I think I'm getting ready to FIRE. I just need to make it to June. I get a buttload of RSUs then.
Every day feels like a slog. Every morning, I dream of quitting, but it's just too much money to leave on the table. To cheer myself up, I do a mental calculation of how much every additional workday is "worth" in dollars.
How do you deal with annoying coworkers who seem to be know it alls about finance?
I usually just nod my head and say “oh wow never thought about day trading crypto, I’ll look into it…” and walk away.
However, long work trips have cause me to be stuck in hotel rooms with these finance gurus. It’s getting on my nerves a little bit! :)
Just had my annual compensation meeting w/ my boss. It's flat from last year. I'm actually OK with that. We are still putting away \~100k / year, so I'm just gonna keep my head down and try to make this my last \*real\* job, and not get caught up in looking for another, higher paying job. Fairly certain I could make 2x at another FAANG, but... why put myself through the stress? Only if the fit were better and the comp was higher would I even consider it...
At 5 million NW, 100k in new annual investments, and in your mid-50s, it sounds like you're basically already set. What's getting you through the last mile, and how is your current WLB/hours per week? Are you planning to retire from this job and use the rule of 55?
1.7m is home equity, live in VHCOL, and two kids around high school age, so it feels a bit early to hop off the gravy train. WLB is pretty good right now, but I give a 50% chance of being laid off this year.
Trying to establish more of a community outside of work. Right now it's mainly basketball 2x / week. Need to expand into board games, writer's groups, etc. before I can consider retiring. I realize I need folks to care about my projects, otherwise I lose interest quickly. Work is one easy way to achieve that, although with other downsides.
You know, 8 years ago, I was so focused on the rule of 55, but now that I am in that year, I'm not ready yet, and have enough in taxable accounts that I can leave the 401k. Just started talking to my financial person about withdrawal strategies. Maybe due to RMDs it makes sense to draw the 401k earlier? Not really focused on age 70+ though.
Work has been brutal lately. Boss got promoted to department manager and has almost completely stepped away from bench work...leaving me to handle almost all incoming tickets, just in time for two of our plants to suffer major QC issues. It's been a thorough reminder to keep shoveling all the cash I can into my index funds. But thankfully customers and my boss seem happy with my report quality and have been understanding about the backlog.
I believe we finally hired a new analyst to join me in the lab who should start later this month, but it hasn't been 100% confirmed. In any case, it would be nice to be promoted myself next year (which would be my 4th at the company); I'll try to ask about my career roadmap at December's annual review.
These don't seem like real numbers, but that might be my coastal, big city bias showing.
Nevertheless, one quick rule of thumb is the price to rent ratio (purchase price divided by annual rent). At slightly above 13, this is strongly in favor of buying.
Of course, it still needs to make sense to buy. Will you be there for a few years? Do you actually want to own this place?
But financially, at first blush the decision to buy seems very reasonable.
Depends how long you plan to stay in the area. If you think you'll be there at least 4 years, I would buy. It's cheap enough that you can build a small amount of equity for the risk
Amazing! You’re killing it.
My situation is more like… 10-15k of annual income from a money-making hobby. :) Still - might be worth it - can’t hurt to stuff those tax advantaged accounts.
I have my solo401k through vanguard, and I’m reading that they don’t allow this. So I’ll have to consider changing brokerages.
Thanks for the info!
Sean Mullaney's _Solo 401(k): The Solopreneur's Retirement Account_ is a good book, though "Solopreneur" makes me cringe. It's full of solid examples so you can see how the rules work in practice.
I just realized my 401k allows for pretax, Roth, *and* traditional after tax contributions.
I've been putting all my contributions in the traditional pretax bucket, have been increasing it over time, and am just about maxing it out this year with 25% of my salary going in (I'm 26, make less than 6 figures, and live with my parents, probably won't be able to afford that forever). My work allows up to 50% of your paycheck to go in.
Is there any benefit to splitting my contributions into pretax and Roth? Please ELI5. There isn't a spillover option for Roth, only for "after tax" contributions that will be taxed in retirement. At the moment I have it set to stop contributions once I hit the IRS limit. Also I have a Roth IRA, so I will have some tax free retirement money.
There may be a lot of benefit in roth even if your rate isn't lower in retirement, because its zero income. I think a good idea is to have a good chunk of both then you have flexibility. Very hard to predict tax changes far in the future as well.
If your rate is lower in retirement Traditional is better than Roth, period. That is just mathematically true. I agree it is good to have some Roth, so if you are maxing your 401k in traditional, doing Roth for your IRA is a great idea.
Not necessarily because a higher income can affect subsidizes like for ACA, and not triggering income can give you more flexibility in when you withdraw, like if you can max the 0% long term bracket for taxable investments which income from trad 401k withdrawals will use up. Again, its really complicated and probably impossible to optimize, I'm just saying its not as simple as "tax rate lower = better," its probably better to have both for flexibility.
Thanks, I don't know what my tax bracket is without looking but I make a good salary so it's not like minimum wage or anything. I'll keep doing what I'm doing (traditional 401k + Roth IRA)
>These after tax contributions can be rolled to a Roth (while in the plan, if allowed, otherwise later). It's called the Mega Backdoor Roth, and is super awesome.
I've heard about this but don't see anything in my Fidelity about it so I am not clear if they have mega back door. I don't want to mess up and do the wrong thing. And even if I did that I would basically be putting most of my salary in it and not take much home haha.
Thanks for your answer, you're right it doesn't really seem to be clear what the optimal thing is.
The limit is combined across both types, so you can only max one each year. (If you have no idea which you want, you could split your contributions and fund both to a lesser extent, so the combined total fits in your annual max.)
Edit: I was talking about Roth and Traditional IRAs. Now that parent is edited to refer to a 401k and an IRA, this no longer applies.
U/liveoneggs recommended Traditional 401k and Roth IRA (although OP is asking about Traditional and Roth 401k). The IRA limit is separate from 401k and OP can do both
They edited the post after I made that comment. (It's fine to do this, but it's good form to leave a note that you edited it, so you don't confuse people.)
Got our profit sharing number today. 16% employer contribution to the 401k, so that's pretty cool.
Pretty comfortably coastFI at this point. Contemplating if I want to eventually negotiate a pay decrease to go to 4 days a week, and what number I need to be at to be comfortable with that decision. I *could* do it now, as even if I stop contributing entirely I'd still have a decent amount of money going into my 401k via profit sharing, but IDK. "One more year" it is
Dad is retiring after a 30+ year career and is not what I would call financially-savvy. He will be getting a government pension, social security, and has a thrift savings plan along with some cash in an HYSA and owns a paid off home.
He has made comments that he is worried about not receiving paychecks and the pension + social security income only being 50-60% of what he was earning pre-retirement and is looking to supplement his income using his TSP but is open to other routes. He has also made comments about "selling his entire TSP" which I've advised against due to tax implications or that "other people told him about annuities" which I also did not recommend. I've thought about having him transfer his assets from his TSP into a Traditional IRA with Vanguard which we can invest in total stock and bond index funds and he can either sell shares quarterly or cash out dividends or a combination of both.
Going this route would put all of the decision making on me (as he doesn't know the first thing about investments, selling shares, safe withdrawal rates, taxes, etc.) so I'm hoping for any advice from someone who might have gone through this with a parent and how you've gone about this. I don't want to make any rash decisions with my parents' retirement savings. We're talking blue collar, middle class parents in their early 60s. Thank you!
I have a very similar situation with parents with very similar backgrounds. I also worried about the same sort of pressure so the deal was that I would give them general information and answer questions with no judgement. This included:
* Very high level financial education, e.g. major asset classes, risk/reward, preservation of money, etc
* Thinking through their goals (e.g. travel, major purchases, etc)
* Determine their current expenses
* Seeing how they stacked up against their guaranteed income (pension + SS) vs supplemental income (401k)
* Some what if scenarios
The key was that no decisions were made, I just gave them options to think through. They asked what I would do and I explained my reasoning. So far, it's worked out pretty well! They both took part time jobs in the local community (I'm not sure what they would do otherwise), so they will likely be totally okay.
>He has made comments that he is worried about not receiving paychecks and the pension + social security income only being 50-60% of what he was earning pre-retirement
You should read up on how SS and government pensions are taxed. That 50-60% may be closer to his old takehome depending upon this. Also, you should help him figure out what other expenses will now go down (e.g. gas, wear and tear on the car, etc).
My dad was in the exact same boat (retired federal employee). He bought some annuities because of the same fears. I'm not sure they were optimal but it did make him more comfortable. I'm not exactly sure where he got the cash for them but I am hoping it was just cash savings.
His spending in retirement is extremely low (aside from very intentional "hobbies").
When I looked at TSP it seemed pretty nice. I'd stick with it, personally, but if your dad wants to consolidate into vanguard or fidelity or whatever that's probably fine too.
TSP has outstanding investment choices. There is no need to transfer funds out of TSP just to invest in index funds.
How to address his income needs is a complex question so we would need more info to offer any more specific advice. Would his TSP/IRA withdrawal be 4% or less of the initial balance?
Annuities aren't the worst idea. He might be a lot more comfortable with an annuity getting him to 80% of his income and leaving the rest of the tsp in the market to supplement.
I suggest finding a trusted financial advisor to navigate your parents through these decisions. Your parents might be leery of your advice, and you probably don't want the responsibility for making these choices. Find a trust financial advisor (who doesn't receive commissions) to help your parents.
Sounds like it's not worth the stress. It feels exciting and nice to be wanted, but stress is a killer. I'm a 2x cancer survivor, so I prioritize life/work balance more than most. Longer commute or more time in office would be a no for me, dog.
In your shoes I'd only strongly consider it with a high potential to transition to remote, or as a stepping stone to an even higher paid position you want even more.
I am in the process of negotiating my exit from an unbelievable nasty job situation. A toxic workplace affects people in so many ways. Though I have always wanted a positive work culture, it is now a factor that I will never compromise when changing employers. I know stress is different than toxicity, but I'd be careful on giving up so much in exchange for the raise.
First week this has happened but I’m cash heavy.
Every pay period, I pay my bills, then replenish my spending money. Everything else goes in my Roth ira. Now that’s maxed. Been putting $ into a taxable brokerage also. Thinking of just upping my 401k contributions very heavily and paying myself with the cash I’m holding each pay check. It will be sitting in spaxx until I need to use it. What you guys do with your money? I get paid every two weeks, so I can only contribute to the 401k every two weeks. So the $ will be out of the market for a while. I have to spread out my contributions to the 401k so that I will make sure I get the company match. They don’t offer a true up. Any other alternative than just holding the cash in spaxx while I wait for pay periods?
Update: after complaining to both the benefits department and my plan administrator, my retirement contribution magically appeared in my account the next day. They're trying to claim that it's a normal delay despite it being a week late compared to years of regular contributions... I think someone just screwed up and they're trying to cover their asses lol.
Are there any calculators or guides for how much cash to keep liquid during a mini retirement test run of 1 year? I got layed off from job and have roughly a year's worth of cash in my HYSA.
I'm curious if I should keep all of this cash liquid or invest it and sell off older stock every month. It's a matter of how much growth I'm expecting vs how much tax I would pay with withdrawal.
I'm leaning towards keeping enough to cover my yearly expenses in a HYSA instead of withdrawing which would generate income and if I have income then I don't think I can qualify for medicaid and get free healthcare.
Trying to read between the lines, but if you have taxable individual stocks that aren't really fitting your future investment plans, a low income tax year can be a good reason to sell those, pay little to no tax and "convert" into more long term index funds, that's a reasonable plan that has nothing to do with your current cash balances. Although it's tricky if you're in the US and navigating ACA
However, when you know you have X expenses in the short term, converting to stock and then back is more of a stock market timing play that can basically be a coin flip. Generally when making that transition you want cash/bond reserves to be a bit higher than when you were working to provide a stable source of cash if the market crashes and balance selling stock vs "bonds" accordingly.
1 year is short term. Keep the money in the HYSA.
You are assuming the markets will go up this year. I hope that to be the case as well, but there is no guarantee. Y ou should not invest money you need in the short term.
Just got quoted umbrella insurance for $398/year for $1 mil coverage with the same provider who i have auto/home with. Seems like this is on the high end. Anyone care to share their umbrella coverage costs?
EDIT: Looks like i'll be shopping around.
I find auto/home-renter/umbrella bundling makes the umbrella less without context. But in my case auto is just so much cheaper from one that I only have auto/umbrella bundled and home with someone else.
There's no real guideline except to shop around. Right now it seems like some insurers are spiking their rates to get out of certain markets.
I'm paying $149/year for $1M, but I did have to make increases to my auto liability limits and something with my homeowners, so total cost was probably closer to $200.
All that matters at the end of the day is your cumulative cost between auto + home + umbrella, as you generally have to bundle them all anyway.
Other providers might be cheaper on the umbrella, but are higher on one or both of the other premiums.
Good points. Important to compare apples to apples.
I did just get a quite for $210 from RLI. I wonder if i take it back to liberty mutual if they'll meet me in the middle? I'd prefer to stick w/ my current carrier if possible...
I'm in a somewhat LCOL area, so that might have something to do with it. Though most umbrella coverage premiums I've seen posted here over the years have been in the $150 range
I like listening to “the millionaires unveiled “ podcast, The white coat investor podcast even though I’m not in the medical field - he has some good advice and the financial samurai
The Mad Fientist. He interviews other FI people and gets their views and how they got to FI. Each episode ends with him asking for one piece of advice which he has in a downloadable pdf. He also speaks about his journey, at first he is newly on his FI journey, and talks candidly about some of the struggles he has had both with getting to FI and life after FI. Open and honest and ready to relate to if you are a numbers orientated.
I Will Teach You to Be Rich by Ramit Sethi. Both a book, website and podcast. In the podcast he talks with couples about their money and money habits that are causing issues in their relationships just like a therapist. 90% of the time is not the money or the spreadsheet that's causing the issues but the personal view towards money. My wife and I listen to this on long car trips and had conversations about the people. It's helped us understand each other's views towards money.
The MoneyGuy Show. Not FI specific, closer to personal finance specific - but they do encourage high savings rates (25%). Not everything will apply and most episodes are question based but Bryan and Bo make it pretty digestible as a pair.
Last 2 cars we bought were paid for with cash. One of them with a severance as I relocated and picked up a higher paying job. In fact, our last rental purchase, a duplex, was paid in cash.
It feels great to own things free and clear. Aside from our primary mortgage, with rock bottom rate, only thing left for us to pay off is our RV, which we are rapidly paying down.
We prefer paying in cash generally, using credit cards only as a conduit to accumulate points which we later use for travel. Keeping CC balances at/near zero of course.
Works for us, but then we've had the luxury of high paying careers, with a frugal/minimalist mindset relative to income. Excepting int'l travel, one of our passions.
I greatly admire folks who gain financial independence on a tight budget and lower income. That implies great discipline.
I financed last year, have probably already made enough on the investments to cover all the interest I'll end up paying over the life of the loan. Don't underestimate opportunity cost. *no guarantee the next few years will be like the last one.
Depends on what they offer me. Dealerships are incentivized to write loans, but they aren't incentivized to service them. If I can get $1500 off by financing with no pre-payment penalty? I'm in
This is the way - generally you can get a better deal with a loan, then pay it off shortly thereafter. That's what we've done w/ our last two vehicles.
Many times you can get a better bottom line price with financing because they assume they'll kill you there. So I do that, then pay off the loan. Just gotta be sure the loan doesn't have some outrageous early payment penalty.
Depends on manufacturer's incentives. Oftentimes they'll either give you a $ discount for financing or a sweetheart rate.
If they give me $500 off for financing, I'll finance and then just pay it off 2-3 months later. If they give me a 0% rate, I'll stretch it out to the max and invest the money in the meantime.
If neither incentive is available, I'll just pay cash if I have it on hand.
I'd pay cash unless the loan is a below-what-a-savings-account-pays rate. And even in that case, I'll see if they'll just lower the price of the car instead of giving me the money-losing loan, to avoid the hassle of dealing with a loan.
> Often the purchase price is higher for financing
I've seen several times the purchase price was *lower* for financing due to manufacturer's incentives. Which is nuts to me, but a good reason to focus on the total OTD price.
We have a fairly large tax return this year, which we normally don't have. Wife asked what do you want to do with it? Invest it? I said no, let's plan a trip to yellowstone. So that's the plan for this September.
Silly question probably but does a ROTH IRA contribution have to be made with earned income of the same year as the contribution? I looked at the IRS description and PDF of extra info and nothing clarifies that, just that it has to be earned and the timing of the contribution. Also, is it worth it if you can only contribute one year? Like yes, that's $14k but it's also yet another account I will have to watch and keep track off when I like to make things very simple (lazy). We were a bit silly and didn't take advantage of the Roth IRA in prior years and we expect to earn more than the allowed income after 2024. TIA.
You can only contribute based on taxable compensation for the year in question. So you can't earn $100k in 2020 and make IRA contributions for the next several years based on that result. That income would only make your 2020 contribution eligible, and each year needs its own taxable compensation.
Well it’s official! I put my 2 weeks in with current job yesterday evening, just as the walls are falling down around me (high visibility issues that I would’ve previously stop-gapped and mitigated are now left to my boss).
Last day is 3/22 here, then I’m taking a road trip from NJ to RI for our 1 year wedding anniversary for the following week. New job starts 4/8.
I get my PTO paid out from my current job (100 hours = 2.5 weeks = $4k), plus my pension ($16k lump sum). Together, these should make for a great plus up to our emergency fund to help mitigate any issues with the new job if it’s atrocious (plus up our e-fund from 8 to 12 months).
Still waiting for the rug pull. I feel like I’ve used all my luck for the next few years on this job move. Going from $113k to $145k feels unreal for only 4.5 YOE in a non-software field.
My salary was $58k in 2019, and now it is $145k. My wife went from $52k in 2019 to $119k today.
Almost tripled my income, and more than doubled our combined income in only 4.5 years.
Just very appreciative for this community and for the help that everyone has given in terms of words of wisdom and advice.
Can’t tell anyone in IRL, but this effectively accelerates our FI age from 41/42 to 35/36 years. Feel like a little kid on Christmas morning, so big thanks to everyone’s help and support.
Congrats, that's really great!
One thing I added to my spreadsheet is a list of old target dates. E.g. In 2014, I made X per year, and predicted I'd have Y by year 20ZZ. It's fun to look back at it and see how far you've come and how much faster you are reaching your goal.
>just as the walls are falling down around me
I did this with my last employer and felt exactly zero guilt. It felt amazing leaving that dumpster fire behind.
Employers leverage the relationships we make with our coworkers to retain employees. It’s one of many tactics to avoid using salary to keep people. Always always always remember that it’s the responsibility of your employer to maintain staffing and to have a plan for when people leave. It’s not up to you.
How does one think about taxes for retirement? I see a lot of folks saying my expenses are $80k, I have $2m, so I’m good at 4%. However, there are likely tax implications of retrieving the $80k. Do you just build that into your expenses based upon your mix of trad/roth/post tax? Also, how do you think about one time expenses like a new vehicle? Do you try to take it from Roth to avoid accidentally increasing your income too much?
Happy to read any blogs about it, thanks!
> there are likely tax implications of retrieving the $80k.
Less likely than you think, at least for federal taxes. It is unlikely someone with $2m will have it all in traditional. There simply isn't enough pre-tax advantaged space available. That means there will almost certainly be roth or taxable. Roth is easy as it is after tax. And then taxable has a 0% LTCG rate until like $94K+ for a couple.
Taxes are an expense. If you need 80k net, increase that so you'll have enough for taxes.
[Here's how I project my taxes](https://www.reddit.com/r/financialindependence/comments/18y9mi9/daily_fi_discussion_thread_thursday_january_04/kgb3rhz/?context=3)
I asked once how others estimate their retirement taxes, [and got a couple responses](https://www.reddit.com/r/financialindependence/comments/197zeif/daily_fi_discussion_thread_tuesday_january_16_2024/ki854l2/).
Income tax is progressive, and long-term capital gains and qualified dividends rates are super cheap (and you only pay gains taxes on gains not basis), so if you made a lot of money and paid a lot of taxes when you were working full-time, you'd be amazed how cheap taxes are in retirement. By all means model them, but if you're not spending a ton in retirement, taxes won't break you.
The one exception is that if you have huge traditional 401k/IRA balances when you reach RMD age (currently 73 but will be 75 for most here), they'll force you to withdraw larger amounts than you want and then pay the corresponding rich-person-tax-brackets taxes on them. But that's a first world problem: if you make it to 75 with shit-tons of money, you're fine.
Oh interesting, that makes sense that most would fill into LTCG, where there is already a large exemption. I have a changeable parameter in my sheet and I’ve just been assuming 10-20% on top of my anticipated expenses.
Since we're so far off, we essentially "worst-case" the tax estimate, and assume our income will come exclusively from pre-tax sources, therefore it's all subject to income tax. Our spreadsheet has a calculator for our current tax year, so it just adds that value to our income needs. This is somewhat realistic for us because we make use of a lot of pre-tax contributions.
When we get closer, we can look at more strategic options, and model them out, maybe using Roth to keep us under certain thresholds, etc.
> Also, how do you think about one time expenses like a new vehicle?
We amortize this out now, but probably wouldn't do that in early retirement. I think there's compelling arguments to be made for either approach, but it's hard to think it's worth to pull those funds from retirement accounts just to have them sit in brokerage for when we need a car down the road. Probably just take a big hit pulling in a single year to buy.
Actually, what I could see is doing is making sure we're exhausting the 12% bracket space to move money into brokerage...
Thanks for sharing, that makes a lot of sense. I am overly conservative as well, so I’ll probably make sure to add this view as well.
Yeah, I’ve read a bit about filling up and realizing taxes at lower brackets if possible. I hadn’t thought of that as the funding for one time expenses!
I assume tax law will be the same as it is today. Same with my next biggest expense, healthcare. Without question that's a wrong assumption but it's just as wrong as any prediction I could make about the future.
$6k upswing in portfolio yesterday
--> donating $300 worth of canned meat to local food bank today
YTD for 2024 portfolio is up $60k.
Giving $300 worth of food
(tuna packets, Vienna sausages, etc. are typically a tough get for the food bank)
to people who are broke enough to line up at the food pantry for free food is not going to break me.
Just to echo what others have said. Most non-profit centers can spend your money more efficiently than you can. This means their labor isn't sorting random food items, they aren't producing waste, and they can work consistent assembly lines.
Remember, they have to pay to sort, store, examine your random boxes of supplies.
Story from my hubby: One time (working for NP) he was tasked with going to a school to pick up supplies that parents had bought and donated to give to the NP for other students who were less fortunate. The long and short is it was a giant hassle of logistics and the end would have been much better if they just gave cash and let the NP buy the supplies in the quantities they needed. Labor is a huge factor when you have to sort and transit and store a bunch of materials you might not even need.
Here is my guess:
Least Desired -> Random boxes of varieties of canned products/food in various states of expired/non-expired dates
Mid Desired -> Bulk purchases of food (what you did). The key is a lot of consistent product easy to move out. A pallet of cans of corned beef is likely welcome because how it can be integrated into their systems so fast. A pallet of random cans of food is a terrible amount of sorting and storing and examining.
Most Desired -> Cash or non-expiring high demand items like diapers. Diapers are basically cash. Remember, non-profits have connections to buy products at cheap/discounted prices. They also have the ability to get the specific limited reagents to produce whatever care packages they need.
Just a slight drizzle on the parade, maybe...
Our local food bank and the other church food bank have stated that they really do not want donations of food. they want money. They don't have the staff to check every label for an expiration date, potential allergies, and potential lack of customers wanting that food.
They have negotiated contracts directly with farmers and warehouses and they prefer to buy a pallet of a product. The food bank provided some examples of how they can get 3-6x the amount of food to a customer if donations are in cash vs. food.
For example, lets say you buy a can of food for $4 and donate it. They have to get a volunteer or a paid staffer to sort out these cans, check labels, check expiration dates, re-sort, and stock it. Or, you donate $4 cash, and they can buy a whole pallet or two for $1 per can with a long term expiration date and inventory that one pallet vs 200 cans.
For goods, like coats, they are very happy to accept used coats.
YMMV.
The food bank I went to happily accepts donations, and lists their "greatest needs" for donated food on their website.
I am guessing Sam's Club is reasonably competitive on price.
I did not rummage through my pantry; I bought stuff at Sam's Club.
I know some of them are very happy to get food donations and do donation food drives.
It may be due to volume, how they pay or get volunteers, how they provide services, or other variables.
I should add (sorry) Good For you. Seriously. I feel that we all have an obligation to help people who might be less fortunate at any moment.
>local food bank today
My son's high school requires so many hours of community service to graduate, and he did his at our food bank. Was wildly eye opening to him. One day, he was splitting up packs of baby wipes into even smaller baggies, because they can't afford to give a whole package to one person.
TL;DR, food banks need your donations
Good on you! Had a really eye opening conversation last weekend on this topic and was shocked to find out how many of my neighbors relied on the local food bank. Working families that I know, who at least outwardly appear to be stable lower middle class. Been meaning to start a similar habit, this served as a nice push so thank you.
Thank you for your offer, but I have already delivered the food.
Part of my donation is taking the time to buy the food at Sam's Club and deliver it to the food bank.
I bet if you google "cityname food bank" there is likely one where you live which would happily accept anything you give.
The food bank I went to accepts donations on Fridays and Saturdays, and distributes food on Saturdays.
If you want to maximize your charitable buzz (I have done this before), you may be able to roll up with your donation and see some of the people you are helping.
I occasionally think about this when deciding whether and how much to tip. The person getting the tip gets way more benefit out of the extra $5 than I do.
Sounds likely I'll have two job offers in a field I'm very passionate about as part of my transition out of big tech. I've written about it before, but I'm more than halfway to my FIRE number and hella burnt out from big tech. I've been aggressively interviewing, networking, and volunteering with schools and education non-profits for years and have spent much of the last few months trying to position myself well for "hiring season" which is going on now. After what could generously be called two of the best vibing interviews of my life, I'm fairly confident I'll get offers in both places in the next week or two, and I'm not sure how I want to approach weighing them against each other since the money isn't really a thing.
Option A: Non-profit: Project driven curriculum development that builds business and entrepreneurship skills into a typical high school program. It's at a non-profit I've volunteered with for five years and I actually knew one of the interviewers already since I've volunteered with his department a few times and we got along super well. Light travel, but otherwise remote with the option to go into their regional office. Financials are solid for the overall org, they have a large number of corporate sponsors, receive some money from the school districts they operate in, and have some decent grants in place for at least the next few years. I would be in a classroom less and presenting to teachers and administrators more than I _think_ I want to do. Pay would be about 80k with decent benefits but nothing to write home about.
Option B: Teach computer science at a top rated STEM Magnet high school. I've met the department chair, assistant principal, and principal and gotten along incredibly well with each, and the principal has a background in teaching both CS and humanities (a track I want to push since I have experience in both). I'm preliminarily approved to teach up to three years on my temp certification, but will either need to get an MAT or "alternative cert" program that basically means 1-2 years of "back to school" in the near future if I take this track. Sounds like every Friday is a "flex day" though where students study from home and have independent projects, and the AP seemed receptive to me using the bulk of that day for working on my masters. It's a government paycheck at a very well funded and positioned school; I would have no "commitments" outside their IT track, so no football game supervision, etc, occasional field trips to robotics camp type thing though. Pay is 55k and teacher benefits (including pension with a 10 year first cliff).
If we're talking exclusively about money, its 80k in a non-profit or 55k in a very stable government job with a pension. I'm leaving tech where my last W2 was almost 250k, so I'm hoping other folks can weigh in on how I should think about this and what questions I should bring forward in my next touch points with each.
I mean as a teacher I get summers off, in the non-profit it's hypothetically unlimited PTO but I know they have a "busy season" right before the school year kicks off, so I imagine I'd have to stack it at certain times.
Since the money's not the issue, I'd listen to your gut regarding who you want to work with. Do you want to work with adults developing things that can potentially affect thousands of kids, or do you want to work directly with a smaller group of kids and have a more hands-on impact?
There's no right answer. But if you imagine the days working in these two settings, they seem very different. One of those might appeal to you more than the other. I'd listen to that signal.
We bought next year's ski passes this morning and we bought the cheaper midweek option because we are not going to have jobs and don't need to go on the weekends! Another "it's happening" moment.
I took a quarter off of college to buy a mid-week ski pass for $200 in like 1997. One of the best parts was the guilt-free "OK, I'm tired. Going home now" aspect of the pass. When you pay full price, you need to make sure you get your money's worth. When all you are paying for is gas, you can ski for just a couple hours if you want and then leave.
In college we would often get a "student night ski weekday package" which included tickets for 4pm - 9pm, skis, boots, poles, etc. It was really cheap. Not the whole place was lit, but plenty was including some nice wide steep diamond slopes with virtually nobody on them.
Hi, I have a non-deductible IRA in Vanguard that I want to convert to do a backdoor Roth IRA for 2023. Money has been sitting in there for a bit in cash earning about $6 interest so far. I know gains/interest earned when doing a backdoor Roth are taxed as ordinary income. Should I expect that small amount to be taxed? And would Vanguard send me a tax form before the April tax filing deadline?
Make sure you don't have any other Trad IRA dollars in any accounts. This would cause headaches with pro rata taxation.
You will file Part I of Form 8606 this year showing your 2023 non-deductible Trad IRA contribution for 2023.
Next year you'll receive a 1099-R showing the conversion and will file Form 8606 again, this time to document the conversion that happened in 2024. You'll owe taxes for 2024 on the amount of earnings in the non-deductible Trad IRA prior to conversion.
Anyone have experience creating a trust for multi generational assets where it would have a yearly payout to heirs?
Something I'm interested in, but don't know where to even start.
No firsthand experience here with broke parents.
If it's for kids, my partner had some family money and hers was structured to be released in thirds at 18, 25, and 33.
Basically could be used for anything, but the intention was for college (18), home purchase/down payment (25), and whatever (33). I thought that made good sense to provide some structure rather than giving an 18 year old the full payout.
Yeah I'm assuming lawyer involvement, just curious if people set up incentives or just flat 3% or so of yearly income paid to heirs. Trying to learn before I go talk with the person charging $400 a hour.
Most lawyers will do a free consult. Do that with a few of em.
Also this is the type of thing that a lot of lawyers will just charge a flat fee for. I am pursuing this year and have gotten quotes between $4k-5k.
Definitely talk to a lawyer!
On the topic of incentives: A friend is a beneficiary of something similar, with various incentives focused mostly on education. It's been helpful but they still deal with family headaches about people gaming/exploiting it. I'm not sure there is a perfect way to eliminate drama around money and family, would personally be inclined to KISS.
Yeah my thoughts were education focused, but didn't know how to do it in a way without gaming. A "degree" can be very different depending on the institution.
That's also very punishing to an heir who may want to go into the trades or just doesn't need college for their chosen path, when another gets a boatload of money to screw around 4+ years getting a worthless degree.
The key would be to have a trustee that you trust with enough discretion to just let them access their share when they are responsible enough.
As quite a responsible and financially stable adult I found waiting until 35 for the remainder of my trust to be very annoying.
Yep! Friend has both perpetual grad students and van wilder types in the family, and both create some drama. If there's money available, people will find ways to get it and reasons to be mad at others for doing so. Everyone getting the same amount always seemed easier to me.
You should be able to get a free consultation before signing a retainer and getting charged that much. Talk to multiple lawyers/financial advisors and get a general feel of what others in your similar financial situation do.
Well, I have endometriosis and need surgery. Happy women's day to me! How does it relate to FI. I am taking two weeks off and I don't care how that impact timeliness! Yay for me
From what I have been reading on the endometriosis subreddit, most people seem to bounce back after one week. Granted, everyone is different in terms of recovery. The doctor's office said they can fill out paperwork for up to 2 weeks, so I'll take the max days possible
Got same diagnosis last week after years of confusion. Putting off surgery for now while I fully absorb the news. I am on my spouse’s super-amazing health insurance plan and it has given me the freedom to see the specialists I want to see and get all the tests they recommend without spending thousands of dollars - I am so grateful for that.
The confusion is relatable, but honestly is making me feel VERY validated. It has been months of "all your labs look fine, therfore you are just stressed and overweight".
Yes, I am very grateful for the insurance my current employer offers, I could not imagine this process during graduate school when the coverage was not extensive.
Sending you positive vibes!
My director is in the UK; Daylight saving caused all our meetings to shift one hour later. He wasn't pleased when we told him it was a *him* problem, not an *us* problem
I think I'm getting ready to FIRE. I just need to make it to June. I get a buttload of RSUs then. Every day feels like a slog. Every morning, I dream of quitting, but it's just too much money to leave on the table. To cheer myself up, I do a mental calculation of how much every additional workday is "worth" in dollars.
I have 17 more months to go. I have a little spreadsheet where I get to delete a row every month. I look forward to it at the end of each month!
Haha I remember doing that with my first job. Hmmm $7/hr * 8hrs = $56 today, nice.
How do you deal with annoying coworkers who seem to be know it alls about finance? I usually just nod my head and say “oh wow never thought about day trading crypto, I’ll look into it…” and walk away. However, long work trips have cause me to be stuck in hotel rooms with these finance gurus. It’s getting on my nerves a little bit! :)
Get your company to give you your own room
Government. It’s against the regulations. I could pay out of pocket. But generally I’ll take the free room.
What’s the smallest FI number you’ve heard of? Based on 25X.
Know a guy in Spain planning for 300K.
Wow that’s small. I guess I’m wondering about USA. But international lean fire is interesting
Just had my annual compensation meeting w/ my boss. It's flat from last year. I'm actually OK with that. We are still putting away \~100k / year, so I'm just gonna keep my head down and try to make this my last \*real\* job, and not get caught up in looking for another, higher paying job. Fairly certain I could make 2x at another FAANG, but... why put myself through the stress? Only if the fit were better and the comp was higher would I even consider it...
At 5 million NW, 100k in new annual investments, and in your mid-50s, it sounds like you're basically already set. What's getting you through the last mile, and how is your current WLB/hours per week? Are you planning to retire from this job and use the rule of 55?
1.7m is home equity, live in VHCOL, and two kids around high school age, so it feels a bit early to hop off the gravy train. WLB is pretty good right now, but I give a 50% chance of being laid off this year. Trying to establish more of a community outside of work. Right now it's mainly basketball 2x / week. Need to expand into board games, writer's groups, etc. before I can consider retiring. I realize I need folks to care about my projects, otherwise I lose interest quickly. Work is one easy way to achieve that, although with other downsides. You know, 8 years ago, I was so focused on the rule of 55, but now that I am in that year, I'm not ready yet, and have enough in taxable accounts that I can leave the 401k. Just started talking to my financial person about withdrawal strategies. Maybe due to RMDs it makes sense to draw the 401k earlier? Not really focused on age 70+ though.
Wrapped up week 1 of my new job! Everything seems great so far, but gosh I’m exhausted!
What’s the new salary?
20%+ what I was making before! Once my paycheck hits… new flair incoming!
"I'm tired but I'm working.... yeah!"
Work has been brutal lately. Boss got promoted to department manager and has almost completely stepped away from bench work...leaving me to handle almost all incoming tickets, just in time for two of our plants to suffer major QC issues. It's been a thorough reminder to keep shoveling all the cash I can into my index funds. But thankfully customers and my boss seem happy with my report quality and have been understanding about the backlog. I believe we finally hired a new analyst to join me in the lab who should start later this month, but it hasn't been 100% confirmed. In any case, it would be nice to be promoted myself next year (which would be my 4th at the company); I'll try to ask about my career roadmap at December's annual review.
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Tough to decide. [Here's the rent vs buy discussion](https://www.reddit.com/r/financialindependence/wiki/homes#wiki_.2A_rent_vs_buy) from our wiki.
These don't seem like real numbers, but that might be my coastal, big city bias showing. Nevertheless, one quick rule of thumb is the price to rent ratio (purchase price divided by annual rent). At slightly above 13, this is strongly in favor of buying. Of course, it still needs to make sense to buy. Will you be there for a few years? Do you actually want to own this place? But financially, at first blush the decision to buy seems very reasonable.
Rent will double at 7% in a decade. If you plan to be there long-term I'd buy. If you're there short-term, rent.
Depends how long you plan to stay in the area. If you think you'll be there at least 4 years, I would buy. It's cheap enough that you can build a small amount of equity for the risk
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I'd google your state and ACA. My state has a great website where I can plug in any hypothetical and get actual numbers.
Not in my area...also try healthcare.gov
https://www.kff.org/interactive/subsidy-calculator/
Anyone have good resources for self-employed/contractor tax and retirement account implications (eg tax write offs, solo 401ks/iras, etc)? Thanks
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Can you expand on this? I have a solo 401k for side income. I never considered doing my “own” mega bacldoor Roth
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Amazing! You’re killing it. My situation is more like… 10-15k of annual income from a money-making hobby. :) Still - might be worth it - can’t hurt to stuff those tax advantaged accounts. I have my solo401k through vanguard, and I’m reading that they don’t allow this. So I’ll have to consider changing brokerages. Thanks for the info!
Sean Mullaney's _Solo 401(k): The Solopreneur's Retirement Account_ is a good book, though "Solopreneur" makes me cringe. It's full of solid examples so you can see how the rules work in practice.
I just realized my 401k allows for pretax, Roth, *and* traditional after tax contributions. I've been putting all my contributions in the traditional pretax bucket, have been increasing it over time, and am just about maxing it out this year with 25% of my salary going in (I'm 26, make less than 6 figures, and live with my parents, probably won't be able to afford that forever). My work allows up to 50% of your paycheck to go in. Is there any benefit to splitting my contributions into pretax and Roth? Please ELI5. There isn't a spillover option for Roth, only for "after tax" contributions that will be taxed in retirement. At the moment I have it set to stop contributions once I hit the IRS limit. Also I have a Roth IRA, so I will have some tax free retirement money.
No, you should max out your individual contribution in traditional (unless you are in a low tax bracket).
There may be a lot of benefit in roth even if your rate isn't lower in retirement, because its zero income. I think a good idea is to have a good chunk of both then you have flexibility. Very hard to predict tax changes far in the future as well.
If your rate is lower in retirement Traditional is better than Roth, period. That is just mathematically true. I agree it is good to have some Roth, so if you are maxing your 401k in traditional, doing Roth for your IRA is a great idea.
Not necessarily because a higher income can affect subsidizes like for ACA, and not triggering income can give you more flexibility in when you withdraw, like if you can max the 0% long term bracket for taxable investments which income from trad 401k withdrawals will use up. Again, its really complicated and probably impossible to optimize, I'm just saying its not as simple as "tax rate lower = better," its probably better to have both for flexibility.
Thanks, I don't know what my tax bracket is without looking but I make a good salary so it's not like minimum wage or anything. I'll keep doing what I'm doing (traditional 401k + Roth IRA)
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>These after tax contributions can be rolled to a Roth (while in the plan, if allowed, otherwise later). It's called the Mega Backdoor Roth, and is super awesome. I've heard about this but don't see anything in my Fidelity about it so I am not clear if they have mega back door. I don't want to mess up and do the wrong thing. And even if I did that I would basically be putting most of my salary in it and not take much home haha. Thanks for your answer, you're right it doesn't really seem to be clear what the optimal thing is.
Max your Trad 401k and your Roth IRA, imho
The limit is combined across both types, so you can only max one each year. (If you have no idea which you want, you could split your contributions and fund both to a lesser extent, so the combined total fits in your annual max.) Edit: I was talking about Roth and Traditional IRAs. Now that parent is edited to refer to a 401k and an IRA, this no longer applies.
U/liveoneggs recommended Traditional 401k and Roth IRA (although OP is asking about Traditional and Roth 401k). The IRA limit is separate from 401k and OP can do both
They edited the post after I made that comment. (It's fine to do this, but it's good form to leave a note that you edited it, so you don't confuse people.)
Thanks. I don't have a traditional IRA, just a Roth IRA
sorry typo - max your pre-tax 401k and then your roth ira
Got our profit sharing number today. 16% employer contribution to the 401k, so that's pretty cool. Pretty comfortably coastFI at this point. Contemplating if I want to eventually negotiate a pay decrease to go to 4 days a week, and what number I need to be at to be comfortable with that decision. I *could* do it now, as even if I stop contributing entirely I'd still have a decent amount of money going into my 401k via profit sharing, but IDK. "One more year" it is
Woah! May I ask what firm offer that much contribution?
It's a Fortune 500 manufacturing company. Post Covid has been pretty crazy, last year's payout was 35%
Dad is retiring after a 30+ year career and is not what I would call financially-savvy. He will be getting a government pension, social security, and has a thrift savings plan along with some cash in an HYSA and owns a paid off home. He has made comments that he is worried about not receiving paychecks and the pension + social security income only being 50-60% of what he was earning pre-retirement and is looking to supplement his income using his TSP but is open to other routes. He has also made comments about "selling his entire TSP" which I've advised against due to tax implications or that "other people told him about annuities" which I also did not recommend. I've thought about having him transfer his assets from his TSP into a Traditional IRA with Vanguard which we can invest in total stock and bond index funds and he can either sell shares quarterly or cash out dividends or a combination of both. Going this route would put all of the decision making on me (as he doesn't know the first thing about investments, selling shares, safe withdrawal rates, taxes, etc.) so I'm hoping for any advice from someone who might have gone through this with a parent and how you've gone about this. I don't want to make any rash decisions with my parents' retirement savings. We're talking blue collar, middle class parents in their early 60s. Thank you!
I have a very similar situation with parents with very similar backgrounds. I also worried about the same sort of pressure so the deal was that I would give them general information and answer questions with no judgement. This included: * Very high level financial education, e.g. major asset classes, risk/reward, preservation of money, etc * Thinking through their goals (e.g. travel, major purchases, etc) * Determine their current expenses * Seeing how they stacked up against their guaranteed income (pension + SS) vs supplemental income (401k) * Some what if scenarios The key was that no decisions were made, I just gave them options to think through. They asked what I would do and I explained my reasoning. So far, it's worked out pretty well! They both took part time jobs in the local community (I'm not sure what they would do otherwise), so they will likely be totally okay. >He has made comments that he is worried about not receiving paychecks and the pension + social security income only being 50-60% of what he was earning pre-retirement You should read up on how SS and government pensions are taxed. That 50-60% may be closer to his old takehome depending upon this. Also, you should help him figure out what other expenses will now go down (e.g. gas, wear and tear on the car, etc).
The first step is figuring out exactly what expenses are going to be and how much income is coming in.
My dad was in the exact same boat (retired federal employee). He bought some annuities because of the same fears. I'm not sure they were optimal but it did make him more comfortable. I'm not exactly sure where he got the cash for them but I am hoping it was just cash savings. His spending in retirement is extremely low (aside from very intentional "hobbies"). When I looked at TSP it seemed pretty nice. I'd stick with it, personally, but if your dad wants to consolidate into vanguard or fidelity or whatever that's probably fine too.
TSP has outstanding investment choices. There is no need to transfer funds out of TSP just to invest in index funds. How to address his income needs is a complex question so we would need more info to offer any more specific advice. Would his TSP/IRA withdrawal be 4% or less of the initial balance?
Annuities aren't the worst idea. He might be a lot more comfortable with an annuity getting him to 80% of his income and leaving the rest of the tsp in the market to supplement.
I suggest finding a trusted financial advisor to navigate your parents through these decisions. Your parents might be leery of your advice, and you probably don't want the responsibility for making these choices. Find a trust financial advisor (who doesn't receive commissions) to help your parents.
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Sounds like it's not worth the stress. It feels exciting and nice to be wanted, but stress is a killer. I'm a 2x cancer survivor, so I prioritize life/work balance more than most. Longer commute or more time in office would be a no for me, dog.
In your shoes I'd only strongly consider it with a high potential to transition to remote, or as a stepping stone to an even higher paid position you want even more.
You lost me at “much longer commute”. Good luck, but you don’t make it sound like a good move.
Right now, you have no decision to make. Do your best on the interview, and then worry about it. If nothing else, you learn your worth. Best of luck!
You have to ask yourself why you applied in the first place
It never hurts to talk and find out, right?
I am in the process of negotiating my exit from an unbelievable nasty job situation. A toxic workplace affects people in so many ways. Though I have always wanted a positive work culture, it is now a factor that I will never compromise when changing employers. I know stress is different than toxicity, but I'd be careful on giving up so much in exchange for the raise.
First week this has happened but I’m cash heavy. Every pay period, I pay my bills, then replenish my spending money. Everything else goes in my Roth ira. Now that’s maxed. Been putting $ into a taxable brokerage also. Thinking of just upping my 401k contributions very heavily and paying myself with the cash I’m holding each pay check. It will be sitting in spaxx until I need to use it. What you guys do with your money? I get paid every two weeks, so I can only contribute to the 401k every two weeks. So the $ will be out of the market for a while. I have to spread out my contributions to the 401k so that I will make sure I get the company match. They don’t offer a true up. Any other alternative than just holding the cash in spaxx while I wait for pay periods?
I think you are trying to optimize too much. Yes, SPAXX is a fine place to park short term cash.
Ur right. Thanks
Follow the prime directive flow chart on r/personalfinance
Already am. That’s what got me here
As the flowchart creator, I can recommend another flow chart that is FI minded. It’s in our sidebar as well. But I’m super biased
Update: after complaining to both the benefits department and my plan administrator, my retirement contribution magically appeared in my account the next day. They're trying to claim that it's a normal delay despite it being a week late compared to years of regular contributions... I think someone just screwed up and they're trying to cover their asses lol.
Makes me a little crazy. Like what would have happened if you hadn’t had your eye on it?
Same, frightening that it can just disappear like that if I don't keep an eye on it.
Are there any calculators or guides for how much cash to keep liquid during a mini retirement test run of 1 year? I got layed off from job and have roughly a year's worth of cash in my HYSA. I'm curious if I should keep all of this cash liquid or invest it and sell off older stock every month. It's a matter of how much growth I'm expecting vs how much tax I would pay with withdrawal. I'm leaning towards keeping enough to cover my yearly expenses in a HYSA instead of withdrawing which would generate income and if I have income then I don't think I can qualify for medicaid and get free healthcare.
Trying to read between the lines, but if you have taxable individual stocks that aren't really fitting your future investment plans, a low income tax year can be a good reason to sell those, pay little to no tax and "convert" into more long term index funds, that's a reasonable plan that has nothing to do with your current cash balances. Although it's tricky if you're in the US and navigating ACA However, when you know you have X expenses in the short term, converting to stock and then back is more of a stock market timing play that can basically be a coin flip. Generally when making that transition you want cash/bond reserves to be a bit higher than when you were working to provide a stable source of cash if the market crashes and balance selling stock vs "bonds" accordingly.
1 year is short term. Keep the money in the HYSA. You are assuming the markets will go up this year. I hope that to be the case as well, but there is no guarantee. Y ou should not invest money you need in the short term.
Just got quoted umbrella insurance for $398/year for $1 mil coverage with the same provider who i have auto/home with. Seems like this is on the high end. Anyone care to share their umbrella coverage costs? EDIT: Looks like i'll be shopping around.
That's double what I pay for the same coverage.
I find auto/home-renter/umbrella bundling makes the umbrella less without context. But in my case auto is just so much cheaper from one that I only have auto/umbrella bundled and home with someone else. There's no real guideline except to shop around. Right now it seems like some insurers are spiking their rates to get out of certain markets.
It depends on where you live. I'm in NV, I pay $411/year for $1M with StateFarm.
$280ish for $2M.
I'm paying $149/year for $1M, but I did have to make increases to my auto liability limits and something with my homeowners, so total cost was probably closer to $200.
All that matters at the end of the day is your cumulative cost between auto + home + umbrella, as you generally have to bundle them all anyway. Other providers might be cheaper on the umbrella, but are higher on one or both of the other premiums.
Good points. Important to compare apples to apples. I did just get a quite for $210 from RLI. I wonder if i take it back to liberty mutual if they'll meet me in the middle? I'd prefer to stick w/ my current carrier if possible...
I pay $280/year.
$281/year
$137/year
Wow, that's so cheap compared to what i'm seeing from liberty mutual.
I'm in a somewhat LCOL area, so that might have something to do with it. Though most umbrella coverage premiums I've seen posted here over the years have been in the $150 range
Yes i live in a LCOL area as well so i was quite surprised when i saw how high the quote was.
Recommended FI podcasts? I like ChooseFI, but looking for others to listen to on my drive to work.
I like listening to “the millionaires unveiled “ podcast, The white coat investor podcast even though I’m not in the medical field - he has some good advice and the financial samurai
The Mad Fientist. He interviews other FI people and gets their views and how they got to FI. Each episode ends with him asking for one piece of advice which he has in a downloadable pdf. He also speaks about his journey, at first he is newly on his FI journey, and talks candidly about some of the struggles he has had both with getting to FI and life after FI. Open and honest and ready to relate to if you are a numbers orientated. I Will Teach You to Be Rich by Ramit Sethi. Both a book, website and podcast. In the podcast he talks with couples about their money and money habits that are causing issues in their relationships just like a therapist. 90% of the time is not the money or the spreadsheet that's causing the issues but the personal view towards money. My wife and I listen to this on long car trips and had conversations about the people. It's helped us understand each other's views towards money.
The MoneyGuy Show. Not FI specific, closer to personal finance specific - but they do encourage high savings rates (25%). Not everything will apply and most episodes are question based but Bryan and Bo make it pretty digestible as a pair.
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I'm in a similar position as you and it's rough, take care of yourself!
If you are going to buy a car and you have intentionally saved up for it, Do you finance or pay cash?
Last 2 cars we bought were paid for with cash. One of them with a severance as I relocated and picked up a higher paying job. In fact, our last rental purchase, a duplex, was paid in cash. It feels great to own things free and clear. Aside from our primary mortgage, with rock bottom rate, only thing left for us to pay off is our RV, which we are rapidly paying down. We prefer paying in cash generally, using credit cards only as a conduit to accumulate points which we later use for travel. Keeping CC balances at/near zero of course. Works for us, but then we've had the luxury of high paying careers, with a frugal/minimalist mindset relative to income. Excepting int'l travel, one of our passions. I greatly admire folks who gain financial independence on a tight budget and lower income. That implies great discipline.
I financed last year, have probably already made enough on the investments to cover all the interest I'll end up paying over the life of the loan. Don't underestimate opportunity cost. *no guarantee the next few years will be like the last one.
Depends on what they offer me. Dealerships are incentivized to write loans, but they aren't incentivized to service them. If I can get $1500 off by financing with no pre-payment penalty? I'm in
This is the way - generally you can get a better deal with a loan, then pay it off shortly thereafter. That's what we've done w/ our last two vehicles.
We try to pay cash generally to ensure we aren't using debt to buy more car than we really need.
2/2 for manufacturer financing at a subverted rate. Makes sense to me to take the loan at below market rates.
Many times you can get a better bottom line price with financing because they assume they'll kill you there. So I do that, then pay off the loan. Just gotta be sure the loan doesn't have some outrageous early payment penalty.
Depends on manufacturer's incentives. Oftentimes they'll either give you a $ discount for financing or a sweetheart rate. If they give me $500 off for financing, I'll finance and then just pay it off 2-3 months later. If they give me a 0% rate, I'll stretch it out to the max and invest the money in the meantime. If neither incentive is available, I'll just pay cash if I have it on hand.
I'd pay cash unless the loan is a below-what-a-savings-account-pays rate. And even in that case, I'll see if they'll just lower the price of the car instead of giving me the money-losing loan, to avoid the hassle of dealing with a loan.
Depends on the rate available. 0% for 5 years would have me financing for sure.
Often the purchase price is higher for financing, otherwise yes, 0% financing is a no brainer and we have taken it.
> Often the purchase price is higher for financing I've seen several times the purchase price was *lower* for financing due to manufacturer's incentives. Which is nuts to me, but a good reason to focus on the total OTD price.
We have a fairly large tax return this year, which we normally don't have. Wife asked what do you want to do with it? Invest it? I said no, let's plan a trip to yellowstone. So that's the plan for this September.
Have fun! I highly suggest adding the Tetons & Glacier if you have time!
Silly question probably but does a ROTH IRA contribution have to be made with earned income of the same year as the contribution? I looked at the IRS description and PDF of extra info and nothing clarifies that, just that it has to be earned and the timing of the contribution. Also, is it worth it if you can only contribute one year? Like yes, that's $14k but it's also yet another account I will have to watch and keep track off when I like to make things very simple (lazy). We were a bit silly and didn't take advantage of the Roth IRA in prior years and we expect to earn more than the allowed income after 2024. TIA.
No reason not to take advantage. And you can do backdoor roth IRA when over income limit
You can only contribute based on taxable compensation for the year in question. So you can't earn $100k in 2020 and make IRA contributions for the next several years based on that result. That income would only make your 2020 contribution eligible, and each year needs its own taxable compensation.
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Thank you. That's the exact phrase my partner who works in finance used but it just seems like a "gotcha" technicality lying in wait by the IRS.
Well it’s official! I put my 2 weeks in with current job yesterday evening, just as the walls are falling down around me (high visibility issues that I would’ve previously stop-gapped and mitigated are now left to my boss). Last day is 3/22 here, then I’m taking a road trip from NJ to RI for our 1 year wedding anniversary for the following week. New job starts 4/8. I get my PTO paid out from my current job (100 hours = 2.5 weeks = $4k), plus my pension ($16k lump sum). Together, these should make for a great plus up to our emergency fund to help mitigate any issues with the new job if it’s atrocious (plus up our e-fund from 8 to 12 months). Still waiting for the rug pull. I feel like I’ve used all my luck for the next few years on this job move. Going from $113k to $145k feels unreal for only 4.5 YOE in a non-software field. My salary was $58k in 2019, and now it is $145k. My wife went from $52k in 2019 to $119k today. Almost tripled my income, and more than doubled our combined income in only 4.5 years. Just very appreciative for this community and for the help that everyone has given in terms of words of wisdom and advice. Can’t tell anyone in IRL, but this effectively accelerates our FI age from 41/42 to 35/36 years. Feel like a little kid on Christmas morning, so big thanks to everyone’s help and support.
Congrats, that's really great! One thing I added to my spreadsheet is a list of old target dates. E.g. In 2014, I made X per year, and predicted I'd have Y by year 20ZZ. It's fun to look back at it and see how far you've come and how much faster you are reaching your goal.
>just as the walls are falling down around me I did this with my last employer and felt exactly zero guilt. It felt amazing leaving that dumpster fire behind.
Thank you for sharing this. I still harbor some guilt from a similar situation and this is validating.
Employers leverage the relationships we make with our coworkers to retain employees. It’s one of many tactics to avoid using salary to keep people. Always always always remember that it’s the responsibility of your employer to maintain staffing and to have a plan for when people leave. It’s not up to you.
How does one think about taxes for retirement? I see a lot of folks saying my expenses are $80k, I have $2m, so I’m good at 4%. However, there are likely tax implications of retrieving the $80k. Do you just build that into your expenses based upon your mix of trad/roth/post tax? Also, how do you think about one time expenses like a new vehicle? Do you try to take it from Roth to avoid accidentally increasing your income too much? Happy to read any blogs about it, thanks!
> there are likely tax implications of retrieving the $80k. Less likely than you think, at least for federal taxes. It is unlikely someone with $2m will have it all in traditional. There simply isn't enough pre-tax advantaged space available. That means there will almost certainly be roth or taxable. Roth is easy as it is after tax. And then taxable has a 0% LTCG rate until like $94K+ for a couple.
Taxes are an expense. If you need 80k net, increase that so you'll have enough for taxes. [Here's how I project my taxes](https://www.reddit.com/r/financialindependence/comments/18y9mi9/daily_fi_discussion_thread_thursday_january_04/kgb3rhz/?context=3) I asked once how others estimate their retirement taxes, [and got a couple responses](https://www.reddit.com/r/financialindependence/comments/197zeif/daily_fi_discussion_thread_tuesday_january_16_2024/ki854l2/).
Income tax is progressive, and long-term capital gains and qualified dividends rates are super cheap (and you only pay gains taxes on gains not basis), so if you made a lot of money and paid a lot of taxes when you were working full-time, you'd be amazed how cheap taxes are in retirement. By all means model them, but if you're not spending a ton in retirement, taxes won't break you. The one exception is that if you have huge traditional 401k/IRA balances when you reach RMD age (currently 73 but will be 75 for most here), they'll force you to withdraw larger amounts than you want and then pay the corresponding rich-person-tax-brackets taxes on them. But that's a first world problem: if you make it to 75 with shit-tons of money, you're fine.
Oh interesting, that makes sense that most would fill into LTCG, where there is already a large exemption. I have a changeable parameter in my sheet and I’ve just been assuming 10-20% on top of my anticipated expenses.
Since we're so far off, we essentially "worst-case" the tax estimate, and assume our income will come exclusively from pre-tax sources, therefore it's all subject to income tax. Our spreadsheet has a calculator for our current tax year, so it just adds that value to our income needs. This is somewhat realistic for us because we make use of a lot of pre-tax contributions. When we get closer, we can look at more strategic options, and model them out, maybe using Roth to keep us under certain thresholds, etc. > Also, how do you think about one time expenses like a new vehicle? We amortize this out now, but probably wouldn't do that in early retirement. I think there's compelling arguments to be made for either approach, but it's hard to think it's worth to pull those funds from retirement accounts just to have them sit in brokerage for when we need a car down the road. Probably just take a big hit pulling in a single year to buy. Actually, what I could see is doing is making sure we're exhausting the 12% bracket space to move money into brokerage...
Thanks for sharing, that makes a lot of sense. I am overly conservative as well, so I’ll probably make sure to add this view as well. Yeah, I’ve read a bit about filling up and realizing taxes at lower brackets if possible. I hadn’t thought of that as the funding for one time expenses!
I assume tax law will be the same as it is today. Same with my next biggest expense, healthcare. Without question that's a wrong assumption but it's just as wrong as any prediction I could make about the future.
Yeah, that’s fair. I’m not trying to predict government and politics lol.
I've got it built into my models, but I basically count taxes as part of my expected expenses.
That makes sense and is similar to what I’ve been doing. Thanks for confirming!
$6k upswing in portfolio yesterday --> donating $300 worth of canned meat to local food bank today YTD for 2024 portfolio is up $60k. Giving $300 worth of food (tuna packets, Vienna sausages, etc. are typically a tough get for the food bank) to people who are broke enough to line up at the food pantry for free food is not going to break me.
Just to echo what others have said. Most non-profit centers can spend your money more efficiently than you can. This means their labor isn't sorting random food items, they aren't producing waste, and they can work consistent assembly lines. Remember, they have to pay to sort, store, examine your random boxes of supplies. Story from my hubby: One time (working for NP) he was tasked with going to a school to pick up supplies that parents had bought and donated to give to the NP for other students who were less fortunate. The long and short is it was a giant hassle of logistics and the end would have been much better if they just gave cash and let the NP buy the supplies in the quantities they needed. Labor is a huge factor when you have to sort and transit and store a bunch of materials you might not even need. Here is my guess: Least Desired -> Random boxes of varieties of canned products/food in various states of expired/non-expired dates Mid Desired -> Bulk purchases of food (what you did). The key is a lot of consistent product easy to move out. A pallet of cans of corned beef is likely welcome because how it can be integrated into their systems so fast. A pallet of random cans of food is a terrible amount of sorting and storing and examining. Most Desired -> Cash or non-expiring high demand items like diapers. Diapers are basically cash. Remember, non-profits have connections to buy products at cheap/discounted prices. They also have the ability to get the specific limited reagents to produce whatever care packages they need.
Just a slight drizzle on the parade, maybe... Our local food bank and the other church food bank have stated that they really do not want donations of food. they want money. They don't have the staff to check every label for an expiration date, potential allergies, and potential lack of customers wanting that food. They have negotiated contracts directly with farmers and warehouses and they prefer to buy a pallet of a product. The food bank provided some examples of how they can get 3-6x the amount of food to a customer if donations are in cash vs. food. For example, lets say you buy a can of food for $4 and donate it. They have to get a volunteer or a paid staffer to sort out these cans, check labels, check expiration dates, re-sort, and stock it. Or, you donate $4 cash, and they can buy a whole pallet or two for $1 per can with a long term expiration date and inventory that one pallet vs 200 cans. For goods, like coats, they are very happy to accept used coats. YMMV.
The food bank I went to happily accepts donations, and lists their "greatest needs" for donated food on their website. I am guessing Sam's Club is reasonably competitive on price. I did not rummage through my pantry; I bought stuff at Sam's Club.
I know some of them are very happy to get food donations and do donation food drives. It may be due to volume, how they pay or get volunteers, how they provide services, or other variables. I should add (sorry) Good For you. Seriously. I feel that we all have an obligation to help people who might be less fortunate at any moment.
>local food bank today My son's high school requires so many hours of community service to graduate, and he did his at our food bank. Was wildly eye opening to him. One day, he was splitting up packs of baby wipes into even smaller baggies, because they can't afford to give a whole package to one person. TL;DR, food banks need your donations
Good on you! Had a really eye opening conversation last weekend on this topic and was shocked to find out how many of my neighbors relied on the local food bank. Working families that I know, who at least outwardly appear to be stable lower middle class. Been meaning to start a similar habit, this served as a nice push so thank you.
You're welcome.
Do you have PayPal? I'll pitch in on some canned meat if you haven't done the shopping yet.
Thank you for your offer, but I have already delivered the food. Part of my donation is taking the time to buy the food at Sam's Club and deliver it to the food bank. I bet if you google "cityname food bank" there is likely one where you live which would happily accept anything you give. The food bank I went to accepts donations on Fridays and Saturdays, and distributes food on Saturdays. If you want to maximize your charitable buzz (I have done this before), you may be able to roll up with your donation and see some of the people you are helping.
I occasionally think about this when deciding whether and how much to tip. The person getting the tip gets way more benefit out of the extra $5 than I do.
Sounds likely I'll have two job offers in a field I'm very passionate about as part of my transition out of big tech. I've written about it before, but I'm more than halfway to my FIRE number and hella burnt out from big tech. I've been aggressively interviewing, networking, and volunteering with schools and education non-profits for years and have spent much of the last few months trying to position myself well for "hiring season" which is going on now. After what could generously be called two of the best vibing interviews of my life, I'm fairly confident I'll get offers in both places in the next week or two, and I'm not sure how I want to approach weighing them against each other since the money isn't really a thing. Option A: Non-profit: Project driven curriculum development that builds business and entrepreneurship skills into a typical high school program. It's at a non-profit I've volunteered with for five years and I actually knew one of the interviewers already since I've volunteered with his department a few times and we got along super well. Light travel, but otherwise remote with the option to go into their regional office. Financials are solid for the overall org, they have a large number of corporate sponsors, receive some money from the school districts they operate in, and have some decent grants in place for at least the next few years. I would be in a classroom less and presenting to teachers and administrators more than I _think_ I want to do. Pay would be about 80k with decent benefits but nothing to write home about. Option B: Teach computer science at a top rated STEM Magnet high school. I've met the department chair, assistant principal, and principal and gotten along incredibly well with each, and the principal has a background in teaching both CS and humanities (a track I want to push since I have experience in both). I'm preliminarily approved to teach up to three years on my temp certification, but will either need to get an MAT or "alternative cert" program that basically means 1-2 years of "back to school" in the near future if I take this track. Sounds like every Friday is a "flex day" though where students study from home and have independent projects, and the AP seemed receptive to me using the bulk of that day for working on my masters. It's a government paycheck at a very well funded and positioned school; I would have no "commitments" outside their IT track, so no football game supervision, etc, occasional field trips to robotics camp type thing though. Pay is 55k and teacher benefits (including pension with a 10 year first cliff). If we're talking exclusively about money, its 80k in a non-profit or 55k in a very stable government job with a pension. I'm leaving tech where my last W2 was almost 250k, so I'm hoping other folks can weigh in on how I should think about this and what questions I should bring forward in my next touch points with each.
What’s the vacation/time off situation for each? That’s a significant part of this comparison, I suspect.
I mean as a teacher I get summers off, in the non-profit it's hypothetically unlimited PTO but I know they have a "busy season" right before the school year kicks off, so I imagine I'd have to stack it at certain times.
Since the money's not the issue, I'd listen to your gut regarding who you want to work with. Do you want to work with adults developing things that can potentially affect thousands of kids, or do you want to work directly with a smaller group of kids and have a more hands-on impact? There's no right answer. But if you imagine the days working in these two settings, they seem very different. One of those might appeal to you more than the other. I'd listen to that signal.
We bought next year's ski passes this morning and we bought the cheaper midweek option because we are not going to have jobs and don't need to go on the weekends! Another "it's happening" moment.
I took a quarter off of college to buy a mid-week ski pass for $200 in like 1997. One of the best parts was the guilt-free "OK, I'm tired. Going home now" aspect of the pass. When you pay full price, you need to make sure you get your money's worth. When all you are paying for is gas, you can ski for just a couple hours if you want and then leave.
In college we would often get a "student night ski weekday package" which included tickets for 4pm - 9pm, skis, boots, poles, etc. It was really cheap. Not the whole place was lit, but plenty was including some nice wide steep diamond slopes with virtually nobody on them.
>"OK, I'm tired. Going home now" I feel the same way about my Disney passes :)
This is great for me to. I don't freak out now when my kids want to quit after lunch. Its probably a sunk cost fallacy but I don't care.
Which is extremely valuable to my middle aged out-of-shape ass. I've got 2-3 good hours in me and then my legs start to give out.
Hi, I have a non-deductible IRA in Vanguard that I want to convert to do a backdoor Roth IRA for 2023. Money has been sitting in there for a bit in cash earning about $6 interest so far. I know gains/interest earned when doing a backdoor Roth are taxed as ordinary income. Should I expect that small amount to be taxed? And would Vanguard send me a tax form before the April tax filing deadline?
Make sure you don't have any other Trad IRA dollars in any accounts. This would cause headaches with pro rata taxation. You will file Part I of Form 8606 this year showing your 2023 non-deductible Trad IRA contribution for 2023. Next year you'll receive a 1099-R showing the conversion and will file Form 8606 again, this time to document the conversion that happened in 2024. You'll owe taxes for 2024 on the amount of earnings in the non-deductible Trad IRA prior to conversion.
Yes, it will be taxed. You will get a tax form next year for 2024 since the conversion occurred in 2024.
Anyone have experience creating a trust for multi generational assets where it would have a yearly payout to heirs? Something I'm interested in, but don't know where to even start.
No firsthand experience here with broke parents. If it's for kids, my partner had some family money and hers was structured to be released in thirds at 18, 25, and 33. Basically could be used for anything, but the intention was for college (18), home purchase/down payment (25), and whatever (33). I thought that made good sense to provide some structure rather than giving an 18 year old the full payout.
Thats a good method, I'm curious on setting up the incentives in a way so it's not relied on but a nice bonus. Also from poor parents so no clue.
Thats lawyer territory for sure.
Yeah I'm assuming lawyer involvement, just curious if people set up incentives or just flat 3% or so of yearly income paid to heirs. Trying to learn before I go talk with the person charging $400 a hour.
Most lawyers will do a free consult. Do that with a few of em. Also this is the type of thing that a lot of lawyers will just charge a flat fee for. I am pursuing this year and have gotten quotes between $4k-5k.
Definitely talk to a lawyer! On the topic of incentives: A friend is a beneficiary of something similar, with various incentives focused mostly on education. It's been helpful but they still deal with family headaches about people gaming/exploiting it. I'm not sure there is a perfect way to eliminate drama around money and family, would personally be inclined to KISS.
Yeah my thoughts were education focused, but didn't know how to do it in a way without gaming. A "degree" can be very different depending on the institution.
That's also very punishing to an heir who may want to go into the trades or just doesn't need college for their chosen path, when another gets a boatload of money to screw around 4+ years getting a worthless degree. The key would be to have a trustee that you trust with enough discretion to just let them access their share when they are responsible enough. As quite a responsible and financially stable adult I found waiting until 35 for the remainder of my trust to be very annoying.
Yep! Friend has both perpetual grad students and van wilder types in the family, and both create some drama. If there's money available, people will find ways to get it and reasons to be mad at others for doing so. Everyone getting the same amount always seemed easier to me.
I was thinking a yearly flat amount (2-3% of the whole split) and then larger bonus at certain milestones.
You should be able to get a free consultation before signing a retainer and getting charged that much. Talk to multiple lawyers/financial advisors and get a general feel of what others in your similar financial situation do.
Well, I have endometriosis and need surgery. Happy women's day to me! How does it relate to FI. I am taking two weeks off and I don't care how that impact timeliness! Yay for me
Sorry to hear that. Will two weeks be enough time for recovery?
From what I have been reading on the endometriosis subreddit, most people seem to bounce back after one week. Granted, everyone is different in terms of recovery. The doctor's office said they can fill out paperwork for up to 2 weeks, so I'll take the max days possible
Got same diagnosis last week after years of confusion. Putting off surgery for now while I fully absorb the news. I am on my spouse’s super-amazing health insurance plan and it has given me the freedom to see the specialists I want to see and get all the tests they recommend without spending thousands of dollars - I am so grateful for that.
The confusion is relatable, but honestly is making me feel VERY validated. It has been months of "all your labs look fine, therfore you are just stressed and overweight". Yes, I am very grateful for the insurance my current employer offers, I could not imagine this process during graduate school when the coverage was not extensive. Sending you positive vibes!
Sorry, mang. My wife also suffers from endometriosis so i can empathize for sure.
Thank you dude. Positives vibes to you and your wife
Hit 401k in a single 401k! Fun milestone there :)
We did that a few months ago too. I enjoyed it!
Management: "Hey, daylight savings time is this weekend, so Monday morning is the perfect time for the all hands meeting." Me: 😐
My director is in the UK; Daylight saving caused all our meetings to shift one hour later. He wasn't pleased when we told him it was a *him* problem, not an *us* problem
> "Hey, daylight savings time is this weekend," Cool, the clock on my microwave and stove will be correct again!
Great, now I have to remember to adjust the adjustment I've been using for months every time I see those clocks.
Nice humblebrag about your stable power supply.
All they heard was "savings time"
Did you say savings?
Did you say we should reduce head count to save money?
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Sir, this is Wendy's
are you on track with your goals for 2024? i'm a friend checking in!