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tuyop posted:I've heard that that's a pretty common strategy, expatriating to somewhere cheap, but isn't there a ban on landowning for expats or something? Yes, foreigners are not allowed to buy land. But nobody can buy property here in Singapore either, you can only get a 99 year lease and you have to be singaporean or PR for that. I have no interest in owning property, whether it be here in asia or back home in America. I understand that is a goal for many people, but it is not for me, at least as far out as I can see. This of course might change eventually, but currently I have no ill feelings about renting until I die. I felt that way when I lived in Houston too, where it seemed everybody's only life goal was "buy a house." Philippine stock market has 8 index funds. I am just learning about how to talk about these things, and I don't understand how to measure if it's "good" or not. I am looking into opening an account to trade there. It's a pain. Maybe I can have my FA stateside invest in the PSE from my american brokerage account? That's what they do, right? Although if I want to move there eventually, it might be wise to have a proper local bank account. My dream retirement is to live in a hut in El Nido and rock climb/kayak/dive/yoga/boat and have no electricity each afternoon and live the simple life in this protected nature paradise. Switchback fucked around with this message at 16:19 on Nov 6, 2013 |
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Nov 6, 2013 16:10
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Switchback posted:My dream retirement is to live in a hut in El Nido and rock climb/kayak/dive/yoga/boat and have no electricity each afternoon and live the simple life in this protected nature paradise.
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Nov 6, 2013 16:55
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So my friend brought up a good question that I didn't have an answer for regarding early retirement. If all of my money is essentially locked away in a 401k and Roth IRA, how do I survive until I hit 60? I know you can take out the money you contribute from your Roth IRA before 60 penatly-free, but I feel like you don't want to do that to let your money grow right?
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Nov 6, 2013 17:01
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enthe0s posted:So my friend brought up a good question that I didn't have an answer for regarding early retirement. If all of my money is essentially locked away in a 401k and Roth IRA, how do I survive until I hit 60? I know you can take out the money you contribute from your Roth IRA before 60 penatly-free, but I feel like you don't want to do that to let your money grow right? Have a separate taxable account? By the time you pull it out, your income should be pretty low taxed anyways.
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Nov 6, 2013 17:08
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enthe0s posted:So my friend brought up a good question that I didn't have an answer for regarding early retirement. If all of my money is essentially locked away in a 401k and Roth IRA, how do I survive until I hit 60? I know you can take out the money you contribute from your Roth IRA before 60 penatly-free, but I feel like you don't want to do that to let your money grow right? However, it's imaginable that you're moving to a much cheaper country - say you work from age 20 to age 40 with a 22500 contribute every year and a 5% interest rate - you'd end up with 780K, giving you 20K-30K to live on every year. Doable (though I'd rather have more). There are specific rules on withdrawing from a Roth IRA. Basically, you'll want to ideally plan it out so that you'll live off of only the contributions on the IRA, not the interest. If you could give specifics, we could give more guidance. No Wave fucked around with this message at 17:18 on Nov 6, 2013 |
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Nov 6, 2013 17:10
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enthe0s posted:So my friend brought up a good question that I didn't have an answer for regarding early retirement. If all of my money is essentially locked away in a 401k and Roth IRA, how do I survive until I hit 60? I know you can take out the money you contribute from your Roth IRA before 60 penatly-free, but I feel like you don't want to do that to let your money grow right? Save money in investments that aren't retirement accounts. I don't know how much you make but you should be probably saving more than the 401k/IRA annual contribution limits anyway.
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Nov 6, 2013 17:10
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So I'm only 23 and I just started my first job 6 months ago, so I'm fairly new to all this. I'm currently working on saving enough money for a 6month emergency fund which I plan to just keep in a savings/checking account and paying off my student loans (which were a modest 7k). Once I've got those 2 things done, where are some places I can put my money where it will still grow at a good rate but is liquid enough to pull from?
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Nov 6, 2013 17:14
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enthe0s posted:So I'm only 23 and I just started my first job 6 months ago, so I'm fairly new to all this. I'm currently working on saving enough money for a 6month emergency fund which I plan to just keep in a savings/checking account and paying off my student loans (which were a modest 7k). Once I've got those 2 things done, where are some places I can put my money where it will still grow at a good rate but is liquid enough to pull from? Just buy index funds and pull from/replenish that emergency fund that you keep in cash, no reason to sell investments and eat fees for quick cash. If you are constantly pulling from it, revise your spending or make your budget more realistic.
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Nov 6, 2013 17:16
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Good rate and liquid are hard to find these days. Well, good rate, liquid, and not-too-risky, at least.
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Nov 6, 2013 17:16
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Somebody said it best in another thread here, that an emergency fund should generate a return like airbags should make your car go faster.
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Nov 6, 2013 17:20
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Jeffrey posted:Just buy index funds and pull from/replenish that emergency fund that you keep in cash, no reason to sell investments and eat fees for quick cash. If you are constantly pulling from it, revise your spending or make your budget more realistic. So would I do this through Vanguard I assume? Just open a general savings account? Also, a slightly related question, but can you divert the gains from a 401k/Roth IRA to your own personal account instead of having them reinvested? I wouldn't do this right now obviously since I want those accounts to grow as fast as possible, but is that something I could do down the line for some passive income?
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Nov 6, 2013 17:39
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enthe0s posted:So would I do this through Vanguard I assume? Just open a general savings account? Err, keep your emergency fund in a regular bank account wherever, it doesn't matter much which one since it is purely for giving you access to cash quickly. Keep any additional savings in index funds/bonds through Vanguard(others are also more qualified to be more specific here).
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Nov 6, 2013 17:43
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No Wave posted:This is one of the trickier parts of FI... in the ideal situation you'd be maxing out your 401k and Roth IRA and you wouldn't have to touch that money until you're 60 - the money you'd live on until you're 60 would come from elsewhere. There's an option for early withdrawals called SEPP (Substantially Equal Periodic Payment) where you can set up a periodic withdrawal that avoids the tax penalty. It's very strict, though, and loving it up results in a huge backtax penalty.
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Nov 6, 2013 17:48
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enthe0s posted:So would I do this through Vanguard I assume? Just open a general savings account? With Roth you can actually do the opposite - you can withdraw the contribution without penalty at pretty much any time but you can't withdraw interest gains until you qualify. koolkal posted:There's an option for early withdrawals called SEPP (Substantially Equal Periodic Payment) where you can set up a periodic withdrawal that avoids the tax penalty. It's very strict, though, and loving it up results in a huge backtax penalty.
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Nov 6, 2013 18:05
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No Wave posted:Oh, wow - this looks like it was designed for early retirement... cool.
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Nov 6, 2013 18:09
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No Wave posted:You can't (and, well, it already is passive income, but I get what you mean). This is something I will be able to do with my other accounts though, correct? Trying to make sure I understand how all this works correctly.
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Nov 6, 2013 18:32
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enthe0s posted:So would I do this through Vanguard I assume? Just open a general savings account? I'd keep the emergency fund in a money market account. It's liquid enough for its purpose but it's out-of-sight-out-of-mind enough that you're not overly tempted to tap into it.
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Nov 6, 2013 18:46
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Or just get a grip on your impulses and keep it in your chequing account.
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Nov 6, 2013 18:49
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tuyop posted:Or just get a grip on your impulses and keep it in your chequing account. You can kiss that money goodbye if someone gets ahold of your account number.
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Nov 6, 2013 18:55
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Harry posted:You can kiss that money goodbye if someone gets ahold of your account number. Are you suggesting it is a bad idea to have a checking account at all? That is a weird post. EDIT: I guess I assumed "keep it in your checking account" to be shorthand for "keep it in a regular bank account with some portion in checking and some in savings", and move some to checking if it gets low. The key part is the regular bank account part, I assumed the poster could figure it out from there. Jeffrey of YOSPOS fucked around with this message at 19:37 on Nov 6, 2013 |
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Nov 6, 2013 19:00
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Jeffrey posted:Are you suggesting it is a bad idea to have a checking account at all? That is a weird post. No, having all your money in a checking account is a bad idea.
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Nov 6, 2013 19:01
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Yeah, I don't understand why anybody would do that unless they entered some weird alternate reality where savings accounts and money market accounts no longer exist?
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Nov 6, 2013 19:06
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I mean, I keep my emergency fund in my checking account because that's where my money gets wired to from my company. It's another step to have to move it a different account, but I guess it's probably worth it for even the small amount of interest a savings/money market account will generate.
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Nov 6, 2013 19:13
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I might be paranoid, but I'm personally more worried about theft. If somebody gains access to my account in some way (forged check, lifted debit number and pin, or even in person with a gun and a ride to an ATM), I want my emergency fund to be safe. In fact, something happening where my checking account got cleared out is one of the specific emergencies I'd think an emergency fund would be useful for. Even if you get the money back, it would likely take some time and I don't want to miss a mortgage payment over it.
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Nov 6, 2013 20:51
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SlightlyMadman posted:I might be paranoid, but I'm personally more worried about theft. If somebody gains access to my account in some way (forged check, lifted debit number and pin, or even in person with a gun and a ride to an ATM), I want my emergency fund to be safe. In fact, something happening where my checking account got cleared out is one of the specific emergencies I'd think an emergency fund would be useful for. Even if you get the money back, it would likely take some time and I don't want to miss a mortgage payment over it. A debit limit serves to help this as well. Also you should probably be even more worried about identity theft and malware on your PC getting your online banking/investment passwords than you are about whatever is in your savings/checking accounts.
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Nov 6, 2013 21:01
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Jeffrey posted:A debit limit serves to help this as well. Also you should probably be even more worried about identity theft and malware on your PC getting your online banking/investment passwords than you are about whatever is in your savings/checking accounts. Sure, but to me it's about balance between risk and liquidity. Moving money from checking into savings has just about no decrease in liquidity, but has an arguably large decrease in risk. You could decrease your risk even further with bars of gold in a safety deposit box, but that would reduce liquidity. A good rule of thumb for me is that if I wind up in jail, I should be able to access that money from jail that night to post bail.
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Nov 6, 2013 21:22
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And make sure you don't have any optional services like overdraft protection which would autodraft from your savings to fund a large debit/check transaction intended to clear you out. I guess ideally it would be best to maintain that savings account in a separate bank or credit union where you don't even have a checking account, but I probably wouldn't go through the hassle.
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Nov 6, 2013 21:23
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You can have multiple bank accounts. Open a free account somewhere just for your efund. It's easy enough to do transfers in and out of it for non-emergency stuff, and you can have a debit card that you keep in a drawer at home so it can't get robbed. It also means if you have some weird dispute with your primary bank, the emergency funds aren't tied up in that dispute. Liquidity + Safety.
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Nov 6, 2013 21:32
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SpelledBackwards posted:And make sure you don't have any optional services like overdraft protection which would autodraft from your savings to fund a large debit/check transaction intended to clear you out. I guess ideally it would be best to maintain that savings account in a separate bank or credit union where you don't even have a checking account, but I probably wouldn't go through the hassle. All overdraft is optional now. It can be turned off even on your checking account (was the result of a law that I forget the name of at the moment).
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Nov 6, 2013 21:33
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SpelledBackwards posted:And make sure you don't have any optional services like overdraft protection which would autodraft from your savings to fund a large debit/check transaction intended to clear you out. I guess ideally it would be best to maintain that savings account in a separate bank or credit union where you don't even have a checking account, but I probably wouldn't go through the hassle. That's not how my overdraft protection works. It doesn't siphon it from my savings account. It just won't let the transaction run through. It only happened to me once when I was spending a couple hundred bucks at the store. My card wouldn't run. It would not accept it no matter what I did, It got declined repeatedly. I called my bank to ask what was up and I guess I either enrolled in the overdraft protection or was automatically enrolled because I don't remember even knowing about it. Anyway I just transferred some money from my savings to my checking over the phone and was able to make the purchase. But no, it did not automatically take it from my savings (which is with the same bank).
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Nov 6, 2013 21:42
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razz posted:That's not how my overdraft protection works. It doesn't siphon it from my savings account. It just won't let the transaction run through. Capital One and Chase (I'm assuming all major banks as well) has the option for the money to come out of your savings account automatically instead of being declined/overdrafted. It's title is something similar to overdraft protection.
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Nov 6, 2013 21:47
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Wells Fargo's version of overdraft protection is pulling the balance from your savings or credit account instead, AND giving you a $25 fee. A slight discount from the typical $35 overdraft fee. Thanks! When that law passed ~years ago that forced overdraft protection to be optional, WF sent out letters saying "Make sure your transactions don't get declined" as a cute, vaguely threatening euphemism for "stay enrolled in our overdraft protection".
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Nov 6, 2013 21:53
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Yeah AFAIK, the default federal status is now for banks to decline PIN enabled debit transactions in the case of insufficient funds. 'Overdraft Protection' is the opt-in package that allows you to overdraft on debit transactions and siphons money from savings and charges you a stupid fee in the process.
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Nov 6, 2013 22:39
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That's a type of "Overdraft Protection" just like geting an Overdraft Line of Credit instead is also a type of Overdraft Protection. The optional Overdraft Protection that was actually turned into being opt-in is when an item is recieved that overdrafts the account, it no longer will be automatically paid from that account at all, and will actually be returned. This used to be turned on by default and what constitutes most people understanding of what happens during an overdraft.
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Nov 6, 2013 22:48
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Harry posted:Capital One and Chase (I'm assuming all major banks as well) has the option for the money to come out of your savings account automatically instead of being declined/overdrafted. It's title is something similar to overdraft protection. That seems like it would be a better system for me, I'll have to ask about it. I always have money in my savings account but sometimes I cut it a little close with the checking account. It's how I save money on my practically-minimum-wage salary. Throw a bunch in my savings account when I get paid and live off what I leave myself in my checking account. That begs a different question - is financial independence possible for people who aren't big earners and probably never will be? My husband is basically an unskilled laborer and I went down a career path that's historically pretty low paying. I'd be pretty thrilled if sometime in the next 5 years we were making 40 or 45K a year combined. Even if we stay in our low cost-of-living area, that's not really what I consider a lot of money for two people. We're hella frugal and are currently living on half that, but it's only possible because we aren't paying rent/utilities right now, and obviously we don't have much in the way of savings. Plus I lose my job at the end of the year (I'm graduating, I get a monthly stipend from the grad school). Now I know it's not likely that my husband and I will be minimum wage earners our entire life. But I worry sometimes that I'll be working until I'm 70. We don't want kids so that will help and have no desire to purchase a house. It's just a little scary, I'll be 28 when I finish school. I've never had a "real" job, never had a 401K or ANY employer benefits. Those phrases are alien to me. My husband went through a divorce before we met that pretty much wiped him out and since then he's basically been a ranch hand, obviously there's no pension or employer savings matching with a job like that. The accountant for the ranch actually said that no one that works on the ranch should be making more than $10 an hour because it's "too much for the type of work they do". Seriously lady, you sit in a cushy chair while they're cutting down trees and fixing barbed-wire fences! That's the small-town mentality - we're all poor so deal with being poor, be happy you even have a job. It sucks because I love my career (wildlife biologist) and he loves working on the ranch. Anyway that's a little E/N, I'm just rambling at the moment.
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Nov 6, 2013 22:50
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You both should learn to code, then you can become, respectively, a wildlife biology app consultant and a ranch hand app consultant. But yeah fast FI practically requires being both high income and low spending. I'd look into alternate means of revenue. For example, just look at the OP; he manages to save bank just going off his side gig. Since you don't have kids you probably have enough free time to seriously look into this kind of thing.
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Nov 6, 2013 23:02
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GoGoGadgetChris posted:Wells Fargo's version of overdraft protection is pulling the balance from your savings or credit account instead, AND giving you a $25 fee. A slight discount from the typical $35 overdraft fee. Thanks! Yeah, I remember getting a mailing from some bank with very similar wording. It's like paying Ticketmaster for convenience fees. I shudder to think how inconvenient my online ticket purchase might've been otherwise, because clearly they took the trouble to save me some hassle, based on that fee's title. 
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Nov 6, 2013 23:07
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I'd think your ability to live frugally puts you in just as good of a position as someone who makes and saves more but demands a higher lifestyle. When my fiance and I budget it is difficult for us to prioritize life-style cuts below about 45k pre-tax. That's our magic number to feel like we aren't just working and living for later. Anything on top of that goes to savings. Once we get our house paid off that can drop to about 32k. If we made more we wouldn't feel the urge to spend it. We aren't highly material but we love restaurants and bars. It's just our thing, some people like video games or cars or golf or whatever. I'd rather work more and keep the restaurants in the budget at the end of the day. So I guess what I am saying is I could make twice as much as you and you'd still be able to retire as early as me because of your discipline and frugal lifestyle standards. The percentage you are saving is more important than anything.
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Nov 6, 2013 23:13
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razz posted:living on half that This is the key to financial independence regardless of income. A 50% savings rate, using rough, simple math that involves a bit of risk*, will result in financial independence in 16 years of working. I think it's helpful to imagine it this way: If you live on only 50% of your income for a year, it means that you do not have to work the next year. You could live off of your savings and go traveling or something. Same with 30%, after three years you can take one off. * MMM Hisself posted:Assumptions:
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Nov 6, 2013 23:18
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razz posted:That begs a different question - is financial independence possible for people who aren't big earners and probably never will be? A couple of thoughts here: Firstly, as the poster above mentioned, increase income with side gigs. There are way too many different ways of making money to list here, but using our household and skill sets as an example - coffee market/event stalls, coffee machine rental, candle making, soap making. Be imaginative and entrepreneurial with the skills that you possess. A microbusiness that costs you a couple hundred bucks or less to start can bring in stunning amounts of money. Secondly, you could approach the other side of the coin, reducing costs, possibly in radical ways. Buy an RV like ERE write Jacob Fisker and watch your living costs dwindle to barely anything. Thirdly, leverage anything you can get for free on a regular basis. My job involves visiting a number of cafés who often offer me free food. I never, ever turn them down. They get a kick out of generosity, and I pay for one less meal this week. I've also got a weekly bread run to a bakery who tosses their (perfectly fine) leftover loaves at close of business. The answer is definitely yes, though. Just requires a lot more creative thinking. It's part of the fun for me, I couldn't handle the grind of a high-paying mindless job (I have briefly held such a position), I much prefer being forced to think outside the cubicle.
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Nov 6, 2013 23:32
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