown up and moved out, and my wife and I still want coverage to get us through to Medicare eligibility at age 65. It is IMPOSSIBLE to get health insurance when you are 63 years old, isnít it? Nope:

$367 per month Ö and all of these prices are the TOTAL for all people, not the per-person price.
http://www.mrmoneymustache.com/2011...ce-waaah-waaah/

Harry
Jun 13, 2003


baquerd posted:

You can specifically get maternity insurance, and if your birth goes perfectly it won't be that expensive to begin with, less than $5k.

Really? I can't imagine such a service being worth it financially since the only people who would get it would be women expecting to get pregnant soon.


That only enforces my point. He has a low rate because he and his wife are in their mid to upper 30s. When I run a husband and wife in my zip code born in 1950, lowest service is $580 a month. Born in 1960, lowest service is $380. And then consider that the average rate inflation expected by the industry is 12% a year.

Harry fucked around with this message at Jul 18, 2013 around 17:58

Cicero
Dec 17, 2003

Jumpjet, melta, jumpjet. Repeat for ten minutes or until victory is assured.

Harry posted:

That only enforces my point. He has a low rate because he and his wife are in their mid to upper 30s. When I run a husband and wife in my zip code born in 1950, lowest service is $580 a month. Born in 1960, lowest service is $380. And then consider that the average rate inflation expected by the industry is 12% a year.
How does admitting that plans will run from around $350-$600 only 'enforce' (reinforce?) your point that those plans will be one to two thousand dollars? I too believe that when my numbers are off by a factor of 3, that only reinforces them.

Additionally, part of financial independence is usually living in a low cost-of-living area. People aiming for FI are generally willing to move somewhere where costs are cheap, and healthcare is one of those costs; apparently your area is expensive for that, so it'd be something to keep in mind and factor in.

Lastly, yeah runaway medical inflation is a problem, but I think it's one mostly orthogonal to financial independence. 12% obviously can't be sustained forever, another decade and that would have healthcare costs at over half of GDP.

Sundae
Dec 1, 2005

Wheeeeeee!

I'd like to point out that he refers to a $10,000 deductible + 20% copay up to 12K limit (meaning $22,000 in a year) as "very manageable" in spite of $22,000 being more than the full annual budgets his example people use. Furthermore, he refers to a $7500 deductible as a Cadillac plan in spite of that being horrible insurance as well. If you're going to predict retirement health cost requirements, you have to assume worst-case scenarios, not best-case (never using the worst, cheapest catastrophic insurance you can find). You have to assume that health care utilization will occur on a yearly basis, and possibly on a more than yearly basis as you get older.

Furthermore, he still didn't address pre-existing conditions or the fact that they tend to add orders of magnitude to the costs of insurance. I wasn't kidding with my quote on what I was paying when I was self-employed.

Neither one of these is actually good insurance, nor is $22,000 in a year assuming you get hurt early in the year manageable when you're assuming your annual living costs are $20K. Note that the limit / deductible reverts to full again at the end of the calendar year, meaning an extended course of treatment billed over the new year will accrue extra costs up to $44,000 depending on just how bad your timing was for getting hurt. That's multiple years taken out of your expected compounding interest, devastating your long-term plans. If you aren't accounting for those expenses, you're in for a rude awakening about the time you run out of dough at age 55.


quote:

Really? I can't imagine such a service being worth it financially since the only people who would get it would be women expecting to get pregnant soon.

They tend to have claim dating requirements that force you to go without a claim for a certain number of months before they'll cover anything. 18 months of premiums before they'll pay out, for example. Average cost of childbirth in the USA is $8,802 according to a study found in a quick google search, but it was not a very thorough search or anything.

Sundae fucked around with this message at Jul 18, 2013 around 18:20

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No Wave
Sep 18, 2005




Sundae posted:

I'd like to point out that he refers to a $10,000 deductible + 20% copay up to 12K limit (meaning $22,000 in a year) as "very manageable" in spite of $22,000 being more than the full annual budgets his example people use. Furthermore, he refers to a $7500 deductible as a Cadillac plan in spite of that being horrible insurance as well. If you're going to predict retirement health cost requirements, you have to assume worst-case scenarios, not best-case (never using the worst, cheapest catastrophic insurance you can find). Furthermore, he still didn't address pre-existing conditions or the fact that they tend to add orders of magnitude to the costs of insurance. I wasn't kidding with my quote on what I was paying when I was self-employed.

Neither one of these is actually good insurance, nor is $22,000 in a year assuming you get hurt early in the year manageable when you're assuming your annual living costs are $20K. Note that the limit / deductible reverts to full again at the end of the calendar year, meaning an extended course of treatment billed over the new year will accrue extra costs up to $44,000 depending on just how bad your timing was for getting hurt.
Okay - are you trying to say that financial independence doesn't work? Because it does, for many people.

An important point - and the reason he buys cheap insurance - is that it's important to have a very large stockpile of cash to be financially independent. I believe that he retired with over a million in the bank. This is absolutely essential, and being cheap on insurance is not logical without this assumption.

I mean, to get caught up in health care etc. is missing the point. The main point is the generally frugal lifestyle that lets you put away assloads of money so that you can stop working sooner. Regardless of whether or not you have a specific condition etc, the principle is still the same even if it means a few extra years of work to put more in the bank. Even if it took you twice as long as MMM w/ the same income because of some real bad condition, you'd still be financially independent at 40. Would be cool!

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