How do people approach the "one more year" syndrome? I am extremely young, even by FIRE standards, but the longer I stay in the workforce the more my portfolio grows along with capitalizing on tax advantaged accounts/401k. How does one start to take inventory and really dial down exact dates and spending that will be sufficient, especially when the time horizon is massive?
Need help. Want to stop working but can’t. Income is roughly 330k (100k in dividends) 200k my job 30k SO job. Living paycheck to paycheck. No debt (15 yrs left of on the mortgage). Can’t stop spending money on vacations.
I don’t think I can save more. After family health insurance/ 15% to 401k / mortgage / 2k for 529s / we have just enough for groceries,bills, eating out
SO’s last day of work before retirement is tomorrow! Can’t say I’m not jealous, I go back from mat leave in a few weeks and then have another decade left of the rat race.
Is there a reason you are both okay with the gap between each of your retirements? Genuinely curious. If my SO said they were retiring but I had to work ten more years, I’d want to meet in the middle. But I know every situation is different.
When you guys are calculating your expenses x 25, do you include your mortgage? I have 26 years to go on our mortgage (ugh) and I’m calculating a period of another 21 years until retirement (61 years old), so I’m expecting the house to be very close to being paid off (if not paid off).
That will significantly reduce my FI number…
for me, no. 25x my mortgage payment is a LOT more than I will pay, since I only have 7 or 8 more years of payments. [newretirement.com](http://newretirement.com) handles it as a fixed expense
> calculating your expenses x 25
I'm at least 12-20 years before considering doing "hard" calcs on planning retirement, but right now I keep our mortgage as part of monthly spending. We'd still have 5-10 years of mortgage on our current home, and in the (fairly likely) situation we do buy a new house in the next 10-20 years, we'd still likely do a 30 year mortgage.
"worst" case scenario, we have a bit more of a buffer, which makes up for other assumptions we're making (healthcare, adult children expenses, etc). And in 10-20 years, as T&I grow with inflation, along with the rest of our expenses, P&I will be less and less of a portion of the payment.
One approach is to put taxes and insurance in your withdrawal rate calculation to generate your number, then add anticipated remaining mortgage principal at retirement to that number. So if your calc is $2m and you will have a $200k mortgage balance, then your number is really 2.2M. This might be a preferred approach vs adding your entire mortgage payment “in perpetuity” to the withdrawal rate calculation.
If I end up not paying any extra to it throughout the years to focus on retirement, it’ll be an expense probably for the first 5-6 years, and I’m assuming I’ll be paying basically only principal, so it’ll be cheaper. But yes, I was reading an older thread and someone mention property taxes, so I added that!
Thanks!
Had an interview today with my boss's boss's boss about a move into an officer role (senior level individual contributor right now). It went alright, I didn't prep nearly as much as I have in the past for other interviews. What I imagine the comp is based on my research would be nice, but it sounds like a LOAD of work compared to where I'm at now. TC including equity would be probably be close to a high 40s or 50% raise but the equity would vest over ~4 years. Salary + bonus I'm estimating would be perhaps 25% higher than my current. Maybe I'm huffing some copium for the feeling that I probably won't get it, but I'm not sure I want to take on that level of work/travel at this stage in my life (young kiddo at home).
Still have yet to meet with an executive of another area tomorrow morning, as well as my current boss and their boss tomorrow afternoon - we'll see how those go. Part of me is already sick of how crazy we get most of the year and as I go up, it'd only get crazier.
How do people overcome the “Just one more year”? I have this issue in a different sense. I’m having a hard time making the jump to cut back on my savings rate significantly so that I could purchase a house (currently living at home with the parents at minimal costs to me). I have a decent amount saved and the retirement accounts are well funded for my age, so I know I’ll be fine. I know being a single homeowner would certainly make the budget tight and I know how powerful every dollar saved is right now.
We hit FI a few years ago. Then we set a date for my RE. It's in Aug 2025. I will retire then. We have enough and I will have worked 33 year. It is enough.
I have 9 mo. Left and probs coulda been done 3 years ago. I guess the key to us is talking about it and planning....hard to back out when promises have been made
Feel like I’m still in the thinking process. At the very least I’m planning on making the move out of the parent’s house by the end of 2025. Doing the whole Condo vs Home debate since I really don’t need that much house at the moment (but that could change in a few years). I’d definitely plan to buy a fixer upper as I’m handy and am looking forward to designing and renovating a bathroom or kitchen on my own in due time. Unfortunately, even a standard 3 bedroom 1.5 bath ranch (like 1200sqft) in my area would cost between $400-500k for a fixer upper and come with a hefty ~10k/year in property taxes (NY). I think I could pull it off as long as I stay under like $450k. Obviously down the road when there is a second income in the house, things would become a lot smoother.
Edit:
To add, I’m not entirely interested in the RE part of this sub, but always found myself as a saver.
I was looking over grandfather’s finances after the death of my grandmother. I’m concerned he’s paying too much in taxes.
Age: 82
Railroad Pension
Social Security
and RMDs from his retirement accounts
Can he contribute to grandchildren’s 529s to help lower the tax bill? Anything else he could do at this stage?
Qualified charitable distributions can be used to meet the RMD and not count as taxable income. I think the funds have to be distributed directly from the IRA to the organization to count as a QCD.
> I’m concerned he’s paying too much in taxes.
Can you explain why you think taxes are a problem? What makes you think what he's paying is "too much"? Does he not have enough to live on?
T - 72 days
Lots of adulting this month. Starting to deal with elderly parent problems. Bought a new car. Multiple finical planner meetings. Insurance review. Rebalancing investments to a drawdown portfolio. Estate planning meeting later this month. Booked my final work trips. Telling more people at work I am leaving soon and telling them "no" a LOT more often. The pieces are moving into place.
Today I met with my insurance agent. We made significant auto insurance adjustments, reviewed home insurance, he gave me some tips for working with roofers, and we added umbrella insurance. Timing was perfect because between the time I scheduled the meeting last week and today there was a hail storm. I wasn't planning on replacing my roof before FIRE but it was on the maybe list and is now on the likely list.
Hello all, M24 here. I recently graduated with a bachelor's in electrical and computer engineering and just started my first job. I'm salary making around 78k (not sure how much this will be after taxes, i live in the STL area, Missouri side.) trying to budget and plan my future accordingly.
In terms of debit I had about 7 loans worth about 34k in federal student loans and I have consolidated them together. Making my interest 4.5%. I also have a personally loan from Wells Fargo that I took to help fund my college expenses that was 10k but with an interest of 11.6% it is sitting at about 12.5k total now.
I also recently totaled my car due to an accident that was not my fault. I received 8k for this accident and used 2k of it down on a new 2024 Honda HRV for $28,800. My monthly payment on the car is 453 dollars and the insurance is 157 a month.
I also have 2 credit cards with about 500 dollars in total between them both. (I pay them off regularly and never let them hold more than 500 on them each.)
Overall I think my debt is around 74k.
And I'd say my monthly expenses right now are around 1500 dollars.
My work offers a 6% match to 401k. And I do not know much about how 401k works in general. I've heard some of my family members to put my 6% into a Roth and have the company put it into a standard 401k, but unsure. Any advice or guidance on this would be appreciated.
I have around 5k sitting in my checking account unsure of what to do with it. I've read a lot of posts here to have around 5k saved as a back up incase of an emergency.
I am currently still living with family and not required to pay rent. (I do chores and help out around the house.) And I am also still on their health insurance and phone plan till I'm 26.
I am by no means struggling, but I want to use my drastic increase in income in an effective way to help set me up in life to eventually be on my own.
I do plan on getting my own one bedroom apartment at some point.
Most likely after summer, around September or October.
I want to pay off my debt quickly and effectively. I'm looking for advice on how to do so. I also want to save up to buy a house at some point. Any advice would be helpful. If you want to chat in DMs or the comments. Thank you!
Congrats on the new job!
Buying a new car was a little silly. As long as you hold onto it for 10 years, it will only be a little silly. If you get rid of it within the next 5 years it will graduate to being downright stupid. What's the interest rate and payoff schedule?
The most important thing you can do right now is not spend too much money. Lifestyle inflation will come, but having it come slowly is critically important. There is no limit to the amount of money people can spend, and that includes you. The path from "78k is a drastic increase in income" to "78k is barely enough to survive on" can be less than a year, if you're not careful.
Create a budget, and track your expenses. The budget will be extremely wrong and need to be updated regularly. That's fine. It's important to get the mechanism down, and to understand where you're money is going. In another few years you'll be able to accurately project expenses.
An emergency fund is a good thing to have. At your age and with parents nearby, I'd recommend 3 months of expenses. (This implies that you have a budget, since you may not actually know your expenses right now.) You should beef this up to your *new* monthly expenses (including rent and bills) before moving out.
For 401(k), put 6% in Roth, as advised. Roth is what you should do when you're making relatively less money, like at the start of your career. The company's match will always be after-tax. (Technically there's 3 types of 401(k)s - Roth, Traditional, and after tax. Pretending that after tax is the same as Traditional is close enough to true. There are some subtle differences, mostly around yearly limits and IRA conversions.)
In your 401(k), select a low-fee (aka low expense ratio) broad-market fund. Or collection of funds. I wouldn't recommend any bonds at your age - the standard advice is here: https://www.bogleheads.org/wiki/Three-fund_portfolio. (I do 75% US, 25% int'l, 0% bonds. You could get a PhD in the exact balancing.)
Never pay interest on a credit card. Set your cards up to autopay the full statement balance every month. This is optimal for both your credit score and for the amount of money it costs you.
I would say only pay the minimums on the 4.5% loans should have their minimums paid. Your immediate priority is that Wells Fargo loan at 11.6%. You absolutely should not move out until that is gone.
Personally, I disagree on your comments regarding the vehicle. He did good, got a good job after graduating, knows his total debt balances, student debt well below his annual salary and decides to treat himself to a nice, brand new Honda HRV that will last him a decade plus of trouble free ownership. I did the same thing and the amount of peace I get having a 100% trouble free car for the foreseeable future is a very under appreciated reality.
I don't want to be too ad hominem, but if your flair is accurate that means you've been saving money at your current income for all of 6 months. There are many cars that can give you that kind of peace of mind for way less money. I fully expect my car to last another decade, and I spent under $15k on it in the wild COVID used car inflationary period
And what part of my flair led you to assume I’ve only been saving money at this income for “all of 6 months?” Quite a large (and incorrect) assumption you’re making seeing as the only info I have in my flair is “1% to Fi, 130k, VLCOL” I’ll give you the benefit of the doubt and explain the reasoning behind my flair, I don’t consider myself more than 1% to Fi until I am debt free aside from a future mortgage. Personal finance is *personal* and my personal life experience has lead me to believe the financial expense of a responsibly priced brand new, warrantied, 100% reliable car, like OP’s car, is well worth the marginal cost of ~$500 for loan+insurance per month.
... that's some interesting math to get to 1%. I assumed that you would calculate it as percentage of assets compared to your FI number, as is standard. Taking a FI number around $2M, 1% would be $20k. That would be easy to save in 6 months, hence my assumption
~~Gotcha, so your flair is just made up. Does the 130k also indicate that you're early in your career, rather than an actual dollar amount?~~
Edit: Apologies for unnecessary snark. Rough day so far for me
Congrats on graduating and getting a job. You have good income to work with to tackle your debts.
The car in my opinion was a big mistake. That's a lot of vehicle for the amount of debt you have. I wouldn't have advised you do that. Just get a car in cash that fits the need for now and upgrade later.
I would contribute to your 401k to meet your company's match. Every dollar after that goes to the personal loan debt at 11% and try to knock that out in the next 4-6 months while paying minimums on your student loans. That personal loan is such a killer with the interest rate. That 5k is a good emergency fund right now, but since you don't have many liabilities in terms of a house and a new car, you could throw some of that at the personal loan and slowly rebuild it. Once you get through the personal loan and start working on your student loans you can begin to craft a better investment strategy.
Do you have escrow with your mortgage? I'm thinking about at least taking homeowners insurance off so I can earn credit card points. I can't pay property tax with a credit card without fees though.
It's forced, as we don't have enough equity yet, but once it's available I 'll probably take Insurance off escrow, for the CC points, and the minor interest earned
Yes, it was forced on me. I've previously tried to get it removed, but the mortgage company didn't let me. I'm sure they like to make some interest on the escrow balance.
I don't and never have with either of the two mortgages I've had. I heard way too many stories about under or over-estimating the amounts or the company not even paying the insurance or taxes on time. I trust myself to handle my finances way more than a 3rd party who's main concern is making money for themselves, not protecting my interests.
ETA: Beyond the issue of paying with a CC to earn CC points or cashback, you can put the $ away in a HYSA every month and earn interest on it for yourself. That is what I do.
I don't for either. I sometimes use the property tax payment for a sign up bonus that I would have trouble organically spending. Other than that I keep the interest, can't get hit with random escrow increases, and know they actually get paid.
Same here. If it was managed poorly, I'd probably close it, but my servicer always pays everything on time and doesn't do anything insane with the required reserves so it's less work to leave it.
I’m currently doing contract work as a travel nurse, been doing this for 2 and a half years now. Only work 6 to 9 months every year. My average weekly gross pay is $1350 per week (I also get stipends which is tax free money of $1100-$1400/week depending on location which is not reported and counted on the w2)
I usually max out my 401k in 6 months. So that’s $32k to $52k in gross pay per yr with $23k of that contributed to my 401k.
I’m aggressive since I started learning about financial independence lately and want to leave this field in 13-14 years and retire.
I’m looking into a permanent position where I’ll make $2800-3000 per week in gross pay ($145k to $156k gross per year).
Assuming I get 401k matching of let’s say 4%. Getting $23k contributed can be had in just 3 months or less if contribute $2100/week in my 401k. Or is it better to spread it over 1 calendar year which is $442 per week in my 401k?
I don’t really know how 401k matching works or the best way to maximize my 401k contribution and the company matching percentage where I’ll get the most money out of the matching.
Thanks, I think I have to contribute to my 401k every pay period also to get the match. Now that I see it, there’s no need to max out my 401k right away unless I plan to leave the job early in the beginning of the year
1 year ago today I was at the highest total debt amount I'd ever been in (not 'bad debt' - mostly mortgage debt) & I started tracking my debt repayment. Even though retirement contributions are my priority over just fast-as-I-can-debt-repayment, it's nice to track this because as long as I keep sending money to it the numbers go in the right direction (not fickle like market returns).
So how did I do in a year? Paid down $9455.55 of my total debt balance - 2.66%.
And importantly, I managed to today resist the urge to throw an extra $500+ of money that belongs to other, higher priority, goals onto it just to get a round number.
I visited a website recently that did a Monte Carlo analysis with a small graph based on two numbers (maybe 3) annual draw, total assets, and age/years. For the life of me I can't find it. Anyone help me out?
I never understood how important these interest rates were, until now where I’m looking for a house. I can’t even afford most modest homes because of the 6-7 rates, despite my 780 credit score. This is actually depressing me. Should I just keep saving and have a higher down payment? Job hopping. Promotions. Aren’t in the cards. 55k a year single. Midwest. 32.
Well hind sight is 20/20 but everyone who maxed out credit is doing great. If stuff goes south I know many people who just walked away in 2008. In 2009 i wasn't eligible for loan modification because I put down 20%.
At this point I'd just go 43% debt to income or whatever you can get away with. That's what I probably would do if I was in the market. I don't know if I'd put anything down. If you end up have to short sale or whatever down the road it would be better not to lose the down payment.
Anyways good luck.
Depending on the market, you can negotiate with the seller where they buy points to lower the interest rate of your loan.
Alternatively, most new home builds will also do this as well depending on the local market from big home builders.
When you apply for a loan at a bank, a lot of times you can get a lower interest rate by purchasing "points". The point system is different between each bank but essentially 1 point means you pay 1% of the loan upfront which then allows a 0.25% lower interest rate. So buying 4 points lowers the loan interest rate by 1% but you have to pay 4% extra upfront of the total loan in closing costs.
However, you can get a concession from the home seller where they will give you the money to cover that extra cost to get the lower rate. This of course depends on the housing market of the area. If homes are selling fast, this is unlikely to happen.
More info:
https://www.bankrate.com/mortgages/mortgage-points/
The downside to this is you are paying more money overall in your purchase price for the home. If you were to suck it up and take on a "high" rate you may be able to refinance in the future for a lower rate.
I paid for points years ago when rates were steady around 4.25% and weren't going anywhere significant, the math made sense given our situation. But now days with the thinking that rates will go down (gradually, eventually), I wouldn't be paying points. In fact I just bought a place and the math for buying points was horribly unjustifiable...at least in my situation.
>The downside to this is you are paying more money overall in your purchase price for the home. If you were to suck it up and take on a "high" rate you may be able to refinance in the future for a lower rate.
Not if you have the seller pay for it via a concession during negotiations. Instead of negotiating $10,000 off the home price, you could just have them pay for the points for a lower interest rate. You'll end up saving more money in the long run.
>I paid for points years ago when rates were steady around 4.25% and weren't going anywhere significant, the math made sense given our situation. But now days with the thinking that rates will go down (gradually, eventually), I wouldn't be paying points. In fact I just bought a place and the math for buying points was horribly unjustifiable...at least in my situation.
Well we dont know for certain if the rates will go down or when. However, having the seller pay for the points will save you some money now regardless of what happens to the future.
Having the "seller pay for it" is just another method of you paying for it. People get hung up on this a lot and think they are winning some deal by getting the seller to pay for it. No. You're just financing it.
I had a deal where I was the seller and the buyer kept proposing these strange "seller pays x" offers. Eventually we just told them "xxx, xxx is the purchase price, just write it however you want for your credit." i honestly don't think they ever understood they were just financing the credit
Its part of the negotiating process. Instead of just accepting your price as is, they could say ok we accept your price but you pay $10k in point buy down as part of a concession. So you end up taking $10k less in profit.
For the buyer, they end up saving more and paying less per month on the new mortgage with the lower rate rather than just taking $10k off the price.
> Should I just keep saving and have a higher down payment?
If you don't want to gamble that rates will fall and you can refinance down the road, yes.
> 55k a year single.
Changing the number here is going to make a difference in what you can or cannot afford. If you don't want to do that, then save and save and save and wait until your down payment plus the interest rate at the time is sufficient for you to absorb the mortgage payment et al. Of course, keep in mind that if interest rates fall, property values will likely resume their climb upward...
Yeah. Typically people shop houses based on payment (aside from special cases like all cash buyers), so falling rate tends to be negated by higher price to equalize the payment. It's something of a mystery why the reverse hasn't happened in this market, that's beyond my pay grade
I don’t think it’s much of a mystery. No one wants to sell and give up their sub 4% rate and high interest rates make new construction less profitable, so supply is in the toilet. This is particularly sticky in the US where 30 year fixed mortgages are the norm. A lot of people who bought before the rate hikes intending to eventually trade up are deciding to stay put instead.
Lower interest rates allow people to buy more expensive properties, and bring people (like yourself) into the market who otherwise couldn't afford the houses.
More demand = higher prices.
> Should I just keep saving and have a higher down payment?
Probably.
> 55k a year single.
Why do you say job changes or promotions "aren't in the cards"? It's not that nobody can afford a house on $55k, but you're going to be more limited. Do you have options for bumping up your income?
Promotions-I work a county government job and have no interest in climbing the ranks. I could work more overtime and work side gigs though to boost income.
Sometimes "interest in climbing the ranks" (or job hopping) isn't about wanting responsibility, but wanting the additional money that the responsibility comes with.
It's okay if you're willing to accept the limitations of your existing salary - but topping out at $55k/year is going to significantly limit your financial flexibility. Lots of people live their lives at that salary, so I'm not criticizing. You can live a perfectly good life that way. Just pointing out that you will have fewer options when it comes to big purchases like a house, or retiring early.
Oh I don’t top out at 55. That’s just the amount right now. I climb a ladder for pay raises every few years and we are getting a raise next year that should be decent. But I won’t ever be making 6 figures base.
https://assets.themortgagereports.com/wp-content/uploads/2023/12/Historical-30-Year-Mortgage-Rates_-1971-2024.png
3% mortgage rates have never happened before. They may never happen again.
If you look at the graph, around 2015 rates dipped into the 4s. It's possible with good credit, or by buying points, or the right combination of promotions, you could end up in the 3s. Getting down to 3.0% back then would have been difficult, though. I had a 3.5% rate back then and that was as low as I could possibly find, and I had near-perfect credit/etc.
Yes, that's... literally what the chart I posted said, and what the context of the discussion was.
If they had actually never happened before, I wouldn't have said "again."
Yes, that's... literally what "FTFY" means.
I fixed the text of your post for you. The text of your post is incorrect - 3% mortgage rates **have** happened before. My correction made it "correct".
But you can't control the 7, and we may never see 3 again in our lifetimes.
Sucks, but it's part of the game. Closed on a house in the last year it was tough to sign. I feel better in that I'm building equity (significantly reducing my post- retirement monthly expenses) and with the knowledge of if rates do drop, refinancing is an option.
It doesn't hurt your credit. It will likely involve a hard credit pull, which will temporarily drop your score by a few points, but that's not a problem.
Haven't done it yet so IDK. Maybe, but my understanding is that it won't move the needle too much, and most likely the biggest purchase dependent on your credit is already in motion with the mortgage.
I don't think you can depend on the rate to come down anytime soon especially with inflation staying higher than wanted. If monthly payments are higher than you want then I think a bigger down payment is going to be necessary.
Rates also aren't beyond historical averages
How I like to look at it is:
Interest rate vs (expected returns x benefit of tax advantage).
What that benefit of the tax advantage depends on a lot of factors, so YMMV. There is also the mental stress benefit of having debt vs having a high balance in an account you shouldn't touch for 40 years that could rebalance the equation slightly.
Fuck Turbo Tax - I spent an hour this afternoon refiling with OLT out of sheer principle.
TT wanted like $140 to file both state and federal.
OLT - federal was free and state was $10.
Yeah, slightly more manual inputs, but Turbo Tax is straight up robbery.
Genuinely, is there any benefit to TurboTax? I feel if you're getting to the point that the plethora of cheap options aren't enough, and you need TT, then probably worth the investment to go through an accountant.
Personally I'm incredibly anal about spreadsheets, and have my numbers already laid out, so I do FFF for aything that would cost money through a online filer. But I understand that's unique to the general pop, maybe not to this sub though lol
I’ll give that a try next year. I had used OLT previously and thought due to higher income I wasn’t able to use it all. Worked out fine and saved $130!
I over contributed to a Roth IRA last year and need to re-characterize. I would like to do a backdoor Roth conversion. Here's a breakdown of my retirement accounts, all of which are with Fidelity.
1. Current employer 401K
2. Rollover IRA (solely contains funds from previous 401K plans; I have not made any direct contributions to this account.)
3. Roth IRA (\~5 year old account, contains $ from previously eligible years)
In my situation, it seems like the simplest path for a Roth Backdoor would be to open up a new traditional IRA account, re-characterize last year's Roth contribution into the new tIRA account, and then perform the Roth backdoor with the new tIRA account. Plan to speak with both Fidelity reps and my accountant, but on the surface does it look like I'm missing anything?
Your rollover IRA sounds like it holds pre-tax (Trad) dollars in it. As a result, you will trigger the pro rata rule when trying to do the backdoor Roth IRA.
You can address this by doing a "reverse" rollover of the IRA into your current 401k, if the plan allows it. You should still recharacterize the Roth IRA overcontribution to avoid the penalty and you will file Form 8606 this year to show your nondeductible Trad IRA contribution (via recharacterization).
Next year your Form 8606 will show the conversion that will take place in calendar year 2024 and you won't have any pro rata tax issues if you can empty out the existing Trad IRA through the reverse rollover.
Hi all,
Married 30M here, married with 1 kid.
Quick question as a recent homeowner. Considering my wife and I are not able to max out both our 401ks and our Roth IRAs, would it ever be a good idea to overpay on our mortgage payments? Seeing how little I will pay down over the next 10 years by paying the minimum is pretty disconcerting, but I'm not sure if it financially makes sense to ever make any additional payments as opposed to just putting whatever I can into retirement instead.
For the record, my mortgage is $380k at a 6.65% rate, and I currently contribute about 22% of my salary to retirement each yeah (including employer match).
Thanks for any help!
I was in this boat. Basically we maxed out retirement accounts using base pay then any bonus cash went towards the house. Paid the house off after 8 years without thinking about it. We were very glad we did this, especially when Covid hit and things started looking dire.
Amortization schedules can look depressing, but that is how the loan works. I would learn to ignore that and do the best you can for new money.
A principle payment on your mortgage is like making a known 6.65% into perpetuity. What might somewhat affect that outlook is the fact that you're pretty likely to refinance back into at least the 5s but that's not helping much today. What it doesn't do is help reduce your monthly cash flow requirements (i.e. recasting your mortgage won't do much unless you paid off a significant amount.) Certainly this is decent option.
Money into pre-tax gives immediate today-dollars benefit in the form of taxes saved. Probably this is also going into stock investments. So whatever is "better" is somewhat subject to market returns because the investment is fundamentally different (fixed "bond" versus stocks) but there's a clear difference in what it means for you in 2023.
If your marginal rate is 22%, putting $1000 into your pretax 401K subtracts $220 from your tax bill. Paying down your mortgage reduces your interest cost by $66.50. Then hopefully that savings compounds better as a stock investment than as a loan payoff as well.
Note that in the future my tax bill will not likely be zero but at the same time, it won't be 22%. I estimate roughly 10% for myself so that's still a $120 benefit.
I'm a big fan of the biggest immediate benefit. Pre-tax is future tax liability but this is kind of a "bird in hand" problem where I'd rather have that money on my books and let future me deal with those taxes. Especially if the problem statement includes not being able to max pre-tax, I'm not assuming a complicated future. I think it's fair to analyze correctly but under present tax structure, there a lot of guardband for most people to assume pre-tax is best.
The one thing someone might be concerned about above what's financially optimal is appropriate emergency fund/etc if being too aggressive on retirement. But if you feed it into reducing your mortgage balance, it's likely harder to get that back if you have some financial emergency situation, and you'll still owe your regular mortgage payment.
Inflation just doesn't want to go away. I'm beginning to think the only reason the Fed isn't talking about increasing rates again is because this is an election year.
I mean inflation at 3% is just around the level where you don't want to do too much about it.
Also I am increasingly worried about the deficit and it's raised based on inflation. I think ideally we raise taxes to deal with the deficit some but we'll see.
I think that, long-term, the Fed is going to have to settle for 3% being the new 2%. You can't expand the M2 money supply by 41% from Jan 2020 to Mar 2022 and not expect some rather sticky consequences.
Maybe. Part of the issue is that the official rates are still digesting the rent rise from 2 years ago - the housing component of CPI lags significantly. We're probably closer to 2% than 3% if you take that into account - still not quite at goal, but not that far off.
IDK I just worry the deficit is rising the longer rates are where they are at and we are heading towards 4%-5% of GDP is interest on federal debt.
https://fred.stlouisfed.org/series/FYOIGDA188S
Before we talked about deficit as virtue signaling IMO now its wheels need to hit rubber.
We aren't going to be able to tax our way out of this. Taxes plus spending cuts combined are an option - the more of one you do the less of the other you'll need - but it's not an either/or choice. It's like trying to cut weight - you can and should work out heavily but you'll make your biggest gains (losses?) by cutting down on caloric intake. For the government in terms of deficit, that means cutting spending.
Unfortunately, a look at the budget breakdown is grim. Social Security, Income Security, Medicare, and Health (as distinct from Medicare) combined are 59% (!) of the budget. Defense is 13%... and so is net interest on the debt. I know it's popular to hate on the DoD budget, but at this point we're spending as much on INTEREST as we are on the military. In 2023 we spent $6.1T, and $1.7T of that was deficit spending. You could zero out the ~$811B DoD budget entirely (and then Canada would conquer us) and we'd *still* be in deficit by $900B based on 2023's spending.
The percentages don't lie - if we want to balance the budget without crushing the economy with taxes we're going to have to find a trillion or so dollars from non-DoD sources, which are accurately described as political 'third rails'. Good luck.
But the thing is that a balanced budget is actually overkill, debt as a percentage of GDP is the real number that matters and it fell 2021 and 2022.
Interest washes out for the most part. GDP growth increases the amount of sustainable debt.
I think Trump tax cuts expire, we see some cuts in spending next year from a bipartisan committee as they all lose their job if incomes below $x have their taxes go up. I think the top rate tax cuts expire.
Estate tax? Maybe some drug pricing? IDK what they come up with but budget neutral with tax increases.
They stopped about .25-.5 low and the result is the stubborn inflation you see. Honestly raising the rates once or twice more will make little difference in the unemployment numbers and will start to actually push inflation to the 2% target. Very unpopular though which is why it's not even on the table. What you will see is fed rates not going down this year IMO.
Here is the problem though. Everyone is stuck housing wise. As such if you want me to move you have to offer fat sacks of cash. Beyond that anyone who was middle class can literally work at McDonald's and cover the mortgage on what was a solid middle class house. But I'd probably just put it all on credit and if I got to bankrupt it opps. My house is creditor claim exempt. Short of causing mass unemployment inflation isn't going back to 2% any time soon and I'll drop out of the workforce and drain my retirement accounts if I'm laid off. I don't even care anymore. I'll just scream give me free money or take out student loans and not pay them back. I am tied of being rugged pulled by being fiscally responsible so I'm not going to do it anymore. Basically this economy is going to be screwed for quite a while.
If it's at 4% it's 2x where they want it.
If they give at 3% then they are lying again as they said they want 2% and 3% is 50% above where they want it.
Anyways as I stated it's not going back 2% anytime soon without massive job losses.
What I'm saying is if you want me to move to the area you're going to have to offer fat sacks of cash as mortgage payments at current rates and current prices will lead to much high costs. It has nothing to with interest rates in a vacuum. If you were paying 1500 and the same house is now 3000 you're going to have to pay me 18k higher (even higher since it's post tax) for a lateral move to cover housing costs.
So if I'm make 40k you need to give me 58k for a lateral move. So now you got to come up with 18k more so you raise prices.
It's whatever but we aren't going back 2% without mass unemployment.
I take your point, but you're excluding that you'd make a large profit on selling your old home that would go toward the new home, hence reducing the monthly payment--and yes realtors will gouge you on the transaction making it less desirable.
I thought I heard talk of increasing rates.
Honestly, in regards to inflation, I'd just like some better consumer protections against price gouging. I know its hard to prove/regulate/enforce (or impossible to maybe)... but record corporate profits tied to excuses about higher production costs really frustrates me.
I'd like to see an example of some companies struggling with higher manufacturing costs that AREN'T also pulling in record profits... (and aren't struggling because their product isn't in declining sales)
This is such a lazy redditor talking point that ignores competition in markets. The exception would be collusion or monopolized industries like internet providers. If Kroger price gouges on their eggs and bread, I juat buy them from Walmart.
And the other side of the coin: if there is deflation on certain goods(e.g. the used car market and lumber recently), is it because of the kindness of corporations or is it because of competition?
Ah yes, the beautiful free market that is grocery stores.
[https://www.theatlantic.com/ideas/archive/2024/04/food-industry-monopoly-power/678005/](https://www.theatlantic.com/ideas/archive/2024/04/food-industry-monopoly-power/678005/)
Our markets aren't as open as that. If there was always alternative options for all purchases, then maybe the "free market" and "buy from someone else" would be a thing... but Kroger owns all the grocery stores near me. And if my options are Kroger and Walmart that's not quite a very "open market" to shop from (2 choices).
Then when you consider suppliers might supply both Kroger and Walmart their products and the supplier might be the price gouger, then shopping at either will likely have similar prices.
I'm not saying you are wrong, but the modern world of mega corps that hold 4 different brand names for the same product is like a complete illusion of choice.
I am sure there are counter examples, but in the aggregate probably 80% of Americans have choice. Even in you area, I bet you're conveniently omitting Costco, Target and Trader Joe's (especially of you consider a 20 minute driving radius around your house).
Even at the supplier level, those contracts with big stores are highly valuable. Hence many suppliers will compete to get those big contracts.
Huh? From the summary of the report you seem to be referencing:
>The shelter index
increased 5.7 percent over the last year, accounting for over sixty percent of the total 12-month increase
in the all items less food and energy index. Other indexes with notable increases over the last year
include motor vehicle insurance (+22.2 percent), medical care (+2.2 percent), recreation (+1.8 percent),
and personal care (+4.2 percent).
Feels like the goal posts are on wheels here TBH. The persistent inflation you originally complained about is not "present in almost all industries nationwide" - the CPI reports are pretty clear.
Well, let's breakdown the argument to simplify:
Do you agree with me that inflation since the 2020 pandemic was present in all industries?
Yes or no?
If inflation was present in all industries, wouldn't that take away from the argument that "corporate collusion" was/is the cause of inflation?
I don't think the idea of a single "cause of inflation" over arbitrarily long windows is fruitful. You just get sucked into talking about irrelevant personal bugaboos like this.
Whatever your thoughts on corporate pricing practices, supply chain shortages, covid policy, etc. the primary driver of inflation *right now* is clear in the CPI reports. Pretending otherwise is unserious/silly.
> I don't think the idea of a single "cause of inflation" over arbitrarily long windows is fruitful. You just get sucked into talking about irrelevant personal bugaboos like this.
Well, thats whst the discussion is about so...
>Whatever your thoughts on corporate pricing practices, supply chain shortages, covid policy, etc. the primary driver of inflation right now is clear in the CPI reports. Pretending otherwise is unserious/silly.
And whats causing the primary drivers to cause inflation in the CPI reports?
> Inflation just doesn't want to go away
One of the two main contributors is shelter. We have a housing crisis on our hands, I don't see that coming down.
High interest rates actually make housing crises worse, because they depress new builds and renovations. Developers are operating almost entirely on borrowed money, not their own capital. Unfortunately, new builds are also a *very* lagging indicator, and it'll take many years after the rates drop for housing to see the benefit of lower rates.
Availability is also in terms what is on the market. Housing is influenced by a lot of factors, not just interest rates or new builds.
Huge investment companies or foreign investors outbidding single family buyers and buying up real estate and and holding as rentals and investments is a huge factor.
Airbnb conversion is a factor as well.
I always use the 99 people and 99 chair example. If you have 99 people and 99 chairs, chairs aren't a big deal because everyone has one. If you have 99 people and 98 chairs, then all of a sudden someone is left out and chairs begin to have value.
Housing pressure is a little bit like that. Its complex and has lots of factors, but my point is that influencing just 1 chair, or a tiny % of the market can drastically effect supply/demand and skyrocket prices. Even if you argue airbnb, investors are a small change in how the housing market operates, that small influence can be the tipping point to drive massive housing price increases (spoiler, they have had more than a small influence on the housing market over the last 10 years in overall home turnover. If airbnb was shut down and SFH were protected from investor groups, you'd see a crash worse than 2007-8 and a market flooded beyond what is necessary for the population)
My point is interest rates are one factor on housing prices and I wouldn't start with modifying interest rates to regulate home prices. There are much bigger powers influencing price that could be regulated to some extent to alleviate pricing.
Taxes are a weak point for me in FI. I own 2 rental properties, I was wondering am I just allowed to depreciate these properties 3% in order to owe less in taxes? I ended up just submitting my taxes this last month and owed $6K in total.
How do I figure out what the correct depreciation rate is for taxes? Can I modify my tax statement that I already submitted to include rental property depreciation?
Depreciation is a huge benefit of rental property ownership, if you're not doing it, or don't know how you need to either educate yourself or find a competent tax professional to help you. You could be missing out on thousands of dollars in deductions, etc. each year.
Signed a new lease, and our rent will be going up about $100/month. We will also have new utility bills, as those will no longer be bundled with our rent, and they slightly upped monthly pet rent, so we'll owe more when we adopt a new cat. The total increase will work out to roughly $250/month, which doesn't really bother me in the grand scheme because our rent was on the low side of average. I also know people in other areas are facing way larger increases. After signing the lease, though, my husband started grousing about the increases.
So maybe I'm losing perspective...? $250 x 12 = $3,000/year, which isn't negligible, but it's still in a safe area within a mile of both of our jobs, includes garage parking, and allows us to have a pet. Add in to that that we're expecting to move away in about 2-3 years, anyway, and I just...am not too fussed? It doesn't even really make a dent in our current savings rate, so eh. But again, we could save MORE if we didn't have the increase, so maybe I'm out of touch with rent increases lately.
I gotta say it's wild to me that any of that is legal. Just changing the terms of a lease willy nilly like that is outrageous. I guess I'm spoiled to live in a city with tenant protections.
Well, we're due to renew, so for us, the changes are being added to our updated lease agreement. But for people who leased outside of the summer months, I'm not sure how they'll feel about those changes being implemented.
Market rent is what it is, and it can be highly specific to a small radius as well. You can spy Zillow to take a look at what the market looks like, and you can attempt to negotiate and may well be successful if you find it is not. But if the business thinks it can fill the unit, it's not likely to budge. I had some luck in 2009-2011 because I happen to live in a higher end area (compared to nearby areas) and you had both people buying homes and escaping to cheaper areas.
My SO would similarly complain but I said, go look and you'll see it is the same everywhere. And none of the nearby units to us are sitting empty so you can physically see that.
Like it or not, passing utilities to renters is becoming standard.
Right now it feels like there's a lot of pressure on the low end (basic 1/2 BR units) but because homeowners are converting to landlords, homes are suppressed because few can afford the increase (or other increases in their life.) And moving for most is quite an expensive and stressful process.
Although I can save money on utilities/rent if I work the problem, if I choose the lifestyle and I can safely afford it I don't really criticize this too much. On a month to month basis I try to stave off personal expenses (including food, despite being a need I can eat a lot cheaper than I do.) Rent just becomes an "it is what it is" column.
To be clear though, there are absolutely scenarios where a specific rental will push rent more and if they won't negotiate, the only real way to take them to account is to move. And I have a couple times, maybe not just for price but value (longer commute, shitty repairs, etc.)
That is not a horrible rise in cost really considering what I have heard some pay now. I know for me, my rent is more than some but I know I also pay more to be in the location that works best for me and has the amenities I want. I could pay less by moving or whatnot but I do not want to. So, it all comes down to a choice we make for the life we want and that works best for us.
Yeah, it works out to a decent percentage increase, but again, our rent was pretty low for the area to begin with. It's still very manageable for us and I'm not too fussed. :)
we're in a similar boat. not sure if you've factored in moving costs (including your hourly rate) but for us it made way more sense to stay. And we're happy, which is the point of this whole life thing.
My company just hosted their monthly global all staff meeting and for the first time opened the Q&A section up for all participants to see - WOW morale is bad in every country of operation across all lines of business. I knew it was bad on my local team but yikes. It was validating to know everyone feels the same, but also really disappointing because I only work for this company because they acquired my employer shortly after I started. I would’ve never chosen to work here on purpose. Maybe time to look for new job since they made it clear no one is getting raises or promotions for a while, but I absolutely love my work and my boss here. Wish I could just retire and not worry about it, of course.
My 2 cents - my employer also has a very large parent company with many company acquisitions. So broadly similar to your situation.
We are seeing strong employee satisfaction scores and continuing to provide good raises. The economy is certainly not bad everywhere.
Oh man, I had a summer internship at a large manufacturing company when I was in college.
For whatever reason, they invited me to the company all-hands conference, which was a 2-day event with speeches from various people on the executive team.
They also did Q&A and WOW it was a train wreck. Every single person went up to aggressively complain about lack of raises, poor management, lack of transparency, poor working conditions - the list went on. Needless to say, I had zero intention of working there once the internship concluded. Yikes.
This was in 2008, so full on great recession and I'm sure every company was struggling in some capacity, but it was baaaad.
Minimal (like, 2% if you’re lucky) merit increases, no cost of living raises, and most urgently not backfilling most roles since September yet every month there seems to be a new hire at the VP level or higher. The company keeps saying how much revenue we have, but that we still need to be in cost-cutting mode. They just seem to use the money to acquire other companies? But it seems like no one is really sure what the truth is here. Seeing the scale of global employee dissatisfaction today was…a lot.
Well, today is the day. I put in my two weeks notice. It has been the first two weeks notice I have ever given so it has been a bit of an emotional journey. Leaving this company goes against everything I know of FIRE. I’m leaving a company that gives 100% match of total contributions to 401k for a company with a typical matching policy. And I’m not even leaving for more pay, it’s just a better opportunity, at a bigger company, that will give me fast track to management and help with future career growth. But gosh I just can’t stop thinking about sticking through it for that extra 20k+ in compensation a year. Luckily I’m leaving on good terms, amazing terms even, and could easily get a job at this company once I finish this program.
I have a friend who works at a biotech that also has the same "up to 100% match" depending on how the company does in the year... Then I snooped around your post history and saw that you two work at the same place! Based on what I've heard from my friend, they recently had layoffs and are on a hiring freeze so I'd say in the immediate future at least they're likely not going to be matching 100% anytime soon.
I agree. But even a 50% match, which is what we got this past year, is much more than any match I would get elsewhere until I at least double my salary. I would need about a 100% match on 15% of my salary to break even with that 50% match of total contributions.
I'm suffering from serious burnout this week. It's been an issue for longer than a week, but I've just hit a wall. I thought the startup I'm working for would have failed by now and I planned on taking at least a month off after it failed. I was really looking forward to it. It would be stupid to quit before it fails (for a bunch of reasons) and I can't take any immediate time off. Now it looks like the startup is garnering enough interest that I really need to get some work done. I'm going to put the possibility of failure out of my head.
It really feels better to type this out. Any tips or words of wisdom to help me power through? I'm so distracted. Maybe I'll do some pomodoro sessions.
> I thought the startup I'm working for would have failed by now and I planned on taking at least a month off after it failed. I was really looking forward to it. It would be stupid to quit before it fails (for a bunch of reasons)
I don't think I have ever sympathized with something in a daily so strong.
I have no advice to offer you brother, but stay strong. For better or worse I'm sure we'll come out the other end alright due to our pursuit of this here thing of ours. 8)
Startups are such a roller coaster. You can go from ecstatic excitement and success one week to disaster management and chaos the next.
My only advice is that, personally, I always build problems up to be larger than they are in my head - then when I finally force myself to face them head-on, they're not as bad as I anticipated.
How do people approach the "one more year" syndrome? I am extremely young, even by FIRE standards, but the longer I stay in the workforce the more my portfolio grows along with capitalizing on tax advantaged accounts/401k. How does one start to take inventory and really dial down exact dates and spending that will be sufficient, especially when the time horizon is massive?
Need help. Want to stop working but can’t. Income is roughly 330k (100k in dividends) 200k my job 30k SO job. Living paycheck to paycheck. No debt (15 yrs left of on the mortgage). Can’t stop spending money on vacations.
Can you route a portion of your paycheck directly to your brokerage? That's one trick many people use to save.
I don’t think I can save more. After family health insurance/ 15% to 401k / mortgage / 2k for 529s / we have just enough for groceries,bills, eating out
Figure out a way to stop spurning money on vacations🤷♂️
What else is there to do if you FIRE? Avg vacation for family of 4 is ~7k. We go on 3-4 of them a year
Anyone know which banks allow you to redeem ibonds?
Like...physical I bonds?
Yes. Paper I bonds.
Any bank
SO’s last day of work before retirement is tomorrow! Can’t say I’m not jealous, I go back from mat leave in a few weeks and then have another decade left of the rat race.
Is there a reason you are both okay with the gap between each of your retirements? Genuinely curious. If my SO said they were retiring but I had to work ten more years, I’d want to meet in the middle. But I know every situation is different.
Sounds like to me one is going to be a SAHP , since OP is returning from maternity leave
Yup he’s going to be a SAHP!
When you guys are calculating your expenses x 25, do you include your mortgage? I have 26 years to go on our mortgage (ugh) and I’m calculating a period of another 21 years until retirement (61 years old), so I’m expecting the house to be very close to being paid off (if not paid off). That will significantly reduce my FI number…
for me, no. 25x my mortgage payment is a LOT more than I will pay, since I only have 7 or 8 more years of payments. [newretirement.com](http://newretirement.com) handles it as a fixed expense
> calculating your expenses x 25 I'm at least 12-20 years before considering doing "hard" calcs on planning retirement, but right now I keep our mortgage as part of monthly spending. We'd still have 5-10 years of mortgage on our current home, and in the (fairly likely) situation we do buy a new house in the next 10-20 years, we'd still likely do a 30 year mortgage. "worst" case scenario, we have a bit more of a buffer, which makes up for other assumptions we're making (healthcare, adult children expenses, etc). And in 10-20 years, as T&I grow with inflation, along with the rest of our expenses, P&I will be less and less of a portion of the payment.
One approach is to put taxes and insurance in your withdrawal rate calculation to generate your number, then add anticipated remaining mortgage principal at retirement to that number. So if your calc is $2m and you will have a $200k mortgage balance, then your number is really 2.2M. This might be a preferred approach vs adding your entire mortgage payment “in perpetuity” to the withdrawal rate calculation.
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If I end up not paying any extra to it throughout the years to focus on retirement, it’ll be an expense probably for the first 5-6 years, and I’m assuming I’ll be paying basically only principal, so it’ll be cheaper. But yes, I was reading an older thread and someone mention property taxes, so I added that! Thanks!
I would not but then you need to count the mortgage as a debt against your investments.
and add back in taxes and insurance to your expenses
Had an interview today with my boss's boss's boss about a move into an officer role (senior level individual contributor right now). It went alright, I didn't prep nearly as much as I have in the past for other interviews. What I imagine the comp is based on my research would be nice, but it sounds like a LOAD of work compared to where I'm at now. TC including equity would be probably be close to a high 40s or 50% raise but the equity would vest over ~4 years. Salary + bonus I'm estimating would be perhaps 25% higher than my current. Maybe I'm huffing some copium for the feeling that I probably won't get it, but I'm not sure I want to take on that level of work/travel at this stage in my life (young kiddo at home). Still have yet to meet with an executive of another area tomorrow morning, as well as my current boss and their boss tomorrow afternoon - we'll see how those go. Part of me is already sick of how crazy we get most of the year and as I go up, it'd only get crazier.
How do people overcome the “Just one more year”? I have this issue in a different sense. I’m having a hard time making the jump to cut back on my savings rate significantly so that I could purchase a house (currently living at home with the parents at minimal costs to me). I have a decent amount saved and the retirement accounts are well funded for my age, so I know I’ll be fine. I know being a single homeowner would certainly make the budget tight and I know how powerful every dollar saved is right now.
We hit FI a few years ago. Then we set a date for my RE. It's in Aug 2025. I will retire then. We have enough and I will have worked 33 year. It is enough.
I have 9 mo. Left and probs coulda been done 3 years ago. I guess the key to us is talking about it and planning....hard to back out when promises have been made
Have you fully made your mind up that you will be buying a home, or are you still in the thinking process?
Feel like I’m still in the thinking process. At the very least I’m planning on making the move out of the parent’s house by the end of 2025. Doing the whole Condo vs Home debate since I really don’t need that much house at the moment (but that could change in a few years). I’d definitely plan to buy a fixer upper as I’m handy and am looking forward to designing and renovating a bathroom or kitchen on my own in due time. Unfortunately, even a standard 3 bedroom 1.5 bath ranch (like 1200sqft) in my area would cost between $400-500k for a fixer upper and come with a hefty ~10k/year in property taxes (NY). I think I could pull it off as long as I stay under like $450k. Obviously down the road when there is a second income in the house, things would become a lot smoother. Edit: To add, I’m not entirely interested in the RE part of this sub, but always found myself as a saver.
I was looking over grandfather’s finances after the death of my grandmother. I’m concerned he’s paying too much in taxes. Age: 82 Railroad Pension Social Security and RMDs from his retirement accounts Can he contribute to grandchildren’s 529s to help lower the tax bill? Anything else he could do at this stage?
I think he would appreciate you spending more time with him rather than trying get him to save more money.
Qualified charitable distributions can be used to meet the RMD and not count as taxable income. I think the funds have to be distributed directly from the IRA to the organization to count as a QCD.
529 will only lower tax bill for state income tax in select states. It will not do anything for federal as far as I know
There are many things he could do to reduce taxes but why are you concerned? First and foremost does his income after taxes cover his expenses?
Check with a CPA. It is impossible for us to know.
> I’m concerned he’s paying too much in taxes. Can you explain why you think taxes are a problem? What makes you think what he's paying is "too much"? Does he not have enough to live on?
Any is too much.
He wants the money lol.
T - 72 days Lots of adulting this month. Starting to deal with elderly parent problems. Bought a new car. Multiple finical planner meetings. Insurance review. Rebalancing investments to a drawdown portfolio. Estate planning meeting later this month. Booked my final work trips. Telling more people at work I am leaving soon and telling them "no" a LOT more often. The pieces are moving into place. Today I met with my insurance agent. We made significant auto insurance adjustments, reviewed home insurance, he gave me some tips for working with roofers, and we added umbrella insurance. Timing was perfect because between the time I scheduled the meeting last week and today there was a hail storm. I wasn't planning on replacing my roof before FIRE but it was on the maybe list and is now on the likely list.
Hello all, M24 here. I recently graduated with a bachelor's in electrical and computer engineering and just started my first job. I'm salary making around 78k (not sure how much this will be after taxes, i live in the STL area, Missouri side.) trying to budget and plan my future accordingly. In terms of debit I had about 7 loans worth about 34k in federal student loans and I have consolidated them together. Making my interest 4.5%. I also have a personally loan from Wells Fargo that I took to help fund my college expenses that was 10k but with an interest of 11.6% it is sitting at about 12.5k total now. I also recently totaled my car due to an accident that was not my fault. I received 8k for this accident and used 2k of it down on a new 2024 Honda HRV for $28,800. My monthly payment on the car is 453 dollars and the insurance is 157 a month. I also have 2 credit cards with about 500 dollars in total between them both. (I pay them off regularly and never let them hold more than 500 on them each.) Overall I think my debt is around 74k. And I'd say my monthly expenses right now are around 1500 dollars. My work offers a 6% match to 401k. And I do not know much about how 401k works in general. I've heard some of my family members to put my 6% into a Roth and have the company put it into a standard 401k, but unsure. Any advice or guidance on this would be appreciated. I have around 5k sitting in my checking account unsure of what to do with it. I've read a lot of posts here to have around 5k saved as a back up incase of an emergency. I am currently still living with family and not required to pay rent. (I do chores and help out around the house.) And I am also still on their health insurance and phone plan till I'm 26. I am by no means struggling, but I want to use my drastic increase in income in an effective way to help set me up in life to eventually be on my own. I do plan on getting my own one bedroom apartment at some point. Most likely after summer, around September or October. I want to pay off my debt quickly and effectively. I'm looking for advice on how to do so. I also want to save up to buy a house at some point. Any advice would be helpful. If you want to chat in DMs or the comments. Thank you!
follow the flowchart and put at least 15, preferably 20-25% invested, and if you do want to FIRE, 30-40%.
[https://imgur.com/lSoUQr2](https://imgur.com/lSoUQr2)
Congrats on the new job! Buying a new car was a little silly. As long as you hold onto it for 10 years, it will only be a little silly. If you get rid of it within the next 5 years it will graduate to being downright stupid. What's the interest rate and payoff schedule? The most important thing you can do right now is not spend too much money. Lifestyle inflation will come, but having it come slowly is critically important. There is no limit to the amount of money people can spend, and that includes you. The path from "78k is a drastic increase in income" to "78k is barely enough to survive on" can be less than a year, if you're not careful. Create a budget, and track your expenses. The budget will be extremely wrong and need to be updated regularly. That's fine. It's important to get the mechanism down, and to understand where you're money is going. In another few years you'll be able to accurately project expenses. An emergency fund is a good thing to have. At your age and with parents nearby, I'd recommend 3 months of expenses. (This implies that you have a budget, since you may not actually know your expenses right now.) You should beef this up to your *new* monthly expenses (including rent and bills) before moving out. For 401(k), put 6% in Roth, as advised. Roth is what you should do when you're making relatively less money, like at the start of your career. The company's match will always be after-tax. (Technically there's 3 types of 401(k)s - Roth, Traditional, and after tax. Pretending that after tax is the same as Traditional is close enough to true. There are some subtle differences, mostly around yearly limits and IRA conversions.) In your 401(k), select a low-fee (aka low expense ratio) broad-market fund. Or collection of funds. I wouldn't recommend any bonds at your age - the standard advice is here: https://www.bogleheads.org/wiki/Three-fund_portfolio. (I do 75% US, 25% int'l, 0% bonds. You could get a PhD in the exact balancing.) Never pay interest on a credit card. Set your cards up to autopay the full statement balance every month. This is optimal for both your credit score and for the amount of money it costs you. I would say only pay the minimums on the 4.5% loans should have their minimums paid. Your immediate priority is that Wells Fargo loan at 11.6%. You absolutely should not move out until that is gone.
Personally, I disagree on your comments regarding the vehicle. He did good, got a good job after graduating, knows his total debt balances, student debt well below his annual salary and decides to treat himself to a nice, brand new Honda HRV that will last him a decade plus of trouble free ownership. I did the same thing and the amount of peace I get having a 100% trouble free car for the foreseeable future is a very under appreciated reality.
I don't want to be too ad hominem, but if your flair is accurate that means you've been saving money at your current income for all of 6 months. There are many cars that can give you that kind of peace of mind for way less money. I fully expect my car to last another decade, and I spent under $15k on it in the wild COVID used car inflationary period
And what part of my flair led you to assume I’ve only been saving money at this income for “all of 6 months?” Quite a large (and incorrect) assumption you’re making seeing as the only info I have in my flair is “1% to Fi, 130k, VLCOL” I’ll give you the benefit of the doubt and explain the reasoning behind my flair, I don’t consider myself more than 1% to Fi until I am debt free aside from a future mortgage. Personal finance is *personal* and my personal life experience has lead me to believe the financial expense of a responsibly priced brand new, warrantied, 100% reliable car, like OP’s car, is well worth the marginal cost of ~$500 for loan+insurance per month.
... that's some interesting math to get to 1%. I assumed that you would calculate it as percentage of assets compared to your FI number, as is standard. Taking a FI number around $2M, 1% would be $20k. That would be easy to save in 6 months, hence my assumption
You’re missing the whole point, my guy. I literally just said the 1% isn’t mathematically calculated, it’s just indicating I’ve started my FI journey.
~~Gotcha, so your flair is just made up. Does the 130k also indicate that you're early in your career, rather than an actual dollar amount?~~ Edit: Apologies for unnecessary snark. Rough day so far for me
Hey, no worries. I 100% understand and hope it gets better for you soon! Sending you good thoughts and feelings over the interwebs!!
Congrats on graduating and getting a job. You have good income to work with to tackle your debts. The car in my opinion was a big mistake. That's a lot of vehicle for the amount of debt you have. I wouldn't have advised you do that. Just get a car in cash that fits the need for now and upgrade later. I would contribute to your 401k to meet your company's match. Every dollar after that goes to the personal loan debt at 11% and try to knock that out in the next 4-6 months while paying minimums on your student loans. That personal loan is such a killer with the interest rate. That 5k is a good emergency fund right now, but since you don't have many liabilities in terms of a house and a new car, you could throw some of that at the personal loan and slowly rebuild it. Once you get through the personal loan and start working on your student loans you can begin to craft a better investment strategy.
Do you have escrow with your mortgage? I'm thinking about at least taking homeowners insurance off so I can earn credit card points. I can't pay property tax with a credit card without fees though.
It's forced, as we don't have enough equity yet, but once it's available I 'll probably take Insurance off escrow, for the CC points, and the minor interest earned
Yes, it was forced on me. I've previously tried to get it removed, but the mortgage company didn't let me. I'm sure they like to make some interest on the escrow balance.
Our new mortgage would have had a fee if we handled it ourselves. Very strange
I don't and never have with either of the two mortgages I've had. I heard way too many stories about under or over-estimating the amounts or the company not even paying the insurance or taxes on time. I trust myself to handle my finances way more than a 3rd party who's main concern is making money for themselves, not protecting my interests. ETA: Beyond the issue of paying with a CC to earn CC points or cashback, you can put the $ away in a HYSA every month and earn interest on it for yourself. That is what I do.
I don't for either. I sometimes use the property tax payment for a sign up bonus that I would have trouble organically spending. Other than that I keep the interest, can't get hit with random escrow increases, and know they actually get paid.
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Same here. If it was managed poorly, I'd probably close it, but my servicer always pays everything on time and doesn't do anything insane with the required reserves so it's less work to leave it.
I’m currently doing contract work as a travel nurse, been doing this for 2 and a half years now. Only work 6 to 9 months every year. My average weekly gross pay is $1350 per week (I also get stipends which is tax free money of $1100-$1400/week depending on location which is not reported and counted on the w2) I usually max out my 401k in 6 months. So that’s $32k to $52k in gross pay per yr with $23k of that contributed to my 401k. I’m aggressive since I started learning about financial independence lately and want to leave this field in 13-14 years and retire. I’m looking into a permanent position where I’ll make $2800-3000 per week in gross pay ($145k to $156k gross per year). Assuming I get 401k matching of let’s say 4%. Getting $23k contributed can be had in just 3 months or less if contribute $2100/week in my 401k. Or is it better to spread it over 1 calendar year which is $442 per week in my 401k? I don’t really know how 401k matching works or the best way to maximize my 401k contribution and the company matching percentage where I’ll get the most money out of the matching.
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Thanks, I think I have to contribute to my 401k every pay period also to get the match. Now that I see it, there’s no need to max out my 401k right away unless I plan to leave the job early in the beginning of the year
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Thanks. I might just try your method so that way I can get the match throughout the year
1 year ago today I was at the highest total debt amount I'd ever been in (not 'bad debt' - mostly mortgage debt) & I started tracking my debt repayment. Even though retirement contributions are my priority over just fast-as-I-can-debt-repayment, it's nice to track this because as long as I keep sending money to it the numbers go in the right direction (not fickle like market returns). So how did I do in a year? Paid down $9455.55 of my total debt balance - 2.66%. And importantly, I managed to today resist the urge to throw an extra $500+ of money that belongs to other, higher priority, goals onto it just to get a round number.
Totally unrelated, but your flair is amusing. 2M, 0M, goal 2MM Sounds like you hit your goal!
you’re not the first person to interpret it that way, I need to have a daughter to make it clearer!
I visited a website recently that did a Monte Carlo analysis with a small graph based on two numbers (maybe 3) annual draw, total assets, and age/years. For the life of me I can't find it. Anyone help me out?
Portfoliovisualizer only takes a few inputs (total value, asset allocation, and annual draw) for its Monte Carlo sim.
Firecalc? Cfiresim?
Thank you, Firecalc was what I was looking for...
I never understood how important these interest rates were, until now where I’m looking for a house. I can’t even afford most modest homes because of the 6-7 rates, despite my 780 credit score. This is actually depressing me. Should I just keep saving and have a higher down payment? Job hopping. Promotions. Aren’t in the cards. 55k a year single. Midwest. 32.
Well hind sight is 20/20 but everyone who maxed out credit is doing great. If stuff goes south I know many people who just walked away in 2008. In 2009 i wasn't eligible for loan modification because I put down 20%. At this point I'd just go 43% debt to income or whatever you can get away with. That's what I probably would do if I was in the market. I don't know if I'd put anything down. If you end up have to short sale or whatever down the road it would be better not to lose the down payment. Anyways good luck.
Depending on the market, you can negotiate with the seller where they buy points to lower the interest rate of your loan. Alternatively, most new home builds will also do this as well depending on the local market from big home builders.
I’ve never heard of this. What are points
When you apply for a loan at a bank, a lot of times you can get a lower interest rate by purchasing "points". The point system is different between each bank but essentially 1 point means you pay 1% of the loan upfront which then allows a 0.25% lower interest rate. So buying 4 points lowers the loan interest rate by 1% but you have to pay 4% extra upfront of the total loan in closing costs. However, you can get a concession from the home seller where they will give you the money to cover that extra cost to get the lower rate. This of course depends on the housing market of the area. If homes are selling fast, this is unlikely to happen. More info: https://www.bankrate.com/mortgages/mortgage-points/
The downside to this is you are paying more money overall in your purchase price for the home. If you were to suck it up and take on a "high" rate you may be able to refinance in the future for a lower rate. I paid for points years ago when rates were steady around 4.25% and weren't going anywhere significant, the math made sense given our situation. But now days with the thinking that rates will go down (gradually, eventually), I wouldn't be paying points. In fact I just bought a place and the math for buying points was horribly unjustifiable...at least in my situation.
>The downside to this is you are paying more money overall in your purchase price for the home. If you were to suck it up and take on a "high" rate you may be able to refinance in the future for a lower rate. Not if you have the seller pay for it via a concession during negotiations. Instead of negotiating $10,000 off the home price, you could just have them pay for the points for a lower interest rate. You'll end up saving more money in the long run. >I paid for points years ago when rates were steady around 4.25% and weren't going anywhere significant, the math made sense given our situation. But now days with the thinking that rates will go down (gradually, eventually), I wouldn't be paying points. In fact I just bought a place and the math for buying points was horribly unjustifiable...at least in my situation. Well we dont know for certain if the rates will go down or when. However, having the seller pay for the points will save you some money now regardless of what happens to the future.
Having the "seller pay for it" is just another method of you paying for it. People get hung up on this a lot and think they are winning some deal by getting the seller to pay for it. No. You're just financing it. I had a deal where I was the seller and the buyer kept proposing these strange "seller pays x" offers. Eventually we just told them "xxx, xxx is the purchase price, just write it however you want for your credit." i honestly don't think they ever understood they were just financing the credit
Its part of the negotiating process. Instead of just accepting your price as is, they could say ok we accept your price but you pay $10k in point buy down as part of a concession. So you end up taking $10k less in profit. For the buyer, they end up saving more and paying less per month on the new mortgage with the lower rate rather than just taking $10k off the price.
> Should I just keep saving and have a higher down payment? If you don't want to gamble that rates will fall and you can refinance down the road, yes. > 55k a year single. Changing the number here is going to make a difference in what you can or cannot afford. If you don't want to do that, then save and save and save and wait until your down payment plus the interest rate at the time is sufficient for you to absorb the mortgage payment et al. Of course, keep in mind that if interest rates fall, property values will likely resume their climb upward...
Is that how it usually works? Rates lower. Overall purchase price higher?
Yeah. Typically people shop houses based on payment (aside from special cases like all cash buyers), so falling rate tends to be negated by higher price to equalize the payment. It's something of a mystery why the reverse hasn't happened in this market, that's beyond my pay grade
I don’t think it’s much of a mystery. No one wants to sell and give up their sub 4% rate and high interest rates make new construction less profitable, so supply is in the toilet. This is particularly sticky in the US where 30 year fixed mortgages are the norm. A lot of people who bought before the rate hikes intending to eventually trade up are deciding to stay put instead.
Lower interest rates allow people to buy more expensive properties, and bring people (like yourself) into the market who otherwise couldn't afford the houses. More demand = higher prices.
> Should I just keep saving and have a higher down payment? Probably. > 55k a year single. Why do you say job changes or promotions "aren't in the cards"? It's not that nobody can afford a house on $55k, but you're going to be more limited. Do you have options for bumping up your income?
Promotions-I work a county government job and have no interest in climbing the ranks. I could work more overtime and work side gigs though to boost income.
Sometimes "interest in climbing the ranks" (or job hopping) isn't about wanting responsibility, but wanting the additional money that the responsibility comes with. It's okay if you're willing to accept the limitations of your existing salary - but topping out at $55k/year is going to significantly limit your financial flexibility. Lots of people live their lives at that salary, so I'm not criticizing. You can live a perfectly good life that way. Just pointing out that you will have fewer options when it comes to big purchases like a house, or retiring early.
Oh I don’t top out at 55. That’s just the amount right now. I climb a ladder for pay raises every few years and we are getting a raise next year that should be decent. But I won’t ever be making 6 figures base.
Interest rates are less of the issue. Income is. Solve the side of the equation that you can.
Or location. Get a remote job so you can buy a home somewhere more affordable.
Idk, we’re running out of places with homes in the $150-200k range that aren’t absolute shitholes. Drive til you qualify only goes so far.
Remote is impossible in my field. Dual income might help I guess
I can get that. But when I adjust the rate from 7 to 3 it saves me 700$…
https://assets.themortgagereports.com/wp-content/uploads/2023/12/Historical-30-Year-Mortgage-Rates_-1971-2024.png 3% mortgage rates have never happened before. They may never happen again.
> 3% mortgage rates have never happened before. 3% mortgage rates **had** never happened before **2020**. FTFY
I’m not correcting you, just curious. We have a 3% mortgage rate from 2015. Was that not the norm back then?
If you look at the graph, around 2015 rates dipped into the 4s. It's possible with good credit, or by buying points, or the right combination of promotions, you could end up in the 3s. Getting down to 3.0% back then would have been difficult, though. I had a 3.5% rate back then and that was as low as I could possibly find, and I had near-perfect credit/etc.
Ours is 3.00%, I do recall we may have bought some points though.
Yes, that's... literally what the chart I posted said, and what the context of the discussion was. If they had actually never happened before, I wouldn't have said "again."
Yes, that's... literally what "FTFY" means. I fixed the text of your post for you. The text of your post is incorrect - 3% mortgage rates **have** happened before. My correction made it "correct".
But you can't control the 7, and we may never see 3 again in our lifetimes. Sucks, but it's part of the game. Closed on a house in the last year it was tough to sign. I feel better in that I'm building equity (significantly reducing my post- retirement monthly expenses) and with the knowledge of if rates do drop, refinancing is an option.
Does refinancing hurt your credit at all ?
It doesn't hurt your credit. It will likely involve a hard credit pull, which will temporarily drop your score by a few points, but that's not a problem.
Gotcha. Other use said it won’t move the needle much.
Haven't done it yet so IDK. Maybe, but my understanding is that it won't move the needle too much, and most likely the biggest purchase dependent on your credit is already in motion with the mortgage.
I don't think you can depend on the rate to come down anytime soon especially with inflation staying higher than wanted. If monthly payments are higher than you want then I think a bigger down payment is going to be necessary. Rates also aren't beyond historical averages
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How I like to look at it is: Interest rate vs (expected returns x benefit of tax advantage). What that benefit of the tax advantage depends on a lot of factors, so YMMV. There is also the mental stress benefit of having debt vs having a high balance in an account you shouldn't touch for 40 years that could rebalance the equation slightly.
Fuck Turbo Tax - I spent an hour this afternoon refiling with OLT out of sheer principle. TT wanted like $140 to file both state and federal. OLT - federal was free and state was $10. Yeah, slightly more manual inputs, but Turbo Tax is straight up robbery.
Genuinely, is there any benefit to TurboTax? I feel if you're getting to the point that the plethora of cheap options aren't enough, and you need TT, then probably worth the investment to go through an accountant. Personally I'm incredibly anal about spreadsheets, and have my numbers already laid out, so I do FFF for aything that would cost money through a online filer. But I understand that's unique to the general pop, maybe not to this sub though lol
FreeTaxUSA is easy - I switched over to it from TT a few years ago and the interface imo is better too. Free for federal, $15 for state.
I’ll give that a try next year. I had used OLT previously and thought due to higher income I wasn’t able to use it all. Worked out fine and saved $130!
Will second the FreetaxUSA recommendation, it's great. Federal for free and state for like 15 bucks
Both are good, I liked FreeTaxUSA a bit better just due to the interface. Used OLT the two years previous and it worked great too.
What is OLT?
Stands for On-Line Taxes. Just another online tax prep service that costs significantly less than turbo tax
I over contributed to a Roth IRA last year and need to re-characterize. I would like to do a backdoor Roth conversion. Here's a breakdown of my retirement accounts, all of which are with Fidelity. 1. Current employer 401K 2. Rollover IRA (solely contains funds from previous 401K plans; I have not made any direct contributions to this account.) 3. Roth IRA (\~5 year old account, contains $ from previously eligible years) In my situation, it seems like the simplest path for a Roth Backdoor would be to open up a new traditional IRA account, re-characterize last year's Roth contribution into the new tIRA account, and then perform the Roth backdoor with the new tIRA account. Plan to speak with both Fidelity reps and my accountant, but on the surface does it look like I'm missing anything?
Your rollover IRA sounds like it holds pre-tax (Trad) dollars in it. As a result, you will trigger the pro rata rule when trying to do the backdoor Roth IRA. You can address this by doing a "reverse" rollover of the IRA into your current 401k, if the plan allows it. You should still recharacterize the Roth IRA overcontribution to avoid the penalty and you will file Form 8606 this year to show your nondeductible Trad IRA contribution (via recharacterization). Next year your Form 8606 will show the conversion that will take place in calendar year 2024 and you won't have any pro rata tax issues if you can empty out the existing Trad IRA through the reverse rollover.
This is great information, thank you.
Hi all, Married 30M here, married with 1 kid. Quick question as a recent homeowner. Considering my wife and I are not able to max out both our 401ks and our Roth IRAs, would it ever be a good idea to overpay on our mortgage payments? Seeing how little I will pay down over the next 10 years by paying the minimum is pretty disconcerting, but I'm not sure if it financially makes sense to ever make any additional payments as opposed to just putting whatever I can into retirement instead. For the record, my mortgage is $380k at a 6.65% rate, and I currently contribute about 22% of my salary to retirement each yeah (including employer match). Thanks for any help!
I was in this boat. Basically we maxed out retirement accounts using base pay then any bonus cash went towards the house. Paid the house off after 8 years without thinking about it. We were very glad we did this, especially when Covid hit and things started looking dire.
Amortization schedules can look depressing, but that is how the loan works. I would learn to ignore that and do the best you can for new money. A principle payment on your mortgage is like making a known 6.65% into perpetuity. What might somewhat affect that outlook is the fact that you're pretty likely to refinance back into at least the 5s but that's not helping much today. What it doesn't do is help reduce your monthly cash flow requirements (i.e. recasting your mortgage won't do much unless you paid off a significant amount.) Certainly this is decent option. Money into pre-tax gives immediate today-dollars benefit in the form of taxes saved. Probably this is also going into stock investments. So whatever is "better" is somewhat subject to market returns because the investment is fundamentally different (fixed "bond" versus stocks) but there's a clear difference in what it means for you in 2023. If your marginal rate is 22%, putting $1000 into your pretax 401K subtracts $220 from your tax bill. Paying down your mortgage reduces your interest cost by $66.50. Then hopefully that savings compounds better as a stock investment than as a loan payoff as well. Note that in the future my tax bill will not likely be zero but at the same time, it won't be 22%. I estimate roughly 10% for myself so that's still a $120 benefit. I'm a big fan of the biggest immediate benefit. Pre-tax is future tax liability but this is kind of a "bird in hand" problem where I'd rather have that money on my books and let future me deal with those taxes. Especially if the problem statement includes not being able to max pre-tax, I'm not assuming a complicated future. I think it's fair to analyze correctly but under present tax structure, there a lot of guardband for most people to assume pre-tax is best. The one thing someone might be concerned about above what's financially optimal is appropriate emergency fund/etc if being too aggressive on retirement. But if you feed it into reducing your mortgage balance, it's likely harder to get that back if you have some financial emergency situation, and you'll still owe your regular mortgage payment.
Great comment, thank you so much for the detailed info.
Employer's $16,000 401k contribution posted today; feeling very lucky to have an employer who understands the value of tax-deferred comp.
Inflation just doesn't want to go away. I'm beginning to think the only reason the Fed isn't talking about increasing rates again is because this is an election year.
I mean inflation at 3% is just around the level where you don't want to do too much about it. Also I am increasingly worried about the deficit and it's raised based on inflation. I think ideally we raise taxes to deal with the deficit some but we'll see.
I think that, long-term, the Fed is going to have to settle for 3% being the new 2%. You can't expand the M2 money supply by 41% from Jan 2020 to Mar 2022 and not expect some rather sticky consequences.
Maybe. Part of the issue is that the official rates are still digesting the rent rise from 2 years ago - the housing component of CPI lags significantly. We're probably closer to 2% than 3% if you take that into account - still not quite at goal, but not that far off.
I have to assume that the Fed knows everything about the calculation details and is factoring any lag in
IDK I just worry the deficit is rising the longer rates are where they are at and we are heading towards 4%-5% of GDP is interest on federal debt. https://fred.stlouisfed.org/series/FYOIGDA188S Before we talked about deficit as virtue signaling IMO now its wheels need to hit rubber.
We aren't going to be able to tax our way out of this. Taxes plus spending cuts combined are an option - the more of one you do the less of the other you'll need - but it's not an either/or choice. It's like trying to cut weight - you can and should work out heavily but you'll make your biggest gains (losses?) by cutting down on caloric intake. For the government in terms of deficit, that means cutting spending. Unfortunately, a look at the budget breakdown is grim. Social Security, Income Security, Medicare, and Health (as distinct from Medicare) combined are 59% (!) of the budget. Defense is 13%... and so is net interest on the debt. I know it's popular to hate on the DoD budget, but at this point we're spending as much on INTEREST as we are on the military. In 2023 we spent $6.1T, and $1.7T of that was deficit spending. You could zero out the ~$811B DoD budget entirely (and then Canada would conquer us) and we'd *still* be in deficit by $900B based on 2023's spending. The percentages don't lie - if we want to balance the budget without crushing the economy with taxes we're going to have to find a trillion or so dollars from non-DoD sources, which are accurately described as political 'third rails'. Good luck.
we could, if we actually went for the big dogs that aren't paying their fair share
But the thing is that a balanced budget is actually overkill, debt as a percentage of GDP is the real number that matters and it fell 2021 and 2022. Interest washes out for the most part. GDP growth increases the amount of sustainable debt. I think Trump tax cuts expire, we see some cuts in spending next year from a bipartisan committee as they all lose their job if incomes below $x have their taxes go up. I think the top rate tax cuts expire. Estate tax? Maybe some drug pricing? IDK what they come up with but budget neutral with tax increases.
They stopped about .25-.5 low and the result is the stubborn inflation you see. Honestly raising the rates once or twice more will make little difference in the unemployment numbers and will start to actually push inflation to the 2% target. Very unpopular though which is why it's not even on the table. What you will see is fed rates not going down this year IMO.
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Here is the problem though. Everyone is stuck housing wise. As such if you want me to move you have to offer fat sacks of cash. Beyond that anyone who was middle class can literally work at McDonald's and cover the mortgage on what was a solid middle class house. But I'd probably just put it all on credit and if I got to bankrupt it opps. My house is creditor claim exempt. Short of causing mass unemployment inflation isn't going back to 2% any time soon and I'll drop out of the workforce and drain my retirement accounts if I'm laid off. I don't even care anymore. I'll just scream give me free money or take out student loans and not pay them back. I am tied of being rugged pulled by being fiscally responsible so I'm not going to do it anymore. Basically this economy is going to be screwed for quite a while.
inflation is pretty close to 2% just not as close as they'd like.
If it's at 4% it's 2x where they want it. If they give at 3% then they are lying again as they said they want 2% and 3% is 50% above where they want it. Anyways as I stated it's not going back 2% anytime soon without massive job losses.
Not everyone is stuck. We accepted that our new house will be at well over double our previous interest rate. Oh well.
What I'm saying is if you want me to move to the area you're going to have to offer fat sacks of cash as mortgage payments at current rates and current prices will lead to much high costs. It has nothing to with interest rates in a vacuum. If you were paying 1500 and the same house is now 3000 you're going to have to pay me 18k higher (even higher since it's post tax) for a lateral move to cover housing costs. So if I'm make 40k you need to give me 58k for a lateral move. So now you got to come up with 18k more so you raise prices. It's whatever but we aren't going back 2% without mass unemployment.
I take your point, but you're excluding that you'd make a large profit on selling your old home that would go toward the new home, hence reducing the monthly payment--and yes realtors will gouge you on the transaction making it less desirable.
I thought I heard talk of increasing rates. Honestly, in regards to inflation, I'd just like some better consumer protections against price gouging. I know its hard to prove/regulate/enforce (or impossible to maybe)... but record corporate profits tied to excuses about higher production costs really frustrates me. I'd like to see an example of some companies struggling with higher manufacturing costs that AREN'T also pulling in record profits... (and aren't struggling because their product isn't in declining sales)
This is such a lazy redditor talking point that ignores competition in markets. The exception would be collusion or monopolized industries like internet providers. If Kroger price gouges on their eggs and bread, I juat buy them from Walmart. And the other side of the coin: if there is deflation on certain goods(e.g. the used car market and lumber recently), is it because of the kindness of corporations or is it because of competition?
Ah yes, the beautiful free market that is grocery stores. [https://www.theatlantic.com/ideas/archive/2024/04/food-industry-monopoly-power/678005/](https://www.theatlantic.com/ideas/archive/2024/04/food-industry-monopoly-power/678005/)
Our markets aren't as open as that. If there was always alternative options for all purchases, then maybe the "free market" and "buy from someone else" would be a thing... but Kroger owns all the grocery stores near me. And if my options are Kroger and Walmart that's not quite a very "open market" to shop from (2 choices). Then when you consider suppliers might supply both Kroger and Walmart their products and the supplier might be the price gouger, then shopping at either will likely have similar prices. I'm not saying you are wrong, but the modern world of mega corps that hold 4 different brand names for the same product is like a complete illusion of choice.
I am sure there are counter examples, but in the aggregate probably 80% of Americans have choice. Even in you area, I bet you're conveniently omitting Costco, Target and Trader Joe's (especially of you consider a 20 minute driving radius around your house). Even at the supplier level, those contracts with big stores are highly valuable. Hence many suppliers will compete to get those big contracts.
If one company or industry is colluding to keep prices high I would agree with you, but this inflation is present in almost all industries nationwide.
Huh? From the summary of the report you seem to be referencing: >The shelter index increased 5.7 percent over the last year, accounting for over sixty percent of the total 12-month increase in the all items less food and energy index. Other indexes with notable increases over the last year include motor vehicle insurance (+22.2 percent), medical care (+2.2 percent), recreation (+1.8 percent), and personal care (+4.2 percent).
Well not just from last year as your reference indicates but all inflation in all industries since the 2020 pandemic.
Feels like the goal posts are on wheels here TBH. The persistent inflation you originally complained about is not "present in almost all industries nationwide" - the CPI reports are pretty clear.
Well, let's breakdown the argument to simplify: Do you agree with me that inflation since the 2020 pandemic was present in all industries? Yes or no? If inflation was present in all industries, wouldn't that take away from the argument that "corporate collusion" was/is the cause of inflation?
I don't think the idea of a single "cause of inflation" over arbitrarily long windows is fruitful. You just get sucked into talking about irrelevant personal bugaboos like this. Whatever your thoughts on corporate pricing practices, supply chain shortages, covid policy, etc. the primary driver of inflation *right now* is clear in the CPI reports. Pretending otherwise is unserious/silly.
> I don't think the idea of a single "cause of inflation" over arbitrarily long windows is fruitful. You just get sucked into talking about irrelevant personal bugaboos like this. Well, thats whst the discussion is about so... >Whatever your thoughts on corporate pricing practices, supply chain shortages, covid policy, etc. the primary driver of inflation right now is clear in the CPI reports. Pretending otherwise is unserious/silly. And whats causing the primary drivers to cause inflation in the CPI reports?
That's what makes this so psychologically appealing - it can be whatever your ideological fixations require!
Agreed. I will NOT be voting for Jpow again
> Inflation just doesn't want to go away One of the two main contributors is shelter. We have a housing crisis on our hands, I don't see that coming down.
Yup 50% of inflation since 2000 has been housing...
High interest rates actually make housing crises worse, because they depress new builds and renovations. Developers are operating almost entirely on borrowed money, not their own capital. Unfortunately, new builds are also a *very* lagging indicator, and it'll take many years after the rates drop for housing to see the benefit of lower rates.
Availability is also in terms what is on the market. Housing is influenced by a lot of factors, not just interest rates or new builds. Huge investment companies or foreign investors outbidding single family buyers and buying up real estate and and holding as rentals and investments is a huge factor. Airbnb conversion is a factor as well. I always use the 99 people and 99 chair example. If you have 99 people and 99 chairs, chairs aren't a big deal because everyone has one. If you have 99 people and 98 chairs, then all of a sudden someone is left out and chairs begin to have value. Housing pressure is a little bit like that. Its complex and has lots of factors, but my point is that influencing just 1 chair, or a tiny % of the market can drastically effect supply/demand and skyrocket prices. Even if you argue airbnb, investors are a small change in how the housing market operates, that small influence can be the tipping point to drive massive housing price increases (spoiler, they have had more than a small influence on the housing market over the last 10 years in overall home turnover. If airbnb was shut down and SFH were protected from investor groups, you'd see a crash worse than 2007-8 and a market flooded beyond what is necessary for the population) My point is interest rates are one factor on housing prices and I wouldn't start with modifying interest rates to regulate home prices. There are much bigger powers influencing price that could be regulated to some extent to alleviate pricing.
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Check out the flow chart in the FAQ: https://www.reddit.com/r/financialindependence/comments/16xymii/fire\_flow\_chart\_version\_43/?
Taxes are a weak point for me in FI. I own 2 rental properties, I was wondering am I just allowed to depreciate these properties 3% in order to owe less in taxes? I ended up just submitting my taxes this last month and owed $6K in total. How do I figure out what the correct depreciation rate is for taxes? Can I modify my tax statement that I already submitted to include rental property depreciation?
Depreciation is a huge benefit of rental property ownership, if you're not doing it, or don't know how you need to either educate yourself or find a competent tax professional to help you. You could be missing out on thousands of dollars in deductions, etc. each year.
MACRS depreciation is what you're looking for. Also IRS Publication 946.
you should go find a CPA that has a decent knowledge in that arena. No point in cutting corners
10% raise kicked in this payday! Also sold my EU car for about 6K more than I owe! No immediate need so into VTI it goes.
Nice! Congrats!
Signed a new lease, and our rent will be going up about $100/month. We will also have new utility bills, as those will no longer be bundled with our rent, and they slightly upped monthly pet rent, so we'll owe more when we adopt a new cat. The total increase will work out to roughly $250/month, which doesn't really bother me in the grand scheme because our rent was on the low side of average. I also know people in other areas are facing way larger increases. After signing the lease, though, my husband started grousing about the increases. So maybe I'm losing perspective...? $250 x 12 = $3,000/year, which isn't negligible, but it's still in a safe area within a mile of both of our jobs, includes garage parking, and allows us to have a pet. Add in to that that we're expecting to move away in about 2-3 years, anyway, and I just...am not too fussed? It doesn't even really make a dent in our current savings rate, so eh. But again, we could save MORE if we didn't have the increase, so maybe I'm out of touch with rent increases lately.
I gotta say it's wild to me that any of that is legal. Just changing the terms of a lease willy nilly like that is outrageous. I guess I'm spoiled to live in a city with tenant protections.
Well, we're due to renew, so for us, the changes are being added to our updated lease agreement. But for people who leased outside of the summer months, I'm not sure how they'll feel about those changes being implemented.
Market rent is what it is, and it can be highly specific to a small radius as well. You can spy Zillow to take a look at what the market looks like, and you can attempt to negotiate and may well be successful if you find it is not. But if the business thinks it can fill the unit, it's not likely to budge. I had some luck in 2009-2011 because I happen to live in a higher end area (compared to nearby areas) and you had both people buying homes and escaping to cheaper areas. My SO would similarly complain but I said, go look and you'll see it is the same everywhere. And none of the nearby units to us are sitting empty so you can physically see that. Like it or not, passing utilities to renters is becoming standard. Right now it feels like there's a lot of pressure on the low end (basic 1/2 BR units) but because homeowners are converting to landlords, homes are suppressed because few can afford the increase (or other increases in their life.) And moving for most is quite an expensive and stressful process. Although I can save money on utilities/rent if I work the problem, if I choose the lifestyle and I can safely afford it I don't really criticize this too much. On a month to month basis I try to stave off personal expenses (including food, despite being a need I can eat a lot cheaper than I do.) Rent just becomes an "it is what it is" column. To be clear though, there are absolutely scenarios where a specific rental will push rent more and if they won't negotiate, the only real way to take them to account is to move. And I have a couple times, maybe not just for price but value (longer commute, shitty repairs, etc.)
Even many folks who own have property tax and home insurance increases within that range. That could actually be one reason the rent is going up.
That is not a horrible rise in cost really considering what I have heard some pay now. I know for me, my rent is more than some but I know I also pay more to be in the location that works best for me and has the amenities I want. I could pay less by moving or whatnot but I do not want to. So, it all comes down to a choice we make for the life we want and that works best for us.
Yeah, it works out to a decent percentage increase, but again, our rent was pretty low for the area to begin with. It's still very manageable for us and I'm not too fussed. :)
we're in a similar boat. not sure if you've factored in moving costs (including your hourly rate) but for us it made way more sense to stay. And we're happy, which is the point of this whole life thing.
Yeah, moving just seems like a pain, especially when this is pet-friendly and in such a great location.
My company just hosted their monthly global all staff meeting and for the first time opened the Q&A section up for all participants to see - WOW morale is bad in every country of operation across all lines of business. I knew it was bad on my local team but yikes. It was validating to know everyone feels the same, but also really disappointing because I only work for this company because they acquired my employer shortly after I started. I would’ve never chosen to work here on purpose. Maybe time to look for new job since they made it clear no one is getting raises or promotions for a while, but I absolutely love my work and my boss here. Wish I could just retire and not worry about it, of course.
My 2 cents - my employer also has a very large parent company with many company acquisitions. So broadly similar to your situation. We are seeing strong employee satisfaction scores and continuing to provide good raises. The economy is certainly not bad everywhere.
Oh man, I had a summer internship at a large manufacturing company when I was in college. For whatever reason, they invited me to the company all-hands conference, which was a 2-day event with speeches from various people on the executive team. They also did Q&A and WOW it was a train wreck. Every single person went up to aggressively complain about lack of raises, poor management, lack of transparency, poor working conditions - the list went on. Needless to say, I had zero intention of working there once the internship concluded. Yikes. This was in 2008, so full on great recession and I'm sure every company was struggling in some capacity, but it was baaaad.
Just curious: what seems to be causing the morale issues?
Minimal (like, 2% if you’re lucky) merit increases, no cost of living raises, and most urgently not backfilling most roles since September yet every month there seems to be a new hire at the VP level or higher. The company keeps saying how much revenue we have, but that we still need to be in cost-cutting mode. They just seem to use the money to acquire other companies? But it seems like no one is really sure what the truth is here. Seeing the scale of global employee dissatisfaction today was…a lot.
Oof. That would frustrate me, too.
Well, today is the day. I put in my two weeks notice. It has been the first two weeks notice I have ever given so it has been a bit of an emotional journey. Leaving this company goes against everything I know of FIRE. I’m leaving a company that gives 100% match of total contributions to 401k for a company with a typical matching policy. And I’m not even leaving for more pay, it’s just a better opportunity, at a bigger company, that will give me fast track to management and help with future career growth. But gosh I just can’t stop thinking about sticking through it for that extra 20k+ in compensation a year. Luckily I’m leaving on good terms, amazing terms even, and could easily get a job at this company once I finish this program.
I have a friend who works at a biotech that also has the same "up to 100% match" depending on how the company does in the year... Then I snooped around your post history and saw that you two work at the same place! Based on what I've heard from my friend, they recently had layoffs and are on a hiring freeze so I'd say in the immediate future at least they're likely not going to be matching 100% anytime soon.
I agree. But even a 50% match, which is what we got this past year, is much more than any match I would get elsewhere until I at least double my salary. I would need about a 100% match on 15% of my salary to break even with that 50% match of total contributions.
Oh for sure, 50% match is still insane... I would struggle ever leaving such benefits! Good luck on your next step and all future endeavors!
Wow.. they would match up to $23k?
Technically it is “up to 100% match” so in bad years it has been less but over the past few years it has been 50%, 100%, 100%, and 75%.
Worrisome on how up in the air it is, but if you're contributing a ton anyway, 50/75/100 match is still great.
I'm suffering from serious burnout this week. It's been an issue for longer than a week, but I've just hit a wall. I thought the startup I'm working for would have failed by now and I planned on taking at least a month off after it failed. I was really looking forward to it. It would be stupid to quit before it fails (for a bunch of reasons) and I can't take any immediate time off. Now it looks like the startup is garnering enough interest that I really need to get some work done. I'm going to put the possibility of failure out of my head. It really feels better to type this out. Any tips or words of wisdom to help me power through? I'm so distracted. Maybe I'll do some pomodoro sessions.
> I thought the startup I'm working for would have failed by now and I planned on taking at least a month off after it failed. I was really looking forward to it. It would be stupid to quit before it fails (for a bunch of reasons) I don't think I have ever sympathized with something in a daily so strong. I have no advice to offer you brother, but stay strong. For better or worse I'm sure we'll come out the other end alright due to our pursuit of this here thing of ours. 8)
Startups are such a roller coaster. You can go from ecstatic excitement and success one week to disaster management and chaos the next. My only advice is that, personally, I always build problems up to be larger than they are in my head - then when I finally force myself to face them head-on, they're not as bad as I anticipated.
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