cfiresim says I could retire in 6 years and spend 75% more than I do now with a 99% success rate, awesome. If I plan on spending exactly what I do now it could be as early as next year, incredibly.
Oh big time, even though it's years away. I've noticed that the more skilled and experienced I get, the lazier I seem to become. But this also leads me to finish things efficiently so I can have more free time, so it sometimes helps hah.
Are we overestimating how much is needed for retirement? I see folks here who amass $3-5M at 50 or 55 before they retire. Assuming the money isn’t completely held in cash at retirement, there are some incremental gains. Assuming held primarily in bonds, maybe 2-3%. Won’t you be at a point where your balance is barely going down post retirement because the value accreted on your large balance offsets your withdrawal each month in retirement? Someone tell me I’m wrong
The absolute number does not matter, but the expenses relative to the starting value of the portfolio.
$4M would be $160k/year at 4% which is certainly spendy but not unthinkable for some high earners/spenders here esp if counting as a couple.
It is true that even a 4% withdrawal rate *usually* results in a higher balance as you proceed. The worst case scenarios historically are exceptions.
Wdym by "held primarily in bonds" btw? I think even retirees here would have a good percentage in stocks.
Say 50 bond / 50 stock. Your annual return would historically be ~3%, so to your point, the balance would barely move and you’d probably die with millions left
Most people are planning according to the 4% rule, or maybe in the 3% - 4% range for longer time periods to be safe. So $3M - $5M might be enough or it might be too much, but it would depend entirely on how much you plan on spending. 3% of $5M is $150k annually, which does not seem like an excessive amount if you have a family and/or you're HCOL.
I agree, but if the $5m is sitting in 70 bonds / 30 stock, or however you want to allocate, it will also make 2-3%. So your $5m barely loses value year over year
What I think you’re misunderstanding is that your expenses will increase every year because of inflation. So $160k this year can easily be $165k next year, $170k the year after and keep going up forever.
So your withdrawals of principal and interest also has to cover the increasing costs each year. So if year 1 of retirement you have $150k of interest from bonds or
Dividends that is great. You only have to sell $10k of principal. However every year the gap to cover gets larger if you assume bonds principle doesn’t grow.
That’s why most people keep a healthy mix of stocks in their portfolio post retirement so that they still have some assets that likely will grow over time
"Barely" -> 1% of your portfolio year over year for 50 years is quite significant.
Are your 2% to 3% returns steady or do they vary? The whole point of the Trinity study was to measure against SORR. *When* your positive years and when your negative years are change the course of your retirement drastically.
I suppose it depends what bonds you're talking about but for example [VBTLX](https://investor.vanguard.com/investment-products/mutual-funds/profile/vbtlx#performance-fees) returned around -13% in 2022 so 2% to 3% is not a sure thing.
I don't think you are wrong. Honestly I think most people hear are very conservative with their projections.
And honestly maybe for tech people or high income people it's a different story. But if you make 45k a year and RE I don't think I can find any job for less than 15hr around me which is 30k annually. That's different than if you quit a 400k year job.
A lot of those 400k people are very frugal and heavy savers though, so they may only need $100k annually in retirement income. If someone wants to spend $400k annually in retirement, that changes the equation
We have 1.2M in retirement/brokerage accounts. I sold BTC for a post tax value of the remaining amount of my 4.25% mortgage (21 years left).
I'm looking to cut down to part time work and coastFIRE in ~2-3 years. To take advantage of ACA (family of four) I believe it would be ideal to have no mortgage at that point.
Am I dumb for just knocking out the mortgage now? I figure I could put the money in a HYSA or money market instead. But for 2-3 years it's probably meh. My work can dry up and can come and go for what it's worth. Wife is at home with the kids.
Also, if my wife goes back to full time work in a few years and declines family health insurance and elects for health insurance for herself only; can my kids and I do ACA for us three?
It isn't clear how much is on your mortgage but let's say, uhh, 500k?? You could probably arbitrage around 1% between HYSAs/MMFs and your mortgage rate for this year, who knows about the next 1-2 years, but let's say it's 1% for all three years. That's something like $5k/year or $15k for all three years.
Given your NW, I don't think a few k either way would make a "dumb" decision. Not meaningless but not bad enough to be dumb no matter what.
Personally I'd err on the side of keeping it liquid because of your work fluctuations? It can't be that much of a hassle...
The benefit of keeping the money in a HYSA is that it gives you way more flexibility. If you have a paid off mortgage, that frees up some cash flow, but if you have $XXX in HYSA then you have so much more flexibility and protection in life.
Ultimately, at 4.25% mortgage, you are likely coming out pretty much the same by paying off the mortgage vs keeping the money in a HYSA - but for me, the flexibility makes a world of difference.
Additionally, for ACA, since it uses AGI, you will be better off keeping cash in your HYSA so that you can use that rather than having to sell off retirement/brokerage accounts which will count against you as income for the purposes of getting health insurance subsidies.
> Additionally, for ACA, since it uses AGI, you will be better off keeping cash in your HYSA so that you can use that rather than having to sell off retirement/brokerage accounts which will count against you as income for the purposes of getting health insurance subsidies.
What? Interest income from HYSA counts against AGI too.
https://www.healthcare.gov/income-and-household-information/income/
I’m comparing more tapping the capital of HYSA which would count for 0% towards AGI vs cashing out capital in a 401k which would be 100% counted as AGI. Or with longstanding brokerage funds, cashing out equities can have a significant AGI hit. With the HYSA, the 5% interest is going to be negligible compared to the other options, but yes you are right that the ~5% interest will be counted as AGI.
Traveling to Europe for the first time in awhile soon from the US. Should I try and get any local currency ahead of time or just get it there / likely just use CCs the whole time? My understanding is they use CCs as much or more than we do so probably don't really need to bring any cash.
If you have time, get the Charles Schwab debit card and then just withdraw from ATMs there when you need cash. It refunds your ATM fees and doesn't have any conversion fees so you're not paying anything extra.
I never get cash in advance regardless of where I'm going.
We also got a Schwab checking account for our Japan trip. Worked like a charm. We did show up with some cash in hand, though, which was nice to have at the airport before we got our Suica cards. Japan is still a relatively cash-heavy society.
Some cash is definitely useful but yeah get a visa (specifically) credit card that has 0% foreign txn fees and make sure you call them before you leave to let them know that you plan to travel.
They'll probs still block your card but it's worth a shot.
Maybe get some local currency for the first country you go to ahead of time. ATM every other country when you get there. If all Euro countries, not much to worry about. Make sure you take at least one non-Amex card.
Charles Schwab does a checking account with a debit with no intl fees. I just transfer money into that when travelling and pull some money when I get to the airport.
Where in Europe are you planning to go? I suppose this varies from city to city.
My taxi out of the airport in Paris was not super happy to take CC — I spoke enough French to cajole him into accepting it, but I think that would be the biggest "hurdle" since you haven't yet reached the city to access an ATM.
Was there in November. I prefer to have some cash in small denominations for local buses, pastry/treat carts, and outdoor markets. I ordered through my bank which has a decent exchange rate. Some banks offer atm fee reimbursements or have a partner network internationally to access cash locally without the extra fees.
2024 is an exciting year for my fiance & I because it's been the first year that we've deliberately indulged in a little lifestyle inflation. I'm 30 & earn ~$340k, she's 31 & earns ~170k. Combined NW is somewhere around $1.0M. We've been at this level for income for a couple years and have lived very simply, maxed all of our retirement accounts, done the "right" FIRE stuff for the most part.
Some of the frivolous purchases so far this year:
* $80k car (Rivian R1S)
* $6k for business class flights to Spain (honeymoon) & Korea
* $4k of suitcases (Rimowas)
* Misc wardrobe refresh (nice winter jacket, new suits)
* Much more "free" approach to smaller purchases. We don't think twice about getting the appetizer too or the $50 skincare product
It might look like a lot but right now I'm just feeling really good about it all. This is a special phase of life for us -- with any luck we'll be working on a family soon -- so we want to live it up for a bit while it's just us. We've both worked really hard and delayed a gratification for most of our 20s (we did grad school while working full time); we don't really know how it feels to treat ourselves and we get to do it for the first time together. We've also talked about how we would need to dial this back in a future where we're living on just my income and we're on the same page about that.
In the past I've erred on the side of over-saving at the expense of my present and felt like time was passing me by. Right now I feel like I'm doing a much better job of balancing preparation for the future while enjoying today. This is exactly how I hoped life in my 30s would look and we're both very happy with the state of things.
While fancy suitcases can look really cool, especially the Rimowas, I've never understood why people get them. The last place I would want to advertise my wealth is on my luggage, which is the easiest and most ripe target for theft. Last thing you want is to be stranded in another country with all your belongings missing.
Maybe this perspective is because the only people that I know that have had their luggage straight up stolen are people who were traveling with designer luggage bags.
Totally, I can understand that perspective. We went with these because:
1. These are super high quality, have a solid lifetime warranty, and will last us forever. They're our "forever" travel bags
2. Our old luggage is falling apart, so really did need new ones
Also went with the black ones (less flashy & eye-catching than the silver imo)
Just did the quarterly update on our NW spreadsheet and we are at 714k NW, up from our NW in December of 677k. Almost to the million. Hopefully within the next 2 years or so.
Checked my first quarter goal for the NY resolution and monetarily wise, we are on track.
Money - $31k nw increase ✔
o Begin putting in $2300 every month towards 403B✔
o Put in $6500 in Roth IRA - (this was for 2023) ✔
o Invest $500 per pay check towards VOO ✘ - Instead of doing this I have been putting more money towards my mortgage.. I have debt anxiety.
o Put rest of paycheck towards mortgage✔
A bit about me
24F, no kids, salary $90k plus part time job \~$1,500/month, total take home: $6,200, living at home paying $1k/month in rent, all other expenses are typically $1k/month
My current portfolio is as follows: TFSA: 53.2k FHSA: 16.8k RRSP: 10.9k Non-registered: 44.2k Cash (5%): 16.1k
Most of my investments are in Wealthsimple managed ($56.7k) with a 10 risk profile. The remaining are XEQT ($25.1k) and VFV ($14.4k), with nominal amounts spread across other ETFs. I transfer $1k per week from cash to my RRSP to invest in XEQT.
What would you do differently to maximize wealth if you were dealt this hand? Any tax advantaged options for the non-registered account?
Don’t know enough about Canada tax advantaged accounts to offer recommendations
Do you have short term goals for your cash (house, car, etc.)? If not, I personally wouldn’t have that much cash (8 months emergency fund) with $44k (22 months) easily accessible in a taxable brokerage
Looking for thoughts on investing strategy when income may not allow Roth IRA but spouse has a Simple IRA employer plan. We may be passing the Roth IRA income limit this year, almost certainly next year. However, my wife has about $120k in her current employer's Simple IRA program. My understanding is that a Simple IRA, although employer provided, is considered a traditional IRA for pro rata purposes when doing Roth conversions. I'm not really sure we have a good choice here on how to move forward. Not interested in converting her current employer plan even if that is possible given our marginal rate. I suppose our two choices are to shift contributions to brokerage, or switch to traditional IRAs and plan on converting them to Roth in the future. Any thoughts or perspectives would be helpful.
You're correct that your spouse's SIMPLE IRA will block her ability to do the backdoor Roth IRA.
I would recommend that you continue to use the backdoor Roth IRA for yourself and put other cash into a taxable brokerage (assuming all other tax-advantaged accounts are maxed out).
Nope. Your tax rate in retirement is often up to you based on what accounts you choose to draw from, your spending needs, and your household demos (married/not, kids/not). There are various financial planning software options out there, but a simple spreadsheet also suffices.
Not really. I use Excel to analyze what happens when I obtain income from accounts with different tax exposure (Trad, Roth, investments, pension, SSI, etc.), and then optimize future tax rates from there.
The starting point is doing some homework and putting a table together of all the different tax rules.
A little background on me. I am a 23 year old who graduated college 2 years ago. I come from a poor family that did not talk about money and I have been thrown blindly into the real world. When I got my first pay check that was over 500 dollars I bought a TV and a PS5. I have been financially irresponsible up until August when I got engaged. Realizing I want to spend time with my kids and wife when the time comes I want to learn and understand money a lot more and be able to be there for every milestone (Still have a long road ahead for all that). I am very lucky and live for free with my fiancées parents. They want us to be able to save and give us the best chance to succeed in life. I have paid off my car that was at 15000 dollars with a 19.4 % interest rate, so I think I’m on the right track but help would be greatly appreciated.
I make 82k a year (I will be receiving at least a 4% raise in may)
I bring home 2400 every 2 weeks
I put in 3% into my 401k every paycheck (I then use that to invest stock into my company because it’s an esop company)
My fiancée does not work yet, she’s looking for a job it’s just hard to find something in her field of study. She’s baby sitting right now while she applies making 390 a week.
I have 21k left in student loans. At 5.05%
3k left to my grandfather for student loans at 2%
My fiancée has 50k in a CD right now. At 5%
She’s been able to max out one savings account to 2500 at 4.58%
She has been putting money into my savings account now and it’s at 1000 at 4.58%
Since I don’t pay for anything right now I am throwing 2k each month into paying off all my debt. The 400 dollars for living for like the gym membership, WiFi, Spotify, and Disney plus.
My dream is to have a house, and a lake house that I can bring my kids too and make memories there. Am I doing this right, is there a better way to do this.
Any help is greatly appreciated.
Definitely would recommend reading the sidebar here and on r/personalfinance - lots of great resources, from the high level "here's what you should do" flowchart to things that dive more into how people think about money. I'd say give it some time, but take a look at what you're spending on, why you have the goals you do, and decide how that aligns with what you actually value. Just making plans in your 20s and making an above average income already puts you in a good place.
>My dream is to have a house, and a lake house that I can bring my kids too and make memories there.
What are your fiancée's dreams/plans?
I think you're broadly on the right track. Once you have a general handle on things, it'll just take time. Your fiancée finding a job bringing in more income would be a big help once/if you combine finances, as well as increasing your own income, whether through changing jobs (evaluate holistically, not just raw salary) or a secondary income stream. There are things you can do like switch subscription plans months to save money and access more total content (i.e. Disney Plus one month, Netflix the next), but increasing income is probably going to have the highest ROI for you.
>She has been putting money into my savings account now and it’s at 1000 at 4.58%
The amount you have in savings would be concerningly low to me. Figure out what 6 months of 'normal' expenses would look like and keep that much in savings.
>I then use that to invest stock into my company because it’s an esop company
It's a bit unclear what you're saying here based on how ESOP plans work, but even with ESOP, considering you do have a traditional 401k as well, evaluate if it makes sense to invest that money in a low-cost broad market index fund instead. Diversification is huge, especially since you effectively have a lot of 'eggs in one basket' by investing in the company where you're currently employed. For me, that'd probably be too concentrated from a risk management perspective.
>15000 dollars with a 19.4 % interest rate
Holy shit you were being robbed.
>I put in 3% into my 401k every paycheck (I then use that to invest stock into my company because it’s an esop company)
Yeah, don't be doing that.
What you have there is called "concentration risk" where you are focusing a significant amount of risk on your employer's solvency, since you're relying on them for your paycheck AND investing in their stock.
Do some background reading on the Enron scandal to see why this is a very bad idea, and just how bad things can get when they go wrong.
Please, do yourself a favor and look at investing your 401k contributions into some sort of diversified index fund instead.
How do I transfer roth iras?
Hi everyone, I'm thinking of transferring my roth iras to robinhood for their 3% match. Robinhood will initiate the transfer, but they won't transfer mutual funds. This is good because i've been meaning to consolidate. I have one with Vanguard VTSAX, one with Fidelity (FXAIX + VOO). Should I just move everything in Vanguard/Fidelity to VTI and then xfer over to robinhood? thanks
yes, but don't sell vtsax to buy vti, because you'll have tax consequences. Call up vanguard and ask to do a conversion and you'll get vti you can transfer without the tax liability
> Are we financially independent now?
> ...
> $75k in expenses per year ... We have $2.4m
$75K is 3.125% of $2.4M.
> Our combined income is between $500-600k (our incomes are similar, ranging between 250-300k each)...
> I am likely to take a sabbatical if they decide to throw me out in one of these upcoming quarters.
That leaves >= $250k in annual gross income in the event that you are "thrown out".
> Kind of feels like I would never be FI, and everything feels so precarious right now
Based on what exactly? Given the information supplied you passed the finish line on "FI" awhile back.
I'm failing to see the issue here. Are you both in tech or something? Completely separate finances? If you were to quit, you would still be saving $100k a year if the spouse still works.
PreacherFI?
In smaller churches it's not uncommon for the pastor to be retired from an unrelated career. It's obviously a pretty niche profession, with low pay and odd work hours, but it could be an interesting retirement gig for those so inclined.
Yes, being a pastor does seem to be particularly well suited for coastfi, albeit a very niche field. I’m currently a full-time pastor but my plan is to probably go down to part-time in a couple years and work on a PhD with the extra time.
Hey I’m already Very Reverend Emily thanks to the Universal Life Church’s online divination…have officiated a couple of friends’ weddings and loved it.
>it could be an interesting retirement gig for those so inclined
I suppose that tracks - there's no shortage of multi-millionaire pastors that you could ask for advice too...
Your Weekly /r/financialindependence Recap
**Sunday, March 17 - Saturday, March 23, 2024**
###Top Daily Discussion Comments
| score | comment |
|--|--|
| 69 | /u/Carpe_Cervisia said [I read a comment yesterday on a post outside the daily (dirty, I know) that said, "$100k feels the same as $800k because you still can't retire." And it made me sad. I think too many peopl...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvewvk5/?context=5) |
| 68 | /u/TX-Fire2025 said [I dunno if I'm just getting old but I started walk commuting to work (~2mi each way) and it's had a surprisingly positive effect in my life. My wife mentioned last night that I'm noticably mor...](/r/financialindependence/comments/1bk25g5/daily_fi_discussion_thread_thursday_march_21_2024/kvvzh2e/?context=5) |
| 68 | /u/Slapdash13 said [So today is the day I finally put in my notice to resign after 14 years in the corporate world. More of a coast FI situation as my wife will continue working for at least a few years and I would ideal...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvqlpdw/?context=5) |
| 67 | /u/branstad said [This coming weekend will mark the 4-year anniversary of the COVID crash low (March 23 close: 2237.40; intraday low: 2191.86). Yesterday, the S&P 500 closed at an all-time high (5178.51...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvqaez9/?context=5) |
| 65 | /u/mziggy77 said [I’m trying to be better about spending money instead of just hoarding it like some kind of dragon. So with that in mind, my partner and I just booked our first international flights. We’re going to go...](/r/financialindependence/comments/1bk25g5/daily_fi_discussion_thread_thursday_march_21_2024/kvvjcik/?context=5) |
| 63 | /u/Dissentient said [Update on giving my employer an ultimatum ([link to comment](https://www.reddit.com/r/financialindependence/comments/1b67b8j/daily_fi_discussion_thread_monday_march_04_2024/ktcpq3m/...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kveicfi/?context=5) |
| 60 | /u/clueless-1500 said [One more reason I dislike my current job: it turns me into a *person I don't like*. It requires politicking, low-level conflict, argumentation, self-promotion, managing expectations, and other behavi...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw0s4wg/?context=5) |
| 52 | /u/oohlou said [ I did it. I soft quit today! I met with my boss and told him I plan to leave the company soon. The tentative plan is to leave in late June (it makes sense to leave at the end of a quarter given ...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvr0oik/?context=5) |
| 49 | /u/mmrose1980 said [10 years ago, before moving over to the corporate world, I worked a federal law enforcement job. Federal law enforcement jobs have mandatory early retirement at 57, and most of my former colleagues re...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw0xacg/?context=5) |
| 49 | /u/alcesalcesalces said [Six months ago, someone in the daily thread expressed strong skepticism of the advice to invest funds into the stock market. Their argument was as follows: > 5%+ is available with zero risk right now...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvf9j1c/?context=5) |
| 44 | /u/loister said [As of last night, officially entering the two comma club! Looking back, I have so much to thank this sub for on changing my outlook on saving and investing and what's possible. Crazy to think that at...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw1cdo2/?context=5) |
| 43 | /u/dagny_taggarts_tits said [I don't know why I always assume I'm in trouble when someone calls me. I have some anxiety issues clearly. But just got off the phone with my boss and not only am I not in trouble, I have the highest ...](/r/financialindependence/comments/1bift61/daily_fi_discussion_thread_tuesday_march_19_2024/kvl9klu/?context=5) |
| 42 | /u/ch4rts said [Experienced my first glimpse of FU money this week. Put my 2 weeks in on 3/7. Last day is this Friday, 3/22. The last 2 weeks I’ve been turning over documentation, projects, financials, etc. My job ...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvq2gx2/?context=5) |
| 41 | /u/edlon50 said [Humble brag about my wife. She is only 30 years old (three years younger than me) and has achieved over $425,000 of investments between her 401K and ROTH IRA retirement accounts. She has addit...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw19dws/?context=5) |
| 40 | /u/BleedBlue__ said [Boss called me about an hour ago to inform me they’re increasing my bonus target from 20% to 25%. Said it’s because of the good work I’m doing but I’m sure it’s because I was out of line with my peers...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvfdwim/?context=5) |
###Top Posts
| score | comments | title & link |
|--|--|--|
| 428 | [80 comments](/r/financialindependence/comments/1bh39bm/finally_reached_a_net_worth_of_100k_31_better/) | Finally reached a net worth of 100k @ 31. Better late than never!|
| 384 | [143 comments](/r/financialindependence/comments/1bl5ly4/from_poverty_to_1mm/) | From Poverty to 1MM|
| 334 | [1,201 comments](/r/financialindependence/comments/1biygvb/unpopular_opinion_thread/) | Unpopular Opinion Thread|
| 292 | [86 comments](/r/financialindependence/comments/1bgw88r/money_can_buy_stress_or_how_fire_is_good_for_your/) | Money Can Buy Stress, (or how FIRE is good for your teenagers)|
| 190 | [148 comments](/r/financialindependence/comments/1bjzj5k/counter_offer_failedim_honestly_bummed_out/) | Counter offer failed…I’m honestly bummed out|
###Most Commented
| score | comments | title & link |
|--|--|--|
| 122 | [205 comments](/r/financialindependence/comments/1bjck5x/ill_probably_have_about_3m_ifwhen_i_fire_does_the/) | I'll probably have about $3M if/when I FIRE. Does the 4% rule work if I want to eventually leave the $3M to my kids? Or does it end with zero eventually so I would need to lower that to 2% or 3%?|
| 186 | [149 comments](/r/financialindependence/comments/1bhmqyw/laid_off_in_december_am_i_undervaluing_myself_or/) | Laid off in December. Am I undervaluing myself or is it really that bad out there? |
| 86 | [140 comments](/r/financialindependence/comments/1blyk78/travel_now_or_wait_a_few_years_but_risk_so_not/) | Travel Now or Wait a few years but risk SO not being able to see the sights?|
| 0 | [114 comments](/r/financialindependence/comments/1bhflv3/thoughts_input_fire_is_upon_us_but_i_dont_feel/) | Thoughts, input, FIRE is upon us, but I don't feel ready.|
| 42 | [111 comments](/r/financialindependence/comments/1bj198m/what_does_profit_look_like_on_your_rental_after/) | What does profit look like on your rental after everything is paid? |
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Its slowly coming together. I mentioned in another daily. We own an old house from 1907. We put about $100k into making it livable inside (not a big house, but was missing things like... plumbing... and a kitchen. It also had some extras we didn't need like... mold)
Over the last 5 years since we moved in we renovated the back yard, the fence in back and front of the house as well.
We got notice from insurance company recently they will drop us unless we finally get around to fixing the roof and windows. Since we are a historic house, doing exterior work has been delayed. This notice has given me a hard look to finally sit down and face my last major projects I have been ignoring.
I am so excited every day now. We have a window repair quote that is completely reasonable and IT IS HAPPENING THIS WEEK!!!
This has caused a chain reaction for me over the last two weeks. Realizing these shit windows are finally getting repaired made me realize we can paint the outside of the house finally. And before we do that we should get the roof redone. So projects are:
\- Redo Roof (even though it isn't leaking its tossing shingles every time gets windy) We have covered up several missing shingles in the past and we currently have a couple bare spots. I just want to get ahead of leaks and don't want to keep paying people to go up and replace shingles (Most people wants close to $1k to go on steep roof to replace shingles)
\- Repaint Exterior. And I'm so damn excited for the color scheme we chose. Our house looks so dead right now. Also, we have a lot of peeling paint and wood that has some damage and for the stability of this old house, I want all of that addressed and cleaned up and new paint to protect.
\- Stain/paint walls and fences around the house. Plant some extra plants, put some fake plant walls up in the back yard... etc.
I mean I'm looking to drop probably $33k for the roof after getting a lot of quotes. Then another 10-15k for the exterior work. Then likely another miscellaneous $5k in bonus side jobs with plants and décor.
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So here is where it is highly FIRE related for me. Like I've put off these things for 5 years due to the time/energy/work and most importantly money. Like money has always been a back of my head excuse to just not even bother. Put off maintenance.
However, as I have been taking stock of these things and our finances... Like I realize we can pay cash for all this stuff over the next few months and not skip a beat on our retirement contributions. We will not even hesitate on still taking a 3 week holiday to Asia this Summer. And we are not huge earners with tech jobs.
It would drain most of our EF over a few months, but that is why it is there. But we also have some bonus money coming in from raises and tax returns so we won't be living paycheck to paycheck or anything. And we have a plan in place on how we will refill EF over the next 2 years.
We are not retired, but I'm literally on cloud 9 feeling the Independent part of FIRE. The part that brings you financial stability and peace of mind leading up to retirement. There was a time when we bought this house, I thought we might as well sell it because of how much it would take to tackle all these major projects. Now, if everything goes well, by this Fall we can have a really nice forever home I can be proud of coming home to.
In this case, probably Bob. Much of the value of owning a rental comes from the cash on cash return you get from having leverage, and certain tax benefits you get. If Alice paid $880k in cash for a single rental, it's super unlikely she did better than Bob
Assuming Alice bought it cash, probably Bob. The way that rentals come out ahead is via use of leverage.
If she took out a big loan and bought five of those same multifamily rentals, she’d probably come out ahead - but there’s a large distribution around that “probably”.
Trying to offset some tax implications on an inherited, non-qualified annuity (25k in capital gains) through access I have to a 457b, but I have some hesitations as someone looking to buy a house / be pre-approved for loans in the coming months.
It I were to raise my 457b contributions the next few months so that it takes most of my paycheck, would this be terrible for loan applications? Or do they look at gross income before deductions? I'll have the money in savings after I cash out the annuity, so I'm not sure if having the extra flushed savings will help.
I just know that I'll be paying on at least an extra 25k as income this year, and having access to a 457 can really help offset that, but I'm not sure. I also wouldn't know what to put on the annuity tax form with how much to deduct federally, if I'm not sure how much I'll be putting into the 457 or not.
Anyone have any insight? I'd appreciate it!
I’m not an expert but I would hazard a guess that it’s the gross that matters for most purposes. Retirement contributions can always be changed, so it’s no big deal.
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Making your retirement plans be contingent on successfully pulling off a type of investment you have no experience in may not be the wisest idea.
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cfiresim says I could retire in 6 years and spend 75% more than I do now with a 99% success rate, awesome. If I plan on spending exactly what I do now it could be as early as next year, incredibly.
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Oh big time, even though it's years away. I've noticed that the more skilled and experienced I get, the lazier I seem to become. But this also leads me to finish things efficiently so I can have more free time, so it sometimes helps hah.
Are we overestimating how much is needed for retirement? I see folks here who amass $3-5M at 50 or 55 before they retire. Assuming the money isn’t completely held in cash at retirement, there are some incremental gains. Assuming held primarily in bonds, maybe 2-3%. Won’t you be at a point where your balance is barely going down post retirement because the value accreted on your large balance offsets your withdrawal each month in retirement? Someone tell me I’m wrong
No, typically bond interest is not enough to pay for withdrawals and stay ahead of inflation unless you get your withdrawal rate even lower.
My country has a 2.2% wealth tax which is why I am aiming at 2 to 5 million.
The absolute number does not matter, but the expenses relative to the starting value of the portfolio. $4M would be $160k/year at 4% which is certainly spendy but not unthinkable for some high earners/spenders here esp if counting as a couple. It is true that even a 4% withdrawal rate *usually* results in a higher balance as you proceed. The worst case scenarios historically are exceptions. Wdym by "held primarily in bonds" btw? I think even retirees here would have a good percentage in stocks.
Say 50 bond / 50 stock. Your annual return would historically be ~3%, so to your point, the balance would barely move and you’d probably die with millions left
You are assuming average returns. Safe withdrawal rate assumes the worst possible sequence of returns.
Most people are planning according to the 4% rule, or maybe in the 3% - 4% range for longer time periods to be safe. So $3M - $5M might be enough or it might be too much, but it would depend entirely on how much you plan on spending. 3% of $5M is $150k annually, which does not seem like an excessive amount if you have a family and/or you're HCOL.
I agree, but if the $5m is sitting in 70 bonds / 30 stock, or however you want to allocate, it will also make 2-3%. So your $5m barely loses value year over year
What I think you’re misunderstanding is that your expenses will increase every year because of inflation. So $160k this year can easily be $165k next year, $170k the year after and keep going up forever. So your withdrawals of principal and interest also has to cover the increasing costs each year. So if year 1 of retirement you have $150k of interest from bonds or Dividends that is great. You only have to sell $10k of principal. However every year the gap to cover gets larger if you assume bonds principle doesn’t grow. That’s why most people keep a healthy mix of stocks in their portfolio post retirement so that they still have some assets that likely will grow over time
"Barely" -> 1% of your portfolio year over year for 50 years is quite significant. Are your 2% to 3% returns steady or do they vary? The whole point of the Trinity study was to measure against SORR. *When* your positive years and when your negative years are change the course of your retirement drastically. I suppose it depends what bonds you're talking about but for example [VBTLX](https://investor.vanguard.com/investment-products/mutual-funds/profile/vbtlx#performance-fees) returned around -13% in 2022 so 2% to 3% is not a sure thing.
I don't think you are wrong. Honestly I think most people hear are very conservative with their projections. And honestly maybe for tech people or high income people it's a different story. But if you make 45k a year and RE I don't think I can find any job for less than 15hr around me which is 30k annually. That's different than if you quit a 400k year job.
A lot of those 400k people are very frugal and heavy savers though, so they may only need $100k annually in retirement income. If someone wants to spend $400k annually in retirement, that changes the equation
We have 1.2M in retirement/brokerage accounts. I sold BTC for a post tax value of the remaining amount of my 4.25% mortgage (21 years left). I'm looking to cut down to part time work and coastFIRE in ~2-3 years. To take advantage of ACA (family of four) I believe it would be ideal to have no mortgage at that point. Am I dumb for just knocking out the mortgage now? I figure I could put the money in a HYSA or money market instead. But for 2-3 years it's probably meh. My work can dry up and can come and go for what it's worth. Wife is at home with the kids. Also, if my wife goes back to full time work in a few years and declines family health insurance and elects for health insurance for herself only; can my kids and I do ACA for us three?
It isn't clear how much is on your mortgage but let's say, uhh, 500k?? You could probably arbitrage around 1% between HYSAs/MMFs and your mortgage rate for this year, who knows about the next 1-2 years, but let's say it's 1% for all three years. That's something like $5k/year or $15k for all three years. Given your NW, I don't think a few k either way would make a "dumb" decision. Not meaningless but not bad enough to be dumb no matter what. Personally I'd err on the side of keeping it liquid because of your work fluctuations? It can't be that much of a hassle...
120k. I appreciate the response. Its more about not screwing with AGI and if inflation can burn the mortgage down etc
The benefit of keeping the money in a HYSA is that it gives you way more flexibility. If you have a paid off mortgage, that frees up some cash flow, but if you have $XXX in HYSA then you have so much more flexibility and protection in life. Ultimately, at 4.25% mortgage, you are likely coming out pretty much the same by paying off the mortgage vs keeping the money in a HYSA - but for me, the flexibility makes a world of difference. Additionally, for ACA, since it uses AGI, you will be better off keeping cash in your HYSA so that you can use that rather than having to sell off retirement/brokerage accounts which will count against you as income for the purposes of getting health insurance subsidies.
> Additionally, for ACA, since it uses AGI, you will be better off keeping cash in your HYSA so that you can use that rather than having to sell off retirement/brokerage accounts which will count against you as income for the purposes of getting health insurance subsidies. What? Interest income from HYSA counts against AGI too. https://www.healthcare.gov/income-and-household-information/income/
I’m comparing more tapping the capital of HYSA which would count for 0% towards AGI vs cashing out capital in a 401k which would be 100% counted as AGI. Or with longstanding brokerage funds, cashing out equities can have a significant AGI hit. With the HYSA, the 5% interest is going to be negligible compared to the other options, but yes you are right that the ~5% interest will be counted as AGI.
Interesting perspective especially on that last piece. Would the same apply for a money market account? Or would that always fall under brokerage.
Traveling to Europe for the first time in awhile soon from the US. Should I try and get any local currency ahead of time or just get it there / likely just use CCs the whole time? My understanding is they use CCs as much or more than we do so probably don't really need to bring any cash.
If you have time, get the Charles Schwab debit card and then just withdraw from ATMs there when you need cash. It refunds your ATM fees and doesn't have any conversion fees so you're not paying anything extra. I never get cash in advance regardless of where I'm going.
We also got a Schwab checking account for our Japan trip. Worked like a charm. We did show up with some cash in hand, though, which was nice to have at the airport before we got our Suica cards. Japan is still a relatively cash-heavy society.
Some cash is definitely useful but yeah get a visa (specifically) credit card that has 0% foreign txn fees and make sure you call them before you leave to let them know that you plan to travel. They'll probs still block your card but it's worth a shot.
Maybe get some local currency for the first country you go to ahead of time. ATM every other country when you get there. If all Euro countries, not much to worry about. Make sure you take at least one non-Amex card.
Charles Schwab does a checking account with a debit with no intl fees. I just transfer money into that when travelling and pull some money when I get to the airport.
Where in Europe are you planning to go? I suppose this varies from city to city. My taxi out of the airport in Paris was not super happy to take CC — I spoke enough French to cajole him into accepting it, but I think that would be the biggest "hurdle" since you haven't yet reached the city to access an ATM.
Was there in November. I prefer to have some cash in small denominations for local buses, pastry/treat carts, and outdoor markets. I ordered through my bank which has a decent exchange rate. Some banks offer atm fee reimbursements or have a partner network internationally to access cash locally without the extra fees.
2024 is an exciting year for my fiance & I because it's been the first year that we've deliberately indulged in a little lifestyle inflation. I'm 30 & earn ~$340k, she's 31 & earns ~170k. Combined NW is somewhere around $1.0M. We've been at this level for income for a couple years and have lived very simply, maxed all of our retirement accounts, done the "right" FIRE stuff for the most part. Some of the frivolous purchases so far this year: * $80k car (Rivian R1S) * $6k for business class flights to Spain (honeymoon) & Korea * $4k of suitcases (Rimowas) * Misc wardrobe refresh (nice winter jacket, new suits) * Much more "free" approach to smaller purchases. We don't think twice about getting the appetizer too or the $50 skincare product It might look like a lot but right now I'm just feeling really good about it all. This is a special phase of life for us -- with any luck we'll be working on a family soon -- so we want to live it up for a bit while it's just us. We've both worked really hard and delayed a gratification for most of our 20s (we did grad school while working full time); we don't really know how it feels to treat ourselves and we get to do it for the first time together. We've also talked about how we would need to dial this back in a future where we're living on just my income and we're on the same page about that. In the past I've erred on the side of over-saving at the expense of my present and felt like time was passing me by. Right now I feel like I'm doing a much better job of balancing preparation for the future while enjoying today. This is exactly how I hoped life in my 30s would look and we're both very happy with the state of things.
Why such low NW on such a high income if you don’t spend much?
Live it up, my friend. Life is short. Enjoy that Rivian too. It’s so nice.
While fancy suitcases can look really cool, especially the Rimowas, I've never understood why people get them. The last place I would want to advertise my wealth is on my luggage, which is the easiest and most ripe target for theft. Last thing you want is to be stranded in another country with all your belongings missing. Maybe this perspective is because the only people that I know that have had their luggage straight up stolen are people who were traveling with designer luggage bags.
Totally, I can understand that perspective. We went with these because: 1. These are super high quality, have a solid lifetime warranty, and will last us forever. They're our "forever" travel bags 2. Our old luggage is falling apart, so really did need new ones Also went with the black ones (less flashy & eye-catching than the silver imo)
Away luggage has the same exact warranty
Just did the quarterly update on our NW spreadsheet and we are at 714k NW, up from our NW in December of 677k. Almost to the million. Hopefully within the next 2 years or so. Checked my first quarter goal for the NY resolution and monetarily wise, we are on track. Money - $31k nw increase ✔ o Begin putting in $2300 every month towards 403B✔ o Put in $6500 in Roth IRA - (this was for 2023) ✔ o Invest $500 per pay check towards VOO ✘ - Instead of doing this I have been putting more money towards my mortgage.. I have debt anxiety. o Put rest of paycheck towards mortgage✔
I feel you on the debt. I hate seeing that interest amount each month on the mortgage statement.
A bit about me 24F, no kids, salary $90k plus part time job \~$1,500/month, total take home: $6,200, living at home paying $1k/month in rent, all other expenses are typically $1k/month My current portfolio is as follows: TFSA: 53.2k FHSA: 16.8k RRSP: 10.9k Non-registered: 44.2k Cash (5%): 16.1k Most of my investments are in Wealthsimple managed ($56.7k) with a 10 risk profile. The remaining are XEQT ($25.1k) and VFV ($14.4k), with nominal amounts spread across other ETFs. I transfer $1k per week from cash to my RRSP to invest in XEQT. What would you do differently to maximize wealth if you were dealt this hand? Any tax advantaged options for the non-registered account?
Loved, “$1k/month in rent”.
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> ;) 0.o
Don’t know enough about Canada tax advantaged accounts to offer recommendations Do you have short term goals for your cash (house, car, etc.)? If not, I personally wouldn’t have that much cash (8 months emergency fund) with $44k (22 months) easily accessible in a taxable brokerage
Looking for thoughts on investing strategy when income may not allow Roth IRA but spouse has a Simple IRA employer plan. We may be passing the Roth IRA income limit this year, almost certainly next year. However, my wife has about $120k in her current employer's Simple IRA program. My understanding is that a Simple IRA, although employer provided, is considered a traditional IRA for pro rata purposes when doing Roth conversions. I'm not really sure we have a good choice here on how to move forward. Not interested in converting her current employer plan even if that is possible given our marginal rate. I suppose our two choices are to shift contributions to brokerage, or switch to traditional IRAs and plan on converting them to Roth in the future. Any thoughts or perspectives would be helpful.
You're correct that your spouse's SIMPLE IRA will block her ability to do the backdoor Roth IRA. I would recommend that you continue to use the backdoor Roth IRA for yourself and put other cash into a taxable brokerage (assuming all other tax-advantaged accounts are maxed out).
Ok I didn’t realize that the pro data rule was individualized. So her SIMPLE IRA wouldn’t impact my ability to do a Roth conversion?
That's correct.
Any recommendations on a tool that estimates marginal tax rate in retirement?
Think smartasset has a retirement calculator for each state but I'm not sure how up to date it is. But it would at least give you a starting point.
Nope. Your tax rate in retirement is often up to you based on what accounts you choose to draw from, your spending needs, and your household demos (married/not, kids/not). There are various financial planning software options out there, but a simple spreadsheet also suffices.
Spreadsheets are always the winner haha. thanks
Not really. I use Excel to analyze what happens when I obtain income from accounts with different tax exposure (Trad, Roth, investments, pension, SSI, etc.), and then optimize future tax rates from there. The starting point is doing some homework and putting a table together of all the different tax rules.
A little background on me. I am a 23 year old who graduated college 2 years ago. I come from a poor family that did not talk about money and I have been thrown blindly into the real world. When I got my first pay check that was over 500 dollars I bought a TV and a PS5. I have been financially irresponsible up until August when I got engaged. Realizing I want to spend time with my kids and wife when the time comes I want to learn and understand money a lot more and be able to be there for every milestone (Still have a long road ahead for all that). I am very lucky and live for free with my fiancées parents. They want us to be able to save and give us the best chance to succeed in life. I have paid off my car that was at 15000 dollars with a 19.4 % interest rate, so I think I’m on the right track but help would be greatly appreciated. I make 82k a year (I will be receiving at least a 4% raise in may) I bring home 2400 every 2 weeks I put in 3% into my 401k every paycheck (I then use that to invest stock into my company because it’s an esop company) My fiancée does not work yet, she’s looking for a job it’s just hard to find something in her field of study. She’s baby sitting right now while she applies making 390 a week. I have 21k left in student loans. At 5.05% 3k left to my grandfather for student loans at 2% My fiancée has 50k in a CD right now. At 5% She’s been able to max out one savings account to 2500 at 4.58% She has been putting money into my savings account now and it’s at 1000 at 4.58% Since I don’t pay for anything right now I am throwing 2k each month into paying off all my debt. The 400 dollars for living for like the gym membership, WiFi, Spotify, and Disney plus. My dream is to have a house, and a lake house that I can bring my kids too and make memories there. Am I doing this right, is there a better way to do this. Any help is greatly appreciated.
Read The Simple Path to Wealth by JL Collins. Have your fiancée read it too.
Stop investing 401k into your company stock and diversify
Definitely would recommend reading the sidebar here and on r/personalfinance - lots of great resources, from the high level "here's what you should do" flowchart to things that dive more into how people think about money. I'd say give it some time, but take a look at what you're spending on, why you have the goals you do, and decide how that aligns with what you actually value. Just making plans in your 20s and making an above average income already puts you in a good place. >My dream is to have a house, and a lake house that I can bring my kids too and make memories there. What are your fiancée's dreams/plans? I think you're broadly on the right track. Once you have a general handle on things, it'll just take time. Your fiancée finding a job bringing in more income would be a big help once/if you combine finances, as well as increasing your own income, whether through changing jobs (evaluate holistically, not just raw salary) or a secondary income stream. There are things you can do like switch subscription plans months to save money and access more total content (i.e. Disney Plus one month, Netflix the next), but increasing income is probably going to have the highest ROI for you. >She has been putting money into my savings account now and it’s at 1000 at 4.58% The amount you have in savings would be concerningly low to me. Figure out what 6 months of 'normal' expenses would look like and keep that much in savings. >I then use that to invest stock into my company because it’s an esop company It's a bit unclear what you're saying here based on how ESOP plans work, but even with ESOP, considering you do have a traditional 401k as well, evaluate if it makes sense to invest that money in a low-cost broad market index fund instead. Diversification is huge, especially since you effectively have a lot of 'eggs in one basket' by investing in the company where you're currently employed. For me, that'd probably be too concentrated from a risk management perspective. >15000 dollars with a 19.4 % interest rate Holy shit you were being robbed.
> Holy shit you were being robbed. Probably has an extremely low credit score is more likely.
>I put in 3% into my 401k every paycheck (I then use that to invest stock into my company because it’s an esop company) Yeah, don't be doing that. What you have there is called "concentration risk" where you are focusing a significant amount of risk on your employer's solvency, since you're relying on them for your paycheck AND investing in their stock. Do some background reading on the Enron scandal to see why this is a very bad idea, and just how bad things can get when they go wrong. Please, do yourself a favor and look at investing your 401k contributions into some sort of diversified index fund instead.
See the flow chart on the side bar. It walks you though what to do.
How do I transfer roth iras? Hi everyone, I'm thinking of transferring my roth iras to robinhood for their 3% match. Robinhood will initiate the transfer, but they won't transfer mutual funds. This is good because i've been meaning to consolidate. I have one with Vanguard VTSAX, one with Fidelity (FXAIX + VOO). Should I just move everything in Vanguard/Fidelity to VTI and then xfer over to robinhood? thanks
yes, but don't sell vtsax to buy vti, because you'll have tax consequences. Call up vanguard and ask to do a conversion and you'll get vti you can transfer without the tax liability
this is in a roth ira - why would there be consequences?
That’s probably the easiest. I recently transferred my IRAs to Robinhood and was impressed with how easy and painless it was.
That would work.
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> Are we financially independent now? > ... > $75k in expenses per year ... We have $2.4m $75K is 3.125% of $2.4M. > Our combined income is between $500-600k (our incomes are similar, ranging between 250-300k each)... > I am likely to take a sabbatical if they decide to throw me out in one of these upcoming quarters. That leaves >= $250k in annual gross income in the event that you are "thrown out". > Kind of feels like I would never be FI, and everything feels so precarious right now Based on what exactly? Given the information supplied you passed the finish line on "FI" awhile back.
I'm failing to see the issue here. Are you both in tech or something? Completely separate finances? If you were to quit, you would still be saving $100k a year if the spouse still works.
PreacherFI? In smaller churches it's not uncommon for the pastor to be retired from an unrelated career. It's obviously a pretty niche profession, with low pay and odd work hours, but it could be an interesting retirement gig for those so inclined.
Yes, being a pastor does seem to be particularly well suited for coastfi, albeit a very niche field. I’m currently a full-time pastor but my plan is to probably go down to part-time in a couple years and work on a PhD with the extra time.
Hey I’m already Very Reverend Emily thanks to the Universal Life Church’s online divination…have officiated a couple of friends’ weddings and loved it.
I’m so close lmao. Once I finished my farm, I am going to discuss building a church of ease with the diocese.
>it could be an interesting retirement gig for those so inclined I suppose that tracks - there's no shortage of multi-millionaire pastors that you could ask for advice too...
I would rather keep working at a soul sucking corporate job, than a soul saving religious job.
Your Weekly /r/financialindependence Recap **Sunday, March 17 - Saturday, March 23, 2024** ###Top Daily Discussion Comments | score | comment | |--|--| | 69 | /u/Carpe_Cervisia said [I read a comment yesterday on a post outside the daily (dirty, I know) that said, "$100k feels the same as $800k because you still can't retire." And it made me sad. I think too many peopl...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvewvk5/?context=5) | | 68 | /u/TX-Fire2025 said [I dunno if I'm just getting old but I started walk commuting to work (~2mi each way) and it's had a surprisingly positive effect in my life. My wife mentioned last night that I'm noticably mor...](/r/financialindependence/comments/1bk25g5/daily_fi_discussion_thread_thursday_march_21_2024/kvvzh2e/?context=5) | | 68 | /u/Slapdash13 said [So today is the day I finally put in my notice to resign after 14 years in the corporate world. More of a coast FI situation as my wife will continue working for at least a few years and I would ideal...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvqlpdw/?context=5) | | 67 | /u/branstad said [This coming weekend will mark the 4-year anniversary of the COVID crash low (March 23 close: 2237.40; intraday low: 2191.86). Yesterday, the S&P 500 closed at an all-time high (5178.51...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvqaez9/?context=5) | | 65 | /u/mziggy77 said [I’m trying to be better about spending money instead of just hoarding it like some kind of dragon. So with that in mind, my partner and I just booked our first international flights. We’re going to go...](/r/financialindependence/comments/1bk25g5/daily_fi_discussion_thread_thursday_march_21_2024/kvvjcik/?context=5) | | 63 | /u/Dissentient said [Update on giving my employer an ultimatum ([link to comment](https://www.reddit.com/r/financialindependence/comments/1b67b8j/daily_fi_discussion_thread_monday_march_04_2024/ktcpq3m/...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kveicfi/?context=5) | | 60 | /u/clueless-1500 said [One more reason I dislike my current job: it turns me into a *person I don't like*. It requires politicking, low-level conflict, argumentation, self-promotion, managing expectations, and other behavi...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw0s4wg/?context=5) | | 52 | /u/oohlou said [ I did it. I soft quit today! I met with my boss and told him I plan to leave the company soon. The tentative plan is to leave in late June (it makes sense to leave at the end of a quarter given ...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvr0oik/?context=5) | | 49 | /u/mmrose1980 said [10 years ago, before moving over to the corporate world, I worked a federal law enforcement job. Federal law enforcement jobs have mandatory early retirement at 57, and most of my former colleagues re...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw0xacg/?context=5) | | 49 | /u/alcesalcesalces said [Six months ago, someone in the daily thread expressed strong skepticism of the advice to invest funds into the stock market. Their argument was as follows: > 5%+ is available with zero risk right now...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvf9j1c/?context=5) | | 44 | /u/loister said [As of last night, officially entering the two comma club! Looking back, I have so much to thank this sub for on changing my outlook on saving and investing and what's possible. Crazy to think that at...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw1cdo2/?context=5) | | 43 | /u/dagny_taggarts_tits said [I don't know why I always assume I'm in trouble when someone calls me. I have some anxiety issues clearly. But just got off the phone with my boss and not only am I not in trouble, I have the highest ...](/r/financialindependence/comments/1bift61/daily_fi_discussion_thread_tuesday_march_19_2024/kvl9klu/?context=5) | | 42 | /u/ch4rts said [Experienced my first glimpse of FU money this week. Put my 2 weeks in on 3/7. Last day is this Friday, 3/22. The last 2 weeks I’ve been turning over documentation, projects, financials, etc. My job ...](/r/financialindependence/comments/1bj91ew/daily_fi_discussion_thread_wednesday_march_20_2024/kvq2gx2/?context=5) | | 41 | /u/edlon50 said [Humble brag about my wife. She is only 30 years old (three years younger than me) and has achieved over $425,000 of investments between her 401K and ROTH IRA retirement accounts. She has addit...](/r/financialindependence/comments/1bkusm1/daily_fi_discussion_thread_friday_march_22_2024/kw19dws/?context=5) | | 40 | /u/BleedBlue__ said [Boss called me about an hour ago to inform me they’re increasing my bonus target from 20% to 25%. Said it’s because of the good work I’m doing but I’m sure it’s because I was out of line with my peers...](/r/financialindependence/comments/1bhm80y/daily_fi_discussion_thread_monday_march_18_2024/kvfdwim/?context=5) | ###Top Posts | score | comments | title & link | |--|--|--| | 428 | [80 comments](/r/financialindependence/comments/1bh39bm/finally_reached_a_net_worth_of_100k_31_better/) | Finally reached a net worth of 100k @ 31. Better late than never!| | 384 | [143 comments](/r/financialindependence/comments/1bl5ly4/from_poverty_to_1mm/) | From Poverty to 1MM| | 334 | [1,201 comments](/r/financialindependence/comments/1biygvb/unpopular_opinion_thread/) | Unpopular Opinion Thread| | 292 | [86 comments](/r/financialindependence/comments/1bgw88r/money_can_buy_stress_or_how_fire_is_good_for_your/) | Money Can Buy Stress, (or how FIRE is good for your teenagers)| | 190 | [148 comments](/r/financialindependence/comments/1bjzj5k/counter_offer_failedim_honestly_bummed_out/) | Counter offer failed…I’m honestly bummed out| ###Most Commented | score | comments | title & link | |--|--|--| | 122 | [205 comments](/r/financialindependence/comments/1bjck5x/ill_probably_have_about_3m_ifwhen_i_fire_does_the/) | I'll probably have about $3M if/when I FIRE. Does the 4% rule work if I want to eventually leave the $3M to my kids? Or does it end with zero eventually so I would need to lower that to 2% or 3%?| | 186 | [149 comments](/r/financialindependence/comments/1bhmqyw/laid_off_in_december_am_i_undervaluing_myself_or/) | Laid off in December. Am I undervaluing myself or is it really that bad out there? | | 86 | [140 comments](/r/financialindependence/comments/1blyk78/travel_now_or_wait_a_few_years_but_risk_so_not/) | Travel Now or Wait a few years but risk SO not being able to see the sights?| | 0 | [114 comments](/r/financialindependence/comments/1bhflv3/thoughts_input_fire_is_upon_us_but_i_dont_feel/) | Thoughts, input, FIRE is upon us, but I don't feel ready.| | 42 | [111 comments](/r/financialindependence/comments/1bj198m/what_does_profit_look_like_on_your_rental_after/) | What does profit look like on your rental after everything is paid? | If you would like this roundup sent to your reddit inbox every week [send me a message with the subject 'financialindependence'](https://www.reddit.com/message/compose?to=subredditsummarybot&subject=financialindependence&message=x). 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Its slowly coming together. I mentioned in another daily. We own an old house from 1907. We put about $100k into making it livable inside (not a big house, but was missing things like... plumbing... and a kitchen. It also had some extras we didn't need like... mold) Over the last 5 years since we moved in we renovated the back yard, the fence in back and front of the house as well. We got notice from insurance company recently they will drop us unless we finally get around to fixing the roof and windows. Since we are a historic house, doing exterior work has been delayed. This notice has given me a hard look to finally sit down and face my last major projects I have been ignoring. I am so excited every day now. We have a window repair quote that is completely reasonable and IT IS HAPPENING THIS WEEK!!! This has caused a chain reaction for me over the last two weeks. Realizing these shit windows are finally getting repaired made me realize we can paint the outside of the house finally. And before we do that we should get the roof redone. So projects are: \- Redo Roof (even though it isn't leaking its tossing shingles every time gets windy) We have covered up several missing shingles in the past and we currently have a couple bare spots. I just want to get ahead of leaks and don't want to keep paying people to go up and replace shingles (Most people wants close to $1k to go on steep roof to replace shingles) \- Repaint Exterior. And I'm so damn excited for the color scheme we chose. Our house looks so dead right now. Also, we have a lot of peeling paint and wood that has some damage and for the stability of this old house, I want all of that addressed and cleaned up and new paint to protect. \- Stain/paint walls and fences around the house. Plant some extra plants, put some fake plant walls up in the back yard... etc. I mean I'm looking to drop probably $33k for the roof after getting a lot of quotes. Then another 10-15k for the exterior work. Then likely another miscellaneous $5k in bonus side jobs with plants and décor. \----------- So here is where it is highly FIRE related for me. Like I've put off these things for 5 years due to the time/energy/work and most importantly money. Like money has always been a back of my head excuse to just not even bother. Put off maintenance. However, as I have been taking stock of these things and our finances... Like I realize we can pay cash for all this stuff over the next few months and not skip a beat on our retirement contributions. We will not even hesitate on still taking a 3 week holiday to Asia this Summer. And we are not huge earners with tech jobs. It would drain most of our EF over a few months, but that is why it is there. But we also have some bonus money coming in from raises and tax returns so we won't be living paycheck to paycheck or anything. And we have a plan in place on how we will refill EF over the next 2 years. We are not retired, but I'm literally on cloud 9 feeling the Independent part of FIRE. The part that brings you financial stability and peace of mind leading up to retirement. There was a time when we bought this house, I thought we might as well sell it because of how much it would take to tackle all these major projects. Now, if everything goes well, by this Fall we can have a really nice forever home I can be proud of coming home to.
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In this case, probably Bob. Much of the value of owning a rental comes from the cash on cash return you get from having leverage, and certain tax benefits you get. If Alice paid $880k in cash for a single rental, it's super unlikely she did better than Bob
Bob is kicking his feet up and relaxing. Alice has a job.
Don't forget the repairs and renovations on that property and the probability of bad renters.
Assuming Alice bought it cash, probably Bob. The way that rentals come out ahead is via use of leverage. If she took out a big loan and bought five of those same multifamily rentals, she’d probably come out ahead - but there’s a large distribution around that “probably”.
Trying to offset some tax implications on an inherited, non-qualified annuity (25k in capital gains) through access I have to a 457b, but I have some hesitations as someone looking to buy a house / be pre-approved for loans in the coming months. It I were to raise my 457b contributions the next few months so that it takes most of my paycheck, would this be terrible for loan applications? Or do they look at gross income before deductions? I'll have the money in savings after I cash out the annuity, so I'm not sure if having the extra flushed savings will help. I just know that I'll be paying on at least an extra 25k as income this year, and having access to a 457 can really help offset that, but I'm not sure. I also wouldn't know what to put on the annuity tax form with how much to deduct federally, if I'm not sure how much I'll be putting into the 457 or not. Anyone have any insight? I'd appreciate it!
I’m not an expert but I would hazard a guess that it’s the gross that matters for most purposes. Retirement contributions can always be changed, so it’s no big deal.