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Early-Retirement Update

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Re: Early-Retirement Update

#271

Post by ghaff »

beforeolives wrote: post #160
didibus wrote: post #52

It's nice to see someone's honest thoughts. Though I can't help but find the person a little judgemental of their prior partner, or people who don't mind working. I also feel like they must have had a strange group of friends, 30k is the US median income, but it seems they only had friends making way more and also somehow being money obsessed. I do like the conclusion though, we're social animals, and the issue with…

> That means once you have financial freedom from work, you're free to see work as a hobby, and be much pickier about what work you do, where you work, how you allow yourself to be treated at work, etc. Since you know you can walk out at any time, since work isn't something you depend on. It gives you the big end of the stick in negotiating with employers, and that in itself is freeing. You can get this if your skill…

There's a big difference between "If I lose/quit my job I really need to find one in the next few months although it shouldn't be too hard" and "If I lose/quit my job, I don't really need another one but maybe I'll find one if it's a good enough match someday... or not."

The second is a lot more relaxing.

Re: Early-Retirement Update

#272

Post by potatoman22 »

birdyrooster wrote: post #151
mathgladiator wrote: post #95

Earlier quoted context omitted.

I'm going to start blogging about FIRE from the other extreme end. I'm a principal engineer making serious dollars, and I'm writing down my playbook. I intend to "Fat-FIRE", and the only reason I don't retire now is to see how much I can leverage my position to do crazy shit at massive scale. Paradoxically, this sets me up for larger windfalls because I can take risks that my peers do not take.

Would be more boring than the OP, probably a waste of time to even write the brag piece.

I think it sounds interesting. Do you really like to spend your days trying to bring people down? Is that fulfilling?

Re: Early-Retirement Update

#273

Post by horsawlarway »

mathgladiator wrote: post #16

One of the things that struck me is that the need for new hardwood floors. I've been there, and I think this is a phase where you have to do something stupid with a lot of money to realize how stupid it is. For instance, I spent $7K on new quartz counter-tops, $5K on a new fireplace insert which I would rarely use, and then $70K on a bathroom that I never used. Now, I've come to the conclusion that perfect doesn't re…

> All the external things that money buys tend to not provide lasting happiness, and there you are stuck with yourself. We all die.

I think this varies. I've had my fair share of purchases that made no difference and I'd probably not repeat if given the opportunity. But I also have a good number of purchases that made a significant difference in the quality of my life.

Honestly, I LOVE (love, love love) being a homeowner. Cheaper than rent and I can customize to my hearts content.

Spent 40k on a porch 3 years ago, and I don't really have any regrets - We knew we wanted it, we knew it would make a lot of things easier (pet care, laundry, chest freezer access) and it's a great spot to just sit and enjoy myself.

Plus, it's on a house I intend to own until I die - not because I plan to live here forever, but because I bought an affordable place where the numbers for renting it work with my mortgage. So for now, my wife and I will enjoy it, in 5 years we'll either still be enjoying it or it will be adding to the monthly rent the place can pull.

We're in the middle of spending about 55k on a bathroom remodel with a similar expected return - We get to enjoy it now, and if we decide at some point it's not working for us or we're no longer happy here, it becomes revenue generating.

The flip side of this was my car - I just didn't care at all about what I was driving as long as it could get me from point A to point B with minimal hassle. I have coworkers & family who don't understand why I'm still driving a crappy 94 mazda protege. Doesn't matter how many times I tell them I don't care.

Similar for the lawn - I grew up in a nice neighborhood, and I got to see first hand exactly how expensive lawn care is and how little time most folks actually spent in their yard. Its like a nightmare of keeping up with the joneses - So we bought in a place with no HOA, and we ripped up most of the grass and have put in beds and paths in the front instead.

Some of the neighbors judge us (or complain openly, to our faces) about how the yard looks, but fuck em. Its not their yard, and I'm not spending the time and money to make other folks happy.

And really - I think that's the crux of the issue. If you're doing something because someone else might judge you if you don't, or because someone else did something similar and you want to show off too... then you're probably doing it for the wrong reasons.

Re: Early-Retirement Update

#274

Post by neogodless »

PragmaticPulp wrote: post #230
neogodless wrote: post #206

Earlier quoted context omitted.

My understanding was that they had separate finances, and 30k/year was just his spending. My spouse and I spend less than $60k/year in a comparable cost-of-living area (COLA), including flights/hotels/entertainment and other nice things to have (home, some land, modern cars, monthly massage, etc.). It's really not "extreme frugality" in my point of view, but I suppose some might see it that way.

There's a big difference between spending $60K/year on average, and having a firm upper limit of $60K/year that can never be exceeded for the entire rest of your life (inflation adjusted), lest your entire financial plan collapses. If you had an unlucky year and had to spend an extra $10K on various things (car breaks down, medical expenses, moving for a job) it's probably not a big deal for you. If a leanFIRE person…

This isn't really accurate, though. In most cases there is a large margin of error built into the 4% "safe withdrawal rate" - and that is that the investments "on average" do much better than 4% (easily 5-7% after inflation, in many cases much higher) and that you end up with much more than what you need to withdraw 4%.

The notable exception is called a "sequence of returns risk" (SORR) where either something bad happens in the first few years draining a really large portion of your original savings (more than $10k) and/or the market undergoes a recession during the first few years, and if you withdrew the full 4% from your investments while their value was markedly depressed, you would never recover (without additional income). In my opinion, a proper retirement strategy should account for SORR; some padding (i.e. the wants portion of your budget you can reduce during a lean year), reverse-glide strategy where you can draw from cash/bonds instead of equities in case of depressed value equities, etc. In many cases, this scenario happens so early in retirement that anyone retiring at a younger age has relatively good prospects of rejoining the work force to get to the other side, and then will likely be very well prepared for a second retirement with a decreased likelihood of yet another bad sequence of returns occurring before their nest egg has grown well beyond 25 times annual expenses.

And all retirement plans should be flexible - some years where you might spend a bit less than the target, but have room to change that, particularly if your invested assets grow beyond the original necessary funds.

Re: Early-Retirement Update

#275

Post by jdavis703 »

TuringNYC wrote: post #114
jdavis703 wrote: post #29

Earlier quoted context omitted.

Not sure what the definition of rich here is, but people in the 10% of income earners most definitely still need health insurance and suffer from illness. For example, my psych meds would be $1500 a month without insurance. Even on a software engineer salary, that’s quite a hit.

>> ...still need health insurance...without insurance.. I think the point is that even with health insurance you can be wiped out. I dont think any reasonable definition of FI/RE would suggest being without health insurance. The thing is that in a small % of cases, even with health insurance, you get one bad examiner, one by-the-books administrator who denies coverage for something, and you're done for.

This is one of the advantages of an HMO. In an HMO it’s medical staff making these calls, not random administrators second guessing medical professionals.

Re: Early-Retirement Update

#276

Post by psychiatrist24 »

labcomputer wrote: post #201
psychiatrist24 wrote: post #149

Earlier quoted context omitted.

You mean MMM or the author here? How do you know he "got lucky", since he doesn't mention how he got his nest egg? (Yes in a wider sense lucky to be born smart enough for a good job, in a country with good jobs and so on, but that applies to many people). Maybe he took those FI blogs seriously and dedicated himself to reaching that goal, and he did. And then people who never tried say "he got lucky".

> Maybe he took those FI blogs seriously and dedicated himself to reaching that goal, and he did. And then people who never tried say "he got lucky". My problem with most of the advice from FI and FIRE blogosphere is that it essentially boils down to "be the 1% (where you live) and live frugally". It's not wrong , per se, but it isn't actionable advice for 99% of the population[1]. In particular, while anyone could b…

I'm tired of this shelf stocker narrative (or more general, the "some people simply have no chance whatsoever"). I think most people don't remain shelf stockers forever. In my country, it is often pupils who do it, or retired people who make some extra bucks. I don't think anybody expects shelf stocking to be their life long career. And even if you were to do shelf stocking all your life, I don't think it means you can't do anything about your financial situation. Same goes for most other low wage jobs. All the "income equality" charts tend to omit the age distribution, a lot of it may simply be older people earning more because they had more time to acquire skills and progress in their careers.

I can perhaps agree that there is no single rule that everybody in the world could follow to become financially independent, like your "rent housing out to other people" example. Nevertheless, in most environments, there is something people can do. If you just have a house you yourself can live in, it also saves you a lot of money.

At the very least, most people have to retire eventually. And many manage to do so, too. As a last resort, perhaps try to have children who can take care of you.

Re: Early-Retirement Update

#277

Post by jeremysalwen »

labcomputer wrote: post #201
psychiatrist24 wrote: post #149

Earlier quoted context omitted.

You mean MMM or the author here? How do you know he "got lucky", since he doesn't mention how he got his nest egg? (Yes in a wider sense lucky to be born smart enough for a good job, in a country with good jobs and so on, but that applies to many people). Maybe he took those FI blogs seriously and dedicated himself to reaching that goal, and he did. And then people who never tried say "he got lucky".

> Maybe he took those FI blogs seriously and dedicated himself to reaching that goal, and he did. And then people who never tried say "he got lucky". My problem with most of the advice from FI and FIRE blogosphere is that it essentially boils down to "be the 1% (where you live) and live frugally". It's not wrong , per se, but it isn't actionable advice for 99% of the population[1]. In particular, while anyone could b…

I think the point of FI is to lower consumption. As long as your total consumption matches your total production over your lifetime, it's sustainable. The level of consumption described in this post (30k/y) is at or below the median level of consumption, so it is certainly attainable for many people, even if they can't achieve it as quickly as the OP).

Re: Early-Retirement Update

#278

Post by psychiatrist24 »

labcomputer wrote: post #245
neogodless wrote: post #213

Earlier quoted context omitted.

With advice, you have to read it, decide if it works for you and then utilize it or discard it. You do not have to decide if it works for everyone and discard if it doesn't. There are aspects of MMM's that anyone can do, but obviously the huge income he got after retiring from the MMM blog is unique to him (and the few really successful FI bloggers) and for many, just having insufficient income compared to the cost o…

> You do not have to decide if it works for everyone and discard if it doesn't. First, I am not discarding the advice. I was responding to the idea that successful practitioners didn't get lucky. Second, my assertion is that the advice is useful for only a small segment of the population. The goalposts have moved to the opposite end of the field if we are now talking about advice for everyone except for a small segme…

"I was responding to the idea that successful practitioners didn't get lucky."

Of course they are "lucky", but only because they took the risks and went in prepared. There is no 100% guarantee for anything, so you also need luck. The article here actually shows that, because the blogger was unlucky to have an expensive disease that made his plan nonviable.

Re: Early-Retirement Update

#279

Post by TuringNYC »

tick_tock_tick wrote: post #223
TuringNYC wrote: post #119

Earlier quoted context omitted.

>> Selling OTM covered calls is not a trade that's going to blow up your account. The worst case is that you suffer a drawdown in your account (which is a risk of all investing). The second worst case is that you miss a massive, short-term rally. Depends on whether youre fully cash secured or not. If you are fully cash secured, you barely make $. If you're not, now you're leveraged and a steep draw-down can wipe you…

A covered call by definition means you own 100 shares for every contract you sell. Even if you own some of that stock on margin you are not increasing your risk by selling the calls.

The parent was referring to OTM call selling, not covered calls only. Covered calls are pretty low-risk. Selling OTM calls includes selling puts, which is not low-risk unless you're unlevered (everything covered by cash.)

Re: Early-Retirement Update

#280

Post by kelnos »

PragmaticPulp wrote: post #207
pcglue wrote: post #184

2.8M nut, about 50/50 in regular/retirement accounts. I'm mid 40's, married with two pre-teen kids, annual expenses of $80K, live in HCOL area (Southern California). Would you FIRE in this situation? Would you take a year long hiatus? As much as I would like to FIRE, I can't/won't, even though the "numbers" say I probably could. But seriously considering a months to year long career break/sabbatical/hiatus, because I…

> because I'm extremely extremely burnt out How often do you take real vacations? Your scenario comes up a lot in FIRE forums: People lead unsustainably stressful work lives and think the only antidote is to quit. Then they decide they're not ready to quit, so they continue working the unsustainably demanding job. The real solution is to work on refactoring your career. You need to teach yourself how to work sustaina…

Agreed.

When I was earlier in my career and was fed up at my then-current job, an older, wiser coworker of mine took me aside and advised me to leave for the right reasons. Be sure that I was running toward something new that excited me, and not just running away from something that made me unhappy. He wanted to make sure I wasn't going to just accept whatever first job came my way, or quit without any plan for the future at all.

The antidote to unsustainably stressful work is only quitting if you've thoroughly looked at what quitting really means and have decided that will truly make you happy.

Quitting might be an intentionally-short-term fix with a plan to find a better job with a healthier work/life balance. Quitting and retiring could be a long-term fix, too, but it's such a huge lifestyle change that it shouldn't be seen as simply a solution to the problem.

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