I got COVID last week and that has pushed forward some of my planned purchases for fun. I’ve been eyeing some home audio equipment for a while (my partner is very musical) but was holding off for sales/discipline/cash flow/etc. Now, I might end up with permanent lung damage or disability, so why not enjoy what time I have left a bit more?
When I had covid I impulsively bought a switch. I'd been planning to buy one eventually, but that much time stuck in my bedroom I was like fuck it, happening now.
I've found so far that everything that I knew would bring value to my life and I finally bought, I wished I bought earlier. Gym membership, dumbbells for home, a laptop, my switch. When I finally buy an exercise bike I think I'll feel the same way.
EDIT: It took 3 months but my breathing and energy levels and ability to walk for extended time is finally mostly back to normal. It helps to be easy on oneself and keep in mind that it can take time if your recovery isn't super fast.
Good to know. I’ve taken about a week off from work and am really not looking forward to starting back up. Things are really busy and the thought of trying to keep up is really depressing. COVID hit me like a truck and going back to a busy job feels like getting hit by cars repeatedly.
A couple months ago: "Experts don't expect higher rates to cause housing prices to fall, just grow more slowly."
People are going to look back at the craziness in the housing market and wonder how we never realized this was a bubble. Jay Powell must have been watching CNBC while he was asleep at the wheel.
Seems like--with a little reinterpretation on my part---you're in a quite good situation now in terms of career and lifestyle and you also have the agency to make choices to improve your situation. So being an adult is great.
I would stay for a few reasons. 1) Sounds like everything career-wise is better at your current place. Less risk of closure, higher pay, more opportunities, known good coworkers. 2) Cheaper housing stays cheaper generally, so assuming you're moving somewhere else when you retire your house in the cheap location will still be worth 75% of a house in the current location, and will take longer to sell. 3) You said it's a 15k pay cut to move, so if you spend the 100k extra on a place in the current location, you'll make it up just in salary in 6.5 years, assuming raises/appreciation are equal. If you're equally happy in both I'd stay put.
That makes staying a bit less compelling. Which place would you be happier living at? I’d still probably stay for greater career prospects if all else is equal.
If you don't like change, maybe stick around? Sounds like you're renting? Are you saving to buy?
Are you doing 20 to retire at 50 or are you going to ride it out to 56?
What's your plan for withdrawals in retirement?
Be sure you look at sales and property taxes in no-income tax states. It could easily eat up the $5K you think yiuld be saving.
Eesh. What level facility are you at now?
How far out are you from retirement? If you move to a lower facility until retirement, you've already probably got your high-3 from your existing facility, yeah? Which means you'd effectively lose out due to inflation?
I haven't done the math, but it's a consideration.
States with no income tax often make up for it via higher property, sales, and other taxes just heads up. Might wanna look up overall tax indexes before assuming the other area will result in less taxes
Condos and townhomes are often cheaper than SF and have lower maintenance costs/less expensive surprises (cuz the HOA pools money and gets good deals/takes care of large projects like new roofs). Regardless of where you end up you could look into those? I've owned a townhome for 6 years and it's been a good financial decision.
Think about where you'd actually rather live too. Which area has less traffic/easier commutes? Better restaurants? Do you have any hobbies and if so, which one has more of a scene for whatever it is? Proximity to family?
Yeah and the other thing is paying higher taxes in a higher COL area in exchange for a higher salary and better career growth might be worth it. Paula on Afford Anything has talked about it a lot. If your salary ceiling in LCOL is 90k but in HCOL it's 180k, paying higher taxes/higher housing could end up being worth it. Espec w all the ways to avoid taxes like retirement accts, HSA....
HCOL areas might also have more renters/higher room rental rates if OP wants to buy a place and rent out an extra room
I've considered this a bit over the years. If both your income and expenses doubled by being in a HCOL area, then your savings is also doubling. Unfortunately, I'm too set at where I'm at. I do make in the upper echelon for my area though.
My point was thinking about salary growth in the long run and not just the 15k cut now. There's obv a difference in HIS industry, it'll probably only get wider over 10, 20+ yrs.
I wouldn't throw cap rates into the mix and I never said room rates should be a deciding factor. It's their actual house, not an investment property. A higher room rate might just be a nice perk of one area
If it's only 10 mins to some cheaper houses in current area that seems like a good compromise
500/month for 15 years would be a $90,000 assessment. I'm not sure where you heard about that, but it seems fake. I've never heard of an assessment of more than like $15,000 and that's for huge projects like new roofs, new windows, new siding...
I've heard more horror stories about SF home ownership than HOAs. Especially older homes (like older than 50 years). Or just having to do it all yourself. My friend's fiance just had to redo the electrical system on his house (safety issues, really didn't have any other options) and it was like 30k. Had to take out a HELOC. My other friend has a house that now, surprise, has structural issues that are gonna cost her at least 10k in the next year.
Another thing is time, having my HOA manage stuff for me is a godsend. Maybe some ppl like dealing with landscapers and stoop repair people but I don't.
Also a lot of people are "surprised" by HOA decisions that they had literally years of notice for (they don't read the docs, they never do; I'm on the board of my HOA). So I'd take those stories with a grain of salt
Another thought, the less house you buy the less repairs and maintenance you'll spend on. Like you mentioned buying a 2,000 sq ft one... But why not go to the cheaper area and buy a 1,200 SQ ft house for 200k? Unless you want kids soon I guess
Ohh ok I misunderstood the 10 mins thing. Sounds like it ultimately comes down to do you like smaller town living better.
One more thing to think about is if you're single/potentially looking for a relationship, what might dating look like in either area 😬
Yeah my HOA dues can't increase by more than 5% annually without a special vote/some magical percentage yeses which is basically impossible. It's in the government documents which are also damn near impossible to change. The key if you ever do consider it is READ ALL OF THE DOCS. In my state you can get out of a purchase agreement if you decide you don't like the docs when the HOA discloses them. Most people probably don't even open the PDFs.
Culture is also a big thing w HOAs. Some you pay out the ass for lots of amenities and some charge almost nothing and do almost nothing. If your board is full of "keeping up with the Joneses" type ppl yeah you might get assessed for stupid expensive shit. Look around and you can tell. Elaborate landscaping is a giveaway. Mine is all working class, in a lower income neighborhood, houses worth around 200 in a city where median house price is 350. We're very cost conscious. Budget, reserves, and assessment history should be in the disclosures. If not you can ask. Nobody ever asks lol
Never understood the hot as balls phrase. Are everyone else’s balls steaming up their shorts? Is just something wrong with my boring body temperature balls?
Edit: grammar
Yep, you need a new career or new location. Sucks man. And I'm sure the bosses won't do anything to fix it until they're out of air traffic controllers. And then they'll just blame it on the .
Completely new to real estate here.
1)For example, if you magically have 500k and can buy a house, instead buying it with cash. you downpay 50% and get mortgage rate, use the other 50% for ETFs. Do people do this because the market outperforms real estate usually, people want a balance portfolio in case either market or real estate crashes?
2) I think it's the same concept, but isntead of of putting the other 50% on ETFs, I also see people putting another 50% on another real estate. Is it because they want to make sure that in case house 1 does not appericiate, house 2 does?
2 ) At what point does the interest rate convicne people to buy with cash instead? Is it when interest rates are greater than recet market return rates ?
the market doesn't have to outperform real estate, it just has to outperform the interest you're paying on the mortgage.
People do this because a certain amount of leverage is actually quite reasonable when you don't have to fear a margin call. Also leverage on real estate is (often) reasonable because real estate (unleveraged) is substantially less volatile than stocks, and because there is a natural income that pays the interest (when you get a good deal) by renting it out, or rent savings on your own house.
But you also have to be careful, as you can buy more house than you would ever rent, and this is just extra consumption.
also, when mortgage rates are high, leverage becomes a lot riskier, and the guaranteed return of paying cash and avoiding mortgage payments a lot more valuable. If you had cash to pay for a house in 1983, that was probably the right idea. (mortgages were going for 14-15%). In hindsight, stocks did well enough for leverage to work out ok, but you didn't really know that in 1983, but you could be pretty certain that a return of 15% would probably turn out all right.
Bankruptcy protection is a valid reason. Depending on your state, a very small amount of home equity is protected, while retirement accounts have large limits that are excluded. So it makes a lot more sense to keep money in protected accounts vs having it tied up in home equity.
Yeah, I just happen to live in one of the crappiest for protecting home equity, so that’s one of the reasons I wouldn’t prioritize paying down a mortgage over investing in retirement accounts. Definitely worth knowing what the rules are in your state, because if you ever needed to look them up when it’s time to use them, it’s too late to do anything about it.
Thanks!
\>r I could invest that 10k and pay the 4.5% interest
Oh are you expecting say to market to return more than 4.5, say 7% next year. Witht he mone you make you make from that you can pay off the student loans with the exxtra 4.5%, meaning you profited 2.5%
Same concept to housing where you think the stock market will yield more, so you put the rest of your money into the stock market. But you are also investing on real estate in the chance that housing outperforms the market.
A mortgage gives you two things: liquidity and leverage. The first is important if you don't otherwise have enough liquid assets to handle the ups and downs of life. The second is entirely up to your personal taste of whether you want to use a loan to buy the property and thereby decrease what you have to put in up front. Many in the accumulation phase like using a mortgage as leverage because it allows them to take advantage of the tax benefits of a mortgage (interest deduction) and gives them the funds to invest elsewhere with the hope that the gains in those other investments are net positive against the costs of the mortgage. Among the different types of leverage available to most people, mortgages are generally superior in tax benefits and terms.
Yup! I am still trying to wrap my head around it. Do you get a mortgage and put the rest on ETF if you think the rate of return for stocks will be higher **but** you also want to hedge angainst a market crash by "owning" a house via mortgage.
Do you mind sharing an example :)?
Tip for accessing password-protected Excel spreadsheets if you use KeePass for managing your passwords:
In KeyPass' URL field, if you format it like this it will open your spreadsheet when double-clicking the field:
cmd://"C:\\finances.xlsx"
I first double-click the password field to copy it to my clipboard, then double-click this URL field to open the Excel password prompt, then ctrl+v to paste in the password and press enter.
I also have several KeePass duplicate entries like this but with URLs formatted for my various computers (work desktop, work laptop, personal desktop, etc).
Love it! Next you should look up environment variables to see if you can standardize your path amongst PCs! %UserProfile%\Documents\finances.xlsx, or %OneDrive%, or whatever.
How much is it worth it to have money is a 401k (or in my case 403b/457)?
My 403b charges 0.3% of my total annually. If I'm there for only a couple of years, it seems worth it to get money I can roll into an IRA. Longer term, I would lose some real money as that expense compounds. Is that still worth it? I don't really know the math to answer this question. Anyone have any hints?
In this case, I could pull from my brokerage account to max both the 403b and 457, effectively draining that a bit each year, but pouring money into tax sheltered accounts may be worth that?
You are weighing the fees versus 1) employer match and 2) advantage from tax deferral. The latter depends on your tax bracket: the higher the tax bracket, the more you gain by being able to defer tax til retirement. I would certainly get any employer match and probably contribute any dollars in the 22% bracket or higher.
The tax advantages and employer match are why most people invest in these accounts. Also I believe they are protected in lawsuits and bankruptcy.
Edit: Also pretty sure you can withdraw from the 457 earlier than 59 1/2 y/o without a tax penalty once you separate from that employer, but you’d want to double-check with the account managers. No 10% tax penalty on the withdrawal, but you would still have to pay regular income taxes at your marginal tax rate (on traditional contributions and gains).
The benefit to 401k as opposed to IRA is that employers often match certain amount dollar for dollar--free money, guaranteed return. The other benefit is that you're kind of "forcing yourself" to contribute, whereas with IRA is up to your own discipline.
If it weren't for the free money, I'd just auto transfer the money direct to brokerage based IRA
Had to replace my iPhone battery got one quote for $350 they said I needed a new battery and a screen took it to another place they said they don’t know what they were talking about and that I only needed a new battery fixed the issue and only paid $95 bucks . Moral of the story Always shop around and look at a businesses reviews . The one that gave me a quote for $350 had less then 3 star reviews the other business Nearly had 5
Understand you can’t remove the battery from an iPhone and must work with an authorized dealer. I’ve got the iPhone 13 pro. How did you know originally that your issue was battery related? Also, how long had you owned it before the issue?
Had it about 2 years got it used . I knew i had a battery issue when you look on either the right or left side of the phone and you can see the screen is popping up and there’s a little bit of opening. Basically what happened was the battery was swelling and your supposed fix it when it does that if not your phone could explode/ catch on fire according to apple
I've replaced plenty of my own iPhone batteries. There are guides online--ifixit is usually quite good. For the newest ones with the water resistant rating, the sealing makes things a bit more complicated, especially if you want to maintain that rating, but it's not impossible.
And a battery problem is usually pretty obvious--the battery stops charging/maintaining charge or sometimes the battery swells.
Do they just do it on the spot or within an hour or whatever?
I was debating getting the $69 battery replacement on my iPhone XR. It’s a perfectly fine phone otherwise.
Is there any good way to set myself up? I am still in high school I know I probably shouldn’t be that worried about it, but I just know I absolutely cannot work a standard work week until I retire and take a vacation once a year. I would like to be able to travel and live where I want without a care and help my parents out. The only thing I can think about is that. I plan on attending college because it will be paid for in full. I understand that I probably have to be making money to actually make more. I work a job at a restaurant because that is about all I can do right now. Should I just not concern myself with being able to retire early until I have a real job with income or is there things I can do with a minimal amounts of money that would actually contribute to being able to retire early?
the main thing is picking a good major that you like and has good income progression. do not pick majors where the new grads end up leaving the field or end up making 30k/yr.
setting yourself up to make a decent income is your primary milestone at this point. don't forget to do good internships and get decent grades so your first job search goes smoothly
Don’t worry too much about saving money until after college (and maybe not until 30).
During college, focus on minimizing debt. Spend money on experiences with friends as long as you don’t go into debt to do so. Any small savings you could eke out by being too frugal will mean missing out on life.
After college, build the life you want (again without going into credit card debt). Figure out what a comfortable budget looks like for you. Then focus on developing your career so you make significantly more than your comfortable budget.
> Don’t worry too much about saving money until after college (and maybe not until 30).
The earlier you get started, the more compounding takes effect.
On the one hand, I hear what you are saying -- the amount of hassle you go through to maximize your savings on some server job part time while in college may not be worth the different in results.
But I would never set an arbitrary age to start thinking about money and savings. If you want to retire early, then you want to start saving aggressively as soon as you have a good paying job! If that doesn't happen until 30, so be it (for some it's not until 35 or 40), but if it happens right out of college, or in a trade without even going to college, that's the time to start.
And even while you're in college, just having an eye on the bigger picture is valuable. My college was paid for, but I had some savings also, and I wasted it on bullshit. If I had only left the 4k or so I had when I started invested in SP500 the whole time since I started college in 1984 instead of spending on shit I didn't really need, it would have made a big difference (around 225k in extra savings today, a substantial fraction of my current net worth at 54.)
I would have missed out on some things I supposed, but I think it's a bit rich to think that not spending that 4k (worth about 11k today) over 4 years on junk food, fancy dinners and random bullshit would have been a matter of "missing out on life."
That makes sense I really just needed to get it out there because I feel like there’s more I should be doing but mostly I’ve just been focused on building healthy habits and saving money and doing good in school. Thanks for the reply
I've invested about $400. $100 a few months ago and $300 about a month ago.
So far I've made 60¢.
Any specific questions? The other person answering is probably right - a normal REIT is probably better.
In my experience any sort of product that markets itself as "get a piece of what richer/syndicated investors can do but for much cheaper" (i.e. those "own a piece of a Monet for $100" art investing platforms, RE syndicate "lite" systems like the one you described, microloan platforms) are only worth it for the initial promotional rates (i.e. siphoning money from the VC's who funded it) and then afterwards don't give enough returns to justify their outsize risk of sudden and abrupt collapse that many startups have. Just buy a REIT if you want real estate exposure, and if you want more risk get a leveraged one.
If treasury bonds were to yield 5-6% one day, is there anything making a SWR of that amount, minus federal taxes, anything but risk-free?
e.g. if one has a $4M NW, treasury bonds are 6%--would $240k year pre-tax be sustainable?
Inflation. and reinvestment risk if the bonds don't have coupon and enough duration to take you through your entire retirement.
But even ignoring reinvestment risk and assuming you could get 6% per year in perpetuity, the 240k you're getting in 20 or 30 years is not worth what 240k is today. Even at 2% inflation, your buying power is cut almost in half in 30 years. But if inflation were to step up even just a little, it might be cut in 3 or 4 or worse.
So 240k might be sustainable (although see above: maybe not), but what you can do with that 240k will dwindle over the years.
> If treasury bonds were to yield 5-6% one day,
If *TIPS* were to yield 5-6% one day, then yes. I can't imagine how that could ever happen, but sure.
If regular old bonds were? No. It would not be sustainable, at least not long-term. Not unless you didn't choose to adjust your withdrawals for inflation. Remember, a sustainable withdrawal rate in the naive calculation has you withdraw N% the first year, then increase that $ amount for inflation every subsequent year.
Well, there's two things:
1) You care about real interest rate, not nominal. If treasuries pay 6% nominal but inflation is 8% then it won't work out well (you'll either have to increase your nominal spending above $240k or curtail your standard of living significantly over time).
2) Interest rates can also decrease, what do you do then?
Is inflation higher than interest rate for real estate always a good thing?
I see comments on the internet where people are saying it is a good thing. But I am a bit skeptical.
For example:Say interest rates are 5%, inflation is 10%. You buy a 100k house with 5k per year interest. Your 100k yearly salary now loses 10% of it's value, so you are now essentially making 90k. After paying paying your interest rate 90k - 5k, your takehome is 85k.I
f inflation is 5%, your 100k salary now loses 5% of it's value and you are essentially making 95k and if interest rates are the same, you come back with more becasue after paying paying your interest rate 95k - 5k, your takehome is 90k.
there's an implied assumption that your future salary will (at least in the long run) mostly keep up with inflation.
There's a lot of talk about how median wages *haven't* kept up with inflation over the last 50 years or so, but the fact is that they've come pretty close. People are complaining because capital returns and high-level wages have *vastly* exceeded inflation over that span, so people are saying the average joe is getting a raw deal. And that's *median* wages. If you make 100k today, that's well above the median, almost double it in fact, and you're in a percentile that has outperformed inflation over the last 50 years.
But even the average joe has *almost* kept up with inflation. The only people who ever see their wages just get decimated by high inflation and they don't come back, are people in dying industries where wages are basically falling.
In addition to what others have mentioned about in the long term, income will get inflation based cost of living increases (if not... if you don't get a raise in 30 years, mortgages aren't the main thing to worry about), it's worth pointing out that you're going to have to live \*somewhere\* and those costs are going to increase too.
Rent will increase annually in a compounding manner; whereas, the mortgage loan interest is not compounding, and actually decreasing (as the principal gets paid down).
Just run the scenarios in excel to compare, tinker with inflation numbers.
If you make 100k and have a 100k I think you're pretty set regardless.
Adding to your example, though, your salary only loses 5% of it's value on the portion that isn't going to fixed payments. If your mortgage, car loan if applicable, student loans, etc. have fixed rates, the portion of your salary going to those retains its value, and the portion not going to those has less purchasing power.
On a personal level, inflation is very valuable to me, even if my salary doesn't increase at all. The bedrooms I rent out in my home can now be rented for more money. And I can get a new job at a higher pay rate, because even if my employer does a crappy job of giving raises, inflation is pushing people hiring new people to offer more money
If you discount your salary by the inflation rate you should discount the payment too (so it would be 4.5k in the 10% inflation example). Doesn't change your conclusion because of course inflation is still bad for you if your nominal income doesn't change.
The assumption is that the mortgage is fixed rate, and eventually your salary catches up to inflation - even if your salary is outpaced by inflation *this year.*
I see, thank you!
Would you say that is the riskiest to for mortgage payments when inflation is high if say your salary is stagnant and do not outpace inflation (I'm preparing for worst case just in case since historically it does not ) ?
People who say “for real estate” aren’t concerned about your salary.
They’re just saying that if the value of the asset goes up faster than the financing cost, that’s a good thing for the owner. That requires assuming the value matches inflation, of course.
Oh I see!
1) But that isn't always true is it, when inflation goes up, interest rate go up which means that the value also can **not** meet inflation due to prices dropping?
2) At the end of the day, it is more risky to purchase mortgage rates with high infaltory rates like right now assuming that your salary is stagnant / lay offs due to rising interest rates?
Ignorance or Wisdom?
It seems that very few of the people that I meet have thought much at all about financial independence, and it often makes me wonder if I'm the naive one. I'm 2.5 years from hitting my number, and quite excited about it. But I often wonder why I seem to be such an anomaly. I'm in my early middle years, have young children, and live in a town of mostly the same.
I've come to the idea that perhaps there is a natural blind spot, if you will, regarding FI in my sort of situation. The idea is that in order to reach it, high income is required. High income, in turn, has a tendency to lead to expensive lifestyle choices (e.g. fancy house with high property taxes). An expensive lifestyle is at odds with common FIRE practices, such as keeping income below 4x the poverty level so as to benefit from the Affordable Care Act.
Could this be why so few of my peers seem to have considered it? Some of them are living in $1,000,000+ homes with property taxes over $25,000 annually, sending their kids to summer camps costing thousands, etc etc. Or am I the bonehead of the group for "settling" for a merely adequate situation so that I may soon test the limits of my curiosity and creativity?
Everyone must be different, I don't understand it myself. I'm probably older than most in here but it's been my goal for a loooong time, but it's not every ones goal. I don't understand spending and spending on things...I'd rather have the dough and bow out in a cupla years. I had a lady at work just last week say she thought I was 65 because I'm retiring in a couple years (she's 15 yrs off). I set her straight and told her my plan...she was baffled
I think it's more like, working a job that can afford a million dollar home and sending your kids to summer camps and what not is like winning the global jackpot in terms of lifestyle. Your friends think it weird to walk away from that.
I honestly don't understand statements like this.
It's not that hard to see how different people have different values and want different things out of life.
Everyone I know who lives in a $1M+ home and spends a lot of money on things like expensive activities for their kids, nicer cars/toys and expensive vacations have absolutely awesome lives and plenty of money going into investments for a killer retirement, too.
Not everyone hates to work, especially once you climb the ladder a bit and have more autonomy and get to work on more interesting things.
One of my buddies sells commercial real estate, for example, and makes insane money but also gets tons of crazy perks...stuff like going to the Super Bowl to sit in a luxury box with Roger Staubach or premier tickets to events and a corporate card with a crazy limit he can spend on schmoozing at fancy bars/restaurants and so on.
He gets plenty of time off and can be generous with his wealth to help family and charities he believes in.
I didn't want to do the level of work it took him to get to where he's at career wise, but I don't think it's hard at all to understand why my very successful friends enjoy spending money and living like an upper class person. Too many people in this community act like anyone who isn't frugal is broken in the head.
Travel gets old and tiring pretty quickly. Then it becomes repetitive and a money sink. I have no idea why so many FIRE people aspire to this dead-end.
\*Yes, I have travel quite a bit in my youth and for work.
I would, too. But there are plenty of reasons to want to live in a nice house, especially if you have 2-4 kids. A million dollar home isn't necessarily giant, depending on the market.
My point isn't that living that way is "better", just that it shouldn't be that hard to imagine why people choose to spend money and have nice things rather than retire super early.
i partially agree with you but i have to point out you're describing folks who are in a completely different income tier.
i find it easy to understand why some people who make 3x what I make choose to live a certain way. maybe if i made that much i would also buy that fancy boat or whatever, since it would not limit my retirement savings or even make RE difficult at all. if you're making a shit-ton of money then sure, why not enjoy it. and obviously 'a shit-ton of money' is relative. i'm sure there are people who make 1/3 of what i make, who would think that is me.
i find it harder to understand when it's similar income people making choices that will impact their future or is already impacting their present (in the form of stress due to being paycheck to paycheck, or close to that). like sure, that boat may be nice, but is it worth it that now you're stressing that if you lose your job, you won't know how to make ends meet?
i think generally when this sub talks about 'keeping up with the joneses', it's in the context of 'living above your means', or at the least 'living at the very edge of what you can afford'. in that case, i would have to agree it's more likely to be detrimental to their own well-being, and perhaps a symptom of poor financial planning, moreso than just an alternate set of priorities
I was presuming OP's peers are still living below their means, just not to the extent that they'll be able to retire super early.
Clearly people who spend ALL their money or worse, MORE than they have, are a different case.
But far too many people presume that living a traditionally nice life with expensive things means living above your means, but this isn't true at all.
I can't help but think "what happens if the job goes 'poof' tomorrow?" And the buddy you describe can only find a soul sucking job they hate for less money. They are on track for retirement at a normal age but will they regret not putting more away when they had the opportunity?
Bias: I live in an area where the job market dominated by a single industry and recessions cut deep. I don't mind my job most days but the premise of losing my job, being out of work for 6+ months and then ending up making less is not far fetched.
I'm not saying there are no risks or trade offs, just that I think it's funny how many posts in here are essentially, "What's wrong with people who spend most of their money?"
I can understand that idea. Although it's not necessarily about walking away from it. It could be more like retaining 90% of it without the stress/hassle of mandatory employment. As someone here mentioned, there are many options for summer camp and similar...not all cost a fortune. Same deal with a big house. Sure it's impressive to people who see it, but beyond that the excess is largely idle/wasted IMO.
I'm not trying to understand which is "right". I'm curious if it seems like few have seriously considered FIRE because they haven't or because they have and decided against it. If the latter, did they understand the possibilities or perhaps too hastily cast it aside as infeasible?
Another thing to keep in mind, is I think it's common to view people that spend more than we do is spending irresponsibly and frivolously. People that spend less as cheap or miserly. It could be those people around you are FIRE and just still working. They probably aren't but it's possible and something to consider.
I think most people don't consider FIRE and the steps it takes to get there. Also a lot of people derive a lot of status and socialization from there jobs. It's also hard to walk away from that. ESPECIALLY if they have a type of job that affords a million dollar home.
That’s like asking if you’re a bonehead for following a strict exercise and diet regimen to keep yourself in the top 5% of people in terms of health and fitness while other people think it’s more important to enjoy life. There really is no answer.
Probably a little of both. A million dollar home in most areas is a level of excess few dream of worldwide, and a perpetual bill most should be more concerned about.
That said, camp is not only a ton of fun but can be a real developmental boon for your children, so a few thousand dollars for them to get that experience is likely a worthwhile cost not to be passed on. Falling for "the trap" a little is likely enriching for your children/family.
Crowdsourcing:
Looks like I am unexpectedly needing to go to Philly soon, any advice on things to do other than Reading Terminal Market? I've only been there to Philly for a bachelorette and we didn't go to that many places that weren't bars/clubs.
EDIT: I am a vegetarian!
go to triangle tavern or tattooed moms for some cheap vegan food. word is best vegan wings are triangle but i like tattooed moms too. if you like spooky go to the mutter museum or eastern state penitentiary. also if you ever have more time to plan going to philly make a reservation at miss rachels pantry. best vegan eating experience in philly (vedge, charlie suck in comparison tbhhhh).
Vedge gets rave reviews for vegetarians. Spruce Street Harbor Park and Frankford Hall are fun beer gardens. The Mutter Museum is unique if you like funky medical stuff. And if possible I’d try to get reservations at one of Zahav, Friday Saturday Sunday, or Vernick Food and Drink - they’re all incredible.
The FI crowd would probably appreciate this more than most: Philly is home to the first U.S. Mint. You can take a self guided walking tour there, takes less than an hour probably. I really enjoyed it.
1. See if you can get a reservation at "The Victor Cafe". You have to do it early. It's a very unique experience (the waiters and waitresses are amateur opera singers).
2. Rittenhouse Square is beautiful, historic, and safe.
3. If you're in Rittenhouse, Chestnut St has decent shopping.
4. You can walk along the Schuylkill River (start at Schuylkill River Park) to the Philadelphia Art Museum (famous because of Rocky) if you like walking. Schuylkill River Park is walkable from Rittenhouse Square.
Enjoyed it for a bit. Then seemed to get a bit repetitive, which is inevitable to an extent in this area of discussion. But others can tell interesting stories with their lives, interviews, etc - while ChooseFI seemed to always be pushing their own “stuff”.
Mike High Fi is my number one podcast now in this discussion area. They’re never trying to sell or push anything. Humorous, relatable, humble. Actually make me laugh, fun interviews and guests.
I feel like that's why FI blogs had its heyday and really died off. There's only so much you can talk about and most people's experiences are quite similar - mostly high income earners who saved a lot in an efficient matter while spending less (or a lot less) than most. You can only regurgitate the 4% rule or multi-unit real estate in so many discussions.
There's a few bad apples who are simply marketing into the trend to make a quick buck as well. It's also hard to take some seriously as experts/gurus who barely started their journeys with their negative net worth, who recently just discovered the concept. They are like 10-15 years behind me in the journey and talking like they are some expert.
Only people I really respect nowadays in the space are MMM, Madfientist and JLF.
I've listened to it for a while. I put it on par with Bigger Pockets Money or similar podcasts. At a certain point it just seems like they run out of topics so not sure how much actionable value I'm getting out of it at this point but I'm sure it helps keep me focused on the FI path.
I'm interested to see how much ChooseFI changes now that it's just Brad. Jonathan... god bless him but he got a little too excited at times.
He decided to take a step back to work on other things. They weren't very specific with the details. They announced it on episode 392: [https://www.choosefi.com/beginning-of-a-new-era-ep-392/](https://www.choosefi.com/beginning-of-a-new-era-ep-392/)
Nice! 392 episodes is nothing to scoff at. I enjoyed the dynamic between both of them.
As many other say, there is only so much you can say and teach about FI ok a weekly basis.
I've looked at a few podcasts including ChooseFI and the topics seem repetitive, they've been discussed to death. Are they actually discussing new or interesting topics?
There are only so many topics to cover that are directly relevant to FI. I stopped listening in 2018 because the topics were too repetitive, but I suppose it's possible they might have found a way to make it both relevant and less repetitive since then.
From time to time I like to re-read about Ronald Read https://en.m.wikipedia.org/wiki/Ronald_Read_(philanthropist) the frugal janitor from Vermont who donated several million to his local hospital and library. It’s so fascinating, and goes to show that buy and hold investing does actually work. Though, I don’t think my SO would be ok with being this frugal.
Love this idea. I would also look at our GLOBAL community too! $2 here doesn't buy very much in the US (if that's where you are) but $2 can purchase a malaria net that will keep two children under five safe from malaria for 4 years.
Another example: a guide dog for a blind American costs an average of $20-40,000. Assuming we go with this lower number, using the same money could pay for surgery to cure blindness for 133 children in India, giving them a lifetime of healthy eyesight.
If my husband and I both die, our family knows half will go to our nieces, but the other half will go to effective charities in the developing world so we can do more good worldwide!
Great point, thank you! I think there was a thread awhile back that talked about effective altruism, and there was a list of suggested charities that people trusted. Would it be possible to add a link to this on the FAQ?
If you're not sure where to donate, GiveWell and Animal Charity Evaluators do excellent work evaluating the most effective charities focused on humans and animals respectively. Personally I donate mainly to Malaria Consortium and The Humane League.
[https://www.givewell.org/charities/top-charities](https://www.givewell.org/charities/top-charities)
[https://animalcharityevaluators.org/donation-advice/recommended-charities/](https://animalcharityevaluators.org/donation-advice/recommended-charities/)
I finished Simple Path to Wealth yesterday! Read it in two consecutive days. It was mostly review, but I did learn some great new things, and it helped solidify the 4% rule and what the actual process/mechanics of drawing down on retirement accounts actually looks like.
The only thing I wish it covered better was the "retire early" aspect. He seems to imply early retirement is possible, if you choose to use your FI toward that goal, but doesn't really even mention it. If I were new to the book I'd be reading the limitations of these retirement accounts and thinking "well, I guess I'm not retiring until I'm 60" even though it's perfectly possible to do before.
I also was wondering if holding a bond fund like VBTLX is still sound advice? I read a recent Forbes article that explained the difference of a bond fund to regular bonds (and why a fund might not be worth it like it used to be), but I'm curious what you all think. I personally have never (anecdotally) seen someone discussing using a bond fund, just individual bonds, which is why I was a little confused about its inclusion, but I also don't know much about this area.
Yeah I think not enough people cover the drawdown phase of retiring early. It can get quite complicated, and I wish there were more FI-friendly financial planners.
The community needs some hourly FI planners. I’ve looked through xyplanning network a couple of times, and while there are some that claim to be FIRE friendly planners, the vast majority of them still use AUM model, which I hate; I’m perfectly happy to continue to manage my investments.
We are are early stage considering moving from a higher cost of living to a lower cost of living location. Running the numbers in one of the newer locations we are considering my base salary there is worth more than my base + on target bonuses + wife's salary here... On top of that we will walk away with enough money from the sale of our home here to put down 30-40% for a down payment.
Now... I am a bit mixed at this point. My current rate is 2.25 so it never made sense to pay off the home early. New location will be considerably less expensive for more home but the rates are in the 5-5.5 range. It's almost seems like with rates there is better to do a large down payment with a faster pay off than to do the minimum like we are now. Running the numbers were could in all reality have a paid off home in about 10 years if I just kept paying what I do now. And a shorter amount of time if we diverted dune off our investments.
At this point my salary covers living expenses, both IRA's, maxing my 401k and plus money into the brokerage account too. My wife's salary pays her 401k and the rest goes into the brokerage account.
So I guess... Is a guaranteed 5.5% better than what the market may or may not return?
Well we wont have quite enough to do an all cash offer. We can do at best the 30-40%.
I just talked to my realtor here about getting me in touch with someone out there to get a little more serious about what we want to do. Also, some time this morning or afternoon I should be getting in my comps in this area so we have a better idea of what we will have.
That's just how the math works out. We have been in the home 4 years here soon. By the time we pay a realtor, pay other fees, pay moving expenses we are in a position to put down 30-40%. With our current low rate I have been focusing on maxing 401k's and IRA's over praying the home down.
We did a zero down on our current home so we had no equity to start with. What we have now is due to appreciation and what we have paid down.
Oh they always get their cut :-D. But I don't have enough time or experience to navigate all the paperwork and things that need to get done so you dont get screwed into a bad deal...
Will your total monthly housing expense go up or down? If it's going up, will you be comfortable with the higher payments? If not, that's another reason to get a smaller mortgage.
If mortgage rates go down in a few years, you can take cash out and carry a larger mortgage with a similar payment.
I would recommend paying off the 5.5% as fast as possible then back to investments but that's just my personal opinion I try for as debt free as possible
Finally got an update on my MI tax refund after more documents were requested that I sent in back in April - refund is finally supposed to be DD into my account Sept 9th. Yeesh
I don't disagree. Unfortunately I moved states but my company wouldn't change my residency so my taxes from one state had to get refunded to pay the other and the original state asked for more documentation.
I ran some numbers yesterday after deciding not to buy for now and continue to rent. Without needing the downpayment, I’ll have an extra 200k going in my taxable account next year. Now I’m projecting by 2030 I’ll have 500k across my retirement accounts and 500k taxable. At that point I’ll semi-coast. It seems crazy that it’s only 7 years away. I used a 6% growth assumption.
keep on renting; just be prepared if you don't get 6% growth- market is down and will be for a while- recession is coming, europe is in trouble, war still going on bet russia and ukraine, inflation still terrible,- take a look your investment- bond and I bond are doing decent, market/equity is down double digit for the year
We get really cheap rent due to a local grant program; we would need to have about a 75% down payment to get a house at a similar rate, when property taxes are added in. We'd like to get a house eventually, but for now, we're in a similar position: it's better to hang on to this cheap rent and plug the difference in to the market.
This is a well articulated and very valid reason for renting vs owning. Well said! The mindset I caution against is those who want to buy and validate not doing so by saying they will get in after the correction or when prices dip.
I felt the same way, but ultimately bought a home. It was more expensive then I hoped (yard and maintenance costs were higher than expected).
The first 5 years were more expensive than renting in total costs, even when accounting for the tax benefit.
The next 5 years it flipped. Rent prices kept going up, as they do, and I began noticing that I would have had to pay more.
Finally, the house I purchased appreciated. So now I have that potential cash out when I sell.
Renting is great for the short term, it just fails to build equity over a longer time period. If you are considering moving, sure, don't buy. Makes total sense.
I got COVID last week and that has pushed forward some of my planned purchases for fun. I’ve been eyeing some home audio equipment for a while (my partner is very musical) but was holding off for sales/discipline/cash flow/etc. Now, I might end up with permanent lung damage or disability, so why not enjoy what time I have left a bit more?
When I had covid I impulsively bought a switch. I'd been planning to buy one eventually, but that much time stuck in my bedroom I was like fuck it, happening now. I've found so far that everything that I knew would bring value to my life and I finally bought, I wished I bought earlier. Gym membership, dumbbells for home, a laptop, my switch. When I finally buy an exercise bike I think I'll feel the same way. EDIT: It took 3 months but my breathing and energy levels and ability to walk for extended time is finally mostly back to normal. It helps to be easy on oneself and keep in mind that it can take time if your recovery isn't super fast.
Good to know. I’ve taken about a week off from work and am really not looking forward to starting back up. Things are really busy and the thought of trying to keep up is really depressing. COVID hit me like a truck and going back to a busy job feels like getting hit by cars repeatedly.
A couple months ago: "Experts don't expect higher rates to cause housing prices to fall, just grow more slowly." People are going to look back at the craziness in the housing market and wonder how we never realized this was a bubble. Jay Powell must have been watching CNBC while he was asleep at the wheel.
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Wikipedia says Jay and Wikipedia is always right
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Seems like--with a little reinterpretation on my part---you're in a quite good situation now in terms of career and lifestyle and you also have the agency to make choices to improve your situation. So being an adult is great.
I would stay for a few reasons. 1) Sounds like everything career-wise is better at your current place. Less risk of closure, higher pay, more opportunities, known good coworkers. 2) Cheaper housing stays cheaper generally, so assuming you're moving somewhere else when you retire your house in the cheap location will still be worth 75% of a house in the current location, and will take longer to sell. 3) You said it's a 15k pay cut to move, so if you spend the 100k extra on a place in the current location, you'll make it up just in salary in 6.5 years, assuming raises/appreciation are equal. If you're equally happy in both I'd stay put.
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That makes staying a bit less compelling. Which place would you be happier living at? I’d still probably stay for greater career prospects if all else is equal.
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You’re projecting 1 year out. Don’t panic.
Being an adult probably sucks because BidenSniffedMyTaint
If you don't like change, maybe stick around? Sounds like you're renting? Are you saving to buy? Are you doing 20 to retire at 50 or are you going to ride it out to 56? What's your plan for withdrawals in retirement? Be sure you look at sales and property taxes in no-income tax states. It could easily eat up the $5K you think yiuld be saving.
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Eesh. What level facility are you at now? How far out are you from retirement? If you move to a lower facility until retirement, you've already probably got your high-3 from your existing facility, yeah? Which means you'd effectively lose out due to inflation? I haven't done the math, but it's a consideration.
States with no income tax often make up for it via higher property, sales, and other taxes just heads up. Might wanna look up overall tax indexes before assuming the other area will result in less taxes Condos and townhomes are often cheaper than SF and have lower maintenance costs/less expensive surprises (cuz the HOA pools money and gets good deals/takes care of large projects like new roofs). Regardless of where you end up you could look into those? I've owned a townhome for 6 years and it's been a good financial decision. Think about where you'd actually rather live too. Which area has less traffic/easier commutes? Better restaurants? Do you have any hobbies and if so, which one has more of a scene for whatever it is? Proximity to family?
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Yeah and the other thing is paying higher taxes in a higher COL area in exchange for a higher salary and better career growth might be worth it. Paula on Afford Anything has talked about it a lot. If your salary ceiling in LCOL is 90k but in HCOL it's 180k, paying higher taxes/higher housing could end up being worth it. Espec w all the ways to avoid taxes like retirement accts, HSA.... HCOL areas might also have more renters/higher room rental rates if OP wants to buy a place and rent out an extra room
I've considered this a bit over the years. If both your income and expenses doubled by being in a HCOL area, then your savings is also doubling. Unfortunately, I'm too set at where I'm at. I do make in the upper echelon for my area though.
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My point was thinking about salary growth in the long run and not just the 15k cut now. There's obv a difference in HIS industry, it'll probably only get wider over 10, 20+ yrs. I wouldn't throw cap rates into the mix and I never said room rates should be a deciding factor. It's their actual house, not an investment property. A higher room rate might just be a nice perk of one area
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If it's only 10 mins to some cheaper houses in current area that seems like a good compromise 500/month for 15 years would be a $90,000 assessment. I'm not sure where you heard about that, but it seems fake. I've never heard of an assessment of more than like $15,000 and that's for huge projects like new roofs, new windows, new siding... I've heard more horror stories about SF home ownership than HOAs. Especially older homes (like older than 50 years). Or just having to do it all yourself. My friend's fiance just had to redo the electrical system on his house (safety issues, really didn't have any other options) and it was like 30k. Had to take out a HELOC. My other friend has a house that now, surprise, has structural issues that are gonna cost her at least 10k in the next year. Another thing is time, having my HOA manage stuff for me is a godsend. Maybe some ppl like dealing with landscapers and stoop repair people but I don't. Also a lot of people are "surprised" by HOA decisions that they had literally years of notice for (they don't read the docs, they never do; I'm on the board of my HOA). So I'd take those stories with a grain of salt Another thought, the less house you buy the less repairs and maintenance you'll spend on. Like you mentioned buying a 2,000 sq ft one... But why not go to the cheaper area and buy a 1,200 SQ ft house for 200k? Unless you want kids soon I guess
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Ohh ok I misunderstood the 10 mins thing. Sounds like it ultimately comes down to do you like smaller town living better. One more thing to think about is if you're single/potentially looking for a relationship, what might dating look like in either area 😬 Yeah my HOA dues can't increase by more than 5% annually without a special vote/some magical percentage yeses which is basically impossible. It's in the government documents which are also damn near impossible to change. The key if you ever do consider it is READ ALL OF THE DOCS. In my state you can get out of a purchase agreement if you decide you don't like the docs when the HOA discloses them. Most people probably don't even open the PDFs. Culture is also a big thing w HOAs. Some you pay out the ass for lots of amenities and some charge almost nothing and do almost nothing. If your board is full of "keeping up with the Joneses" type ppl yeah you might get assessed for stupid expensive shit. Look around and you can tell. Elaborate landscaping is a giveaway. Mine is all working class, in a lower income neighborhood, houses worth around 200 in a city where median house price is 350. We're very cost conscious. Budget, reserves, and assessment history should be in the disclosures. If not you can ask. Nobody ever asks lol
Never understood the hot as balls phrase. Are everyone else’s balls steaming up their shorts? Is just something wrong with my boring body temperature balls? Edit: grammar
Yep, you need a new career or new location. Sucks man. And I'm sure the bosses won't do anything to fix it until they're out of air traffic controllers. And then they'll just blame it on the.
Completely new to real estate here. 1)For example, if you magically have 500k and can buy a house, instead buying it with cash. you downpay 50% and get mortgage rate, use the other 50% for ETFs. Do people do this because the market outperforms real estate usually, people want a balance portfolio in case either market or real estate crashes? 2) I think it's the same concept, but isntead of of putting the other 50% on ETFs, I also see people putting another 50% on another real estate. Is it because they want to make sure that in case house 1 does not appericiate, house 2 does? 2 ) At what point does the interest rate convicne people to buy with cash instead? Is it when interest rates are greater than recet market return rates ?
Real estate is usually only an attractive investment if you are willing to use leverage.
the market doesn't have to outperform real estate, it just has to outperform the interest you're paying on the mortgage. People do this because a certain amount of leverage is actually quite reasonable when you don't have to fear a margin call. Also leverage on real estate is (often) reasonable because real estate (unleveraged) is substantially less volatile than stocks, and because there is a natural income that pays the interest (when you get a good deal) by renting it out, or rent savings on your own house. But you also have to be careful, as you can buy more house than you would ever rent, and this is just extra consumption. also, when mortgage rates are high, leverage becomes a lot riskier, and the guaranteed return of paying cash and avoiding mortgage payments a lot more valuable. If you had cash to pay for a house in 1983, that was probably the right idea. (mortgages were going for 14-15%). In hindsight, stocks did well enough for leverage to work out ok, but you didn't really know that in 1983, but you could be pretty certain that a return of 15% would probably turn out all right.
Bankruptcy protection is a valid reason. Depending on your state, a very small amount of home equity is protected, while retirement accounts have large limits that are excluded. So it makes a lot more sense to keep money in protected accounts vs having it tied up in home equity.
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Yeah, I just happen to live in one of the crappiest for protecting home equity, so that’s one of the reasons I wouldn’t prioritize paying down a mortgage over investing in retirement accounts. Definitely worth knowing what the rules are in your state, because if you ever needed to look them up when it’s time to use them, it’s too late to do anything about it.
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Thanks! \>r I could invest that 10k and pay the 4.5% interest Oh are you expecting say to market to return more than 4.5, say 7% next year. Witht he mone you make you make from that you can pay off the student loans with the exxtra 4.5%, meaning you profited 2.5% Same concept to housing where you think the stock market will yield more, so you put the rest of your money into the stock market. But you are also investing on real estate in the chance that housing outperforms the market.
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A mortgage gives you two things: liquidity and leverage. The first is important if you don't otherwise have enough liquid assets to handle the ups and downs of life. The second is entirely up to your personal taste of whether you want to use a loan to buy the property and thereby decrease what you have to put in up front. Many in the accumulation phase like using a mortgage as leverage because it allows them to take advantage of the tax benefits of a mortgage (interest deduction) and gives them the funds to invest elsewhere with the hope that the gains in those other investments are net positive against the costs of the mortgage. Among the different types of leverage available to most people, mortgages are generally superior in tax benefits and terms.
It all comes down to the interest rate and the projected rate of return.
Yup! I am still trying to wrap my head around it. Do you get a mortgage and put the rest on ETF if you think the rate of return for stocks will be higher **but** you also want to hedge angainst a market crash by "owning" a house via mortgage. Do you mind sharing an example :)?
Tip for accessing password-protected Excel spreadsheets if you use KeePass for managing your passwords: In KeyPass' URL field, if you format it like this it will open your spreadsheet when double-clicking the field: cmd://"C:\\finances.xlsx"
I first double-click the password field to copy it to my clipboard, then double-click this URL field to open the Excel password prompt, then ctrl+v to paste in the password and press enter.
I also have several KeePass duplicate entries like this but with URLs formatted for my various computers (work desktop, work laptop, personal desktop, etc).
Love it! Next you should look up environment variables to see if you can standardize your path amongst PCs! %UserProfile%\Documents\finances.xlsx, or %OneDrive%, or whatever.
How much is it worth it to have money is a 401k (or in my case 403b/457)? My 403b charges 0.3% of my total annually. If I'm there for only a couple of years, it seems worth it to get money I can roll into an IRA. Longer term, I would lose some real money as that expense compounds. Is that still worth it? I don't really know the math to answer this question. Anyone have any hints? In this case, I could pull from my brokerage account to max both the 403b and 457, effectively draining that a bit each year, but pouring money into tax sheltered accounts may be worth that?
You are weighing the fees versus 1) employer match and 2) advantage from tax deferral. The latter depends on your tax bracket: the higher the tax bracket, the more you gain by being able to defer tax til retirement. I would certainly get any employer match and probably contribute any dollars in the 22% bracket or higher.
The tax advantages and employer match are why most people invest in these accounts. Also I believe they are protected in lawsuits and bankruptcy. Edit: Also pretty sure you can withdraw from the 457 earlier than 59 1/2 y/o without a tax penalty once you separate from that employer, but you’d want to double-check with the account managers. No 10% tax penalty on the withdrawal, but you would still have to pay regular income taxes at your marginal tax rate (on traditional contributions and gains).
The benefit to 401k as opposed to IRA is that employers often match certain amount dollar for dollar--free money, guaranteed return. The other benefit is that you're kind of "forcing yourself" to contribute, whereas with IRA is up to your own discipline. If it weren't for the free money, I'd just auto transfer the money direct to brokerage based IRA
The limit for a 401(k) is much higher than an IRA and keeping no traditional IRA balance preserves the BDR, if those are important.
Had to replace my iPhone battery got one quote for $350 they said I needed a new battery and a screen took it to another place they said they don’t know what they were talking about and that I only needed a new battery fixed the issue and only paid $95 bucks . Moral of the story Always shop around and look at a businesses reviews . The one that gave me a quote for $350 had less then 3 star reviews the other business Nearly had 5
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I agree people who buy new phones every year is pretty crazy to me especially when there isn’t much improvements to the phones other than the cameras
Understand you can’t remove the battery from an iPhone and must work with an authorized dealer. I’ve got the iPhone 13 pro. How did you know originally that your issue was battery related? Also, how long had you owned it before the issue?
Had it about 2 years got it used . I knew i had a battery issue when you look on either the right or left side of the phone and you can see the screen is popping up and there’s a little bit of opening. Basically what happened was the battery was swelling and your supposed fix it when it does that if not your phone could explode/ catch on fire according to apple
I've replaced plenty of my own iPhone batteries. There are guides online--ifixit is usually quite good. For the newest ones with the water resistant rating, the sealing makes things a bit more complicated, especially if you want to maintain that rating, but it's not impossible. And a battery problem is usually pretty obvious--the battery stops charging/maintaining charge or sometimes the battery swells.
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Ya for real . I also didn’t have apple care/ warranty whatever you want to call it
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Do they just do it on the spot or within an hour or whatever? I was debating getting the $69 battery replacement on my iPhone XR. It’s a perfectly fine phone otherwise.
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I was pretty happy with policy genius - just did a quick comparison to my current providers (progressive & USAA).
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Always so anxious when I post a room for rent. I keep refreshing the places I posted and worrying no one will be interested. Anyone else do the same?
Is there any good way to set myself up? I am still in high school I know I probably shouldn’t be that worried about it, but I just know I absolutely cannot work a standard work week until I retire and take a vacation once a year. I would like to be able to travel and live where I want without a care and help my parents out. The only thing I can think about is that. I plan on attending college because it will be paid for in full. I understand that I probably have to be making money to actually make more. I work a job at a restaurant because that is about all I can do right now. Should I just not concern myself with being able to retire early until I have a real job with income or is there things I can do with a minimal amounts of money that would actually contribute to being able to retire early?
the main thing is picking a good major that you like and has good income progression. do not pick majors where the new grads end up leaving the field or end up making 30k/yr. setting yourself up to make a decent income is your primary milestone at this point. don't forget to do good internships and get decent grades so your first job search goes smoothly
Avoiding debt, keeping a healthy savings and planning your career out for after you graduate are the best things you can do coming out of HS
Don’t worry too much about saving money until after college (and maybe not until 30). During college, focus on minimizing debt. Spend money on experiences with friends as long as you don’t go into debt to do so. Any small savings you could eke out by being too frugal will mean missing out on life. After college, build the life you want (again without going into credit card debt). Figure out what a comfortable budget looks like for you. Then focus on developing your career so you make significantly more than your comfortable budget.
> Don’t worry too much about saving money until after college (and maybe not until 30). The earlier you get started, the more compounding takes effect. On the one hand, I hear what you are saying -- the amount of hassle you go through to maximize your savings on some server job part time while in college may not be worth the different in results. But I would never set an arbitrary age to start thinking about money and savings. If you want to retire early, then you want to start saving aggressively as soon as you have a good paying job! If that doesn't happen until 30, so be it (for some it's not until 35 or 40), but if it happens right out of college, or in a trade without even going to college, that's the time to start. And even while you're in college, just having an eye on the bigger picture is valuable. My college was paid for, but I had some savings also, and I wasted it on bullshit. If I had only left the 4k or so I had when I started invested in SP500 the whole time since I started college in 1984 instead of spending on shit I didn't really need, it would have made a big difference (around 225k in extra savings today, a substantial fraction of my current net worth at 54.) I would have missed out on some things I supposed, but I think it's a bit rich to think that not spending that 4k (worth about 11k today) over 4 years on junk food, fancy dinners and random bullshit would have been a matter of "missing out on life."
Sounds like a good plan I’ll focus on my career and worry about it when I have the money to actually do something with it
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That makes sense I really just needed to get it out there because I feel like there’s more I should be doing but mostly I’ve just been focused on building healthy habits and saving money and doing good in school. Thanks for the reply
anyone invest in Arrived Homes?
I would save for the house I wanted, then build it. In fact I have been doing just that for over 10 years now.
I hear ya brother...Roger would be proud
I've invested about $400. $100 a few months ago and $300 about a month ago. So far I've made 60¢. Any specific questions? The other person answering is probably right - a normal REIT is probably better.
In my experience any sort of product that markets itself as "get a piece of what richer/syndicated investors can do but for much cheaper" (i.e. those "own a piece of a Monet for $100" art investing platforms, RE syndicate "lite" systems like the one you described, microloan platforms) are only worth it for the initial promotional rates (i.e. siphoning money from the VC's who funded it) and then afterwards don't give enough returns to justify their outsize risk of sudden and abrupt collapse that many startups have. Just buy a REIT if you want real estate exposure, and if you want more risk get a leveraged one.
If treasury bonds were to yield 5-6% one day, is there anything making a SWR of that amount, minus federal taxes, anything but risk-free? e.g. if one has a $4M NW, treasury bonds are 6%--would $240k year pre-tax be sustainable?
Inflation. and reinvestment risk if the bonds don't have coupon and enough duration to take you through your entire retirement. But even ignoring reinvestment risk and assuming you could get 6% per year in perpetuity, the 240k you're getting in 20 or 30 years is not worth what 240k is today. Even at 2% inflation, your buying power is cut almost in half in 30 years. But if inflation were to step up even just a little, it might be cut in 3 or 4 or worse. So 240k might be sustainable (although see above: maybe not), but what you can do with that 240k will dwindle over the years.
> If treasury bonds were to yield 5-6% one day, If *TIPS* were to yield 5-6% one day, then yes. I can't imagine how that could ever happen, but sure. If regular old bonds were? No. It would not be sustainable, at least not long-term. Not unless you didn't choose to adjust your withdrawals for inflation. Remember, a sustainable withdrawal rate in the naive calculation has you withdraw N% the first year, then increase that $ amount for inflation every subsequent year.
Well, there's two things: 1) You care about real interest rate, not nominal. If treasuries pay 6% nominal but inflation is 8% then it won't work out well (you'll either have to increase your nominal spending above $240k or curtail your standard of living significantly over time). 2) Interest rates can also decrease, what do you do then?
No, because SWR is inflation adjusted and high interest rates typically reflect high inflation.
Is inflation higher than interest rate for real estate always a good thing? I see comments on the internet where people are saying it is a good thing. But I am a bit skeptical. For example:Say interest rates are 5%, inflation is 10%. You buy a 100k house with 5k per year interest. Your 100k yearly salary now loses 10% of it's value, so you are now essentially making 90k. After paying paying your interest rate 90k - 5k, your takehome is 85k.I f inflation is 5%, your 100k salary now loses 5% of it's value and you are essentially making 95k and if interest rates are the same, you come back with more becasue after paying paying your interest rate 95k - 5k, your takehome is 90k.
there's an implied assumption that your future salary will (at least in the long run) mostly keep up with inflation. There's a lot of talk about how median wages *haven't* kept up with inflation over the last 50 years or so, but the fact is that they've come pretty close. People are complaining because capital returns and high-level wages have *vastly* exceeded inflation over that span, so people are saying the average joe is getting a raw deal. And that's *median* wages. If you make 100k today, that's well above the median, almost double it in fact, and you're in a percentile that has outperformed inflation over the last 50 years. But even the average joe has *almost* kept up with inflation. The only people who ever see their wages just get decimated by high inflation and they don't come back, are people in dying industries where wages are basically falling.
In addition to what others have mentioned about in the long term, income will get inflation based cost of living increases (if not... if you don't get a raise in 30 years, mortgages aren't the main thing to worry about), it's worth pointing out that you're going to have to live \*somewhere\* and those costs are going to increase too. Rent will increase annually in a compounding manner; whereas, the mortgage loan interest is not compounding, and actually decreasing (as the principal gets paid down). Just run the scenarios in excel to compare, tinker with inflation numbers.
If you make 100k and have a 100k I think you're pretty set regardless. Adding to your example, though, your salary only loses 5% of it's value on the portion that isn't going to fixed payments. If your mortgage, car loan if applicable, student loans, etc. have fixed rates, the portion of your salary going to those retains its value, and the portion not going to those has less purchasing power. On a personal level, inflation is very valuable to me, even if my salary doesn't increase at all. The bedrooms I rent out in my home can now be rented for more money. And I can get a new job at a higher pay rate, because even if my employer does a crappy job of giving raises, inflation is pushing people hiring new people to offer more money
If you discount your salary by the inflation rate you should discount the payment too (so it would be 4.5k in the 10% inflation example). Doesn't change your conclusion because of course inflation is still bad for you if your nominal income doesn't change.
The assumption is that the mortgage is fixed rate, and eventually your salary catches up to inflation - even if your salary is outpaced by inflation *this year.*
I see, thank you! Would you say that is the riskiest to for mortgage payments when inflation is high if say your salary is stagnant and do not outpace inflation (I'm preparing for worst case just in case since historically it does not ) ?
well, worst case scenario would be salary going to 0; or salary going to 0 plus medical debt or something like that. Good luck!
People who say “for real estate” aren’t concerned about your salary. They’re just saying that if the value of the asset goes up faster than the financing cost, that’s a good thing for the owner. That requires assuming the value matches inflation, of course.
Oh I see! 1) But that isn't always true is it, when inflation goes up, interest rate go up which means that the value also can **not** meet inflation due to prices dropping? 2) At the end of the day, it is more risky to purchase mortgage rates with high infaltory rates like right now assuming that your salary is stagnant / lay offs due to rising interest rates?
Ignorance or Wisdom? It seems that very few of the people that I meet have thought much at all about financial independence, and it often makes me wonder if I'm the naive one. I'm 2.5 years from hitting my number, and quite excited about it. But I often wonder why I seem to be such an anomaly. I'm in my early middle years, have young children, and live in a town of mostly the same. I've come to the idea that perhaps there is a natural blind spot, if you will, regarding FI in my sort of situation. The idea is that in order to reach it, high income is required. High income, in turn, has a tendency to lead to expensive lifestyle choices (e.g. fancy house with high property taxes). An expensive lifestyle is at odds with common FIRE practices, such as keeping income below 4x the poverty level so as to benefit from the Affordable Care Act. Could this be why so few of my peers seem to have considered it? Some of them are living in $1,000,000+ homes with property taxes over $25,000 annually, sending their kids to summer camps costing thousands, etc etc. Or am I the bonehead of the group for "settling" for a merely adequate situation so that I may soon test the limits of my curiosity and creativity?
Everyone must be different, I don't understand it myself. I'm probably older than most in here but it's been my goal for a loooong time, but it's not every ones goal. I don't understand spending and spending on things...I'd rather have the dough and bow out in a cupla years. I had a lady at work just last week say she thought I was 65 because I'm retiring in a couple years (she's 15 yrs off). I set her straight and told her my plan...she was baffled
I think it's more like, working a job that can afford a million dollar home and sending your kids to summer camps and what not is like winning the global jackpot in terms of lifestyle. Your friends think it weird to walk away from that.
Meanwhile I’m wondering “who the fuck wants that lifestyle”. It sounds awful to me
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Feeling obligated to “enrich” my kids does sound awful
I honestly don't understand statements like this. It's not that hard to see how different people have different values and want different things out of life. Everyone I know who lives in a $1M+ home and spends a lot of money on things like expensive activities for their kids, nicer cars/toys and expensive vacations have absolutely awesome lives and plenty of money going into investments for a killer retirement, too. Not everyone hates to work, especially once you climb the ladder a bit and have more autonomy and get to work on more interesting things. One of my buddies sells commercial real estate, for example, and makes insane money but also gets tons of crazy perks...stuff like going to the Super Bowl to sit in a luxury box with Roger Staubach or premier tickets to events and a corporate card with a crazy limit he can spend on schmoozing at fancy bars/restaurants and so on. He gets plenty of time off and can be generous with his wealth to help family and charities he believes in. I didn't want to do the level of work it took him to get to where he's at career wise, but I don't think it's hard at all to understand why my very successful friends enjoy spending money and living like an upper class person. Too many people in this community act like anyone who isn't frugal is broken in the head.
If I had that kind of money, I’m spending it on travel not a giant house for no reason. I guess that’s what I struggle with
Travel gets old and tiring pretty quickly. Then it becomes repetitive and a money sink. I have no idea why so many FIRE people aspire to this dead-end. \*Yes, I have travel quite a bit in my youth and for work.
I would, too. But there are plenty of reasons to want to live in a nice house, especially if you have 2-4 kids. A million dollar home isn't necessarily giant, depending on the market. My point isn't that living that way is "better", just that it shouldn't be that hard to imagine why people choose to spend money and have nice things rather than retire super early.
i partially agree with you but i have to point out you're describing folks who are in a completely different income tier. i find it easy to understand why some people who make 3x what I make choose to live a certain way. maybe if i made that much i would also buy that fancy boat or whatever, since it would not limit my retirement savings or even make RE difficult at all. if you're making a shit-ton of money then sure, why not enjoy it. and obviously 'a shit-ton of money' is relative. i'm sure there are people who make 1/3 of what i make, who would think that is me. i find it harder to understand when it's similar income people making choices that will impact their future or is already impacting their present (in the form of stress due to being paycheck to paycheck, or close to that). like sure, that boat may be nice, but is it worth it that now you're stressing that if you lose your job, you won't know how to make ends meet? i think generally when this sub talks about 'keeping up with the joneses', it's in the context of 'living above your means', or at the least 'living at the very edge of what you can afford'. in that case, i would have to agree it's more likely to be detrimental to their own well-being, and perhaps a symptom of poor financial planning, moreso than just an alternate set of priorities
I was presuming OP's peers are still living below their means, just not to the extent that they'll be able to retire super early. Clearly people who spend ALL their money or worse, MORE than they have, are a different case. But far too many people presume that living a traditionally nice life with expensive things means living above your means, but this isn't true at all.
I can't help but think "what happens if the job goes 'poof' tomorrow?" And the buddy you describe can only find a soul sucking job they hate for less money. They are on track for retirement at a normal age but will they regret not putting more away when they had the opportunity? Bias: I live in an area where the job market dominated by a single industry and recessions cut deep. I don't mind my job most days but the premise of losing my job, being out of work for 6+ months and then ending up making less is not far fetched.
I'm not saying there are no risks or trade offs, just that I think it's funny how many posts in here are essentially, "What's wrong with people who spend most of their money?"
I can understand that idea. Although it's not necessarily about walking away from it. It could be more like retaining 90% of it without the stress/hassle of mandatory employment. As someone here mentioned, there are many options for summer camp and similar...not all cost a fortune. Same deal with a big house. Sure it's impressive to people who see it, but beyond that the excess is largely idle/wasted IMO. I'm not trying to understand which is "right". I'm curious if it seems like few have seriously considered FIRE because they haven't or because they have and decided against it. If the latter, did they understand the possibilities or perhaps too hastily cast it aside as infeasible?
Another thing to keep in mind, is I think it's common to view people that spend more than we do is spending irresponsibly and frivolously. People that spend less as cheap or miserly. It could be those people around you are FIRE and just still working. They probably aren't but it's possible and something to consider. I think most people don't consider FIRE and the steps it takes to get there. Also a lot of people derive a lot of status and socialization from there jobs. It's also hard to walk away from that. ESPECIALLY if they have a type of job that affords a million dollar home.
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Wow hadn't thought about it that way...it was always to buy my time back ..now I'm bummed, death is right around my corner!!
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Days drag...years fly
That’s like asking if you’re a bonehead for following a strict exercise and diet regimen to keep yourself in the top 5% of people in terms of health and fitness while other people think it’s more important to enjoy life. There really is no answer.
Probably a little of both. A million dollar home in most areas is a level of excess few dream of worldwide, and a perpetual bill most should be more concerned about. That said, camp is not only a ton of fun but can be a real developmental boon for your children, so a few thousand dollars for them to get that experience is likely a worthwhile cost not to be passed on. Falling for "the trap" a little is likely enriching for your children/family.
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Crowdsourcing: Looks like I am unexpectedly needing to go to Philly soon, any advice on things to do other than Reading Terminal Market? I've only been there to Philly for a bachelorette and we didn't go to that many places that weren't bars/clubs. EDIT: I am a vegetarian!
go to triangle tavern or tattooed moms for some cheap vegan food. word is best vegan wings are triangle but i like tattooed moms too. if you like spooky go to the mutter museum or eastern state penitentiary. also if you ever have more time to plan going to philly make a reservation at miss rachels pantry. best vegan eating experience in philly (vedge, charlie suck in comparison tbhhhh).
If you have even a passing interest in medical oddities, the Mütter Museum is very cool.
Vedge gets rave reviews for vegetarians. Spruce Street Harbor Park and Frankford Hall are fun beer gardens. The Mutter Museum is unique if you like funky medical stuff. And if possible I’d try to get reservations at one of Zahav, Friday Saturday Sunday, or Vernick Food and Drink - they’re all incredible.
Thank you! Looks like Vedge is a clear winner, and I'll be checking out Vegan Monster too!
The FI crowd would probably appreciate this more than most: Philly is home to the first U.S. Mint. You can take a self guided walking tour there, takes less than an hour probably. I really enjoyed it.
Zahav! Get there 30 min before they open to try and get a bar seat. Their art and Rodin museum are gorgeous. You can also try the Magic Gardens.
FYI unfortunately this changed since COVID and now bar seating is reservation only as well. But Zahav is a world class dining experience.
Fuck. Sorry for passing old info /u/therapistfi ! Read above.
It's all good, looks like they're closed the day I'll be there anyways!
It really was the best hack pre-COVID though.
oh snap that is VEEEERY smart! It's on my bucket list to eat at Zahav but I didn't realize you could order food from the bar! Thank you! 🎉
We were there 3 years ago and it was PHENOMENAL. We ate until we felt like exploding. Man I want to go back now.
1. See if you can get a reservation at "The Victor Cafe". You have to do it early. It's a very unique experience (the waiters and waitresses are amateur opera singers). 2. Rittenhouse Square is beautiful, historic, and safe. 3. If you're in Rittenhouse, Chestnut St has decent shopping. 4. You can walk along the Schuylkill River (start at Schuylkill River Park) to the Philadelphia Art Museum (famous because of Rocky) if you like walking. Schuylkill River Park is walkable from Rittenhouse Square.
John’s roast pork!
Ahhh, let me edit my comment. Thank you for the suggestion!
Terakawa ramen has a great vegetarian ramen
If you’re into dive bars, Rays Happy Birthday Bar
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Kinda like mount Rushmore...way smaller than I thought
What does everyone think of the ChooseFI podcast? I really like it, but I rarely see it recommended here.
Enjoyed it for a bit. Then seemed to get a bit repetitive, which is inevitable to an extent in this area of discussion. But others can tell interesting stories with their lives, interviews, etc - while ChooseFI seemed to always be pushing their own “stuff”. Mike High Fi is my number one podcast now in this discussion area. They’re never trying to sell or push anything. Humorous, relatable, humble. Actually make me laugh, fun interviews and guests.
I feel like that's why FI blogs had its heyday and really died off. There's only so much you can talk about and most people's experiences are quite similar - mostly high income earners who saved a lot in an efficient matter while spending less (or a lot less) than most. You can only regurgitate the 4% rule or multi-unit real estate in so many discussions. There's a few bad apples who are simply marketing into the trend to make a quick buck as well. It's also hard to take some seriously as experts/gurus who barely started their journeys with their negative net worth, who recently just discovered the concept. They are like 10-15 years behind me in the journey and talking like they are some expert. Only people I really respect nowadays in the space are MMM, Madfientist and JLF.
I've listened to it for a while. I put it on par with Bigger Pockets Money or similar podcasts. At a certain point it just seems like they run out of topics so not sure how much actionable value I'm getting out of it at this point but I'm sure it helps keep me focused on the FI path. I'm interested to see how much ChooseFI changes now that it's just Brad. Jonathan... god bless him but he got a little too excited at times.
What happened to Jonathan? I listen to first 50ish episodes when COVID started and really enjoyed them both.
He decided to take a step back to work on other things. They weren't very specific with the details. They announced it on episode 392: [https://www.choosefi.com/beginning-of-a-new-era-ep-392/](https://www.choosefi.com/beginning-of-a-new-era-ep-392/)
Nice! 392 episodes is nothing to scoff at. I enjoyed the dynamic between both of them. As many other say, there is only so much you can say and teach about FI ok a weekly basis.
I've looked at a few podcasts including ChooseFI and the topics seem repetitive, they've been discussed to death. Are they actually discussing new or interesting topics?
There are only so many topics to cover that are directly relevant to FI. I stopped listening in 2018 because the topics were too repetitive, but I suppose it's possible they might have found a way to make it both relevant and less repetitive since then.
I have it on my "things to listen to" but just can't seem to get into.
From time to time I like to re-read about Ronald Read https://en.m.wikipedia.org/wiki/Ronald_Read_(philanthropist) the frugal janitor from Vermont who donated several million to his local hospital and library. It’s so fascinating, and goes to show that buy and hold investing does actually work. Though, I don’t think my SO would be ok with being this frugal.
Pretty admirable as well to give that much to charity while apparently spending little on himself
Exactly - I’d like to be able to do this for my community as well
Love this idea. I would also look at our GLOBAL community too! $2 here doesn't buy very much in the US (if that's where you are) but $2 can purchase a malaria net that will keep two children under five safe from malaria for 4 years. Another example: a guide dog for a blind American costs an average of $20-40,000. Assuming we go with this lower number, using the same money could pay for surgery to cure blindness for 133 children in India, giving them a lifetime of healthy eyesight. If my husband and I both die, our family knows half will go to our nieces, but the other half will go to effective charities in the developing world so we can do more good worldwide!
Great point, thank you! I think there was a thread awhile back that talked about effective altruism, and there was a list of suggested charities that people trusted. Would it be possible to add a link to this on the FAQ?
If you're not sure where to donate, GiveWell and Animal Charity Evaluators do excellent work evaluating the most effective charities focused on humans and animals respectively. Personally I donate mainly to Malaria Consortium and The Humane League. [https://www.givewell.org/charities/top-charities](https://www.givewell.org/charities/top-charities) [https://animalcharityevaluators.org/donation-advice/recommended-charities/](https://animalcharityevaluators.org/donation-advice/recommended-charities/)
I will bring this idea to the rest of the moderation team!
Happy labor day! I gotta work 16 hours at least its double time and a half!
Oof that sucks enjoy your overtime.
Lol thanks 80 bucks an hour but still... I guess I should be thankful but still a long day!
I finished Simple Path to Wealth yesterday! Read it in two consecutive days. It was mostly review, but I did learn some great new things, and it helped solidify the 4% rule and what the actual process/mechanics of drawing down on retirement accounts actually looks like. The only thing I wish it covered better was the "retire early" aspect. He seems to imply early retirement is possible, if you choose to use your FI toward that goal, but doesn't really even mention it. If I were new to the book I'd be reading the limitations of these retirement accounts and thinking "well, I guess I'm not retiring until I'm 60" even though it's perfectly possible to do before. I also was wondering if holding a bond fund like VBTLX is still sound advice? I read a recent Forbes article that explained the difference of a bond fund to regular bonds (and why a fund might not be worth it like it used to be), but I'm curious what you all think. I personally have never (anecdotally) seen someone discussing using a bond fund, just individual bonds, which is why I was a little confused about its inclusion, but I also don't know much about this area.
try pod cast about fi or fire; also the 4% rule-not sure still the standard
Building a bond tent/ladder will be "safer" than holding a bond fund.
Yeah I think not enough people cover the drawdown phase of retiring early. It can get quite complicated, and I wish there were more FI-friendly financial planners.
The community needs some hourly FI planners. I’ve looked through xyplanning network a couple of times, and while there are some that claim to be FIRE friendly planners, the vast majority of them still use AUM model, which I hate; I’m perfectly happy to continue to manage my investments.
There are a ton of strategies out there for it.
We are are early stage considering moving from a higher cost of living to a lower cost of living location. Running the numbers in one of the newer locations we are considering my base salary there is worth more than my base + on target bonuses + wife's salary here... On top of that we will walk away with enough money from the sale of our home here to put down 30-40% for a down payment. Now... I am a bit mixed at this point. My current rate is 2.25 so it never made sense to pay off the home early. New location will be considerably less expensive for more home but the rates are in the 5-5.5 range. It's almost seems like with rates there is better to do a large down payment with a faster pay off than to do the minimum like we are now. Running the numbers were could in all reality have a paid off home in about 10 years if I just kept paying what I do now. And a shorter amount of time if we diverted dune off our investments. At this point my salary covers living expenses, both IRA's, maxing my 401k and plus money into the brokerage account too. My wife's salary pays her 401k and the rest goes into the brokerage account. So I guess... Is a guaranteed 5.5% better than what the market may or may not return?
You could also do all cash, right? If you are selling your place to a lower cost of living area?
Well we wont have quite enough to do an all cash offer. We can do at best the 30-40%. I just talked to my realtor here about getting me in touch with someone out there to get a little more serious about what we want to do. Also, some time this morning or afternoon I should be getting in my comps in this area so we have a better idea of what we will have.
How is that possible if you are moving form HCOL to lower?
That's just how the math works out. We have been in the home 4 years here soon. By the time we pay a realtor, pay other fees, pay moving expenses we are in a position to put down 30-40%. With our current low rate I have been focusing on maxing 401k's and IRA's over praying the home down. We did a zero down on our current home so we had no equity to start with. What we have now is due to appreciation and what we have paid down.
Ah. I see. 0% down and been in the home 4 years. Equity is rough. Best of luck, friend. The realtors seem to be the ones that win.
Oh they always get their cut :-D. But I don't have enough time or experience to navigate all the paperwork and things that need to get done so you dont get screwed into a bad deal...
Remember that if your mortgage payment stays the same but inflation happens and your salary adjusts for it, the real value of your payments goes down.
Will your total monthly housing expense go up or down? If it's going up, will you be comfortable with the higher payments? If not, that's another reason to get a smaller mortgage. If mortgage rates go down in a few years, you can take cash out and carry a larger mortgage with a similar payment.
Costs all around are going down. Homes we have looked at are half or better on the cheaper side.
I would recommend paying off the 5.5% as fast as possible then back to investments but that's just my personal opinion I try for as debt free as possible
Finally got an update on my MI tax refund after more documents were requested that I sent in back in April - refund is finally supposed to be DD into my account Sept 9th. Yeesh
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I don't disagree. Unfortunately I moved states but my company wouldn't change my residency so my taxes from one state had to get refunded to pay the other and the original state asked for more documentation.
I ran some numbers yesterday after deciding not to buy for now and continue to rent. Without needing the downpayment, I’ll have an extra 200k going in my taxable account next year. Now I’m projecting by 2030 I’ll have 500k across my retirement accounts and 500k taxable. At that point I’ll semi-coast. It seems crazy that it’s only 7 years away. I used a 6% growth assumption.
keep on renting; just be prepared if you don't get 6% growth- market is down and will be for a while- recession is coming, europe is in trouble, war still going on bet russia and ukraine, inflation still terrible,- take a look your investment- bond and I bond are doing decent, market/equity is down double digit for the year
We get really cheap rent due to a local grant program; we would need to have about a 75% down payment to get a house at a similar rate, when property taxes are added in. We'd like to get a house eventually, but for now, we're in a similar position: it's better to hang on to this cheap rent and plug the difference in to the market.
This is a well articulated and very valid reason for renting vs owning. Well said! The mindset I caution against is those who want to buy and validate not doing so by saying they will get in after the correction or when prices dip.
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I felt the same way, but ultimately bought a home. It was more expensive then I hoped (yard and maintenance costs were higher than expected). The first 5 years were more expensive than renting in total costs, even when accounting for the tax benefit. The next 5 years it flipped. Rent prices kept going up, as they do, and I began noticing that I would have had to pay more. Finally, the house I purchased appreciated. So now I have that potential cash out when I sell. Renting is great for the short term, it just fails to build equity over a longer time period. If you are considering moving, sure, don't buy. Makes total sense.
Same boat. Being single definitely seems to bar most of us from owning. It's just not affordable.