|
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. 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!
|
# ¿ Jul 18, 2013 19:23 |
|
|
# ¿ Apr 25, 2024 07:18 |
|
Realistically, everyone is probably planning on being financially independent at some point. It's a really, really smart idea to choose an age and target it rather than just sort of, I don't know, work until you fall apart and let the chips lie where they fall.
|
# ¿ Jul 18, 2013 19:47 |
|
moana posted:I disagree - health issues seem like the biggest possibility for loving up plans for financial independence, so it makes sense to scrutinize that area to see if there's any way to avoid undue risk. I always want to hope for the best, plan for the worst. If you're making a decent amount of money, working and living without a notion of when you want to be financially independent is a huge mistake. I'd love for this thread to be an introduction to the concept and framework for a lot of people, because structuring my work and approach to finances this way has changed my life and has made my future immeasurably better.
|
# ¿ Jul 19, 2013 00:27 |
|
moana posted:How exactly did you decide on a target number, No Wave, if you don't mind me asking? But mine's high! I'm lucky in an awful lot of ways, but there's no reason not to err on the side of caution here if your income's high enough I don't have a spouse/family or anything yet, so really I chose a number where I'd be an idiot not to be able to live a good life off of it. I figure 40k a year of minimally taxed rent-free income will see a family of 3-4 through pretty much anything especially with all that down time and flexibility. If I had a family, I'd want 40k of income in addition to my house. So it would be about a million in investments (really, 800k would be enough) + the cost of a house. Again, rough as hell. Honestly I sort of just chose the median household income for the USA, figuring that if I got that I'd feel really psychologically sound (and I'd know that if there were a problem, it would be me, not the money). Right now my job's good enough that I wouldn't quit it even if I were financially independent, but that won't last forever. Honestly 30k a year would be fine, but with all the compounding it's a very short time to get the last 10k - only a few years if you're still putting money away. I'm aware of the statistic that happiness correlates w/ money up to 77k a year, but this 40k a.) has very little tax and b.) is rent-free (I included house in the calculations) - slash off the commuting costs, as well, and this 40k will probably roughly correlate to that number. Ignoranceisbliss88 posted:How old is your son? I imagine that he's probably pretty young and quite happy to hang out with old dad/mom. What happens when he's 15 and independent (maybe hates your guts), or when he moves across the country for college or for a new job? My point is, you can't base your entire 60+ years of adult life around 15 years of your children's adolescence. Family is great, I just don't think that for most people devoting their life to their family is enough. I think most people need a little slice of their own life, which for many is a career. I'm only playing devil's advocate here, the concept of financial independence/early retirement is great, I just don't think it's quite what many people think it is. The grass is always greener. No Wave fucked around with this message at 03:03 on Jul 19, 2013 |
# ¿ Jul 19, 2013 02:41 |
|
zmcnulty posted:That's exactly what I'm talking about. A trip to Europe with your family will cost like a quarter of your annual budget. I agree there's plenty of down time, but how does <$2k per month for a family of 3-4 provide "flexibility??" As for a trip to Europe, I mean, is that mandatory now? I could definitely send the kids off to exchange programs or whatever ($800 round-trip? why not?), but why go all together? It's a waste. Family time can be cheap. If you want to have a cultural experience, it's far more valuable to do it on your own for an extended period of time. I had a family trip to Europe when I was six and it was completely wasted on me - I lived in France in my twenties and it was incredibly rewarding. (also, all my family is in the USA) Again, I'm getting super theoretical here because, I mean, I'm a single dude, but I don't mind having the discussion. These are important discussions to be having! No Wave fucked around with this message at 03:03 on Jul 19, 2013 |
# ¿ Jul 19, 2013 02:57 |
|
moana posted:So once I own my house outright and need $40k for expenses, I would need to save... The idea is that you're making enough so that you're usually actually putting even more money away each year, with a slight decrease in recession years. Whatever - spend a little less that year, or don't, you'll probably be fine. And keep in mind - 4% average return is highly conservative. Maybe other people known something I don't, but then again, I'm not retired yet so it doesn't matter - the strategy remains the same. No Wave fucked around with this message at 20:29 on Jul 19, 2013 |
# ¿ Jul 19, 2013 20:26 |
|
enraged_camel posted:Besides, we're probably due for another crash within the next 5 years. So if you're planning to retire 10 years from now, that's pretty much perfect timing! Just have plenty of savings so you can buy a ton of stocks when they become cheap, and ride them up!
|
# ¿ Jul 19, 2013 20:31 |
|
enraged_camel posted:I don't mean it in the sense of trying to time the market. I would continue to invest as usual, but if a crash happens then I would gladly dip into my savings (and/or liquidate some assets) to buy even more stocks, since they would be cheap. One hack I'm still looking into - if you have money in an IRA or 401(k), it seems like you can transfer a little of your money every year into its respective Roth counterpart. This is loving phenomenal for years of low income, ie, most of your years post-financial independence. Just transfer about 25k a year from standard to Roth when your income is zero, pay very little tax, and it'll all be tax-free when you start withdrawing it after age 59.5. This is because money taken from a 401(k) isn't technically "investment" income, and is taxed like normal income, and it's much better to spread out your standard income over a long period (done by the gradual conversion). Also, moana, remember that you won't be able to touch your 401(k) for a long time! Not a huge deal, as even if you time it extremely close and completely drain your non-401(k) account at age 59.5, the money will still be there. Like, the math will still work out. But you may have different risk profiles for your non-"retirement" accounts and your retirement accounts. Either way, I certainly recommend talking to a professional when you think you're within a few years of your financial independence for a sanity check. But I'm sure you'd do that anyways.
|
# ¿ Jul 19, 2013 20:44 |
|
enraged_camel posted:Be very careful with this. Most people who say this kind of stuff end up losing huge amounts of money to various expenses. shrike82 posted:People really need to read up on sequence of returns... No Wave fucked around with this message at 21:42 on Jul 19, 2013 |
# ¿ Jul 19, 2013 21:08 |
|
paperchaseguy posted:http://www.marketwatch.com/retirement/tools/retirement-planning-calculator enraged_camel posted:This is correct. We definitely hope the stock market does not return a mere 4% per year on average or we'll all be hosed, financial independence or no financial independence.
|
# ¿ Jul 19, 2013 21:59 |
|
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?
|
# ¿ Aug 3, 2013 01:24 |
|
tuyop posted:That doesn't preclude setting up a fund to help them just in case something terrible happens, but giving them a full-ride just because we happen to be related really doesn't appeal to me.
|
# ¿ Nov 3, 2013 21:50 |
|
tuyop posted:I really don't see how it's this huge emotional issue for people. My parents bought a cottage instead of paying for my education. This is literally exactly how it was explained to me, and so I joined the army to pay for part of my school (I didn't qualify for public OR private loans) and ruined my back for the rest of my life. I don't feel any resentment toward my parents for this, I have no idea what kind of person I'd be if they hadn't bought the cottage, but I'm very happy now. There's nothing intrinsically wrong with not helping your kids out too much because realistically if you're FI you've probably already given them lots of attention and care and had time to think about parenting that they're probably not all hosed up and poo poo, which is of course the greatest possible gift. I mean that's why MMM did FI in the first place. But note that his narrative is completely different from yours - he believes that his kid will turn out better for not having poo poo paid for. I don't necessarily agree, but that's completely different from no longer looking out for your kid's best interests because other people have it worse. If this is your belief, DO NOT HAVE KIDS, it'll be a totally hosed up situation for you and them. Also - to get WAY too personal - for someone whose mental state is less than ideal, why would you just copy what your parents did? I'm not saying they made a wrong decision, I just don't understand why that would be your default argument. Don't you think you can make life a little better for your kids than yours was? There's an awful lot I'm going to do differently if I have kids, and that doesn't mean that I resent my parents, either, just that I don't see the fact of their behavior as a justification for basing future actions off of that behavior. No Wave fucked around with this message at 02:32 on Nov 4, 2013 |
# ¿ Nov 4, 2013 01:24 |
|
Folly posted:I went to school twice. The first time, my parents paid and I barely cared. I did the minimum it took to maintain my scholarship and pretty much wasted the time. The second time, I paid for it myself. The money came from my savings and sacrifices, and it hurt my family. I made sure I took it seriously and graduated in top 11% of my class. In my ideal scenario, I'd have the money saved for education - either to be spent on education or to be received when they turn 25 (and then, perhaps, subsequently spent on education - it would be up to them). Though this is all theoretical and a long ways off. But if I raised them correctly they'd be able to recognize their self-interest better than I would.
|
# ¿ Nov 4, 2013 17:53 |
|
tuyop posted:Well, obviously this is pretty divisive, but I remember one of the more important realizations of university being that I wasn't accountable to anyone for my performance. I didn't have to show my parents my report card, for better or worse. It took about two years to pay off the 18k of student loans and 13k of credit card debt that college left me with, and I don't think I'd trade that two years of moderate sacrifice to be under my parents' thumb. But I moved out when I was 18 because independence is very important to me, and for other reasons. No Wave fucked around with this message at 22:28 on Nov 4, 2013 |
# ¿ Nov 4, 2013 22:21 |
|
razz posted:But they aren't really the overbearing type to begin with and I'm pretty much an A-B student in general so yeah, I guess I would have traded that slight bit of inconvenience for decades of loan payments. They did give me a couple grand for school, maybe 10% of my total college expenditure, and I'm thankful for that. Now the fact that my mom told all her friends that they paid for my tuition in some sort of weird "Keeping Up With The Joneses" scenario since literally ALL of their friends paid for their kids' tuition so my mom felt she had to lie about it... that's another story haha
|
# ¿ Nov 4, 2013 23:35 |
|
I mean, if you're so ashamed of your actions, what kind of life are you living? This western culture thing is going down the crapper.
|
# ¿ Nov 4, 2013 23:41 |
|
razz posted:What's funny is I think my mom does feel guilty about it (she also took money from me in other ways, by claiming me as a dependent for too long and she did it to my little bro too and we had a slight falling out a few years ago) but now she and my dad like, go out of their way to help me and my husband out with money. I think my parents have given me more money in the last 3 years than they have in my whole life combined. My mom paid off my car a while back for my birthday which was like $1500, paid for my wedding (was cheap, but still), and last month gave us $1,000 to fix our broken truck. They take us out to eat, my mom secretly puts gas in my car when we visit, she always has a new shirt or dress that she found on sale for me, that sort of stuff. So you know. I'm not complaining. And I definitely don't ever want to talk poo poo on my mom. She made mistakes as a parent as they all do. I think she's more than made up for being a doofus 5 years ago. Regardless, glad you are happy with your relationship.
|
# ¿ Nov 5, 2013 01:21 |
|
Mofabio posted:Human lives cost around $1800 to save from preventable diseases. I know that FI and ethics make for strange bedfellows, but in what ethical system is your child's student loan debt worth the actual lives of 90 other children?
|
# ¿ Nov 5, 2013 03:36 |
|
Mofabio posted:I guess I'm mostly curious about the ethical system that would make the things you listed bad for the world. I get that they would be slightly bad for the giver, but how would they be bad for the world? Mofabio posted:(this was a double post, but...) MMM would not find the blog to be worth doing without swearing. He places importance upon his own feelings, because it is his life. I expect you to do the same. Have you ever seen a thread here - "How do I live my life more justly?" Are your expectations of what people are supposed to want maybe flawed? Given that this is something that, quite literally, nobody does, the idea of judging people through that lens seems unproductive. No Wave fucked around with this message at 13:38 on Nov 5, 2013 |
# ¿ Nov 5, 2013 13:29 |
|
Mofabio posted:Thanks for responding seriously. FI'ers and the somalian-refugee-roommaters have similar attitudes to consumerism and dollar efficiency. I'm just figuring out what separates the people who put the money in their Vanguard, and the people who give it away. What's cool about FI is that it frees you to do what you want to do. It can be argued that capitalism distorts generous impulses somewhat - this does not mean that human beings only contain generous impulses, however. FI allows you to experience all of your impulses with all of your time. No Wave fucked around with this message at 18:26 on Nov 5, 2013 |
# ¿ Nov 5, 2013 18:10 |
|
koolkal posted:This thread certainly took a weird turn from financial independence and early retirement to libertarianism and philosophy. No Wave fucked around with this message at 01:31 on Nov 6, 2013 |
# ¿ Nov 6, 2013 01:29 |
|
Switchback posted:My dream retirement is to live in a hut in El Nido and rock climb/kayak/dive/yoga/boat and have no electricity each afternoon and live the simple life in this protected nature paradise.
|
# ¿ Nov 6, 2013 16:55 |
|
enthe0s posted:So my friend brought up a good question that I didn't have an answer for regarding early retirement. If all of my money is essentially locked away in a 401k and Roth IRA, how do I survive until I hit 60? I know you can take out the money you contribute from your Roth IRA before 60 penatly-free, but I feel like you don't want to do that to let your money grow right? However, it's imaginable that you're moving to a much cheaper country - say you work from age 20 to age 40 with a 22500 contribute every year and a 5% interest rate - you'd end up with 780K, giving you 20K-30K to live on every year. Doable (though I'd rather have more). There are specific rules on withdrawing from a Roth IRA. Basically, you'll want to ideally plan it out so that you'll live off of only the contributions on the IRA, not the interest. If you could give specifics, we could give more guidance. No Wave fucked around with this message at 17:18 on Nov 6, 2013 |
# ¿ Nov 6, 2013 17:10 |
|
enthe0s posted:So would I do this through Vanguard I assume? Just open a general savings account? With Roth you can actually do the opposite - you can withdraw the contribution without penalty at pretty much any time but you can't withdraw interest gains until you qualify. koolkal posted:There's an option for early withdrawals called SEPP (Substantially Equal Periodic Payment) where you can set up a periodic withdrawal that avoids the tax penalty. It's very strict, though, and loving it up results in a huge backtax penalty.
|
# ¿ Nov 6, 2013 18:05 |
|
semicolonsrock posted:So, somewhat related question. I'm not interested in retiring early because I really enjoy all the work I'd be doing. What I am interested in, however, is taking 2 years or so off from being employed by other people to work on my own companies with an income to support myself so I can take risks I otherwise couldn't. So, over the next 3-4 years I'd like to save enough to support myself independently for 2 years. 1.) You'll have to make some decisions about what to do with your 401k/Roth IRA - ie, at what rate you'll contribute over the next 3-4 years. 2.) Make sure you budget for health care for the two years afterwards.
|
# ¿ Nov 25, 2013 13:52 |
|
SlightlyMadman posted:He's a fortunate dude who was smart enough to exercise common sense and take advantage of windfalls, but I don't think he deserves his reputation as a champion of frugality. I don't think that means he's lazy or a sell-out or anything though, and I agree that the criticisms of that nature posted earlier have got to be trolling. You say "early retirement" and 95% of people look at you like you have three heads. I'm happy with him keeping the blog "active" because millions of people could still benefit from reading the site. Including almost all of my friends from college. (note that MMM admits that he's not even very frugal anymore. If you want that, go to ERE) No Wave fucked around with this message at 19:23 on Jan 23, 2014 |
# ¿ Jan 23, 2014 19:19 |
|
SlightlyMadman posted:I think we're talking about two different things. I was referring to the comment that being frugal and riding a bicycle is lazy. That just seems intentionally inflammatory to me. I do however think statements like the above can be dangerous. What's relevant to the people who subscribe to SA is not representative of the general public. Most people will think you're crazy to consider early retirement because they're living paycheck-to-paycheck not because of irresponsible spending but rather being born into inescapable poverty. That's outside the scope of this thread though. Note sure why my statement was "dangerous", either.
|
# ¿ Jan 23, 2014 22:24 |
|
Cicero posted:This makes it sound like the optimal path is to invest in a traditional IRA and then convert it once you're in a low tax bracket. I feel like I'm missing something here because it seems like everyone is always about Roth IRAs. No Wave fucked around with this message at 22:53 on Jan 31, 2014 |
# ¿ Jan 31, 2014 22:27 |
|
Engineer Lenk posted:On the other hand, if you're maxing it out the Roth lets you put more away. 5500 pre-tax at marginal 30% tax rate is only equivalent to 3850 in a Roth. I did some math and over a long enough timeframe it comes out basically even, but in this case "long enough timeframe" means something like 40 years. I was assuming that you're in the 25% tax rate now and would be in the 15% tax rate during retirement. If your state allows you to deduct IRA contributions from state tax (does any state?) then it's probably a definite win to do Trad IRA and then converting in a low-income year. I'll probably start doing it going forward - not gonna freak out about this year because the timeframe for withdrawal is still long enough to make it come out nearly even... No Wave fucked around with this message at 14:29 on Feb 1, 2014 |
# ¿ Feb 1, 2014 14:22 |
|
Jeffrey posted:Is there any reason to put money into a 401k with no matching? It is treated as such common knowledge that I feel like I'm missing something. I'm happy to buy and hold index funds myself, saving me the the fees. I get that I can take money out at a lower tax bracket when I'm 65+, but it's kind of hard to estimate what percentage of my income I will need to save for pre-65 but post-retirement years. That also assumes that marginal tax rates will not go up in the next 40 years, which I'm not sure I want to bet on. The other benefit is not paying capital gains tax on the growth (the Roth 401K makes this more obvious, but the principle is still the same). For non-retirement accounts you have to pay 15% cap gains tax (unless your total income is below 35K). No Wave fucked around with this message at 21:54 on Mar 6, 2014 |
# ¿ Mar 6, 2014 21:51 |
|
Jeffrey posted:You don't pay capital gains tax on interest earned in a 401k? I thought you paid tax on all the money you withdraw from a retirement account, if not that's a huge win. No Wave fucked around with this message at 22:02 on Mar 6, 2014 |
# ¿ Mar 6, 2014 21:57 |
|
Jeffrey posted:EDIT: Have to think more Basically - if you have 10 thousand dollars that turns into 40K when you retire, it doesn't matter if you're taxed 25% now or later, as 7500*4 is 30K, which is 40K-.25(40K) - meaning that the skipping capital gains tax is a big win. It is theoretically possible to put yourself into a HIGHER tax rate in retirement than your current income with retirement accounts alone, it's just unlikely for most people. If you're a super-aggressive saver you'll want to do some thinking, but you'd have to be putting away quite a lot of your income. No Wave fucked around with this message at 22:07 on Mar 6, 2014 |
# ¿ Mar 6, 2014 22:03 |
|
Guinness posted:Given the unknown of future tax rates, for both income and capital gains, I still think it is beneficial to diversify the types of tax-advantaged accounts you hold. Since I max out my traditional 401k contribution that's a lot of investment with deferred taxes, so I choose to max a Roth IRA rather than a trad IRA to diversify the tax structures. The math will absolutely vary from person to person, of course.
|
# ¿ Mar 6, 2014 22:14 |
|
Nocheez posted:Just out of curiosity, do you include the extra money you'll likely spend on things like food, shoes, and possibly doctor's visits that bicycling can cause? I agree it's cheaper by a large amount, but there are definitely more costs associated than just the bike and repairs.
|
# ¿ May 9, 2014 17:22 |
|
loki k zen posted:How do you financial independence goons calculate cost in time?
|
# ¿ May 13, 2014 02:30 |
|
poopinmymouth posted:Yeah one of the things is to remember the line between frugality and deprivation. It will be different for everyone. I bought a 1,200 dollar camera a few years ago, but I have taken thousands of photos with it, managed to replace my expensive DSLR and multiple lenses, and have recorded some important memories. Whereas for many people that would not make sense. I happen to like being a bit high (and weed is way cheaper than booze per dose in Iceland) but sometimes a black russian is just what I want at dinner time.
|
# ¿ May 13, 2014 20:47 |
|
GoGoGadgetChris posted:Has anybody read the Four Hour Workweek? I'm halfway through and can't tell if I want to finish it or toss it in a furnace. His approach to FI appears to be "Hire India to live for you and sell workout supplements online" There were parts I found enormously liberating and hilarious, like the way that he has the four-step plan to being able to say you gave talks at Harvard University and Fortune 500 companies - and he's right. It puts you into the mindset of the ultimate cynic businessperson, able to adeptly navigate institutions while necessarily stripping them of whatever value they might have had in your mind. The book makes you much less eager to impress, and directs your efforts towards the factors that actually matter. It makes you choose what you're actually looking to maximize in your life, a question that most people don't have to answer. It's almost an instruction manual on killing your idols - the fancy car, credentials, money, international competitions - but it does leave you in the existential dilemma of not knowing what's next. I had to turn to hardcore philosophy to make sense of things after getting the FI mindset. Also, if you think you can follow anyone's else's path and make free easy money forever, you're an idiot. They're tools, not instructions manuals. No Wave fucked around with this message at 16:41 on May 30, 2014 |
# ¿ May 30, 2014 16:38 |
|
tuyop posted:It's practically useless unless you have a very specific skillset and ideals. If you're a knowledge worker who needs to help people face-to-face (think social workers, teachers, any medical professional) in order to feel worthwhile - which is most people in my experience - then outsourcing your life in order to satisfy your hedonistic desires will really not make you happy. Just because you can't or don't want to be Tim Ferriss doesn't mean that the book is useless. The constant lessons in applied automation - most memorably to me the idea that if people are coming to you for advice all the time, your workflow probably sucks - stick. In my experience, the only way past hedonism is through it - if you're tempted by material stuff you need to indulge in it to see that it's not the right end goal. This, I think, is why Ferriss recommends that people get exactly what they want immediately (such as by leasing that Mercedes) in a non-permanent way. If a thing is really important to you, it's probably cheaper to at least rent than you think, and it probably matters far less than you think. moana posted:Tim Ferris is an idiot and TFHW is a terribly saleable mix of common sense and braggadacio. I'd toss it in a furnace, but burning poison is supposed to be bad for your lungs, so No Wave fucked around with this message at 20:02 on May 30, 2014 |
# ¿ May 30, 2014 17:53 |
|
|
# ¿ Apr 25, 2024 07:18 |
|
moana posted:Give me one quote from that book that's actually useful or insightful. Because here, let me copy-paste some completely idiotic useless quotes from his book just by randomly picking them off of Goodreads: To pick one that you quoted: quote:“Alternating periods of activity and rest is necessary to survive, let alone thrive. Capacity, interest, and mental endurance all wax and wane. Plan accordingly.” Four hour work week is how he gets peoples' interest, like how Millionaire Fastlane starts out about a Lamborghini. Also not sure why you're calling him a dolt. I mean there is a dude who posted a thread in BFC who said that he started a $200,000+ a year passive income business because he read the 4-Hour Workweek. Obviously not typical results, but I don't know what other evidence of its potential usefulness is required. And he's not the only one to have been influenced by the book. EDIT: quote:Doing less meaningless work, so that you can focus on things of greater personal importance, is NOT laziness. This is hard for most people to accept, because our culture [American] tends to reward personal sacrifice instead of personal productivity. quote:It's amazing how someone's IQ seems to double as soon as you give them responsibility and indicate that you trust them. quote:Being overwhelmed is often as unproductive as doing nothing, and is far more unpleasant. Being selective - doing less - is the path of the productive. Focus on the important few and ignore the rest. quote:Creating demand is hard. Filling demand is easier. Don't create a product, then seek someone to sell it to. Find a market - define your customers - then find or develop a product for them. No Wave fucked around with this message at 20:48 on May 30, 2014 |
# ¿ May 30, 2014 20:35 |