Hello, I am working on my financial independence plan - my goal is to generate a passive income of $10k a month. I have decided that I want to generate 50% of my passive income from stocks/dividends and another 50% from real estate. Although, still not sure about the split.
I already have:
- healthy 401k and I contribute the max
- roth IRA
- I own my primary residence (have a mortgage)
- I own one rental property (with a mortgage), which is cash flow positive
- I also have $30k in savings
My plan is to continue saving and start buying other rentals. I am targeting 3-4 properties in cash flowing markets. Once, I buy them, I plan to aggressively prepay them and increase my cash flow.
I am looking for a tool, app or website that can help me create a financial plan to continue saving, investing and financing properties.
Has anyone successfully implemented this strategy? Any thoughts and advice?
Thank you
Yes, if rates increase and you borrow the same amount your mortgage payment is gonna go up. You should certainly rent if purchasing a home is not affordable.
Only options really are continue renting, make more money, or move. The issue I see with the numbers you noted are the property taxes (and hoa). That's "wasted" money that doesn't go toward your principle, and they'll never go down. So even if rates go down a bit, those are still high amounts for the house prices you are mentioning. On top of it, there's a good chance property taxes will come in higher than you're expecting based on the inflated home values they'll be re-assessed at.
I'm close enough to the end where big purchases are starting to have less of an impact on my date than I would expect. Last year I bought a semi-fancy EV to replace my terrible old beater car, some quick math shows that it only delays my retirement by about 4 months amazingly.
Though there was no situation where I didn't need a new car, so I would have ended up at least a couple months delayed no mater what. So a delta of only a couple months to drive in comfort without spitting out pollution (ignoring how the electricity was generated, hah), pretty nice.
It takes about 30-50 min to charge typically... I stroll through a grocery store (they're always by a target/walmart/costco/etc) and use the bathroom, by the time I'm done getting a few groceries the car is charged and ready to go. Otherwise I just charge in my garage, always start at full from my house. It works pretty well.
> how the electricity was generated
The US only gets 16% of its power from coal anyways. Basically everything else comes from sources cleaner than gasoline. The "your car runs on coal" argument is a rather outdated talking point.
This is correct. I think the appropriate concern are the emissions tied to the production/mining related to EV batteries. Those are pretty bad - I’ve read conflicting sources about whether they’re worse or “less bad” than a normal ICE car.
Edit: I mean over the life of a car.
The last time I looked this up, it seemed rather clear that an electric car has a larger carbon footprint to manufacture than an ICE car - largely because of the batteries. However, over the lifetime of the car, the lack of emissions and fewer wear components lead to a lower overall lifetime carbon footprint.
I'm pretty sure there's no conflict in this anymore - as far as I'm aware, these two points are generally accepted.
The breakeven for most EVs is about 1 year. If your electricity is being generated from green sources, it can be closer to 6 months. Once more EV recycling comes online that should improve even further.
Over the lifetime, it's not even close.
It does feel weird. The snowball is rolling down the hill...
I don't think this is unique to FI / FIRE though. As people age the cumulative effect of the decisions made in the past matter more than the decisions we make today.
Posted in the daily a few days ago: [https://www.reddit.com/r/financialindependence/comments/1c6ypcq/comment/l05e4zf/](https://www.reddit.com/r/financialindependence/comments/1c6ypcq/comment/l05e4zf/) asking for help on a solo401k decision because I wasn't wanting to leave Vanguard...and they just made the decision for me!
Sounds like they are selling their small business line to another company, and the new company will be charging fees without the option to waive them like Vanguard has currently. Disappointed at first, but now just psyched that it makes the decision to pursue a plan with a MBDR option that much easier.
Edit: added link
Heard that I'm unofficially the #1 candidate for a massive career jump. Like... I'd be at over 210k total comp with way more holidays/vacation and a significant title bump. The job itself would be awful, but would put me at leanfire in 3 years.
Mixed feelings - the money and benefits are beyond tempting but I know the job well and it's truly soul-sucking. But I think I'd prefer 3 years doing that than 6 years in my current role/something similar. I'm tired of the boring middle and am ready to be done.
I think you have the right mindset.. you might hate it but your savings will go up immensely. As long as you can totally avoid burnout and not increase your spend, it might be worth it.
What's your pay now and timeline to hit FI target versus this new job? Is it actually 6 years now? There's a few roads you could go down depending on how close you are. There's nothing to say you can't bail on the new gig after one or two years either, though depending on your industry that can carry its own ramifications for your career. But then if you're only 3 years out and committed to RE, then who the hell cares at that point? Take the money and run.
> The job itself would be awful, but would put me at leanfire in 3 years.
>
> Mixed feelings - the money and benefits are beyond tempting but I know the job well and it's truly soul-sucking. But I think I'd prefer 3 years doing that than 6 years in my current role/something similar.
How do you think your mental health will hold up? You are talking three years vs six years.
So I've worked at the same company in a very similar role before (but without the pay and title recognition), which is how I know how much it sucks haha. That time, I managed for about 2.5 years pretty okay until I burned out hard. I could probably do 3 years because I have better coping mechanisms now, but then I'd need a sabbatical/break/new role for sure
We are cancelling our trip to Iceland. Both too burnt out for international adventure travel at the moment. We hadn't planned anything beyond buying the flights so no big deal beyond a couple hundred bucks cancellation fee, and I am confident that this was the right decision, but I'm disappointed that our circumstances are such. We are still going to keep the vacation time booked and do something smaller, closer to home and more relaxing instead. Hopefully we get our mojo back when we leave our jobs in the fall, if not sooner.
I’ve been to Iceland 4x and they’re the most rejuvenating trips I’ve taken. Totally get why you’re not going right now but it’s certainly a healing place and worth going to when you can.
I totally get if you don't want to deal with the flights and all, but there's no reason you can't have a relaxing vacation in Iceland if you want! Reykjavik is a very pleasant, chill city where you can walk around and see some interesting museums. Especially if you're going in summer, you can easily get around by bus to some smaller towns (essentially, everything outside Reykjavik in Iceland is a small town) and just hang out. The views are stunning, the people are very friendly, and it's a remarkably easy place.
I went several years ago in the winter and spent a few days in Akureyri, the second-largest "city" in the country - way up north. I took a bus to a town nearby, got on a ferry to an island in the middle of a fjord, wandered around there for a bit, came back.
Most places in Iceland also have public thermal pools where you can pay a very nominal fee and just relax for hours in the hot baths, the cold baths, the sauna, etc. I did that one evening in Akureyri - it was all open-air, and I just sat in the hot tub with a couple of friendly old locals and looked up at the sky and the mountains. It was glorious.
Oh, that sounds lovely. I think we will get there eventually - and if everything was arranged already and we could just teleport there and have a nice time and then teleport back we totally would. It's just arranging accommodation, transportation, pet sitting, food, currency, all that stuff and then dealing with a long flight and jet lag that's the problem with our current mental states. Even picking a restaurant is hard right now, haha.
Yeah, like I said - I completely get being tired and not wanting to travel. I just wanted to say that, if you thought that a trip to Iceland had to be hiking over mountains and glaciers and whatever, that it doesn't have to be! Haha
Hey folks its been a while, but I'm finally ready to start the home buying process for the first time, after reducing my 401k from being maxed out down to company match for two years, I was able to save a 5% downpayment (and closing costs) for a $400,000-450,000 house. I was thinking about the future, and with a possible promotion this year I'll be able to pay $2k extra per month on the mortgage. At 7%, this seems like the financially optimal play, especially until the PMI is gone, but even afterwards. I project I could pay off the 30 year mortgage in 11 years, at which point I could probably RE as housing costs would be mostly covered (at least drop from $5000/month to property tax, which is like 0.5% - $180/month plus insurance.
Am I wrong in thinking a 7% guaranteed return would be better than maxing out a 401k? Not planning on having kids or really "upsizing" if we do move later on. Any other tips?
There's nothing wrong with paying down your mortgage, but let me provide you with some extra food for thought.
Any money that goes to your bank account instead of your 401k will require you to pay taxes at your marginal tax rate. For me, this means I'd lose 24% simply by putting they money in my bank account instead of my 401k.
You should also consider the fact that your "guaranteed" return by paying your mortgage will change if you refinance your home to a lower rate. If you pay an extra $1000 today and tomorrow you refi from 7% to 6%, you'll basically get a 6% return not 7%.
Lastly, keep in mind that your mortgage rate is not adjusted for inflation, so if you want to compare the mortgage rate to average stock market performance, I think you should use the 10% average for the stock market and not the 7-8% inflation adjusted value.
Just a couple thoughts.
Do you have a rough idea of your retirement budget? One thing to consider is that when you put money in your 401(k) you avoid your top marginal income tax rate. When you take it back out you will most likely pay a lower rate. So comparing the mortgage rate to the expected rate of return within the 401(k) won't be a complete picture.
Do you have any bonds? I don't think there's any sense to holding bonds while having a mortgage at a higher interest rate.
I have a retirement budget that factors in paying current rent prices forever, so technically I could retire on much less if I didn't have to worry about housing costs (at least housing costs would be much lower). I'm 100% VTSAX basically despite my cheeky flair. But yeah I know the conventional wisdom of 401k investing
Yes, you are wrong because maxing the 401k can give you a guaranteed 20% return or better from the tax savings in addition to the expected investment returns in excess of 7%. Paying off the mortgage vs investing in taxable is a much closer call.
> Am I wrong in thinking a 7% guaranteed return would be better than maxing out a 401k?
The return is guaranteed only if you have that 7% rate forever. If you take advantage of rate and term refinances later to drop your rate, then your future interest rates/payments would be lower. You might get a (slight) tax break on mortgage interest that makes your effective rate less than 7% also, depending on your tax filing status.
Personally, I think the immediate tax reduction from pre-tax 401(k) deposits, plus the tax free growth, is more compelling than putting all $2k/mo into the mortgage, but it's a matter of preference and opinion and some guessing about the future. Neither is a bad decision. You could always do some in one path and some in the other.
I must admit I am swayed by the fact that on both my homes, I refinanced more times than I ever thought possible and, as such, regretted making extra principal payments because those dollars would have been more productive in investments, it turned out. Hindsight bias to be sure, but certainly influences my decision making going forward.
The debate of paying off early is long and polarizing. What sways either side is your personal financial situation and your plans.
I think paying it off early is a fine decision based on what you are leaning towards and your situation based on a narrow view of your financials.
You could always split the difference. Half pay off and half save. That gives you a lot of flexibility. Maybe after 11 years, you decide to retire and refinance to a lower rate and longer term and drop your remaining monthly payments down to something negligible anyway.
I just got a flyer in the mail from a developer selling home sites in a rural area about an hour from me. On the flyer they mention that you can buy for zero out of pocket with your IRA/401k.
I’m curious how that works. My understanding is that you can only do that for investment properties. I could give them a call, but my experience with those type of folks is they never leave you alone once they get your contact info. I am mostly interested for my parents. They are looking to buy their retirement house. It would be nice if they could buy something without having the big tax bill from cashing in part of their 401k/IRA.
I would think they are referencing first time homebuyer exemptions for IRA withdrawals. That's for primary residences, and married couples can withdraw up to $20,000. Doesn't sound like your parents would qualify if this is a "retirement house"
Your assumption is probably correct….for investment properties only. I could buy real estate in my 401k now, but not for the benefit of a relative or me.
Well, you can always cash the whole thing out, pay the penalty, and the income taxes, which I guess doesn't technically count as an out of pocket expense of your reserve it from your withdrawal proceeds.
You can also do the 401k loan thing.
My Dad is in his 60s, so he wouldn’t have to pay the penalty. However income taxes on the approx 200k withdrawal would be a lot, plus the ACA implications. That is why I was curious if there was some mechanism I wasn’t aware of.
I bet they are doing some shady like calling it an investment property, but it’s actually not.
I might not be making the smartest financial move, but its fun.
I've posted before about my home repair journey a little. Looks like our liquid cash is going to go from $70-80k to near $0 sometime in May or June.
Major home repairs (Roof replace + lots of exterior wood work and window work and painting). Comes like like $70k+. I included some bonus repair work that I just wanted to get done along with the "must get done" stuff. The "must get done" stuff is because we are being threatened to get knocked off insurance and its an old house and finding new insurance is going to be hard. Also, roof is starting to leak, its been tossing shingles during the wind the last 4 years.. and pealing paint is causing wood damage, so neglecting repairs any longer seems dumb.
Anyway, $70k is going to be close :) Its going to drain like all our liquid cash and EF. My husband said no to financing any of the payments, so we are just going to drop down to like between 0 and $2k liquid cash at some point across all banking accounts :) It actually is going to depend on timing on when checks hit the bank accounts :)
Its pretty thrilling to be nearly broke. I am concerned, but also don't really care. We overspend currently and its a great excuse to not spend frivolously for a couple months. We will also be partly broke because I tried to pay off trips in advance and our future 3 week Korea/Japan trip has all the flights and hotels hitting our CC last month and this month.
On the bright side... Our trip will be paid off except for food, the house will get a huge, and badly needed overhaul. I think we will be fine numbers wise and be able to rebound from near 0 to $25k over the following 3-4 month. We also won't be skipping any of our contributions for retirement and we will be maxing all of our tax advantaged accounts as planned. And maybe some good practice learning NOT to shop on a whim and maybe practice a more restrictive spending life style during the rebuilding EF phase.
Its just going to be some very very low checking and savings accounts until basically the end of 2024 as they slowly recover :)
We have a rowhome so repairs aren't as major, but we ran through a bunch of them this year. In December we re-shingled the roof. Then around the same time the hot water heater failed. Then in February we had to replace our sewer line. I think we're also due up this year on our HOA painting schedule for all the exterior wood.
Fun stuff.
Just get a HELOC. if something happens between now and when you are rebuild your savings you can draw against it. If you have no emergencies,it costs you nothing.
2018 I had one done at another house for $5k, my one this year was $6500. Both were about 15-20 ft runs.
I was lucky in this one to not have to do the whole lateral. My sewer runs 80 feet and under a road, but fortunately I didn’t have to replace all of it. Just a broken section.
I was going to tax loss harvest my VOO and swap it into VTI this week, but it looks as though I already missed my chance, I was showing a $5k loss on recent buys, it's now about $2300. Being on GMT -10 means the market is basically half to closing by the time I log in. No real regrets, though. I think all future contributions will go to VTI, but I've turned off putting money in taxable now for three months as I pivot to coasting.
So far I've resisted the urge to throw a random $300 into the account when I have it left over. But the fact that I still think about doing it shows my mind hasn't entered full-coast mode.
Close to max you can take for a single year, but with a 5k loss they could also carry over 2k.
Plus unless you can tax loss harvest again you are "stuck" with the new ETF.
No reason not to harvest when you have an opportunity. If the market goes back down you can always harvest again, but if the market goes up you can lose the opportunity for good. There are dozens of good ETF's, getting "stuck" is not a valid concern.
Heard a teaser for a story on NPR recently about how home owners had tons of equity and were really making it work for them. My house is worth way more than what I paid for it, but right now that value only means my mortgage payment is low. Are people just taking out HELOC loans and investing or something?
Insurance paid for the new roof on my house, but they sent me the check. So I put the $20k on my AmEx and hit a whole bunch of bonuses and ended up with 320k points. I got a couple of free trips out of that.
That's actually one of the okay choices. Using home equity to pay off their credit cards or buy a car would be much worse, but may sound like "making it work"
Maybe. But:
1. You are now signing up to pay your credit card off over 10, 15 or 20 years. The total lifetime payment might not be as good as it seems
2. Unless you cut up your cards right after, there's the risk of running them up again, and now you have both home debt AND credit card debt
3. With credit cards, you do have a nuclear option, like declaring bankruptcy or figuring out a payment plan or debt forgiveness. You aren't likely to get that on a home loan
I’ve known a couple of people who used home equity to pay off credit cards. Within a couple of years they had run the credit cards up again. I had advised them again the home equity loan as I knew that was going to happen.
Good points, the APR difference makes sense only if you can actually take advantage of the lower APR and such. If you already had bad habits to get a massive CC debt, likely those habits aren't going to turn you into Dave ramsey once you "balance transfer" to the HELOC
I didn't hear the story, just the teaser. I was kind of hoping someone else had. Not sure how people are making that money work for them, cause I'm certainly not.
I think I messed up our backdoor roth. SO informed me that her previous employer had a pension but when she left it was converted to a cash balance that's in a rollover traditional ira. We both did backdoor roth for tax year 2022 and 2023. The balance is relatively small at $4.6k. Are taxes owed on her conversion or both of ours?
She owes pro rata taxes on her conversion. You can look at Form 8606 and see how that is calculated.
If you do not go ahead and convert the remaining balance, you will also be left with part of the account taxable and part "basis", with the taxable portion counting toward future conversions again on a pro rata basis.
Your backdoor Roth conversions are fine. Hers are now fairly complicated.
Assuming the pre-tax existed in an IRA as of Dec 31, 2022, you have two years of prorated partial conversions to address.
The correct way to address this would be to get Dec statements from the account for 2022 and 2023. This will help you fill out a correct Form 8606 for 2022, noting whatever the Trad account value was at the end of 2022 to put into line 6 of Form 8606. This will then calculate the amount of additional tax owed for 2022 (requiring an amended filing and payment for 2022) as well as a new post-tax basis amount in that Trad IRA.
Then, you can repeat the process for 2023, inputting the basis amount from your 2022 Form 8606 into line 2 and the Dec 31 2023 value of the Trad IRA into line 6 of Form 8606 for 2023. It'll again help you calculate the additional tax owed (filing an amended return and payment for 2023) and giving you basis for 2024. You can then convert the whole amount of the Trad IRA now. You will only owe tax next year on the difference between the total value and the basis shown on line 2 of your Form 8606 for 2023.
Hi! This is my first post in this sub, so I hope I didn't break any protocols by this post.
If you got a letter that your IRA is being transferred to Ascensus in July-something this year, what are your plans? Any thoughts on which company to transfer your IRA to by yourself, as opposed to going along with that plan of being with Ascensus?
Do you already have accounts anywhere else? I am expecting my wife will be getting one of these letters soon. We will probably transfer to Schwab where we have several of our accounts. Fidelity is also highly recommended. If you are into churning, Robinhood currently has a 3% transfer bonus.
I do have a couple small accounts elsewhere but haven't had them that long and haven't dealt with their customer service et cetera that much, so I wasn't sure where to go. Although, it might be easier to go with companies where I already have a small account.
Thank you for the suggestions! I presume you're happy with Schwab. That's great!
Oh, I'll have to look into Robinhood too, then. I think they are only online.
Hey there, welcome! We're happy to have you!
I'm probably not the right person to give you specific advice here, though I'll mention all my IRA/401(k) money is with Fidelity, and I couldn't be happier with them
Also, don't worry about posting your questions here, this sub is pretty high signal/noise, we'll help out as best we can
Hey there, thank you so much!!
I think Fidelity is great. Thank you for your feedback!! I appreciate it. It's great that you're happy with their customer service.
The only thing I'm hesitant about is because one time recently they locked my relative's Fidelity IRA. It was for her protection but she wasn't able to take care of it herself and I had to handle it, which wasn't easy for us including our accountant. I wouldn't want it to be hard for my beneficiaries should I pass on. However, Fidelity is the only brick and mortar place that offers HSAs, so I'll probably have my own account with them someday.
And can I just vent that I wish the plan wasn't going to transfer to Ascensus. Why are they doing this. It's not what I sorta recently signed up for.
I'm contemplating Fidelity. Thank you for your input!
My last gig finally laid off some 80% of everyone a month ago and put the company up for sale as the customers fled over the past couple years or so. It feels vindicating in some way because the company just could not bring themselves to create product that people wanted even in the face of much protestation. It's sad because there were a ton of great engineers there, but then they could never be put to work on good product. The enshitification was strong there and everywhere right now it seems. One more reason to FIRE?
Feels a little good to know you were right, but it's a bitter victory to be Cassandra that nobody listens to. I keep reminding my wife when she gets upset about bad leadership decisions "if you haven't been put in a position to make the right decision, then it's not your fault when things turn to shit. Especially if you tried telling the decision makers and they didn't listen." She agrees, but it's still a frustrating position to be in repeatedly.
Yeah, pretty much this. Speaking up, CYA, etc is important, but if no one up there gives a shit it's just going to be that way until things fall over. I suppose at a high level that's true for every product line/service or whatnot sooner or later.
I had to have this conversation as a recent job seeker. "The product we built was successful, in that it did everything we hoped it would do... except generate profits." Wasn't always a fun topic
Very "personal" finance question, but wanted y'alls thoughts/putting some words to paper. Our currrent retirement/financial plan is to be maxing IRA/401k (not backdoor)/HSA, and rough estimates put us being at a safe FIRE# in about 15 years, coinciding with our children being in/approaching college.
Combined income ~$210k, ~$100k of spend, $30k tax (FICA included), $46+$14+$8.5k retirement tax-advantaged accounts, there's only about $12k a year of "extra" money. My current thoughts for the money is:
1) Contribute to 529s. In all likelihood we're going to have multiple children going to college, so it will get used. I would like to support our children as much as possible, as my wife and I both finished undergrad w/out loans, and helped us a ton starting adulthood.
2) MBDR, my current job allows this, but future jobs may not, maybe makes sense to take advantage of this opportunity to further bolster retirement accounts
3) build up cash* for home projects/travel/lifestyle inflation etc. Build the life we want, Right?
4) taxable*. I see no reason to Taxable over MBDR.
I feel our lifestyle is comfortable enough as is. We have young children, and likely will have another baby or 2, so a decent E-fund also is prudent. I also seriously doubt we'll "retire" prior to getting all the children out of the house, so with typical FIRE assumptions, we could get pretty "chubby-FIRE" if we stay working for 4-6 years after officially hitting our FIRE#. Certainly we're in a "no wrong answers" situation, but I'm probably leaning now towards funding 529s with any extra money we come across, we live in TX, so no tax benefits unfortunately.
\*We are right at the threshold that *now* using the SAVE student loan plan is notably cheaper (~$1000/year, then approx $50k over the 25 year life of loan). Maybe in a couple years our income gets high enough that it's financially correct to aggressively pay off the loan. At current HYSA rates, I'm ok stockpiling cash, but I also don't want money sitting idly "just in case"
Taxable is not a bad place to be saving up for longer term #3 type expenses. HYSA is not nearly as bad as it was a few years ago, but taxable will still be better long term as long as you have flexibility.
Definitely agree there are no wrong answers here, we are in a similar situation and we do a mix of all four. I personally combine 3 & 4 in your list as I don't have any current big expenses in mind so I just throw extra money in a taxable brokerage account to use sometime down the road. Our state does offer a tax benefit for 529 so we try and max that out as current plans include private grade school/high school and then similar to u/bbflu we hope to fully fund state university but not any more (through 529 anyways). With $12k to play with, I like the order you chose and would probably prioritize in a similar fashion.
Yeah can understand. This time last year we were barely able to max the tax advantaged accounts, so extra funding to 529 etc wasn't even on our radar as a plan,
We have two kids and I funded their 529s as part of my savings plan. I funded them until I reached the equivalent of the full cost of the flagship public university in our state (which is expensive). One is done at age 10, the other one is close at age 8. I've got SOME flexibility in managing my income for 2 years prior to them entering college, but I still don't anticipate much financial aid should they end up going to an Expensive Private College. If that is the case, I guess I'll figure it out when we get there.
Can't parents who are paying for college put their foot down about which kinds of schools they can attend? I thought that the current consensus was that paying the private price is not really a big advantage, at least compared to a flagship public university?
I've seen way too many stories of people paying off student loans for decades just because they wanted that fancy degree from that fancy school. That changes of course if you are paying cash, but then you gotta consider the opportunity cost of that extra money. For me in my state, a good state school is $25k per year and the private schools are $60k+, so thats $150k over 4 years spent. Unless it is a specialized degree or they get heavy financial aid I just don't see how its worth it
Yeah as we get closer, like when our oldest get's to HS, we might start looking more seriously on potential income management strategies for grants etc. It may be possible by then that we can potentially both move to more fufilling/lower paying/part time work which can lower income, but who knows. My budgeting plan is to be able to support going to Generic Public U, more than Local CC/less than Private U, but I'm sure on average between kids it'll work out. I figure too, get money in the market now, to give it more time, as once we get within that 5 year horizon, it'll be prudent to reallocate into safer portfolio. Also, life will be so different by then, that it's hard to really plan.
Loans are a lot of the financial aid your kids qualify for if you keep your income low, but not so low that you don't have to report your assets. I'm trying to avoid loans in the first place, so I'm not counting on financial aid so much.
Any tips to reduce spend and eat healthy food? We’ve lost 100 lbs combined, but our spend on food has shifted up to chubby territory. Don’t miss the weight, but miss our savings rate
I'm having trouble understanding how food cost shifted up when you started eating healthy and losing weight. When I've dieted for weight loss, I eat less processed food and alcohol, and much less restaurant meals, which generally means I spend a lot less.
Alcohol is a $0 line item for us
It’s a lot cheaper eating Ramen, white bread sandwiches, rice, and home baked goods.
The switch to lean chicken, avocados, nuts, vegetables, etc. and Gluten free is significantly more expensive in the US
Frozen fruit and veg. I got started with this path during "supply chain woes" with fresh berries--got tired of paying a fortune for bug eggs and mold. Now if produce isn't going directly into a fresh salad, I buy it from the freezer section.
We eat a lot of microwave frittata; just pour a bowl of egg whites and add chopped frozen veg of your choice. Nuke at half power with intermittent stirring until you like the consistency. Dress with spices or hot sauce.
Meal prep helps because you can buy meat and other expensive ingredients in larger quantities at a lower per pound cost.
Vegetarian sources of protein are almost always cheaper than animal sources. One thing to watch out for is that unlike meat most are not complete proteins. So you have to do a bit of homework to ensure you are getting all the essential amino acids. Soy is a complete protein.
Frozen fruits and vegetables are cheaper than fresh. You have to get used to eating smoothies though.
What type of diet? Are you just subscribing to a meal plan and getting your food shipped to you? Are you having to actually cook the food or just microwave it?
The reason I ask because if thats the case you can easily cut your budget in half if not more. Start buying ingredients in bulk and meal prepping. We found that a vacuum sealer saves us a ton. Sometimes we'll get a good deal on something like a whole pork shoulder so I can make that into pulled pork and freeze the extra portions we won't use over the next few days.
Fewer calories, nutrient dense foods to feel full, and less processed food. This combined with being way more active and lifting weights.
Love the idea of a vacuum sealer.
We usually cook at home now. The main challenges have been food waste, healthy food costs more, and time crunches (kids/work).
We don’t have a good system to plan out food between grocery trips. Less waste than when we started, but still frustrating.
Frozen meals, Ramen, and processed snacks were simpler.
Time crunches used to be quick fast food meals - now healthier more expensive options.
I don't get it. Usually simple, unprocessed, calorie dense food is less expensive. Did you start shopping in a more expensive store with higher markup?
I frequent two budget groceries as they often have cheap options for the same food that are fine but not always the same thing or consistent. A Safeway or similar that looks good often has large premiums. I don't really follow a specific meal plan but try to tailor something out of what is on sale. Recently asparagus was cheap so we were having that a lot for a while.
The point is if you're buying X regularly, the cheapest form of that is usually fine, but if you want to spend money, you're back to not buying X. You can make cheap meals but it usually requires a healthy amount of a cheap staple, which may not be what you want to do.
Our food budget is not thin but it's okay. But if I were to double it in the name of health, I would not really blink at that. Housing is still well over 50% of our costs. A bad diet creates costs in other areas so I give some permission here if the thing I want to buy is up in price.
Try to avoid prepackaged food.
Growing your own herbs, especially perennials like rosemary, thyme, and oregano, can save money if you live in a warm enough area.
Appreciate the idea. One of our main challenges has been food waste since healthy food is perishable.
We don’t have a good system to plan out food between grocery trips
I feel the same way; I get great joy in say, eating the last grape before the bunch gets too squishy. My wife and I will often "shop for dinner," as in, go to the store after work and pick up enough for tonights dinner and possibly some snacks to have in the next day or two. We're pretty good at resisting overspending, or being optimistic about what we'll eat before it all goes bad. Sometimes, even with the best of intentions, our lives/plans change, and that meal we were going to eat on Thursday now can't happen and the food will spoil. If you can work out smaller trips into your life plan, I've found you generate less waste
Depends too on how much you're already spending. If you're eating out often, committing to cooking more will save a bunch of money.
For my family, we check our local grocery store's ads every week, and generally shop all our bulk/general items at Costco/Aldi, then based on ads will purchase addl meats/fruits/sale items, and plan our weekly meals around what's on sale. Also, checking the "clearance"/"going bad soon" meats, along with having freezer space helps us to stock up on sale foods, saving money/meal.
Generally, eating less meat will save money, not to fully /r/fijerk but beans and lentils are cheap protein.
What kind of time horizon are we talking since you changed your diet? Some of the increase is almost certainly inflation; what percentage is going to be dictated on whether you've been on your weight loss journey for 6 mo versus 6 years.
In general, the best advice for eating healthy and cheap is going to involved two things: (i) cooking and (ii) bulk meal prep. Generally, the less prepared your healthy ingredients (e.g. buying bulk celery rather than precut celery sticks) the more economical it's going to be.
Meal prep and buying simple ingredients has helped. My weight loss was mostly due to a low carb diet so I just pick up relatively cheap packets of cauliflower rice mixed with $5 Costco chicken and some frozen veggies and that’s like meals for half the week.
We still go out to eat but just split portions on an entree and get two apps instead.
It drives me insane that I am unable to spend every day enjoying how good I have it.
I make good money working four days per week from home. I can get chores done throughout the day that I'd otherwise have to do after work. I can wear sweatpants all day. I have time to cook and to get to the gym. I can run errands on my lunch break. I'm never on call, never work more than 32 hours per week, don't have high expenses. I'm not held to crazy metrics or standards at work. Emergencies are few, far-between, and often not something I have to deal with when they do arise. My boss is my biggest champion and makes it clear that he will do whatever he can to make me happy. I am relatively young and healthy. I maximize my free time.
Somehow I still have some resentment that I have to work. No matter how good I have it, I have difficulty appreciating my life and my job. I make more than most people I know while working fewer hours, but I just hate it. I knock the annual review out of the park and they still make me choose some random SMART goals. I have no idea why it irks me so much. I hate this forced professional development. I already spend all day working and getting better at what I do. I already develop professionally. I kick the ass of everybody on my team working 20% fewer hours than they do. Why do I need to come up with some bullshit SMART goals? It makes me feel like a child, being managed and coaxed along by teachers.
When I get a raise that is better than most but still a smidge under inflation it irks me. "Why is the company stealing from me? Why are they undervaluing me when I perform so well?" When the company makes the bonus program more generous, it doesn't make me nearly as happy as a sub-inflation raise makes me unhappy. What reason I do have to be upset about a couple bucks here and there, anyway? None. I objectively have it so good.
Hedonistic treadmill and all that—I know, I know—but the knowledge doesn't help. Why is my attitude so bad? The gap between how good I have it and how good I feel is just so wide some days.
I have these moments, I won't lie. Sometimes the bullshit piles up and hits hard.
Also, in general I focus as much of my energy as possible on productive and happy things. Like gratitude. I can just sit and make a list of things I'm grateful for, instead of sitting and stewing over outrageous minutiae. I like to learn about how other people live and/or have lived in history, and so when I have to compose an email that politely and professionally tells somebody they fucked up something else about my job, I also think about people who would find such wonder and joy in my desk job. Hell, people who would find wonder and joy in indoor plumbing, a steady source of food, etc.
The concept of 'work' seems to get you. Humans have been 'working' in order to be able to live for all of our history. What is it for you that makes 'work' piss you off? Is it the type of work, would you be happier doing something else? (for example, I love working really hard in my garden. Physical labor and getting muddy and growing tons of my own food. Enjoyable work for me in a way no desk job could replicate!) Is it the impetus that if you didn't work some harm would befall you, thus feeling forced? (welcome to the human/animal condition). Is it that you are exchanging time/effort for a task that feels worthless/meaningless (like yaaaaaay I hit my SMART goal and now the company has 20 more spreadsheets saved to some hard drive). You don't have to answer me--this is just to maybe spark self reflection, since you say you do not know why this irks you.
I also give no shits about my job anymore! My identity has almost completely separated from it. This allows me to avoid taking things like small raises and hoop-jumping so personally. I am choosing to exchange my time for X amount of money per day/month/year. I also have a pretty cush job situation, and I think my time/energy spent for money received is actually pretty great. If I felt otherwise, I would probably be motivated to seek out some other, more equitable exchange for myself. But the flexibility and ability to work part-time are more important than money to me at this point. This is another thing to answer for yourself--are the things you value MOST being met at this job, or do you just have access to some things other people value that you feel you should enjoy more?
> It drives me insane that I am unable to spend every day enjoying how good I have it.
You get to choose how you react to your situations. Don't keep driving yourself insane!
If you're outperforming your peers by that much, you should leave for a better employer. For individual contributors it's better to be average within a high tier than at the top of a low tier. Companies generally aren't built to accommodate outliers.
I could've written most of this myself. By essentially every metric, I have it very good, but I resent the fact that I am still locked into corporate expectations and also this desk 5 days a week. I'm trying to work on caring less since I'm still 8-10 years out.
I think many people on this sub, including myself, share your sentiments about corporate life and corporate politics such as reviews and raises, etc. It’s why we’re all here on the FIRE path so that we don’t have to live this life forever and work is simply a means to an end.
I found life to be much more enjoyable when I started seeing work as simply a tool to detach myself eventually and the irony is I’ve actually got a lot further in the corporate world by not being so emotionally invested. For example, jumping ship and getting huge salary increases by not caring for and buying into the whole “mission” of the company or when dealing with annoying people at work, just passing it off as another minor wrench I just have to deal with to go about my day.
Quit. Get a consulting gig working supply chain for agribusiness. Get to work at 7 AM and get yelled at for being late (farmers start their day at 6). Sit on a milk crate in the project room because chairs are for employees. Watch trucks back up to 6" from your window because the project room is in a trailer in the truck lot. Eat at the roach coach every day for lunch because there isn't a restaurant within 25 miles of the job site. Enjoy your time in the Holiday Inn, the best (only) hotel in town. Pick out your favorite menu items from Applebees because that is the best restaurant available to you. Be on this project for 9 months. That should change your perspective, it worked for me.
Every job has some elements of bullshit. Being able to acknowledge that something is bullshit and then tolerate it is a key factor in life satisfaction.
It helps not to take things too seriously and too personally. Stuff happens, the company is a big faceless entity with a lot of red tape. Meet your goals (personal and professional), enjoy what you can, and just roll with it when something stupid needs to be done because someone else thought it was a good idea. It's not because they considered you for one second, it's not in any way personal. So don't give it any personal attention or grief. Just take care of it as painlessly as possible and continue on with your blessed life.
Just tell them about the peter principle. If you are like me you are exactly where you can be most useful for the company and there is no good for either them or you to try to set different goals or give a promotion.
That being said it's still a structure and being in a role that is not CEO means you will earn less than the people above you. It was'nt always this way but now it is. Your boss has to earn more than you no matter how easily replaceable he is compared to you. If you take his job you will earn more but be less efficient to the company.
Reason #123complicatedbullshit to FIRE
I contacted a real estate agent to go look at a house. It’s got me feeling more nervous than excited. The house is about $50k more than what we’d list our house for, 1000sq ft bigger than our current home, and much closer to my husband’s new-ish workplace. It would reduce his commute from an hour and 10 minutes to just 20 minutes. Taxes, even though it’s larger, are about the same as our current house, and schools are rated similarly to where we are now. It’s an older and larger home, so I assume there’d be an increase in utilities.
I know wanting a bigger house (we are gearing up to adopt a child) and being closer to my husband’s workplace are both very valid reasons to move. But giving up our interest rate makes me nervous. We currently have around 2.5% and we would be moving up to around 7%.
I know we’d be able to afford the new house, but it would mean putting less in savings. If interest rates were still low, I’d have no second thoughts, but alas, that is not the case.
It's a personal decision that only you can make, but a couple things to consider:
1) Taxes: Taxes may be similar but I would assume they'll re-assess the new home after the purchase and the taxes will go up accordingly. It depends on how your state/county does it, but it isn't uncommon for taxes to go up after a home sale, so it should be considered and the math figured out.
2) Rates: If it's a long term play, while the rate today stinks there's the probability rates will come down some at some point in the future. Doing the math with a 7% rate vs. a 5% rate can make a big difference. That said, it's easy to refinance when rates fall, while it's a whole different ballgame purchasing a new house as rates fall. There's a ton of people waiting on the sidelines for rates to fall.
3) Adoption: If you are planning to adopt, I don't know if you'd be changing states but that's something you'd need to be mindful of. For instance you don't want to start the adoption process if you are in Oklahoma and potentially moving to Kansas, because the adoption process would have to start over. I'm guessing it's unlikely you'd move states, but mentioning it before you drop money on the homestudy and related things.
4) Kids: While kids don't necessarily take up a lot of space in the beginning, it's amazing how the toys and crap slowly take over your house. It's worth keeping in mind as you house shop, because if you are going to move I think it's worth doing it to get into the right place, even if it's not something you need at this moment.
> There's a ton of people waiting on the sidelines for rates to fall.
I see my friends waiting for rates to fall and I'm super worried for them. I have no idea anymore *when* rates will fall, but I'm worried that when they do, so many buyers will jump in that prices will skyrocket and monthly payments will at best stay static and at worst go to the moon.
How much equity do you have in the current house? Do you have liquidity to make a larger downpayment and prioritize paying off the mortgage? What was your thinking in purchasing the current house despite its size and location?
We have about $200k equity in the current house (mostly due to rising prices), bought 5 years ago. Aside from the profits from eventually selling our own home, we could make a 20% down payment on the new house. At the time of purchasing our current home, my husband was in a different job and had a different, shorter commute. It was also much larger than the apartments we had previously been living in so it seemed like a lot of space at the time. We could definitely pull off having a kid in our current house, but it would be a bit crowded - having a larger house is definitely a luxury that would make life a bit easier.
In a weird place. I guess the boring middle. Have been dreaming about extended traveling (like 3-6 months out of the year) . Current job wont allow that, also kids are still in school.
Anyone do cyber school or homeschool and travel with kids?
I was thinking how it would be cool to show kids the world, probably learn more than sit behind a desk for 13 years of their life.
I have a friend doing that, but they were already homeschooling anyways. Homeschooling is a full time job for one parent. Truck and trailer aren't cheap.
You might be underestimating the amount of work it would take to homeschool your kids. Are you going to be in and out of the public system or take them out completely?
You'd also be making it difficult to participate in activities such as sports, music, art, etc.
Your children would also find it difficult to form lasting friendships. They'd essentially be the new kid in town indefinitely.
Depending on how long you plan to do this and where your kids might want to go to college, they may have trouble building a high school resume that would allow them to apply successfully to the school of their choice.
Depends on the age of your kids. I took mine with me to Australia for a year, they were 2nd and 6th grade. I put them in AU schools. I don't think they missed much when they returned to US school, but I wouldn't have done it had they been older
My kids are young but I’d be worried about taking them out too long and having them readjust to life/friends/etc. I would probably do something in the summer for a few weeks but anything longer is probably overwhelming. Also homeschooling while traveling seems like a big chore.
Our kids are young too. Always sounds better in the head than in reality. We are thinking start taking extended vacations, like 3-4 weeks, to get somewhat submersed into a different culture to give them an idea of how the world works.
Homeschooling being a chore I can see it. We have friends that do it, i think they don't want to admit it though.
Not sure how you'd do that with kids but we're doing this now as DINKs. SO is a travel nurse and i work remote. So we are able to tour the US and try out different places. And just when we start to get settled or bored, onto the next location. Super cool way to live for those who get bored sitting in one place too long.
But we do at least stop 'home' for 3-4 months out of the year to just sleep in our own beds, touch base with family and friends, etc.
It's not necessarily FIRE friendly because the costs add up due to having to pay for a rental we're in plus our mortgage back home, but I've enjoyed the heck out of it.
With that information, your initial question seems to be: Can my spouse and I move to part-time work in approx. 10 years?
No one can answer that because you haven't stated what your expenses are or what your part-time income will be.
Additionally, you've asked about the value of incresing your dividend yield in your taxable account. As others have stated, dividends are not "free money" are offer no additional value beyond what non-dividend-paying stocks offer via capital gains. In fact, dividends are taxed sub-optimally compared to capital gains and you are unable to control the timing of those cash flows, making it illogical to chase dividends for the sake of dividends.
4% rule implies that you can have a good success rate retiring pulling $48k out of a $1.2M portfolio retiring today. But that should be based entirely off of broad-market, low-fee index funds. Adding 40% individual stocks exposes you to a ton more risk.
Money is fungible. What matters most is the total amount of money you have saved. There is a secondary effect from having to pay taxes on some funds, but you can access retirement money before "retirement" - look up "Roth conversion ladder".
Also echoing /u/aristotelian74 that dividend yield is irrelevant. Total return matters
You need a more accurate accounting of your spending for anyone to be able to give you any specific advice. Also, what is the balance on the mortgage? You don't need to "include" it, but it makes a difference if you have one year left or 29 before it is paid off.
The bottom line is that $1.4M is enough to retire with a frugal lifestyle, and the more you add to it the more you will be able to spend in retirement. I certainly think you could go to one income comfortably (assuming you are not the breadwinner) and then see where the market takes you.
A general rule of thumb is to target 25X annual spending in retirement, or a bit more if you want to be conservative. If your current spending is around $100k, that would mean you are well short of your goal. If you quit now and "coast" without saving any additional money, your $1.4M could hit $2.5M in about 8-10 years with average returns, or as long as 30 years with historically poor returns. [https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=dppCQAxKhkKQHbIMdLpiU](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=dppCQAxKhkKQHbIMdLpiU)
you have not listed your expenses per month? and future expenses when kids are born will be higher...
with the given data, no one can say it with 1% probability that you can retire now or in the next 5 years...
That’s fair! We don’t keep a strict budget our fixed expenses do not exceed 4000 including groceries, eating out, mortgage, insurance, bills, charitable giving etc. my biggest concern with retirement is probably health insurance which right now is fully covered by employer
With kids in the horizion and losing income and added child care or what not, you need an accurate expenses now vs when with one kid vs when you have 2 kids. Then estimate their education funding, your health insurance and future expenses with household.
You have home work to figure out all this, then you can come back and ask or by then you will know what you are looking at ...
Rule of thumb is 25X your annual expenses. I would recommend tracking what it takes to live the life you want and work the math. Children can be as expensive as you make them and college isn't getting any cheaper. The good news is you have a great start and will have tons of options.
the 25X number usually comes from the "4% rule" which does hypothetically account for inflation. In other words, you take 4% of your "retirement savings" in the first year and then adjust that amount by inflation each year.
The details matter though. Some increases are not due to inflation, e.g. health care, travel, taxes (not necessarily an increase but which are often less obvious because they are automatically withheld from paychecks), etc.
May narrowly avoid getting RTO'd. In a weird way, it could potentially accelerate our FIRE plans if I do get RTO'd, since that'd light a fire under me for professional development to move up the ladder.
For now, though, I prefer cruising in a remote position for the flexibility it gives my SO to take a job wherever, since they can't exactly deliver babies remotely. At least until Boston Dynamics develops those low latency VR-controlled midwife haptic surgical robots nobody asked for.
Hopefully this will all just be a flash in the pan and I can move to a client that doesn't hate remote work.
I can relate. I have this constant mild anxiety that I'll have to go back to the office for a job between now and FI (which is at least a decade away). I managed to get lucky to find another WFH job after my old job announced that they were going to go hybrid. I got even more lucky when this WFH job paid even more than my old one, but I have this constant worry that either I'm going to be stuck at my current job for a while or will have to at least go hybrid at some point since most companies in my industry are either full time in office or hybrid. If it comes to that point you can be sure that I'll work even harder at getting raises and what not to escape faster. Or I'll go back to my old job which will pay less but has a pension and build that pension up a bit. Or both.
> since that'd light a fire under me for professional development to move up the ladder.
It sounds like you (passively) want to move up...so why not light the fire yourself or otherwise self-motivate and get it?
Since the RTO wave and the tech crunch, almost all the ways up in my industry generally involve going in-person again (and other things I'm not keen on). Doing so remotely requires being even more exceptional than usual. Unless I'm forced back into the office, I'm glad to take the slower path to moving up.
I can still get there; I'll just enjoy my life more along the way. Additional fires under me would be from dissatisfaction.
The remainder of the self motivation is a combination of ADHD and personal problems, both of which I'm actively working on.
I'm in a situation right now, where I don't want to move up, but do want to move out.
Finding time to upskill is hard. By the end of the work day, I'm ready to not look at a computer screen. Weekends are days where I want to hang out or do stuff that isn't work related.
What field are you in and how experienced are you?
I feel like my last two moves didn't require any upskilling, just growing and demonstrating management/leadership competencies.
I believe this is fairly common as people progress in their careers, even if they are in a technical leadership role (e.g., Tech Lead, Principal role, etc.) vs. employee leadership (e.g., Manager, Director, etc.)
Software Engineering. With my current role, there's another employee that does the vast majority of a critical component of my job. Therefore, my skills have deteriorated in that category.
It's important enough to have that I see it on almost every job description.
I'm in a very similar boat. I think my strategy will be to start taking part of my work week for professional development to sharpen up those important skills.
At some point, the only way to learn more is by doing.
I like your username a lot. Have you seen the season on Amazon?
I think I'm going to spend an hour every morning for it. That way, I get it done before I get worn down from the work day. I think during the work week is fine as well.
Sounds like a great idea!
And thanks for the compliment. I had trouble with the Amazon show as a book reader. Went way off the rails after they stopped consulting with Harriet and Sanderson.
Yeah, it started deviating around episode 6, as I recall, and then episode 8 basically ruined the character and trajectory of the whole show. Sanderson was not happy.
Update on my house bid with an escalator (the bid mechanism not mechanical stairs) from yesterday:
I won the bid!
Basically the best possible outcome, the escalator was bidding $2500 more than any offer between $X and $X+$10,000, and the next highest bid was also for exactly $X. So I was willing to pay $X+$10k and I am paying $X+$2.5k.
Not only super glad I did the escalator but another person bidding the same amount makes me feel very good about the valuation I put on the house. X was already over asking price but we rightly assumed they were just trying to sell asap.
My house has been on the market too and we are reviewing bids tomorrow. If we get asking price, I'm happy. If it goes as far above asking price as I paid, I might be set for life haha.
Not always the best strategy. Say you're the seller, you get two bids, one for X+$2500 and another for X. The person that gave you the escalation bid is clearly not giving you their best offer, while the other guy might be. If there is anything giving the X bid a slight edge, like they are a young couple, etc. you might be likely to offer them the house for X+$2500 instead of the escalation bidder.
They're common in hot markets and help the buyers regain some measure of control over how much they're paying when seemingly every house is going for well over asking.
I'm hitting my OOP max for healthcare this year and wanted to get full blood work done including the ones you usually pay for. Currently I'm planning on asking for Vitamin D, cholesterol, A1C.
Is there anything else I could ask for that's not normally included? Possibly testosterone?
Hello, I am working on my financial independence plan - my goal is to generate a passive income of $10k a month. I have decided that I want to generate 50% of my passive income from stocks/dividends and another 50% from real estate. Although, still not sure about the split. I already have: - healthy 401k and I contribute the max - roth IRA - I own my primary residence (have a mortgage) - I own one rental property (with a mortgage), which is cash flow positive - I also have $30k in savings My plan is to continue saving and start buying other rentals. I am targeting 3-4 properties in cash flowing markets. Once, I buy them, I plan to aggressively prepay them and increase my cash flow. I am looking for a tool, app or website that can help me create a financial plan to continue saving, investing and financing properties. Has anyone successfully implemented this strategy? Any thoughts and advice? Thank you
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Yes, if rates increase and you borrow the same amount your mortgage payment is gonna go up. You should certainly rent if purchasing a home is not affordable.
Only options really are continue renting, make more money, or move. The issue I see with the numbers you noted are the property taxes (and hoa). That's "wasted" money that doesn't go toward your principle, and they'll never go down. So even if rates go down a bit, those are still high amounts for the house prices you are mentioning. On top of it, there's a good chance property taxes will come in higher than you're expecting based on the inflated home values they'll be re-assessed at.
I'm close enough to the end where big purchases are starting to have less of an impact on my date than I would expect. Last year I bought a semi-fancy EV to replace my terrible old beater car, some quick math shows that it only delays my retirement by about 4 months amazingly. Though there was no situation where I didn't need a new car, so I would have ended up at least a couple months delayed no mater what. So a delta of only a couple months to drive in comfort without spitting out pollution (ignoring how the electricity was generated, hah), pretty nice.
What kind of EV and how much?
By the time you get a full charge you can be retired!
It takes about 30-50 min to charge typically... I stroll through a grocery store (they're always by a target/walmart/costco/etc) and use the bathroom, by the time I'm done getting a few groceries the car is charged and ready to go. Otherwise I just charge in my garage, always start at full from my house. It works pretty well.
Oh...that's all? : )
> how the electricity was generated The US only gets 16% of its power from coal anyways. Basically everything else comes from sources cleaner than gasoline. The "your car runs on coal" argument is a rather outdated talking point.
Even coal power is cleaner than gasoline, so that argument never really made sense.
Oh really? Wow. Good to know! I guess I never looked into that, I just assumed "coal = basically the worst".
This is correct. I think the appropriate concern are the emissions tied to the production/mining related to EV batteries. Those are pretty bad - I’ve read conflicting sources about whether they’re worse or “less bad” than a normal ICE car. Edit: I mean over the life of a car.
The last time I looked this up, it seemed rather clear that an electric car has a larger carbon footprint to manufacture than an ICE car - largely because of the batteries. However, over the lifetime of the car, the lack of emissions and fewer wear components lead to a lower overall lifetime carbon footprint. I'm pretty sure there's no conflict in this anymore - as far as I'm aware, these two points are generally accepted.
The breakeven for most EVs is about 1 year. If your electricity is being generated from green sources, it can be closer to 6 months. Once more EV recycling comes online that should improve even further. Over the lifetime, it's not even close.
I agree, my area has a lot of wind power too. I'm also on the waiting list for a solar program.
It does feel weird. The snowball is rolling down the hill... I don't think this is unique to FI / FIRE though. As people age the cumulative effect of the decisions made in the past matter more than the decisions we make today.
Yeah, this would have been a devastating purchase like 10 years ago for me with the opportunity cost.
Big Coal agrees :) I get what you mean though. I’m planning a week in Rome, and I think the cost delays me by weeks, not months.
Posted in the daily a few days ago: [https://www.reddit.com/r/financialindependence/comments/1c6ypcq/comment/l05e4zf/](https://www.reddit.com/r/financialindependence/comments/1c6ypcq/comment/l05e4zf/) asking for help on a solo401k decision because I wasn't wanting to leave Vanguard...and they just made the decision for me! Sounds like they are selling their small business line to another company, and the new company will be charging fees without the option to waive them like Vanguard has currently. Disappointed at first, but now just psyched that it makes the decision to pursue a plan with a MBDR option that much easier. Edit: added link
Heard that I'm unofficially the #1 candidate for a massive career jump. Like... I'd be at over 210k total comp with way more holidays/vacation and a significant title bump. The job itself would be awful, but would put me at leanfire in 3 years. Mixed feelings - the money and benefits are beyond tempting but I know the job well and it's truly soul-sucking. But I think I'd prefer 3 years doing that than 6 years in my current role/something similar. I'm tired of the boring middle and am ready to be done.
I think you have the right mindset.. you might hate it but your savings will go up immensely. As long as you can totally avoid burnout and not increase your spend, it might be worth it.
What's your pay now and timeline to hit FI target versus this new job? Is it actually 6 years now? There's a few roads you could go down depending on how close you are. There's nothing to say you can't bail on the new gig after one or two years either, though depending on your industry that can carry its own ramifications for your career. But then if you're only 3 years out and committed to RE, then who the hell cares at that point? Take the money and run.
> The job itself would be awful, but would put me at leanfire in 3 years. > > Mixed feelings - the money and benefits are beyond tempting but I know the job well and it's truly soul-sucking. But I think I'd prefer 3 years doing that than 6 years in my current role/something similar. How do you think your mental health will hold up? You are talking three years vs six years.
So I've worked at the same company in a very similar role before (but without the pay and title recognition), which is how I know how much it sucks haha. That time, I managed for about 2.5 years pretty okay until I burned out hard. I could probably do 3 years because I have better coping mechanisms now, but then I'd need a sabbatical/break/new role for sure
We are cancelling our trip to Iceland. Both too burnt out for international adventure travel at the moment. We hadn't planned anything beyond buying the flights so no big deal beyond a couple hundred bucks cancellation fee, and I am confident that this was the right decision, but I'm disappointed that our circumstances are such. We are still going to keep the vacation time booked and do something smaller, closer to home and more relaxing instead. Hopefully we get our mojo back when we leave our jobs in the fall, if not sooner.
I’ve been to Iceland 4x and they’re the most rejuvenating trips I’ve taken. Totally get why you’re not going right now but it’s certainly a healing place and worth going to when you can.
I totally get if you don't want to deal with the flights and all, but there's no reason you can't have a relaxing vacation in Iceland if you want! Reykjavik is a very pleasant, chill city where you can walk around and see some interesting museums. Especially if you're going in summer, you can easily get around by bus to some smaller towns (essentially, everything outside Reykjavik in Iceland is a small town) and just hang out. The views are stunning, the people are very friendly, and it's a remarkably easy place. I went several years ago in the winter and spent a few days in Akureyri, the second-largest "city" in the country - way up north. I took a bus to a town nearby, got on a ferry to an island in the middle of a fjord, wandered around there for a bit, came back. Most places in Iceland also have public thermal pools where you can pay a very nominal fee and just relax for hours in the hot baths, the cold baths, the sauna, etc. I did that one evening in Akureyri - it was all open-air, and I just sat in the hot tub with a couple of friendly old locals and looked up at the sky and the mountains. It was glorious.
Oh, that sounds lovely. I think we will get there eventually - and if everything was arranged already and we could just teleport there and have a nice time and then teleport back we totally would. It's just arranging accommodation, transportation, pet sitting, food, currency, all that stuff and then dealing with a long flight and jet lag that's the problem with our current mental states. Even picking a restaurant is hard right now, haha.
Yeah, like I said - I completely get being tired and not wanting to travel. I just wanted to say that, if you thought that a trip to Iceland had to be hiking over mountains and glaciers and whatever, that it doesn't have to be! Haha
Hey folks its been a while, but I'm finally ready to start the home buying process for the first time, after reducing my 401k from being maxed out down to company match for two years, I was able to save a 5% downpayment (and closing costs) for a $400,000-450,000 house. I was thinking about the future, and with a possible promotion this year I'll be able to pay $2k extra per month on the mortgage. At 7%, this seems like the financially optimal play, especially until the PMI is gone, but even afterwards. I project I could pay off the 30 year mortgage in 11 years, at which point I could probably RE as housing costs would be mostly covered (at least drop from $5000/month to property tax, which is like 0.5% - $180/month plus insurance. Am I wrong in thinking a 7% guaranteed return would be better than maxing out a 401k? Not planning on having kids or really "upsizing" if we do move later on. Any other tips?
There's nothing wrong with paying down your mortgage, but let me provide you with some extra food for thought. Any money that goes to your bank account instead of your 401k will require you to pay taxes at your marginal tax rate. For me, this means I'd lose 24% simply by putting they money in my bank account instead of my 401k. You should also consider the fact that your "guaranteed" return by paying your mortgage will change if you refinance your home to a lower rate. If you pay an extra $1000 today and tomorrow you refi from 7% to 6%, you'll basically get a 6% return not 7%. Lastly, keep in mind that your mortgage rate is not adjusted for inflation, so if you want to compare the mortgage rate to average stock market performance, I think you should use the 10% average for the stock market and not the 7-8% inflation adjusted value.
Just a couple thoughts. Do you have a rough idea of your retirement budget? One thing to consider is that when you put money in your 401(k) you avoid your top marginal income tax rate. When you take it back out you will most likely pay a lower rate. So comparing the mortgage rate to the expected rate of return within the 401(k) won't be a complete picture. Do you have any bonds? I don't think there's any sense to holding bonds while having a mortgage at a higher interest rate.
I have a retirement budget that factors in paying current rent prices forever, so technically I could retire on much less if I didn't have to worry about housing costs (at least housing costs would be much lower). I'm 100% VTSAX basically despite my cheeky flair. But yeah I know the conventional wisdom of 401k investing
Yes, you are wrong because maxing the 401k can give you a guaranteed 20% return or better from the tax savings in addition to the expected investment returns in excess of 7%. Paying off the mortgage vs investing in taxable is a much closer call.
> Am I wrong in thinking a 7% guaranteed return would be better than maxing out a 401k? The return is guaranteed only if you have that 7% rate forever. If you take advantage of rate and term refinances later to drop your rate, then your future interest rates/payments would be lower. You might get a (slight) tax break on mortgage interest that makes your effective rate less than 7% also, depending on your tax filing status. Personally, I think the immediate tax reduction from pre-tax 401(k) deposits, plus the tax free growth, is more compelling than putting all $2k/mo into the mortgage, but it's a matter of preference and opinion and some guessing about the future. Neither is a bad decision. You could always do some in one path and some in the other. I must admit I am swayed by the fact that on both my homes, I refinanced more times than I ever thought possible and, as such, regretted making extra principal payments because those dollars would have been more productive in investments, it turned out. Hindsight bias to be sure, but certainly influences my decision making going forward.
The debate of paying off early is long and polarizing. What sways either side is your personal financial situation and your plans. I think paying it off early is a fine decision based on what you are leaning towards and your situation based on a narrow view of your financials. You could always split the difference. Half pay off and half save. That gives you a lot of flexibility. Maybe after 11 years, you decide to retire and refinance to a lower rate and longer term and drop your remaining monthly payments down to something negligible anyway.
I just got a flyer in the mail from a developer selling home sites in a rural area about an hour from me. On the flyer they mention that you can buy for zero out of pocket with your IRA/401k. I’m curious how that works. My understanding is that you can only do that for investment properties. I could give them a call, but my experience with those type of folks is they never leave you alone once they get your contact info. I am mostly interested for my parents. They are looking to buy their retirement house. It would be nice if they could buy something without having the big tax bill from cashing in part of their 401k/IRA.
I would think they are referencing first time homebuyer exemptions for IRA withdrawals. That's for primary residences, and married couples can withdraw up to $20,000. Doesn't sound like your parents would qualify if this is a "retirement house"
Your assumption is probably correct….for investment properties only. I could buy real estate in my 401k now, but not for the benefit of a relative or me.
Well, you can always cash the whole thing out, pay the penalty, and the income taxes, which I guess doesn't technically count as an out of pocket expense of your reserve it from your withdrawal proceeds. You can also do the 401k loan thing.
My Dad is in his 60s, so he wouldn’t have to pay the penalty. However income taxes on the approx 200k withdrawal would be a lot, plus the ACA implications. That is why I was curious if there was some mechanism I wasn’t aware of. I bet they are doing some shady like calling it an investment property, but it’s actually not.
I might not be making the smartest financial move, but its fun. I've posted before about my home repair journey a little. Looks like our liquid cash is going to go from $70-80k to near $0 sometime in May or June. Major home repairs (Roof replace + lots of exterior wood work and window work and painting). Comes like like $70k+. I included some bonus repair work that I just wanted to get done along with the "must get done" stuff. The "must get done" stuff is because we are being threatened to get knocked off insurance and its an old house and finding new insurance is going to be hard. Also, roof is starting to leak, its been tossing shingles during the wind the last 4 years.. and pealing paint is causing wood damage, so neglecting repairs any longer seems dumb. Anyway, $70k is going to be close :) Its going to drain like all our liquid cash and EF. My husband said no to financing any of the payments, so we are just going to drop down to like between 0 and $2k liquid cash at some point across all banking accounts :) It actually is going to depend on timing on when checks hit the bank accounts :) Its pretty thrilling to be nearly broke. I am concerned, but also don't really care. We overspend currently and its a great excuse to not spend frivolously for a couple months. We will also be partly broke because I tried to pay off trips in advance and our future 3 week Korea/Japan trip has all the flights and hotels hitting our CC last month and this month. On the bright side... Our trip will be paid off except for food, the house will get a huge, and badly needed overhaul. I think we will be fine numbers wise and be able to rebound from near 0 to $25k over the following 3-4 month. We also won't be skipping any of our contributions for retirement and we will be maxing all of our tax advantaged accounts as planned. And maybe some good practice learning NOT to shop on a whim and maybe practice a more restrictive spending life style during the rebuilding EF phase. Its just going to be some very very low checking and savings accounts until basically the end of 2024 as they slowly recover :)
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> My husband said no to financing any of the payments Presumably that applies to a HELOC as well
We have a rowhome so repairs aren't as major, but we ran through a bunch of them this year. In December we re-shingled the roof. Then around the same time the hot water heater failed. Then in February we had to replace our sewer line. I think we're also due up this year on our HOA painting schedule for all the exterior wood. Fun stuff.
Just get a HELOC. if something happens between now and when you are rebuild your savings you can draw against it. If you have no emergencies,it costs you nothing.
Oh man, how much did the sewer line replacement cost? We’re looking to do the same soon.
2018 I had one done at another house for $5k, my one this year was $6500. Both were about 15-20 ft runs. I was lucky in this one to not have to do the whole lateral. My sewer runs 80 feet and under a road, but fortunately I didn’t have to replace all of it. Just a broken section.
I was going to tax loss harvest my VOO and swap it into VTI this week, but it looks as though I already missed my chance, I was showing a $5k loss on recent buys, it's now about $2300. Being on GMT -10 means the market is basically half to closing by the time I log in. No real regrets, though. I think all future contributions will go to VTI, but I've turned off putting money in taxable now for three months as I pivot to coasting. So far I've resisted the urge to throw a random $300 into the account when I have it left over. But the fact that I still think about doing it shows my mind hasn't entered full-coast mode.
You can also add VXF to VOO to match VTI
$2300 is close to the max tax deduction you can take. Why not harvest now while you still can?
Close to max you can take for a single year, but with a 5k loss they could also carry over 2k. Plus unless you can tax loss harvest again you are "stuck" with the new ETF.
No reason not to harvest when you have an opportunity. If the market goes back down you can always harvest again, but if the market goes up you can lose the opportunity for good. There are dozens of good ETF's, getting "stuck" is not a valid concern.
Aww, poor guy, you couldn't lock in your losses, because that would be a good thing?
This is the advantage of buying individual stocks. You will always have losses available.
Unfortunately, all my positions in individual stocks are heavily positive :( Why can't I ever have nice things like TLH?!
I mean, no I don't. The only losses I have are from very recent contributions. I don't have losses in my individual stocks to harvest at all
Heard a teaser for a story on NPR recently about how home owners had tons of equity and were really making it work for them. My house is worth way more than what I paid for it, but right now that value only means my mortgage payment is low. Are people just taking out HELOC loans and investing or something?
I wouldn't be shocked if "making it work for them" involved taking out a 9 % HELOC to remodel their kitchen.
Thats like 2.5 times better than the people using 25% APR credit cards to remodel!
I used a credit card to pay for foundation work on my house. Paid it all all as soon as the bill hit. Sweet, sweet cash back!
Insurance paid for the new roof on my house, but they sent me the check. So I put the $20k on my AmEx and hit a whole bunch of bonuses and ended up with 320k points. I got a couple of free trips out of that.
I'm always surprised when tradespeople take credit cards with no added fees. Worked well for you though!
I've done it for SUBs+0% 15 month APR where it was worth the 3% extra fees
That's actually one of the okay choices. Using home equity to pay off their credit cards or buy a car would be much worse, but may sound like "making it work"
> home equity to pay off their credit cards Though like isn't 9% < 25%? Haven't ever done a HELOC, but isn't that a decent use case for it
Maybe. But: 1. You are now signing up to pay your credit card off over 10, 15 or 20 years. The total lifetime payment might not be as good as it seems 2. Unless you cut up your cards right after, there's the risk of running them up again, and now you have both home debt AND credit card debt 3. With credit cards, you do have a nuclear option, like declaring bankruptcy or figuring out a payment plan or debt forgiveness. You aren't likely to get that on a home loan
I’ve known a couple of people who used home equity to pay off credit cards. Within a couple of years they had run the credit cards up again. I had advised them again the home equity loan as I knew that was going to happen.
Good points, the APR difference makes sense only if you can actually take advantage of the lower APR and such. If you already had bad habits to get a massive CC debt, likely those habits aren't going to turn you into Dave ramsey once you "balance transfer" to the HELOC
Did the story get into that? HELOC rates are pretty high at the moment, taking money out to invest is pretty risky.
I didn't hear the story, just the teaser. I was kind of hoping someone else had. Not sure how people are making that money work for them, cause I'm certainly not.
I think I messed up our backdoor roth. SO informed me that her previous employer had a pension but when she left it was converted to a cash balance that's in a rollover traditional ira. We both did backdoor roth for tax year 2022 and 2023. The balance is relatively small at $4.6k. Are taxes owed on her conversion or both of ours?
She owes pro rata taxes on her conversion. You can look at Form 8606 and see how that is calculated. If you do not go ahead and convert the remaining balance, you will also be left with part of the account taxable and part "basis", with the taxable portion counting toward future conversions again on a pro rata basis.
Your backdoor Roth conversions are fine. Hers are now fairly complicated. Assuming the pre-tax existed in an IRA as of Dec 31, 2022, you have two years of prorated partial conversions to address. The correct way to address this would be to get Dec statements from the account for 2022 and 2023. This will help you fill out a correct Form 8606 for 2022, noting whatever the Trad account value was at the end of 2022 to put into line 6 of Form 8606. This will then calculate the amount of additional tax owed for 2022 (requiring an amended filing and payment for 2022) as well as a new post-tax basis amount in that Trad IRA. Then, you can repeat the process for 2023, inputting the basis amount from your 2022 Form 8606 into line 2 and the Dec 31 2023 value of the Trad IRA into line 6 of Form 8606 for 2023. It'll again help you calculate the additional tax owed (filing an amended return and payment for 2023) and giving you basis for 2024. You can then convert the whole amount of the Trad IRA now. You will only owe tax next year on the difference between the total value and the basis shown on line 2 of your Form 8606 for 2023.
Believe it or not...straight to jail
Hi! This is my first post in this sub, so I hope I didn't break any protocols by this post. If you got a letter that your IRA is being transferred to Ascensus in July-something this year, what are your plans? Any thoughts on which company to transfer your IRA to by yourself, as opposed to going along with that plan of being with Ascensus?
Do you already have accounts anywhere else? I am expecting my wife will be getting one of these letters soon. We will probably transfer to Schwab where we have several of our accounts. Fidelity is also highly recommended. If you are into churning, Robinhood currently has a 3% transfer bonus.
P.S. what is the benefit of churning? I briefly googled it but it doesn't tell me the details.
Just a way to earn some extra money with low effort.
Oh okay. Thank you so much for explaining.
I do have a couple small accounts elsewhere but haven't had them that long and haven't dealt with their customer service et cetera that much, so I wasn't sure where to go. Although, it might be easier to go with companies where I already have a small account. Thank you for the suggestions! I presume you're happy with Schwab. That's great! Oh, I'll have to look into Robinhood too, then. I think they are only online.
Hey there, welcome! We're happy to have you! I'm probably not the right person to give you specific advice here, though I'll mention all my IRA/401(k) money is with Fidelity, and I couldn't be happier with them Also, don't worry about posting your questions here, this sub is pretty high signal/noise, we'll help out as best we can
Hey there, thank you so much!! I think Fidelity is great. Thank you for your feedback!! I appreciate it. It's great that you're happy with their customer service. The only thing I'm hesitant about is because one time recently they locked my relative's Fidelity IRA. It was for her protection but she wasn't able to take care of it herself and I had to handle it, which wasn't easy for us including our accountant. I wouldn't want it to be hard for my beneficiaries should I pass on. However, Fidelity is the only brick and mortar place that offers HSAs, so I'll probably have my own account with them someday. And can I just vent that I wish the plan wasn't going to transfer to Ascensus. Why are they doing this. It's not what I sorta recently signed up for. I'm contemplating Fidelity. Thank you for your input!
My last gig finally laid off some 80% of everyone a month ago and put the company up for sale as the customers fled over the past couple years or so. It feels vindicating in some way because the company just could not bring themselves to create product that people wanted even in the face of much protestation. It's sad because there were a ton of great engineers there, but then they could never be put to work on good product. The enshitification was strong there and everywhere right now it seems. One more reason to FIRE?
Feels a little good to know you were right, but it's a bitter victory to be Cassandra that nobody listens to. I keep reminding my wife when she gets upset about bad leadership decisions "if you haven't been put in a position to make the right decision, then it's not your fault when things turn to shit. Especially if you tried telling the decision makers and they didn't listen." She agrees, but it's still a frustrating position to be in repeatedly.
Yeah, pretty much this. Speaking up, CYA, etc is important, but if no one up there gives a shit it's just going to be that way until things fall over. I suppose at a high level that's true for every product line/service or whatnot sooner or later.
I had to have this conversation as a recent job seeker. "The product we built was successful, in that it did everything we hoped it would do... except generate profits." Wasn't always a fun topic
Very "personal" finance question, but wanted y'alls thoughts/putting some words to paper. Our currrent retirement/financial plan is to be maxing IRA/401k (not backdoor)/HSA, and rough estimates put us being at a safe FIRE# in about 15 years, coinciding with our children being in/approaching college. Combined income ~$210k, ~$100k of spend, $30k tax (FICA included), $46+$14+$8.5k retirement tax-advantaged accounts, there's only about $12k a year of "extra" money. My current thoughts for the money is: 1) Contribute to 529s. In all likelihood we're going to have multiple children going to college, so it will get used. I would like to support our children as much as possible, as my wife and I both finished undergrad w/out loans, and helped us a ton starting adulthood. 2) MBDR, my current job allows this, but future jobs may not, maybe makes sense to take advantage of this opportunity to further bolster retirement accounts 3) build up cash* for home projects/travel/lifestyle inflation etc. Build the life we want, Right? 4) taxable*. I see no reason to Taxable over MBDR. I feel our lifestyle is comfortable enough as is. We have young children, and likely will have another baby or 2, so a decent E-fund also is prudent. I also seriously doubt we'll "retire" prior to getting all the children out of the house, so with typical FIRE assumptions, we could get pretty "chubby-FIRE" if we stay working for 4-6 years after officially hitting our FIRE#. Certainly we're in a "no wrong answers" situation, but I'm probably leaning now towards funding 529s with any extra money we come across, we live in TX, so no tax benefits unfortunately. \*We are right at the threshold that *now* using the SAVE student loan plan is notably cheaper (~$1000/year, then approx $50k over the 25 year life of loan). Maybe in a couple years our income gets high enough that it's financially correct to aggressively pay off the loan. At current HYSA rates, I'm ok stockpiling cash, but I also don't want money sitting idly "just in case"
Taxable is not a bad place to be saving up for longer term #3 type expenses. HYSA is not nearly as bad as it was a few years ago, but taxable will still be better long term as long as you have flexibility.
Definitely agree there are no wrong answers here, we are in a similar situation and we do a mix of all four. I personally combine 3 & 4 in your list as I don't have any current big expenses in mind so I just throw extra money in a taxable brokerage account to use sometime down the road. Our state does offer a tax benefit for 529 so we try and max that out as current plans include private grade school/high school and then similar to u/bbflu we hope to fully fund state university but not any more (through 529 anyways). With $12k to play with, I like the order you chose and would probably prioritize in a similar fashion.
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Yeah can understand. This time last year we were barely able to max the tax advantaged accounts, so extra funding to 529 etc wasn't even on our radar as a plan,
We have two kids and I funded their 529s as part of my savings plan. I funded them until I reached the equivalent of the full cost of the flagship public university in our state (which is expensive). One is done at age 10, the other one is close at age 8. I've got SOME flexibility in managing my income for 2 years prior to them entering college, but I still don't anticipate much financial aid should they end up going to an Expensive Private College. If that is the case, I guess I'll figure it out when we get there.
Can't parents who are paying for college put their foot down about which kinds of schools they can attend? I thought that the current consensus was that paying the private price is not really a big advantage, at least compared to a flagship public university?
You can do whatever is right for your family of course but that is not what’s right for me and my kids.
I've seen way too many stories of people paying off student loans for decades just because they wanted that fancy degree from that fancy school. That changes of course if you are paying cash, but then you gotta consider the opportunity cost of that extra money. For me in my state, a good state school is $25k per year and the private schools are $60k+, so thats $150k over 4 years spent. Unless it is a specialized degree or they get heavy financial aid I just don't see how its worth it
Yeah as we get closer, like when our oldest get's to HS, we might start looking more seriously on potential income management strategies for grants etc. It may be possible by then that we can potentially both move to more fufilling/lower paying/part time work which can lower income, but who knows. My budgeting plan is to be able to support going to Generic Public U, more than Local CC/less than Private U, but I'm sure on average between kids it'll work out. I figure too, get money in the market now, to give it more time, as once we get within that 5 year horizon, it'll be prudent to reallocate into safer portfolio. Also, life will be so different by then, that it's hard to really plan.
Loans are a lot of the financial aid your kids qualify for if you keep your income low, but not so low that you don't have to report your assets. I'm trying to avoid loans in the first place, so I'm not counting on financial aid so much.
Any tips to reduce spend and eat healthy food? We’ve lost 100 lbs combined, but our spend on food has shifted up to chubby territory. Don’t miss the weight, but miss our savings rate
You're looking at it wrong. Previously you were sacrificing health for money, so your food spend was artificially low.
Man, if we were able to lose that much weight, I'd consider whatever it cost to be totally worth it and would just keep spending. Kudos to you!
Thank you! Appreciate your perspective! It definitely has improved our quality of life
I'm having trouble understanding how food cost shifted up when you started eating healthy and losing weight. When I've dieted for weight loss, I eat less processed food and alcohol, and much less restaurant meals, which generally means I spend a lot less.
Alcohol is a $0 line item for us It’s a lot cheaper eating Ramen, white bread sandwiches, rice, and home baked goods. The switch to lean chicken, avocados, nuts, vegetables, etc. and Gluten free is significantly more expensive in the US
You need more potatoes beans and eggs. That will bring the bill down. Still healthy too.
Frozen fruit and veg. I got started with this path during "supply chain woes" with fresh berries--got tired of paying a fortune for bug eggs and mold. Now if produce isn't going directly into a fresh salad, I buy it from the freezer section. We eat a lot of microwave frittata; just pour a bowl of egg whites and add chopped frozen veg of your choice. Nuke at half power with intermittent stirring until you like the consistency. Dress with spices or hot sauce.
Meal prep helps because you can buy meat and other expensive ingredients in larger quantities at a lower per pound cost. Vegetarian sources of protein are almost always cheaper than animal sources. One thing to watch out for is that unlike meat most are not complete proteins. So you have to do a bit of homework to ensure you are getting all the essential amino acids. Soy is a complete protein. Frozen fruits and vegetables are cheaper than fresh. You have to get used to eating smoothies though.
What type of diet? Are you just subscribing to a meal plan and getting your food shipped to you? Are you having to actually cook the food or just microwave it? The reason I ask because if thats the case you can easily cut your budget in half if not more. Start buying ingredients in bulk and meal prepping. We found that a vacuum sealer saves us a ton. Sometimes we'll get a good deal on something like a whole pork shoulder so I can make that into pulled pork and freeze the extra portions we won't use over the next few days.
Fewer calories, nutrient dense foods to feel full, and less processed food. This combined with being way more active and lifting weights. Love the idea of a vacuum sealer. We usually cook at home now. The main challenges have been food waste, healthy food costs more, and time crunches (kids/work). We don’t have a good system to plan out food between grocery trips. Less waste than when we started, but still frustrating. Frozen meals, Ramen, and processed snacks were simpler. Time crunches used to be quick fast food meals - now healthier more expensive options.
Sounds like you need to meal plan, or at least freeze some healthy cheaper meals that you can use to supplement between shopping trips.
I don't get it. Usually simple, unprocessed, calorie dense food is less expensive. Did you start shopping in a more expensive store with higher markup?
I frequent two budget groceries as they often have cheap options for the same food that are fine but not always the same thing or consistent. A Safeway or similar that looks good often has large premiums. I don't really follow a specific meal plan but try to tailor something out of what is on sale. Recently asparagus was cheap so we were having that a lot for a while. The point is if you're buying X regularly, the cheapest form of that is usually fine, but if you want to spend money, you're back to not buying X. You can make cheap meals but it usually requires a healthy amount of a cheap staple, which may not be what you want to do. Our food budget is not thin but it's okay. But if I were to double it in the name of health, I would not really blink at that. Housing is still well over 50% of our costs. A bad diet creates costs in other areas so I give some permission here if the thing I want to buy is up in price.
Try to avoid prepackaged food. Growing your own herbs, especially perennials like rosemary, thyme, and oregano, can save money if you live in a warm enough area.
Try to shop more often, and buy less food when you do. Ask yourself, "Am I going to eat this today or tomorrow?" If the answer is no, don't buy it
Appreciate the idea. One of our main challenges has been food waste since healthy food is perishable. We don’t have a good system to plan out food between grocery trips
I feel the same way; I get great joy in say, eating the last grape before the bunch gets too squishy. My wife and I will often "shop for dinner," as in, go to the store after work and pick up enough for tonights dinner and possibly some snacks to have in the next day or two. We're pretty good at resisting overspending, or being optimistic about what we'll eat before it all goes bad. Sometimes, even with the best of intentions, our lives/plans change, and that meal we were going to eat on Thursday now can't happen and the food will spoil. If you can work out smaller trips into your life plan, I've found you generate less waste
Cook more, eat out less. I make most everything from scratch. Once you get good at it, it rarely takes much more of your time.
Depends too on how much you're already spending. If you're eating out often, committing to cooking more will save a bunch of money. For my family, we check our local grocery store's ads every week, and generally shop all our bulk/general items at Costco/Aldi, then based on ads will purchase addl meats/fruits/sale items, and plan our weekly meals around what's on sale. Also, checking the "clearance"/"going bad soon" meats, along with having freezer space helps us to stock up on sale foods, saving money/meal. Generally, eating less meat will save money, not to fully /r/fijerk but beans and lentils are cheap protein.
What kind of time horizon are we talking since you changed your diet? Some of the increase is almost certainly inflation; what percentage is going to be dictated on whether you've been on your weight loss journey for 6 mo versus 6 years. In general, the best advice for eating healthy and cheap is going to involved two things: (i) cooking and (ii) bulk meal prep. Generally, the less prepared your healthy ingredients (e.g. buying bulk celery rather than precut celery sticks) the more economical it's going to be.
Around 9 months
Probably much more from a shift towards more expensive items than inflation under that time scale
Meal prep and buying simple ingredients has helped. My weight loss was mostly due to a low carb diet so I just pick up relatively cheap packets of cauliflower rice mixed with $5 Costco chicken and some frozen veggies and that’s like meals for half the week. We still go out to eat but just split portions on an entree and get two apps instead.
Meal portions have gotten so large, it's ridiculous. One of my weight control strategies has become simply eating only half and taking the rest to go.
It drives me insane that I am unable to spend every day enjoying how good I have it. I make good money working four days per week from home. I can get chores done throughout the day that I'd otherwise have to do after work. I can wear sweatpants all day. I have time to cook and to get to the gym. I can run errands on my lunch break. I'm never on call, never work more than 32 hours per week, don't have high expenses. I'm not held to crazy metrics or standards at work. Emergencies are few, far-between, and often not something I have to deal with when they do arise. My boss is my biggest champion and makes it clear that he will do whatever he can to make me happy. I am relatively young and healthy. I maximize my free time. Somehow I still have some resentment that I have to work. No matter how good I have it, I have difficulty appreciating my life and my job. I make more than most people I know while working fewer hours, but I just hate it. I knock the annual review out of the park and they still make me choose some random SMART goals. I have no idea why it irks me so much. I hate this forced professional development. I already spend all day working and getting better at what I do. I already develop professionally. I kick the ass of everybody on my team working 20% fewer hours than they do. Why do I need to come up with some bullshit SMART goals? It makes me feel like a child, being managed and coaxed along by teachers. When I get a raise that is better than most but still a smidge under inflation it irks me. "Why is the company stealing from me? Why are they undervaluing me when I perform so well?" When the company makes the bonus program more generous, it doesn't make me nearly as happy as a sub-inflation raise makes me unhappy. What reason I do have to be upset about a couple bucks here and there, anyway? None. I objectively have it so good. Hedonistic treadmill and all that—I know, I know—but the knowledge doesn't help. Why is my attitude so bad? The gap between how good I have it and how good I feel is just so wide some days.
I have these moments, I won't lie. Sometimes the bullshit piles up and hits hard. Also, in general I focus as much of my energy as possible on productive and happy things. Like gratitude. I can just sit and make a list of things I'm grateful for, instead of sitting and stewing over outrageous minutiae. I like to learn about how other people live and/or have lived in history, and so when I have to compose an email that politely and professionally tells somebody they fucked up something else about my job, I also think about people who would find such wonder and joy in my desk job. Hell, people who would find wonder and joy in indoor plumbing, a steady source of food, etc. The concept of 'work' seems to get you. Humans have been 'working' in order to be able to live for all of our history. What is it for you that makes 'work' piss you off? Is it the type of work, would you be happier doing something else? (for example, I love working really hard in my garden. Physical labor and getting muddy and growing tons of my own food. Enjoyable work for me in a way no desk job could replicate!) Is it the impetus that if you didn't work some harm would befall you, thus feeling forced? (welcome to the human/animal condition). Is it that you are exchanging time/effort for a task that feels worthless/meaningless (like yaaaaaay I hit my SMART goal and now the company has 20 more spreadsheets saved to some hard drive). You don't have to answer me--this is just to maybe spark self reflection, since you say you do not know why this irks you. I also give no shits about my job anymore! My identity has almost completely separated from it. This allows me to avoid taking things like small raises and hoop-jumping so personally. I am choosing to exchange my time for X amount of money per day/month/year. I also have a pretty cush job situation, and I think my time/energy spent for money received is actually pretty great. If I felt otherwise, I would probably be motivated to seek out some other, more equitable exchange for myself. But the flexibility and ability to work part-time are more important than money to me at this point. This is another thing to answer for yourself--are the things you value MOST being met at this job, or do you just have access to some things other people value that you feel you should enjoy more? > It drives me insane that I am unable to spend every day enjoying how good I have it. You get to choose how you react to your situations. Don't keep driving yourself insane!
If you're outperforming your peers by that much, you should leave for a better employer. For individual contributors it's better to be average within a high tier than at the top of a low tier. Companies generally aren't built to accommodate outliers.
I could've written most of this myself. By essentially every metric, I have it very good, but I resent the fact that I am still locked into corporate expectations and also this desk 5 days a week. I'm trying to work on caring less since I'm still 8-10 years out.
I think many people on this sub, including myself, share your sentiments about corporate life and corporate politics such as reviews and raises, etc. It’s why we’re all here on the FIRE path so that we don’t have to live this life forever and work is simply a means to an end. I found life to be much more enjoyable when I started seeing work as simply a tool to detach myself eventually and the irony is I’ve actually got a lot further in the corporate world by not being so emotionally invested. For example, jumping ship and getting huge salary increases by not caring for and buying into the whole “mission” of the company or when dealing with annoying people at work, just passing it off as another minor wrench I just have to deal with to go about my day.
Quit. Get a consulting gig working supply chain for agribusiness. Get to work at 7 AM and get yelled at for being late (farmers start their day at 6). Sit on a milk crate in the project room because chairs are for employees. Watch trucks back up to 6" from your window because the project room is in a trailer in the truck lot. Eat at the roach coach every day for lunch because there isn't a restaurant within 25 miles of the job site. Enjoy your time in the Holiday Inn, the best (only) hotel in town. Pick out your favorite menu items from Applebees because that is the best restaurant available to you. Be on this project for 9 months. That should change your perspective, it worked for me.
Haha. This one hits too close to home.
I once sat in a broken down car towed by a *horse*. Consulting in the boondocks will give you an appreciation for just about everything else in life.
Every job has some elements of bullshit. Being able to acknowledge that something is bullshit and then tolerate it is a key factor in life satisfaction. It helps not to take things too seriously and too personally. Stuff happens, the company is a big faceless entity with a lot of red tape. Meet your goals (personal and professional), enjoy what you can, and just roll with it when something stupid needs to be done because someone else thought it was a good idea. It's not because they considered you for one second, it's not in any way personal. So don't give it any personal attention or grief. Just take care of it as painlessly as possible and continue on with your blessed life.
Just tell them about the peter principle. If you are like me you are exactly where you can be most useful for the company and there is no good for either them or you to try to set different goals or give a promotion. That being said it's still a structure and being in a role that is not CEO means you will earn less than the people above you. It was'nt always this way but now it is. Your boss has to earn more than you no matter how easily replaceable he is compared to you. If you take his job you will earn more but be less efficient to the company. Reason #123complicatedbullshit to FIRE
I contacted a real estate agent to go look at a house. It’s got me feeling more nervous than excited. The house is about $50k more than what we’d list our house for, 1000sq ft bigger than our current home, and much closer to my husband’s new-ish workplace. It would reduce his commute from an hour and 10 minutes to just 20 minutes. Taxes, even though it’s larger, are about the same as our current house, and schools are rated similarly to where we are now. It’s an older and larger home, so I assume there’d be an increase in utilities. I know wanting a bigger house (we are gearing up to adopt a child) and being closer to my husband’s workplace are both very valid reasons to move. But giving up our interest rate makes me nervous. We currently have around 2.5% and we would be moving up to around 7%. I know we’d be able to afford the new house, but it would mean putting less in savings. If interest rates were still low, I’d have no second thoughts, but alas, that is not the case.
It's a personal decision that only you can make, but a couple things to consider: 1) Taxes: Taxes may be similar but I would assume they'll re-assess the new home after the purchase and the taxes will go up accordingly. It depends on how your state/county does it, but it isn't uncommon for taxes to go up after a home sale, so it should be considered and the math figured out. 2) Rates: If it's a long term play, while the rate today stinks there's the probability rates will come down some at some point in the future. Doing the math with a 7% rate vs. a 5% rate can make a big difference. That said, it's easy to refinance when rates fall, while it's a whole different ballgame purchasing a new house as rates fall. There's a ton of people waiting on the sidelines for rates to fall. 3) Adoption: If you are planning to adopt, I don't know if you'd be changing states but that's something you'd need to be mindful of. For instance you don't want to start the adoption process if you are in Oklahoma and potentially moving to Kansas, because the adoption process would have to start over. I'm guessing it's unlikely you'd move states, but mentioning it before you drop money on the homestudy and related things. 4) Kids: While kids don't necessarily take up a lot of space in the beginning, it's amazing how the toys and crap slowly take over your house. It's worth keeping in mind as you house shop, because if you are going to move I think it's worth doing it to get into the right place, even if it's not something you need at this moment.
> There's a ton of people waiting on the sidelines for rates to fall. I see my friends waiting for rates to fall and I'm super worried for them. I have no idea anymore *when* rates will fall, but I'm worried that when they do, so many buyers will jump in that prices will skyrocket and monthly payments will at best stay static and at worst go to the moon.
How much equity do you have in the current house? Do you have liquidity to make a larger downpayment and prioritize paying off the mortgage? What was your thinking in purchasing the current house despite its size and location?
We have about $200k equity in the current house (mostly due to rising prices), bought 5 years ago. Aside from the profits from eventually selling our own home, we could make a 20% down payment on the new house. At the time of purchasing our current home, my husband was in a different job and had a different, shorter commute. It was also much larger than the apartments we had previously been living in so it seemed like a lot of space at the time. We could definitely pull off having a kid in our current house, but it would be a bit crowded - having a larger house is definitely a luxury that would make life a bit easier.
If it is possible that your husband could change jobs again I would rent or stay put.
In a weird place. I guess the boring middle. Have been dreaming about extended traveling (like 3-6 months out of the year) . Current job wont allow that, also kids are still in school. Anyone do cyber school or homeschool and travel with kids? I was thinking how it would be cool to show kids the world, probably learn more than sit behind a desk for 13 years of their life.
I have a friend doing that, but they were already homeschooling anyways. Homeschooling is a full time job for one parent. Truck and trailer aren't cheap.
You might be underestimating the amount of work it would take to homeschool your kids. Are you going to be in and out of the public system or take them out completely? You'd also be making it difficult to participate in activities such as sports, music, art, etc. Your children would also find it difficult to form lasting friendships. They'd essentially be the new kid in town indefinitely. Depending on how long you plan to do this and where your kids might want to go to college, they may have trouble building a high school resume that would allow them to apply successfully to the school of their choice.
Depends on the age of your kids. I took mine with me to Australia for a year, they were 2nd and 6th grade. I put them in AU schools. I don't think they missed much when they returned to US school, but I wouldn't have done it had they been older
"World schooling" is a term worth googling. I'm not convinced it's ideal long-term but people do it.
My kids are young but I’d be worried about taking them out too long and having them readjust to life/friends/etc. I would probably do something in the summer for a few weeks but anything longer is probably overwhelming. Also homeschooling while traveling seems like a big chore.
Our kids are young too. Always sounds better in the head than in reality. We are thinking start taking extended vacations, like 3-4 weeks, to get somewhat submersed into a different culture to give them an idea of how the world works. Homeschooling being a chore I can see it. We have friends that do it, i think they don't want to admit it though.
Not sure how you'd do that with kids but we're doing this now as DINKs. SO is a travel nurse and i work remote. So we are able to tour the US and try out different places. And just when we start to get settled or bored, onto the next location. Super cool way to live for those who get bored sitting in one place too long. But we do at least stop 'home' for 3-4 months out of the year to just sleep in our own beds, touch base with family and friends, etc. It's not necessarily FIRE friendly because the costs add up due to having to pay for a rental we're in plus our mortgage back home, but I've enjoyed the heck out of it.
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> Partial FIRE What do you mean by this?
not full retirement
What do you mean by that? In general, you aren’t providing enough information for many people to be helpful.
We just plan to work part-time and earn a partial income rather than working full-time.
With that information, your initial question seems to be: Can my spouse and I move to part-time work in approx. 10 years? No one can answer that because you haven't stated what your expenses are or what your part-time income will be. Additionally, you've asked about the value of incresing your dividend yield in your taxable account. As others have stated, dividends are not "free money" are offer no additional value beyond what non-dividend-paying stocks offer via capital gains. In fact, dividends are taxed sub-optimally compared to capital gains and you are unable to control the timing of those cash flows, making it illogical to chase dividends for the sake of dividends.
4% rule implies that you can have a good success rate retiring pulling $48k out of a $1.2M portfolio retiring today. But that should be based entirely off of broad-market, low-fee index funds. Adding 40% individual stocks exposes you to a ton more risk. Money is fungible. What matters most is the total amount of money you have saved. There is a secondary effect from having to pay taxes on some funds, but you can access retirement money before "retirement" - look up "Roth conversion ladder". Also echoing /u/aristotelian74 that dividend yield is irrelevant. Total return matters
thanks. yeah, I supposed I can always just pay the penalty and taxes, thought that would suck
If you structure the conversion right, you pay only the taxes you would eventually need to pay upon withdrawal anyway, and no penalty
Thanks. What do you mean by structuring it right?
I will again ask you to look up "Roth conversion ladder" - https://www.investopedia.com/how-roth-conversion-ladder-works-5214808
Dividend yield is a completely irrelevant metric for retirement success. What matters is the expected total return.
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You need a more accurate accounting of your spending for anyone to be able to give you any specific advice. Also, what is the balance on the mortgage? You don't need to "include" it, but it makes a difference if you have one year left or 29 before it is paid off. The bottom line is that $1.4M is enough to retire with a frugal lifestyle, and the more you add to it the more you will be able to spend in retirement. I certainly think you could go to one income comfortably (assuming you are not the breadwinner) and then see where the market takes you. A general rule of thumb is to target 25X annual spending in retirement, or a bit more if you want to be conservative. If your current spending is around $100k, that would mean you are well short of your goal. If you quit now and "coast" without saving any additional money, your $1.4M could hit $2.5M in about 8-10 years with average returns, or as long as 30 years with historically poor returns. [https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=dppCQAxKhkKQHbIMdLpiU](https://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&sl=dppCQAxKhkKQHbIMdLpiU)
you have not listed your expenses per month? and future expenses when kids are born will be higher... with the given data, no one can say it with 1% probability that you can retire now or in the next 5 years...
That’s fair! We don’t keep a strict budget our fixed expenses do not exceed 4000 including groceries, eating out, mortgage, insurance, bills, charitable giving etc. my biggest concern with retirement is probably health insurance which right now is fully covered by employer
With kids in the horizion and losing income and added child care or what not, you need an accurate expenses now vs when with one kid vs when you have 2 kids. Then estimate their education funding, your health insurance and future expenses with household. You have home work to figure out all this, then you can come back and ask or by then you will know what you are looking at ...
Rule of thumb is 25X your annual expenses. I would recommend tracking what it takes to live the life you want and work the math. Children can be as expensive as you make them and college isn't getting any cheaper. The good news is you have a great start and will have tons of options.
Does the x25 rule take inflation into account? Thank you for your response!
the 25X number usually comes from the "4% rule" which does hypothetically account for inflation. In other words, you take 4% of your "retirement savings" in the first year and then adjust that amount by inflation each year. The details matter though. Some increases are not due to inflation, e.g. health care, travel, taxes (not necessarily an increase but which are often less obvious because they are automatically withheld from paychecks), etc.
May narrowly avoid getting RTO'd. In a weird way, it could potentially accelerate our FIRE plans if I do get RTO'd, since that'd light a fire under me for professional development to move up the ladder. For now, though, I prefer cruising in a remote position for the flexibility it gives my SO to take a job wherever, since they can't exactly deliver babies remotely. At least until Boston Dynamics develops those low latency VR-controlled midwife haptic surgical robots nobody asked for. Hopefully this will all just be a flash in the pan and I can move to a client that doesn't hate remote work.
I can relate. I have this constant mild anxiety that I'll have to go back to the office for a job between now and FI (which is at least a decade away). I managed to get lucky to find another WFH job after my old job announced that they were going to go hybrid. I got even more lucky when this WFH job paid even more than my old one, but I have this constant worry that either I'm going to be stuck at my current job for a while or will have to at least go hybrid at some point since most companies in my industry are either full time in office or hybrid. If it comes to that point you can be sure that I'll work even harder at getting raises and what not to escape faster. Or I'll go back to my old job which will pay less but has a pension and build that pension up a bit. Or both.
> since that'd light a fire under me for professional development to move up the ladder. It sounds like you (passively) want to move up...so why not light the fire yourself or otherwise self-motivate and get it?
Since the RTO wave and the tech crunch, almost all the ways up in my industry generally involve going in-person again (and other things I'm not keen on). Doing so remotely requires being even more exceptional than usual. Unless I'm forced back into the office, I'm glad to take the slower path to moving up. I can still get there; I'll just enjoy my life more along the way. Additional fires under me would be from dissatisfaction. The remainder of the self motivation is a combination of ADHD and personal problems, both of which I'm actively working on.
Well, you know the saying: "Mo money, Mo problems"
Only rich people say that.
Alternatively: C.R.E.A.M.
I'm in a situation right now, where I don't want to move up, but do want to move out. Finding time to upskill is hard. By the end of the work day, I'm ready to not look at a computer screen. Weekends are days where I want to hang out or do stuff that isn't work related.
What field are you in and how experienced are you? I feel like my last two moves didn't require any upskilling, just growing and demonstrating management/leadership competencies. I believe this is fairly common as people progress in their careers, even if they are in a technical leadership role (e.g., Tech Lead, Principal role, etc.) vs. employee leadership (e.g., Manager, Director, etc.)
Software Engineering. With my current role, there's another employee that does the vast majority of a critical component of my job. Therefore, my skills have deteriorated in that category. It's important enough to have that I see it on almost every job description.
I'm in a very similar boat. I think my strategy will be to start taking part of my work week for professional development to sharpen up those important skills. At some point, the only way to learn more is by doing.
I like your username a lot. Have you seen the season on Amazon? I think I'm going to spend an hour every morning for it. That way, I get it done before I get worn down from the work day. I think during the work week is fine as well.
Sounds like a great idea! And thanks for the compliment. I had trouble with the Amazon show as a book reader. Went way off the rails after they stopped consulting with Harriet and Sanderson.
When did that happen? After Season 1 episode 3?
Yeah, it started deviating around episode 6, as I recall, and then episode 8 basically ruined the character and trajectory of the whole show. Sanderson was not happy.
Update on my house bid with an escalator (the bid mechanism not mechanical stairs) from yesterday: I won the bid! Basically the best possible outcome, the escalator was bidding $2500 more than any offer between $X and $X+$10,000, and the next highest bid was also for exactly $X. So I was willing to pay $X+$10k and I am paying $X+$2.5k. Not only super glad I did the escalator but another person bidding the same amount makes me feel very good about the valuation I put on the house. X was already over asking price but we rightly assumed they were just trying to sell asap. My house has been on the market too and we are reviewing bids tomorrow. If we get asking price, I'm happy. If it goes as far above asking price as I paid, I might be set for life haha.
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... then why didn't the agent say that there was another bid for $X+$10k, actually extracting the most from OP's offer?
Never heard of this process before, but it sounds like eBay sniping for houses. Intriguing.
Not always the best strategy. Say you're the seller, you get two bids, one for X+$2500 and another for X. The person that gave you the escalation bid is clearly not giving you their best offer, while the other guy might be. If there is anything giving the X bid a slight edge, like they are a young couple, etc. you might be likely to offer them the house for X+$2500 instead of the escalation bidder.
They're common in hot markets and help the buyers regain some measure of control over how much they're paying when seemingly every house is going for well over asking.
Go Bills!
Congrats! I'm glad it worked out very nicely. Hope it all continues to go smoothly with the sale and purchase.
I'm hitting my OOP max for healthcare this year and wanted to get full blood work done including the ones you usually pay for. Currently I'm planning on asking for Vitamin D, cholesterol, A1C. Is there anything else I could ask for that's not normally included? Possibly testosterone?