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I'm glad this thread exists. Saving money can be a challenge sometimes, but you can't talk to anybody about it without looking like an rear end in a top hat. I guess here, we can all be assholes together. I am a father in a traditional family of four. My wife and I only recently discovered the concept of early retirement. My career in IT started just before the dot-com bubble collapsed, so all of my working life was under fear of getting cut by the annual layoff cycle. To compensate for this, we always tried to keep our expenses low enough to survive off of one income. We never really considered what we should do with the half we were saving, and it shows. (Also, I went back to law school after my IT career went stagnant. That cost a lot, and I don't have much to show for it.) Reducing my spending allowed me view the possibility of a layoff as something to be annoyed by rather than something to fear. It let me wait to take the job that was best for my family, instead of running to any port in a storm. In a few years, I'll have the upper hand in any salary negotiation. A few years past that, and I should be able to reduce my workday to just the hours my kids are in school. Reducing my spending has a long term benefit, to be sure. But it also offers substantial quality of life improvements immediately. Still, I'm pretty far from being an expert. The simple math says I can retire in a little less than 10 years at our current savings rate, but I know that won't happen until I can figure out how to get a decent return on investment. So right now, my goal is to increase my comically absent investing skill. I'm currently reading "The Intelligent Asset Allocator" but I'm open to suggestions about what to read next.
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Aug 30, 2013 19:31
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My current strategy is a mishmash of various funds chosen based on whatever was doing well when I bought them. The fees are too high and the performance is always below the S&P. This year my 401k is actually down 0.5%. Oh, and one cash-value pension that the company sets the interest rate on every year (currently 1.2%). When I get done with this book, I'll rebalance into a traditionally diversified array of index funds. My primary goal will be to reduce fees, because they are the most controllable variable. No clue what to do about the pension. On the upside, I got a bus pass today. That saves me about $115 a month in commuting costs.
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Sep 5, 2013 04:03
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As my last post suggests, I have absolutely no idea what I'm talking about. This is not tax advice. It is a question from me to the gurus here that might be able to teach me. I guess it depends on how much faith you have in your ability to predict expenses and income for the rest of your life. The IRS charges a 10% additional penalty on early IRA withdrawal unless you meet one of the exceptions. IRAs: http://www.irs.gov/taxtopics/tc557.html Non-IRA (401ks) http://www.irs.gov/taxtopics/tc558.html To me, the big wildcard exception here is "Made as part of a series of substantially equal periodic payments for your life." If you start pulling from your tax-deferred account early, you have to keep pulling from it at that rate or pay a the penalty, right? If you go back to work or have a boom year on your normal stocks (and realize the gains), then you'll lose the benefit of the tax deferred savings because you'll keep pulling from the account even though you don't want to. But that's not too bad, because you don't pay any additional penalty. Unless you do really, really well that year and pay more taxes on your IRA withdrawals. So no loss, just not as much benefit. So, just a rough guess here, it seems like you'd want a mix weighted far more heavily toward tax deferred accounts. Given the source of early retirement savings and the caps on tax-deferred contributions ($5k IRA + $17k 401k = $22k), it seems like you'd want to cram as much as you could into the tax deferred accounts...after you get your emergency buffer/self-insurance account in place. The more money you make, the more that this problem takes care of itself. And over the course of your whole career, even a short one, the problem will probably solve itself. I got nothin' on picking between a traditional IRA and a Roth. I guess if you're already maxing out your 401k contribution, then you probably want a Roth because you're already putting 3 times as much into the tax deferred account. As a bonus, you might want a Roth for investing in things like REITs that are (I think) taxed as ordinary income and not capital gains. Does that sound like what others have read on the subject?
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Sep 5, 2013 14:09
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Well, the purpose of the penalty is to make sure that you're using your IRA for actual retirement and not a tax shelter. This exception seems to be specifically added to allow early retirement. If it were removed, there really isn't another way to use an IRA for early retirement. So its not really a loophole as much an express exception to the general rule of "pay a penalty if you withdraw early." It looks like it's been around since the law was passed in 1994. (Check http://uscode.house.gov/ for Title 26, section 72.) That said, you're trying to predict the Congress. Remember, there is a minimum withdrawal rate once you start withdrawing from your IRA. There are all kinds of calculators for it on the web.
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Sep 5, 2013 19:27
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I was hoping that another Canadian would chime in here, but honestly there's no way to tell from my end. It looks like there's a whole different set of vocabulary tied to RRSPs than what I'm use to. Canadian law hopefully supports the same policies, but the method it uses to get there is probably completely different. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/ncm/menu-eng.html On an unrelated note, did you guys know that craigslist has a building materials section? I tore out the smelly, cat-stained carpet in my basement (previous owner) and replaced it with rubber-backed carpet tiles for $0.30 per sqft. This will last until I decide on a permanent solution, and give me time to hunt for a bargain. And if the kids stain any of them, I just toss it out and lay down a new one. Bottom line, it feels like I just added a usable floor to my house for $250.
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Sep 9, 2013 14:01
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I've been eyeing the materials section of craigslist since I made that post. I intend to add a kitchen to my basement, so that I can make the basement into a functional apartment when needed. I regularly find a whole custom kitchen that some rich person "updated" to a different color by replacing the whole thing. We're talking all of the cabinets, and sometimes natural stone counter tops, and sometimes a sink for about $1000. The best part is that since I'm fitting it in an empty space with no existing plumbing, I can use almost any kitchen layout that I want. Also, there is constantly natural stone tile in lots of 80 to 100sqft for around $50 to $100. That's enough for a 10x10 kitchen. Now I just need to find one I like. On a less awesome note, I finally pulled up the fund options at the new company's 401k through T. Rowe Price. I have exactly 3 options with a cost ratio below 0.50%, with most of them being in the 0.65% range. So my options are the S&P 500 index for 0.10%, a money market account with 0.20%, or a bond fund at 0.46%. I know I'm new to this, but those fees seem high. They are considerably higher than the fees on the 401k I still have through my previous employer, and I wasn't even paying attention before. I guess I'll just buy the index and use my other 401k to diversify. Does anybody have any recommendations for T. Rowe Price funds that I could request the plan manager to add, once I figure out how to do that?
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Sep 17, 2013 14:44
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paperchaseguy posted:0.10% is decent, the others aren't too bad. The cheapest ETF portfolio will show you the rock bottom fees you can get for a super diversified portfolio. That's for this. Schwab just happens to be my brokerage, so I can buy these without any commissions. I'll probably change it some, but this looks like a good place to start.
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Sep 19, 2013 19:55
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I went to school twice. The first time, my parents paid and I barely cared. I did the minimum it took to maintain my scholarship and pretty much wasted the time. The second time, I paid for it myself. The money came from my savings and sacrifices, and it hurt my family. I made sure I took it seriously and graduated in top 11% of my class. Somewhere, I think here, I read an idea about back-paying my kids education. My kids will be responsible for finding the money to pay up front, so they'll have to have an understanding of the effort it takes to put that money together. If they maintain a specific GPA, I'll reimburse all of the school-related expenses for that year. Of course, my kids are very young, so my opinion or my options may change before it matters.
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Nov 4, 2013 17:22
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SlightlyMadman posted:He's just a bit of a hypocrite now, because while he seems to have started out completely honestly and legitimately, he's basically come out of retirement to work his new job as a super famous blogger who makes an undisclosed but presumably huge amount of money by blogging about how you don't need to make money. This is the "he's not really retired" argument again, right? That's kinda been done. The point is that if you reduce your spending down to $25k per year, then you can generate that from a $600k nest egg. Any work or other income you have is optional. If someone kept giving me money to tell people my ideas, it would be really hard for me to walk way too. I mean here I am, just giving them away for free. Also, you guys quit reading the comments too early (emphasis mine): Jarome Barry posted:A key part of living with income below the "poverty line" for a family of your size, is that you leverage the welfare state to collect benefits which can triple your spending. Let the welfare pay for your house, your food, your medical, and your telephone. That $25K income from investments is just used for the bling. 
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Jan 23, 2014 15:40
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SlightlyMadman posted:I may be mistaken, and it's difficult to say since he redacts all the numbers whenever he posts stuff about money, but I am under the impression that he's no longer living that lifestyle and his blog has basically become a work of fiction. I could be wrong, and it's honestly not my business how he lives, I just found his blog to be taking a shift towards more political opinion than useful financial advice, and it was no longer relevant to me so I stopped reading it. http://www.mrmoneymustache.com/2014/01/12/exposed-the-mmm-familys-2013-spending/ I also don't read the site so much anymore. Now that I've taken the time to wrap my head around the math and work things out for myself, I don't really need the site anymore. It's a morale booster for when I feel like I've started to loosen up on my spending and I need to get motivated to regain my footing. But that's about it. edit: beaten
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Jan 23, 2014 18:07
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tuyop posted:I'm also very interested in the idea of mini-retirements or long sabbaticals. Like, set your finances up to allow you to take five years off to raise your child(ren), or take two years to hike the PNT and AT, you know? I took 3 years to get a law degree debt free and with no interruption to standard of living for my family. This was right through the worst of the recession too. Literally, the market crashed two months into my first year. Ultimately it was a bad investment, but a great experience. It feels a lot better when I cast it as a sabbatical, because it added about 5 years to my retirement timeline. But I should have done the Appalachian trail instead. Also, I scrolled through a lot more of those comments. I swear, nobody understands insurance. One guys said MMM was crazy for not having life insurance. Why would he need life insurance? What risk would that insure? And they can't fathom the idea of a high deductible policy. There are comments from people who are paying more per year for their health insurance than MMM's family would pay if they maxed out the deductible every single year. Folly fucked around with this message at 22:22 on Jan 23, 2014 |
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Jan 23, 2014 22:03
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If he spent $36k and saved $52k then his savings rate is about 60%. That will get you retired in < 10 years, I think. Also, because this thread is back from the dead, we should all remember that it's January. Time for most of us to hold our family's annual budget meeting. Analyze last years goals and set next year's goals. I'd like to keep the thread alive, so I'll offer mine up in rough numbers. We were ~9% over on projected spending for 2013 and that year was projected to be an expensive year with the following non-repeating expenses that accounted for about 25% of our total spending last year:
For 2014, we intend to cut our base spending by about 30% and I have already identified where/how. This will result in a total spending of about 35% of my current income. The new spending plan has been in place since October and has thus far been successful. However, next year will have the previously mentioned remodel, which might exceed the money we've set aside. If so, we will reanalyze.
Advice is welcome.
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Jan 24, 2014 19:45
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Chadzok posted:About how much do these things cost on first arrival? I ask for a friend who sleeps in my bed and is beginning to make demands. I think the hospital told us the price out of pocket was going to be $3750 because that's what the insurance company had negotiated with them. It's always a few hundred dollars more because there are some tests you want that aren't covered in the standard package. The insurers have a new trick where the split the deductible between mother and child, so you pay 40% instead of 20%, and we're still fighting about that one. But I hear that the average birth costs $4k to $10k. The good news is that you have time to shop around for a good price. The bad news is that the sorority of mothers puts a lot of emphasis on the mother's comfort with the OB. A first time mother would have to have a formidable will through a time of overwhelming uncertainty if she were to overcome that social pressure and consider price. Still these prices are pretty solid and if you're going to have a baby, then there's not much room for savings here. The place where I think most people waste money on new babies isn't the actual birth. It comes from 2 other sources instead: 1) the stuff, most of which you barely need. Talk to frugal parents who have 2 or more kids and they'll tell you what you actually need. 2) the fact that your life suddenly went into chaos and you're suddenly more willing to spend money just to keep your head above water It's the second one that kills budgets. Use whatever mental tricks you have already developed to help you keep a budget. It's kinda like running when you're tired; you have to push harder just to keep the same pace. Also, assuming you're in the US, if it's your first kid, expect your health insurance premiums to increase to cover the Family Option instead of the Self + Spouse option. Good luck. 
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Jan 25, 2014 20:00
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Sounds right in practical effect for *MOST* people in this thread. It's not that Roth's are objectively bad, but more that the benefits of a Roth are mitigated by anybody whose game plan is retirement through heavily reduced spending. In any savings year, your income should be higher than your eventual withdrawal rate, so the greater tax benefits are from the traditional IRA. Assuming, like LorneReams said, that tax rate remain constant. But I'm sure they would have some niche uses. Maybe they could serve a purpose as a kind of emergency fund if you're over 65? I need to go re-read the withdrawal rules. I've forgotten them again.
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Jan 31, 2014 21:42
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Jeffrey posted:Is there any reason to put money into a 401k with no matching? It is treated as such common knowledge that I feel like I'm missing something. I'm happy to buy and hold index funds myself, saving me the the fees. I get that I can take money out at a lower tax bracket when I'm 65+, but it's kind of hard to estimate what percentage of my income I will need to save for pre-65 but post-retirement years. That also assumes that marginal tax rates will not go up in the next 40 years, which I'm not sure I want to bet on. Assuming you retire at all, your spending rate is less than your earning rate. That's how you build the savings. When you retire, you only withdraw to your spending rate, you don't keep withdrawing what you use to earn. So the rate you're taxed at after retirement is going to be less than the rate you're taxed at while your saving. So yes, a 401k still saves you a lot of money on taxes.
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Mar 6, 2014 21:51
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Remember, the estimate for cost per mile on a car includes a ton of hidden costs: regular maintenance, expected repairs, tires, etc. Even once you convert that into the added expenses for a bike, even including expected medical expenses, it's still much cheaper than driving a car. Running is also a bit more prone to repetitive use type injuries than biking seems to be. And as for traumatic injuries, remember that bike wreck statistics include children who have no road/driving training. Also, invest in puncture resistant tires for your bike. They were totally worth it for me. Edit: ^^^ And the time saved by not having to go to the gym. For me, when I weighed that against my increased commute time, I actually gained time each day.
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May 9, 2014 17:16
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If you're limited to investing in Iceland, then it sounds pretty plausible as a means to diversify if nothing else. I can't imagine Iceland's financial instrument market is big enough to allow full diversification, given the size of the population.
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May 12, 2014 20:59
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Most of mine are food related, so they may not translate to other countries. 1) Make your own drat bread. (MMM mentions this one.) Buy a bread maker on craigslist for $20. Here's a Recipe: 1 cup water 2 teaspoons of yeast 2 tablespoons of sugar 1/4 cup vegetable oil 3 cups flour 1 teaspoon of salt I use the bread machine to make the dough, then I bake it in a pan for 30 minutes at 350F. I only do this to make it prettier. The worst part is stopping yourself from eating half of the loaf when it's still warm. If you buy your yeast in bulk (amazon), then this costs about $0.30-$.50 a loaf. Bread from the store has more additives and costs about $2 a loaf. *Note: This also applies to pancakes. Make your own drat pancakes. Bisquick saves you very little effort but costs a fair bit more than the stuff that it's made of. 2) Bones make broth Roast a whole chicken and eat it with veggies. Then boil the carcass and leftover meat into broth and make a chicken based soup. (I prefer dumplings.) Roast a ham and eat it with veggies. Then boil the bones and leftover fat to make broth for bean soup. 3) Use staples Find sides you can make with beans, flour, rice, and corn. They're cheap pretty much everywhere, compared to other foods. They vary regionally with relation to each other, though. There should be 2 or 3 meals you prepare every week that are maximized for savings and nutrition. You'll buy these items every week, so you'll be able to recognize immediately when the grocery store jacks with your prices. It will save you time too, because of the routine you'll be able to prepare these meals very quickly and with less mess. You still get to be creative with dinner on the other 2 or 3 nights.
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May 13, 2014 18:34
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I brew my own beer. The only problem is that my diet keeps me from drinking that much anymore, so I can never drink it as fast as I want to make it. Unfortunately I haven't saved any money with it. I use my savings per batch to buy more equipment. So I guess my hobby is at least paying for itself. And I'm pretty much out of gizmos to buy. And ya, frugality, diet, and environmental stewardship are all about sustainable consumption. When someone asks about one of the frugal things I do and I don't want to get involved in a financial discussion, I tell them that I'm trying to consume less to be greener or eat less processed food. I usually get a dismissive glassy-eyed look and a change of subject. But when I say I do it to save money, they almost always have to respond with something that defends the alternative. I guess because people don't take those as personally.
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May 13, 2014 21:07
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Someone please explain maximum HSA contributions to me? If I'm on a self-only plan, but my wife and kids are on a family plan together, then is our total maximum $3330 + $6550 = $9850 each year? Or is there an overall cap at $6550? Edit: Fixed. Individual max is $3300 for 2014. It looks like I can get the larger number of $9850 based on this http://www.irs.gov/pub/irs-drop/rp-12-26.pdf. It seems to be tied to the kind of coverage you have. Does Self+Kids count as family coverage? Folly fucked around with this message at 14:48 on May 20, 2014 |
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May 20, 2014 14:37
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I found the same thing in different publication: http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204045IRS posted:Rules for married people. If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. Looks like the cap is $6550 for my wife and I combined.
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May 20, 2014 17:52
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Are Multi-cookers a worthwhile thing? We use our slow cooker multiple times each week, but the ceramic lining on it is cracked. Currently, we don't own a pressure cooker. It's a safe bet we'll at least use it as a veggie steamer, rice cooker, and pressure cooker. I can replace my slow cooker for about $25. Is it worth another $50-$100 for these extra features?
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May 28, 2014 13:48
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We usually steam them in the steamer pot. We also usually cook rice in a pot. I really wouldn't mind a little more fire-and-forget for both. I totally need a pressure cooker, though. I just realized that I didn't put the roast in this morning. Hope I can cook it in 4 hours. The Sous Vide thing is interesting, never tried cooking like that. But I've got like 75% of what it takes to make one in Arduino parts right now. I might as well put it on the project list. I only lack the relay and the screen.
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May 29, 2014 20:04
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Those quotes, taken together, does make him sound a little manic. It sounds like he's one of those people who constantly has to be doing something. My mother-in-law is that way, which probably gives me a worse opinion of that personality trait than it deserves on it's own. Hey, moana, what happened to the romantic lit writers thread? I can't find it.
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May 30, 2014 20:34
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Frankly, the email in his post his so automatically offensive to the women who read his that he couldn't have found a better post to draw more women into the comments on his side. No, I don't think MMM setup a false flag. But a lovely troll is a drat good straw-man. Also, it turns out that I react with irrational anger towards abbreviations like DH = Darling Husband. I don't know why.
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Jul 18, 2014 17:53
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poopinmymouth posted:I thought the exact same thing. I'm not quite on that wagon, and I'll explain why. I mean, assuming the whole website isn't a complete farce, then it's not like the guy needs the money AND his core philosophy is about ignoring the poo poo you don't need. So if it's fake, it's most likely just laziness. If so, why make it so long? Basically, none of it adds up well enough for me to distrust it, especially given the number of times we've seen this same basic argument on /r/personalfinance. If anything is fake, the most likely part would be that he got it in an email instead of finding it on some forum editing it to make it look like an email. And it seems too long even for that. I mean, if he copies too much then you can probably plug it in to google and find where it came from. He's got to know that. To try and kill a derail, we just replaced the two of our toilets that had a 3.5 gallon flush. Despite the amount of water they used, the 40 year old engineering on them was bad enough that they still clogged regularly. The best part? My wife decided that she wanted to do the work so that she knew how. And she did. I only helped to lift the old one out. I have no idea how long it will take them to pay for themselves because it's not easy to estimate toilet use. These are the two most used toilets in the house: the upstairs hallway toilet and the main floor toilet. Next up: Adding insulation to the attic.
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Jul 21, 2014 14:22
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tuyop posted:Wait... You replaced them. With what? HAH! Sorry man, I'm just not on your level. We got a couple of 1.25 GPF toilets.
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Jul 21, 2014 20:25
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BEHOLD: MY CAPE posted:Right, I guess it's all semantics but he appears to be basically a multi-profession freelancer for his living Sorta. It's not for his living. It's for his work. By being financially independent he has separated the two. The true benefit to that is what you make of it.
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Mar 1, 2015 19:08
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MJBuddy posted:The improvements themselves precede the policy, generally, or otherwise they were very clearly moving in that direction. The law itself isn't the improvement, but the benefits its addressing are. That's probably how it should be. Law should generally proscribe the things almost everybody knows you shouldn't do. When the law is used to drive societal change, people just lose respect for the law.
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Mar 7, 2015 23:10
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BEHOLD: MY CAPE posted:excuse me, who is to say that a $5000 four night hotel stay financed by looting retirement savings is luxury for the sake of luxury? I'm pretty sure you said it. Right there. Just now.
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Apr 23, 2015 20:58
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pig slut lisa posted:I share the same recollection, although I've had trouble finding it again. I think it's come up in comments rather than articles. I think it was something like, "you need a relatively high income to retire early, but the spending reductions work well for everybody." Really, his original schtick was pointing out that "middle class" Americans are, in fact, quite wealth and just too privileged to see it.
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May 8, 2015 18:05
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tuyop posted:With his worldview described as one with regular reflection, mindfulness and constant gratitude, I think he's being honest when he describes his spending as "ridiculous". Look at this Canadian version of Thomas Jefferson! There is a definite skill to swimming against the cultural current. He's using a psychological technique of managing his expectations to keep himself grounded. In all honesty, it's probably one of the better ways to do it, and it sounds far better than constantly withholding from yourself. Money itself doesn't really seem to be his main focus, freedom is. It's probably the best way to pursue happiness in the modern world. Edit: The problem is that money is what draws in his readers. And there's only so many ways he can re-state his premise. Literally, his goal is to get to the point where he doesn't have to worry about money and yet he's still trying to talk about it every week.
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May 8, 2015 19:12
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Not exactly that, but I have a related problem. I've lost a lot of interest in increasing my income. My employer just started a work-from-home program. Once I started working from home most days, I totally lost interest in taking a certification exam which would probably double my income. It's a difference between about 6 more working years and 9 more working years, but I wouldn't be able to work from home anymore. It would take about 90 minutes a day for about 6 weeks. And I'm just shrugging and going "yep, I should get around to doing that."
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May 10, 2015 22:45
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Blinky2099 posted:I don't really want to talk personal finances but I think I can retire by 35 at the latest. if I marry someone who insists on a million dollar house I hope the bwm thread shames me for the rest of my life. http://firecalc.org should give you another estimation option. The website explains how it works better than I can, but basically it uses the historical data on as the simulation data going forward, and runs your number through every historic market and plots them on a graph. It gives you an 82% chance of success with $600k plan for 60 years, by the way. Edit: ^ beaten
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Jan 7, 2017 17:48
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The weirdest part to me is the audience (this thread). Even if you can time the market, nobody in this thread should need to do it. We don't even have to beat the market, we just have to not lose to it. And you'd have to beat it by a lot or for a long time to make a meaningful change in your FI timeline. And the farther you try to get ahead of the market, the more risk you're going to have to assume. I just don't think that the increased risk lines up with this specific goal and method.
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Sep 5, 2017 15:56
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I'm assuming the people who hit FI don't hang out here any more. They don't need the moral support. I can say not to worry too much about the stigma. There are ways to mitigate it. And remember that you don't have to go back into earning your full salary to put more money in the bank. You might want to talk about a leave of absence or a sabbatical with your employer to give it a trial run.
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Sep 14, 2017 17:19
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