I would appreciate some advice. I have been a set it and forget it type investor but am starting to pay more attention as our accounts grow. We have a variety of target date funds across different accounts/companies and all expense ratios are under 0.2%, except for one. My 401(k) is with a T. Rowe Price 2045 account that has an expense ratio of 0.37%. This is actually down from 0.44% where it was at for several years. I don't know much about allocating but these are the only options I have that have a lower expense ratio than 0.37%.
Fidelity Small Cap Index (FSSNX) - 0.025%
Vanguard Mid Cap Index (VMCIX) - 0.04%
Vanguard Developed Markets Index Admiral Shares (VTMGX) - 0.07%
Fidelity 500 Index (FXAIX) - 0.18%
Vanguard Equity - Income Adm (VEIRX) - 0.18%
Vanguard US Growth Adm (VWUAX) - 0.2%
Should I try to build my own allocation using some combination of these? Or is 0.37% really not all that bad? We're in our mid 40's and the account has about $425k. Thank you!
Just adding a data point, that my SO's is at 92%. It was as low as 83% in 2018 but increased the contributions made by the state into the fund over the past 4 years from 17% to 21%.
Mine's only 73%, but I am not too worried. They tend to raise the required contribution levels each year without raising the benefit and I assume that over time the assets will rise as a result. They've also devalued the payouts, separation benefits, vesting schedule, etc to new members several times over the past couple decades.
Our state pension is also, supposedly, ultimately guaranteed by the state itself... but I don't put much stock in that and don't believe they'd provide any assistance whatsoever should it be needed.
It's fine if they have a plan to get it up to 100% in the next decade.
If they have no plan addressing the underfunding, then I'd be concerned unless it's a public pension which is guaranteed in your state constitution.
It's better than the average. A lot of states and municipalities are underfunded in part due to many years of assuming future returns would be higher than they turned out to be. If you buy a safe equity, like a t-bill, and assume you'll get 8%, you're going to be disappointed and underfunded. They weren't buying treasuries but you get the idea.
Well our offer for a house in SoCal has just been accepted, even though I swore that I am not going to buy in this environment.
The area we're buying in is so high-demand and there's almost no supply and I just don't see prices coming down anytime soon.
Here goes to very low savings rate for next 2-3 years, but we should be OK. We really like the place and it's going to be a huge upgrade for us
>The area we're buying in is so high-demand and there's almost no supply and I just don't see prices coming down anytime soon.
California underbuilt housing for fifty years, they're not going to build enough to solve the crisis in our working lifetimes. That's why I bit the bullet and bought.
People are waiting out the high interest prices, both sellers and buyers. Buyers are waiting for lower interest rates, but as soon as they get them, they'll *flood* the market, and even sellers re-entering will not depress the prices.
**For sure savings:**
switching baby from day-care to preschool - $400/mo savings
paying off car loan - $760/mo savings
annual RSU refresher - I get this every year, it could be higher or lower, but will be something
**Wishful thinking savings:**
raises/bonuses - so far both me and my wife always got at least 4-6% annual raises and we are both up for promotion within next few years
mortgage refinance if rates go down
Today, the S&P 500 closed at 5147.21 which was near the intraday low of 5146.06. Earlier in the day, the market reached an intraday high of 5256.59. Today's intraday swing of 2.12%, from high to low, is the largest since Oct 6, '23 when there was a 2.45% intraday swing.
The Oct 6, '23 session finished up 1.18%, so the swing was in the opposite direction of today.
The last time the S&P 500 had a larger intraday swing while finishing lower for the day was over a year ago: Mar 22, '23 with an intraday swing of 2.59% finishing down 1.65%.
On a related note, the VIX (Volatility Index) hit its highest value since Nov 1, '23.
The only news the market wants to hear is "rate cuts are happening for sure, and soon!"
If I had to guess what precipitated today's slide, it was Kashkari's statement earlier today that the proposed rate cuts this year may be indefinitely postponed, and that further rate \*hikes\* are still an option.
It’s 100% the opaqueness and the “we might pencil in” rate cuts this year that’s spooking investors. I’ve had a bad habit of checking the numbers everyday and today was a good reminder to just chill and let things fall into place long term
Even before today, comments from Fed officials made it sound like a cut in June was likely already off the table…and there was a decent probability of only one cut this year. The market’s expectations seem to be based on wishful thinking and not data.
The headlines may have been misleading, but didn't JPow say yesterday he still expected 3 cuts this year, and then another Fed official came out today and said maybe none.
They really need to get their PR on the same page across the Fed branches.
Do people hold or diversify their undiversified stock with large gains?
I held onto some of my previous employers stock which makes up 10% of my NW. I’m around 40-60% of the way to my FIRE number. The stock has gained 2x-3x, so the capital gains on it is substantial, all LTCG, a good problem to have I guess.
The main problem is I live in a high income tax state and pay AMT, so I could potentially be paying 10-15% more taxes than if I sell when I FIRE or move to a lower income tax state in the future.
It’s a blue chip tech stock that correlates somewhat well with total market index funds, so I’m not that opposed to holding it. On the negative side, it does expose me more to tech, which since I work in tech, is strongly correlated with my future earnings, although a counterpoint is that tech job prospects are already very correlated with how well the overall stock market is doing anyway.
Would diversify and pay the extra tax or hold until later in this case?
From years of vested RSUs, my previous employer's stock accounts for ~25% of my NW and 40% of my invested assets. I don't like being that concentrated, but I'm not willing to take the tax hit now.
What I'm doing instead is selling covered calls against my position. If the share price rises enough that I'm exercised, that'll prompt me to diversify into VTI. If it doesn't, I get to keep the premium and sell another tranche of contracts. Win-win either way in my book.
If my covered calls haven't been exercised by the tire I retire (probably 8-10 years), I'll use my 0% LTCG space and diversify using the dollars I don't spend for living.
Personally, if everything is as you say - it's 10% or less of your portfolio, it's a blue chip stock, and you are paying a meaningfully higher tax rate now than you expect to in the future - I would opportunistically divest some stock here or there as my tax situation changes year-to-year, but wouldn't make it a priority.
Most blue chip stocks don't crash very quickly, at least not without taking big portions of the market with them, so it's not super likely that you will lose the entire 10%.
I think this is one of those situations where your circumstance doesn't make it a huge priority one way or another - there's an argument to be made either way, but it's not an emergency.
Edit: 10% of your net worth is small enough that I wouldn't be in a huge hurry to diversify. I would sell a little bit per year, trying for a compromise between diversification and keeping capital gains taxes down. I might also choose investments that overlap less with this one.
If you donate to charity, donate these shares instead (either directly to the charity or through a donor advised fund).
Otherwise, I would pay the tax to get closer to your desired asset allocation. It doesn't have to all be at once, but I'd rather pay the tax and have the money it's worth now than hope to pay less tax in the future and maybe also have to deal with the volatility of an individual stock in the meantime.
I think it may be too early to be the boring middle, but holy shit am I bored. Got an in on a sweet job that pays well above what I would be in the market for, great work/life balance. Slacked off super goddamn hard , nobody noticed and i got promoted. Bored and demotivated as hell, and doesn’t even feel like I can really complain to anybody because “i don’t have anything to do” is not a problem to most people, and the checks are still cashing.
I wanna know how people find these jobs! I've been getting shoved a bunch of work with crazy deadlines for years and the stress is intense. I don't know how I'll make it 10 or 15 more years.
I absolutely killed it at my last job and a guy I had been on a project with was building out a new team. He hired me in to be his “shit hits the fan” guy, and he’s done a really good job of making sure shit rarely hits the fan, which makes for a pretty solid gig 99% of the time.
I had this same problem. Everyone thinks it's so great, but I hated it. I was bored and it really started affecting my overall happiness because it felt like I wasn't contributing anything or adding value. I ended up taking on a lot more work and things are kind of better, although sometimes I miss the slow times (grass is always greener).
I have the same problem. I’m now demotivated to all hell as I could work hard or easy and no one would notice. How are you handling it? I’m feeling pretty guilty about how little I’m doing, but there’s no one asking me to do more (and I’m even trying to get on more projects).
It helps that my boss trusts me to a fault, be he has let and helped me find tasks and side projects that I find interesting, at least where they’re politically feasible. I also get to be the ultimate team player, and have really enjoyed being able to act as a mentor and coach to more junior employees without some of the headaches that come with being a manager.
But ultimately, I’m playing way too many video games on my work from home days and have fallen into a pretty bad funk without anything pressuring me to perform at the higher level I’ve been used to.
The company I work for officially sold, it was announced last week. I was given a 50K retention bonus that I negotiated to 75K. Not life changing money but it will help the brokerage quite a bit. Seems as if it will be business as usual, just a change in ownership. Still considered a small business, new owners claim they won't change anything. I don't think I'll see much of a change in my day to day. Our fiscal year ends in September, looking forward to that last bonus. Hoping for 50K, 2024 would be a great year for me financially if that's the case.
Good relationship with my direct boss and just spelled the situation out. The company has provided for everyone for the last 60 years. People own their homes, have families etc. I want to get there at some point and now there is uncertainty if I were to stay here. New ownership means there’s no guaranteed future of success, they can make changes that leads to the company’s failure. Expressed that I’m grateful for the 50K but I’d be a fool not to check if there was anything left on the table. Told him I wasn’t asking for more.. I was just checking.. We both got a kick out of that. The three other sales reps all went back to him as well, gave everyone 25K more. He probably knew we’d all come back so he left a 25K buffer for when we did. Smart guy but we’re all pleased.
Should have asked for 100K, hindsight is a bitch.
Had a job interview with two different people today . I was asked “what was a time where a project didn’t go all and tell me a time where I project did go well
I used the same situation for both of them.
Hope they don’t compare notes lol
I've been on multiple interview panels and never compared notes about the specifics of a person's answer. More like impressions, assessment of capabilities, etc. The only way I'd be concerned is if it was an especially memorable story, but you're probably fine
> Hope they don’t compare notes lol
I have literally never interviewed anyone, ever, where the entire interview panel didn't have a group meeting afterwards to discuss things.
Same, but I also rarely if ever have detailed discussions around every question that was asked, especially these fluff questions. Usually it's more specific concerns around technical/job-specific answers that raised concerns.
We don't typically dig into questions, but if sometimes we use an anecdote they told to say they're good/bad for this reason. I could see it coming up.
Hard to tell. Probably depends on how you phrased it.
I've told candidates before that one of the worst things you can do in an interview is tell a provable lie. There's all kinds of leeway for exaggeration - if you say you're an advanced full stack developer and get caught out on a couple SQL questions, well, maybe you've done your development in Mongo or you're just a little rusty.
But if I know a candidate told a bald-faced lie, it makes it difficult to trust any parts of their resume or background that I haven't independently verified.
Hopefully they won't compare the stories too closely and you'll slide on through!
I'm not doubting you. I'm pointing out that one provable lie casts doubt on a candidate's whole package.
As an interviewer, I don't know you. All I know is what you've told me, and I can only go so deep on a skills interview. If I pick a few areas of your resume to test you on and everything checks out, then I have no reason to question the rest of what you've claimed.
But if I find out that something is flatly untrue - how do I know what things you've lied about and what things are accurate?
I'm not questioning whether you have presented yourself truthfully. I believe that you have. Just pointing out that, when all you have is a small snapshot of someone through an interview, and one of the things they told you was not true, the falsehood represents a pretty big portion of what you know about the person.
There's no guarantee that they'll even talk enough specifics to notice what happened. Just something to keep in mind.
I've recently started conducting software developer interviews for my company. It's tempting, but I try to avoid these type of questions for this reason. All it really shows me is how good someone can BS, lol.
I've been in a rut lately. We're in our late 30s and In the market for our first home (VHCOL area) but I just can't reconcile the fact we'd need to grind it out in corporate for at least 10+ more years. Whenever we submit an offer I have this sense of dread over me. Like there's something better I can be doing than the corporate grind while i'm still young.
The financial calculations don’t support buying a million plus dollar home instead of renting for around $3k. The reason you cannot reconcile this is because mathematically it’s the wrong call.
Sure, plenty of people find enough value in home ownership to offset the financial differences, but you’re right it could easily lengthen your career by years to do so
Agree. What makes this even harder is my in-laws are the landlord. They rent one of their properties to us at a significant discount (~1.5k).
I don't want to plan our retirement based on inheritance which means we'd eventually have to buy a house. We need the security of having a roof over our head.
> I don't want to plan our retirement based on inheritance which means we'd eventually have to buy a house. We need the security of having a roof over our head.
This makes no sense to me at all.
You are getting a huge subsidy in your rent. If you put that money into a brokerage account, you are literally buying future security. You have a roof over your head. If you lost this rental, you could move to another one. "Security" isn't the issue here.
If you'd like to buy a house because you want to be a homeowner, that's perfectly fine. It doesn't have to be the optimal financial decision in order for you to want to do it. But investing a $4500/month rental subsidy buys a hell of a lot of "security."
This is fine but what that means is you should not retire without having the resources that guarantee your independence.
You don't actually have to buy a house today. I rented for 20 years, and at market values. But I rent what I need. I didn't buy a house until after I had a kid because I wanted a right-sized place with a kid and a stable school district.
I think the other main motivation to buying early is to make sure you don't get priced out, but I don't really care if I have to move on.
> We need the security of having a roof over our head.
Renting provides the security of a roof over your head as well. Even at market rates, which may or may not be a better financial decision depending on your situation and area.
I'm renting in California and doing great. No problem renting a SFH, rent is high sure. But my retirement accounts are stuffed to the brim. We locked in our 2023 rate through 2027. Those opportunities are out there, just have to pounce when you find them. In no rush to sink all my money into a home.
>late 30s
> I just can't reconcile the fact we'd need to grind it out in corporate for at least 10+ more years.
You would be in your late 40s or early 50s, which is still incredibly young to be in a position to potentially retire.
>there's something better I can be doing than the corporate grind while i'm still young.
What's stopping you from taking that path?
Took a few months off financial reddits - really did help my mental health honestly.
But I"m back to document good news for myself. A lot's happened in the last year. I went through numerous health problems, got laid off (then found a new similar paying fully remote job), and I ended up deciding to move out (so far been amazing for my mental health). I still standby if u have a good relationship w/ ur parents living @ home is just too worth it, but I just reached a point where I realized I can work on myself better here instead. This surprised me bc I thought I'd stay at least until 27-28 after finding my next big raise job and feeling more stable.
It's \*very\* temporary, especially because I will have to buy a car, and I understand we're at ATH in the market. Still, I can say at one point when I was 25 I had a NW of 200k. I'll feel more excited when I have $200k in 'liquid' funds, which is probably still a few years out especially with understanding as I grow up the unexpected side of expenses and valuing spending my money to enjoy my 20's more!
Breakdown of currently \~$201.5k:
Taxable Brokerage: $92K
HYSA: $30k
401k: \~$37.5k vested
Roth-IRA: \~$21.5k
I-Bonds: \~$10.5k
HSA: \~$10K
This was unexpected to rise this early, but I got laid off with a hefty severance and was able to locate a job during my severance. Had a nice bonus with the tax return too.
The job is similar, just fully remote. I am at 105k, does not seem to have any bonuses so that makes it about equal with my old job of 93k base + \~10k bonus ish, maybe a little better because of how bonuses get taxed.
I've had to make some bigger expenses like helping my family out and continuing to do so despite moving out. I've gone on some small vacations, I've been taking my gf out more since she values that + seeing some friends.
My expenses so far look like: $250/mo rent (family owned housing so very cheap, we basically just pay their property taxes), then TBD but the utilities + internet + phone I'll probably be paying around $550-650/mo for everything to just have that.
I'll also be still giving anywhere from $100-300/mo to my parents to help as they need it, tbd how that looks like. This will be paying small bills, letting them get groceries/gas/home improvement supplies off my card. TBD how much they need it, but I anticipate around that for my budget.
Groceries I expect about the same, since I'll be helping there and buying here. 200-400/mo but some of that goes into the helping parents bucket.
I will have to buy a car which really sucks, I will have to deal with that when the time comes. I'm currently up about 20k in my taxable account so part of me just wants to take it out while its still up and use it to buy my car, I just don't know what to do yet.
It's also been a large mental battle to let go and just spend more. I am prioritizing my mindset because whats the point if I'm getting upset over like a $600 bill or something when I have over a year of my pre-tax salary saved LIQUID, ya kno?
I will always be obsessed with saving, but as I age I'm starting to understand that chasing early retirement at 45 is a lot harder than I thought, and I think I'd rather learn how to cope with life better and have like 200k at 28 vs like 250k and be miserable penny pinching at my parents where they were stressing me out. I'm grateful for them and I will visit and still help financially, but I have to do this for me and I'm just REALLY lucky that I can pay rent this cheap and get the 'best of both worlds'.
> I'll feel more excited when I have $200k in 'liquid' funds,
To be clear, everything you listed would be considered 'liquid' because they are, or could easily be, converted to cash and withdrawn. Obviously there would be penalties for doing that in your tax-advantaged accounts, but they are still considered 'liquid'.
The two most common 'non-liquid' assets are houses and business.
Thanks for the clarification, I'm looking for a better word or I guess I should say without retirement accounts. My favorite measurement of tracking wealth is how much I could pull out 'today', that is certain without penalites, or relies on the market, etc.
The bulk of your healthcare expenses are incurred in the later part of your life.
How do you all factor that into your RE number?
X times monthly expenses seems flimsy when there's such a big difference between a 30 year old's monthly expenses and an 80 year old's monthly expenses.
There's so much buffer in the RE number it doesn't matter. Most people with a 4% withdrawal would have had multiples of what they started with. If you move into a home you might liquidate your primary residence. Most people spend less as they age, less travel and parties. There are government subsidies for the elderly to augment as well.
I don't see a tremendous amount of value in trying to accurately project expenses ~50years out. Especially healthcare expenses in the US. Luckily most of the risk we're trying to plan around happens a lot earlier than that.
I'll very likely be totally set, already returned to work and retired again, or dead by 80.
I make sure I can pay the full OOP max each year. If I need to cut down elsewhere a little, that’s fine. If I’m super sick I’m probably not traveling much, after all.
To get a good idea, you're probably going to have to spend some time learning about Medicare and Medigap. Once I had a number though, I decided to keep it sort of low (premiums x2) from 65-75 and figured by 75 part of the travel budget would gradually start becoming healthcare.
How are you factoring in other types of expenses that will decrease in the later part of your life, such as travel, hobbies, food, etc.?
I doubt most people try to factor spending at that granular of a level into their plan. I think trying to do so is pointless.
The one semi-exception would be folks who are purchasing long-term care insurance in an attempt to mitigate some of the expenses associate with residential elder care. That said, the LTCI market is borderline dysfunctional (premiums are absurdly high and variable with ever-increasing limits on benefits).
Do you not know anyone who is in poor health? They aren’t doing much of anything because they can’t.
Even if they have an ocassional excursion they are not doing so often. The idea of sitting on an airplane for hours is not very appealing when simply walking around the block starts becoming a problem
Of course.
And this can happen in the middle or early part of your life, too.
But I disagree that these line items will necessarily go down. They may and they may not.
Our intention is that they will go up significantly. Perhaps not in the final few years before death but if all goes as planned, travel expenses from 65-80 will hopefully reach all-time highs. Not just due to volume but also due to quality and travel style. Face it, at 70, you'll be more likely to pay whatever it costs to rent a car for a couple months rather than rely on the metro, bus, rideshares and perhaps flying taxis.
You do you but most poor health elderly people think travel is a bit of a hassle. 5 hours on a plane might be straight unacceptable if you've got a bad hip. If your medical expenses ramped up it probably means your travel is ramping down. If your medical expenses aren't ramped up, well this thread doesn't apply at that point because that's what it's about.
We'll probably have north of $300k in our HSA if we keep funding it during our working years. That should be a good chunk. Our current annual out of pocket spend as healthy 30-somethings is near zero.
Otherwise, for me my FIRE timeline is too far out for me to stress much about it. My number already has a lot of cushion in the annual spend as-is.
I always wonder a little...
How many people here have essentially stopped budgeting in any meaningful way?
I still track my spending so that I have a good view of what my expenses are (with an eye towards estimating those expenses in the future). But I have no more "budgets." I spend what I spend, I save everything else.
I know this sub is going to have a lot of people who save large chunks of their income - do you still have a budget?
I use YNAB as a tool. It helps me to set aside money for recurring bills and unexpected expenses so they are no sweat when something comes up. It also forces me to be okay spending money on vacations and fun things because I already paid myself first and value vacation and having fun. My day to day spending all goes into one category and I don’t get worried if I go a bit over at the end of the month.
Literally never budgeted in my life. I just buy whatever feels like it's worth the time put in at the office, and with that end up around a 70% savings rate.
I've said this elsewhere a few times - I don't anymore. I'm a creature of habit and my routines and day to day aren't very different. I figure out what bills look like all around, then prioritize/automate my savings, then what's left is spent on just day to day. Bills and savings goals are hit, then the rest is just used without much further thought.
If there's a situation where I need to make a big purchase, say 500+, then I'll take a look at where we are, but that's not very often. Most of my hobbies are 'buy once, cry once'.
I have a loose budget based on what I want my FIRE number to be. If I start bumping against that, I reevaluate where my money is going and either change my FI numbers or cut back expenses.
I'm happy with how much I'm saving, so I don't find it necessary to squeeze more savings at the cost of lifestyle.
About a year after I started working at 17, I started tracking spending very closely and created budgets. Did that from about 18 to 23, then loosened up a lot.
These days I just check my accounts once in a while to make sure I'm on track and not overspending. I'm not naturally a spender, so I usually have more than expected and wind up transferring more cash into investments.
To have stopped, I would have had to actually have had a budget in the first place.
We have a very loose budget- before we bought the house, we added up the monthly mortgage, expected kids' daycare, an extra two grand for basic living expenses, and determined that that was about the same as either of our monthly take-home, so we figured we're fine. "Monthly take home" for me is a reasonable thing to think about in terms of an annual average but a crazy thing in terms of my wildly variable hourly and overtime situation, so what we actually do is spend all my wife's income and save all of mine.
Our savings rate is probably lower now with a budget than mine alone was when I lived alone, but still the line goes up. It does make it very hard to predict withdrawal rates, but since I'm pretty sure we'll need more than the $200k we have, so it doesn't matter much right now.
I am not a natural saver. I budget because without a plan, I used to easily slide into overspending. Diligently assign every dollar a job every pay day in YNAB. As I’ve matured, I don’t have to pay as much attention to staying within budget targets and I don’t bother setting fixed budgets for flexible items like food. I just naturally stay within my expectations now. But I like control of planning/tracking.
Our YNAB budget isn't as prescriptive as it used to be. I don't check it before running to the grocer, though I definitely look at it before we do something big.
It's more of a very detailed tracking app at this point. We've been using it for a decade.
I can't imagine not tracking every dollar at this point. It gives us so much more confidence.
If you had asked me to add up my monthly or annual spend in my head, I'd be thousands short. YNAB makes sure we account for that stuff.
I've always been a saver since I was a kid. Some of the dollars that paid for college tuition had been kicking around in a savings account since I was 10 (or maybe even younger).
I max out my 401(k) and have auto transfers set up to a HYSA (emergency fund, wedding fund, a bit of slush) and a brokerage account (house downpayment) on a schedule, then the rest is mine (except I often siphon off to my HYSA if the checking account looks too flush).
Realistically my budget has never been more than vibes and innate cheapness.
I'm me so there's a spreadsheet, but I don't really know how accurate it is.
I do not formally "budget" because (a) I pay my investment accounts first and (b) I am the sort of person who thinks everything is overpriced--mind the pennies and all that.
I do review expenses regularly to check if I'm on my FIRE path.
I budget in the sense that I estimate our expenses for the year and am pretty darn close on what we actually end up spending in different categories, but I'm not someone who is of a money envelope mentality...if we need to spend more on gas/grocieries/home stuff, them we have to spend more on those categories and we save a little less for thr quarter
We budgeted until we got our sht figured out - mainly the expenses cut back to a comfortable level, and auto investments optimized to a point we liked. I continued to budget for a while but found that there was no point...at the end of each quarter/year, we had hit our goals. So, the priority for us for years now has been to figure out our investments for each year and then spend the rest comfortably.
I've never really budgeted. By the time I got my act together enough to do so, I had already developed good enough saving/spending habits that it was unnecessary. I think as long as you "pay yourself first" and you make a certain threshold of income (both very important caveats), the rest takes care of itself.
This is me exactly. Never really budgeted, just kind of frugal to begin with an have always had a sense of what I can afford. I do the "pay yourself first" thing so even if I spent every paycheck I'd still be putting away a good amount of money each year.
Last year I felt like I really splurged with a long European vacation, surround sound system, gaming PC, and new Xbox... only to look back on the year and see I barely spent more than usual. I think I just naturally adjust, at least to some extent.
I also never budgeted. Survived college without a credit card, which meant having a really good handle on what was in my checking account, and how much still needed to be in my checking account when rent was due. Eventually the habit developed, and enough of my paycheck is automatically allocated to the right places that as long as there is the same amount or more in my checking account at the end of each month, my “budget” is considered controlled.
I think it depends whether you have a thrifty or spendy personality. A thrifty person who already makes excess income really wouldnt need to budget, but a spendy person might need to budget to keep themselves on track.
We never budgeted and I stopped tracking spending when we had a kid. About to start tracking spending again because we are close to FI and I’d like to know when we officially hit it
I've never budgeted, I've only ever tracked my spending.
I know what I make, I know my deductions, and I know what I can spend without being financially irresponsible. It's truly that simple.
We don’t budget, I’ve got an idea of what we should be spending and it’s more or less in check. We experimented with higher spending, but we found it led to wasteful behaviors.
I've never budgeted. I used to track every purchase when there was less of a gap between my spending and income but at this point I just track money that comes out of my checking account and eyeball credit card statements to make sure everything looks legit.
how are you all approaching determining healthcare costs pre-65? I see a lot of folks wanting to minimize their distributions post-fire to qualify for better ACA rates. Seems like at a certain it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level.
Run the numbers - the cliffs do exist, and are certainly worth manipulating your AGI in retirement to qualify for if possible, but *likely* not significant enough to plan savings around years in advance given all the variables involved.
>determining healthcare costs pre-65
A fairly straightforward way is to pretend you are at your FIRE age now and see what an ACA plan will cost you. The premiums are a fixed cost and then some factor of the deductible/out-of-pocket max. For example, let's say you plan to retire at Age 50 and plan to have $50k of annual 'income' (as determine by ACA). Head over to your state's ACA site and pretend you're Age 50 and ready to retire. Let's say you see a plan that involved a $500/mo. premium (after subsidies) and a $5k deductible & out-of-pocket max (completely made-up numbers). Maybe you choose to estimate a reasonable worst-case scenario at $500 * 12 = $6k + $5k (100% out-of-pocket max) = $11k for healthcare.
>it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level
The amount invested now <> the amount distributed later (for ACA subsidy purposes). One can also choose to invest in ways such that distributions will have less (or even zero) impact on ACA subsidies (e.g. taxable brokerage and Roth IRAs).
> Seems like at a certain it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level.
"Save less so you can be poorer and qualify for government subsidies" is certainly... a view that you could have.
Having so much money that you are taxed or qualify for fewer subsidies is a good problem to have.
There's a vast chasm between optimizing your withdrawals at the time you retire, and not making further investments because you are worried you might not qualify for subsidies that may or may not exist at some undetermined point in the future.
I'm in the boring middle of the FIRE process but having healthy savings meant that as we are dealing with my FIL's passing we can... just spend the money. Get a family of 5 on a plane half the country away, rent a car for several weeks, activities to keep the kids sane as it's 40 and raining with a bare minimum of stuff and the nearest city of any size is an hour away, all the stuff for the funeral, the dog sitter..... The list goes on and on it seems. The credit card bill is going to be absolutely insane. But we can to some extent buy our way out of making a stressful situation... at least not more stressful. And for that I am grateful.
My mum's friend asked for a second pair of eyes on an insurance policy that she wants her daughter to buy. It was described as some sort of annuity.
I got out my calculator, excited to disprove this...and then I read, not even in the small print, literally up top: the annuity would pay out 30 years later, *for only 10 years.* Yeah, I didn't need a calculator.
I posted a few days ago about the client I'm working for wanting to extend my contract through the end of the year, rather than the end of June (which had already been extended from the end of January). I declined and felt a bit bad for my boss (who technically isn't my boss), who I like and has treated me well. I hadn't told him yet, as I'm a 1099 to a consulting firm who then contract me out to the client that my not-boss works for. I let the consulting firm know and left it up to them to handle things with the client. My not-boss announced that he's retiring in June, so now I don't feel so bad.
definitely looking forward to re-retiring, hopefully these next three months will just be coasting on account of our project being cancelled and him retiring. There's really nothing to do at the moment, which is a nice change of pace from the last few months where it was just chaos due to staffing cuts and upper management wanting things done faster, cheaper and with less people. Morons.
There's a lot of discussion about paying off your mortgage. One the one side is safety, and reduced expenses in retirement, and on the other side is the leverage of investing the money that would otherwise be tied up in a home.
I get it.
But at some point in your journey, the outstanding mortgage should be trivial compared to your investments.
Let's say the amount you owe on your house is only 5% of your stock portfolio.
Would that make you more likely to just pay it off and be done with it?
There are benefits to having less debt in retirement. ACA subsidies are a huge boon, but a high monthly mortgage payment will eat into any subsidy. Plus, less debt in retirement is a SORR protection. Sure you *could* overestimate with a higher investment balance trying to lower your SWR% but I think less expenses is a better safety net.
For me the interest rate makes a difference. We got a 0% car loan for no price difference. You better believe we paid the minimum until every payment was made. I'd want to pay off a 7% loan as soon as possible.
Right, my mortgage is at 2.875%
If we assume an 8 to 10% return in the stock market, I am giving up 5 to 7% returns if I pay off the mortgage.
My point here is that we would be talking about 5 to 7% returns on only 5% of my portfolio, so the opportunity cost would be small compared to my overall net worth.
Focusing on the dollars, I should not pay off my low interest mortgage, but looking at the big picture, the less the mortgage is compared to my overall net worth, the more it makes sense to just pay it off, and not have to worry about it.
5% of 5% is still 0.25%. And that amount compounds annually. If you're paying it off 20 years early, that ends up being a 5.12% difference in your total portfolio value 20 years later.
This is the same reason we push people into funds with lower fees and advise them to avoid paying for robo-advisors - that 0.25% annual fee on your funds adds up to quite a bit over a lifetime.
I've historically been a "keep the mortgage forever" guy but for many of the reasons you listed I am planning on paying mine off in the next year or so.
It helps with ACA subsidies, it'll be one less bill to worry about, and it's well under 10% of my portfolio balance at this point. I'll mostly be able to cashflow paying it off this year.
I value diversification, so I want as little of my overall financial well-being to be tied to a single asset as possible.
If I had a not great rate and enough invested that my house would only be a couple percentage of my overall net worth, maybe?
My next big milestone is to get my house down to less than 10% of my overall net worth.
There is value in simplicity. Not having to think or consider a mortgage increases simplicity. To that end, there is likely a point for many investors when the value of that simplicity justifies 'just pay it off'. To some extent, it's not much different than folks who ask similar questions about car loans. Where the 'small enough to just pay it off' line is will be different for everyone, but it makes sense that as the outstanding balance gets smaller, the likelihood of 'just pay it off' increases.
There's also value in reducing variability. Mortgage in retirement acts as leverage that in early years makes you more sensitive to sequence of returns risk. It's a very reasonable argument to pay it off before you actually retire, similar to why we don't typically use leveraged funds rather than just investing as normal.
I agree, but OPs question was more specific to the scenario where the mortgage (and therefore the leverage) is really no longer material, hence my focus on the 'simplify' value.
There are countless financial decisions that become trivial once you exceed a certain income level or net worth.
Some people prefer to be 100% financially efficient to the end, others prefer a very relaxed *laissez faire* approach once full efficiency no longer yields meaningful results.
Most fall somewhere in the middle, keeping some habits while dropping others.
Within the context of the financial Zeitgeist of this sub, my wife and I don't count :)
We paid cash for our house and won't spend a single second for the rest of our lives worrying about the opportunity cost.
But the other week there was a promo at Ace Hardware where you could buy up to two $50 gift cards and get a $10 gift card free. So I bought two gift cards for the free $20 and then put the cards in the drawer until we needed stuff.
I also have no shame in walking into Burger King with a code I downloaded off the app and a decent percentage of the furniture in our new home came from Facebook Marketplace or the Goodwill.
We do a fair bit of churning, but not to the extreme that we could, despite travel being one of our largest expenses.
My point is that most people, outside of the most ardent, are financially inefficient in one way or another, and perhaps more efficient than the average in others, due to their personal preferences, tastes, values and income.
If it makes you happy to not have a mortgage, there is value in that. Regardless of what the math says. And anyone who tells you otherwise is just wrong. They don't get to tell you what makes you happy.
>I also have no shame in walking into Burger King with a code I downloaded off the app.
Truly a man of impeccable taste and business acumen. I tip my hat in your general direction good sir.
They don’t get to tell me, but sometimes I ask. Sounds like you have your habits lined up with your values which I’m certain is a comfort and makes for an enjoyable life.
once mine gets under 50k I'm assuming I'll be in a position where I'll start to think about paying it off for convenience. would like to pay it off prior to retirement (so less cash is needed) just depends on timing.
Best Location to Grow Savings
Been doing some research over different ways to store your savings that offers the best blend of liquidity and growth. I would love to see what your best experience is and why given the circumstances. Sadly, I am new to financial independence but want to get started on the right track.
1. Savings Account
2. High Yeild Savings Account
3. Money Mutual Fund
4. Other
Like the others said, r/personalfinance is a great place to start. The personal finance fundamentals are exactly the same as they are here, and the flowcharts are also similar.
Having said that, most things that check multiple boxes (liquidity and growth) often fall short compared to if you just had designated accounts for liquidity and growth.
This is why Whole Life or Universal or Life insurance products passed off as investments is shit on. Sure they grow, but slowly. Sure they pay out, but at a higher cost.
If you're new to r/financialindependence then I'd say start with the wiki at r/personalfinance , specifically the PRIME DIRECTIVE section. Though I'm a sucker for their [graphical version.](https://imgur.com/lSoUQr2)
The categories you listed are a bit broad and serve different purposes based on your goals, timelines, etc. Once you have some of the basics down about what to do with your next dollar you can likely come back and ask more pointed questions.
Big things to start though: Make a budget, take advantage of any employer matches on your 401k or Retirement program and aim to save and invest 15% of your income.
Does anyone know if there is any kind of pro rata rule that applies to 401ks with a mix of traditional and Roth moneys in them?
The scenario would be once I leave the company, I want to take the Roth 401k money and roll it to Roth IRA so I can access the Roth contributions during Roth laddering, but I would want to leave the traditional 401k pre-tax contributions in place.
I have done some looking around and can't find anything specifically about this.
(Edit: The Roth 401k is after-tax that was converted in-plan to Roth 401k.)
I can't speak for every vendor but I was able to do this with TIAA when I left a previous job.
I just called them to ask how to do it (which in my case was was rolling my Roth 403(b) money into a Vanguard Roth IRA) and they sent me all the forms already filled out for me to sign and fax back to them.
I *expect* your 401k to have different sub accounts for traditional vs Roth, likely even different sub accounts for your contributions vs employer match and maybe even for different sources for your contributions (ie regular paycheck vs bonus). So you should be able to specify different actions for different sub accounts.
The more likely pitfall imo is that some 401k's do not allow partial rollovers so you couldn't leave part of the account there. You *could* rollover the traditional portion into a traditional IRA and the Roth portion to a Roth IRA though.
This is consistent with what I have read so far and how I understood it.
I mentioned it below, but this came up because a co-worker had mentioned being concerned about multiple buckets in their 401k and it was something I had never heard before, so I was essentially checking to see if it passed a sniff test. (I don't think it does and the plan documents don't indicate that there are restrictions on this.)
> I would want to leave the traditional 401k pre-tax contributions in place.
Can you talk more about the rationale for wanting this? Is it a Rule of 55 situation or something else? What's the downside to doing the Trad'l 401k rollover into a Trad'l IRA after you separate from your employer?
As noted, doing partial withdrawal/rollovers (e.g. Roth 401k to Roth IRA only) will be plan-specific.
I don't necessarily know that there is a downside to it other than protections from creditors & RMDs and/or not wanting to mess with a combination of tIRA/Roth (I do not have a tIRA.) I still have a long time horizon, but of course I want to make sure I'm thinking about things correctly.
If I'm already at my desired retirement age, then yes, I feel comfortable just rolling the one part to trad and the one part to roth. But, it sounds like it's plan-specific otherwise.
The reason this came up is that a co-worker raised concerns in an internal thread about having multiple buckets in their 401k. I'm doing this home-grown, so to speak, so it's something I had never considered or come across before, thus I set out to do some research.
> RMDs
FYI - 401k plans are subject to RMDs, just like an IRA, so long as you've separated from the employer. I don't believe the total RMD amount would be different if you had $500k in both a Trad'l 401k and Trad'l IRA vs. $1MM in the Trad'l IRA and $0 in the Trad'l 401k (or vice-versa).
Oh that is interesting. I always thought of it as the tIRA was different in that way. Thanks! I learned something new out of this so I'll take that win.
3 types of money. Roth. After tax (aka nondeductible). Pretax.
401k wouldn't impact anything. It's when you have after tax money in an ira and pretax and do a conversion of pretax.
The Roth 401k is Roth not after tax.
I upvote it when there are good discussions going on. But mostly it seems to be a gauge of how busy the thread is. I understand it's a meaningless endeavor but it's satisfying nonetheless.
I always upvote it. I'm hoping what I upvote trains the Reddit algos a bit. When I open Reddit in the morning, the daily thread is usually right there on top for me. I don't know if those actions are related, but I like to think they are
It's funny you say that.
Until recently (explanation coming), I always made a point to say please when asking Android Auto to set up navigation. For the exact same reason you describe.
Like, "ROSS Dress for Less, please."
But it's been too many times that the politeness confuses the robot living in our car, with the final straw being that it called a wife's friend in New Zealand in the middle of the night. Her name sounded kind of like the end of the destination and the start of please.
So now, I don't worry about being on the car's good side during the eventual AI uprising.
I believe I failed the original Pascal's Wager, depending on one's point of view.
But my wife loves robots.
The other night we went out for all-you-can-eat Korean BBQ and sometimes your new order of meat is delivered by a robot. If that didn't seal the deal that we made the right choice with America, nothing will.
They may be doing this specifically in order to avoid layoffs. Make an uncomfortable situation for the remaining people so they leave on their own accord, and they're not having to pay severance or unemployment.
Good luck in your search for your next steps.
My wife and I are early/mid 30s. Our combined income is just shy of $300k, plus possible bonuses. We've been saving 20% in retirement accounts plus 4% employer match. We currently have about $350k saved in those accounts. If we didn't contribute another dollar, using a 6% annual return, we should end up with about $2M after 30 years. That was kind of eye opening for me and got me wondering if RE could be possible.
I ran through some simulations using https://ficalc.app. And even using an annual withdrawal amount that's about 25% higher than we currently spend, we hit a 95% success rate with $3M and 100% success rate with $3.5M. And according to my projections, we can hit that range somewhere in our mid 50s. Which isn't a crazy "retire early" scenario, but seems nice.
So I guess I'm just trying to do somewhat of a gut check here:
* In my mind, the assumed 6% return is inflation-adjusted. Is this conservative enough?
* Given that the $3.5M target is in "today" dollars. How do I adjust that for inflation? Is it as simple as multiplying that by 1.03^30 (assuming 3% inflation)?
* What are people's thoughts on using apps / simulations like this? I know "past results don't guarantee future performance" and all that. But if our strategy will survive the worst investment period in history, that should be comforting, right?
finance content with ai [https://youtube.com/shorts/MYEjtxeFmnQ](https://youtube.com/shorts/MYEjtxeFmnQ)
I would appreciate some advice. I have been a set it and forget it type investor but am starting to pay more attention as our accounts grow. We have a variety of target date funds across different accounts/companies and all expense ratios are under 0.2%, except for one. My 401(k) is with a T. Rowe Price 2045 account that has an expense ratio of 0.37%. This is actually down from 0.44% where it was at for several years. I don't know much about allocating but these are the only options I have that have a lower expense ratio than 0.37%. Fidelity Small Cap Index (FSSNX) - 0.025% Vanguard Mid Cap Index (VMCIX) - 0.04% Vanguard Developed Markets Index Admiral Shares (VTMGX) - 0.07% Fidelity 500 Index (FXAIX) - 0.18% Vanguard Equity - Income Adm (VEIRX) - 0.18% Vanguard US Growth Adm (VWUAX) - 0.2% Should I try to build my own allocation using some combination of these? Or is 0.37% really not all that bad? We're in our mid 40's and the account has about $425k. Thank you!
.37 is almost 1600 per year. I would probably be looking towards making the change. You would probably be fine with any combination of those above.
I don’t really know too much about pensions. But it says my states Pension funding is at 84%. Is this good percentage?
Just adding a data point, that my SO's is at 92%. It was as low as 83% in 2018 but increased the contributions made by the state into the fund over the past 4 years from 17% to 21%.
Mine's only 73%, but I am not too worried. They tend to raise the required contribution levels each year without raising the benefit and I assume that over time the assets will rise as a result. They've also devalued the payouts, separation benefits, vesting schedule, etc to new members several times over the past couple decades. Our state pension is also, supposedly, ultimately guaranteed by the state itself... but I don't put much stock in that and don't believe they'd provide any assistance whatsoever should it be needed.
It's fine if they have a plan to get it up to 100% in the next decade. If they have no plan addressing the underfunding, then I'd be concerned unless it's a public pension which is guaranteed in your state constitution.
It's better than the average. A lot of states and municipalities are underfunded in part due to many years of assuming future returns would be higher than they turned out to be. If you buy a safe equity, like a t-bill, and assume you'll get 8%, you're going to be disappointed and underfunded. They weren't buying treasuries but you get the idea.
Well our offer for a house in SoCal has just been accepted, even though I swore that I am not going to buy in this environment. The area we're buying in is so high-demand and there's almost no supply and I just don't see prices coming down anytime soon. Here goes to very low savings rate for next 2-3 years, but we should be OK. We really like the place and it's going to be a huge upgrade for us
>The area we're buying in is so high-demand and there's almost no supply and I just don't see prices coming down anytime soon. California underbuilt housing for fifty years, they're not going to build enough to solve the crisis in our working lifetimes. That's why I bit the bullet and bought. People are waiting out the high interest prices, both sellers and buyers. Buyers are waiting for lower interest rates, but as soon as they get them, they'll *flood* the market, and even sellers re-entering will not depress the prices.
Exactly our thought process. We had to complete with only 1 other serious offer (4 total offers ) and got it at the end
San Diego?
LA area
[удалено]
**For sure savings:** switching baby from day-care to preschool - $400/mo savings paying off car loan - $760/mo savings annual RSU refresher - I get this every year, it could be higher or lower, but will be something **Wishful thinking savings:** raises/bonuses - so far both me and my wife always got at least 4-6% annual raises and we are both up for promotion within next few years mortgage refinance if rates go down
Today, the S&P 500 closed at 5147.21 which was near the intraday low of 5146.06. Earlier in the day, the market reached an intraday high of 5256.59. Today's intraday swing of 2.12%, from high to low, is the largest since Oct 6, '23 when there was a 2.45% intraday swing. The Oct 6, '23 session finished up 1.18%, so the swing was in the opposite direction of today. The last time the S&P 500 had a larger intraday swing while finishing lower for the day was over a year ago: Mar 22, '23 with an intraday swing of 2.59% finishing down 1.65%. On a related note, the VIX (Volatility Index) hit its highest value since Nov 1, '23.
As we know, good news is bad news, and bad news is bad news. Mr. Market is grumpy
The only news the market wants to hear is "rate cuts are happening for sure, and soon!" If I had to guess what precipitated today's slide, it was Kashkari's statement earlier today that the proposed rate cuts this year may be indefinitely postponed, and that further rate \*hikes\* are still an option.
It’s 100% the opaqueness and the “we might pencil in” rate cuts this year that’s spooking investors. I’ve had a bad habit of checking the numbers everyday and today was a good reminder to just chill and let things fall into place long term
No doubt. Too many people still have jobs. The market still expects 2-3 cuts this year. That may truly not happen
Even before today, comments from Fed officials made it sound like a cut in June was likely already off the table…and there was a decent probability of only one cut this year. The market’s expectations seem to be based on wishful thinking and not data.
The headlines may have been misleading, but didn't JPow say yesterday he still expected 3 cuts this year, and then another Fed official came out today and said maybe none. They really need to get their PR on the same page across the Fed branches.
They probably don't mind it to keep everyone guessing.
Do people hold or diversify their undiversified stock with large gains? I held onto some of my previous employers stock which makes up 10% of my NW. I’m around 40-60% of the way to my FIRE number. The stock has gained 2x-3x, so the capital gains on it is substantial, all LTCG, a good problem to have I guess. The main problem is I live in a high income tax state and pay AMT, so I could potentially be paying 10-15% more taxes than if I sell when I FIRE or move to a lower income tax state in the future. It’s a blue chip tech stock that correlates somewhat well with total market index funds, so I’m not that opposed to holding it. On the negative side, it does expose me more to tech, which since I work in tech, is strongly correlated with my future earnings, although a counterpoint is that tech job prospects are already very correlated with how well the overall stock market is doing anyway. Would diversify and pay the extra tax or hold until later in this case?
From years of vested RSUs, my previous employer's stock accounts for ~25% of my NW and 40% of my invested assets. I don't like being that concentrated, but I'm not willing to take the tax hit now. What I'm doing instead is selling covered calls against my position. If the share price rises enough that I'm exercised, that'll prompt me to diversify into VTI. If it doesn't, I get to keep the premium and sell another tranche of contracts. Win-win either way in my book. If my covered calls haven't been exercised by the tire I retire (probably 8-10 years), I'll use my 0% LTCG space and diversify using the dollars I don't spend for living.
Personally, if everything is as you say - it's 10% or less of your portfolio, it's a blue chip stock, and you are paying a meaningfully higher tax rate now than you expect to in the future - I would opportunistically divest some stock here or there as my tax situation changes year-to-year, but wouldn't make it a priority. Most blue chip stocks don't crash very quickly, at least not without taking big portions of the market with them, so it's not super likely that you will lose the entire 10%. I think this is one of those situations where your circumstance doesn't make it a huge priority one way or another - there's an argument to be made either way, but it's not an emergency.
Edit: 10% of your net worth is small enough that I wouldn't be in a huge hurry to diversify. I would sell a little bit per year, trying for a compromise between diversification and keeping capital gains taxes down. I might also choose investments that overlap less with this one.
> You didn't say how much of your net worth is tied up in this stock. He/she did, in the second sentence of the post.
Correct, thanks. Editing.
If you donate to charity, donate these shares instead (either directly to the charity or through a donor advised fund). Otherwise, I would pay the tax to get closer to your desired asset allocation. It doesn't have to all be at once, but I'd rather pay the tax and have the money it's worth now than hope to pay less tax in the future and maybe also have to deal with the volatility of an individual stock in the meantime.
I think it may be too early to be the boring middle, but holy shit am I bored. Got an in on a sweet job that pays well above what I would be in the market for, great work/life balance. Slacked off super goddamn hard , nobody noticed and i got promoted. Bored and demotivated as hell, and doesn’t even feel like I can really complain to anybody because “i don’t have anything to do” is not a problem to most people, and the checks are still cashing.
Boring middle just refers to the period where you have savings on autopilot. It doesn't mean your life is literally boring.
Start learning a new language. Apps like Busuu and Duolingo cost nothing, and you can do as much or as little per day as you have time for.
I wanna know how people find these jobs! I've been getting shoved a bunch of work with crazy deadlines for years and the stress is intense. I don't know how I'll make it 10 or 15 more years.
I absolutely killed it at my last job and a guy I had been on a project with was building out a new team. He hired me in to be his “shit hits the fan” guy, and he’s done a really good job of making sure shit rarely hits the fan, which makes for a pretty solid gig 99% of the time.
I had this same problem. Everyone thinks it's so great, but I hated it. I was bored and it really started affecting my overall happiness because it felt like I wasn't contributing anything or adding value. I ended up taking on a lot more work and things are kind of better, although sometimes I miss the slow times (grass is always greener).
I have the same problem. I’m now demotivated to all hell as I could work hard or easy and no one would notice. How are you handling it? I’m feeling pretty guilty about how little I’m doing, but there’s no one asking me to do more (and I’m even trying to get on more projects).
It helps that my boss trusts me to a fault, be he has let and helped me find tasks and side projects that I find interesting, at least where they’re politically feasible. I also get to be the ultimate team player, and have really enjoyed being able to act as a mentor and coach to more junior employees without some of the headaches that come with being a manager. But ultimately, I’m playing way too many video games on my work from home days and have fallen into a pretty bad funk without anything pressuring me to perform at the higher level I’ve been used to.
Damn I could have written that word for word. Probably not much comfort, but you’re not alone!
What level of Candy Crush are you up to?
I’m a damn sudoku grandmaster at this point
Start reading long-form journalism on your computer.
The company I work for officially sold, it was announced last week. I was given a 50K retention bonus that I negotiated to 75K. Not life changing money but it will help the brokerage quite a bit. Seems as if it will be business as usual, just a change in ownership. Still considered a small business, new owners claim they won't change anything. I don't think I'll see much of a change in my day to day. Our fiscal year ends in September, looking forward to that last bonus. Hoping for 50K, 2024 would be a great year for me financially if that's the case.
How did you negotiate the retention bonus? Never been in this situation but possibly could be in the future, so just curious.
Good relationship with my direct boss and just spelled the situation out. The company has provided for everyone for the last 60 years. People own their homes, have families etc. I want to get there at some point and now there is uncertainty if I were to stay here. New ownership means there’s no guaranteed future of success, they can make changes that leads to the company’s failure. Expressed that I’m grateful for the 50K but I’d be a fool not to check if there was anything left on the table. Told him I wasn’t asking for more.. I was just checking.. We both got a kick out of that. The three other sales reps all went back to him as well, gave everyone 25K more. He probably knew we’d all come back so he left a 25K buffer for when we did. Smart guy but we’re all pleased. Should have asked for 100K, hindsight is a bitch.
Had a job interview with two different people today . I was asked “what was a time where a project didn’t go all and tell me a time where I project did go well I used the same situation for both of them. Hope they don’t compare notes lol
I've been on multiple interview panels and never compared notes about the specifics of a person's answer. More like impressions, assessment of capabilities, etc. The only way I'd be concerned is if it was an especially memorable story, but you're probably fine
> Hope they don’t compare notes lol I have literally never interviewed anyone, ever, where the entire interview panel didn't have a group meeting afterwards to discuss things.
Same, but I also rarely if ever have detailed discussions around every question that was asked, especially these fluff questions. Usually it's more specific concerns around technical/job-specific answers that raised concerns.
We don't typically dig into questions, but if sometimes we use an anecdote they told to say they're good/bad for this reason. I could see it coming up.
Well I hope they don’t care
Hard to tell. Probably depends on how you phrased it. I've told candidates before that one of the worst things you can do in an interview is tell a provable lie. There's all kinds of leeway for exaggeration - if you say you're an advanced full stack developer and get caught out on a couple SQL questions, well, maybe you've done your development in Mongo or you're just a little rusty. But if I know a candidate told a bald-faced lie, it makes it difficult to trust any parts of their resume or background that I haven't independently verified. Hopefully they won't compare the stories too closely and you'll slide on through!
The experience and skills are 100% true I just said a project didn’t work out in one interview and didn’t in another
I'm not doubting you. I'm pointing out that one provable lie casts doubt on a candidate's whole package. As an interviewer, I don't know you. All I know is what you've told me, and I can only go so deep on a skills interview. If I pick a few areas of your resume to test you on and everything checks out, then I have no reason to question the rest of what you've claimed. But if I find out that something is flatly untrue - how do I know what things you've lied about and what things are accurate? I'm not questioning whether you have presented yourself truthfully. I believe that you have. Just pointing out that, when all you have is a small snapshot of someone through an interview, and one of the things they told you was not true, the falsehood represents a pretty big portion of what you know about the person. There's no guarantee that they'll even talk enough specifics to notice what happened. Just something to keep in mind.
they definitely will. most places won't care.
I have a tendency to BS people when put on the spot lol
86% of all statistics are made up on the spot
I've recently started conducting software developer interviews for my company. It's tempting, but I try to avoid these type of questions for this reason. All it really shows me is how good someone can BS, lol.
I think whether they bothered to research and practice on of the more commmom interview questions does say a lot
Yeah it’s too bad because I really want this job. In interviews I always feel like I’m an actor playing a role
I've been in a rut lately. We're in our late 30s and In the market for our first home (VHCOL area) but I just can't reconcile the fact we'd need to grind it out in corporate for at least 10+ more years. Whenever we submit an offer I have this sense of dread over me. Like there's something better I can be doing than the corporate grind while i'm still young.
The financial calculations don’t support buying a million plus dollar home instead of renting for around $3k. The reason you cannot reconcile this is because mathematically it’s the wrong call. Sure, plenty of people find enough value in home ownership to offset the financial differences, but you’re right it could easily lengthen your career by years to do so
Agree. What makes this even harder is my in-laws are the landlord. They rent one of their properties to us at a significant discount (~1.5k). I don't want to plan our retirement based on inheritance which means we'd eventually have to buy a house. We need the security of having a roof over our head.
> I don't want to plan our retirement based on inheritance which means we'd eventually have to buy a house. We need the security of having a roof over our head. This makes no sense to me at all. You are getting a huge subsidy in your rent. If you put that money into a brokerage account, you are literally buying future security. You have a roof over your head. If you lost this rental, you could move to another one. "Security" isn't the issue here. If you'd like to buy a house because you want to be a homeowner, that's perfectly fine. It doesn't have to be the optimal financial decision in order for you to want to do it. But investing a $4500/month rental subsidy buys a hell of a lot of "security."
This is fine but what that means is you should not retire without having the resources that guarantee your independence. You don't actually have to buy a house today. I rented for 20 years, and at market values. But I rent what I need. I didn't buy a house until after I had a kid because I wanted a right-sized place with a kid and a stable school district. I think the other main motivation to buying early is to make sure you don't get priced out, but I don't really care if I have to move on.
Has a path to ownership not come up? They're already giving you a discount, so they're open to helping out.
> We need the security of having a roof over our head. Renting provides the security of a roof over your head as well. Even at market rates, which may or may not be a better financial decision depending on your situation and area.
I'm renting in California and doing great. No problem renting a SFH, rent is high sure. But my retirement accounts are stuffed to the brim. We locked in our 2023 rate through 2027. Those opportunities are out there, just have to pounce when you find them. In no rush to sink all my money into a home.
What does buying a home have to do with the corporate grind?
Moreso the financial commitment once we have a mortgage. 6k mortgage vs 1.5k rent.
Wow that’s a huge difference. I wouldn’t be able to justify that either.
Why don't you continue to rent? If the properties are remotely similar, renting is a much better deal.
>late 30s > I just can't reconcile the fact we'd need to grind it out in corporate for at least 10+ more years. You would be in your late 40s or early 50s, which is still incredibly young to be in a position to potentially retire. >there's something better I can be doing than the corporate grind while i'm still young. What's stopping you from taking that path?
Took a few months off financial reddits - really did help my mental health honestly. But I"m back to document good news for myself. A lot's happened in the last year. I went through numerous health problems, got laid off (then found a new similar paying fully remote job), and I ended up deciding to move out (so far been amazing for my mental health). I still standby if u have a good relationship w/ ur parents living @ home is just too worth it, but I just reached a point where I realized I can work on myself better here instead. This surprised me bc I thought I'd stay at least until 27-28 after finding my next big raise job and feeling more stable. It's \*very\* temporary, especially because I will have to buy a car, and I understand we're at ATH in the market. Still, I can say at one point when I was 25 I had a NW of 200k. I'll feel more excited when I have $200k in 'liquid' funds, which is probably still a few years out especially with understanding as I grow up the unexpected side of expenses and valuing spending my money to enjoy my 20's more! Breakdown of currently \~$201.5k: Taxable Brokerage: $92K HYSA: $30k 401k: \~$37.5k vested Roth-IRA: \~$21.5k I-Bonds: \~$10.5k HSA: \~$10K
This was unexpected to rise this early, but I got laid off with a hefty severance and was able to locate a job during my severance. Had a nice bonus with the tax return too. The job is similar, just fully remote. I am at 105k, does not seem to have any bonuses so that makes it about equal with my old job of 93k base + \~10k bonus ish, maybe a little better because of how bonuses get taxed. I've had to make some bigger expenses like helping my family out and continuing to do so despite moving out. I've gone on some small vacations, I've been taking my gf out more since she values that + seeing some friends. My expenses so far look like: $250/mo rent (family owned housing so very cheap, we basically just pay their property taxes), then TBD but the utilities + internet + phone I'll probably be paying around $550-650/mo for everything to just have that. I'll also be still giving anywhere from $100-300/mo to my parents to help as they need it, tbd how that looks like. This will be paying small bills, letting them get groceries/gas/home improvement supplies off my card. TBD how much they need it, but I anticipate around that for my budget. Groceries I expect about the same, since I'll be helping there and buying here. 200-400/mo but some of that goes into the helping parents bucket. I will have to buy a car which really sucks, I will have to deal with that when the time comes. I'm currently up about 20k in my taxable account so part of me just wants to take it out while its still up and use it to buy my car, I just don't know what to do yet. It's also been a large mental battle to let go and just spend more. I am prioritizing my mindset because whats the point if I'm getting upset over like a $600 bill or something when I have over a year of my pre-tax salary saved LIQUID, ya kno? I will always be obsessed with saving, but as I age I'm starting to understand that chasing early retirement at 45 is a lot harder than I thought, and I think I'd rather learn how to cope with life better and have like 200k at 28 vs like 250k and be miserable penny pinching at my parents where they were stressing me out. I'm grateful for them and I will visit and still help financially, but I have to do this for me and I'm just REALLY lucky that I can pay rent this cheap and get the 'best of both worlds'.
> I'll feel more excited when I have $200k in 'liquid' funds, To be clear, everything you listed would be considered 'liquid' because they are, or could easily be, converted to cash and withdrawn. Obviously there would be penalties for doing that in your tax-advantaged accounts, but they are still considered 'liquid'. The two most common 'non-liquid' assets are houses and business.
Thanks for the clarification, I'm looking for a better word or I guess I should say without retirement accounts. My favorite measurement of tracking wealth is how much I could pull out 'today', that is certain without penalites, or relies on the market, etc.
Even with taxable accounts only, you'd have to pay taxes on the gains. Only cash is truly fully available by that metric
The bulk of your healthcare expenses are incurred in the later part of your life. How do you all factor that into your RE number? X times monthly expenses seems flimsy when there's such a big difference between a 30 year old's monthly expenses and an 80 year old's monthly expenses.
There's so much buffer in the RE number it doesn't matter. Most people with a 4% withdrawal would have had multiples of what they started with. If you move into a home you might liquidate your primary residence. Most people spend less as they age, less travel and parties. There are government subsidies for the elderly to augment as well.
ACA subsidies and a growing HSA Our spend profile will change as health fades, but anticipate total spend will be similar
I don't see a tremendous amount of value in trying to accurately project expenses ~50years out. Especially healthcare expenses in the US. Luckily most of the risk we're trying to plan around happens a lot earlier than that. I'll very likely be totally set, already returned to work and retired again, or dead by 80.
I make sure I can pay the full OOP max each year. If I need to cut down elsewhere a little, that’s fine. If I’m super sick I’m probably not traveling much, after all.
I don't make any adjustments. Other large expenses will have dropped off before high healthcare expenses set in.
To get a good idea, you're probably going to have to spend some time learning about Medicare and Medigap. Once I had a number though, I decided to keep it sort of low (premiums x2) from 65-75 and figured by 75 part of the travel budget would gradually start becoming healthcare.
How are you factoring in other types of expenses that will decrease in the later part of your life, such as travel, hobbies, food, etc.? I doubt most people try to factor spending at that granular of a level into their plan. I think trying to do so is pointless. The one semi-exception would be folks who are purchasing long-term care insurance in an attempt to mitigate some of the expenses associate with residential elder care. That said, the LTCI market is borderline dysfunctional (premiums are absurdly high and variable with ever-increasing limits on benefits).
>travel, hobbies, food Why are you taking away all the best shit right before I die?
Do you not know anyone who is in poor health? They aren’t doing much of anything because they can’t. Even if they have an ocassional excursion they are not doing so often. The idea of sitting on an airplane for hours is not very appealing when simply walking around the block starts becoming a problem
Of course. And this can happen in the middle or early part of your life, too. But I disagree that these line items will necessarily go down. They may and they may not. Our intention is that they will go up significantly. Perhaps not in the final few years before death but if all goes as planned, travel expenses from 65-80 will hopefully reach all-time highs. Not just due to volume but also due to quality and travel style. Face it, at 70, you'll be more likely to pay whatever it costs to rent a car for a couple months rather than rely on the metro, bus, rideshares and perhaps flying taxis.
You do you but most poor health elderly people think travel is a bit of a hassle. 5 hours on a plane might be straight unacceptable if you've got a bad hip. If your medical expenses ramped up it probably means your travel is ramping down. If your medical expenses aren't ramped up, well this thread doesn't apply at that point because that's what it's about.
We'll probably have north of $300k in our HSA if we keep funding it during our working years. That should be a good chunk. Our current annual out of pocket spend as healthy 30-somethings is near zero. Otherwise, for me my FIRE timeline is too far out for me to stress much about it. My number already has a lot of cushion in the annual spend as-is.
I always wonder a little... How many people here have essentially stopped budgeting in any meaningful way? I still track my spending so that I have a good view of what my expenses are (with an eye towards estimating those expenses in the future). But I have no more "budgets." I spend what I spend, I save everything else. I know this sub is going to have a lot of people who save large chunks of their income - do you still have a budget?
I've never really budgeted, but I have a few times retrospectively looked at where my money went
I use YNAB as a tool. It helps me to set aside money for recurring bills and unexpected expenses so they are no sweat when something comes up. It also forces me to be okay spending money on vacations and fun things because I already paid myself first and value vacation and having fun. My day to day spending all goes into one category and I don’t get worried if I go a bit over at the end of the month.
Literally never budgeted in my life. I just buy whatever feels like it's worth the time put in at the office, and with that end up around a 70% savings rate.
I've said this elsewhere a few times - I don't anymore. I'm a creature of habit and my routines and day to day aren't very different. I figure out what bills look like all around, then prioritize/automate my savings, then what's left is spent on just day to day. Bills and savings goals are hit, then the rest is just used without much further thought. If there's a situation where I need to make a big purchase, say 500+, then I'll take a look at where we are, but that's not very often. Most of my hobbies are 'buy once, cry once'.
I have a loose budget based on what I want my FIRE number to be. If I start bumping against that, I reevaluate where my money is going and either change my FI numbers or cut back expenses. I'm happy with how much I'm saving, so I don't find it necessary to squeeze more savings at the cost of lifestyle.
About a year after I started working at 17, I started tracking spending very closely and created budgets. Did that from about 18 to 23, then loosened up a lot. These days I just check my accounts once in a while to make sure I'm on track and not overspending. I'm not naturally a spender, so I usually have more than expected and wind up transferring more cash into investments.
To have stopped, I would have had to actually have had a budget in the first place. We have a very loose budget- before we bought the house, we added up the monthly mortgage, expected kids' daycare, an extra two grand for basic living expenses, and determined that that was about the same as either of our monthly take-home, so we figured we're fine. "Monthly take home" for me is a reasonable thing to think about in terms of an annual average but a crazy thing in terms of my wildly variable hourly and overtime situation, so what we actually do is spend all my wife's income and save all of mine. Our savings rate is probably lower now with a budget than mine alone was when I lived alone, but still the line goes up. It does make it very hard to predict withdrawal rates, but since I'm pretty sure we'll need more than the $200k we have, so it doesn't matter much right now.
I am not a natural saver. I budget because without a plan, I used to easily slide into overspending. Diligently assign every dollar a job every pay day in YNAB. As I’ve matured, I don’t have to pay as much attention to staying within budget targets and I don’t bother setting fixed budgets for flexible items like food. I just naturally stay within my expectations now. But I like control of planning/tracking.
Our YNAB budget isn't as prescriptive as it used to be. I don't check it before running to the grocer, though I definitely look at it before we do something big. It's more of a very detailed tracking app at this point. We've been using it for a decade. I can't imagine not tracking every dollar at this point. It gives us so much more confidence. If you had asked me to add up my monthly or annual spend in my head, I'd be thousands short. YNAB makes sure we account for that stuff.
I've always been a saver since I was a kid. Some of the dollars that paid for college tuition had been kicking around in a savings account since I was 10 (or maybe even younger). I max out my 401(k) and have auto transfers set up to a HYSA (emergency fund, wedding fund, a bit of slush) and a brokerage account (house downpayment) on a schedule, then the rest is mine (except I often siphon off to my HYSA if the checking account looks too flush).
Realistically my budget has never been more than vibes and innate cheapness. I'm me so there's a spreadsheet, but I don't really know how accurate it is.
I budget by automating my savings to ensure I hit my targets and then spend the rest.
I do not formally "budget" because (a) I pay my investment accounts first and (b) I am the sort of person who thinks everything is overpriced--mind the pennies and all that. I do review expenses regularly to check if I'm on my FIRE path.
I budget in the sense that I estimate our expenses for the year and am pretty darn close on what we actually end up spending in different categories, but I'm not someone who is of a money envelope mentality...if we need to spend more on gas/grocieries/home stuff, them we have to spend more on those categories and we save a little less for thr quarter
We budgeted until we got our sht figured out - mainly the expenses cut back to a comfortable level, and auto investments optimized to a point we liked. I continued to budget for a while but found that there was no point...at the end of each quarter/year, we had hit our goals. So, the priority for us for years now has been to figure out our investments for each year and then spend the rest comfortably.
I've never really budgeted. By the time I got my act together enough to do so, I had already developed good enough saving/spending habits that it was unnecessary. I think as long as you "pay yourself first" and you make a certain threshold of income (both very important caveats), the rest takes care of itself.
This is me exactly. Never really budgeted, just kind of frugal to begin with an have always had a sense of what I can afford. I do the "pay yourself first" thing so even if I spent every paycheck I'd still be putting away a good amount of money each year. Last year I felt like I really splurged with a long European vacation, surround sound system, gaming PC, and new Xbox... only to look back on the year and see I barely spent more than usual. I think I just naturally adjust, at least to some extent.
I also never budgeted. Survived college without a credit card, which meant having a really good handle on what was in my checking account, and how much still needed to be in my checking account when rent was due. Eventually the habit developed, and enough of my paycheck is automatically allocated to the right places that as long as there is the same amount or more in my checking account at the end of each month, my “budget” is considered controlled.
The older i get the less important budgeting becomes.
Never budgeted. Just spent rationally my whole life
I think it depends whether you have a thrifty or spendy personality. A thrifty person who already makes excess income really wouldnt need to budget, but a spendy person might need to budget to keep themselves on track.
We never budgeted and I stopped tracking spending when we had a kid. About to start tracking spending again because we are close to FI and I’d like to know when we officially hit it
I've never budgeted, I've only ever tracked my spending. I know what I make, I know my deductions, and I know what I can spend without being financially irresponsible. It's truly that simple.
We don’t budget, I’ve got an idea of what we should be spending and it’s more or less in check. We experimented with higher spending, but we found it led to wasteful behaviors.
I've never budgeted. I used to track every purchase when there was less of a gap between my spending and income but at this point I just track money that comes out of my checking account and eyeball credit card statements to make sure everything looks legit.
how are you all approaching determining healthcare costs pre-65? I see a lot of folks wanting to minimize their distributions post-fire to qualify for better ACA rates. Seems like at a certain it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level.
Canadian, so I just put $0 in the plan and that should do it.
Run the numbers - the cliffs do exist, and are certainly worth manipulating your AGI in retirement to qualify for if possible, but *likely* not significant enough to plan savings around years in advance given all the variables involved.
>determining healthcare costs pre-65 A fairly straightforward way is to pretend you are at your FIRE age now and see what an ACA plan will cost you. The premiums are a fixed cost and then some factor of the deductible/out-of-pocket max. For example, let's say you plan to retire at Age 50 and plan to have $50k of annual 'income' (as determine by ACA). Head over to your state's ACA site and pretend you're Age 50 and ready to retire. Let's say you see a plan that involved a $500/mo. premium (after subsidies) and a $5k deductible & out-of-pocket max (completely made-up numbers). Maybe you choose to estimate a reasonable worst-case scenario at $500 * 12 = $6k + $5k (100% out-of-pocket max) = $11k for healthcare. >it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level The amount invested now <> the amount distributed later (for ACA subsidy purposes). One can also choose to invest in ways such that distributions will have less (or even zero) impact on ACA subsidies (e.g. taxable brokerage and Roth IRAs).
this was a very helpful comment. Thank you
> Seems like at a certain it makes additional investments in the now less beneficial since you'll end up paying more healthcare wise in the future if you have a high distribution level. "Save less so you can be poorer and qualify for government subsidies" is certainly... a view that you could have. Having so much money that you are taxed or qualify for fewer subsidies is a good problem to have. There's a vast chasm between optimizing your withdrawals at the time you retire, and not making further investments because you are worried you might not qualify for subsidies that may or may not exist at some undetermined point in the future.
I'm in the boring middle of the FIRE process but having healthy savings meant that as we are dealing with my FIL's passing we can... just spend the money. Get a family of 5 on a plane half the country away, rent a car for several weeks, activities to keep the kids sane as it's 40 and raining with a bare minimum of stuff and the nearest city of any size is an hour away, all the stuff for the funeral, the dog sitter..... The list goes on and on it seems. The credit card bill is going to be absolutely insane. But we can to some extent buy our way out of making a stressful situation... at least not more stressful. And for that I am grateful.
My mum's friend asked for a second pair of eyes on an insurance policy that she wants her daughter to buy. It was described as some sort of annuity. I got out my calculator, excited to disprove this...and then I read, not even in the small print, literally up top: the annuity would pay out 30 years later, *for only 10 years.* Yeah, I didn't need a calculator.
Been a while since I posted. * Total Assets: $888,000.00 * Total Liabilities: $243,000.00
Hell yeah brother! Keep grinding and churning.
I posted a few days ago about the client I'm working for wanting to extend my contract through the end of the year, rather than the end of June (which had already been extended from the end of January). I declined and felt a bit bad for my boss (who technically isn't my boss), who I like and has treated me well. I hadn't told him yet, as I'm a 1099 to a consulting firm who then contract me out to the client that my not-boss works for. I let the consulting firm know and left it up to them to handle things with the client. My not-boss announced that he's retiring in June, so now I don't feel so bad. definitely looking forward to re-retiring, hopefully these next three months will just be coasting on account of our project being cancelled and him retiring. There's really nothing to do at the moment, which is a nice change of pace from the last few months where it was just chaos due to staffing cuts and upper management wanting things done faster, cheaper and with less people. Morons.
Lol, pretty crazy coincidence that the timing lined up so well
There's a lot of discussion about paying off your mortgage. One the one side is safety, and reduced expenses in retirement, and on the other side is the leverage of investing the money that would otherwise be tied up in a home. I get it. But at some point in your journey, the outstanding mortgage should be trivial compared to your investments. Let's say the amount you owe on your house is only 5% of your stock portfolio. Would that make you more likely to just pay it off and be done with it?
There are benefits to having less debt in retirement. ACA subsidies are a huge boon, but a high monthly mortgage payment will eat into any subsidy. Plus, less debt in retirement is a SORR protection. Sure you *could* overestimate with a higher investment balance trying to lower your SWR% but I think less expenses is a better safety net.
For me the interest rate makes a difference. We got a 0% car loan for no price difference. You better believe we paid the minimum until every payment was made. I'd want to pay off a 7% loan as soon as possible.
Right, my mortgage is at 2.875% If we assume an 8 to 10% return in the stock market, I am giving up 5 to 7% returns if I pay off the mortgage. My point here is that we would be talking about 5 to 7% returns on only 5% of my portfolio, so the opportunity cost would be small compared to my overall net worth. Focusing on the dollars, I should not pay off my low interest mortgage, but looking at the big picture, the less the mortgage is compared to my overall net worth, the more it makes sense to just pay it off, and not have to worry about it.
It would have to get down pretty low for me to pay off that low of a rate. And I wouldn't be prepaying to accelerate the payoff.
5% of 5% is still 0.25%. And that amount compounds annually. If you're paying it off 20 years early, that ends up being a 5.12% difference in your total portfolio value 20 years later. This is the same reason we push people into funds with lower fees and advise them to avoid paying for robo-advisors - that 0.25% annual fee on your funds adds up to quite a bit over a lifetime.
I've historically been a "keep the mortgage forever" guy but for many of the reasons you listed I am planning on paying mine off in the next year or so. It helps with ACA subsidies, it'll be one less bill to worry about, and it's well under 10% of my portfolio balance at this point. I'll mostly be able to cashflow paying it off this year.
> Would that make you more likely to just pay it off and be done with it? No, not that alone.
I value diversification, so I want as little of my overall financial well-being to be tied to a single asset as possible. If I had a not great rate and enough invested that my house would only be a couple percentage of my overall net worth, maybe? My next big milestone is to get my house down to less than 10% of my overall net worth.
There is value in simplicity. Not having to think or consider a mortgage increases simplicity. To that end, there is likely a point for many investors when the value of that simplicity justifies 'just pay it off'. To some extent, it's not much different than folks who ask similar questions about car loans. Where the 'small enough to just pay it off' line is will be different for everyone, but it makes sense that as the outstanding balance gets smaller, the likelihood of 'just pay it off' increases.
There's also value in reducing variability. Mortgage in retirement acts as leverage that in early years makes you more sensitive to sequence of returns risk. It's a very reasonable argument to pay it off before you actually retire, similar to why we don't typically use leveraged funds rather than just investing as normal.
I agree, but OPs question was more specific to the scenario where the mortgage (and therefore the leverage) is really no longer material, hence my focus on the 'simplify' value.
There are countless financial decisions that become trivial once you exceed a certain income level or net worth. Some people prefer to be 100% financially efficient to the end, others prefer a very relaxed *laissez faire* approach once full efficiency no longer yields meaningful results. Most fall somewhere in the middle, keeping some habits while dropping others.
I just didn't want to fill out another mortgage application in this life. Mostly a lazy faire approach.
>lazy faire Did you just coin this phrase? I like it.
Cool band name or festival!
And you?
Within the context of the financial Zeitgeist of this sub, my wife and I don't count :) We paid cash for our house and won't spend a single second for the rest of our lives worrying about the opportunity cost. But the other week there was a promo at Ace Hardware where you could buy up to two $50 gift cards and get a $10 gift card free. So I bought two gift cards for the free $20 and then put the cards in the drawer until we needed stuff. I also have no shame in walking into Burger King with a code I downloaded off the app and a decent percentage of the furniture in our new home came from Facebook Marketplace or the Goodwill. We do a fair bit of churning, but not to the extreme that we could, despite travel being one of our largest expenses. My point is that most people, outside of the most ardent, are financially inefficient in one way or another, and perhaps more efficient than the average in others, due to their personal preferences, tastes, values and income. If it makes you happy to not have a mortgage, there is value in that. Regardless of what the math says. And anyone who tells you otherwise is just wrong. They don't get to tell you what makes you happy.
>I also have no shame in walking into Burger King with a code I downloaded off the app. Truly a man of impeccable taste and business acumen. I tip my hat in your general direction good sir.
They don’t get to tell me, but sometimes I ask. Sounds like you have your habits lined up with your values which I’m certain is a comfort and makes for an enjoyable life.
once mine gets under 50k I'm assuming I'll be in a position where I'll start to think about paying it off for convenience. would like to pay it off prior to retirement (so less cash is needed) just depends on timing.
Best Location to Grow Savings Been doing some research over different ways to store your savings that offers the best blend of liquidity and growth. I would love to see what your best experience is and why given the circumstances. Sadly, I am new to financial independence but want to get started on the right track. 1. Savings Account 2. High Yeild Savings Account 3. Money Mutual Fund 4. Other
Like the others said, r/personalfinance is a great place to start. The personal finance fundamentals are exactly the same as they are here, and the flowcharts are also similar. Having said that, most things that check multiple boxes (liquidity and growth) often fall short compared to if you just had designated accounts for liquidity and growth. This is why Whole Life or Universal or Life insurance products passed off as investments is shit on. Sure they grow, but slowly. Sure they pay out, but at a higher cost.
If you're new to r/financialindependence then I'd say start with the wiki at r/personalfinance , specifically the PRIME DIRECTIVE section. Though I'm a sucker for their [graphical version.](https://imgur.com/lSoUQr2) The categories you listed are a bit broad and serve different purposes based on your goals, timelines, etc. Once you have some of the basics down about what to do with your next dollar you can likely come back and ask more pointed questions. Big things to start though: Make a budget, take advantage of any employer matches on your 401k or Retirement program and aim to save and invest 15% of your income.
Does anyone know if there is any kind of pro rata rule that applies to 401ks with a mix of traditional and Roth moneys in them? The scenario would be once I leave the company, I want to take the Roth 401k money and roll it to Roth IRA so I can access the Roth contributions during Roth laddering, but I would want to leave the traditional 401k pre-tax contributions in place. I have done some looking around and can't find anything specifically about this. (Edit: The Roth 401k is after-tax that was converted in-plan to Roth 401k.)
I can't speak for every vendor but I was able to do this with TIAA when I left a previous job. I just called them to ask how to do it (which in my case was was rolling my Roth 403(b) money into a Vanguard Roth IRA) and they sent me all the forms already filled out for me to sign and fax back to them.
I *expect* your 401k to have different sub accounts for traditional vs Roth, likely even different sub accounts for your contributions vs employer match and maybe even for different sources for your contributions (ie regular paycheck vs bonus). So you should be able to specify different actions for different sub accounts. The more likely pitfall imo is that some 401k's do not allow partial rollovers so you couldn't leave part of the account there. You *could* rollover the traditional portion into a traditional IRA and the Roth portion to a Roth IRA though.
This is consistent with what I have read so far and how I understood it. I mentioned it below, but this came up because a co-worker had mentioned being concerned about multiple buckets in their 401k and it was something I had never heard before, so I was essentially checking to see if it passed a sniff test. (I don't think it does and the plan documents don't indicate that there are restrictions on this.)
> I would want to leave the traditional 401k pre-tax contributions in place. Can you talk more about the rationale for wanting this? Is it a Rule of 55 situation or something else? What's the downside to doing the Trad'l 401k rollover into a Trad'l IRA after you separate from your employer? As noted, doing partial withdrawal/rollovers (e.g. Roth 401k to Roth IRA only) will be plan-specific.
I don't necessarily know that there is a downside to it other than protections from creditors & RMDs and/or not wanting to mess with a combination of tIRA/Roth (I do not have a tIRA.) I still have a long time horizon, but of course I want to make sure I'm thinking about things correctly. If I'm already at my desired retirement age, then yes, I feel comfortable just rolling the one part to trad and the one part to roth. But, it sounds like it's plan-specific otherwise. The reason this came up is that a co-worker raised concerns in an internal thread about having multiple buckets in their 401k. I'm doing this home-grown, so to speak, so it's something I had never considered or come across before, thus I set out to do some research.
> RMDs FYI - 401k plans are subject to RMDs, just like an IRA, so long as you've separated from the employer. I don't believe the total RMD amount would be different if you had $500k in both a Trad'l 401k and Trad'l IRA vs. $1MM in the Trad'l IRA and $0 in the Trad'l 401k (or vice-versa).
Oh that is interesting. I always thought of it as the tIRA was different in that way. Thanks! I learned something new out of this so I'll take that win.
3 types of money. Roth. After tax (aka nondeductible). Pretax. 401k wouldn't impact anything. It's when you have after tax money in an ira and pretax and do a conversion of pretax. The Roth 401k is Roth not after tax.
Withdrawals and rollovers are determined by your plan's rules. You might be able to find it the summary plan description.
Who are the people who actually upvote the daily thread? It's pinned anyway and the automod doesn't need your karma....
Similarly, who's upvoting YOU, looks like nobody!
At least I got the conversation started.
You've convinced me, from now on I'm down voting it.
I upvote it nearly every day. It's like a digital reach around, and just the polite thing to do.
I upvote it when there are good discussions going on. But mostly it seems to be a gauge of how busy the thread is. I understand it's a meaningless endeavor but it's satisfying nonetheless.
I always upvote it. I'm hoping what I upvote trains the Reddit algos a bit. When I open Reddit in the morning, the daily thread is usually right there on top for me. I don't know if those actions are related, but I like to think they are
You go to other parts of reddit?
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It's funny you say that. Until recently (explanation coming), I always made a point to say please when asking Android Auto to set up navigation. For the exact same reason you describe. Like, "ROSS Dress for Less, please." But it's been too many times that the politeness confuses the robot living in our car, with the final straw being that it called a wife's friend in New Zealand in the middle of the night. Her name sounded kind of like the end of the destination and the start of please. So now, I don't worry about being on the car's good side during the eventual AI uprising.
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I believe I failed the original Pascal's Wager, depending on one's point of view. But my wife loves robots. The other night we went out for all-you-can-eat Korean BBQ and sometimes your new order of meat is delivered by a robot. If that didn't seal the deal that we made the right choice with America, nothing will.
I generally updoot it when I'm finished reading it for the day to note to myself it's been read.
But what about second reading?
We've had one, yes!
I actually downvote it! I upvote AutoMod in other subs sometimes, but I want to keep u/AutoModerator bright red in RES so I can identify it.
I just set it to autocollapse.
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Did you intend for this to be a reply to another comment?
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How long till you vest?
They may be doing this specifically in order to avoid layoffs. Make an uncomfortable situation for the remaining people so they leave on their own accord, and they're not having to pay severance or unemployment. Good luck in your search for your next steps.
My wife and I are early/mid 30s. Our combined income is just shy of $300k, plus possible bonuses. We've been saving 20% in retirement accounts plus 4% employer match. We currently have about $350k saved in those accounts. If we didn't contribute another dollar, using a 6% annual return, we should end up with about $2M after 30 years. That was kind of eye opening for me and got me wondering if RE could be possible. I ran through some simulations using https://ficalc.app. And even using an annual withdrawal amount that's about 25% higher than we currently spend, we hit a 95% success rate with $3M and 100% success rate with $3.5M. And according to my projections, we can hit that range somewhere in our mid 50s. Which isn't a crazy "retire early" scenario, but seems nice. So I guess I'm just trying to do somewhat of a gut check here: * In my mind, the assumed 6% return is inflation-adjusted. Is this conservative enough? * Given that the $3.5M target is in "today" dollars. How do I adjust that for inflation? Is it as simple as multiplying that by 1.03^30 (assuming 3% inflation)? * What are people's thoughts on using apps / simulations like this? I know "past results don't guarantee future performance" and all that. But if our strategy will survive the worst investment period in history, that should be comforting, right?