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Ask HN: How have you achieved financial independence?

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Re: Ask HN: How have you achieved financial independence?

#111

Post by cmdrfred »

pc86 wrote: post #104
artimaeis wrote: post #84

Earlier quoted context omitted.

Isn't the core idea behind MMM just spend less, save more? Not sure how that's garbage advice. The particulars of some of the things he advocates aren't possible for everyone, sure. But reducing debt and increasing your savings is a goal that probably everyone who hopes to live another 10+ years should strive for.

Like most finance blogs, the core idea behind MMM (spend less, save more, retire early) is fine. It's the specifics that are either completely ineffectual (don't use AC because you'll get used to the heat anyway), or unrealistic for most people (walk or bike to work; spend $1k on a 20 year old Corolla and be your own mechanic). Edit: And (3) a lot of the advice is the same old thing rehashed in a different way (never…

Also if you are anything near minimum wage in most of the united states its useless advice. Saving that 9 dollars a month won't lift you out of poverty only growth will. Invest in yourself.

Re: Ask HN: How have you achieved financial independence?

#112

Post by [deleted] »

pc86 wrote: post #104
artimaeis wrote: post #84

Earlier quoted context omitted.

Isn't the core idea behind MMM just spend less, save more? Not sure how that's garbage advice. The particulars of some of the things he advocates aren't possible for everyone, sure. But reducing debt and increasing your savings is a goal that probably everyone who hopes to live another 10+ years should strive for.

Like most finance blogs, the core idea behind MMM (spend less, save more, retire early) is fine. It's the specifics that are either completely ineffectual (don't use AC because you'll get used to the heat anyway), or unrealistic for most people (walk or bike to work; spend $1k on a 20 year old Corolla and be your own mechanic). Edit: And (3) a lot of the advice is the same old thing rehashed in a different way (never…

[deleted]

Re: Ask HN: How have you achieved financial independence?

#113

Post by zen_boy »

tim333 wrote: post #60
zen_boy wrote: post #10

Just turned 30. Invested most of my savings (20k€) into Bitcoin several years ago, and then converted everything to Ethereum in the pre-sale. Those 20k€ are worth roughly 1M€ pre-tax at the current rates. Started a fintech startup three years ago and we are close to a liquidation event that would net ~1.5M€ pre-tax. Right now, though, I have less than 10k€ in my bank account. Would be also really curious to hear how…

Typically the best / simplest way for sustainable mostly passive income is rental property. Lots of how to guides out there. Mortgage rates are really low at the mo if you want to leverage.

I did some calculations about owning your own apartment vs renting. At least in Finland with the current housing prices and interest rates, the difference in a 25 year period between owning and renting was surprisingly small. Personally, I'm happy to pay rent and have the money in more liquid assets as well as enjoy more freedom and being debt free.

I assume renting out would only be worse with the additional risk of having bad tenants.

This helped a lot https://www.khanacademy.org/economics-finance-domain/core-fi...

Here in Finland, the status quo seems to be that you obviously save for your own apartment as the first thing. From purely financial gains perspective, I couldn't find the rationale.

Re: Ask HN: How have you achieved financial independence?

#114

Post by Jtsummers »

netman21 wrote: post #71
lucb1e wrote: post #24

Earlier quoted context omitted.

I would like to hear more about living on less than $10k a year. I'm still a student and my parents pay a lot, so I don't actually know how much I'd spend if I paid for everything myself currently. I just always assumed that $40k is about the minimum for a normal living. Doing the math though, counting food, rent and "service costs" (water, electricity, internet), I end up with a lower bound of about 6000 a year. Thi…

My first thought: you forgot medical insurance. But I guess if you are making under $10K a year you get it for free. I know I pay $11,500 for medical insurance with a $18K deductible, so could have as much as $30K a year in medical costs. Meaning you have to earn $50K just to cover medical (married 57 yrs old, self employed).

Medical insurance (pre-ACA, get it through my employer so I haven't researched it) was very inexpensive for pretty good policies as a mostly healthy twenty-something. In NC I had BCBS, a policy equivalent to my current one through work, with a $2k or so deductible that cost me around $1500/year.

OTOH, pre-ACA you could go without and not pay any penalties if you were feeling lucky (I wasn't, and glad I didn't because two surgeries in that time would've cost me around $50k I didn't have).

Re: Ask HN: How have you achieved financial independence?

#115

Post by rufius »

pauljaworski wrote: post #43

Not me, but the last time I talked to the CTO of my last company, he was making ~$120k/year passively via LendingClub with ~$1M invested (which he acquired via our exit).

Has he reevaluated his investment at all with them since some of their sketchy business? I've been trying to decide with the chunk of money I have invested there.

Re: Ask HN: How have you achieved financial independence?

#116

Post by cmdrfred »

charlesdm wrote: post #56
siscia wrote: post #20

Earlier quoted context omitted.

The married part is the one I am more interested in. I too live extremely cheaply, but my girlfriend has way more expense than me (still reasonable, but too high in my book). We are not married, but we spend a lot of time together and I am a little afraid that this difference in how we spend money will be a problem. How did you manage it? My very first step was to have her create a save account where she deposit each…

Living extremely cheaply isn't always that great.. you can be frugal, but at a certain point, people take it too far. I.e., if you spend hours (or days!) comparing prices when purchasing lower value items, you value your time at exactly zero, and it might actually be easier to make (!) money vs spending less. Maybe your girlfriend actually prefers living a little? I'm not saying to throw your money away on useless st…

I agree. My advice is focus on growth. Willpower is a finite resource, you can use it to save 2 bucks on a bottle of water or spend a few minutes learning a new skill. One saves money once, one pays dividends forever. If you have unlimited willpower go ahead and do both, I know I don't.

Re: Ask HN: How have you achieved financial independence?

#117

Post by zen_boy »

charlesdm wrote: post #107
zen_boy wrote: post #102

Earlier quoted context omitted.

In Finland, the capital gains on cryptos are realised once you sell them for floating currencies (ie. USD or EUR). We pay 34% tax on the profit. For example, I'd pay (1M€ - 20k€) x 34% = 333k€ of taxes on capital gains. I'm not sure how the taxation works if you try to dodge it by relocating to a more tax friendly zone. I've heard some horror stories about Finnish companies moving to Estonia for tax benefits only to…

In Belgium (where I live), these gains are tax free. So that is one country you could potentially move to to avoid the tax. The same applies for the UK, Malta, Cyprus (non dom regime) and Monaco. If I were you, I'd consider doing the perpetual traveler thing for a while (i.e. while having a base in Malta, which is cheap) and cash out + reinvest in stocks. After a few years, move back, and then pay capital gains tax o…

Wow, this advice is very valuable. I'll definitely investigate. Thank you.

Another interesting discussion is the ethical side of things. I do feel some obligation to pay back to my home country for things it has provided (free education, healthcare, etc.), many of which were financed with tax income.

But paying the whole amount from current and future gains would be tad too much. Also, would it be possible to achieve higher and more direct impact with dodging the taxes and distributing that money via philantrophic means? Just some questions I'm thinking about in the whole picture.

Re: Ask HN: How have you achieved financial independence?

#118

Post by charlesdm »

zen_boy wrote: post #117
charlesdm wrote: post #107

Earlier quoted context omitted.

In Belgium (where I live), these gains are tax free. So that is one country you could potentially move to to avoid the tax. The same applies for the UK, Malta, Cyprus (non dom regime) and Monaco. If I were you, I'd consider doing the perpetual traveler thing for a while (i.e. while having a base in Malta, which is cheap) and cash out + reinvest in stocks. After a few years, move back, and then pay capital gains tax o…

Wow, this advice is very valuable. I'll definitely investigate. Thank you. Another interesting discussion is the ethical side of things. I do feel some obligation to pay back to my home country for things it has provided (free education, healthcare, etc.), many of which were financed with tax income. But paying the whole amount from current and future gains would be tad too much. Also, would it be possible to achieve…

1. If you intend to move back at some point, it doesn’t matter. Say you generate €75-100k a year from that million in the future, you’ll be paying 25k a year in taxes anyway. The more capital you have, the more you can generate, hence the more tax you can pay in the future. Pay 333k now vs 25k a year over the next 50 years. But building that first €500k-1m is hard, imo.

2. Always give back. For example, I gift €X,000 every year to local good causes. Yep, I get a 45% tax deduction for it, but I also use it as a way to give back. You’re not going to spend one euro to save 45 cents in tax, if it's not something you believe in.

You can also give back by investing in Finnish companies.

3. If you’re interested in Belgium (low cost of living, high quality of life, free health insurance, relaxed society, high taxes but not on capital), I can intro you to my tax lawyer. He’s awesome.

Re: Ask HN: How have you achieved financial independence?

#119

Post by zen_boy »

chillydawg wrote: post #65
zen_boy wrote: post #35

Earlier quoted context omitted.

Ethereum seems to have great potential to multiply its value in the next 12-24 months. I think the probability of ETH going from 1B$ -> 2-5B$ market cap is far greater than BTC going from 10B$ to 20-50B$ due to several factors. My line of thinking has been that in order for the 4% to be meaningful, you need to start with at least a million. Saving a portion from the salary and getting 4% annualized growth just wouldn…

You do realise you're gambling, right? There's nothing wrong with that, but be honest with yourself about the risks of having nearly all your money in one instrument (ETH) which could easily wildly fluctuate up or down. If you honestly think it's a bet worth making, go look up the kelly criterion.

This is always a good reminder. Then again, had I not done that investment or cashed out earlier, that 20k€ would be nowhere near 1M€. There simply doesn't exist many ways to achieve 50x ROI in Hard to say what I would be saying had I lost everything though. It's easy for me to rationalise the decision now that it paid off. And yes, we have to remember to look at the graveyard too.

The non-linear utility of money puts an interesting twist on things though. The effort and risk one should take to achieve additional wealth seems to reduce logarithmically after a certain point. I guess that point seems to be further for me than most people, but I feel it's close now.

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