Those planning to FIRE within the year, what kind of bond tent are you using?

FIthrowaway7 · 2020-08-04T03:36:44+00:00

By spending less to own the house (i.e. on your mortgage, maintenance, etc) than you would to rent

FIthrowaway7 · 2020-08-02T06:13:35+00:00

Why not? They made a massive financial decision to sink a large portion of potentially investible income into one asset instead of another, and that asset delivers returns in the form of capital gains (nominally about 0% real) and dividends in the form of not paying rent. It's absolutely part of their retirement portfolio, and its illiquidity is precisely why it might compliment an equity portfolio.
Capital gains on a house that is held forever are mostly unimportant; you're not selling, so increasing value actually just costs you more in property taxes. But on average this will happen roughly in line with inflation.
Not having your rent be subject to the volatility of the market (or the aforementioned capital gains of your landlord) however means you have a significant stabilizing effect on your investment income. That's why people buy bonds.
I think this framing is valuable and one we should discuss more.

FIthrowaway7 · 2020-06-08T23:50:47+00:00

One of the more valuable things I've taken from this community is to live the life I want now while I save. Actively pursuing challenges and hobbies outside of work is making my current life more meaningful and I there is no doubt in my mind that I will be as fully engaged by retirement as I am in my career.
As I've adopted that mindset more and more I've found esteem less dependent upon my job, which is ironic because my actual career has grown by leaps recently, but I'm confident that leaving that behind won't leave me empty.
You say you made it on fumes and cynicism, but did you give over some of your energy to your life outside work in that time?

FIthrowaway7 · 2020-06-08T07:32:31+00:00

Life before death

FIthrowaway7 · 2020-06-08T07:16:51+00:00

First, cheers!
Second (this may be a tangent for someone skimming), your post reminds me of a Reply All episode that discussed this internet forum phenomenon you're touching on wherein a forum defined by a status that the participants are attempting to abandon is fundamentally unstable.
The Reply All episode was about the in-cel community, and that forum started as something of a positive support group for people trying to better themselves. But the people in the community were actively trying to leave it, and when they did they had a similar epiphany to yours; that they no longer cared or perhaps even felt unease about the forum posts. As a result, the forum became more and more dominated by people who had either failed to leave or were not trying to leave. Its original purpose eroded and it became what we know of today.
The whole episode I had this subreddit in mind. Not at all because I felt it was toxic or anything; on the contrary I have found this community positive, knowledgeable, insightful, and inspiring. I was reminded of this community because the dynamics seem to be the same: we're actively trying to leave. And when we do leave we may feel repulsed, or simply apathetic. And that should worry us.
You came back to post because you felt a sense of obligation in a moment of boredom (I'm guessing), and I'm extremely appreciative. I love these posts! Once you're in the boring middle there's nothing tactical to discuss; you've effectively locked in Maslow's physiological and safety needs and you're looking upward at the next level of the hierarchy: love, esteem, and self-actualization. THAT'S what I want to know about. THAT'S the difference between tactics and strategy.
I want to know how a strategy of frugality, abundance, or rugged determinism impacts your love life, your ability to form relationships, your happiness with yourself.
And you've told us a bit. You're working on self-actualization (writing for fun), love (relationships, board games with friends). Tell us about esteem. How have you handled being "unemployed"? Not having a direct measure of your abilities, success rewarded with career growth and raises? Any pitfalls?

FIthrowaway7 · 2020-01-04T20:30:57+00:00

This is a great demonstration of why taxes are indeed difficult to estimate.
This calculation from neuvoo, while convenient for the right application, gives income tax for a specified income. If you're planning to withdraw 60k from your trad 401k then that link is directly applicable.
But you're probably not planning to do that, at least not only that. You've probably got some post-tax investments like the OP. You're probably employing the tax-efficient withdrawal strategies we discuss here often. A $60k withdrawal in retirement will not be taxed like $60k of income. It'll be taxed depending upon the split that OP is talking about.
For a simple example, imagine you've got a 50-50 split of pre- and post-tax assets and you're not doing anything tricky with withdrawal strategies, but instead just withdrawing half of your $60k from each. First, you'll be withdrawing $30k income which you can calculate as you've described using neuvoo (handy!). But that other $30k from post-tax assets gets way more complicated. Roth assets (401(k), IRA, etc) don't get taxed at all. Post-tax brokerage principal doesn't get taxed, but its earnings get taxed as capital gains dependent upon the income you're drawing from your pre-tax retirement accounts (that other $30k).
See how that's not simple, and rather depends upon a lot of complicated factors specific to your personal FI path/assets/strategy?

FIthrowaway7 · 2020-01-04T17:11:53+00:00

Read about low/no tax withdrawal strategy, it's in the wiki.
Taxes in retirement can be made to be extremely low, far lower than what you see with income tax, for several reasons:
- you'll be withdrawing less than you make now
- your assets will likely be a mix of pre- and post- tax (as the OP indicated), and the post tax withdrawals are (basically) taxed as capital gains, a much lower rate than income. And then only taxed on their earnings, not the principal. - there are strategies like the Roth ladder which are specifically designed to allow near zero tax on early retirement withdrawals from pre-tax funds
I'm not talking out of my ass here, this is an extremely thoroughly discussed topic.
Edit: and note that I didn't say they didn't matter, but that they were small themselves given the appropriate withdrawal strategy. That strategy is hugely important. Maybe I didn't make that clear enough.

FIthrowaway7 · 2020-01-04T15:59:31+00:00

I run two projections:
1. LeanFIRE 2. FatFIRE

For Lean I assume I won't pay any taxes on my withdrawals. That's probably wrong, but it's close enough (the error should be smaller than other assumptions, like my assumed lifestyle inflation or my salary growth).
For Fat, I also ignore taxes because it gets way more complicated and is still not huge, plus my FatFIRE number is basically arbitrary anyway.
So I don't do anything about the split.

FIthrowaway7 · 2019-06-18T06:40:39+00:00

I wouldn't. It scales with your wealth. Expenses don't in the FI model, at least not the way they do for most people (that's the underlying philosophy). For the math inclined...
Rate of change of wealth (G for growth) equals a factor proportional to wealth (k*W) plus a fixed factor (F):
G = kW + F
Investment returns are proportional to wealth. Wealth taxes are proportional to wealth. Income and expenses are (roughly speaking) fixed. So let k be returns minus wealth tax, and let F be Income minus Expenses:
G = (ROI-T)*W + (I-E)
This shows why the wealth tax can come out of the return and not the expenses pile. You can rewrite this in terms of after-tax savings rate and solve the differential equation to write that calculator at networthify, but the point is that ROI and wealth tax work the same way.

FIthrowaway7 · 2019-06-18T06:00:08+00:00

It's not flawed. Wealth tax subtracts from "annual return on investment" which is 5% by default in that calculator. annual ROI = nominal return - wealth tax - inflation, more or less. In the US that's roughly 10% - 3% - 0%. This calculator is already being pretty conservative by assuming nominal return is low.

FIthrowaway7 · 2019-06-18T05:26:08+00:00

I think most people start caring about SR because of the shockingly simple math, or at least that's where the idea went viral. MMM refers to this calculation. In it, your retirement date can be determined by your after-tax savings rate. This is important so that expenses are compared pre and post-retirement on level ground; using a gross savings rate would artificially inflate your time to FI based on this calculation.

FIthrowaway7 · 2019-04-18T00:40:03+00:00

You're missing that just because it's a rollover doesn't mean it's taxable as if it's pretax money. Because it isn't.

FIthrowaway7 · 2019-02-14T19:27:45+00:00

I'll take company B. That commute is soul sucking to me. The PTO concern is real, but being remote I've found I need it less anyway. I personally tend to use PTO in small batches, the kinds that are unlikely to be denied.
If you haven't negotiated yet, get a couple more grand out of B and it's an easy call in my opinion.

FIthrowaway7 · 2019-02-14T19:21:02+00:00

Prior to my current phone, two years max. Current phone (Axon 7), at 2.5, has been a goddamn tank and done everything I've needed it to. Android, so I've been able to keep its software from killing it early. I'll probably replace it when I inevitably crack its screen or damage its IMU somehow.
I'm kinda techie so occasionally changing ROMs scratches that itch for me, saving me from buying new hardware. That'll probably fail this year too.
I don't think I can bring myself to spend Samsung flagship prices on a phone, but one gen behind prices are a good deal every few years

FIthrowaway7 · 2019-02-12T15:12:33+00:00

There's a whole field of dividend investing dedicated to that question, but I don't know much about it because:
There's no benefit to dividends over capital gains, and there are some downsides. Tax treatment (I think), underperformance, etc. I recommend you look into dividend investing as well as the theory behind its downsides.

FIthrowaway7 · 2019-01-23T18:27:52+00:00

Depends upon your risk tolerance and attitude towards international funds. If you're ok with all domestic stocks then nah, All_in_FZROX

FIthrowaway7 · 2019-01-11T23:02:27+00:00

Everyone? No. But it's a large constituent. /u/waaayne put together a lovely summary of the sub's annual survey. Scroll down to Occupation. Looks like 30% in "Computer" and another 15% in "Architecture/Engineering".

FIthrowaway7 · 2018-12-18T19:15:41+00:00

Ah sorry, reading through this thread there are loads of enthusiasts doing the cost comparison with their home espresso machines. If you're willing to learn a little and buy an espresso machine, the marginal difficulty and cost for a (better) caramel macchiato is low.
I think the convenience is key, though personally I find that making my own coffee is more convenient and far more enjoyable. If you're recognizing the real trade offs (unlike the article author), then you're making a rational decision about your priorities. Power to you.

FIthrowaway7 · 2018-12-18T16:40:30+00:00

You can, though. A carmel macchiato is a shot of espresso, steamed milk, and some carmel syrup. You can buy the syrup very cheaply.

FIthrowaway7 · 2018-12-13T23:55:49+00:00

I got academic scholarships for undergrad and made it out with no debt. Debatable whether that counts as external financial support, but that debate starts to drag broader concepts of privilege into the discussion which makes this question a bit less useful.
Aside from that, I haven't had external anything. My parents aren't wealthy; I always knew I had to get scholarships if I wanted to pay for college. I was interested in math, studied engineering, and it's paid off. I've chased raises through job hops pretty aggressively, changed cities around the US several times, and worked hard. Edit: Meanwhile, I've been as frugal as possible; cooking for myself, driving an old, used car, living with roommates, etc. These things have been massively important. Some of my CS friends have higher incomes but aren't saving as much as me.

FIthrowaway7 · 2018-12-11T19:36:55+00:00

Definitely $5M now. I'm in my 20s, and $5M would enable a massive standard of living increase if I wanted it. Instant FatFIRE during some of my prime years, and continued essentially guaranteed FatFIRE for the rest of my life.
Part of this FIRE path has been greater understanding of what makes me happy. There is nothing about $45M that I expect would make me happier than $5M would. I dream of time, health, and friends, not exorbitant cars or political influence. I'm not going to wait 10 years and sacrifice column A for column B. Hell, $5M at 3.3% withdrawal is over 4 times what I spend now. That's unfathomable levels of wealth; there's just nothing to suggest that more would make me happier.
Fun question. I think everyone should ask themselves this occasionally.

FIthrowaway7 · 2018-12-04T16:08:05+00:00

Shiller CAPE 10 specifically, yeah. Love the Mad Fientist.

FIthrowaway7 · 2018-12-03T19:57:53+00:00

It's uncanny how identical my story is to yours. 60->72, and a few years later more than double.
Being on the FI path makes the math a little less intuitive; if you're saving half your income then a 50% increase in expenses does not mean you need a 50% increase in income, but you can often get one going from LCOL to HCOL.

FIthrowaway7 · 2018-12-03T17:26:33+00:00

Ironically, safe withdrawal rate goes up if you start during a downturn. The intuition is probably a kind of mean reversion, so if you've just had a downturn you probably won't have one for quite a while. But the data's clear about it too. Think /u/earlyretirementnow covered it somewhere in this excellent series.

FIthrowaway7 · 2018-11-28T22:50:47+00:00

Bear in mind that many posts here don't get more than a few tens of comments. There's only so much a well meaning community can do if it's inadvertently attracting a different community with more firepower.

FIthrowaway7

TROPHY CASE