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Huttan posted:The "official" inflation rate is around 2%. The administration keeps deleting consumer price indices and producer price indices that show higher inflation rates. Shadowstats has been measuring inflation and unemployment in much higher amounts than the official stats. If you measure the cost of groceries you purchase, and include the smaller container sizes (cynically called the "grocery shrink ray"), you will measure somewhere between 10 and 15% inflation. Just a quick FYI, but if inflation was 15% you wouldn't be able to hide it. Shipon posted:Is it even reasonable to extrapolate past trends into the future, given the troubles virtually every developed nation is going through along with impending issues in nations like China or India? Everyone will be quick to point out past trends don't imply future performance for an actively managed fund but can't seem to apply it to the stock market as a whole. Also the belief that high risk = high return, whereas it's more like if you had a high return you most certainly were exposed to high risk.
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Aug 3, 2013 15:21
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Shipon posted:Is it even reasonable to extrapolate past trends into the future, given the troubles virtually every developed nation is going through along with impending issues in nations like China or India? That's the real question. A lot of the fi gurus seem to think it is reasonable but I'm not quite so sure.
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Aug 3, 2013 17:14
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DanManIt posted:That's the real question. A lot of the fi gurus seem to think it is reasonable but I'm not quite so sure. 2. Even if the economy tanks again and you don't have enough to retire/hit FI when you planned, you still have a big wad of cash, and the ability to easily live on relatively little. Not much of a downside, really.
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Aug 3, 2013 20:01
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Cicero posted:1. Sure, an economic apocalypse could happen, but is it likely enough to explicitly prepare for? Even the great recession, as awful as it was, really did not change the economy tremendously, and that was the worst economic event since the great depression. Just a note on this, the "Great Recession" was hardly the worst economic event since the Great Depression. Even the fact that it was just a recession (a period of greatly diminished economic activity, i.e. the economy gets bigger much more slowly than normal) and not a depression (a period of downward trending economic activity, i.e. the economy actually gets smaller) is indicative of it. It's true that the stock market took a massive initial hit, but unlike during the Great Depression, it recovered most of its value pretty quickly. Had this been anything like the Great Depression, things would have been much much worse. That being said, economic downturns of the type seen in the Great Depression become increasingly unlikely. More and more economic controls and regulation help prevent that. It means we won't get to enjoy the benefits of nearly as many bubbles, but it should also mean avoiding the worst crashes.
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Aug 3, 2013 21:38
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ripped0ff posted:Just a note on this, the "Great Recession" was hardly the worst economic event since the Great Depression.
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Aug 3, 2013 21:40
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Cicero posted:What else was there? Do you mean outside the US? I was referring to just the US. Eh, if you just take the US then it's debatable. But assuming that you diversify your portfolio to include some degree of international investments (you probably should), then obviously international depressions and recessions have an impact on your finances. Looking at just the US though, this gives some perspective: http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Great_Depression_onward
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Aug 3, 2013 22:20
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LorneReams posted:One year at -35% really messes with your average. I'm +17% this year, but it was pretty bad between 2007 and 2008. Yeah, but it really only matters in the short run. Time in the market is much more important than timing the market. The important thing is to not let short-term events affect your perception and economic outlook. Just make sure that your assets are properly diversified and keep contributing.
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Aug 4, 2013 22:26
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I guess I've been psuedo following the save money thing for most of my life. I only spent 35% of my income, according to Mint, and that doesn't include my pretax stuff, but does include my Roth. I expect this year to be a bit worse because I don't think my car has another year left on it, but luckily I have enough to just buy a new one with cash. I found the MMM blog on accident and I've been reading through some of the articles. My only hope is that once I can get to that goal, I can get a job doing something I think I would love, like being a zoo keeper or something, instead of doing IT. I've kinda looked into some of the Vanguard Dividend funds as a potential source of passive income, but honestly I have a hard time telling if they're worth it. TLG James fucked around with this message at 02:05 on Aug 7, 2013 |
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Aug 7, 2013 02:02
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TLG James posted:I've kinda looked into some of the Vanguard Dividend funds as a potential source of passive income, but honestly I have a hard time telling if they're worth it. Right now, VHDYX doesn't look too bad if you're wanting to live off the dividends. Expense ratio is 15bp over total stock market fund and offers ~130bp more in dividends.
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Aug 7, 2013 02:28
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baquerd posted:Right now, VHDYX doesn't look too bad if you're wanting to live off the dividends. Expense ratio is 15bp over total stock market fund and offers ~130bp more in dividends. Vanguard offers an admiral 'equity income' as well, which (ironically?) has a higher expense ratio than the above, but it's 'VEIRX'
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Aug 7, 2013 02:35
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MrEnigma posted:Vanguard offers an admiral 'equity income' as well, which (ironically?) has a higher expense ratio than the above, but it's 'VEIRX' It looks like they are very similar funds with very similar returns after adjusting for the slight dividend difference.
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Aug 7, 2013 02:44
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Heh I can't believe I missed this thread, I'm going to read through the whole thing now. Anyway my plan for financial independence boiled down to learning to be happy with less. Together my wife and I earn the average income for our area (64k) but are able to save quite a bit of money (we probably save 50% and spend 50%) because we've learned how to be happy for less and can also get the things we want significantly cheaper than most people. The main thing I need to do at the moment is find another place to live. I'm currently mortgaging a 1600 (2000 if you include the garage) square foot home ($1k a month) and my wife and I really only utilize 25% of that. I suppose if we had kids that number might jump up to 35-50% (1-2 kids) but the fact is we bought way too much house and it's really hurting our potential to save. So basically we need to find a cheaper place to live, maybe we'll rent something temporarily or buy a smaller home. edit: According to that "Simple Math" MMM article I'll be able to retire in 17 years assuming a 5% real return if I continue to save 50%. My guess is that I will probably never fully retire and will instead end up semi-retiring with part time work, income from a side business and/or rental property. 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, 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. Ugh I'll probably get some flak for pointing this out in BFC but the great thing about the medicaid expansion is that eligibility is based on income and not assets. So a guy (say a family of four) that has a ton of assets/money in the bank could get medicaid if they could live off of $29,700 (in 2011) per year, which is entirely possible for someone who owns their home outright. In the end it is actually good for the economy because that person is opening up a position for someone who wants to work and is probably a greater contributor (they spend/waste more of their money) to the economy anyway. My guess is that the unemployment rate in expansion states is going to drop a bit in 2014. Sephiroth_IRA fucked around with this message at 15:59 on Aug 27, 2013 |
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Aug 27, 2013 14:00
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I'm glad this thread exists. Saving money can be a challenge sometimes, but you can't talk to anybody about it without looking like an rear end in a top hat. I guess here, we can all be assholes together. I am a father in a traditional family of four. My wife and I only recently discovered the concept of early retirement. My career in IT started just before the dot-com bubble collapsed, so all of my working life was under fear of getting cut by the annual layoff cycle. To compensate for this, we always tried to keep our expenses low enough to survive off of one income. We never really considered what we should do with the half we were saving, and it shows. (Also, I went back to law school after my IT career went stagnant. That cost a lot, and I don't have much to show for it.) Reducing my spending allowed me view the possibility of a layoff as something to be annoyed by rather than something to fear. It let me wait to take the job that was best for my family, instead of running to any port in a storm. In a few years, I'll have the upper hand in any salary negotiation. A few years past that, and I should be able to reduce my workday to just the hours my kids are in school. Reducing my spending has a long term benefit, to be sure. But it also offers substantial quality of life improvements immediately. Still, I'm pretty far from being an expert. The simple math says I can retire in a little less than 10 years at our current savings rate, but I know that won't happen until I can figure out how to get a decent return on investment. So right now, my goal is to increase my comically absent investing skill. I'm currently reading "The Intelligent Asset Allocator" but I'm open to suggestions about what to read next.
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Aug 30, 2013 19:31
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How are you investing currently? I had some old rear end CDs close that I forgot about, so I threw them into that VHDYX fund mentioned a bit earlier. Hopefully they earn me more than the .55 cents a month my CD was raking in! According to my 12 month budget on Mint. I'm only spending about 35% of my income in the last 12 months. It'll be great once my fiance is done with grad school. Though I expect it to get up to about 55% when I buy a new car (with cash!) My old car isn't going to last another winter. TLG James fucked around with this message at 19:33 on Sep 2, 2013 |
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Sep 2, 2013 19:26
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My current strategy is a mishmash of various funds chosen based on whatever was doing well when I bought them. The fees are too high and the performance is always below the S&P. This year my 401k is actually down 0.5%. Oh, and one cash-value pension that the company sets the interest rate on every year (currently 1.2%). When I get done with this book, I'll rebalance into a traditionally diversified array of index funds. My primary goal will be to reduce fees, because they are the most controllable variable. No clue what to do about the pension. On the upside, I got a bus pass today. That saves me about $115 a month in commuting costs.
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Sep 5, 2013 04:03
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My guess is that people who want to retire early will need to have most of their investments in a taxable account. The advice I usually see for taxable accounts is to put everything in the most tax efficient funds like the Vanguard Total Stock Market and Total International Funds. That makes sense of course but my question is if there are special considerations I should consider when investing in taxable accounts considering I would like to retire early. The fact that I'm scratching my head over this makes me think I should pick up another book (I'm leaning toward the Intelligent Asset Allocator) or read The Four Pillars again. edit: Looks like my wife may be transferred or will be leaving her job soon. Thankfully she's going to be getting her retirement money out of her home country (11k before taxes) pretty soon so it looks like we'll be fine if we have to go without her income for a bit.
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Sep 5, 2013 06:22
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Has anyone tried Bettement.com? It looks good and I've heard good things and recently moved a small amount there to try it out but was wondering if anyone here has experience with it.
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Sep 5, 2013 12:16
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Orange_Lazarus posted:My guess is that people who want to retire early will need to have most of their investments in a taxable account. The advice I usually see for taxable accounts is to put everything in the most tax efficient funds like the Vanguard Total Stock Market and Total International Funds. That makes sense of course but my question is if there are special considerations I should consider when investing in taxable accounts considering I would like to retire early. I'm confused about this too, and from what I've read, it doesn't matter that much whether you use tax-free or not. If you retire in ten years with 20% of your pre-retirement income, or forty years with 20% of your pre-retirement income, the benefit of avoiding taxes on your pre-retirement income is still there, right?
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Sep 5, 2013 12:37
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Orange_Lazarus posted:My guess is that people who want to retire early will need to have most of their investments in a taxable account. No, you'd still want to take advantage of the tax benefits of the usual retirement accounts. Max your 401K and roth IRA first, then save the excess in taxable accounts. Early retirees can get around the age 59.5 rule by taking "substantially equal periodic payments" from the retirement accounts.
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Sep 5, 2013 13:47
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As my last post suggests, I have absolutely no idea what I'm talking about. This is not tax advice. It is a question from me to the gurus here that might be able to teach me. I guess it depends on how much faith you have in your ability to predict expenses and income for the rest of your life. The IRS charges a 10% additional penalty on early IRA withdrawal unless you meet one of the exceptions. IRAs: http://www.irs.gov/taxtopics/tc557.html Non-IRA (401ks) http://www.irs.gov/taxtopics/tc558.html To me, the big wildcard exception here is "Made as part of a series of substantially equal periodic payments for your life." If you start pulling from your tax-deferred account early, you have to keep pulling from it at that rate or pay a the penalty, right? If you go back to work or have a boom year on your normal stocks (and realize the gains), then you'll lose the benefit of the tax deferred savings because you'll keep pulling from the account even though you don't want to. But that's not too bad, because you don't pay any additional penalty. Unless you do really, really well that year and pay more taxes on your IRA withdrawals. So no loss, just not as much benefit. So, just a rough guess here, it seems like you'd want a mix weighted far more heavily toward tax deferred accounts. Given the source of early retirement savings and the caps on tax-deferred contributions ($5k IRA + $17k 401k = $22k), it seems like you'd want to cram as much as you could into the tax deferred accounts...after you get your emergency buffer/self-insurance account in place. The more money you make, the more that this problem takes care of itself. And over the course of your whole career, even a short one, the problem will probably solve itself. I got nothin' on picking between a traditional IRA and a Roth. I guess if you're already maxing out your 401k contribution, then you probably want a Roth because you're already putting 3 times as much into the tax deferred account. As a bonus, you might want a Roth for investing in things like REITs that are (I think) taxed as ordinary income and not capital gains. Does that sound like what others have read on the subject?
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Sep 5, 2013 14:09
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SlapActionJackson posted:No, you'd still want to take advantage of the tax benefits of the usual retirement accounts. Max your 401K and roth IRA first, then save the excess in taxable accounts. What if that loophole (which I plan to research now) is removed 5-10 years from now? Is there any chance of that?
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Sep 5, 2013 16:52
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Well, the purpose of the penalty is to make sure that you're using your IRA for actual retirement and not a tax shelter. This exception seems to be specifically added to allow early retirement. If it were removed, there really isn't another way to use an IRA for early retirement. So its not really a loophole as much an express exception to the general rule of "pay a penalty if you withdraw early." It looks like it's been around since the law was passed in 1994. (Check http://uscode.house.gov/ for Title 26, section 72.) That said, you're trying to predict the Congress. Remember, there is a minimum withdrawal rate once you start withdrawing from your IRA. There are all kinds of calculators for it on the web.
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Sep 5, 2013 19:27
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Pretty sure you can roll your pre-tax 401(k) into a Roth IRA in quantities of your choosing (once you lease your company or retire). These would be taxable events but you could choose to roll over only the amount necessary to minimize taxes for that year. Presumably you'd be retired so other taxable income would be limited. You can then withdraw these new contributions to the Roth IRA after 5 years. So the idea is to essentially establish a roll over ladder where you roll over some of your old pre-tax 401(k) every year so that 5 years down the road you'll be able to withdraw those contribution tax and penalty free. You would need something to get you through those 5 years but you if you were also contributing to a Roth IRA while working, you could start withdrawing those contributions to tide you over. Of course you would be limited to living on past contributions until official retirement age since withdrawing the gains would be penalized.
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Sep 6, 2013 00:27
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Does the same thing work for RRSPs in Canadaland?
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Sep 6, 2013 12:17
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I was hoping that another Canadian would chime in here, but honestly there's no way to tell from my end. It looks like there's a whole different set of vocabulary tied to RRSPs than what I'm use to. Canadian law hopefully supports the same policies, but the method it uses to get there is probably completely different. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/ncm/menu-eng.html On an unrelated note, did you guys know that craigslist has a building materials section? I tore out the smelly, cat-stained carpet in my basement (previous owner) and replaced it with rubber-backed carpet tiles for $0.30 per sqft. This will last until I decide on a permanent solution, and give me time to hunt for a bargain. And if the kids stain any of them, I just toss it out and lay down a new one. Bottom line, it feels like I just added a usable floor to my house for $250.
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Sep 9, 2013 14:01
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Folly posted:I was hoping that another Canadian would chime in here, but honestly there's no way to tell from my end. It looks like there's a whole different set of vocabulary tied to RRSPs than what I'm use to. Canadian law hopefully supports the same policies, but the method it uses to get there is probably completely different. I don't think it's a HUGE deal anyway, I mean your contributions are capped at around $5000 per year at the highest income level. Unless you're going to move to Uganda or something for your retirement, you're going to have to save more than that and use other types of account.
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Sep 9, 2013 14:50
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tuyop posted:I don't think it's a HUGE deal anyway, I mean your contributions are capped at around $5000 per year at the highest income level. Unless you're going to move to Uganda or something for your retirement, you're going to have to save more than that and use other types of account. The maximum yearly contribution for RRSP in 2013 is $23,820  You might be thinking of TFSA, whose maximum total amount increases by $5500 every year.
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Sep 9, 2013 16:04
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FrozenVent posted:The maximum yearly contribution for RRSP in 2013 is $23,820 Well poo poo, I guess I missed that.  I mean, my contributions have always been capped at like 5300/year. Now I feel inadequate.
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Sep 9, 2013 20:54
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Folly posted:On an unrelated note, did you guys know that craigslist has a building materials section? I tore out the smelly, cat-stained carpet in my basement (previous owner) and replaced it with rubber-backed carpet tiles for $0.30 per sqft. This will last until I decide on a permanent solution, and give me time to hunt for a bargain. And if the kids stain any of them, I just toss it out and lay down a new one. Bottom line, it feels like I just added a usable floor to my house for $250. Holy poo poo, I had no idea, thanks! A friend of mine is very handy and likes to help me with projects around the house when he comes to town... we put in my stone patio, put up new gutters, and a few other things. Now we're looking at putting an arbor, a patio retaining wall, and new indoor flooring, and this might be just the thing we need. For anyone else who's curious, the category is For Sale > Materials.
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Sep 10, 2013 04:50
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I've been eyeing the materials section of craigslist since I made that post. I intend to add a kitchen to my basement, so that I can make the basement into a functional apartment when needed. I regularly find a whole custom kitchen that some rich person "updated" to a different color by replacing the whole thing. We're talking all of the cabinets, and sometimes natural stone counter tops, and sometimes a sink for about $1000. The best part is that since I'm fitting it in an empty space with no existing plumbing, I can use almost any kitchen layout that I want. Also, there is constantly natural stone tile in lots of 80 to 100sqft for around $50 to $100. That's enough for a 10x10 kitchen. Now I just need to find one I like. On a less awesome note, I finally pulled up the fund options at the new company's 401k through T. Rowe Price. I have exactly 3 options with a cost ratio below 0.50%, with most of them being in the 0.65% range. So my options are the S&P 500 index for 0.10%, a money market account with 0.20%, or a bond fund at 0.46%. I know I'm new to this, but those fees seem high. They are considerably higher than the fees on the 401k I still have through my previous employer, and I wasn't even paying attention before. I guess I'll just buy the index and use my other 401k to diversify. Does anybody have any recommendations for T. Rowe Price funds that I could request the plan manager to add, once I figure out how to do that?
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Sep 17, 2013 14:44
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Yeah, I realized that craigslist may be a good resource for building when I had a lot of extra really high end tile that I couldn't even give away. I saw an entire, brand new Arclinea kitchen for like 1/5 of retail.
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Sep 17, 2013 16:13
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Folly posted:On a less awesome note, I finally pulled up the fund options at the new company's 401k through T. Rowe Price. I have exactly 3 options with a cost ratio below 0.50%, with most of them being in the 0.65% range. So my options are the S&P 500 index for 0.10%, a money market account with 0.20%, or a bond fund at 0.46%. I know I'm new to this, but those fees seem high. They are considerably higher than the fees on the 401k I still have through my previous employer, and I wasn't even paying attention before. 0.10% is decent, the others aren't too bad. The cheapest ETF portfolio will show you the rock bottom fees you can get for a super diversified portfolio.
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Sep 17, 2013 23:53
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Sep 18, 2013 00:07
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paperchaseguy posted:0.10% is decent, the others aren't too bad. The cheapest ETF portfolio will show you the rock bottom fees you can get for a super diversified portfolio. That's for this. Schwab just happens to be my brokerage, so I can buy these without any commissions. I'll probably change it some, but this looks like a good place to start.
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Sep 19, 2013 19:55
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Cicero posted: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. On that note, how feasible is it to live cheap in these cities and save over half of your pay? I want to find a software engineering job in NYC or the SF Bay area as a graduate with a few months of experience, since my current job kind of blows. Safe and Secure! fucked around with this message at 04:03 on Oct 18, 2013 |
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Oct 18, 2013 04:01
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I lived in NYC on a teacher's salary so you should be able to live on half your pay easily 
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Oct 18, 2013 05:24
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Safe and Secure! posted:On that note, how feasible is it to live cheap in these cities and save over half of your pay? I want to find a software engineering job in NYC or the SF Bay area as a graduate with a few months of experience, since my current job kind of blows. In NYC at least, rent will be your biggest expense by like, a factor of three. It is doable with roommates or if you make a whole lot. I would probably stick it out for at least a year though, unless it is like, a failing startup. I can't imagine companies would be too eager to hire someone leaving after a few months without a good reason. I suppose you could leave them off your resume and say you were travelling, up to you. The same definitely holds true in the bay area, there's a premium for living in the city, the suburbs have lower rent. If you live near a caltrain station you can probably survive without a car, depending on where exactly you live.
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Oct 18, 2013 05:28
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Jeffrey posted:I can't imagine companies would be too eager to hire someone leaving after a few months without a good reason. Depends on the reason and your skills in software engineering. In any case, it's possible to save 50% of your salary in the bay area or NYC, but it also depends on company. Also, you'll probably have to live with roommates.
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Oct 18, 2013 05:31
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I was told I'd be doing Java web development. Instead, they're having me work on maintenance tickets that come in to update copy on Wordpress sites and the occasional cold fusion site. Sometimes I get to figure out why one of a site's plugins, thrown together by the company's previous oversea contractors, doesn't work, and then assign it to be fixed by the company's new team of oversea contractors. Also, the company's HR department lied to me about what positions they could hire me for and what compensation they could offer back when I was interviewing them.
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Oct 18, 2013 11:18
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Anybody else keep significant other out of the loop as far as savings are concerned? I don't have any ulterior motives, but I just know my wife, and if she knew we had the amount I save up available, she'd want to use it. I never know how to feel about this. I just want to make sure we can actually retire.
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Oct 23, 2013 18:58
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