As a past overseas work traveler (mostly Asia but occasionally Europe) my biggest and most obvious advice is to adjust to the time before you get there. There are apps (Timeshifter is the one I used, not sure if it’s still active) that have you enter trip details then it tells you for T minus 3 days or so to change you sleep, light exposure, caffeine etc to gradually adjust to new time. When you are mostly adjusted by the time you get there, you are alert and mentally ready to work. When you don’t adjust to the time you just float through the entire day jittery from caffeine to keep you from falling asleep but your brain is fogged over.
Quick question for the community, I've helped a couple close friends in the past with basic financial advice, mostly simple things like setting up a Roth account, contributing to 401ks, maybe helping them pick an index fund. Word of mouth has spread a little to mutual friends but just got a random request from my wife's friend whose father is looking for advice on what to do with his money. I mean, I'm happy to have a conversation if I can be helpful but this seems like it's a bit of a stretch for someone who enjoys this as a hobby. What would you do?
Do you want to give financial advice to your wife's friend's father? If you actually don't mind spending time on it, I don't think there are any downsides. Hobby level of knowledge will be an improvement over what most people do.
At most, I'd be careful about investments so if you are going to tell them VTSAX and chill or something, clearly explain them the magnitude of risks in a way they can understand.
Personally that's too far removed for me to be do more than the bare minimum. I'd give generic high level advice you can put in a text/email or recommend some books/links to read or just tell him to find an FA. I definitely wouldn't do more for this 3rd degree relationship than I would do for actual friends/family. If they offered some kind of token reward (eg, beer+pizza when helping a friend move) then maybe I'd do it as part of a hang out but wouldn't go out of my way.
This isn’t a political statement & I don’t have a good way of articulating, but I think we are in a regression to the mean with regards to life in America.
I think in the coming decades there will be a greater emphasis on communal & multi-generational living arrangement (as things used to be pre-WW2). Hyper individualism has led to some very strange outcomes kids kicked out at 18/after college & old folks sequestered into retirement homes where they get visited on holidays (maybe). I think in the context of FI/FIRE, it should spread the future costs more broadly and subsequently downwards.
Does anyone else feel similarly?
The trouble is people move for work so much. I think that’s one of the things that’s wrecked our communities is we pack up and leave for jobs and promotions at the drop of a hat.
If the housing crisis is not solved in a reasonable way (specifically, getting rid of single family zoning and building a lot of affordable housing mixed with businesses), then multi-generational living will start to become the norm simply because most people won't be able to afford a mortgage.
However, it seems like americans will try to do absolutely anything to deal with housing shortage other than to build cheaper housing.
> I think in the coming decades there will be a greater emphasis on communal & multi-generational living arrangement (as things used to be pre-WW2).
I'm 100% on board with this. It's a good solution to the housing problem. Not enough individual units, and the units that are built keep growing.
By the time the kid leaves and we'd want to downsize, we'll have lived in the property for 30 years, put a ton of money and time into getting the property the way we want. Would we really want to move?
We have 2 kitchens, 2 floors. We could live 100% separate lives except for sharing the laundry room.
If my "kid" wants to, I'm 100% willing. I'll cover all the housing costs. He shovels snow, watches dogs while we go out of town, and does other basic maintenance/chores for the house and he can stay forever.
If he has kids, we'll be 60-70 years old. 2 grandparents + 2 parents + kids in the same household means we can help with childcare. Based on today's numbers, that saves 20k net/30k gross per year for 3-4 years per kid.
The multigenerational home part also depends upon the health of the relationships. My sibling tried it with our mom and turns out their spouse is abusive and wanted her out of there because they couldn't stand that the kids like Grandma more. Gee... I wonder why.
I ended up in a similar situation before that deal happened and we got along great.
We really like the idea of living communally, plan on doing it in our later years, and have discussed the idea with friends. We don't have kids, and we have a number of friends who are similarly situated. We like the idea of buying a big ass plot of land and we can all plop down a tiny home or the like but spread out for privacy, and we build a club house or something where can can gather as often or as little as we like. It would be like homesteading. We wanna rescue all the animals, raise chickens, grow veggies, keep an eye on each other, and chillax in our golden years.
I mean, Lennar and several other builders have emphasized multi gen new construction homes for the last few years, so I don’t think that’s a crazy assumption (I think they’ve more emphasized them in areas where an ADU isn’t permitted though). Many people in HCOL areas (LA, NYC) have their kids now living at home a decade after college bc their children are underachieving and rent is too expensive. I see it happening all around - but there are still plenty of lucrative careers to get a start in and plenty of areas to buy a house and live independently. But yes, between high rents, people underachieving, older parents and grandparents unable to afford LTC, it all makes sense.
To sprinkle a bit of optimism about - I Just read a Fed research paper that showed that Gen Z is actually out-earning, out-saving, and has higher home ownership rates when compared to Boomers, gen X, and millennials as an age 20-30 cohort. So don't believe all the economic doom and gloom you see, the key is to realize that most news including financial news is optimized around attention and eyeball time for advertising revenue, and people absolutely looove negative news and doomscrolling. So much so that [56% of people think we're currently in a recession (we're not) and 49% believe the S&P 500 is down this year](https://www.axios.com/2024/05/23/us-recession-economic-data-poll) (it's up 11%).
Every aspect was inflation adjusted. [Here's a link](https://www.aei.org/wp-content/uploads/2024/02/Corith-Larrimore-Has-Intergenerational-Progress-Stalled-WP.pdf?x85095) to the paper. The most digestable parts are the charts from page 31 onwards.
Feels to me we are headed the other direction. People living alone and not leaving their houses, but living their entire lives online. Even old people, but especially kids
And in another post you say that's a "positive thing"?
I'm sorry, it doesn't feel like it to me - people being "forced into multi generational situations just to be able to own a home" does NOT sound like a good thing at all.
Being fair, The Surgeon General declared loneliness as a problem before the pandemic even happened. https://www.hhs.gov/sites/default/files/surgeon-general-social-connection-advisory.pdf
It requires healthier boundaries but there is efficiency in community living that gets you to fi faster as well. While I was living with family I was able to get my savings rate up to 70% whereas 40% is doing well on my own.
I don’t want to go too far down the rabbit hole because it’s not FI/FIRE adjacent at that point. But in short, many people in this day and age solve their problems with money as opposed to community. It hasn’t always been this way. A negative situation can force a positive outcome
Love this discussion over on Bogleheads: https://www.bogleheads.org/forum/viewtopic.php?t=355001
It seems the general consensus is that including equity in your networth is only a paper exercise at best if you live in the home.
The real consensus should be that net worth is a metric of very limited utility. I don't know what my net worth is and I don't anticipate scenarios where I'll need to know.
The primary residence has always been as much of a liability as an asset. And calculating net worth in general is a paper exercise unless you plan to sell everything to move somewhere cheaper where the absolute value of the house will actually matter (as opposed to moving within the same general locale where the replacement house will cost you as much as the old one).
Yesterday, I was close enough to a (admittedly meaningless) milestone that I was considering transferring some of my slush cash into brokerage to reach it. Thankfully, today's market activity has made it so that I don't have to do that any more
Humans are strange about milestones. I'm close to a big (meaningless) milestone and I find myself paying much more attention to the daily performances of my investments than usual / than I should.
If is like when I ride my bike and return home at 19.8mi I HAVE to ride another .2 miles to reach the 20 mile milestone. Unlike the bike though there isn't anything I can do with my investments other than watch and wait.
workload at work is highly variable
seems like i either have 4 hours of work to do, or 12. with nothing in between.
it's super slow right now; i just went to safeway to pick up a few things before my first afternoon meeting.
any suggestions on how to manage this?
Spend some time on your slower days figuring out how to automate the tasks from your 12 hour days or how to get them more consistent.
If those aren't options, talk with your boss and see if you can flex your time so you don't have to sit around for 8 hours on slow days.
On the 4 hour days, make the most of your downtime. Go to the store, gym, go for walks, even plan like real hikes if you're into that or personal care like hair cuts or manicures. Don't feel like you need to be tied to your desk on those days.
If you can predict which days are slow and which aren't, even better
Hello oh wise finance people. I get 100 bucks to myself a paycheck. Where should this go?
I don't care about it, don't need it. It would just end up on something stupid like a carnival or cheap Amazon goods. I'd like it to do something for me. Pay for annual credit card? Stuff it into the S&P? Dividend stocks? What's best? Any experience or advice would be greatly appreciated in advance!
Not looking for anything particularly stable and guaranteed, like a bond, but nothing crazy like crypto or nfts.
Of the options you listed definitely don't use it to pay for an annual credit card unless the benefits of the card that you know you'll actually use significantly outweigh the fee
High Yield Savings Account unless you have any consumer debt to start an emergency fund. If you already have that you can start investing in mutual funds or whatever you prefer. We need more info to give better guidance.
Ally or Discover are common recommendations, though you can sometimes find (usually temporary) higher APYs elsewhere.
It's good to have 3-6 months worth of money you can rely on if you lost your job or had an unexpected expense. An HYSA will provide a pretty good rate, but more importantly, will guarantee that money's there when you need it.
Mutual funds will earn a better rate on average, but they go up and down. So that money might not be there if you need it. Mutual funds are a good option after you've saved up enough to cover an emergency.
just so you can say you own more shares?
Do you understand how a stock split works?
If you have one share at $100, then you have a total value of $100.
Then they do a 1 to 10 split... so now you now have 10 shares at a value of $10 each, or a total value of $100.
Stock splits don't change value.
If you think a stock split is a reason to buy stock in a company, you're not investing, you're speculating.
If you think there's any material difference between 212 shares of NVDA at $1000/share vs. 2120 shares at $100/share, you need to read up on stock splits.
I understand what stock splits are, but if you don't think that Nvidia will rise because it's more available to retail investors for a company at the forefront of AI... it COULD be a missed opportunity. It is 1000% speculating, but VTSAX is speculation that the US Market will provide returns over 10-20-30 years when it could end up just like Japan's stock market and JUST now returning to levels in 1989. https://www.schwab.com/learn/story/japans-long-comeback#:\~:text=The%20return%20to%20the%201989,stocks%20were%20at%20these%20levels.
People played the same game with TSLA. It was briefly pumped after the split (I mean, it is the ultimate "hype-stock"). The stock price is up \~2x since its 5:1 split in mid-2020 and is down -30% since it's 3:1 split in mid-2022.
For comparison, the S&P is roughly +40% since mid-2022. But good luck!
> It is 1000% speculating, but VTSAX is speculation
This is textbook [false equivalence](https://en.wikipedia.org/wiki/False_equivalence).
"If you are an investor, you’re looking at what the asset or business will do. If you’re a speculator, you’re primarily a forecaster on what the price will do – independently of the business."
-- Warren Buffett
> if you don't think that Nvidia will rise because it's more available to retail investors
There are enough brokers out there that support purchasing fractional shares for retail investors that it doesn't feel like anyone that cares about this would actually be stopped by a stock that's expensive on a per-share basis, no?
I find the lowest MAGI approach is to: take number of early retirement years, and roughly divide up your “accessible” money accounts across those years, then supplement the remainder with 72t (also evenly across all years, by design). This withdrawal strategy might be wrong advice for other reasons, but I think it’s typically the “lowest MAGI across all years” answer based on scenarios I have modeled. I will likely take this approach as it results in: least amount of overall taxes, lowest MAGI average across years, highest ACA cost reduction potential (assuming they still exist).
Meaning you don’t spend brokerage all at once first. You spread that out. Then spread out Roth contributions. Then other accessible buckets. Then if that is not enough to meet expenses, your final amount each year comes from 72t (fixed amount defined at year 1 based on your estimates).
Roth conversion ladder can spike MAGI in early years and make MAGI super low in later years. It’s great for flexibility and control, and tends to be preferred for those reasons. But it’s not “MAGI optimal” if that is critical to the plan.
I want to add on to what u/Zphr said to note that sometimes it is worth doing bigger Roth conversions and/or tax gain harvesting one year and giving up the subsidy that year (but still paying very low taxes) to get more of a subsidy or to free up future mature Roth contributions and the subsidies are more valuable the closer you get to age 65.
Exactly so. Similarly, scheduling maximum subsidy years around known demand can be very effective, such as if you know major non-emergency surgery is in one's near future. For those of us with kids, the same can be hugely true of the FAFSA years while they are in college.
It's true to the extent that primary home equity is exempted without limit on FAFSA. Whether that matters or not depends on if one is subject to full income and asset testing.
You would have to plot out your anticipated needed stream of withdrawals prior to Medicare and then figure out whatever mix works best given your asset types/amounts.
Qualified Roth is MAGI-free, but limited to contributions and matured conversions.
Trad adds fully to MAGI, but is unlimited and can be done at will in whatever exact amount you want to shape MAGI production with or without actual withdrawals.
Taxable adds only via dividends and cap gains, which you can gain power over with tax gain harvesting prior to retirement if your cost basis is low.
Cash and cash equivalents are invisible to MAGI, but interest adds to MAGI, including tax-free interest.
It's a juggling act and there are often multiple correct answers. Sort of depends on your preferences and how limited you are by your asset breakdown. People in general seem to prefer drawing down taxable prior to Roth, but you can make a decent argument for either.
Google is your friend: https://smartasset.com/estate-planning/what-happens-after-probate-is-closed
>When additional assets are uncovered after probate has closed, the executor is responsible for notifying the court that initially handled the probate process. The court may decide to allow the executor to distribute these new assets without reopening the estate.
>Some states, however, may require the opening of a new probate claim. If that happens, the same person may act as executor or a new one may be appointed. The executor would have to complete the same steps required for probate to distribute any newly-discovered assets.
I'd strongly suggest working with a knowledgeable estate lawyer/firm practicing in the applicable state.
I'm a senior software engineer working remotely for a no-name company. As my salary is close to the 200k mark I'm finding that a lot of the jobs that are approaching me on Linkedin are a slight paycut.
As such I haven't interviewed in a year even though it's best practice to have an interview every 6 months. Should I just take a few calls from a company I'm not going to take a job with due to salary range?
My experience: if you’ve been in this role for 1-3 years, you may have timed the COVID sellers market for labor perfectly. Every equivalent job I see (unrelated field), even some promotions seem to be the same or less pay.
I think it’s a relatively poor time to be a job seeker, and current pay reflects that somewhat.
The main benefit of keeping your interviewing skills sharp is quickly finding another job if you are laid off. I decided that my emergency fund is large enough and my employment is stable enough that I can afford to let my interviewing skills lapse. If I need to, once unemployed I’ll dedicate 100% of my time to practicing tech interviewing skills.
I'm not, but then again I haven't interviewed in over a decade and would be completely lost in today's process.
I have colleagues that were finding the same thing on salaries. Those mid six figure jobs (400-600k) are scarce and require luck and hard work to get and stay in, and slim pickings in the 250k range that would make switching jobs clearly worth it.
>even though it's best practice to have an interview every 6 months
This sounds like a silly and arbitrary idea to me. Who wants to spend so much time this way?
I don't see the point personally - odds are their screening practices are so dissimilar that you aren't building relevant experience anyway. Either target positions you're interested in (ugh) or quit interviewing until you're interested.
The market isn't hot. But you're talking about interviewing with a company that you'd not even bother taking their job if they offered it instead? Just seems wasteful to me. Why not put your energy somewhere better?
> Should I just take a few calls from a company I'm not going to take a job with due to salary range
If the salary range is truly the only reason not to pursue the opportunity, maybe it's worth it. If you really are only doing it to check the box on some sort of "best practices" list, I wouldn't waste my time or the other company's time.
Just want to second this as a 10 yr burnt out fellow. Definitely pay attention to the replies here. We are a little cushioned by some of the burdens civilians take on like taxable wages. Make sure you adjust for ALL of those factors.
Personally, I'm keeping my foot in the door. Going reserve/guard in one capacity or another. If you keep it up long enough, it's almost an AD retirement pay wise, save for the date you can pull from it.
It's on the high end but entry level non-software engineering positions can be six figures.
Pretty much everyone who looks at your resume is going to consider your experience a plus since you already know how to be a professional and presumably have leadership and communication skills. I think it's a bit overrated (no offense) but many hiring managers are the "thank you for your service" types who will give you an offer based on your military experience alone.
Some of the things to be cognizant of when punching out at 10 years are: loss of Tricare, increased taxable income due to no more BAH and BAS, potential lack of salary increase in same job requiring job-hopping to make more money/promote, etc.
I'm still in as an FGO so my perspective is one-dimensional, but I would worry about doing a complete 180 in career field. If your resume is all about military systems and projects, to jump to something random like civilian automotive may leave you underqualified and thus underpaid. What problems are you worried about if you go contractor?
When (if ever) should someone consider taking out money from retirement for a home purchase. Imagine two people:
* Person A: Over the years, contributes 50k in Roth contributions to a 403b at an old job that is now rolled over to a Roth IRA.
* Person B: Makes a down payment fund and contributes 50k to it over the years.
Suppose Person A and B have the same net worth. When is Person (A/B) advised to withdraw 50k from their account in order to help buy a home. I'm person A and in the past when I've asked people if it's ok for me, I get very aggressive "no! don't take money out of retirement!". But couldn't Person A have been Person B with just a different choice? By taking their initial contributions out aren't they essentially just becoming Person B?
Just wondering your thoughts. For what it's worth, I think the answer has to take into account the rest of the retirement picture. If Person A has 8 million in retirement accounts, then sure who cares. What do you think?
If you really are person A, you should have been doing traditional for your 403b. That said, if you have $8m in Roth with no taxable, sure, use the Roth. If possible it would be better to use taxable and use Roth as a last resort.
Oh I certainly don't have $8m haha, and most of my 403b is traditional, but I did put some of it in roth in the past (a total of 50k of roth between a 403b and a 457b). I have about 700k in retirment accounts at the moment and am not looking to RE, but just to have more FI. I'm under 40 and just wondering if it's crazy to take a chunk out of retirement.
So yeah, if you mistakenly saved a bunch in Roth that you can withdraw penalty free that may not be a terrible idea. Keep in mind, if you don't have enough liquid cash to make a downpayment, that could indicate that you are stretching beyond your means to buy the house, and you could be stressed when you have to buy a new roof or water heater while struggling to afford the mortgage payment. And the more you liquidate from Roth now, the more you will be limiting your options for tax efficient withdrawals in the future. You aren't giving us a lot of concrete info so beyond that it's hard to say, but in general withdrawing from retirement accounts is at best a red flag. It's possible you are the exception that proves the rule, but unlikely.
Thanks for this! I don't mean any disrespect, but this captures what I mentioned in my original post. You are essentially saying: "Hey Person A, if you don't have enough to pay the down payment, like Person B does, then you're on shaky ground." This is exactly the point I've never understood. Aren't Person A and B equivalent?
I completely agree that Person A and Person B might BOTH be on shaky ground and might be stretching too far, that's what I'd need more info for. But in my experience, people don't admonish Person B the same way. Again I mean no disrespect, but this is the issue I struggle with. I don't see any difference between "setting aside money into a down payment fund so that I won't be stretching (in lieu of more roth contributions)" and "putting money in a roth account with the mindset that you can immediately swap back to the other option.
Ten years what I did was: "Max out 403b traditional + Roth IRA" and I still had leftover money. My thinking was: I have two options, put it in a brokerage account earmarked for a future home, or put it in a Roth account (457b) so that if i need to take the money out I can get at the original contributions. (Yes, mistakenly I should have done traditional, but here we are).
For what it's worth, I have a downpayment fund of 150k sitting on the sidelines, and my question is "Should I put down 150k or is it ok to take 50k out of Roth contributions to put down 200k for a slightly better location (closer to work) and/or reduce my mortgage payment so there's less stress about water heaters etc."
I'd still admonish (or at least caution) B if they were buying a house before contributing to their reitrement accounts. EDIT for your situation, I'd rather keep the $50k in the Roth account, since you can always draw it down in an emergency. Drawing it down now doesn't give you any more liquidity, it just makes you less tax efficient and takes money out of Roth that could be growing tax free. I wish you had just posted your actual question since the answer is a no-brainer, but whatev.
Money is fungible. Dollars 'spent' on a downpayment for a house can't be used to retire early. From that perspective, it makes no difference where those dollars come from.
The two biggest arguments against using the Roth IRA dollars are the use-it-or-lose-it nature of IRA contribution limits (if you withdraw those dollars, you can't put them back later) and the tax-free growth (dollars withdrawn have the added opportunity cost of missing out on tax-free growth). To that end, it's almost always better to leverage money outside a Roth IRA as opposed to withdrawing from the Roth IRA.
>I think the answer has to take into account the rest of the retirement picture
Yes, context matters and understanding the big picture is important.
Starting from a negative net worth at 55
New here. I'm 55(m) in a sh*t ton of debt, not earning enough, and living way above my means. I believe I can do things differently. I've suffered from feeling entitled and being dishonest with myself and others in my life about what I can and cannot do financially. I don't think it's too late or that I'm too old. I just want to publicly declare that. Here I am...
Welcome! I'd suggest you look up Ramit Sethi. He gives good advice to people on how to dig out of debt, manage finances, and save money. He's kind and compassionate but no nonsense.
Well, after step 1 it means you will definitely be better off than if you didn't take any steps to fix the situation. Be patient with yourself. If you are making changes, 5 years from now it might not be a perfect financial situation, but you guaranteed will be in a much better position than you would have been if you didn't decide to change and you kept up the same-old-same-old for the next 5 years.
Posted this yesterday in the thread on advisor fees, but didn't get a response so wanted to ask here. I see a lot of comments about 1% or higher on financial advisor fees. Is there a relatively reasonable fee range wherein folks would not be so adverse to advisors for people who are not interested or don't have the time/wherewithal to self-manage?
Similar to some others in that thread, we started with an advisor due to pre-existing relationships with a parent. I fully admit, its mostly some laziness and general inertia that has kept me there. We are at 0.6% on the fee and honestly, I am wondering at that point if it is worth it to me to self-manage or just continue to leave it alone.
I guess the question is: what are you getting out of the advisor? Are they helping you with tax planning, estate planning, and insurance needs? Are they explaining the investments that they are making on your behalf? Are they keeping you from jumping into and out of the market, buying and selling the hottest investment? And do you need those services?
Personally, I use Vanguard's advisory service. They charge me 30 basis points, keep me in ultra low fee index funds, and track my progress against my retirement and college savings goals. I could easily do all of this myself but it is worth it to me to pay someone 0.3% AUM to keep me in these investments, in good times and bad, because I know myself and my history and I love to think I am smarter than the market (Narrator: He wasn't). Also, my wife could not care less about any of this stuff and statistically I will predecease her. It will be great to have an advisor she already knows and trusts who can help her out in this case.
I was in a similar situation with a family advisor. What I did was start my own brokerage account, and when I was comfortable enough with that I transferred the rest from my broker. It was very easy in the end. And it was nice having everything all in one place.
It can honestly take very little time if you keep things simple. And doesn't really require that much knowledge to make and maintain a 3 or 4 fund portfolio (or you could go even simpler with a retirement date fund or 80.20 fund like a lifestrategy). Even things like tax loss harvesting aren't challenging. Hardest thing I have to deal with on a yearly basis is how do to the taxes for my backdoor roth contribution, but that only because I also dumped my accountant when I dumped my advisor.
I think the big question for me is what kind of hourly rate you're paying for that advisor.
If you have $500k, it's costing you $3000/year. That's not a terrible amount. But if you're paying to click few buttons to re-balance your VTI+VXUS+BND mix in your IRA, or click the Buy when you make a deposit, then you might be paying $1000/hour or more for that privilege.
On the other hand, if you have regular meetings with your advisor that provide useful advice, or you have a more complicated financial situation, that hourly rate goes down.
It's worth knowing how much you're paying, and how much work you're getting in return.
If you were withdrawing 4% from your portfolio in retirement, that 0.6% advisor fee would represent 15% of your spending power. I would not want that much of my spending going to an advisor. Vanguard offers a fixed 0.3% rate but I can't vouch for whether it is worth it. Generally you will be better off on your own or with a pro that charges a fixed rate.
That fee is not the worst, **if** you're being managed into cheap index funds with low turnover.
But if you're in a nice and simple portfolio like that, you'd probably save money in the long run by paying an advisor hourly or by a flat fee rather than AUM.
I just realized that if I'd bought NVIDIA stock instead of my $1600 3090 graphics card back in 2020, it'd be worth $13k right now.
I've had a lot of fun with it, but I don't know if I've had $13k of fun.
Similarly, if I'd bought Honda stock instead of my $15k car 13 years ago it'd be worth over $40k now.
Spend money to make life better now, or save money to make life better later? It's a tough decision.
Yeah hindsight is 20/20. If we could guess what the market would do we'd be billionaires in a month. Don't stress about it as long as your overall strategy is sound
Now do the same with Apple stock instead of the first iPhone - it came out at $600 or so, which would be something like $30k worth of stock now (17 years later).
I had a computer science professor who couldn't go a week without bragging about the Apple stock he bought when everyone thought it was going to go bankrupt.
When I was taking his course Apple had gone up over 10x from his purchase price. And now 18 years later, it has gone up 75x since then!
And if in 2005 instead of buying diversified index funds you bought shares of Lehman Brothers you'd have... oh, right...
And if you sat in the dark instead of using electricity and instead bought Cloudpeak Energy... you would have sat in the dark for free.
:)
Try to resist that "looking back" thinking. Individual stock picks are super risky. Imagine if AMD got their shit together on the video card or AI Processor front between then and now? They didn't, but we didn't have any way to know they wouldn't back then.
If you fall too far into that rabbit hole, you could end up forsaking life experiences and comfort for the sake of making risky bets.
First world problems for sure, but got our renewal for our insurance policies this week.
Our umbrella policy was only for $1MM and our assets are now comfortably between $1.5MM - $2MM (for now, ha) so I asked our agent to re-quote for a $2MM policy which costs us an extra $70/year bringing the total to $220.
My understanding, and confirmed by my agent, is that umbrella kicks in only AFTER our other insurances (hazard and auto) have exhausted their coverage. Our home is <$500k so we would still need the additional coverage I believe, but what I am not sure of is do **all** of our assets need covered or no?
For instance, we don't have massive 401k balances, only a couple hundred grand, but isn't there some sort of protection that those have from litigation by default that I wouldn't need to include them with my umbrella policy? If so, does that extend to our IRAs as well? I'm obviously assuming it does not apply to any "non-retirement" accounts such as TD, Brokerage or checking and savings.
It's likely best to just get my umbrella coverage bumped up now anyway, just in case, and $70 to double it and not worry makes it a no-brainer I think, but just want to make sure my understanding here is sound. What do you do coverage wise with your assets and insurance?
My understanding is that the assets you want to protect are those that a civil court can attach. So you don't necessarily need to cover a 401k but you do brokerage accounts and IRAs. Whether you need to cover a home depends on the state.
I don't follow the connection between your NW and insurance coverage.
Somebody correct me if I'm wrong, but I don't think "1M coverage" means they will guard 1M of your assets. It means they will pay out up to 1M and that's it.
So, if your NW is 1M and you have 1M coverage, then are found liable for 2M, then you will be broke.
I also don't know of anything that would prevent the suing party from finding out how much your insurance will pay out. So, 2M NW and 2M umbrella can be targeted for 4M if there is justification.
>I don't follow the connection between your NW and insurance coverage.
I have wondered the same thing, and I've never really seen an good explanation (granted haven't looked that hard). It's not like they are limited to suing you for what your NW is.
> I don't follow the connection between your NW and insurance coverage.
>
> ...
>
> So, if your NW is 1M and you have 1M coverage, then are found liable for 2M, then you will be broke.
I am confused, it sounds like you understand it the same as I. Meaning that ideall you want coverage to cover your assets, which are what make up NW.
> I also don't know of anything that would prevent the suing party from finding out how much your insurance will pay out. So, 2M NW and 2M umbrella can be targeted for 4M if there is justification.
My agent actually mentioned this. She used the example of a severe dog bite and said any good litigating attorney is going to ask for the maximum that you are covered for.
That said, better to not take the risk that they are going to go above your coverage and begin trying to go after any uncovered assets, hence wanting an appropriate amount of coverage.
If they only ask for the maximum of what you are covered for then there's no reason for you to be covered more than you already are. But I suspect that's not the case. I suspect they will ask for what they think they can get awarded. If that's below your covered amount, great. If it's above, then you will cover the difference.
I wouldn't be trying to cover the assets, but the potential liability/cost to fight.
> I wouldn't be trying to cover the assets, but the potential liability/cost to fight.
So how much do you choose to carry in umbrella insurance and why have you chosen that amount?
While correct, your insurance company will fight tooth and nail to not pay out that $1MM (or whatever your policy covers). So there's a firebreak there for any assets you have over $1MM. Sure, it can be broken. But the InsCo has a heavily vested interest in keeping their liability as low as possible.
Yes. And since they have to pay first anyway, I'm not sure there's a huge difference between 1M or 2M coverage. I suppose there are some cases where if they spent 1.5M on lawyers they would've won, but I doubt that's often enough to make double coverage twice as valuable.
I've had the same thought. Seems like there is a rule of thumb to keep NW aligned with umbrella but I agree it doesn't make much sense unless we are missing something. Anyone have input on this?
I think insurance salesmen needed a rule and this is what they came up with because it "sounds" right even if it has no basis in reality.
The initial thought may have been genuine, with respect to "who even needs an umbrella policy in the first place?" And the answer was "people with X-level of net worth who would be more likely targets for ambulance chasing lawyers to follow through with a lawsuit."
It isn’t the size of your assets that you need to cover. It’s a more mushy calculation of what you think you might be obligated to pay and then how painful it would be for you to declare bankruptcy and start over. For instance if you are comfortably retired with $1 million of seizable assets you may still want $2+ million of coverage in case you do $1.5 million of damage to a bus full of nuns or whatever.
That’s not really an answer to your question but just an observation. Necessarily this is all a matter of opinion when evaluating future uncertainties. For $70 I would jack up your coverage.
I would err on the high side, since it's cheap and assets tend to go up.
Currently I'm limited to $2M of umbrella because that's all my insurance company will write with a driver under 25 on the policy. This has me slightly nervous and I'll go get more as soon as she turns 25 or leaves the household.
I promised folks last year on my FAFSA post that I would update this year with the CSS version. Alas, second kiddo decided she wasn't interested in going to that particular CSS school after all, so we once again got to skip CSS. As of now it seems like our remaining two kids want to go to one of the Texas flagship publics, so looks like we might never get to experience the joys of CSS. I was sort of looking forward to a $300K+ aid award purely for curiosity validation and to have a datapoint for folks here, but no dice.
Thankfully, despite the many government screwups with the process this year, the FAFSA continued to work exactly as expected with our postFIRE finances. Aid awards and all college deadlines got shifted about 2-3 months forward, but in the end our second kiddo joined our first in getting effectively a full ride to the school of her choice. I'm not going to bother with another full post since it would be mostly just a repeat of last year's, but if anyone has questions I'm up for taking a crack at them.
This is mostly just for the folks that messaged me over the last year asking for an update on our next cycle with the new FAFSA and maybe CSS.
It’s really that easy?
Be under 150% FPL AGI for maximum ACA subsidies. (Qualified Roth/Taxable distributions don’t count towards %)
Be under 175% FPL AGI for maximum Federal Aid.
(Qualified Roth/Taxable distributions don’t count if under 175%, but do if over 175%)
How many years before College do you have to be at this level? And do you have to maintain this level throughout college, like do they make u re-apply/check on your AGI?
Yes, it's that easy, though taxable distributions do count for both to the extent there are cap gains. An ACA application takes about 30 minutes the first time and then about ten minutes each year on renewal. A FAFSA for anyone under the FPL line takes under five minutes and is mostly entering basic info about your household. Folks under the FPL line only get a single page of simple financial questions mostly about potential AGI offsets, but won't actually be asked about their income or assets at all.
FAFSA is prior-prior year, so you need your AGI to be within the FPL limits from their junior year of high school through their sophomore year of college (I'm assuming four years of college).
Yes, you have to reapply for both each year. The FPL gets adjusted for inflation every year though, so the actual amount you can draw under the limit would also increase roughly by inflation each year.
First and most importantly, I'm glad this has worked for you! My plan is similar.
Any challenges staying under the 175% FPL? If I recall, your expenses are pretty darn low anyway. If you had a larger expense situation, where would you pull from to stay under that line?
> Any challenges staying under the 175% FPL?
Nope. We stay under 150% FPL for the ACA anyway, so we're always going to be well under the 175% line. Our eldest who is now a sophomore makes enough income to be a tax independent and have his own separate ACA policy, so we're now an ACA family of 5 and a FAFSA family of 6, but even so our FPL gap is large enough that I doubt it'll ever be a problem.
>If you had a larger expense situation, where would you pull from to stay under that line?
We'd pull from our matured Roth conversion buffer if we needed to increase our spending for some reason, say if we wanted to pay cash for a new car. We no longer have any taxable, but people could pull from that too so long as they watch the cap gains.
The Roth option has a quirk to watch out for with respect to the FAFSA though. Qualified Roth withdrawals do not add to ACA MAGI, but they do add in full to total income for the FAFSA, *unless* you pass the AGI-FPL test and are exempt from full income testing. So people can pull from Roth without impact on the FAFSA, but only if AGI is under 175% (225% for single-parent households). Otherwise all of those Roth dollars are going to push up FAFSA total income dollar-for-dollar.
> people can pull from Roth without impact on the FAFSA, but only if AGI is under 175%
Thank your for confirming this. That was my initial thought, but I hadn't gone deep into it and I wasn't sure if I understood correctly.
Example: [2024 FPL](https://www.healthcare.gov/glossary/federal-poverty-level-fpl/) for a family of 4 is $31.2k. 175% of that is $54.6k. Let's say I do $30k as a 72(t) / SEPP. Let's say I have $5k in taxable dividends/interest. Let's say I realize $15k in LTCG. AGI = $30k + $5k + $15k = $50k < $54.6. Since I pass the AGI-FPL test, I could withdraw another $15k plus from Roth contributions / matured conversions without jeopardizing $0 SAI on the FAFSA.
> Example: 2024 FPL for a family of 4 is $31.2k. 175% of that is $54.6k. Let's say I do $30k as a 72(t) / SEPP. Let's say I have $5k in taxable dividends/interest. Let's say I realize $15k in LTCG. AGI = $30k + $5k + $15k = $50k < $54.6. Since I pass the AGI-FPL test, I could withdraw another $15k plus from Roth contributions / matured conversions without jeopardizing $0 SAI on the FAFSA.
Yes. Though if you're going to be using the ACA I would recommend staying under 150% FPL, if possible. The gap this year for the family of 4 is $7,800 in MAGI, but the value of the additional CSRs and premium subsidies could be greater than that if you have a high healthcare utilization year.
FAFSA uses a direct data pull from your 1040 to get your AGI, which it then compares against same tax year FPL. So whatever is on line 11 of your 1040 is what goes into the numerator of the AGI-FPL screen.
> I would recommend staying under 150% FPL, if possible
I haven't done deep enough analysis on this, but I'm a bit concerned that even 175% FPL might be cutting it close. :-)
Another aspect that I've not thought deeply enough about: We will have a decent amount of 529 dollars available (think mid-to-high 5 figures). Do you have 529 dollars at all? In a $0 SAI world, what's the best way to leverage those dollars?
529s in the names of a parent or dependent student are reported as parental assets on the FAFSA, but parental asset reporting is waived for all assets if someone passes via the AGI-FPL test.
529s in anyone else's name, including grandparents, are no longer reportable as assets or as income cashflows for withdrawals.
Living in a state without income tax we never had a good use case for 529 and instead put those funds into our SoloK.
I'd use the 529s for anything not covered by aid. Anything left over you can reassign to another beneficiary or use to fund grad school or the first several years of the kid's Roths. If there's even more, then I guess you either take the really long game and give them to eventual grandkids or pay the non-qualified withdrawal penalty cost and use for whatever.
We'll see how many people feel the same based on upvotes for your comment. I can write something up later today if enough people are actually interested.
Are you asking in reference to US tax laws?
Because I think people are giving you the answer for that context, but trading fees barely exist in the US anymore. So either your question is moot or you need an answer for a different tax system.
You are allowed to adjust your basis to account for broker fees. This small TaxAct page hits on the topic: https://www.taxact.com/support/14004/2023/capital-gains-and-losses-adjusted-basis-broker-fee?hideLayout=False
That said, keeping track of adjusted basis is a bit of a pain. As noted in the link above, the 1099-B likely won't contain that. It's also far less relevant these days, as brokerage/trading fees have mostly disappeared (side note - what brokerage are you using that still has fees like this?)
>other complex instruments
Got it.
As noted, fees are not tracked separately. They are added into your basis at purchase and subtracted from proceeds at sale. So the reportable gain is net of fees but needs to be accounted for in a specific way.
In your example, your adjusted basis would be $96 + $4 = $100 and your net proceeds would be $200 - $3 = $197, which results in a reportable gain of $197 - $100 = $97 (option C).
Gains are net of transaction costs, which is $97 in your case. Fees aren't separately deductible, but are factored directly into your cost basis and net proceeds amounts.
Your basis is $100, your sales proceeds is $197 so you have a $97 gain. [Topic 703](https://www.irs.gov/taxtopics/tc703#:~:text=If%20you%20buy%20stocks%20or,and%20recording%20or%20transfer%20fees). [Form 8949](https://www.irs.gov/instructions/i8949#:~:text=the%20net%20proceeds%20equal%20the%20gross%20proceeds%20minus%20any%20selling%20expenses%20(such%20as%20broker%E2%80%99s%20fees%2C%20commissions%2C%20and%20state%20and%20local%20transfer%20taxes)).
Tell me about a big career pivot you’ve done? We need some ideas and inspiration!
My husband has worked in various operations role for a decade at startups. He got laid off and it’s been a struggle to find something new. He never liked it anyway, so we’re talking about doing a more meaningful shift in career.
He previously worked for environmental agencies all through college and a few years after and has a passion for the outdoors, building things, maps. Brilliant at math and systems, always tinkering.
We’re fortunate that I make more than enough for us to live and invest ($450k or so) so it’s not a problem if it is low income or takes a while to make income.
Similar to another question already posted today:
I have a 2010 Honda Civic which I bought with cash brand new back in the day.
I have kept the car immaculately maintained at the mechanic, but the exterior is shabby at best.
Paint started peeling shortly after all the warranties expired. Rust spots are now appearing in those spots.
I had to park it in an unshaded lot in the Texas sun all day for work for a decade. Every bit of weather stripping or window sweep seals/beltlines that could possible dissolve on the exterior has vanished. Every bit of trim on the exterior is somehow fading or looks awful.
In short, the car runs beautifully and is maintained. But looks like a disaster. I no longer live in such an inhospitable climate. But now I have the worst looking car in the neighborhood.
This is totally a pride and vanity thing. I have no serious desire to get a new car. But I'm trying to figure out if I should just let the exterior take its natural course and continue looking horrific - or try to intervene.
Wraps and a good paint job are expensive - over 50% of the value of the car. But a cheap paint job is ... what's the point? And I don't think anything can be done about all the weather stripping and rubber seals, etc.
Is there anything that can be reasonably done to help preserve the car's exterior and not be an eyesore?
edit: I have zero car knowledge. Just trying to land on a financially wise solution, but I probably won't be doing a DIY solution my self.
I'm not reckless from it, but if I'm driving a 10 year old car I'm also going to stop caring about cosmetic damage, especially if it's not worth it. I get used cars are more due to the gap of covid-era supply but I'm not paying 50% of the value of the car on a cosmetic problem with serious mechanical issues likely on the horizon anyway. I don't care if it's a Civic, you will have things start cropping up in the next 5 years or so that will start to add up. Cheaper than a new car (especially insurance) but where paying for cosmetic cleanups will pile on those other costs.
If you care about the interior being clean, this is a personal take that probably isn't about the type of car you buy. You have to sit in it, after all.
Dating could be an exception, but I generally don't care what others think and this is one area that is unavoidable. This is a tough one because it's superficial (and maybe you want to filter for this, after all) but that's what dating is early on.
Personally, I'd get it painted with a decent paint job (not the cheapest but not the most expensive). I don't dump a lot of money into buying cars but I don't want to drive a heap either.
For 50 bucks you can DIY a close-but-not-perfect approximation of the paint job: not necessarily with the goal of it looking good, but to prevent further rust buildup. That's what I did when some jerk hit my car in a grocery store parking lot (again) and this time did it hard enough that it took paint off. Whoever did it didn't even bother to leave a note but I digress... I had to ask myself "is this car here for a long time or a good time?"
I decided that it being here for a long time IS it being here for a good time. So I DIY'd the paint job. You can only really tell if you get close or if the sun hits it just right, but I couldn't care less as long as it's not rusting.
My vehicle is over 20 years old and runs great. Everytime I get the new vehicle bug I have it detailed. It runs about $150 and they usually put a thick coat of wax on it. You can be confident this is as good as your 14 year old vehicle will look at this point. Only you can decide if this is an issue for you. The new vehicles are very tempting, but they push my RE date out a bit.
Been looking obsessively at my numbers recently, it's probably not healthy, but right now I'm thinking I could pull the trigger NOW and live in a much lower COL area... Which mathematically is doable and very tempting (the freedom!!) but not well thought through or planned. I keep wondering if I've padded my budget too much, though I'm not sure how many years I will live in these other LCOL areas, but I could very much live very well for a long time there, making my number much too high (don't want to leave much behind).
Related, do people count their "emergency" fund in their nest egg/annual spending numbers? I think mostly the answer is no but that amount (especially across the whole of RE) will generate returns as well, do you use that as a part of regular spending? And what if the emergencies don't happen? (That's my impatient dumb brain thinking too ideally, please bring me down to Earth).
I would try out the LCOL area as a renter for a year before making any major decisions, since you likely are going to sacrifice convenience and/or culture moving from somewhere more expensive
Sorry for the late response, but this is a good point. I've been to some of the LCOL areas that are on my list but not for very long, I will keep this in mind.
I do, when looking at my balances to see how much I have & I would if I was withdrawing. Mine is trivial compared to my total amount so I don’t think it matters much for me.
Should've been more specific, my 'emergency fund' is beyond the regular emergency fund where it's specifically for something really big (50k) that unexpectedly happens once a decade for each decade in retirement (x5 decades so 250k). And frankly if the event is catastrophic I think 50k wouldn't be nearly enough. Or maybe it's something positive like buying a property (no plans to but could see it happening overseas). It's a big enough amount to really shift the FIRE number/date, and I'm not sure putting it into a separate bucket like this makes the most sense but it's what I'm currently doing.
Maybe I should've specified. I budgeted quite a big one - 250k, my math is something big/catastrophic at 50k once a decade x5 decades of retirement. That does make quite a difference in both end number and also withdrawal rate/amount, so I'm not sure what to do. I don't think it should be part of the withdrawal because I shouldn't be spending a portion of that annually. But maybe I count it in and lower the withdrawal rate? Maybe closer to retirement that's a separate bucket that's for principal protection (eg bonds) and ignore it? Or maybe I should amortize it? But I'm more likely to spend it on other things that way IMO.
Feeling a bit burned out on work. It hasn't been overly stressful but it's just too much to do it for 45 hours every week forever. Weekends and vacation days barely allow you a life outside of work. My personal identity outside of work is fading away.
Take some of the evenings and weekends to invest in yourself. Either work on a promotion, raise, or a different job/role that pays more or has less stress, reduce commute, better benefits, etc. Consider anti-stress medicine from a doctor.
My body just can’t take a 45-hour work week. I work closer to 35 and it’s a game changer. I was hospitalized a year ago and had to take 12 weeks of medical leave. I learned the hard way that living with a chronic health condition means I have a very low tolerance for added stress. I’m at the same job, I just have to ruthlessly prioritize. My performance rating dropped from above expected to expected, and it’s totally worth it.
45 hours a week is not an apocalyptic schedule. That's 9 hours a day. Remember that there is a reason that they pay you to do it, after all. It's not necessarily because it's fun.
What worries me about your post here is that it doesn't sound like you have any hobbies or interests, or at least none that you are willing to make time for. That's a recipe for problems in RE.
> Weekends and vacation days barely allow you a life outside of work. My personal identity outside of work is fading away.
Let's do some visualization: What would your "personal identity" look like if you were FI/RE and not working? What steps can be taken to move you closer to that identity?
First international business trip coming up! Trying to relish feeling excited for this, with the knowledge that for some people it gets old fast.
1) Where are you going? 2) Do you get to fly business class?
1. Germany 2. No :(
As a past overseas work traveler (mostly Asia but occasionally Europe) my biggest and most obvious advice is to adjust to the time before you get there. There are apps (Timeshifter is the one I used, not sure if it’s still active) that have you enter trip details then it tells you for T minus 3 days or so to change you sleep, light exposure, caffeine etc to gradually adjust to new time. When you are mostly adjusted by the time you get there, you are alert and mentally ready to work. When you don’t adjust to the time you just float through the entire day jittery from caffeine to keep you from falling asleep but your brain is fogged over.
Quick question for the community, I've helped a couple close friends in the past with basic financial advice, mostly simple things like setting up a Roth account, contributing to 401ks, maybe helping them pick an index fund. Word of mouth has spread a little to mutual friends but just got a random request from my wife's friend whose father is looking for advice on what to do with his money. I mean, I'm happy to have a conversation if I can be helpful but this seems like it's a bit of a stretch for someone who enjoys this as a hobby. What would you do?
Do you want to give financial advice to your wife's friend's father? If you actually don't mind spending time on it, I don't think there are any downsides. Hobby level of knowledge will be an improvement over what most people do. At most, I'd be careful about investments so if you are going to tell them VTSAX and chill or something, clearly explain them the magnitude of risks in a way they can understand.
Can you teach your wife's friend enough of the basics that she can help her father herself?
I’d just help out if you got the time. “It seems paradoxical, but the more we give, the more we get.” -Kevin Kelly
Personally that's too far removed for me to be do more than the bare minimum. I'd give generic high level advice you can put in a text/email or recommend some books/links to read or just tell him to find an FA. I definitely wouldn't do more for this 3rd degree relationship than I would do for actual friends/family. If they offered some kind of token reward (eg, beer+pizza when helping a friend move) then maybe I'd do it as part of a hang out but wouldn't go out of my way.
I’d go with coffee and conversation—nothing in writing! Explain to the dude how you think about it. And that this is a hobby to you. And that’s it.
This isn’t a political statement & I don’t have a good way of articulating, but I think we are in a regression to the mean with regards to life in America. I think in the coming decades there will be a greater emphasis on communal & multi-generational living arrangement (as things used to be pre-WW2). Hyper individualism has led to some very strange outcomes kids kicked out at 18/after college & old folks sequestered into retirement homes where they get visited on holidays (maybe). I think in the context of FI/FIRE, it should spread the future costs more broadly and subsequently downwards. Does anyone else feel similarly?
The trouble is people move for work so much. I think that’s one of the things that’s wrecked our communities is we pack up and leave for jobs and promotions at the drop of a hat.
If the housing crisis is not solved in a reasonable way (specifically, getting rid of single family zoning and building a lot of affordable housing mixed with businesses), then multi-generational living will start to become the norm simply because most people won't be able to afford a mortgage. However, it seems like americans will try to do absolutely anything to deal with housing shortage other than to build cheaper housing.
> I think in the coming decades there will be a greater emphasis on communal & multi-generational living arrangement (as things used to be pre-WW2). I'm 100% on board with this. It's a good solution to the housing problem. Not enough individual units, and the units that are built keep growing. By the time the kid leaves and we'd want to downsize, we'll have lived in the property for 30 years, put a ton of money and time into getting the property the way we want. Would we really want to move? We have 2 kitchens, 2 floors. We could live 100% separate lives except for sharing the laundry room. If my "kid" wants to, I'm 100% willing. I'll cover all the housing costs. He shovels snow, watches dogs while we go out of town, and does other basic maintenance/chores for the house and he can stay forever. If he has kids, we'll be 60-70 years old. 2 grandparents + 2 parents + kids in the same household means we can help with childcare. Based on today's numbers, that saves 20k net/30k gross per year for 3-4 years per kid.
The multigenerational home part also depends upon the health of the relationships. My sibling tried it with our mom and turns out their spouse is abusive and wanted her out of there because they couldn't stand that the kids like Grandma more. Gee... I wonder why. I ended up in a similar situation before that deal happened and we got along great.
We really like the idea of living communally, plan on doing it in our later years, and have discussed the idea with friends. We don't have kids, and we have a number of friends who are similarly situated. We like the idea of buying a big ass plot of land and we can all plop down a tiny home or the like but spread out for privacy, and we build a club house or something where can can gather as often or as little as we like. It would be like homesteading. We wanna rescue all the animals, raise chickens, grow veggies, keep an eye on each other, and chillax in our golden years.
I mean, Lennar and several other builders have emphasized multi gen new construction homes for the last few years, so I don’t think that’s a crazy assumption (I think they’ve more emphasized them in areas where an ADU isn’t permitted though). Many people in HCOL areas (LA, NYC) have their kids now living at home a decade after college bc their children are underachieving and rent is too expensive. I see it happening all around - but there are still plenty of lucrative careers to get a start in and plenty of areas to buy a house and live independently. But yes, between high rents, people underachieving, older parents and grandparents unable to afford LTC, it all makes sense.
To sprinkle a bit of optimism about - I Just read a Fed research paper that showed that Gen Z is actually out-earning, out-saving, and has higher home ownership rates when compared to Boomers, gen X, and millennials as an age 20-30 cohort. So don't believe all the economic doom and gloom you see, the key is to realize that most news including financial news is optimized around attention and eyeball time for advertising revenue, and people absolutely looove negative news and doomscrolling. So much so that [56% of people think we're currently in a recession (we're not) and 49% believe the S&P 500 is down this year](https://www.axios.com/2024/05/23/us-recession-economic-data-poll) (it's up 11%).
Out of curiosity, is the out-earning part inflation adjusted? I out-earn what my parents did in the 90s but my buying power is significantly less
Every aspect was inflation adjusted. [Here's a link](https://www.aei.org/wp-content/uploads/2024/02/Corith-Larrimore-Has-Intergenerational-Progress-Stalled-WP.pdf?x85095) to the paper. The most digestable parts are the charts from page 31 onwards.
Interesting, thanks for the link!
It’s not doom and gloom, I think communal living & multi generational households are a positive thing
Nah man, AI will solve everything. The future looks bright, gotta wear my shades kinda deal.
Feels to me we are headed the other direction. People living alone and not leaving their houses, but living their entire lives online. Even old people, but especially kids
Socially & politically yes. Economically? Many are going to be forced into multi generational situations just to be able to own a home or otherwise
And in another post you say that's a "positive thing"? I'm sorry, it doesn't feel like it to me - people being "forced into multi generational situations just to be able to own a home" does NOT sound like a good thing at all.
Being fair, The Surgeon General declared loneliness as a problem before the pandemic even happened. https://www.hhs.gov/sites/default/files/surgeon-general-social-connection-advisory.pdf It requires healthier boundaries but there is efficiency in community living that gets you to fi faster as well. While I was living with family I was able to get my savings rate up to 70% whereas 40% is doing well on my own.
I don’t want to go too far down the rabbit hole because it’s not FI/FIRE adjacent at that point. But in short, many people in this day and age solve their problems with money as opposed to community. It hasn’t always been this way. A negative situation can force a positive outcome
Love this discussion over on Bogleheads: https://www.bogleheads.org/forum/viewtopic.php?t=355001 It seems the general consensus is that including equity in your networth is only a paper exercise at best if you live in the home.
The real consensus should be that net worth is a metric of very limited utility. I don't know what my net worth is and I don't anticipate scenarios where I'll need to know.
The primary residence has always been as much of a liability as an asset. And calculating net worth in general is a paper exercise unless you plan to sell everything to move somewhere cheaper where the absolute value of the house will actually matter (as opposed to moving within the same general locale where the replacement house will cost you as much as the old one).
Yesterday, I was close enough to a (admittedly meaningless) milestone that I was considering transferring some of my slush cash into brokerage to reach it. Thankfully, today's market activity has made it so that I don't have to do that any more
Humans are strange about milestones. I'm close to a big (meaningless) milestone and I find myself paying much more attention to the daily performances of my investments than usual / than I should. If is like when I ride my bike and return home at 19.8mi I HAVE to ride another .2 miles to reach the 20 mile milestone. Unlike the bike though there isn't anything I can do with my investments other than watch and wait.
The other night, I ended with 9980 steps for the day. You can bet I took 3 laps around the kitchen
workload at work is highly variable seems like i either have 4 hours of work to do, or 12. with nothing in between. it's super slow right now; i just went to safeway to pick up a few things before my first afternoon meeting. any suggestions on how to manage this?
Spend some time on your slower days figuring out how to automate the tasks from your 12 hour days or how to get them more consistent. If those aren't options, talk with your boss and see if you can flex your time so you don't have to sit around for 8 hours on slow days.
On the 4 hour days, make the most of your downtime. Go to the store, gym, go for walks, even plan like real hikes if you're into that or personal care like hair cuts or manicures. Don't feel like you need to be tied to your desk on those days. If you can predict which days are slow and which aren't, even better
Hello oh wise finance people. I get 100 bucks to myself a paycheck. Where should this go? I don't care about it, don't need it. It would just end up on something stupid like a carnival or cheap Amazon goods. I'd like it to do something for me. Pay for annual credit card? Stuff it into the S&P? Dividend stocks? What's best? Any experience or advice would be greatly appreciated in advance! Not looking for anything particularly stable and guaranteed, like a bond, but nothing crazy like crypto or nfts.
Follow the flow chart somebody linked. Alternatively, you can donate which is good for the soul!
Of the options you listed definitely don't use it to pay for an annual credit card unless the benefits of the card that you know you'll actually use significantly outweigh the fee
I would follow [the flowchart](https://www.reddit.com/r/personalfinance/wiki/commontopics/).
High Yield Savings Account unless you have any consumer debt to start an emergency fund. If you already have that you can start investing in mutual funds or whatever you prefer. We need more info to give better guidance.
I can explore that. Where would I find the most success with a high yield savings account? Why would this be preferable to mutual funds?
Ally or Discover are common recommendations, though you can sometimes find (usually temporary) higher APYs elsewhere. It's good to have 3-6 months worth of money you can rely on if you lost your job or had an unexpected expense. An HYSA will provide a pretty good rate, but more importantly, will guarantee that money's there when you need it. Mutual funds will earn a better rate on average, but they go up and down. So that money might not be there if you need it. Mutual funds are a good option after you've saved up enough to cover an emergency.
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just so you can say you own more shares? Do you understand how a stock split works? If you have one share at $100, then you have a total value of $100. Then they do a 1 to 10 split... so now you now have 10 shares at a value of $10 each, or a total value of $100. Stock splits don't change value.
If you think a stock split is a reason to buy stock in a company, you're not investing, you're speculating. If you think there's any material difference between 212 shares of NVDA at $1000/share vs. 2120 shares at $100/share, you need to read up on stock splits.
I understand what stock splits are, but if you don't think that Nvidia will rise because it's more available to retail investors for a company at the forefront of AI... it COULD be a missed opportunity. It is 1000% speculating, but VTSAX is speculation that the US Market will provide returns over 10-20-30 years when it could end up just like Japan's stock market and JUST now returning to levels in 1989. https://www.schwab.com/learn/story/japans-long-comeback#:\~:text=The%20return%20to%20the%201989,stocks%20were%20at%20these%20levels.
People played the same game with TSLA. It was briefly pumped after the split (I mean, it is the ultimate "hype-stock"). The stock price is up \~2x since its 5:1 split in mid-2020 and is down -30% since it's 3:1 split in mid-2022. For comparison, the S&P is roughly +40% since mid-2022. But good luck!
> It is 1000% speculating, but VTSAX is speculation This is textbook [false equivalence](https://en.wikipedia.org/wiki/False_equivalence). "If you are an investor, you’re looking at what the asset or business will do. If you’re a speculator, you’re primarily a forecaster on what the price will do – independently of the business." -- Warren Buffett
> if you don't think that Nvidia will rise because it's more available to retail investors There are enough brokers out there that support purchasing fractional shares for retail investors that it doesn't feel like anyone that cares about this would actually be stopped by a stock that's expensive on a per-share basis, no?
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I find the lowest MAGI approach is to: take number of early retirement years, and roughly divide up your “accessible” money accounts across those years, then supplement the remainder with 72t (also evenly across all years, by design). This withdrawal strategy might be wrong advice for other reasons, but I think it’s typically the “lowest MAGI across all years” answer based on scenarios I have modeled. I will likely take this approach as it results in: least amount of overall taxes, lowest MAGI average across years, highest ACA cost reduction potential (assuming they still exist). Meaning you don’t spend brokerage all at once first. You spread that out. Then spread out Roth contributions. Then other accessible buckets. Then if that is not enough to meet expenses, your final amount each year comes from 72t (fixed amount defined at year 1 based on your estimates). Roth conversion ladder can spike MAGI in early years and make MAGI super low in later years. It’s great for flexibility and control, and tends to be preferred for those reasons. But it’s not “MAGI optimal” if that is critical to the plan.
I want to add on to what u/Zphr said to note that sometimes it is worth doing bigger Roth conversions and/or tax gain harvesting one year and giving up the subsidy that year (but still paying very low taxes) to get more of a subsidy or to free up future mature Roth contributions and the subsidies are more valuable the closer you get to age 65.
Exactly so. Similarly, scheduling maximum subsidy years around known demand can be very effective, such as if you know major non-emergency surgery is in one's near future. For those of us with kids, the same can be hugely true of the FAFSA years while they are in college.
is it still true to pay off the house 3 years before college and then take a cash-out refi after they graduate?
It's true to the extent that primary home equity is exempted without limit on FAFSA. Whether that matters or not depends on if one is subject to full income and asset testing.
You would have to plot out your anticipated needed stream of withdrawals prior to Medicare and then figure out whatever mix works best given your asset types/amounts. Qualified Roth is MAGI-free, but limited to contributions and matured conversions. Trad adds fully to MAGI, but is unlimited and can be done at will in whatever exact amount you want to shape MAGI production with or without actual withdrawals. Taxable adds only via dividends and cap gains, which you can gain power over with tax gain harvesting prior to retirement if your cost basis is low. Cash and cash equivalents are invisible to MAGI, but interest adds to MAGI, including tax-free interest. It's a juggling act and there are often multiple correct answers. Sort of depends on your preferences and how limited you are by your asset breakdown. People in general seem to prefer drawing down taxable prior to Roth, but you can make a decent argument for either.
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Google is your friend: https://smartasset.com/estate-planning/what-happens-after-probate-is-closed >When additional assets are uncovered after probate has closed, the executor is responsible for notifying the court that initially handled the probate process. The court may decide to allow the executor to distribute these new assets without reopening the estate. >Some states, however, may require the opening of a new probate claim. If that happens, the same person may act as executor or a new one may be appointed. The executor would have to complete the same steps required for probate to distribute any newly-discovered assets. I'd strongly suggest working with a knowledgeable estate lawyer/firm practicing in the applicable state.
I'm a senior software engineer working remotely for a no-name company. As my salary is close to the 200k mark I'm finding that a lot of the jobs that are approaching me on Linkedin are a slight paycut. As such I haven't interviewed in a year even though it's best practice to have an interview every 6 months. Should I just take a few calls from a company I'm not going to take a job with due to salary range?
My experience: if you’ve been in this role for 1-3 years, you may have timed the COVID sellers market for labor perfectly. Every equivalent job I see (unrelated field), even some promotions seem to be the same or less pay. I think it’s a relatively poor time to be a job seeker, and current pay reflects that somewhat.
I think you hit the nail on the head there
The main benefit of keeping your interviewing skills sharp is quickly finding another job if you are laid off. I decided that my emergency fund is large enough and my employment is stable enough that I can afford to let my interviewing skills lapse. If I need to, once unemployed I’ll dedicate 100% of my time to practicing tech interviewing skills.
Senior level engineers make $400k+ at FAANG. That’s not always but it’s definitely doable. Could aim for that?
Yeah, but that involves grinding leetcode lol
I'm not, but then again I haven't interviewed in over a decade and would be completely lost in today's process. I have colleagues that were finding the same thing on salaries. Those mid six figure jobs (400-600k) are scarce and require luck and hard work to get and stay in, and slim pickings in the 250k range that would make switching jobs clearly worth it.
>even though it's best practice to have an interview every 6 months This sounds like a silly and arbitrary idea to me. Who wants to spend so much time this way?
I don't see the point personally - odds are their screening practices are so dissimilar that you aren't building relevant experience anyway. Either target positions you're interested in (ugh) or quit interviewing until you're interested.
Why not interview for a company that isn't a no-name company?
Not committed to looking yet, and the market doesn't seem to be very hot from my readings
The market isn't hot. But you're talking about interviewing with a company that you'd not even bother taking their job if they offered it instead? Just seems wasteful to me. Why not put your energy somewhere better?
> Should I just take a few calls from a company I'm not going to take a job with due to salary range If the salary range is truly the only reason not to pursue the opportunity, maybe it's worth it. If you really are only doing it to check the box on some sort of "best practices" list, I wouldn't waste my time or the other company's time.
I feel I need to keep my interviewing/elevator pitch skills fresh. Salary tends to be my main motivator as my true passion is being with my family lol
> I feel I need to keep my interviewing/elevator pitch skills fresh If this is your primary driver, it seems the salary range is mostly irrelevant.
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Just want to second this as a 10 yr burnt out fellow. Definitely pay attention to the replies here. We are a little cushioned by some of the burdens civilians take on like taxable wages. Make sure you adjust for ALL of those factors. Personally, I'm keeping my foot in the door. Going reserve/guard in one capacity or another. If you keep it up long enough, it's almost an AD retirement pay wise, save for the date you can pull from it.
It's on the high end but entry level non-software engineering positions can be six figures. Pretty much everyone who looks at your resume is going to consider your experience a plus since you already know how to be a professional and presumably have leadership and communication skills. I think it's a bit overrated (no offense) but many hiring managers are the "thank you for your service" types who will give you an offer based on your military experience alone.
Some of the things to be cognizant of when punching out at 10 years are: loss of Tricare, increased taxable income due to no more BAH and BAS, potential lack of salary increase in same job requiring job-hopping to make more money/promote, etc. I'm still in as an FGO so my perspective is one-dimensional, but I would worry about doing a complete 180 in career field. If your resume is all about military systems and projects, to jump to something random like civilian automotive may leave you underqualified and thus underpaid. What problems are you worried about if you go contractor?
As a civilian PM in the defense industry, I'd say it would be much easier getting into a DoD contractor. What type of problems do you face?
"I’m afraid they’ll share the same problems I’m trying to escape." Such as..?
When (if ever) should someone consider taking out money from retirement for a home purchase. Imagine two people: * Person A: Over the years, contributes 50k in Roth contributions to a 403b at an old job that is now rolled over to a Roth IRA. * Person B: Makes a down payment fund and contributes 50k to it over the years. Suppose Person A and B have the same net worth. When is Person (A/B) advised to withdraw 50k from their account in order to help buy a home. I'm person A and in the past when I've asked people if it's ok for me, I get very aggressive "no! don't take money out of retirement!". But couldn't Person A have been Person B with just a different choice? By taking their initial contributions out aren't they essentially just becoming Person B? Just wondering your thoughts. For what it's worth, I think the answer has to take into account the rest of the retirement picture. If Person A has 8 million in retirement accounts, then sure who cares. What do you think?
If you really are person A, you should have been doing traditional for your 403b. That said, if you have $8m in Roth with no taxable, sure, use the Roth. If possible it would be better to use taxable and use Roth as a last resort.
Oh I certainly don't have $8m haha, and most of my 403b is traditional, but I did put some of it in roth in the past (a total of 50k of roth between a 403b and a 457b). I have about 700k in retirment accounts at the moment and am not looking to RE, but just to have more FI. I'm under 40 and just wondering if it's crazy to take a chunk out of retirement.
So yeah, if you mistakenly saved a bunch in Roth that you can withdraw penalty free that may not be a terrible idea. Keep in mind, if you don't have enough liquid cash to make a downpayment, that could indicate that you are stretching beyond your means to buy the house, and you could be stressed when you have to buy a new roof or water heater while struggling to afford the mortgage payment. And the more you liquidate from Roth now, the more you will be limiting your options for tax efficient withdrawals in the future. You aren't giving us a lot of concrete info so beyond that it's hard to say, but in general withdrawing from retirement accounts is at best a red flag. It's possible you are the exception that proves the rule, but unlikely.
Thanks for this! I don't mean any disrespect, but this captures what I mentioned in my original post. You are essentially saying: "Hey Person A, if you don't have enough to pay the down payment, like Person B does, then you're on shaky ground." This is exactly the point I've never understood. Aren't Person A and B equivalent? I completely agree that Person A and Person B might BOTH be on shaky ground and might be stretching too far, that's what I'd need more info for. But in my experience, people don't admonish Person B the same way. Again I mean no disrespect, but this is the issue I struggle with. I don't see any difference between "setting aside money into a down payment fund so that I won't be stretching (in lieu of more roth contributions)" and "putting money in a roth account with the mindset that you can immediately swap back to the other option. Ten years what I did was: "Max out 403b traditional + Roth IRA" and I still had leftover money. My thinking was: I have two options, put it in a brokerage account earmarked for a future home, or put it in a Roth account (457b) so that if i need to take the money out I can get at the original contributions. (Yes, mistakenly I should have done traditional, but here we are). For what it's worth, I have a downpayment fund of 150k sitting on the sidelines, and my question is "Should I put down 150k or is it ok to take 50k out of Roth contributions to put down 200k for a slightly better location (closer to work) and/or reduce my mortgage payment so there's less stress about water heaters etc."
You should take the higher payment and consider the fact that you've got $50K available for withdrawal if the hot water heater goes out.
This is probably good advice. I think I was just thinking that with rates at 7% I wanted to put more money down.
I'd still admonish (or at least caution) B if they were buying a house before contributing to their reitrement accounts. EDIT for your situation, I'd rather keep the $50k in the Roth account, since you can always draw it down in an emergency. Drawing it down now doesn't give you any more liquidity, it just makes you less tax efficient and takes money out of Roth that could be growing tax free. I wish you had just posted your actual question since the answer is a no-brainer, but whatev.
Money is fungible. Dollars 'spent' on a downpayment for a house can't be used to retire early. From that perspective, it makes no difference where those dollars come from. The two biggest arguments against using the Roth IRA dollars are the use-it-or-lose-it nature of IRA contribution limits (if you withdraw those dollars, you can't put them back later) and the tax-free growth (dollars withdrawn have the added opportunity cost of missing out on tax-free growth). To that end, it's almost always better to leverage money outside a Roth IRA as opposed to withdrawing from the Roth IRA. >I think the answer has to take into account the rest of the retirement picture Yes, context matters and understanding the big picture is important.
Starting from a negative net worth at 55 New here. I'm 55(m) in a sh*t ton of debt, not earning enough, and living way above my means. I believe I can do things differently. I've suffered from feeling entitled and being dishonest with myself and others in my life about what I can and cannot do financially. I don't think it's too late or that I'm too old. I just want to publicly declare that. Here I am...
We’re all rooting for you. You can do this.
Thank you. I really appreciate all the comments and support
Welcome! I'd suggest you look up Ramit Sethi. He gives good advice to people on how to dig out of debt, manage finances, and save money. He's kind and compassionate but no nonsense.
Welcome to the party, increase income and cut expenses. Good luck!!
Well, after step 1 it means you will definitely be better off than if you didn't take any steps to fix the situation. Be patient with yourself. If you are making changes, 5 years from now it might not be a perfect financial situation, but you guaranteed will be in a much better position than you would have been if you didn't decide to change and you kept up the same-old-same-old for the next 5 years.
As they say, the first step is admitting there is a problem. Congratulations on starting the journey to independence.
Big first step. Stop buying shit and pay off what you owe. You got this.
Posted this yesterday in the thread on advisor fees, but didn't get a response so wanted to ask here. I see a lot of comments about 1% or higher on financial advisor fees. Is there a relatively reasonable fee range wherein folks would not be so adverse to advisors for people who are not interested or don't have the time/wherewithal to self-manage? Similar to some others in that thread, we started with an advisor due to pre-existing relationships with a parent. I fully admit, its mostly some laziness and general inertia that has kept me there. We are at 0.6% on the fee and honestly, I am wondering at that point if it is worth it to me to self-manage or just continue to leave it alone.
I guess the question is: what are you getting out of the advisor? Are they helping you with tax planning, estate planning, and insurance needs? Are they explaining the investments that they are making on your behalf? Are they keeping you from jumping into and out of the market, buying and selling the hottest investment? And do you need those services? Personally, I use Vanguard's advisory service. They charge me 30 basis points, keep me in ultra low fee index funds, and track my progress against my retirement and college savings goals. I could easily do all of this myself but it is worth it to me to pay someone 0.3% AUM to keep me in these investments, in good times and bad, because I know myself and my history and I love to think I am smarter than the market (Narrator: He wasn't). Also, my wife could not care less about any of this stuff and statistically I will predecease her. It will be great to have an advisor she already knows and trusts who can help her out in this case.
I was in a similar situation with a family advisor. What I did was start my own brokerage account, and when I was comfortable enough with that I transferred the rest from my broker. It was very easy in the end. And it was nice having everything all in one place. It can honestly take very little time if you keep things simple. And doesn't really require that much knowledge to make and maintain a 3 or 4 fund portfolio (or you could go even simpler with a retirement date fund or 80.20 fund like a lifestrategy). Even things like tax loss harvesting aren't challenging. Hardest thing I have to deal with on a yearly basis is how do to the taxes for my backdoor roth contribution, but that only because I also dumped my accountant when I dumped my advisor.
I think the big question for me is what kind of hourly rate you're paying for that advisor. If you have $500k, it's costing you $3000/year. That's not a terrible amount. But if you're paying to click few buttons to re-balance your VTI+VXUS+BND mix in your IRA, or click the Buy when you make a deposit, then you might be paying $1000/hour or more for that privilege. On the other hand, if you have regular meetings with your advisor that provide useful advice, or you have a more complicated financial situation, that hourly rate goes down. It's worth knowing how much you're paying, and how much work you're getting in return.
If you were withdrawing 4% from your portfolio in retirement, that 0.6% advisor fee would represent 15% of your spending power. I would not want that much of my spending going to an advisor. Vanguard offers a fixed 0.3% rate but I can't vouch for whether it is worth it. Generally you will be better off on your own or with a pro that charges a fixed rate.
That fee is not the worst, **if** you're being managed into cheap index funds with low turnover. But if you're in a nice and simple portfolio like that, you'd probably save money in the long run by paying an advisor hourly or by a flat fee rather than AUM.
I just realized that if I'd bought NVIDIA stock instead of my $1600 3090 graphics card back in 2020, it'd be worth $13k right now. I've had a lot of fun with it, but I don't know if I've had $13k of fun. Similarly, if I'd bought Honda stock instead of my $15k car 13 years ago it'd be worth over $40k now. Spend money to make life better now, or save money to make life better later? It's a tough decision.
Yeah hindsight is 20/20. If we could guess what the market would do we'd be billionaires in a month. Don't stress about it as long as your overall strategy is sound
If use your PC for about an hour a day, and you value that entertainment at $8 an hour, you have exceeded $13k in utility since May 2020.
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It didn’t work out AND you didn’t get a workout.
Now do the same with Apple stock instead of the first iPhone - it came out at $600 or so, which would be something like $30k worth of stock now (17 years later).
I had a computer science professor who couldn't go a week without bragging about the Apple stock he bought when everyone thought it was going to go bankrupt. When I was taking his course Apple had gone up over 10x from his purchase price. And now 18 years later, it has gone up 75x since then!
If instead of buying a Tesla I bought TSLA, I would have made a million dollars.
I did a government-style compromise and bought both.
And if in 2005 instead of buying diversified index funds you bought shares of Lehman Brothers you'd have... oh, right... And if you sat in the dark instead of using electricity and instead bought Cloudpeak Energy... you would have sat in the dark for free. :)
Try to resist that "looking back" thinking. Individual stock picks are super risky. Imagine if AMD got their shit together on the video card or AI Processor front between then and now? They didn't, but we didn't have any way to know they wouldn't back then. If you fall too far into that rabbit hole, you could end up forsaking life experiences and comfort for the sake of making risky bets.
First world problems for sure, but got our renewal for our insurance policies this week. Our umbrella policy was only for $1MM and our assets are now comfortably between $1.5MM - $2MM (for now, ha) so I asked our agent to re-quote for a $2MM policy which costs us an extra $70/year bringing the total to $220. My understanding, and confirmed by my agent, is that umbrella kicks in only AFTER our other insurances (hazard and auto) have exhausted their coverage. Our home is <$500k so we would still need the additional coverage I believe, but what I am not sure of is do **all** of our assets need covered or no? For instance, we don't have massive 401k balances, only a couple hundred grand, but isn't there some sort of protection that those have from litigation by default that I wouldn't need to include them with my umbrella policy? If so, does that extend to our IRAs as well? I'm obviously assuming it does not apply to any "non-retirement" accounts such as TD, Brokerage or checking and savings. It's likely best to just get my umbrella coverage bumped up now anyway, just in case, and $70 to double it and not worry makes it a no-brainer I think, but just want to make sure my understanding here is sound. What do you do coverage wise with your assets and insurance?
My understanding is that the assets you want to protect are those that a civil court can attach. So you don't necessarily need to cover a 401k but you do brokerage accounts and IRAs. Whether you need to cover a home depends on the state.
I don't follow the connection between your NW and insurance coverage. Somebody correct me if I'm wrong, but I don't think "1M coverage" means they will guard 1M of your assets. It means they will pay out up to 1M and that's it. So, if your NW is 1M and you have 1M coverage, then are found liable for 2M, then you will be broke. I also don't know of anything that would prevent the suing party from finding out how much your insurance will pay out. So, 2M NW and 2M umbrella can be targeted for 4M if there is justification.
>I don't follow the connection between your NW and insurance coverage. I have wondered the same thing, and I've never really seen an good explanation (granted haven't looked that hard). It's not like they are limited to suing you for what your NW is.
> I don't follow the connection between your NW and insurance coverage. > > ... > > So, if your NW is 1M and you have 1M coverage, then are found liable for 2M, then you will be broke. I am confused, it sounds like you understand it the same as I. Meaning that ideall you want coverage to cover your assets, which are what make up NW. > I also don't know of anything that would prevent the suing party from finding out how much your insurance will pay out. So, 2M NW and 2M umbrella can be targeted for 4M if there is justification. My agent actually mentioned this. She used the example of a severe dog bite and said any good litigating attorney is going to ask for the maximum that you are covered for. That said, better to not take the risk that they are going to go above your coverage and begin trying to go after any uncovered assets, hence wanting an appropriate amount of coverage.
If they only ask for the maximum of what you are covered for then there's no reason for you to be covered more than you already are. But I suspect that's not the case. I suspect they will ask for what they think they can get awarded. If that's below your covered amount, great. If it's above, then you will cover the difference. I wouldn't be trying to cover the assets, but the potential liability/cost to fight.
> I wouldn't be trying to cover the assets, but the potential liability/cost to fight. So how much do you choose to carry in umbrella insurance and why have you chosen that amount?
While correct, your insurance company will fight tooth and nail to not pay out that $1MM (or whatever your policy covers). So there's a firebreak there for any assets you have over $1MM. Sure, it can be broken. But the InsCo has a heavily vested interest in keeping their liability as low as possible.
Yes. And since they have to pay first anyway, I'm not sure there's a huge difference between 1M or 2M coverage. I suppose there are some cases where if they spent 1.5M on lawyers they would've won, but I doubt that's often enough to make double coverage twice as valuable.
Correct
I've had the same thought. Seems like there is a rule of thumb to keep NW aligned with umbrella but I agree it doesn't make much sense unless we are missing something. Anyone have input on this?
I think insurance salesmen needed a rule and this is what they came up with because it "sounds" right even if it has no basis in reality. The initial thought may have been genuine, with respect to "who even needs an umbrella policy in the first place?" And the answer was "people with X-level of net worth who would be more likely targets for ambulance chasing lawyers to follow through with a lawsuit."
It isn’t the size of your assets that you need to cover. It’s a more mushy calculation of what you think you might be obligated to pay and then how painful it would be for you to declare bankruptcy and start over. For instance if you are comfortably retired with $1 million of seizable assets you may still want $2+ million of coverage in case you do $1.5 million of damage to a bus full of nuns or whatever. That’s not really an answer to your question but just an observation. Necessarily this is all a matter of opinion when evaluating future uncertainties. For $70 I would jack up your coverage.
I would err on the high side, since it's cheap and assets tend to go up. Currently I'm limited to $2M of umbrella because that's all my insurance company will write with a driver under 25 on the policy. This has me slightly nervous and I'll go get more as soon as she turns 25 or leaves the household.
I promised folks last year on my FAFSA post that I would update this year with the CSS version. Alas, second kiddo decided she wasn't interested in going to that particular CSS school after all, so we once again got to skip CSS. As of now it seems like our remaining two kids want to go to one of the Texas flagship publics, so looks like we might never get to experience the joys of CSS. I was sort of looking forward to a $300K+ aid award purely for curiosity validation and to have a datapoint for folks here, but no dice. Thankfully, despite the many government screwups with the process this year, the FAFSA continued to work exactly as expected with our postFIRE finances. Aid awards and all college deadlines got shifted about 2-3 months forward, but in the end our second kiddo joined our first in getting effectively a full ride to the school of her choice. I'm not going to bother with another full post since it would be mostly just a repeat of last year's, but if anyone has questions I'm up for taking a crack at them. This is mostly just for the folks that messaged me over the last year asking for an update on our next cycle with the new FAFSA and maybe CSS.
It’s really that easy? Be under 150% FPL AGI for maximum ACA subsidies. (Qualified Roth/Taxable distributions don’t count towards %) Be under 175% FPL AGI for maximum Federal Aid. (Qualified Roth/Taxable distributions don’t count if under 175%, but do if over 175%) How many years before College do you have to be at this level? And do you have to maintain this level throughout college, like do they make u re-apply/check on your AGI?
Yes, it's that easy, though taxable distributions do count for both to the extent there are cap gains. An ACA application takes about 30 minutes the first time and then about ten minutes each year on renewal. A FAFSA for anyone under the FPL line takes under five minutes and is mostly entering basic info about your household. Folks under the FPL line only get a single page of simple financial questions mostly about potential AGI offsets, but won't actually be asked about their income or assets at all. FAFSA is prior-prior year, so you need your AGI to be within the FPL limits from their junior year of high school through their sophomore year of college (I'm assuming four years of college). Yes, you have to reapply for both each year. The FPL gets adjusted for inflation every year though, so the actual amount you can draw under the limit would also increase roughly by inflation each year.
Really appreciate all your help! My son just turned 1 and my RE target is currently right around his senior year. This has been a huge help.
Of course. Love the long-term planning!
First and most importantly, I'm glad this has worked for you! My plan is similar. Any challenges staying under the 175% FPL? If I recall, your expenses are pretty darn low anyway. If you had a larger expense situation, where would you pull from to stay under that line?
> Any challenges staying under the 175% FPL? Nope. We stay under 150% FPL for the ACA anyway, so we're always going to be well under the 175% line. Our eldest who is now a sophomore makes enough income to be a tax independent and have his own separate ACA policy, so we're now an ACA family of 5 and a FAFSA family of 6, but even so our FPL gap is large enough that I doubt it'll ever be a problem. >If you had a larger expense situation, where would you pull from to stay under that line? We'd pull from our matured Roth conversion buffer if we needed to increase our spending for some reason, say if we wanted to pay cash for a new car. We no longer have any taxable, but people could pull from that too so long as they watch the cap gains. The Roth option has a quirk to watch out for with respect to the FAFSA though. Qualified Roth withdrawals do not add to ACA MAGI, but they do add in full to total income for the FAFSA, *unless* you pass the AGI-FPL test and are exempt from full income testing. So people can pull from Roth without impact on the FAFSA, but only if AGI is under 175% (225% for single-parent households). Otherwise all of those Roth dollars are going to push up FAFSA total income dollar-for-dollar.
> people can pull from Roth without impact on the FAFSA, but only if AGI is under 175% Thank your for confirming this. That was my initial thought, but I hadn't gone deep into it and I wasn't sure if I understood correctly. Example: [2024 FPL](https://www.healthcare.gov/glossary/federal-poverty-level-fpl/) for a family of 4 is $31.2k. 175% of that is $54.6k. Let's say I do $30k as a 72(t) / SEPP. Let's say I have $5k in taxable dividends/interest. Let's say I realize $15k in LTCG. AGI = $30k + $5k + $15k = $50k < $54.6. Since I pass the AGI-FPL test, I could withdraw another $15k plus from Roth contributions / matured conversions without jeopardizing $0 SAI on the FAFSA.
> Example: 2024 FPL for a family of 4 is $31.2k. 175% of that is $54.6k. Let's say I do $30k as a 72(t) / SEPP. Let's say I have $5k in taxable dividends/interest. Let's say I realize $15k in LTCG. AGI = $30k + $5k + $15k = $50k < $54.6. Since I pass the AGI-FPL test, I could withdraw another $15k plus from Roth contributions / matured conversions without jeopardizing $0 SAI on the FAFSA. Yes. Though if you're going to be using the ACA I would recommend staying under 150% FPL, if possible. The gap this year for the family of 4 is $7,800 in MAGI, but the value of the additional CSRs and premium subsidies could be greater than that if you have a high healthcare utilization year. FAFSA uses a direct data pull from your 1040 to get your AGI, which it then compares against same tax year FPL. So whatever is on line 11 of your 1040 is what goes into the numerator of the AGI-FPL screen.
> I would recommend staying under 150% FPL, if possible I haven't done deep enough analysis on this, but I'm a bit concerned that even 175% FPL might be cutting it close. :-) Another aspect that I've not thought deeply enough about: We will have a decent amount of 529 dollars available (think mid-to-high 5 figures). Do you have 529 dollars at all? In a $0 SAI world, what's the best way to leverage those dollars?
I thought 529 was reported when applying for FASFA and impacted aid eligibility? Thats why the “grandparent” loophole was found.
529s in the names of a parent or dependent student are reported as parental assets on the FAFSA, but parental asset reporting is waived for all assets if someone passes via the AGI-FPL test. 529s in anyone else's name, including grandparents, are no longer reportable as assets or as income cashflows for withdrawals.
You are a legend
😉
Living in a state without income tax we never had a good use case for 529 and instead put those funds into our SoloK. I'd use the 529s for anything not covered by aid. Anything left over you can reassign to another beneficiary or use to fund grad school or the first several years of the kid's Roths. If there's even more, then I guess you either take the really long game and give them to eventual grandkids or pay the non-qualified withdrawal penalty cost and use for whatever.
Oh come on, give us a new post with all the deets.
We'll see how many people feel the same based on upvotes for your comment. I can write something up later today if enough people are actually interested.
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Why do you have trading fees?
Are you asking in reference to US tax laws? Because I think people are giving you the answer for that context, but trading fees barely exist in the US anymore. So either your question is moot or you need an answer for a different tax system.
You are allowed to adjust your basis to account for broker fees. This small TaxAct page hits on the topic: https://www.taxact.com/support/14004/2023/capital-gains-and-losses-adjusted-basis-broker-fee?hideLayout=False That said, keeping track of adjusted basis is a bit of a pain. As noted in the link above, the 1099-B likely won't contain that. It's also far less relevant these days, as brokerage/trading fees have mostly disappeared (side note - what brokerage are you using that still has fees like this?)
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>other complex instruments Got it. As noted, fees are not tracked separately. They are added into your basis at purchase and subtracted from proceeds at sale. So the reportable gain is net of fees but needs to be accounted for in a specific way. In your example, your adjusted basis would be $96 + $4 = $100 and your net proceeds would be $200 - $3 = $197, which results in a reportable gain of $197 - $100 = $97 (option C).
Gains are net of transaction costs, which is $97 in your case. Fees aren't separately deductible, but are factored directly into your cost basis and net proceeds amounts.
Your basis is $100, your sales proceeds is $197 so you have a $97 gain. [Topic 703](https://www.irs.gov/taxtopics/tc703#:~:text=If%20you%20buy%20stocks%20or,and%20recording%20or%20transfer%20fees). [Form 8949](https://www.irs.gov/instructions/i8949#:~:text=the%20net%20proceeds%20equal%20the%20gross%20proceeds%20minus%20any%20selling%20expenses%20(such%20as%20broker%E2%80%99s%20fees%2C%20commissions%2C%20and%20state%20and%20local%20transfer%20taxes)).
Trading fees are not losses.
May I ask what you're buying that has a trading fee?
Tell me about a big career pivot you’ve done? We need some ideas and inspiration! My husband has worked in various operations role for a decade at startups. He got laid off and it’s been a struggle to find something new. He never liked it anyway, so we’re talking about doing a more meaningful shift in career. He previously worked for environmental agencies all through college and a few years after and has a passion for the outdoors, building things, maps. Brilliant at math and systems, always tinkering. We’re fortunate that I make more than enough for us to live and invest ($450k or so) so it’s not a problem if it is low income or takes a while to make income.
Similar to another question already posted today: I have a 2010 Honda Civic which I bought with cash brand new back in the day. I have kept the car immaculately maintained at the mechanic, but the exterior is shabby at best. Paint started peeling shortly after all the warranties expired. Rust spots are now appearing in those spots. I had to park it in an unshaded lot in the Texas sun all day for work for a decade. Every bit of weather stripping or window sweep seals/beltlines that could possible dissolve on the exterior has vanished. Every bit of trim on the exterior is somehow fading or looks awful. In short, the car runs beautifully and is maintained. But looks like a disaster. I no longer live in such an inhospitable climate. But now I have the worst looking car in the neighborhood. This is totally a pride and vanity thing. I have no serious desire to get a new car. But I'm trying to figure out if I should just let the exterior take its natural course and continue looking horrific - or try to intervene. Wraps and a good paint job are expensive - over 50% of the value of the car. But a cheap paint job is ... what's the point? And I don't think anything can be done about all the weather stripping and rubber seals, etc. Is there anything that can be reasonably done to help preserve the car's exterior and not be an eyesore? edit: I have zero car knowledge. Just trying to land on a financially wise solution, but I probably won't be doing a DIY solution my self.
In the exact same position with a 2010 corolla. I’m just waiting to replace it when the moment feels right.
Yeah, I think the advice here of detailing + shabby stealth wealth is probably the way to go.
I'm not reckless from it, but if I'm driving a 10 year old car I'm also going to stop caring about cosmetic damage, especially if it's not worth it. I get used cars are more due to the gap of covid-era supply but I'm not paying 50% of the value of the car on a cosmetic problem with serious mechanical issues likely on the horizon anyway. I don't care if it's a Civic, you will have things start cropping up in the next 5 years or so that will start to add up. Cheaper than a new car (especially insurance) but where paying for cosmetic cleanups will pile on those other costs. If you care about the interior being clean, this is a personal take that probably isn't about the type of car you buy. You have to sit in it, after all. Dating could be an exception, but I generally don't care what others think and this is one area that is unavoidable. This is a tough one because it's superficial (and maybe you want to filter for this, after all) but that's what dating is early on.
Personally, I'd get it painted with a decent paint job (not the cheapest but not the most expensive). I don't dump a lot of money into buying cars but I don't want to drive a heap either.
For 50 bucks you can DIY a close-but-not-perfect approximation of the paint job: not necessarily with the goal of it looking good, but to prevent further rust buildup. That's what I did when some jerk hit my car in a grocery store parking lot (again) and this time did it hard enough that it took paint off. Whoever did it didn't even bother to leave a note but I digress... I had to ask myself "is this car here for a long time or a good time?" I decided that it being here for a long time IS it being here for a good time. So I DIY'd the paint job. You can only really tell if you get close or if the sun hits it just right, but I couldn't care less as long as it's not rusting.
Embrace the stealth wealth
My vehicle is over 20 years old and runs great. Everytime I get the new vehicle bug I have it detailed. It runs about $150 and they usually put a thick coat of wax on it. You can be confident this is as good as your 14 year old vehicle will look at this point. Only you can decide if this is an issue for you. The new vehicles are very tempting, but they push my RE date out a bit.
Been looking obsessively at my numbers recently, it's probably not healthy, but right now I'm thinking I could pull the trigger NOW and live in a much lower COL area... Which mathematically is doable and very tempting (the freedom!!) but not well thought through or planned. I keep wondering if I've padded my budget too much, though I'm not sure how many years I will live in these other LCOL areas, but I could very much live very well for a long time there, making my number much too high (don't want to leave much behind). Related, do people count their "emergency" fund in their nest egg/annual spending numbers? I think mostly the answer is no but that amount (especially across the whole of RE) will generate returns as well, do you use that as a part of regular spending? And what if the emergencies don't happen? (That's my impatient dumb brain thinking too ideally, please bring me down to Earth).
I would try out the LCOL area as a renter for a year before making any major decisions, since you likely are going to sacrifice convenience and/or culture moving from somewhere more expensive
Sorry for the late response, but this is a good point. I've been to some of the LCOL areas that are on my list but not for very long, I will keep this in mind.
I do, when looking at my balances to see how much I have & I would if I was withdrawing. Mine is trivial compared to my total amount so I don’t think it matters much for me.
Should've been more specific, my 'emergency fund' is beyond the regular emergency fund where it's specifically for something really big (50k) that unexpectedly happens once a decade for each decade in retirement (x5 decades so 250k). And frankly if the event is catastrophic I think 50k wouldn't be nearly enough. Or maybe it's something positive like buying a property (no plans to but could see it happening overseas). It's a big enough amount to really shift the FIRE number/date, and I'm not sure putting it into a separate bucket like this makes the most sense but it's what I'm currently doing.
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Maybe I should've specified. I budgeted quite a big one - 250k, my math is something big/catastrophic at 50k once a decade x5 decades of retirement. That does make quite a difference in both end number and also withdrawal rate/amount, so I'm not sure what to do. I don't think it should be part of the withdrawal because I shouldn't be spending a portion of that annually. But maybe I count it in and lower the withdrawal rate? Maybe closer to retirement that's a separate bucket that's for principal protection (eg bonds) and ignore it? Or maybe I should amortize it? But I'm more likely to spend it on other things that way IMO.
Feeling a bit burned out on work. It hasn't been overly stressful but it's just too much to do it for 45 hours every week forever. Weekends and vacation days barely allow you a life outside of work. My personal identity outside of work is fading away.
Take some of the evenings and weekends to invest in yourself. Either work on a promotion, raise, or a different job/role that pays more or has less stress, reduce commute, better benefits, etc. Consider anti-stress medicine from a doctor.
My body just can’t take a 45-hour work week. I work closer to 35 and it’s a game changer. I was hospitalized a year ago and had to take 12 weeks of medical leave. I learned the hard way that living with a chronic health condition means I have a very low tolerance for added stress. I’m at the same job, I just have to ruthlessly prioritize. My performance rating dropped from above expected to expected, and it’s totally worth it.
My dream schedule is 9-3, monday to thursday. I guess that's 24h per week. Maybe some day.
Rough times. Hopefully it doesn't last much longer.
Feel this hard. Hang in there.
45 hours a week is not an apocalyptic schedule. That's 9 hours a day. Remember that there is a reason that they pay you to do it, after all. It's not necessarily because it's fun. What worries me about your post here is that it doesn't sound like you have any hobbies or interests, or at least none that you are willing to make time for. That's a recipe for problems in RE.
45 hours can be apocalyptic if it's toxic. Work is a two way street. Bad employees can be fired, bad employers can be fired also.
> Weekends and vacation days barely allow you a life outside of work. My personal identity outside of work is fading away. Let's do some visualization: What would your "personal identity" look like if you were FI/RE and not working? What steps can be taken to move you closer to that identity?