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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?

#71

Post by netman21 »

lucb1e wrote: post #24
mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

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).

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

#73

Post by patcho »

lucb1e wrote: post #24
mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

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…

It's actually surprising how little you can live on given small lifestyle changes. I haven't gone down to 10k/year but my expenses each year range from 14-17k. And that's on a salary about 7x that.

It's all about little things that add up. If you go to Starbucks 5 days a week, that could easily cost you 1k a year. I mostly buy clothes at thrift stores, you can find furniture/kitchen appliances/etc on Craigslist. Instead of going out, buy a six pack and have some friends over. Another big killer is driving. I live in quite a bike unfriendly city so my car expenses are more that I would like them to be, but insurance + regular maintenance + unscheduled maintenance + car payment + gas really adds up.

Other random expenses do come up, so I budget for them. I make sure I have about $2k/year to spend on things I can't account for. Some years you go over, and some years you barely need to tap into it.

This isn't to say I don't spend money on things though. If I want something I will buy it, I'm just conscious about how much I'm spending.

If you are interested in learning more about this kind of lifestyle, Mr. Money Mustache is a good place to start. http://www.mrmoneymustache.com/category/mmm-classics/

All that being said I realize I am in a very fortunate position. I don't have student loans, I have a well paying job, no disabilities, etc. Some people are in situations that make financial independence very difficult to achieve.

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

#74

Post by charlesdm »

barrkel wrote: post #23
javitury wrote: post #22

Earlier quoted context omitted.

> Spending 3k€ per month for the next 30 years would be about 1M€ That is only withdrawing the principal without taking into account the real interest/yield rate you can make off the investment. That money would probably last longer or yield more for the same time period. In fact, as you point out it can last indefinitely with an after inflation and tax ROI(real yield) of 4% which converts to ~3k/mo. You would have t…

The real interest rate is usually negative in today's environment; I'd love to know where you're getting a risk-free 4% after inflation and tax.

Why does it have to be risk free? Did you make your money not taking risks? Taking calculated (not stupid) risks helps you get decent returns above 5% quite easily.

Put half of it in a low fee index fund, and half in stocks you believe in. Those stocks are higher risk, but can have a much higher (or lower) return than the index, i.e. risk 20% of your capital for a potential 50% gain. You can add bonds to the mix if you want.

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

#75

Post by pc86 »

patcho wrote: post #73
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…

It's actually surprising how little you can live on given small lifestyle changes. I haven't gone down to 10k/year but my expenses each year range from 14-17k. And that's on a salary about 7x that. It's all about little things that add up. If you go to Starbucks 5 days a week, that could easily cost you 1k a year. I mostly buy clothes at thrift stores, you can find furniture/kitchen appliances/etc on Craigslist. Inst…

Not sure why this was flagged except maybe the link to MMM (which is generally garbage advice for 80% of the population).

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

#76

Post by sotojuan »

erikb wrote: post #54
Swizec wrote: post #13

As others have mentioned, financial independence isn't hard. The hard part is financial independence without lifestyle compromises. I'm making roughly $2k/month with books and workshops. The marketing and content producing takes about 2h/day on average. It makes my life a lot easier and less stressful. But rent alone is $3500 in this stupid city (San Francisco). So I still need a day job for now.

> The hard part is financial independence without lifestyle compromises. My point exactly. But I also think you don't need to live in one of the most expensive cities of this planet. A few lifestyle changes should be acceptable, though. I would say if you spend more than $50k/year it should be possible to have quite a good life with some modifications.

Until remote working becomes more common, living in a big city has a lot of benefits for a tech worker. Even with the higher living cost, I make a lot more than back home in Texas. Sadly just not enough to become independent :-)

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

#77

Post by pc86 »

siscia wrote: post #20
mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

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…

I would not use the word "frugal" to describe myself, but I spend less than I make by quite a bit and I try to get the best deal on things you can negotiate (which is most things). That being said, my wife had a very different opinion when we started dating. We both had student and vehicle loans, she had CC debt and personal loans, etc.

The important part is to be very up front and honest with each other. The finances will work or they won't, and if they won't then the relationship will not work. Full stop. You can't live a life with someone who has fundamentally opposed financial opinions. If you want to save 80% of your income and she doesn't care if you have $50k in CC debt, there is no way to make that work. Even separate accounts won't work because once you're married new debt is joint debt (usually) and new assets are joint assets (usually).

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

#78

Post by pc86 »

mailshanx wrote: post #19
mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

10K is indeed unreasonably low. Could you describe where in Japan you live, what kind of work you do now, and the transformation you possibly experienced when you decided to work for curiosity / interest rather than money? I have had a reverse path - I spent my early career working for a research lab, where the the work was immensely intellectually satisfying and fun for the most part. However, the pay was so ridicul…

The problem is the early years are when it's most important to save as much as possible for retirement. You probably make enough now to correct for it, but running the numbers on retirement savings started at 22 v. 25 v. 30 is terrifying, especially if you have nothing saved in your late 20's.

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

#79

Post by nstj »

adventured wrote: post #37
barrkel wrote: post #23

Earlier quoted context omitted.

The real interest rate is usually negative in today's environment; I'd love to know where you're getting a risk-free 4% after inflation and tax.

Muni bonds are the best way to go for that. You can still nail 4% plus after inflation and taxes there. You're not going to get risk-free anywhere, there's no such thing.

Can you provide some example names? I'm seeing returns of only 1.65% on the Barclays Muni Index[0]

[0]: https://index.barcap.com/Benchmark_Indices/Aggregate/Bond_In...

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

#80

Post by forgetsusername »

EliRivers wrote: post #17
n72 wrote: post #14

Earlier quoted context omitted.

Dividend stocks are not a good way to have passive income. The benefit of the dividend is already priced into the stock, so they are no better than any other stock. Prefer, rather, to just go for good stocks and not worry about the dividend. If you need income, sell some stocks. Also, the % that you're pulling out of stocks should be determined by looking at, say, a 30 year window, not a very recent one. That is, if…

"The benefit of the dividend is already priced into the stock, so they are no better than any other stock." I hear this sort of thing a lot, and in my experience, everything already being priced in isn't true (both of dividend stocks, and stocks not paying dividends). This relies on the efficient market hypothesis being broadly correct, and based purely on my own experience, it isn't. My findings are very much based…

>My findings are very much based on my own experience

In my experience, people think they're far better at stock-picking and investing than they really are. Have you calculated your actual, after-all-expense returns? Because if you are consistently beating the market, risk-adjusted, start a hedge fund. I'm only half joking.

It's important to interpret EMH "realistically", in that prices, on average, will reflect all relevant information. But it obviously doesn't occur instantaneously or perfectly. Everyone who has traded stocks has a few wins. The question is whether you can garner an advantage consistently.

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