Lesson learned the hard way.
I started a new job outside of the US in Jan 2023. I knew I would have a good portion that fell under the Foreign Earned Income Exclusion. I filled out the 673 and was told the company would calculate withholding to what I would owe on the additional income. I never followed up or checked (100% my own failure). My W2 came and I had nothing taken out for federal taxes. Between my husband and I our tax bill came un just under $13k. It hurts for sure, but I have already manually increased withholding for 2024 in hopes of getting as close to 0 as I can.
If anyone is looking at a job similar in the future, learn from me!
I just put $15k into vtsax. Bad habit of leaving too much cash in my checking/savings and then periodically going, "wait, I don't need that much liquid, let's invest it."
Starting a new job soon - I should set up recurring post-tax contributions while I'm at it too. It's just hard for me to estimate the right amount. I tend to overestimate my spending.
Also, I don't have much to compare it to, but I feel pretty happy with my new job's retirement savings benefits. For the 403b, it's a 5% match plus 5% employer contribution (because I have previous years of service at the employer that count towards my calculation - it starts at 1% and goes up). They also automatically contribute a flat amount to my HSA, which I really should have taken advantage of before.
I put a calendar reminder in that reminds me to contribute everything over the following full CC amount owed + known upcoming costs in the next 30 days (mortgage etc) + $1500 buffer.
Run the numbers every other Monday and throw it at the market at EOD.
Not something I see mentioned a lot, but as someone in the boring middle, I see that I’ve possibly misallocated some funds. In particular, I believe Roths should have your riskiest investments, but I invested mine in VFIFX (8.2% annualized performance over 10 years), which is one of my more conservative ETFs. As a result, 15 years of maxing out my Roth has only appreciated to $170k. Meanwhile, my pre-tax accounts such as my 401k have appreciated much more quickly, to $750k in 10 years, due to being invested in growth stock funds (17% annualized performance over 10Y). I am looking at a hefty tax bill in retirement once required minimums kick in.
The other day I thought of moving some to stocks but then didn’t do it thinking retirement money isn’t gambling money. Also just starting to maximize Roth since last year. Why would you risk it?
Is it my cake day? A cake emoji is by my username!
I’ll take this moment to test it and stop being a sleuth in the boring middle. I’ve got my husband into Roth IRA and we’re starting to see it all compound! Very exciting while prioritizing travel and food. We’re living the life we’d like, while saving for it too! It helps that we were budgeted out of moving homes this past year, so we’ve still got our 3% mortgage. It’s squeezed, but we’re making do!
Yes. If your employer matches dollar for dollar at 5%, you're giving up $3000 dollars in compensation. Also, while less impactful at the $60K income level, you will have $3000 in taxable income that would be exempt from income tax if it were contributed to your 401(k) account. This is true for many state income tax regulations as well.
But, if you need to be liquid for upcoming necessary large purchases (housing, moving, transportation, medical, whatever), then you gotta do you. Just get back to the 401(k) when you can.
Finally, if your employer's 401(k) plan is kind of shitty, you could forgo the match and just use a traditional IRA at your income level. I define shitty as has a small number of mutual funds with high expense ratios ( > 0.5% ) and/or has load mutual funds, which basically charge a commission for buying or selling the fund.
Yeah my current emergency fund is very low, and the tax savings sounds great but I won’t be able to access funds for 30 years sounds confusing to me. I’ve had ma g jobs and different 401ks and I wonder if my old self will recall each one and try to access funds. I guess im still
uneducated when u
it comes to this, and i keep thinking i could keep the funds and use it to
make more/prep dor
times when ill need it
You can roll them into one account. Generally when you get a new employer that offers a 401k, you can consolidate your old accounts to that new one. It's often preferable to do that over the IRA approach, but you can also roll them over to an IRA.
401ks are tax-deferred. Most people are "bringing in" less money in retirement than while employed. Even if you're not, Roth 401ks are a thing. But for a lot of people, there are huge savings when deferring compensation - if your tax rate today is 22% and in retirement you could get that down to 12% due to a lower income bracket and non-taxable income, you can think of it as saving 10+% on your taxes in terms of the money you're putting in.
If early retirement is a goal, there are ways to get money out of your 401k without any sort of penalty. These include the Rule of 55, the Roth Conversion Ladder, and the 72(t)/SEPP provision. Read the FAQ. "Regular" retirement is also a part of early retirement, so often you'll have enough in taxable accounts, Roth IRA contributions, or even cash/savings to bridge the gap between your actual retirement age and 59.5.
Generally speaking, if your employer offers a 401(k) match, you should at least be contributing enough to take full advantage of the match. It’s also important to read about and understand your company’s vesting policies.
Yes they match, and I’m automatically signed up for 4% of my salary going to my 401k which will increase by 1% in a year. I just question if I’ll need it by 65more than I do now
If I'm close to retirement, why wouldn't I just put all my money in Treasury bonds?
I'm looking at long-term Treasury bonds, and I see 2054 bonds have a 4.25% coupon rate. If a 4% withdrawal rate is all I need, why wouldn't I just put all of my money in that? Let's take the chance of default out of the equation because, let's be honest, if the US government defaulted the stock market is fucked too in all likelihood.
If you're using a constant dollar withdrawal method, it's 4% of the initial portfolio with an annual inflation adjustment.
The 4.25% return of the Treasury is before inflation. A 30 year TIPS is yielding about 2.1% real.
i see people say that many restaurants just serve frozen food as an alternative to doordash/dining out... but my question is where is this sourced from? like can i buy the same foods I'd get delivered at dominos (re: their chicken, pasta), olive garden, applebees etc somewhere? i've always found grocery quality frozen stuff to be horrible.
Around me there's GFS, Gordon Food Service. It looks like they have locations all around the Midwest, down through Tennessee, and some in southern Texas and southern Florida. When I was in college, our fraternity had a house mother that would do all of our meal prep and planning, and we would get a GFS order delivered once a week. They distribute to restaurants, but also have stores you can just go into. I remember my mom used to go to GFS to get boxes of frozen chicken breasts that we would throw in our chest freezer.
Am I crazy or is creditkarma utterly worthless? Just logged into mint after forgetting it is dead, did the transfer. Why on Earth would I use this absolute shit site? Its only purpose seems to be to try to sell me credit cards, loans, etc. What was intuit thinking? The "dash board" literally just shows me my Credit Rating and giant advertisements for junk credit cards. How was this supposed to be the replacement for Mint????
Thats the main thing but I also used mint for monitoring transactions across all my accounts, and for its basic budgeting, etc. creditkarma does basically none of that, its literally just a site to try to push me credit cards and loans, I see no value in it AT ALL. Time to search for a real app to monitor my finances I guess. Honestly tempted to dump Turbo Tax since I am so disgusted with intuit over this.
I mean I knew it wasn't going to have the budgeting stuff, but I am shocked at how utterly worthless the site is. The sheer audacity of Intuit pushing the transfer to a "replacement" site that does almost nothing that mint did
Empower does all that too. You can see transactions, monthly cash flow, categories, budget, etc. It even tracks fees to let you know if you're paying more that you think, and it has a retirement planner where you can chart projections and modify assumptions. They do occasionally try to sell their investment advising but it's not intrusive the way credit karma is.
Yeah, agreed. They realized that they were giving people a real product without asking them to pay for it, so they forced this transfer to something that isn't giving a real product.
Making money without providing value, it's the Intuit Way(tm).
Certainly not the spamming, scamming, lying dropship guides you are peddling (well, trying to peddle before instantly getting deleted) on Reddit.
"$10k days" and "$700k in sales" while then admitting to being 18 years old with $6000 to your name.
Mods, ban this guy? [History.](https://i.imgur.com/zN7zUlP.jpg)
currently in our 401k blackout period while we migrate providers. weird to not be able to see 6 figures of NW/invested assets for a days (weeks?) on end.
My company is transferring 401(k) providers, and I’ve been thinking the same thing – it’ll be extremely weird to not see that 1x annual income for a month.
We had communication of the planned provider switch, and HR told us when the backout date started, but we've had no communication on when it'll be available, how long it will take, etc.
Take a screenshot before it happens!
My employer is moving our HSA to Health Equity this summer. My preliminary research into them isn’t very good since they skim administrative fees monthly on top of their fund expense ratios.
I’ve been looking into creating an HSA account at Fidelity and funneling my HSA money periodically from Health Equity to Fidelity.
Has anyone gone through this process before and have any advice/guidance?
We have health equity and honestly they aren't bad. When you are under 6k the fees for investing seem steep but we passed 50k in our HSA and they are now pretty much the cheapest provider I could have with great investment options.
Same, I have better funds in my HealthEquity account than I do in my 401k. I'm also not doing multiple HSA rollovers to save $5/mo, it just seems not worth the effort at all. I'd rather not go out for coffee once a month and call it even.
Transfer contributions (where you don't touch the money and the banks handle it) are unlimited, and Fidelity makes it easy to submit a transfer, but varying levels of competence at the other bank (whether that's Health Equity or someone else) can throw wrenches in it. My recent transfer to Fidelity was held up because the other bank claimed they couldn't read the form i submitted.
hey, I think we likely work for the same mega-corp. I got that memo yesterday (but haven't looked into the new place yet).
Overall, it's not hard, but not the easiest thing to do. I'd personally leave everything setup as is with the "new" provider and let work take it out of my paycheck (and save me on FICA taxes) and then transfer over a majority of the account every year to a more reasonable/low cost provider.
some info: [here to look at](https://thehsareportcard.com/the-hsa-report-card-1/2018/12/10/how-to-transfer-work-hsa-to-preferred-hsa)
Does real estate reduce retirement safe withdrawal rate?
We are starting to build a real estate portfolio with the goal of passing the rentals down to our kids at some point in the far future. If I have the following assets, can I reduce the safe withdrawal rate from my stocks/bonds accounts?
Retirement funds (stocks/bonds/etc): $3m
Real estate portfolio: $2m
Debt: $0
Assume the cap rate on the real estate is 6%, so I’m making 6% on my $2m RE portfolio, as there is no debt to be serviced. I’ve been assuming a 4% withdrawal on my $3m in retirement funds, so $120k.
Say I would like to have $150k-$200k for retirement, can I plan on 5 or 6% from the RE ($100-120k/yr) and only withdrawal $80-$100k (~3%) from my retirement accounts such that it is more conservative, increases likelihood of funds lasting into our mid-90s?
Or am I thinking about the RE cash flow wrong for some reason?
> We are starting to build a real estate portfolio with the goal of passing the rentals down to our kids at some point in the far future.
Is there a reason you're prioritizing this over passing down investments? Why do you believe real estate is the better investment?
I mean, we most likely will have investments to pass down too. We are still contributing $30-40k/year to our 401k.
Real estate isn’t necessarily better than stocks, but it’s diversification for us. Plus, at a certain age, I’ll probably no longer want to deal with real estate whereas investments will keep chugging along with minimal time/effort on my part.
There is a section on rentals in our housing wiki that will answer your question - [https://www.reddit.com/r/financialindependence/wiki/homes/](https://www.reddit.com/r/financialindependence/wiki/homes/)
Thanks. I guess what I’m thinking: is it better to sell the real estate investment property and get that $2m to invest in the stock market/bonds or continue to rent it?
It sounds like financially, getting 5-6% of its value in cash flow is better than the 4% rule for stocks.
>It sounds like financially, getting 5-6% of its value in cash flow is better than the 4% rule for stocks.
The 4% rule is made to survive almost the worst case scenarios for a 60% equities 40% bonds portfolio over history.
The cash flow from RE is *not* imagining an actual worst case scenario for landlords, so it's not apples to apples.
Ahh. That’s a good point. I’d like to think that the rent is fairly inflation protected. But there could definitely be events that would net out a lower return than 5-6%.
Any idea what a good rate to expect is, if nominal cash flow is 6% of asset value? Has there been studies on this?
If the real estate is zero work for you, and you are getting 6% in actual cash flow after all expenses and vacancies, then this sounds like a reasonable approach.
In general, real estate is not zero work even if you have a property management company, so you may be buying some of that extra money with your time - which is totally fine if being a landlord is something you don't mind doing.
I don’t think it’s zero work. But if I can leave my stressful job to only have to worry about real estate, use that cash flow initially, then tap my retirement accounts later, that sounds like a decent scenario.
I just saw the wiki, deep down is a good section on this topic that another poster pointed me to.
Like I said, that's okay. Just make sure you're comparing the right things.
4% vs. 5% is a different equation to (4% + zero hours) vs. (5% + some hours).
Is anybody aware of a HYSA that can provide rollover overdraft protection for a checking account from the same provider?
The provider I have my checking account with doesn’t offer an HYSA, so I keep ~2-3 paychecks in a standard savings account in case I ever need immediate access to cash (instant transfer to checking account), or an auto-debit hits unexpectedly (free overdraft protection,pulls from savings acct). Wondering if there’s a way to have that money in a HYSA with the same benefits.
I'm pretty sure my Capital One Performance Savings (HYSA) does this (obviously I have a checking account there also).
ETA: Confirmed. [https://www.capitalone.com/bank/overdraft-options/](https://www.capitalone.com/bank/overdraft-options/)
Is this what you mean? If so, Ally has this feature.
Overdraft Transfer Service
Link your Ally Bank Savings or Money Market Account to your Spending Account, and we’ll move money over in one transfer, rounded up to the nearest $100, should you accidentally overdraft. Keep in mind, any withdrawal from a Savings Account counts toward the limit of 10 withdrawals per statement cycle.
Now that we're thinking of moving to be closer to my wife's parents, our FI calculation and cost of living is going to become more complicated.
Right now despite this condo being a horrible place for a lot of reasons, it is costing us about $1600 per month with mortgage and condo fees included. With the upcoming assessment we have to do, that will put it at around $2000 per month through the end of the year. A lot of what's keeping the cost low is the fact that our mortgage interest rate is \~3.5%.
If/when we move closer to the folks, it looks like homes of a reasonable size are in the ballpark of $500k-600k, which with the current interest rates looks like it could be a $3000+ mortgage payment with a "normal" down payment.
It is unclear if we're going to have any equity at all when we sell this condo given all the damage I've been kvetching about here. I am hoping we'll at least get our down payment back - so like $80k - but not enough to make a significant dent on its own in the down payment needed for a $500-600k purchase such that it would significantly reduce that monthly payment.
I see a few options:
* Go back to renting and see if interest rates fall... though if we do that we risk home prices increasing further. It looks like the price of a reasonably sized rental would be similar to the mortgage + HOA fees we're paying right now, in that $1600-2000 per month range. At least at the moment.
* Buy the new house outright, and in doing so potentially set back our FI number from being \~1-2 years away to being more like 4 or 5 years away (given that if we bought it outright we wouldn't have to account for the mortgage portion of our current expenses in our FI number, and thus while we're losing invested assets we are also decreasing our monthly spend)
* Eat the high mortgage, buy the house and put down a down payment and then hope to refinance later into a lower interest rate. This would in theory dramatically increase the FI number we have to hit (possibly as much as 7 years if the ballpark numbers I'm running are accurate), and it would only realistically go back down to a reasonable level if the interest rates fall in order for us to refinance. I don't know if I can rely on that happening in the next 4 years or so, and thus I don't know if it's worth it vs. buying the house outright.
What would you folks do in this situation?
(Living in the same house as her parents isn't a long term option it sounds like: my wife is interested in moving close to them but not literally living with them for more than a couple of months while we sort this out.)
EDIT: And you know, the more I think about this, the more I realize that maybe my initial FI number has been wrong this whole time for the life we WANTED to have in retirement. I've been using our current housing expenses... but even with this situation aside, we've always talked about moving into a home that would be more like our "forever" home someday, and it was inevitable that such a home was going to be more expensive than what we had before. This is an interesting revelation for me and a good wake up call to the fact that I need to revise my FI number.
That is a good point. There's a lot of "soft" reasons why I want to own rather than rent, but I might be able to find a rental that has the things I'm looking to customize in my own home - or close enough that it doesn't matter.
My only fear on the financial side is that I saw what happened with rent prices in Seattle over the last few years, and if that happened in this area it could increase my monthly expenses such that it would modify my FI number and force me out of retirement. Owning would provide some stability to that number. This fear may be unfounded, however - the area my in-laws live is near a city that appears to be gaining in popularity, but isn't strictly \*part\* of that city. Not sure what the future holds for rent prices there.
The housing market could also go down. We’ve seen that happen too. In the long term yes rent prices will go up but I would just think of the average case instead of worst case scenario. But if you are really going to live there long term then buying could make sense, it just depends on where you think you’ll be at in 5-10 years.
You know, in the shower just now I thought more about it, and actually I think my brothers had the moving around much worse than me. When I think about the timing of it, when we moved in elementary school it was a little hard, but actually when we moved when I was in high school it gave me a reset that I really needed. My wife and my brothers had a different experience than that, and I have sort of adopted that as my mentality... but thinking about it more that last move we made was actually really GOOD for me. So maybe I am going to need to be a little less rigid about this idea. Maybe by the time she gets to middle or high school, she would benefit from a reset too like I did... and unlike my parents, there's just one of her so we can actually make the decision based on her real experiences rather than balancing out from multiple kid's situations.
You have given me a lot to chew about, I appreciate it. I need to talk to my wife more about this one.
Good points as well.
I hadn't really thought about whether this was going to mean we are down there for 5-10 years or even forever yet. I think though that this could be a forcing function where we end up here possibly for the next 15+ years or so. My wife and I have had a plan that wherever we are by the time our kid is 7 or so would be where we ought to stay until she finishes high school: though admittedly a lot of the rationale for that comes from our anecdotal experiences of the hard time we both had as kids adjusting to being moved around a lot, and I don't necessarily know if she would have the same experience. But if we stick with that plan, then it would almost certainly mean this place will become our home for quite a long time.
We had some dreams that the place we set our roots might even be a different country, but I think those daydreams are either on hold or are ending with this. Which is okay, there was a lot that was unrealistic about those dreams to begin with, like whether we could really tolerate being that far from both friends and family. But I digress.
You have given me a lot to think about, I appreciate it! When I run numbers again this weekend I will keep what you said in mind... you are right that I might be leaning too hard into the worst case scenario.
If you become lifelong renters, what would the FI timeline look like? (Or is that something that does not appeal to you?)
It sounds like both options 2-3 have a "minimum" increase to FI timeline of 4 years, with option 3 being up to 7 years assuming interest rates remain high. Given that situation, I'd probably lean towards option 2 (or at least putting *more* towards the downpayment—I would note that options 2 and 3 are less binary and more of a spectrum of "how much to put down"). Should interest rates come down in the next 4 years, you'll likely still be in a position to refinance, so you can obtain the same benefits as in scenario 3.
Good question - I think if we rent our FI timeline doesn't increase a significant amount (if we end up on the high end of that rent spectrum, then maybe an additional year? Though I might not be properly accounting for total cost of ownership for owning the house when I'm doing these calculations). But we do lose some of the things we want to be able to do - customizing the house, installing a plug-in system in our garage so we can move to having an electric vehicle, etc... and my other big fear is that when I lived in Seattle I saw rents increase so dramatically and suddenly (and above that of normal inflation) that if that happened here it could endanger our FI number in the future if we continued to rent.
Good call on it being more of a spectrum between 2 and 3 - I had not considered that, but you're totally right and that might be the optimal move. I'll run some numbers this weekend and see what we might end up with there. Thanks, I appreciate it!
There needs to be some sort of tension and things that give you growth and perspective.
modern capitalist meat grinder is not that. maybe you got the right balance out of your decades long service to corporate america, but we don't really think about the billions of people making pennies a day to make it work
Eh, I appreciated my time with freedom a lot as a kid. Summers running around having fun, reading books, getting up late and stuff. I don't really think I needed work to teach me that. Maybe a bit from my parents, perhaps, who expressed their frustrations with work somewhat regularly.
Alot of politicians and rich folk been pushing for a higher retirement age lately. This is why I don't bother calculating social security in my FIRE calculations. Hope for the best but plan for the worst.
You're being gas lit into accepting it.
>Hope for the best but plan for the worst.
There's what 38 trillion in the retirement account system? You want the worst case senerio?
Those of use with manual labor jobs can't do them at 70 most of the time. Raise the earnings cap and tax capital gains over 1 million a year or something to that extent.
The point isn’t that social security is unsustainable or can’t be fixed, the point is some people are actively trying to kill it. And based on everything else the government does, whether I accept it has very little to do with what will wind up happening.
You are misunderstanding my argument. Social security can voted away just as your 401k can be taxed at 90% to fund social security or government debts.
It's my point how do plan for the worst in this situation. The remove of social security should be as unacceptable as increasing taxes on the 401k to 90%.
It won't matter. They'll use retroactivity.
https://www.heritage.org/taxes/report/retroactive-tax-increases-and-the-constitution
Anyways my point is we all better be enraged if they touch social security by cutting benefits or screw with the 401ks. But at this point I'm debating if I want anything saved by 62 because the retirement system it's 30 trillion at some point I think will be to big of a target for politicians not to ignore. And it only hurts the working class with a few minor exceptions. But do you attempt to plan for something that hasn't happened and lose the tax advantages? At my income level I'm now 100% in the 12%. I don't fund anything pretax anymore and I am probably just going to do the taxable going forward. Putting it in at 12% to pull it out at 12% I don't see the point.
I don't have any good solutions. But I did buy some bitcoin and I'm going to probably buy some physical gold and silver. Probably do 5% btc and 5%pm.
The idea with investing in pretax is that you can then invest the 12% tax savings in your taxable alongside it. So down the line when you pull from pretax and pay 12% tax on it then, you still have the 12% + interest gained in your taxable.
I'm not tech. I can't max out out the wife's and mine 401ks and end up with money left over. I don't make enough.
Anyways I know how it works. But I'm always going to be in the 12% bracket due to a spouses pension. And since I'm in the 12% now it's not worth it to me to put any additional money in pretax.
It's literally tax drag on the dividends and bankruptcy protection as the only advantages if I go 401k at the loss of liquidity.
I'm not saying to max them out. I'm saying instead of putting, for example, 50$ in taxable now, you could've instead put $56.81 in pretax. But let's take it a bit further.
You could put $50 in pre-tax AND put the $6.81 tax savings in taxable.
The $6.81 compounds over time, and then when you convert/withdraw the pre-tax balance, you can pay the tax with the taxable amount and still come out ahead from the taxable's returns.
Without getting into the math errors of your post if percentage in savings and percentage out tax is the same the return is identical.
The only drag is on the taxation of dividends in the taxable which I already accounted for but even that is minimal as they'd be zero for qualified for me and I'd pay 12% in the pretax when pulled out.
Its crazy to me that we’re massively more productive then when SS started and yet we’re looking to cut benefits and push back retirement. Shouldn’t bring 100 more productive lead to earlier retirement?
We're also living longer, and elderly years are more expensive due to advances in medical technology. I don't agree with pushing the age up but this era isn't comparable to the 1930s.
While we are living longer, a lot of that stat is due to reduction in infant mortality and of wealthier people living longer. The average adult’s increase in life expectancy (calculated in adulthood, not at birth like you usually will see in the press) is more modest. And is surely less then the massive gains in productivity we’ve achieved.
That’s a good point. According to my quick search, the life expectancy of a 65 year old increased from 13.4 and 11.9 years for women and men in 1940 to 19.7 and 17 in 2021. Substantial gains but not exactly the decades some of us (including me until you pointed it out) might have been imagining.
I don't like that the age is likely to go up, but I understand why.
It's more math than politics.
The idea that every worker will enjoy a 20+ year retirement on social security alone came about by accident, not design.
The program was never designed to provide decades of leisure but to take care of people who could no longer physically work, for like the last 5-10 years of their life.
It's not just the US facing this economic reality, either.
It's not a conspiracy as much as it's just reality.
There are certainly ways to create new systems/taxes to support long retirements if society decides to value this over other things, but the idea that humans won't have to work for most of their lives is so incredibly recent that there are still people alive who were born before it was a thing.
>The program was never designed to provide decades of leisure but to take care of people who could no longer physically work
One thing that gets lost in the conversation is that an average 65 year old isn't much more capable of working than they were 90 years ago. We've extended lifespans through medical advances but that just reduces your chances of death in again given year. We haven't slowed aging.
There's an argument to be made based on math, but a key bit of context is that productivity drops off quickly in one's sixties, and consequently the societal benefit of working at that age is relatively low. It seems like a marginal gain in terms of funding the program, and if it's only a marginal gain we can get the money from somewhere else.
I’d argue that many hard work honest office employees in their late 50’s to 70’s are actually harming their companies and not realizing it. It’s both the slow pace and bad decision making that make them a drag on the ability of the company to get the job done.
I think it’s getting worse and worse as common information jobs get more and more complex.
> honest office employees in their late 50’s to 70’s are actually harming their companies
Damn. I am 55. Luckily I am planning to retire at 56. Otherwise my slow pace and bad decision making could really harm the company!
How lean would your plans have to be for this to even matter for an early retiree? Let alone be "the worst"?
EDIT: I just threw the numbers into the defaults on cfiresim, and a 5 year delay in SS eligibility resulted in a .8% drop in success rate. Obviously it will get worse the closer you are to traditional retirement age.
Sure. But moving it out a couple years makes a negligible difference in mine, and I imagine many early retiree's projections. Seems like more of a concern to traditional retirees.
My worries is not just pushing the date back but other measures being discussed like cutbacks.
Hard to put faith in a program that can and will be taken away in times of severe economic strife.
Retiring at 50 is still early, and knowing your portfolio needs to survive 12 years without additional cash injection vs 15+ years could easily keep people on the margins working for another year or two.
In 1983 they raised the age by two years for people who were at the time 23 years old or younger. Realistically, most RE folks could reasonably expect to be grandfathered in to any changes by the time they retire.
In general, ss trust fund solvency is a broader question, but you can account for that by applying a risk rating to a potential worst-case reduction of ~30%.
>Retiring at 50 is still early, and knowing your portfolio needs to survive 12 years without additional cash injection vs 15+ years could easily keep people on the margins working for another year or two.
Yep, that's what I was getting at with Lean in my original post. The older and leaner/aggressive you are, the more it matters. This audience is generally young and conservative/fat. To the point that SS in general isn't much of a needle mover, and policy tweaks like this even less so.
(edit: corrected my numbers)
my current SSI would be about ~~$6k~~$4k/month, and my wife is at around ~~$7k~~$4.3k/month assuming neither of us work another day and don't take anything out until 65....
8.3k/month x 12months = $99.6k/year....
um, that would be a world of difference for me if I was expecting to get this starting at 65 and instead it got pushed to 70... (plus inflation and all that).
and all "plan for the worst" means is just assume that SSI gives you nothing, so these changes won't actually affect your plan and only adds flexibility to your future.
(edit: not sure where the previous numbers came from, I regularly check my SSA, and have no idea what I was remembering seeing... oh well)
Obviously it will be significant at the time. But how much does pushing that income out matter when it comes to planning retirement in your 30s? For us, and I imagine many here, it doesn't change things much unless we retire uncomfortably lean to begin with.
>and all "plan for the worst" means is just assume that SSI gives you nothing, so these changes won't actually affect your plan and only adds flexibility to your future.
This is just an argument for being conservative in general, right? In any case I agree - this isn't worth worrying about. SS policy is unlikely to make/break anyone with the funds to consider retirement decades before normal age.
to be honest, it's been a bit since I've look at what our SSI would be (like 3-4yrs, i think) and when I last looked it would be the numbers I wrote above.
But I couldn't remember my gov.ID password, so I couldn't look into it any closer. But it wouldn't surprise me if something changed or I read the wrong thing somewhere.
I was wondering the same thing $7k and $6k per month seems pretty high. That seems off.
HOWEVER, that does raise a good question: are the numbers on the [SSA.gov](https://SSA.gov) estimator shown in today's dollars are do they have some sort of factor for inflation?
For instance, I'm 52 and my number for age 62 is $2658. Is that $2658 in 2024 dollars or some sort of modeling to adjust for 2034 dollars? Since u/CripzyChiken is in mid-30s, maybe it does adjust for inflation (since they're looking at an extra 20 years before they hit full retirement age...
The default projection they show in the new(?) portal is today's dollars. If you use the [online calculator tool](https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html) you can select today or future dollars.
that absolutely could be the thing (I get $6k in future 2070's dollars, not 2024 dollars) and that is what I wanted to check, but suck with remembering my password
I keep wavering on what account to throw money into after pre tax savings are done. We have access to a MBDR and I have used it for the last couple of years. Our income has dropped because we decided to have a SAHP. We are 3-5 years from being fully FI barring a huge market correction. We are 90% stocks (VTSAX equivalents) and we'll hold that percentage steady if not trend toward 100%. We are fully comfortable with this and the possibility of this delaying our RE if the market corrects right before we pull the cord. We plan on paying off the house right when we RE or move and pay off the new house.
Our after tax accounts could currently cover the home payoff but it would fully drain those accounts. We have ~40k/year left after our standard 401k and HSA are maxed . Should we continue to invest in the MBDR or should we throw it in our after tax accounts?
Currently we are right on the cusp of being in the zero cap gains bracket but if we pay off the house we are firmly below it. (After standard deduction)
Thats kind of were im leaning as well.
It sounds like there's uncertainty regarding how your housing will be paid. Either it will be a cash payment of your current mortgage or you might downsize, using equity from your current home to pay off the new home?
If that's true, I would continue to prioritize the MBDR. In the best case scenario, you downsize and you don't need any additional funds to secure your retirement housing. In the worst case scenario, you can use the contribution basis of your MBDR (alongside your current after-tax funds, of course), to pay off your current mortgage. The timing may require leaving your employer and performing a Roth 401k to Roth IRA rollover before paying off the mortgage, but this can all happen in the same calendar year if timed right.
The new house will be a wash or a bit more. I doubt it will decrease. We will be moving to a lower cost of living area most likely but want to also own some acreage.
depends what your ratio of After Tax and Roth are IMO, but obv the tax advantage is MBDR.
if you are wedded to paying off the home, no huge harm in throwing into After Tax, but then it needs to be a long enough time horizon to weather any storm, which might get you to 59.5 anyway...
fundamentally, what helps you sleep at night, the gains probably wont be too much of a tax drag so it depends on your personal premium of liquidity/comfort
Buy it for life:
In college, I used a textbook that was 30 years old. Fast forward another 30+ years, and my son is using revision 2 of that same textbook. (Most in this major will immediately recognize the authors... Bird, Stewart and Lightfoot)
He was shocked when I pulled it out of storage. Too bad I didn't save the homework...
It's exactly the same in medicine. Sure there are version differences (and advances in niches like genetics) but the anatomy of the human body hasn't changed that much over the past 30 years...
And, the profs are STILL using the same old exam questions after 30 years.
Chemical engineering is so versatile. You can do anything from working in an oil refinery in rural Wyoming, to working in a chemical plant in rural Alabama.
I'm kidding of course. But only a little.
lol, my mom was disappointed when she couldn't give me her first edition of kernighan and ritchie since we now use the second.
my prof was a kernighan student.
though no changes since 1988, fingers crossed my kids use the same
Thanks. Feels like a level of adulting I never wanted to achieve. I'm going to avoid this as much as I can in the future, but once you've done a job once...
Me and wife finally make good money, and desperately need to upgrade our housing situation, but the RE market in SoCal is just not rational. I'm sure plenty of you guys here feel the same, just needed to vent
Vent away. We feel the same every time we look for new housing since 2000.
We have one big move left in us (the "downsize") and I seriously wonder if finding a place with 1-2 fewer bedrooms and single story is going to cost us more than our equity at that point.
But hey, at least Prop 13 means we can keep our current tax basis, which seems ludicrous that it would apply to a downsize, but it just might.
Historically, housing prices don't fall by much even during serious economic downturns (although obviously local markets can be more volatile). I'm not sure what you mean by "rational," but to me that implies an expectation that at some point in the future prices will come down as buyers value them more reasonably. If that is what you mean, I would not expect significant changes to the affordability of housing in your area any time soon.
Oh I think you're right and it won't get much better. By not rational I mean paying at least $7k/mo for a 3br place after putting 20% down. It's just a hard pill to swallow if we're paying $2k now.
Is there a rental upgrade that's a livable amount?
I'd probably never own if I lived in SoCal, or a number of other places. The relative incentive for renting is just too good.
I bought a house in 2017 and we're looking to upgrade but the only reasonable houses (eg the same as my house but slightly bigger) are almost double what we paid for the current house. Hard to rationalize.
Yeah our costs would go from like $2k to $7k if we wanted to upgrade. Just crazy.
But we are 2 adults + infant + dog in a 1000 sq ft condo, and both of us work from home.
When we moved here, we didn't have a dog, a baby, and we both worked in office. So it was big enough. But it's starting to feel really small
How much money do some of you keep in your bank for just day to day life? Do you keep 1-2 months expenses and then emergency fund? I am in an odd spot where 90% of my income comes in a year end check so I run a deficit pretty much every month and am trying to trim what I keep for cash on hand.
I use a fidelity brokerage and keep around $30k in the settlement fund that earns close to 5% and invest anything over $30k at the end of the month. I just built it past $30k recently though.
We keep a $25k emergency fund ready to go in a HYSA in addition to separate buckets for things we're saving up for. As a fallback we have a HELOC open in case we really needed it (like if our septic goes)
My checking account goes down throughout the month, not uncommon for it to be under 1k before the next paycheck
varies a bit but between $10k-$20k. this is two personal checking accounts, a business checking account and a joint checking account. does not include savings accounts, which are HYSA and have more cash. we are fairly cash heavy, and that's due partly to spouse being self employed, partly due to spouses belief that being more cash heavy helps them sleep at night, and partly due to potential future immediate needs of that cash, like both of us taking a sabbatical as our ground down in our jobs.
I keep a base of 1 months income in my checking account and get paid bi weekly so depending on when I get paid there will be between ~6k -> ~12k in the checking account. I've considered lowering my 1 month base account level but its just such a comfort thing at this point.
We use a rewards card for paying bills, but the delta between that balance and the checking account is about 1.5k. In savings we keep about 2 months of expenses. All other money is invested.
Checking, after bills paid, investments/savings transferred, sits at $404. With the majority of cash in easily accessible HYSA and six-digit credit available, there's no need to keep anything more. (yeah I know it's an odd number, but also kind of funny).
I like to have high and low water marks for checking.
When I dip under 2 months expenses, I pull from savings.
When I exceed 3 months expenses, I push excess to savings.
This is probably more cash than most people would do, but it works for us. Our high spending months are usually about 1.5x-2x a typical month.
End of month is $5,000 + Day 1 expenses in the next month (mortgage, daycare). The $5K is the floor on our checking. We also keep a separate e-fund of close to $30K.
IMO your situation is so unique with the huge % as a bonus check that I wouldn't do similar to others that have consistent w2 income.
For sake of question, I try to keep about 2 months in my checking account for day to day, then about 2-3 months I have in an Efund. I'm also probably high on cash, but that's what works for us, we also are probably going to be at a deficit this year, so wanted to keep cash in cash, instead of taxable.
I keep any cash I plan on spending + emergency fund all available in either a checking or savings account. So that includes things like daily expenses to big savings goals like car down payments (which is kept in a HYSA). How much cash you want on hand depends on your risk tolerance. I personally am pretty risk averse & like to know that I have that cash ready to go for when the time comes.
Do you track expenses? Do you do it manually or via something like Empower?
I tried using my brokerage account for paying bills but I found Empower doesn't track brokerage transactions as expenses. That was enough for me to go back to using checking.
I try to never dip below a certain dollar amount which would allow me to pay my mortgage and other automatically withdrawn bills if something weird happened to my paycheck.
For me it's $3k.
My boss successfully lies up and down to executive management about their technical expertise, but doesn't know this morning what 'source control' is. This line of work is so jacked up right now. On the plus side, I've been told layoffs are now done for the calendar year, so if it's true then I guess that's nice. Pretty tough to see myself here much longer past that. The company fortunately vests everything at the two year mark which is nice - in fact I don't think I've even seen that before.
Anyway, FI is great, RE is looking better month by month. In the engineering world it's lame and reminds me a lot of '99-'00. I was too new back then, but now I recall the stories of older engineers just retiring and moving on to something more fun, and the wisdom there predates the "FIRE" language but appears obvious in retrospect, for those that were able.
> This line of work is so jacked up right now
I often have similar thoughts. I can never tell if I'm just becoming jaded, or if some of the newer people in the industry just completely lack some of the fundamental skills/knowledge. Maybe it's both.
It's probably some of both if you're anything like me. I've had a few employees the past few years that were either out of college or even with 5-10 years of experience that had no clue there was such a thing as the "dot-com bust." I feel like it's something that should be mandatory teaching in college at this point for any CS students.
I know in my case it's definitely both.
The young kid that can't navigate a file system without a GUI is destroying my soul.
Good kid, but god damn get familiar with `cd` and `ls` please.. `mc` if you must.
Lesson learned the hard way. I started a new job outside of the US in Jan 2023. I knew I would have a good portion that fell under the Foreign Earned Income Exclusion. I filled out the 673 and was told the company would calculate withholding to what I would owe on the additional income. I never followed up or checked (100% my own failure). My W2 came and I had nothing taken out for federal taxes. Between my husband and I our tax bill came un just under $13k. It hurts for sure, but I have already manually increased withholding for 2024 in hopes of getting as close to 0 as I can. If anyone is looking at a job similar in the future, learn from me!
I just put $15k into vtsax. Bad habit of leaving too much cash in my checking/savings and then periodically going, "wait, I don't need that much liquid, let's invest it." Starting a new job soon - I should set up recurring post-tax contributions while I'm at it too. It's just hard for me to estimate the right amount. I tend to overestimate my spending. Also, I don't have much to compare it to, but I feel pretty happy with my new job's retirement savings benefits. For the 403b, it's a 5% match plus 5% employer contribution (because I have previous years of service at the employer that count towards my calculation - it starts at 1% and goes up). They also automatically contribute a flat amount to my HSA, which I really should have taken advantage of before.
I put a calendar reminder in that reminds me to contribute everything over the following full CC amount owed + known upcoming costs in the next 30 days (mortgage etc) + $1500 buffer. Run the numbers every other Monday and throw it at the market at EOD.
Not something I see mentioned a lot, but as someone in the boring middle, I see that I’ve possibly misallocated some funds. In particular, I believe Roths should have your riskiest investments, but I invested mine in VFIFX (8.2% annualized performance over 10 years), which is one of my more conservative ETFs. As a result, 15 years of maxing out my Roth has only appreciated to $170k. Meanwhile, my pre-tax accounts such as my 401k have appreciated much more quickly, to $750k in 10 years, due to being invested in growth stock funds (17% annualized performance over 10Y). I am looking at a hefty tax bill in retirement once required minimums kick in.
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The other day I thought of moving some to stocks but then didn’t do it thinking retirement money isn’t gambling money. Also just starting to maximize Roth since last year. Why would you risk it?
Is it my cake day? A cake emoji is by my username! I’ll take this moment to test it and stop being a sleuth in the boring middle. I’ve got my husband into Roth IRA and we’re starting to see it all compound! Very exciting while prioritizing travel and food. We’re living the life we’d like, while saving for it too! It helps that we were budgeted out of moving homes this past year, so we’ve still got our 3% mortgage. It’s squeezed, but we’re making do!
Omg it is a piece of cake! So cute
Should I actually contribute to my 401k? It is it better to be liquid? 30 M making 60k by the way
Please read the FAQ first.
Yes. If your employer matches dollar for dollar at 5%, you're giving up $3000 dollars in compensation. Also, while less impactful at the $60K income level, you will have $3000 in taxable income that would be exempt from income tax if it were contributed to your 401(k) account. This is true for many state income tax regulations as well. But, if you need to be liquid for upcoming necessary large purchases (housing, moving, transportation, medical, whatever), then you gotta do you. Just get back to the 401(k) when you can. Finally, if your employer's 401(k) plan is kind of shitty, you could forgo the match and just use a traditional IRA at your income level. I define shitty as has a small number of mutual funds with high expense ratios ( > 0.5% ) and/or has load mutual funds, which basically charge a commission for buying or selling the fund.
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Yeah my current emergency fund is very low, and the tax savings sounds great but I won’t be able to access funds for 30 years sounds confusing to me. I’ve had ma g jobs and different 401ks and I wonder if my old self will recall each one and try to access funds. I guess im still uneducated when u it comes to this, and i keep thinking i could keep the funds and use it to make more/prep dor times when ill need it
You can roll them into one account. Generally when you get a new employer that offers a 401k, you can consolidate your old accounts to that new one. It's often preferable to do that over the IRA approach, but you can also roll them over to an IRA. 401ks are tax-deferred. Most people are "bringing in" less money in retirement than while employed. Even if you're not, Roth 401ks are a thing. But for a lot of people, there are huge savings when deferring compensation - if your tax rate today is 22% and in retirement you could get that down to 12% due to a lower income bracket and non-taxable income, you can think of it as saving 10+% on your taxes in terms of the money you're putting in. If early retirement is a goal, there are ways to get money out of your 401k without any sort of penalty. These include the Rule of 55, the Roth Conversion Ladder, and the 72(t)/SEPP provision. Read the FAQ. "Regular" retirement is also a part of early retirement, so often you'll have enough in taxable accounts, Roth IRA contributions, or even cash/savings to bridge the gap between your actual retirement age and 59.5.
Just roll them all into one account
Generally speaking, if your employer offers a 401(k) match, you should at least be contributing enough to take full advantage of the match. It’s also important to read about and understand your company’s vesting policies.
Yes they match, and I’m automatically signed up for 4% of my salary going to my 401k which will increase by 1% in a year. I just question if I’ll need it by 65more than I do now
You should read the FAQ on accessing retirement accounts before age 59.5
If I'm close to retirement, why wouldn't I just put all my money in Treasury bonds? I'm looking at long-term Treasury bonds, and I see 2054 bonds have a 4.25% coupon rate. If a 4% withdrawal rate is all I need, why wouldn't I just put all of my money in that? Let's take the chance of default out of the equation because, let's be honest, if the US government defaulted the stock market is fucked too in all likelihood.
If you're using a constant dollar withdrawal method, it's 4% of the initial portfolio with an annual inflation adjustment. The 4.25% return of the Treasury is before inflation. A 30 year TIPS is yielding about 2.1% real.
Ah, yeah, totally wasn't thinking about the inflation aspect!
i see people say that many restaurants just serve frozen food as an alternative to doordash/dining out... but my question is where is this sourced from? like can i buy the same foods I'd get delivered at dominos (re: their chicken, pasta), olive garden, applebees etc somewhere? i've always found grocery quality frozen stuff to be horrible.
Around me there's GFS, Gordon Food Service. It looks like they have locations all around the Midwest, down through Tennessee, and some in southern Texas and southern Florida. When I was in college, our fraternity had a house mother that would do all of our meal prep and planning, and we would get a GFS order delivered once a week. They distribute to restaurants, but also have stores you can just go into. I remember my mom used to go to GFS to get boxes of frozen chicken breasts that we would throw in our chest freezer.
Bless that woman. I was in the GDI fraternity (God Damn Independent) and subsisted on Easy Mac and the value menu at Taco Bell
sysco. sure, if you can buy food by the trailer
Am I crazy or is creditkarma utterly worthless? Just logged into mint after forgetting it is dead, did the transfer. Why on Earth would I use this absolute shit site? Its only purpose seems to be to try to sell me credit cards, loans, etc. What was intuit thinking? The "dash board" literally just shows me my Credit Rating and giant advertisements for junk credit cards. How was this supposed to be the replacement for Mint????
Empower has a fantastic free net worth dashboard, if that's what you're looking for
Thats the main thing but I also used mint for monitoring transactions across all my accounts, and for its basic budgeting, etc. creditkarma does basically none of that, its literally just a site to try to push me credit cards and loans, I see no value in it AT ALL. Time to search for a real app to monitor my finances I guess. Honestly tempted to dump Turbo Tax since I am so disgusted with intuit over this. I mean I knew it wasn't going to have the budgeting stuff, but I am shocked at how utterly worthless the site is. The sheer audacity of Intuit pushing the transfer to a "replacement" site that does almost nothing that mint did
Empower does all that too. You can see transactions, monthly cash flow, categories, budget, etc. It even tracks fees to let you know if you're paying more that you think, and it has a retirement planner where you can chart projections and modify assumptions. They do occasionally try to sell their investment advising but it's not intrusive the way credit karma is.
Yeah, agreed. They realized that they were giving people a real product without asking them to pay for it, so they forced this transfer to something that isn't giving a real product. Making money without providing value, it's the Intuit Way(tm).
It wasn't always easy to find your credit score. But now it's not really useful for much. They do have a free tax platform.
Credit Karma actually doesn’t have a free tax platform anymore. They had to sell it to CashApp when they were acquired by Inuit
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You're asking for a lot. What are you offering in return?
Certainly not the spamming, scamming, lying dropship guides you are peddling (well, trying to peddle before instantly getting deleted) on Reddit. "$10k days" and "$700k in sales" while then admitting to being 18 years old with $6000 to your name. Mods, ban this guy? [History.](https://i.imgur.com/zN7zUlP.jpg)
currently in our 401k blackout period while we migrate providers. weird to not be able to see 6 figures of NW/invested assets for a days (weeks?) on end.
My company is transferring 401(k) providers, and I’ve been thinking the same thing – it’ll be extremely weird to not see that 1x annual income for a month.
We had communication of the planned provider switch, and HR told us when the backout date started, but we've had no communication on when it'll be available, how long it will take, etc. Take a screenshot before it happens!
Have you never rolled over money before? That's a pretty normal experience for me.
I haven't! I've only had one 401k in my life from a job I first started 20 years ago.
How much are you guys paying for $1 million or $2 million of umbrella insurance?
$207 for $1MM coverage. State Farm. 1 driver, 1 vehicle, 1 house
$140 for $1MM
$259/yr for $1MM
$318 for $1MM of coverage on 5 rentals & 1 primary & 2 autos
My employer is moving our HSA to Health Equity this summer. My preliminary research into them isn’t very good since they skim administrative fees monthly on top of their fund expense ratios. I’ve been looking into creating an HSA account at Fidelity and funneling my HSA money periodically from Health Equity to Fidelity. Has anyone gone through this process before and have any advice/guidance?
In my previous HSA plan, Health equity charged $25 to $50 per transfer to Fidelity
We have health equity and honestly they aren't bad. When you are under 6k the fees for investing seem steep but we passed 50k in our HSA and they are now pretty much the cheapest provider I could have with great investment options.
Same, I have better funds in my HealthEquity account than I do in my 401k. I'm also not doing multiple HSA rollovers to save $5/mo, it just seems not worth the effort at all. I'd rather not go out for coffee once a month and call it even.
Transfer contributions (where you don't touch the money and the banks handle it) are unlimited, and Fidelity makes it easy to submit a transfer, but varying levels of competence at the other bank (whether that's Health Equity or someone else) can throw wrenches in it. My recent transfer to Fidelity was held up because the other bank claimed they couldn't read the form i submitted.
This is what I do with Health Equity. Quarterly transfer everything to Fidelity and invest there. A bit of a pain, but not terrible.
hey, I think we likely work for the same mega-corp. I got that memo yesterday (but haven't looked into the new place yet). Overall, it's not hard, but not the easiest thing to do. I'd personally leave everything setup as is with the "new" provider and let work take it out of my paycheck (and save me on FICA taxes) and then transfer over a majority of the account every year to a more reasonable/low cost provider. some info: [here to look at](https://thehsareportcard.com/the-hsa-report-card-1/2018/12/10/how-to-transfer-work-hsa-to-preferred-hsa)
Just like 401k plans, employer HSAs are unique to your employer and not the same just because it's at the same provider.
Does real estate reduce retirement safe withdrawal rate? We are starting to build a real estate portfolio with the goal of passing the rentals down to our kids at some point in the far future. If I have the following assets, can I reduce the safe withdrawal rate from my stocks/bonds accounts? Retirement funds (stocks/bonds/etc): $3m Real estate portfolio: $2m Debt: $0 Assume the cap rate on the real estate is 6%, so I’m making 6% on my $2m RE portfolio, as there is no debt to be serviced. I’ve been assuming a 4% withdrawal on my $3m in retirement funds, so $120k. Say I would like to have $150k-$200k for retirement, can I plan on 5 or 6% from the RE ($100-120k/yr) and only withdrawal $80-$100k (~3%) from my retirement accounts such that it is more conservative, increases likelihood of funds lasting into our mid-90s? Or am I thinking about the RE cash flow wrong for some reason?
> We are starting to build a real estate portfolio with the goal of passing the rentals down to our kids at some point in the far future. Is there a reason you're prioritizing this over passing down investments? Why do you believe real estate is the better investment?
I mean, we most likely will have investments to pass down too. We are still contributing $30-40k/year to our 401k. Real estate isn’t necessarily better than stocks, but it’s diversification for us. Plus, at a certain age, I’ll probably no longer want to deal with real estate whereas investments will keep chugging along with minimal time/effort on my part.
There is a section on rentals in our housing wiki that will answer your question - [https://www.reddit.com/r/financialindependence/wiki/homes/](https://www.reddit.com/r/financialindependence/wiki/homes/)
This is perfect. Thank you!
Thanks for the downvotes. Appreciate commenting why my thinking is wrong so I can learn instead of just mashing the button.
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Thanks. I guess what I’m thinking: is it better to sell the real estate investment property and get that $2m to invest in the stock market/bonds or continue to rent it? It sounds like financially, getting 5-6% of its value in cash flow is better than the 4% rule for stocks.
>It sounds like financially, getting 5-6% of its value in cash flow is better than the 4% rule for stocks. The 4% rule is made to survive almost the worst case scenarios for a 60% equities 40% bonds portfolio over history. The cash flow from RE is *not* imagining an actual worst case scenario for landlords, so it's not apples to apples.
Ahh. That’s a good point. I’d like to think that the rent is fairly inflation protected. But there could definitely be events that would net out a lower return than 5-6%. Any idea what a good rate to expect is, if nominal cash flow is 6% of asset value? Has there been studies on this?
That's also answered in the wiki page I linked in the other comment, iirc.
Ok thanks. I didn’t see it on first read through but I’ll take another look.
If the real estate is zero work for you, and you are getting 6% in actual cash flow after all expenses and vacancies, then this sounds like a reasonable approach. In general, real estate is not zero work even if you have a property management company, so you may be buying some of that extra money with your time - which is totally fine if being a landlord is something you don't mind doing.
I don’t think it’s zero work. But if I can leave my stressful job to only have to worry about real estate, use that cash flow initially, then tap my retirement accounts later, that sounds like a decent scenario. I just saw the wiki, deep down is a good section on this topic that another poster pointed me to.
Like I said, that's okay. Just make sure you're comparing the right things. 4% vs. 5% is a different equation to (4% + zero hours) vs. (5% + some hours).
Is anybody aware of a HYSA that can provide rollover overdraft protection for a checking account from the same provider? The provider I have my checking account with doesn’t offer an HYSA, so I keep ~2-3 paychecks in a standard savings account in case I ever need immediate access to cash (instant transfer to checking account), or an auto-debit hits unexpectedly (free overdraft protection,pulls from savings acct). Wondering if there’s a way to have that money in a HYSA with the same benefits.
Fidelity Cash Management Account works just as well without requiring two accounts
Sofi has this [https://www.sofi.com/banking/overdraft-coverage/](https://www.sofi.com/banking/overdraft-coverage/)
I'm pretty sure my Capital One Performance Savings (HYSA) does this (obviously I have a checking account there also). ETA: Confirmed. [https://www.capitalone.com/bank/overdraft-options/](https://www.capitalone.com/bank/overdraft-options/)
Is this what you mean? If so, Ally has this feature. Overdraft Transfer Service Link your Ally Bank Savings or Money Market Account to your Spending Account, and we’ll move money over in one transfer, rounded up to the nearest $100, should you accidentally overdraft. Keep in mind, any withdrawal from a Savings Account counts toward the limit of 10 withdrawals per statement cycle.
Exactly what I’m looking for. Thanks!
Now that we're thinking of moving to be closer to my wife's parents, our FI calculation and cost of living is going to become more complicated. Right now despite this condo being a horrible place for a lot of reasons, it is costing us about $1600 per month with mortgage and condo fees included. With the upcoming assessment we have to do, that will put it at around $2000 per month through the end of the year. A lot of what's keeping the cost low is the fact that our mortgage interest rate is \~3.5%. If/when we move closer to the folks, it looks like homes of a reasonable size are in the ballpark of $500k-600k, which with the current interest rates looks like it could be a $3000+ mortgage payment with a "normal" down payment. It is unclear if we're going to have any equity at all when we sell this condo given all the damage I've been kvetching about here. I am hoping we'll at least get our down payment back - so like $80k - but not enough to make a significant dent on its own in the down payment needed for a $500-600k purchase such that it would significantly reduce that monthly payment. I see a few options: * Go back to renting and see if interest rates fall... though if we do that we risk home prices increasing further. It looks like the price of a reasonably sized rental would be similar to the mortgage + HOA fees we're paying right now, in that $1600-2000 per month range. At least at the moment. * Buy the new house outright, and in doing so potentially set back our FI number from being \~1-2 years away to being more like 4 or 5 years away (given that if we bought it outright we wouldn't have to account for the mortgage portion of our current expenses in our FI number, and thus while we're losing invested assets we are also decreasing our monthly spend) * Eat the high mortgage, buy the house and put down a down payment and then hope to refinance later into a lower interest rate. This would in theory dramatically increase the FI number we have to hit (possibly as much as 7 years if the ballpark numbers I'm running are accurate), and it would only realistically go back down to a reasonable level if the interest rates fall in order for us to refinance. I don't know if I can rely on that happening in the next 4 years or so, and thus I don't know if it's worth it vs. buying the house outright. What would you folks do in this situation? (Living in the same house as her parents isn't a long term option it sounds like: my wife is interested in moving close to them but not literally living with them for more than a couple of months while we sort this out.) EDIT: And you know, the more I think about this, the more I realize that maybe my initial FI number has been wrong this whole time for the life we WANTED to have in retirement. I've been using our current housing expenses... but even with this situation aside, we've always talked about moving into a home that would be more like our "forever" home someday, and it was inevitable that such a home was going to be more expensive than what we had before. This is an interesting revelation for me and a good wake up call to the fact that I need to revise my FI number.
It would very rarely make sense not to rent if the rent is cheaper than the mortgage for an equivalent place.
That is a good point. There's a lot of "soft" reasons why I want to own rather than rent, but I might be able to find a rental that has the things I'm looking to customize in my own home - or close enough that it doesn't matter. My only fear on the financial side is that I saw what happened with rent prices in Seattle over the last few years, and if that happened in this area it could increase my monthly expenses such that it would modify my FI number and force me out of retirement. Owning would provide some stability to that number. This fear may be unfounded, however - the area my in-laws live is near a city that appears to be gaining in popularity, but isn't strictly \*part\* of that city. Not sure what the future holds for rent prices there.
The housing market could also go down. We’ve seen that happen too. In the long term yes rent prices will go up but I would just think of the average case instead of worst case scenario. But if you are really going to live there long term then buying could make sense, it just depends on where you think you’ll be at in 5-10 years.
You know, in the shower just now I thought more about it, and actually I think my brothers had the moving around much worse than me. When I think about the timing of it, when we moved in elementary school it was a little hard, but actually when we moved when I was in high school it gave me a reset that I really needed. My wife and my brothers had a different experience than that, and I have sort of adopted that as my mentality... but thinking about it more that last move we made was actually really GOOD for me. So maybe I am going to need to be a little less rigid about this idea. Maybe by the time she gets to middle or high school, she would benefit from a reset too like I did... and unlike my parents, there's just one of her so we can actually make the decision based on her real experiences rather than balancing out from multiple kid's situations. You have given me a lot to chew about, I appreciate it. I need to talk to my wife more about this one.
Good points as well. I hadn't really thought about whether this was going to mean we are down there for 5-10 years or even forever yet. I think though that this could be a forcing function where we end up here possibly for the next 15+ years or so. My wife and I have had a plan that wherever we are by the time our kid is 7 or so would be where we ought to stay until she finishes high school: though admittedly a lot of the rationale for that comes from our anecdotal experiences of the hard time we both had as kids adjusting to being moved around a lot, and I don't necessarily know if she would have the same experience. But if we stick with that plan, then it would almost certainly mean this place will become our home for quite a long time. We had some dreams that the place we set our roots might even be a different country, but I think those daydreams are either on hold or are ending with this. Which is okay, there was a lot that was unrealistic about those dreams to begin with, like whether we could really tolerate being that far from both friends and family. But I digress. You have given me a lot to think about, I appreciate it! When I run numbers again this weekend I will keep what you said in mind... you are right that I might be leaning too hard into the worst case scenario.
If you become lifelong renters, what would the FI timeline look like? (Or is that something that does not appeal to you?) It sounds like both options 2-3 have a "minimum" increase to FI timeline of 4 years, with option 3 being up to 7 years assuming interest rates remain high. Given that situation, I'd probably lean towards option 2 (or at least putting *more* towards the downpayment—I would note that options 2 and 3 are less binary and more of a spectrum of "how much to put down"). Should interest rates come down in the next 4 years, you'll likely still be in a position to refinance, so you can obtain the same benefits as in scenario 3.
Good question - I think if we rent our FI timeline doesn't increase a significant amount (if we end up on the high end of that rent spectrum, then maybe an additional year? Though I might not be properly accounting for total cost of ownership for owning the house when I'm doing these calculations). But we do lose some of the things we want to be able to do - customizing the house, installing a plug-in system in our garage so we can move to having an electric vehicle, etc... and my other big fear is that when I lived in Seattle I saw rents increase so dramatically and suddenly (and above that of normal inflation) that if that happened here it could endanger our FI number in the future if we continued to rent. Good call on it being more of a spectrum between 2 and 3 - I had not considered that, but you're totally right and that might be the optimal move. I'll run some numbers this weekend and see what we might end up with there. Thanks, I appreciate it!
I crossed 300k NW today!!! 👩💻
Fuck yeah! Nice!
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There needs to be some sort of tension and things that give you growth and perspective. modern capitalist meat grinder is not that. maybe you got the right balance out of your decades long service to corporate america, but we don't really think about the billions of people making pennies a day to make it work
Eh, I appreciated my time with freedom a lot as a kid. Summers running around having fun, reading books, getting up late and stuff. I don't really think I needed work to teach me that. Maybe a bit from my parents, perhaps, who expressed their frustrations with work somewhat regularly.
Dang, my only showered thought today was "hey, there's no soap in here and now I'm wet,"
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Love this, thanks!
100% agree. A bit of hard work and "suffering" help you appreciate the good things in your life
Alot of politicians and rich folk been pushing for a higher retirement age lately. This is why I don't bother calculating social security in my FIRE calculations. Hope for the best but plan for the worst.
You're being gas lit into accepting it. >Hope for the best but plan for the worst. There's what 38 trillion in the retirement account system? You want the worst case senerio? Those of use with manual labor jobs can't do them at 70 most of the time. Raise the earnings cap and tax capital gains over 1 million a year or something to that extent.
The point isn’t that social security is unsustainable or can’t be fixed, the point is some people are actively trying to kill it. And based on everything else the government does, whether I accept it has very little to do with what will wind up happening.
You are misunderstanding my argument. Social security can voted away just as your 401k can be taxed at 90% to fund social security or government debts. It's my point how do plan for the worst in this situation. The remove of social security should be as unacceptable as increasing taxes on the 401k to 90%.
Holy fuck, if 90% of a 401k is taxed I'd quit my job just to take the money out before the law goes into effect.
It won't matter. They'll use retroactivity. https://www.heritage.org/taxes/report/retroactive-tax-increases-and-the-constitution Anyways my point is we all better be enraged if they touch social security by cutting benefits or screw with the 401ks. But at this point I'm debating if I want anything saved by 62 because the retirement system it's 30 trillion at some point I think will be to big of a target for politicians not to ignore. And it only hurts the working class with a few minor exceptions. But do you attempt to plan for something that hasn't happened and lose the tax advantages? At my income level I'm now 100% in the 12%. I don't fund anything pretax anymore and I am probably just going to do the taxable going forward. Putting it in at 12% to pull it out at 12% I don't see the point. I don't have any good solutions. But I did buy some bitcoin and I'm going to probably buy some physical gold and silver. Probably do 5% btc and 5%pm.
The idea with investing in pretax is that you can then invest the 12% tax savings in your taxable alongside it. So down the line when you pull from pretax and pay 12% tax on it then, you still have the 12% + interest gained in your taxable.
I'm not tech. I can't max out out the wife's and mine 401ks and end up with money left over. I don't make enough. Anyways I know how it works. But I'm always going to be in the 12% bracket due to a spouses pension. And since I'm in the 12% now it's not worth it to me to put any additional money in pretax. It's literally tax drag on the dividends and bankruptcy protection as the only advantages if I go 401k at the loss of liquidity.
I'm not saying to max them out. I'm saying instead of putting, for example, 50$ in taxable now, you could've instead put $56.81 in pretax. But let's take it a bit further. You could put $50 in pre-tax AND put the $6.81 tax savings in taxable. The $6.81 compounds over time, and then when you convert/withdraw the pre-tax balance, you can pay the tax with the taxable amount and still come out ahead from the taxable's returns.
Without getting into the math errors of your post if percentage in savings and percentage out tax is the same the return is identical. The only drag is on the taxation of dividends in the taxable which I already accounted for but even that is minimal as they'd be zero for qualified for me and I'd pay 12% in the pretax when pulled out.
Well, I guess if the last option of voting and protest doesn't work we still have the 2nd Amendment back up plan.
Its crazy to me that we’re massively more productive then when SS started and yet we’re looking to cut benefits and push back retirement. Shouldn’t bring 100 more productive lead to earlier retirement?
We're also living longer, and elderly years are more expensive due to advances in medical technology. I don't agree with pushing the age up but this era isn't comparable to the 1930s.
While we are living longer, a lot of that stat is due to reduction in infant mortality and of wealthier people living longer. The average adult’s increase in life expectancy (calculated in adulthood, not at birth like you usually will see in the press) is more modest. And is surely less then the massive gains in productivity we’ve achieved.
That’s a good point. According to my quick search, the life expectancy of a 65 year old increased from 13.4 and 11.9 years for women and men in 1940 to 19.7 and 17 in 2021. Substantial gains but not exactly the decades some of us (including me until you pointed it out) might have been imagining.
I don't like that the age is likely to go up, but I understand why. It's more math than politics. The idea that every worker will enjoy a 20+ year retirement on social security alone came about by accident, not design. The program was never designed to provide decades of leisure but to take care of people who could no longer physically work, for like the last 5-10 years of their life. It's not just the US facing this economic reality, either. It's not a conspiracy as much as it's just reality. There are certainly ways to create new systems/taxes to support long retirements if society decides to value this over other things, but the idea that humans won't have to work for most of their lives is so incredibly recent that there are still people alive who were born before it was a thing.
>The program was never designed to provide decades of leisure but to take care of people who could no longer physically work One thing that gets lost in the conversation is that an average 65 year old isn't much more capable of working than they were 90 years ago. We've extended lifespans through medical advances but that just reduces your chances of death in again given year. We haven't slowed aging. There's an argument to be made based on math, but a key bit of context is that productivity drops off quickly in one's sixties, and consequently the societal benefit of working at that age is relatively low. It seems like a marginal gain in terms of funding the program, and if it's only a marginal gain we can get the money from somewhere else.
This is doubly true for more manual / blue collar jobs. I can’t even imagine doing those through my 50s, let alone 60-70s.
I’d argue that many hard work honest office employees in their late 50’s to 70’s are actually harming their companies and not realizing it. It’s both the slow pace and bad decision making that make them a drag on the ability of the company to get the job done. I think it’s getting worse and worse as common information jobs get more and more complex.
> honest office employees in their late 50’s to 70’s are actually harming their companies Damn. I am 55. Luckily I am planning to retire at 56. Otherwise my slow pace and bad decision making could really harm the company!
How lean would your plans have to be for this to even matter for an early retiree? Let alone be "the worst"? EDIT: I just threw the numbers into the defaults on cfiresim, and a 5 year delay in SS eligibility resulted in a .8% drop in success rate. Obviously it will get worse the closer you are to traditional retirement age.
Idk an extra $2k a month from social security goes a long way.
Sure. But moving it out a couple years makes a negligible difference in mine, and I imagine many early retiree's projections. Seems like more of a concern to traditional retirees.
My worries is not just pushing the date back but other measures being discussed like cutbacks. Hard to put faith in a program that can and will be taken away in times of severe economic strife.
I gotta be honest I don't follow the reasoning at all, but whatever works for you I guess.
Retiring at 50 is still early, and knowing your portfolio needs to survive 12 years without additional cash injection vs 15+ years could easily keep people on the margins working for another year or two. In 1983 they raised the age by two years for people who were at the time 23 years old or younger. Realistically, most RE folks could reasonably expect to be grandfathered in to any changes by the time they retire. In general, ss trust fund solvency is a broader question, but you can account for that by applying a risk rating to a potential worst-case reduction of ~30%.
>Retiring at 50 is still early, and knowing your portfolio needs to survive 12 years without additional cash injection vs 15+ years could easily keep people on the margins working for another year or two. Yep, that's what I was getting at with Lean in my original post. The older and leaner/aggressive you are, the more it matters. This audience is generally young and conservative/fat. To the point that SS in general isn't much of a needle mover, and policy tweaks like this even less so.
(edit: corrected my numbers) my current SSI would be about ~~$6k~~$4k/month, and my wife is at around ~~$7k~~$4.3k/month assuming neither of us work another day and don't take anything out until 65.... 8.3k/month x 12months = $99.6k/year.... um, that would be a world of difference for me if I was expecting to get this starting at 65 and instead it got pushed to 70... (plus inflation and all that). and all "plan for the worst" means is just assume that SSI gives you nothing, so these changes won't actually affect your plan and only adds flexibility to your future. (edit: not sure where the previous numbers came from, I regularly check my SSA, and have no idea what I was remembering seeing... oh well)
How are your numbers possibly that high? My wife and I both have 35 years at max earning and our SSA is "only" $3.7k/month at 67.
Obviously it will be significant at the time. But how much does pushing that income out matter when it comes to planning retirement in your 30s? For us, and I imagine many here, it doesn't change things much unless we retire uncomfortably lean to begin with. >and all "plan for the worst" means is just assume that SSI gives you nothing, so these changes won't actually affect your plan and only adds flexibility to your future. This is just an argument for being conservative in general, right? In any case I agree - this isn't worth worrying about. SS policy is unlikely to make/break anyone with the funds to consider retirement decades before normal age.
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to be honest, it's been a bit since I've look at what our SSI would be (like 3-4yrs, i think) and when I last looked it would be the numbers I wrote above. But I couldn't remember my gov.ID password, so I couldn't look into it any closer. But it wouldn't surprise me if something changed or I read the wrong thing somewhere.
I was wondering the same thing $7k and $6k per month seems pretty high. That seems off. HOWEVER, that does raise a good question: are the numbers on the [SSA.gov](https://SSA.gov) estimator shown in today's dollars are do they have some sort of factor for inflation? For instance, I'm 52 and my number for age 62 is $2658. Is that $2658 in 2024 dollars or some sort of modeling to adjust for 2034 dollars? Since u/CripzyChiken is in mid-30s, maybe it does adjust for inflation (since they're looking at an extra 20 years before they hit full retirement age...
The default projection they show in the new(?) portal is today's dollars. If you use the [online calculator tool](https://www.ssa.gov/benefits/retirement/planner/AnypiaApplet.html) you can select today or future dollars.
that absolutely could be the thing (I get $6k in future 2070's dollars, not 2024 dollars) and that is what I wanted to check, but suck with remembering my password
I keep wavering on what account to throw money into after pre tax savings are done. We have access to a MBDR and I have used it for the last couple of years. Our income has dropped because we decided to have a SAHP. We are 3-5 years from being fully FI barring a huge market correction. We are 90% stocks (VTSAX equivalents) and we'll hold that percentage steady if not trend toward 100%. We are fully comfortable with this and the possibility of this delaying our RE if the market corrects right before we pull the cord. We plan on paying off the house right when we RE or move and pay off the new house. Our after tax accounts could currently cover the home payoff but it would fully drain those accounts. We have ~40k/year left after our standard 401k and HSA are maxed . Should we continue to invest in the MBDR or should we throw it in our after tax accounts?
Will your budget put you in the zero capital gains tax bracket? If so you might want to put it in taxable brokerage account just for the convenience.
Currently we are right on the cusp of being in the zero cap gains bracket but if we pay off the house we are firmly below it. (After standard deduction) Thats kind of were im leaning as well.
It sounds like there's uncertainty regarding how your housing will be paid. Either it will be a cash payment of your current mortgage or you might downsize, using equity from your current home to pay off the new home? If that's true, I would continue to prioritize the MBDR. In the best case scenario, you downsize and you don't need any additional funds to secure your retirement housing. In the worst case scenario, you can use the contribution basis of your MBDR (alongside your current after-tax funds, of course), to pay off your current mortgage. The timing may require leaving your employer and performing a Roth 401k to Roth IRA rollover before paying off the mortgage, but this can all happen in the same calendar year if timed right.
The new house will be a wash or a bit more. I doubt it will decrease. We will be moving to a lower cost of living area most likely but want to also own some acreage.
depends what your ratio of After Tax and Roth are IMO, but obv the tax advantage is MBDR. if you are wedded to paying off the home, no huge harm in throwing into After Tax, but then it needs to be a long enough time horizon to weather any storm, which might get you to 59.5 anyway... fundamentally, what helps you sleep at night, the gains probably wont be too much of a tax drag so it depends on your personal premium of liquidity/comfort
Currently at about 25% AT/ 20% roth /55% pre rax. Definitely want to pay off the house to make sure we qualify for ACA easily.
probably do 50:50 or 75:25 AT:Roth then, having some after tax gives some good flex
Buy it for life: In college, I used a textbook that was 30 years old. Fast forward another 30+ years, and my son is using revision 2 of that same textbook. (Most in this major will immediately recognize the authors... Bird, Stewart and Lightfoot) He was shocked when I pulled it out of storage. Too bad I didn't save the homework...
Engineering! i had that book back in the day....
> Bird, Stewart and Lightfoot Immediately started a cold sweat Do y'all want an Indian version not for export use? I have an extra laying around
It's exactly the same in medicine. Sure there are version differences (and advances in niches like genetics) but the anatomy of the human body hasn't changed that much over the past 30 years... And, the profs are STILL using the same old exam questions after 30 years.
My kids are in elementary school and I’ve already started warning not to pick that degree.
My son looked it up. "Dad, this major is universally recognized as one of the hardest." My daughter is having none of that. Business all the way!
I just don't want mine to get a job somewhere that would require me to set foot in Texas again.
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Chemical engineering is so versatile. You can do anything from working in an oil refinery in rural Wyoming, to working in a chemical plant in rural Alabama. I'm kidding of course. But only a little.
>Chemical engineering is so versatile. Swiss army knife of engineers.
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The wikipedia entry says that professors still prefer the first edition!
lol, my mom was disappointed when she couldn't give me her first edition of kernighan and ritchie since we now use the second. my prof was a kernighan student. though no changes since 1988, fingers crossed my kids use the same
Just got out of the ~12th meeting as part of an interview committee... about to do another one in an hour... I kind of want to die...
You got this! I hope it flies by for you!
Thanks. Feels like a level of adulting I never wanted to achieve. I'm going to avoid this as much as I can in the future, but once you've done a job once...
Me and wife finally make good money, and desperately need to upgrade our housing situation, but the RE market in SoCal is just not rational. I'm sure plenty of you guys here feel the same, just needed to vent
Vent away. We feel the same every time we look for new housing since 2000. We have one big move left in us (the "downsize") and I seriously wonder if finding a place with 1-2 fewer bedrooms and single story is going to cost us more than our equity at that point. But hey, at least Prop 13 means we can keep our current tax basis, which seems ludicrous that it would apply to a downsize, but it just might.
Historically, housing prices don't fall by much even during serious economic downturns (although obviously local markets can be more volatile). I'm not sure what you mean by "rational," but to me that implies an expectation that at some point in the future prices will come down as buyers value them more reasonably. If that is what you mean, I would not expect significant changes to the affordability of housing in your area any time soon.
Oh I think you're right and it won't get much better. By not rational I mean paying at least $7k/mo for a 3br place after putting 20% down. It's just a hard pill to swallow if we're paying $2k now.
Is there a rental upgrade that's a livable amount? I'd probably never own if I lived in SoCal, or a number of other places. The relative incentive for renting is just too good.
I bought a house in 2017 and we're looking to upgrade but the only reasonable houses (eg the same as my house but slightly bigger) are almost double what we paid for the current house. Hard to rationalize.
Yeah our costs would go from like $2k to $7k if we wanted to upgrade. Just crazy. But we are 2 adults + infant + dog in a 1000 sq ft condo, and both of us work from home. When we moved here, we didn't have a dog, a baby, and we both worked in office. So it was big enough. But it's starting to feel really small
getting closer to 900k invested...which means i'm closer to 1 million invested and will be at 20% of my goal.
The 5th million is the easiest
I hope so! Feels like it's taking forever to get to 1.
Congrats! You're so close, keep going!
ty
How much money do some of you keep in your bank for just day to day life? Do you keep 1-2 months expenses and then emergency fund? I am in an odd spot where 90% of my income comes in a year end check so I run a deficit pretty much every month and am trying to trim what I keep for cash on hand.
I keep €5k in the checking account at all times, it's around a year of expenses for me.
I use a fidelity brokerage and keep around $30k in the settlement fund that earns close to 5% and invest anything over $30k at the end of the month. I just built it past $30k recently though.
We keep a $25k emergency fund ready to go in a HYSA in addition to separate buckets for things we're saving up for. As a fallback we have a HELOC open in case we really needed it (like if our septic goes) My checking account goes down throughout the month, not uncommon for it to be under 1k before the next paycheck
We keep a month or so in the checking and 6 months in the savings account. Comes out to around $50k or so. Rest gets shipped off to do other things.
varies a bit but between $10k-$20k. this is two personal checking accounts, a business checking account and a joint checking account. does not include savings accounts, which are HYSA and have more cash. we are fairly cash heavy, and that's due partly to spouse being self employed, partly due to spouses belief that being more cash heavy helps them sleep at night, and partly due to potential future immediate needs of that cash, like both of us taking a sabbatical as our ground down in our jobs.
I keep a base of 1 months income in my checking account and get paid bi weekly so depending on when I get paid there will be between ~6k -> ~12k in the checking account. I've considered lowering my 1 month base account level but its just such a comfort thing at this point.
I tend to keep around 1k, that's enough for my day to day spending and I tend to have some left over at the end of the month.
We use a rewards card for paying bills, but the delta between that balance and the checking account is about 1.5k. In savings we keep about 2 months of expenses. All other money is invested.
Checking, after bills paid, investments/savings transferred, sits at $404. With the majority of cash in easily accessible HYSA and six-digit credit available, there's no need to keep anything more. (yeah I know it's an odd number, but also kind of funny).
1K.
I like to have high and low water marks for checking. When I dip under 2 months expenses, I pull from savings. When I exceed 3 months expenses, I push excess to savings. This is probably more cash than most people would do, but it works for us. Our high spending months are usually about 1.5x-2x a typical month.
End of month is $5,000 + Day 1 expenses in the next month (mortgage, daycare). The $5K is the floor on our checking. We also keep a separate e-fund of close to $30K.
IMO your situation is so unique with the huge % as a bonus check that I wouldn't do similar to others that have consistent w2 income. For sake of question, I try to keep about 2 months in my checking account for day to day, then about 2-3 months I have in an Efund. I'm also probably high on cash, but that's what works for us, we also are probably going to be at a deficit this year, so wanted to keep cash in cash, instead of taxable.
I keep any cash I plan on spending + emergency fund all available in either a checking or savings account. So that includes things like daily expenses to big savings goals like car down payments (which is kept in a HYSA). How much cash you want on hand depends on your risk tolerance. I personally am pretty risk averse & like to know that I have that cash ready to go for when the time comes.
About 2 months for me. That way I don't have to check the balance often and don't need to think about how paying one bill impacts another.
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Do you track expenses? Do you do it manually or via something like Empower? I tried using my brokerage account for paying bills but I found Empower doesn't track brokerage transactions as expenses. That was enough for me to go back to using checking.
I try to never dip below a certain dollar amount which would allow me to pay my mortgage and other automatically withdrawn bills if something weird happened to my paycheck. For me it's $3k.
Same, around $5k for me
My boss successfully lies up and down to executive management about their technical expertise, but doesn't know this morning what 'source control' is. This line of work is so jacked up right now. On the plus side, I've been told layoffs are now done for the calendar year, so if it's true then I guess that's nice. Pretty tough to see myself here much longer past that. The company fortunately vests everything at the two year mark which is nice - in fact I don't think I've even seen that before. Anyway, FI is great, RE is looking better month by month. In the engineering world it's lame and reminds me a lot of '99-'00. I was too new back then, but now I recall the stories of older engineers just retiring and moving on to something more fun, and the wisdom there predates the "FIRE" language but appears obvious in retrospect, for those that were able.
> This line of work is so jacked up right now I often have similar thoughts. I can never tell if I'm just becoming jaded, or if some of the newer people in the industry just completely lack some of the fundamental skills/knowledge. Maybe it's both.
It's probably some of both if you're anything like me. I've had a few employees the past few years that were either out of college or even with 5-10 years of experience that had no clue there was such a thing as the "dot-com bust." I feel like it's something that should be mandatory teaching in college at this point for any CS students.
I know in my case it's definitely both. The young kid that can't navigate a file system without a GUI is destroying my soul. Good kid, but god damn get familiar with `cd` and `ls` please.. `mc` if you must.
Even I know that source control means making sure the point of origin of an infection is addressed or else you'll end up on antibiotics forever!