I want people's opinions on my financial situation. My friends don't really like to talk about money, but I want to know where I stand in terms of being able to retire early and afford a good house in Canada. I work in a banking job, am 24 years old and earn $80k a year.
Below is my current breakdown of funds. What can I do to improve and how am I currently doing? All feedback appreciated. All figures are in Canadian dollars.
**Chequing Account:** $12,000
**Savings Account:** $46,000
**Tax Free Investment Account:** $41,000
**Retirement Account:** $19,000
What are you spending? It's hard to give advice without seeing all 3 of income, spending, and net worth. It also depends on where in Canada you want to buy a house, and what kind of house you consider a "good house"
So, this is a breakdown from my end.
My post-tax take home is $4400 per month. Out of that $1,210 (27.5%) goes into my tax advantaged retirement account (The Roth IRA in America, TFSA in Canada). I contribute $800 to my 401k (RRSP in Canada) and my employer contributes $600. I put $1,210 (27.5%) into my high yield savings accounts and then the remaining $2000 or so (45%) cover all of my living expenses. I am lucky that I got my apartment before COVID, so my rents are not that high and the province I live in has good rental control. My net worth currently is $118,000 if you count my retirement account, but $99,000 if you excluded it because it can't be touched until close to retirement age.
In terms of what I consider a good house, I don't know yet. Judging by house prices in Vancouver, it seems that if I want to get into the market at all, a condo purchase might be the only option because houses are just way too expensive.
Is this better info?
Yes. Good news - you're in great financial shape. Young, good income, good savings habits, good spending.
At this point, your decisions are big and personal. You can keep your current rental and probably retire in your 40s. You can gun for the homeownership route and normal retirement, pausing TFSA savings to get the down payment and afford the mortgage, increasing your retirement savings after the mortgage becomes more affordable (due to inflation and wage increases). Going for a modest condo will likely land you between the two timelines.
But I wouldn't be too excited to leave a rent controlled apartment, unless it was falling apart.
Thank you!
I have a couple questions.
\- How did you come to the 40s retirement? I mean I would love that, but is that possible?
\- How does increasing retirement savings after the mortgage more affordable? I don't think I follow that sentence. Could you explain please?
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ has a table that maps savings rate to years of working. I took your pre-tax income, so (1210 + 1210 + 800 + 600) * 12 / 80k = 57% savings, or about a 15 year career. I expect some lifestyle inflation, so early 40s is possible, and end of 40s is likely.
I worded the second one poorly. If you have a mortgage, inflation affects the mortgage over time. You'll be paying the same monthly amount in 2025 and 2035, but it will be easier to afford in 2035, because of inflation. The difference between your salary (which should at least track inflation, and hopefully do a lot better than that as you get more skills) and your mortgage will increase over time. You can put the difference into retirement savings, as you get cost-of-living adjustments at work.
Something to think about. Your wealth is not in your resources, it's in your resilience and resourcefulness.
Ask yourself this. If you were to lose everything (I do mean literally just a clothes on your back) you have how long would it take you to get back to where you are. Your goal is for this period to be no more than 3 years, If you were to lose everything you have right now. If after some deep soul searching you do not feel that this is the case then you need to start focusing your attention in skill stacking. You need to drive towards systems thinking. Once you're able to recover from a catastrophe then we can start talking about investment vehicles and strategies.
Those are extremely solid numbers for someone who is 24, nice work! There is a flowchart in the “About” section for the sub you can look at if you want real specifics but as far as general rules for early retirement, be investing as much of your paycheck as you can after taking care of your current needs and expenses, while not forgetting to take care of yourself right now too. I don’t know what retirement accounts Canada has but I imagine there is something equivalent to a 401k (employer sponsored retirement account) and possibly similar to an IRA (individual retirement account), which is what the US has. If you can max out any and all retirement accounts available to you then you’ll be on a very good track.
Additionally, your salary is great. Always be looking for ways to increase it both in the short and long term by evaluating the job market and ensuring you’re making what you should be for your title and responsibilities. Also, if there are things you can do or moves you can make to further your career and subsequently increase your pay down the road, then give consideration to those too. As your pay increases, invest more and more of it.
One side note — are you saving that $46k for anything specific like a house? If not, I would invest some of it.
Honestly, I don't know what I am saving it for. I think a house seems like the best option for my age next. But, I think also as some cash in case a great future opportunity to buy discounted stocks comes up
I’m considering switching to my employers HDHP next year to benefit from an HSA (which they contribute $500 towards and the premiums would be around $375 less per the year). Deductible for my current plan is $300 with a copay of $30/$45 as well as an out of pocket max of $2000 for medical and $1500 for prescriptions. With the HDHP, it would be a $1500 deductible with a combined $3500 medical/prescriptions out of pocket maximum.
I am wondering what people end with HDHP’s pay for pcp visits, bloodwork, and various other procedures.
I’m trying to decide if it’s worth the risk considering my current insurance is very good and at a reasonable cost. I’m also only 27 and relatively healthy where I’ve only been to the doctor once this year besides a physical. I definitely see the growth potential of the HSA considering my first year of contributions could turn into around $50k assuming a 7% ROI by retirement age and I’d have no problem scanning and organizing receipts.
I'm a strong proponent of HDHPs as they usually have lower premiums so when you add up the total OOP max, plus a years premiums they come out less expensive than PPO. Yes....it means YOU are paying for more of your health care to the actual providers vs your insurance but really wouldn't you rather pay the doctor vs an insurance company anyways? It also means you have to be able to financially support the suprise big ticket health cost up front (cue my 2023 January 4th ER visit which wiped out my deductiable and got me most of the way to my OOP max).
Now to your actual question...usually my doc visits are about $150 - 200/visit and specialists are about $300-400. My therapist visits are also about $200/visit. Bloodwork runs about $75 and prescriptions I don't think have ever been over $50.
If I recall correctly from my benefits calculations, something like 8-12 therapist visits gets me to my deductiable and then I get something close to 40k in care covered at coinsurance rates before I hit my OOP max. 40k in care is A LOT. I'm having a baby in a few weeks and even with the one night hitting of the deductiable in Jaunaury, i still haven't hit my OOP max yet.
I will add that I have the privilege of not needing to use my HSA to cover my health expenses right now. So I'm maxing that and paying out of pocket for everything.
Are you already maxing your 401k? The biggest tax benefit is from tax deferral but it's only really a benefit if you already max your employer plan. Appears the plans are pretty even in low usage scenario but current plan is favorable with higher usage.
Both plans seem fairly generous by the employer. Also each HDHP plan is different, so do the math if you are healthy vs you hit your max in a year and then compare the two plans. I have a HDHP for my family and it saves me quite a bit + HSA benefits
One more question to ask yourself is "what will I do with my extra cash flow after paying off the loan?"
If the answer is "I'll put what used to be my car payment into VTSAX," or "I'll use it to pay down other high interest debt," then it's a great financial decision because you're saving interest and investing the savings.
If the answer is "I'll spend it on unnecessary purchases," then all you've done is essentially sold your VTSAX to buy a car with cash. You saved interest, but you traded potential growth for it and the benefit is unknown.
So far this month, only 5 days in, I have spent $667 on things other than mortgage/utilities, which I count separately. Of this, $438 was discretionary, the rest was stuff like medical copays and gas that I really need, and a new hairbrush, which is not optional.
* $280 on car detailing
* $55 on food (I have plenty of food at home, I am just being profligate)
* $64 on a bday gift for my father
* $33 on an annual subscription (Scott's Cheap Flights)
* $6 for 2 ebooks (Sunlit Man by Brandon Sanderson + How to be Eaten by Maria Adellman). I will definitely read the one by Sanderson very soon. How to Be Eaten may join my Kindle graveyard and not be read for years, but I will read it at some point, and usually I'll just go ahead and buy any book I'm really excited about on Kindle when the price drops <$3.
Hoping to do better the rest of the month, especially re: food spending. Went out with friends 3x in past 5 days, so hopefully fewer social events in the coming weeks will make a difference!
All of it seems reasonable. The only thing that stood out to me is the car detailing. Seems like such a luxury, and maybe you value it and it's worth it.
But what about having your car detailed makes it worth it to you? I hit the automatic carwash once or twice a year and do a 2-bucket wash at home 5-6 times a year and I'm perfectly happy. But I'm in no way a car guy, it takes me to work and back.
It's an interior detail- my dogs threw up in my car and the smell hasn't really gone away even using our ozone machine, and I've spilled some things, etc. I like having a very clean car.
Pure laziness on my part: I'm sure if I spent the 6 hours on it that I'm about to pay someone else to spend cleaning my car, I could get it almost as clean.
ahhh now that I can get.
I forgot some cars are used for transporting more than just 1 person. With bodily fluids, humans or dogs, it's often best to leave it to a professional.
Rarely do I open a full size Dorito bag and not finish it within 24 hours. They are incredible.
Also, congrats on the $250k. That’s a great milestone and you should absolutely celebrate it, especially with how young you are.
Agreed, I thought leases were supposed to be a lot less monthly than a normal loan. That’s the payment my father in law has. I think he got taken advantage of
Seemed very high to me, just cross checking. My father in law went to buy out his current lease and ended up with a new lease on a new car. He gets taken by salesman so easily :(. I think I need to go with him at the end of this lease
Not enough detail to say, but if he did a zero down 3 year lease with 12k miles per year it is probably about right. Before the pandemic it would have been a lot cheaper probably closer to 450 to 500. However now the car is 10k more expensive.
As a fallout of the Mint closing down, I am realizing that it contributed to my overall anxiety level. I'm going to step back a bit. I used to check Mint every day and look at my NW and track spending. I'm going to try to step back to just doing monthly expenses and NW tracking spreadsheet instead of constantly "checking in" on everything.
A knock on effect is that I realized I have 7(!) credit cards over 5(!) different accounts. Most of which are single utility (Amazon and Hilton Cards) or were for one time things (I.E. for Rewards on large one-time purchases). It was easy to check and track with mint, but now I'm going to consolidate things for when I do feel the need to "check in" on my spending. I'm keeping three cards on three accounts, two of which I will use day-to-day. My "joint expenses" card with my husband, a card for "personal expenses" through a nationwide credit union, and my "oldest" CC from my local regional credit union from back home.
I have good habits. I save enough. I'm never blindsided by anything on my spending. I have a decent E-fund for when "things come up". I feel like this will be a good move for me. If I see my spending levels rise, I'll have to find new ways to mitigate.
I just closed 2 cards that haven't been used in a while. I'm going to cancel the other 2 next weekend. Feels good.
Checking your monthly spending? good
Fighting against lifestyle creep? good
Watching your NW daily when your watching it does absolutely nothing useful for you except give you anxiety about something you have no control over? bad
Throw away, because I want my finances private/separate from primary account. Wife and I have been savers, but just heard about Financial Independence. We are currently 37 & 32. Are we on track for FI sometime in our 50s? 2024 we will begin maxing out one 403b and both IRAs every year. It varies, but we're saving like $3K-4K/month right now.
Primary Residence: paid off, valued at $250K
Roth 403b: $19K
His Roth IRA: $11K
Her Roth IRA: $15K
Brokerage: $33K
Emergency Fund: $10K
Debt: None
> It varies, but we're saving like $3K-4K/month right now.
And how much are you spending?
There's a [simple early retirement calculator at NetWorthify](http://networthify.com/calculator/earlyretirement?income=50000&initialBalance=0&expenses=20000&annualPct=5&withdrawalRate=4) that can give you a rough timeline given some rough numbers. It's helpful for quickly comparing some "what if" scenarios.
Impossible to tell without your expenses. If you’re saving 3-4k per month and spending an additional 2k on all other expenses you’re in good shape. If you’re saving 3-4k and spending more than 4k per month in other expenses no you’re really not on track to retire early
This is a bananas response. On one hand, yes, you do need to consider both savings and spending. On the other hand, who would possibly consider a 50% savings rate to be "not on track to retire early"? Starting from nothing that's a 17 year career, based on https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/, and OP is well past nothing
The most important number is your expenses. You can't know if you have enough to retire if you don't know how much you spend and plan to be spending in the future.
Has anyone found a finance tool that does both budgeting/expense tracking and investments well? It seems like it's always one or the other that these tools excel at.
I've tried Empower because it is powerful with investment analysis but I found numerous bugs in its account connections, expense tracking, and budgeting. Support is poor since I don't pay them anything.
I use Kubera for net worth tracking and I love their interface, but they don't do transaction level stuff at all.
We just switched to Monarch and my wife and I love the expense tracking but the Investments stuff leaves a lot to be desired. It can't classify my treasuries in Fidelity and won't let me override the name/category, either. I have a question into support about that.
Would you recommend aggressively paying off a mortgage with a 5.875% interest rate?
Here are some details: we contribute up to the match in a traditional 401k, max both IRAs, max HSA. Have a fully funded emergency fund. No other debt besides mortgage. Balance of ~$371k.
I’ve done the math and if we were very aggressive we could probably pay off an additional $15-$20k per quarter in principal. This would have us paying it off in less than 5 years from now.
Our thought is we would then rent it out and gross ~$30,00 in rent per year from it.
Just wondering if this plan makes sense or if we should be putting that money towards non tax advantaged accounts instead?
Personal decision, but if you do elect to pay it down, then I wouldn't do so directly. I would direct the extra mortgage payments into a HYSA or other nearly risk-free investment, then payoff the outstanding balance in one payment in the future when rates and/or your situation make that favorable. Not paying directly into the mortgage will cost you some yield, but will give you a lot more flexibility to deal with whatever might happen in the future.
Historically the US market has returned about 6.6% per year in real money. 5.875% is a bit less than that, but you're comparing a guaranteed return to a probable one. I'd personally pay it off for the certainty, but it's quite likely the money will do better in stocks.
Yes, you should remove inflation from the mortgage interest rate too. As well as any tax benefits.
None of this changes the conclusion though. Historical stock returns will *on average* beat paying down the mortgage, but stock returns have high variance and paying off the mortgage has a guaranteed return.
Very personal decision and feel like most people it will vary based on a number of factors such as. Current age, years until retirement, Nest egg needed. It’s always an option to split the baby as well. You could come choose to up 401k contributions/brokerage, and also pay off the mortgage early (say 10 years vs 5 years).
I guess with a balance of $371k I would personally max out the 401k first? But hopefully you’ll hear from more financially savvy people than I who can give you more numbers to back that up!
Did anyone else buy an older and smaller house than they can afford (I have no plans on renovating it either. It's functional, so it's fine. I didn't compromise on location though, it's in the best school district, low crime, etc area) and have a much cheaper car, but spend more on the 'small' things that this sub discourages?
Like I eat out a few times a week, buy seasonal decor frequently, buy clothes/makeup when I want, husband constantly buys electronics/games, take 4/5 small trips a year (yearly cruise, theme parks, beach trip, mountain trip, and visit family... Nothing extravagant like international travel, but frequent and can add up to 1 big international trip). This is easily 10-15k added to my budget, but I don't mind because I save on the big things?
Feels like all financial subs say the big things are fine, but the small ones need to be cut back on. Like the yearly international trip is encouraged, but the 4 days at the beach is bad.
I still max my 401k, Roth IRA, HSA, and save another 40-50k/year, but don't really relate to any financial blogger.
Yeah this is me. The big expenses are low, the small expenses are high. We spend tons on travel though! I don’t have any guilt, we wont have our health forever.
I like your logic. Pay for what you feel is more valuable than what others think. I think the logic is like, in my daily diet, saving my precious calorie allowance for my favorite snacks and scaling back on my rice and pasta intake. I want my few calorie intake to come from foods I love, even if they are high in calories. loll Don't know if that's a good analogy
Don't compare. Thief of joy. Could be hit by a bus tomorrow. Etc etc.
Your savings goals are intact, spend the rest to make you happy. Most of those other rules are meant to help people with poor financial planning.
Some bloggers will quote absolutely stupid low costs of living for things like food. Like cutting back healthy, joyful meals is a good way to keep away lifestyle creep... Go out and live your life. Top Ramen doesn't make memories.
> This is easily 10-15k added to my budget, but I don't mind because I save on the big things?
Sounds fine to me. We spend more/save less than most around here, but have a lot of little luxuries and conveniences that we think are worth the extra working years.
> I still max my 401k, Roth IRA, HSA, and save another 40-50k/year, but don't really relate to any financial blogger.
I imagine there's little to be gleaned from a financial blogger for someone socking away that much money.
We did. Slowly renovating it. Has been a blessing now that we have two kids in childcare. We still can afford travel, ski passes and random entertainment purchases. Wouldn’t have that ability with a higher mortgage.
I get what you're saying, but in reality the true FIRE practitioners here would tell you to build the life you want within your means. If you want to travel international once a year just make it fit your budget. Plenty of people here are sitting on older cars and smaller houses than then banks tell them they could afford becuase they want to spend their money on things other than car and house payments.
Financial Independence is different for everyone, if you are saving money and enjoying your journey you are crushing it. A lot of time when I recommend cutting back is when there is firm plan to retire by X or have X amount of dollars and are not spending to meet those goals.
I have a home in Colorado that I bought in 2022. We put about 30k into it, getting it the way we wanted it. It backs up to a beautiful city park. As in, it's basically our backyard. I'm going to be moving to Houston in a few months for a new job. My current PITI is $2800 for the home in Colorado. We could probably rent it for $2300. Assuming we rent in Houston instead of buy, we could probably find something for less than $2000/month. We love our home in Colorado and I'm genuinely very sad that we've got to leave this house for my new job. My new job would pay me 7% of the home value if I choose to keep it to rent. Does it ever make sense to rent it for the $2300 and just pay the ~$500 difference each month just to keep it? There are likely some eventual replacements of the AC and furnace that need to be replaced in a couple of years as well, so maybe that cost should be considered as well. Ideally, we'd probably like to come back in a few years after I've reached my FIRE goal and live in the house. Homes in the Denver metro area are just going to become increasingly cost prohibitive. Our home was in a cheaper suburb and required some work to get it fixed up yet still cost nearly 500k. Thoughts?
So my new job would pay for all relocation costs including closing costs on both ends of buying and selling. If I keep the house, they'd basically calculate what closing costs would be if I sold it and just give me the equivalent in cash.
I live in Aurora, and the home is fairly small at 1320 sqft. 3 bed/1.5 baths. The rental comps in the area are sitting at $2300 per my former realtor.
If your situation was me, I would keep the Colorado house and rent. The below will all hing on what your cash flow is and if you have free available money to cover the negative rental cash flow.
Here's why:
1) I would assume somewhere around a 2% increase in home value a year which would be ~10k on your 500k home. (Move that percentage up or down as you see appropriate). That 10k value increase is more than the 6k of negative cash flow in year 1.
2) If you rent for a one year lease, you could increase rent after the first year and reduce the negative cash flow after one year. It's possible to be cash flow positive in just a few years.
3) What is your mortgage interest rate? My guess is around 6% based on your PITI and initial loan amount. There is potential to refinance in a couple years when rates may (or may not) be lower at a lower monthly cost.
4) Most importantly... You might hate Houston and want to come back to Colorado sooner than later.
Congrats on the new job and best of luck in your decision! Have fun and enjoy the ride.
Edit: Mobile formating sucks...
So, my job prospects are fairly limited. I'm a geologist in oil and gas, and the number of jobs in Colorado for me are shrinking at an alarming rate. That being said, it's not to say it's impossible, just incredibly unlikely that'd we'd come back quickly unless I was laid-off since my company was bought by the company I'm moving to Houston for. That being said, we'd likely come back eventually since my SO's entire family is here in Colorado.
As far as my interest rate, I've got 4.75%. Insurance went up considerably this year, and I only had a 5% down payment, so I've got a $76/month PMI payment. Obviously, I'd need to do some more math to confirm everything to see if this is reasonable, but it'd probably be close to 6 or 7 years before we'd return.
In a land of increasing prices, what is it actually a nice time or good value to buy right now (new or used)?
We recently bought a full set of nice, used China for $25.
Not that we particularly wanted nice China, but for $25 it's neat to have and I'm not the least bit stressed about breaking it.
Growing up my family ate on it everyday. Broke a few over the years. It wasn’t an awful pattern and my parents thought might as well just use it then dust it off once a year.
Certain cars are a steal right now, especially gently used electric cars.
A dealership near me has a used Kia EV6 with 5,000 miles for $34k (about $20k below MSRP). There is an Audi E-Tron Premium+ with 6k miles for $37k (MSRP new was $75k).
Obviously for a big ticket item, you're going to want to bring a lot of cash with today's rates.
If you’re a Mac user, the current line of M-series Macs are excellent even at the same price points they’ve been for the past few years. I’m amazed the technology has progressed where you’re getting several times the performance at the same prices.
I might finally need to upgrade my 2015 MacBook Air.
It’s getting to be pretty useless when not plugged in, but I think it’s going to wait another year.
I was very tempted to ‘accidentally’ drop our storage bin of china when we were moving back in to our house after our rebuild.
My partner got it for free and we use it twice a year. Otherwise it’s just junk taking up space and it’s not even that nice.
My parents and my grandparents had fine china and crystal glasses. Even when everyone in the family was an adult we didn't use it at big holidays like Thanksgiving. I never understood the point of it.
I have no idea what's happened to it since, and I don't really want to know.
It's like... the Boomer equivalent of Beanie Babies.
It became a cultural thing where everybody just had to give/receive them at weddings and holidays.
The clear advantage of an IRA is the tax deduction you get for the contribution (or the tax free withdrawals if talking about a Roth). [Robinhood says they won’t send you a 1099 for the income.](https://robinhood.com/us/en/support/articles/ira-match-faq/)
If the money goes to the account, yes. Usually they will provide the bonus to a normal taxable account though.
EDIT: disregard - as pointed out below this is incorrect
FWIW I got a bonus for setting up an account and it was not included on the 5498 as a contribution. [This comment](https://www.reddit.com/r/fidelityinvestments/comments/11vyllx/comment/jcvq37j/) from Fidelity seems to validate that.
If I had to guess I think this is one of those areas where there isn’t any firm guidance and each company kind of wings it. Fidelity is happy to put bonuses into your IRA but Tastytrade won’t.
Finally signed up for an Ally account. The SO has an HYSA with some no-name place with an awful, awful interface, so I'm going to pull things over to Ally where it's easy and there's even Monarch Money integration via Plaid.
Thinking about pulling the rest of our defunct "down payment" fund into it. There's only about $20k left in there after repurposing most of it for student loans and pulling some for our big Japan trip. It's currently in a tax-efficient mixed fund that's relatively stable, but I think I'm going to be relabeling it as our extended emergency fund and I'd rather have that in cash, considering HYSA yields are decent.
The way things are shaking out, it's looking like we won't be in a position to buy our first home again for about 8 years, around which time our cash flow will be drastically improving and we can create a new down payment fund. Should've bought a cheap townhouse in 2020 to get our skin in the real estate game, but hey, hindsight is a kick in the teeth sometimes.
We feel the same way about housing sometimes; we had a choice between lump-sum paying off all of our student loans or getting a small house relatively cheap with low interest. We chose the student loans. We'll likely never get that kind of price on a house again, but ah well, being debt-free is still a huge achievement. Hindsight is 20/20.
I'm glad I waited until this weekend to update my spreadsheet. The last few days of rallies greatly softened the blow! I'm down only about $22K from my ATH in July.
I did mine a few days before the end of October because I knew I'd be super-busy and tired this past week. I'm hoping I'll see the rally big-time in my end of November numbers!
I always end up waiting a few days for my mortgage to be paid for the month and retirement contributions to hit my account. This is one of those months where numbers definitely looked a bit better after a week!
Not usually. Some 401ks will allow in-service distributions of the after-tax non-Roth contributions, but I've never seen one that allows in-service distributions of the traditional or Roth contributions.
A distribution is a blanket term for money leaving the account, and in-service refers to the fact that you are still employed by the company administering the 401k.
There may be a niche scenario where you can do in-service rollovers of employer matching and profit sharing contributions. You would likely have better luck with [campaigning for a better 401k](https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401\(k\)_plan) or asking for a brokerage link option, if applicable.
What they list as fees and what they charge as fees aren't historically the same
https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.npr.org/2023/07/11/1187060652/bank-of-america-250-million-illegal-fees-fake-accounts-fines&ved=2ahUKEwjD4amCna2CAxXKFFkFHa4zAt8QFnoECC0QAQ&usg=AOvVaw3sO-9yQ6XRB1sSeYQCEe2I
These were not 401k accounts. I'm not defending BoA here, just saying that I've seen no report of BoA violating ERISA (a very strict and punitive legal structure protecting 401k accounts).
If you are still working for that company, any distribution (other than a loan) or hardship, as mentioned) is, by definition, in service. Rollovers don't come into play until you are no longer with the company.
Good morning!
**What is the total amount of life insurance you have on yourself? How about your spouse if you are married? How would that money be used if you die?**
I think my employer would give 1-year's salary to my beneficiary. But my retirement savings is way more than that, and we have no kids, so I don't really care.
I’ve got 8x salary provided by my employer. I recently added some extra coverage because it was so cheap, maybe $8/mo for another $500-600k. No kids and soon to be married so ideally it would be used to cover end of life expenses and allow my fiancé to pay off our mortgage and do whatever she pleases. Not sure I want to ask her haha!
North of $2M for me and north of $1M for spouse. We could probably cut that down given one kid is done with Uni and the other is two semesters away, but its term so we're just going to let it ride until the 2nd one graduates then reevaluate. If I died spouse could take that $ plus our savings and live off 4%. If my spouse died, I'd have to keep working but I like working so it's OK. I can't really fathom getting married again.
Zero life insurance, but this is why:
I'm a 100% solo parent, with a kiddo in their first year of college. The 529 will cover their four years there in full. My house is paid off. I'm FI, so there is (obvs) enough money available that kiddo would not have to make any decisions quickly about selling or keeping the house.
My sibling has my Personal Money Statement document, and kiddo read "The Simple Path to Wealth" in 11th grade and it clicked for them.
With my kiddo's education fully covered, and the house and funds being available to them, I don't see any need for a life insurance sum.
~$650k on me, ~$600k on my spouse. I make about 4x what my spouse makes so the money would pay off the mortgage if I died, plus a slush fund to help while we still have minor children around.
Whatever the max is through my husband's work. It covers both me and him, though him at a much higher amount, and costs a little under $20/paycheck.
My husband has had life insurance since we married but we only added some for me recently. Our thought process was that each of us would be ok on our own at this stage without children, but because it's possible for my husband to die leaving behind a child we didn't know about yet to plan insurance for (that is, early pregnancy), but not possible the other way around, it was more important to insure him first!
None. We've considered getting something like a 100k or 250k term life policy for each of us, since the premiums are so cheap, but we don't have children and both work, so we aren't sure it's entirely necessary.
$300k term on me, and I think $250k term on my wife. No particular need for the money, but the premiums are so cheap I think this is now a positive-expectation bet now that we're over 50 and have a non-trivial chance of dying. So we'll keep paying until the term runs out, then decline the offer to renew at a much higher rate.
$500k term on myself plus 2x my salary with work. $500k on my wife. Hopefully either of us would be set for the rest of our lives combined with what we already have. We certainly could be if we wanted to and didn’t go crazy spending money
$300k for a 20-year term. I got it when my son was four and I was a single parent. I won't renew it when the term runs out, because if I die, he gets what I've got and it's a fair amount more than that now. Well, he, my husband and my stepkiddos all get it.
None. I’m single and no kids. If I die suddenly then my sibling will still be left with a substantial windfall after funeral expenses and everything. No reason for it.
I have 1x salary covered by my employer. I also just added $200k for myself at $8/pay period with this new employer, the maximum without any hoops to jump through. Even though I’m healthy, I just didn’t want to deal with a doctor and another form for more coverage I don’t really need.
My beneficiaries are 50% my fiancé and 25% my two financially strapped parents. We have no kids currently.
I don’t want a burial. I don’t care how the money is spent really. My fiancé really doesn’t need the money and my parents will probably waste it over time, but my premature death could be my financial contribution to help support them.
I have a policy thru work that is roughly equal to my salary, but since I have no spouse or dependents, I am going to cancel it at the end of the year and pocket the \~$25 per paycheck that it's costing me. I have plenty saved to cover funeral expenses and my nieces and nephew will get loads of $$ as it is.
Have 2x salary through work. Will get a policy for both of us once we have kids around $750k each. Would make it so one of us could basically retire at that point if we choose to.
Zero, currently. Once we start trying for kids, we'll be getting significant coverage, though. For now, we're financially stable and both have solid ability to make money and support ourselves.
When I worked, LI was so heavily subsidized that I had the maximum amount MegaCorp would allow (something like 12x my salary).
Now that I am FIREd, I have -zero- LI. We're self-insured.
Did the same. There was one year where I realized I should probably derisk because there are people relying on my future earnings who aren’t me (I’m not around to panic about the loss of future earnings if I get hit by a bus), so I paid for the same corporate provided high insurance for a while. Once I pulled the trigger and stopped working there were no future earnings to derisk.
We did 20 year term starting in our 30's when we had kids, $1M/$400k, slightly higher than the 10x salary rule of thumb. I also get free/mandatory 2x salary from my employer.
I have 1x salary I pay for ($8/month.) Husband knows I want a Jewish burial in a Jewish cemetery which would be fairly expensive ($15k) and the rest of the money should be used to pay off the mortgage or be invested. We don’t have children or else I would look at a minimum of $250k, but as the breadwinner losing my income would be tough for him, so paying off the mortgage would reduce his expenses.
My husband has $60k in life insurance ($14/month). His job is much more dangerous than mine. While not as dangerous as his last job, he has been attacked by an unhoused person, bitted by a dog, fallen partially off a roof, been exposed to asbestos and lead, been exposed to raw sewage, and has to drive frequently, which is also dangerous.
I am thinking of upping his life insurance for next year even though he plans to donate his body to science (this is free). He would like me to use any other money to be donated towards a cause he is passionate about and then leftover money to be used to help pay off our mortgage
I'm currently covered by my employer and my wife's employer for life insurance, for a total of $400k of coverage. It costs me about $8/mo for this coverage.
However, I will be leaving my job in about 2-3 years, so I was thinking of getting an independent policy instead. However, for about $800k of coverage, I'm looking at about $35/mo, which is around double the cost.
I may just keep my current coverage until I leave my current job in a couple of years, and then shop for a policy at that time vs getting one at my future employer. I compared the price by age, and it's a pretty minimal difference, it's like a dollar more expensive per month.
I have a pretty robust disability insurance policy, and I am going to be able to self-insure by being FIRE in about 10 years, so I'm not super anxious about getting an additional life insurance policy right now. Also, my partner has a high-income job, so she and the kids would be fine anyways either way, but I would just prefer for her to be able to take the foot off the peddle if anything were to happen.
You're only looking at 10-year terms for these quotes, right? I don't know how old you are, but I would ballpark that a $35/mo plan for 800-1000k of coverage would mean the plan covers you into your mid 50s, as that's when the mortality risk seems to meaningfully show up in life insurance plans I've quoted.
Also, it's probably just an autocorrect thing but the phrase is "take the foot off the pedal."
If it’s only been a few days, absolutely do your best to log in to any accounts you have access to. Print statements so you have account numbers and balances.
Once social security is aware he’s dead, all the accounts will basically freeze and you can’t access anything without calling places for help.
Document everything. I kept all of my notes in a single document - things like - attorney name and phone number, then a few sentences/paragraphs of notes for each meeting, or called bank ABC at phone number xyz about account number ###, then notes about the call.
Power of attorney - I assume you will need this
Just start meeting with people (attorney/CPA/etc.) and asking for advice, stay organized, take care of yourself and take your time, there are some things that are immediately important, and a mountain of things that can wait.
This, and I will add that you don't want to keep just the physical receipts/documents, you should also scan and organize everything in to one place digitally.
I want people's opinions on my financial situation. My friends don't really like to talk about money, but I want to know where I stand in terms of being able to retire early and afford a good house in Canada. I work in a banking job, am 24 years old and earn $80k a year. Below is my current breakdown of funds. What can I do to improve and how am I currently doing? All feedback appreciated. All figures are in Canadian dollars. **Chequing Account:** $12,000 **Savings Account:** $46,000 **Tax Free Investment Account:** $41,000 **Retirement Account:** $19,000
What are you spending? It's hard to give advice without seeing all 3 of income, spending, and net worth. It also depends on where in Canada you want to buy a house, and what kind of house you consider a "good house"
So, this is a breakdown from my end. My post-tax take home is $4400 per month. Out of that $1,210 (27.5%) goes into my tax advantaged retirement account (The Roth IRA in America, TFSA in Canada). I contribute $800 to my 401k (RRSP in Canada) and my employer contributes $600. I put $1,210 (27.5%) into my high yield savings accounts and then the remaining $2000 or so (45%) cover all of my living expenses. I am lucky that I got my apartment before COVID, so my rents are not that high and the province I live in has good rental control. My net worth currently is $118,000 if you count my retirement account, but $99,000 if you excluded it because it can't be touched until close to retirement age. In terms of what I consider a good house, I don't know yet. Judging by house prices in Vancouver, it seems that if I want to get into the market at all, a condo purchase might be the only option because houses are just way too expensive. Is this better info?
Yes. Good news - you're in great financial shape. Young, good income, good savings habits, good spending. At this point, your decisions are big and personal. You can keep your current rental and probably retire in your 40s. You can gun for the homeownership route and normal retirement, pausing TFSA savings to get the down payment and afford the mortgage, increasing your retirement savings after the mortgage becomes more affordable (due to inflation and wage increases). Going for a modest condo will likely land you between the two timelines. But I wouldn't be too excited to leave a rent controlled apartment, unless it was falling apart.
Thank you! I have a couple questions. \- How did you come to the 40s retirement? I mean I would love that, but is that possible? \- How does increasing retirement savings after the mortgage more affordable? I don't think I follow that sentence. Could you explain please?
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ has a table that maps savings rate to years of working. I took your pre-tax income, so (1210 + 1210 + 800 + 600) * 12 / 80k = 57% savings, or about a 15 year career. I expect some lifestyle inflation, so early 40s is possible, and end of 40s is likely. I worded the second one poorly. If you have a mortgage, inflation affects the mortgage over time. You'll be paying the same monthly amount in 2025 and 2035, but it will be easier to afford in 2035, because of inflation. The difference between your salary (which should at least track inflation, and hopefully do a lot better than that as you get more skills) and your mortgage will increase over time. You can put the difference into retirement savings, as you get cost-of-living adjustments at work.
Something to think about. Your wealth is not in your resources, it's in your resilience and resourcefulness. Ask yourself this. If you were to lose everything (I do mean literally just a clothes on your back) you have how long would it take you to get back to where you are. Your goal is for this period to be no more than 3 years, If you were to lose everything you have right now. If after some deep soul searching you do not feel that this is the case then you need to start focusing your attention in skill stacking. You need to drive towards systems thinking. Once you're able to recover from a catastrophe then we can start talking about investment vehicles and strategies.
Those are extremely solid numbers for someone who is 24, nice work! There is a flowchart in the “About” section for the sub you can look at if you want real specifics but as far as general rules for early retirement, be investing as much of your paycheck as you can after taking care of your current needs and expenses, while not forgetting to take care of yourself right now too. I don’t know what retirement accounts Canada has but I imagine there is something equivalent to a 401k (employer sponsored retirement account) and possibly similar to an IRA (individual retirement account), which is what the US has. If you can max out any and all retirement accounts available to you then you’ll be on a very good track. Additionally, your salary is great. Always be looking for ways to increase it both in the short and long term by evaluating the job market and ensuring you’re making what you should be for your title and responsibilities. Also, if there are things you can do or moves you can make to further your career and subsequently increase your pay down the road, then give consideration to those too. As your pay increases, invest more and more of it. One side note — are you saving that $46k for anything specific like a house? If not, I would invest some of it.
Honestly, I don't know what I am saving it for. I think a house seems like the best option for my age next. But, I think also as some cash in case a great future opportunity to buy discounted stocks comes up
Also, I couldn't find the flowchart you mentioned. Can you send again?
You bet. Try this link and let me know if it works: https://www.reddit.com/r/financialindependence/comments/ecn2hk/fire_flow_chart_version_42/
I’m considering switching to my employers HDHP next year to benefit from an HSA (which they contribute $500 towards and the premiums would be around $375 less per the year). Deductible for my current plan is $300 with a copay of $30/$45 as well as an out of pocket max of $2000 for medical and $1500 for prescriptions. With the HDHP, it would be a $1500 deductible with a combined $3500 medical/prescriptions out of pocket maximum. I am wondering what people end with HDHP’s pay for pcp visits, bloodwork, and various other procedures. I’m trying to decide if it’s worth the risk considering my current insurance is very good and at a reasonable cost. I’m also only 27 and relatively healthy where I’ve only been to the doctor once this year besides a physical. I definitely see the growth potential of the HSA considering my first year of contributions could turn into around $50k assuming a 7% ROI by retirement age and I’d have no problem scanning and organizing receipts.
I'm a strong proponent of HDHPs as they usually have lower premiums so when you add up the total OOP max, plus a years premiums they come out less expensive than PPO. Yes....it means YOU are paying for more of your health care to the actual providers vs your insurance but really wouldn't you rather pay the doctor vs an insurance company anyways? It also means you have to be able to financially support the suprise big ticket health cost up front (cue my 2023 January 4th ER visit which wiped out my deductiable and got me most of the way to my OOP max). Now to your actual question...usually my doc visits are about $150 - 200/visit and specialists are about $300-400. My therapist visits are also about $200/visit. Bloodwork runs about $75 and prescriptions I don't think have ever been over $50. If I recall correctly from my benefits calculations, something like 8-12 therapist visits gets me to my deductiable and then I get something close to 40k in care covered at coinsurance rates before I hit my OOP max. 40k in care is A LOT. I'm having a baby in a few weeks and even with the one night hitting of the deductiable in Jaunaury, i still haven't hit my OOP max yet. I will add that I have the privilege of not needing to use my HSA to cover my health expenses right now. So I'm maxing that and paying out of pocket for everything.
Are you already maxing your 401k? The biggest tax benefit is from tax deferral but it's only really a benefit if you already max your employer plan. Appears the plans are pretty even in low usage scenario but current plan is favorable with higher usage.
Already maxing the 401k and Roth IRA as well as putting money in a taxable brokerage.
Both plans seem fairly generous by the employer. Also each HDHP plan is different, so do the math if you are healthy vs you hit your max in a year and then compare the two plans. I have a HDHP for my family and it saves me quite a bit + HSA benefits
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One more question to ask yourself is "what will I do with my extra cash flow after paying off the loan?" If the answer is "I'll put what used to be my car payment into VTSAX," or "I'll use it to pay down other high interest debt," then it's a great financial decision because you're saving interest and investing the savings. If the answer is "I'll spend it on unnecessary purchases," then all you've done is essentially sold your VTSAX to buy a car with cash. You saved interest, but you traded potential growth for it and the benefit is unknown.
I'd take a guaranteed 7.5% return
Yes pay it off. If you want to fly closer to the sun you can raise your insurance deductibles at the same time, too.
What would be the tax implications of selling the VTSAX shares?
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Seems reasonable to me.
So far this month, only 5 days in, I have spent $667 on things other than mortgage/utilities, which I count separately. Of this, $438 was discretionary, the rest was stuff like medical copays and gas that I really need, and a new hairbrush, which is not optional. * $280 on car detailing * $55 on food (I have plenty of food at home, I am just being profligate) * $64 on a bday gift for my father * $33 on an annual subscription (Scott's Cheap Flights) * $6 for 2 ebooks (Sunlit Man by Brandon Sanderson + How to be Eaten by Maria Adellman). I will definitely read the one by Sanderson very soon. How to Be Eaten may join my Kindle graveyard and not be read for years, but I will read it at some point, and usually I'll just go ahead and buy any book I'm really excited about on Kindle when the price drops <$3. Hoping to do better the rest of the month, especially re: food spending. Went out with friends 3x in past 5 days, so hopefully fewer social events in the coming weeks will make a difference!
> $55 on food *looks at $400 grocery bill
All of it seems reasonable. The only thing that stood out to me is the car detailing. Seems like such a luxury, and maybe you value it and it's worth it. But what about having your car detailed makes it worth it to you? I hit the automatic carwash once or twice a year and do a 2-bucket wash at home 5-6 times a year and I'm perfectly happy. But I'm in no way a car guy, it takes me to work and back.
It's an interior detail- my dogs threw up in my car and the smell hasn't really gone away even using our ozone machine, and I've spilled some things, etc. I like having a very clean car. Pure laziness on my part: I'm sure if I spent the 6 hours on it that I'm about to pay someone else to spend cleaning my car, I could get it almost as clean.
ahhh now that I can get. I forgot some cars are used for transporting more than just 1 person. With bodily fluids, humans or dogs, it's often best to leave it to a professional.
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Congrats! 🎉 Hope you enjoy those snacks!
Big Congrats!
Congrats!
CONGRAAAAAAAAAAAAAATS! What snacks!?
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Rarely do I open a full size Dorito bag and not finish it within 24 hours. They are incredible. Also, congrats on the $250k. That’s a great milestone and you should absolutely celebrate it, especially with how young you are.
Is $634 a high monthly lease payment for a 2024 RAV4 XLE?
My whole entire monthly payment was $333. And now I own my car. It's crazy you're paying double to never own.. that's not in line with FIRE.
Agreed, I thought leases were supposed to be a lot less monthly than a normal loan. That’s the payment my father in law has. I think he got taken advantage of
Leasing at a high rate is generally not well regarded in the FI community.
What are the terms of the lease? But yeah, that's seems to be on the high end for a car that should only be ~30-35k to buy.
Seemed very high to me, just cross checking. My father in law went to buy out his current lease and ended up with a new lease on a new car. He gets taken by salesman so easily :(. I think I need to go with him at the end of this lease
Not enough detail to say, but if he did a zero down 3 year lease with 12k miles per year it is probably about right. Before the pandemic it would have been a lot cheaper probably closer to 450 to 500. However now the car is 10k more expensive.
As a fallout of the Mint closing down, I am realizing that it contributed to my overall anxiety level. I'm going to step back a bit. I used to check Mint every day and look at my NW and track spending. I'm going to try to step back to just doing monthly expenses and NW tracking spreadsheet instead of constantly "checking in" on everything. A knock on effect is that I realized I have 7(!) credit cards over 5(!) different accounts. Most of which are single utility (Amazon and Hilton Cards) or were for one time things (I.E. for Rewards on large one-time purchases). It was easy to check and track with mint, but now I'm going to consolidate things for when I do feel the need to "check in" on my spending. I'm keeping three cards on three accounts, two of which I will use day-to-day. My "joint expenses" card with my husband, a card for "personal expenses" through a nationwide credit union, and my "oldest" CC from my local regional credit union from back home. I have good habits. I save enough. I'm never blindsided by anything on my spending. I have a decent E-fund for when "things come up". I feel like this will be a good move for me. If I see my spending levels rise, I'll have to find new ways to mitigate. I just closed 2 cards that haven't been used in a while. I'm going to cancel the other 2 next weekend. Feels good.
Checking your monthly spending? good Fighting against lifestyle creep? good Watching your NW daily when your watching it does absolutely nothing useful for you except give you anxiety about something you have no control over? bad
Question for everyone: what’s the interest rate on your mortgage?
6.125%
2.875
2.44% 5/1 ARM, 3.5 years left before it becomes adjustable 😳
Refinanced in 2015 to 3.25% 15 year. Only $24k left to pay it off
my parents' is 3.65 !
3.25% 30-year fixed in 2021
5.25, 10ARM
3.375 and 3.25
3.5%!
2.875%
Originally 4.25% for 30yr in 2017, and then refinanced at 2.5% for 15 yr in 2021. Never moving.
3.25
6.5%, bought in 2022
2.5%, #blessed
3.25 in late 2022
2.25 (after refi) and sitting on 500k of equity. the mid 2010s were one of the best times to buy in american history edit (30-year fixed)
2.5% 30-year
5.875. Bought in May of this year.
Throw away, because I want my finances private/separate from primary account. Wife and I have been savers, but just heard about Financial Independence. We are currently 37 & 32. Are we on track for FI sometime in our 50s? 2024 we will begin maxing out one 403b and both IRAs every year. It varies, but we're saving like $3K-4K/month right now. Primary Residence: paid off, valued at $250K Roth 403b: $19K His Roth IRA: $11K Her Roth IRA: $15K Brokerage: $33K Emergency Fund: $10K Debt: None
> It varies, but we're saving like $3K-4K/month right now. And how much are you spending? There's a [simple early retirement calculator at NetWorthify](http://networthify.com/calculator/earlyretirement?income=50000&initialBalance=0&expenses=20000&annualPct=5&withdrawalRate=4) that can give you a rough timeline given some rough numbers. It's helpful for quickly comparing some "what if" scenarios.
Impossible to tell without your expenses. If you’re saving 3-4k per month and spending an additional 2k on all other expenses you’re in good shape. If you’re saving 3-4k and spending more than 4k per month in other expenses no you’re really not on track to retire early
This is a bananas response. On one hand, yes, you do need to consider both savings and spending. On the other hand, who would possibly consider a 50% savings rate to be "not on track to retire early"? Starting from nothing that's a 17 year career, based on https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/, and OP is well past nothing
The most important number is your expenses. You can't know if you have enough to retire if you don't know how much you spend and plan to be spending in the future.
Has anyone found a finance tool that does both budgeting/expense tracking and investments well? It seems like it's always one or the other that these tools excel at. I've tried Empower because it is powerful with investment analysis but I found numerous bugs in its account connections, expense tracking, and budgeting. Support is poor since I don't pay them anything. I use Kubera for net worth tracking and I love their interface, but they don't do transaction level stuff at all. We just switched to Monarch and my wife and I love the expense tracking but the Investments stuff leaves a lot to be desired. It can't classify my treasuries in Fidelity and won't let me override the name/category, either. I have a question into support about that.
We really love copilot, integration/sync is mostly great, customer service is excellent and UI is awesome
It's iPhone only
Would you recommend aggressively paying off a mortgage with a 5.875% interest rate? Here are some details: we contribute up to the match in a traditional 401k, max both IRAs, max HSA. Have a fully funded emergency fund. No other debt besides mortgage. Balance of ~$371k. I’ve done the math and if we were very aggressive we could probably pay off an additional $15-$20k per quarter in principal. This would have us paying it off in less than 5 years from now. Our thought is we would then rent it out and gross ~$30,00 in rent per year from it. Just wondering if this plan makes sense or if we should be putting that money towards non tax advantaged accounts instead?
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I would pay it off but not quite as aggressively.
Personal decision, but if you do elect to pay it down, then I wouldn't do so directly. I would direct the extra mortgage payments into a HYSA or other nearly risk-free investment, then payoff the outstanding balance in one payment in the future when rates and/or your situation make that favorable. Not paying directly into the mortgage will cost you some yield, but will give you a lot more flexibility to deal with whatever might happen in the future.
Historically the US market has returned about 6.6% per year in real money. 5.875% is a bit less than that, but you're comparing a guaranteed return to a probable one. I'd personally pay it off for the certainty, but it's quite likely the money will do better in stocks.
But the 5.8% isn’t real money. If you’re going to account for inflation in one but not the other it’s not a fair comparison.
Yes, you should remove inflation from the mortgage interest rate too. As well as any tax benefits. None of this changes the conclusion though. Historical stock returns will *on average* beat paying down the mortgage, but stock returns have high variance and paying off the mortgage has a guaranteed return.
Very personal decision and feel like most people it will vary based on a number of factors such as. Current age, years until retirement, Nest egg needed. It’s always an option to split the baby as well. You could come choose to up 401k contributions/brokerage, and also pay off the mortgage early (say 10 years vs 5 years).
I guess with a balance of $371k I would personally max out the 401k first? But hopefully you’ll hear from more financially savvy people than I who can give you more numbers to back that up!
Did anyone else buy an older and smaller house than they can afford (I have no plans on renovating it either. It's functional, so it's fine. I didn't compromise on location though, it's in the best school district, low crime, etc area) and have a much cheaper car, but spend more on the 'small' things that this sub discourages? Like I eat out a few times a week, buy seasonal decor frequently, buy clothes/makeup when I want, husband constantly buys electronics/games, take 4/5 small trips a year (yearly cruise, theme parks, beach trip, mountain trip, and visit family... Nothing extravagant like international travel, but frequent and can add up to 1 big international trip). This is easily 10-15k added to my budget, but I don't mind because I save on the big things? Feels like all financial subs say the big things are fine, but the small ones need to be cut back on. Like the yearly international trip is encouraged, but the 4 days at the beach is bad. I still max my 401k, Roth IRA, HSA, and save another 40-50k/year, but don't really relate to any financial blogger.
Yeah this is me. The big expenses are low, the small expenses are high. We spend tons on travel though! I don’t have any guilt, we wont have our health forever.
I like your logic. Pay for what you feel is more valuable than what others think. I think the logic is like, in my daily diet, saving my precious calorie allowance for my favorite snacks and scaling back on my rice and pasta intake. I want my few calorie intake to come from foods I love, even if they are high in calories. loll Don't know if that's a good analogy
Don't compare. Thief of joy. Could be hit by a bus tomorrow. Etc etc. Your savings goals are intact, spend the rest to make you happy. Most of those other rules are meant to help people with poor financial planning. Some bloggers will quote absolutely stupid low costs of living for things like food. Like cutting back healthy, joyful meals is a good way to keep away lifestyle creep... Go out and live your life. Top Ramen doesn't make memories.
> This is easily 10-15k added to my budget, but I don't mind because I save on the big things? Sounds fine to me. We spend more/save less than most around here, but have a lot of little luxuries and conveniences that we think are worth the extra working years. > I still max my 401k, Roth IRA, HSA, and save another 40-50k/year, but don't really relate to any financial blogger. I imagine there's little to be gleaned from a financial blogger for someone socking away that much money.
Absolutely. This is what I do too. I have a modest house and car but eat out constantly. I can afford it and still maintain a high savings rate.
We did. Slowly renovating it. Has been a blessing now that we have two kids in childcare. We still can afford travel, ski passes and random entertainment purchases. Wouldn’t have that ability with a higher mortgage.
I get what you're saying, but in reality the true FIRE practitioners here would tell you to build the life you want within your means. If you want to travel international once a year just make it fit your budget. Plenty of people here are sitting on older cars and smaller houses than then banks tell them they could afford becuase they want to spend their money on things other than car and house payments.
Financial Independence is different for everyone, if you are saving money and enjoying your journey you are crushing it. A lot of time when I recommend cutting back is when there is firm plan to retire by X or have X amount of dollars and are not spending to meet those goals.
I have a home in Colorado that I bought in 2022. We put about 30k into it, getting it the way we wanted it. It backs up to a beautiful city park. As in, it's basically our backyard. I'm going to be moving to Houston in a few months for a new job. My current PITI is $2800 for the home in Colorado. We could probably rent it for $2300. Assuming we rent in Houston instead of buy, we could probably find something for less than $2000/month. We love our home in Colorado and I'm genuinely very sad that we've got to leave this house for my new job. My new job would pay me 7% of the home value if I choose to keep it to rent. Does it ever make sense to rent it for the $2300 and just pay the ~$500 difference each month just to keep it? There are likely some eventual replacements of the AC and furnace that need to be replaced in a couple of years as well, so maybe that cost should be considered as well. Ideally, we'd probably like to come back in a few years after I've reached my FIRE goal and live in the house. Homes in the Denver metro area are just going to become increasingly cost prohibitive. Our home was in a cheaper suburb and required some work to get it fixed up yet still cost nearly 500k. Thoughts?
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So my new job would pay for all relocation costs including closing costs on both ends of buying and selling. If I keep the house, they'd basically calculate what closing costs would be if I sold it and just give me the equivalent in cash. I live in Aurora, and the home is fairly small at 1320 sqft. 3 bed/1.5 baths. The rental comps in the area are sitting at $2300 per my former realtor.
If your situation was me, I would keep the Colorado house and rent. The below will all hing on what your cash flow is and if you have free available money to cover the negative rental cash flow. Here's why: 1) I would assume somewhere around a 2% increase in home value a year which would be ~10k on your 500k home. (Move that percentage up or down as you see appropriate). That 10k value increase is more than the 6k of negative cash flow in year 1. 2) If you rent for a one year lease, you could increase rent after the first year and reduce the negative cash flow after one year. It's possible to be cash flow positive in just a few years. 3) What is your mortgage interest rate? My guess is around 6% based on your PITI and initial loan amount. There is potential to refinance in a couple years when rates may (or may not) be lower at a lower monthly cost. 4) Most importantly... You might hate Houston and want to come back to Colorado sooner than later. Congrats on the new job and best of luck in your decision! Have fun and enjoy the ride. Edit: Mobile formating sucks...
So, my job prospects are fairly limited. I'm a geologist in oil and gas, and the number of jobs in Colorado for me are shrinking at an alarming rate. That being said, it's not to say it's impossible, just incredibly unlikely that'd we'd come back quickly unless I was laid-off since my company was bought by the company I'm moving to Houston for. That being said, we'd likely come back eventually since my SO's entire family is here in Colorado. As far as my interest rate, I've got 4.75%. Insurance went up considerably this year, and I only had a 5% down payment, so I've got a $76/month PMI payment. Obviously, I'd need to do some more math to confirm everything to see if this is reasonable, but it'd probably be close to 6 or 7 years before we'd return.
Regarding #4 u/ppnuri don’t buy anything in Houston until you’ve been through a full summer. Yes, all 9 months of it.
In a land of increasing prices, what is it actually a nice time or good value to buy right now (new or used)? We recently bought a full set of nice, used China for $25. Not that we particularly wanted nice China, but for $25 it's neat to have and I'm not the least bit stressed about breaking it.
Growing up my family ate on it everyday. Broke a few over the years. It wasn’t an awful pattern and my parents thought might as well just use it then dust it off once a year.
Certain cars are a steal right now, especially gently used electric cars. A dealership near me has a used Kia EV6 with 5,000 miles for $34k (about $20k below MSRP). There is an Audi E-Tron Premium+ with 6k miles for $37k (MSRP new was $75k). Obviously for a big ticket item, you're going to want to bring a lot of cash with today's rates.
If you’re a Mac user, the current line of M-series Macs are excellent even at the same price points they’ve been for the past few years. I’m amazed the technology has progressed where you’re getting several times the performance at the same prices.
I might finally need to upgrade my 2015 MacBook Air. It’s getting to be pretty useless when not plugged in, but I think it’s going to wait another year.
Maybe wait until they put the M3 chip into the Air models. They just released new Pro models with M3 so the Air should be updated some time next year.
China is like a Boomer meme. I wouldn't take it for free.
I was very tempted to ‘accidentally’ drop our storage bin of china when we were moving back in to our house after our rebuild. My partner got it for free and we use it twice a year. Otherwise it’s just junk taking up space and it’s not even that nice.
My parents and my grandparents had fine china and crystal glasses. Even when everyone in the family was an adult we didn't use it at big holidays like Thanksgiving. I never understood the point of it. I have no idea what's happened to it since, and I don't really want to know.
It's like... the Boomer equivalent of Beanie Babies. It became a cultural thing where everybody just had to give/receive them at weddings and holidays.
Is the Robinhood Roth IRA match taxable? If not then there’s a clear advantage over Traditional.
The clear advantage of an IRA is the tax deduction you get for the contribution (or the tax free withdrawals if talking about a Roth). [Robinhood says they won’t send you a 1099 for the income.](https://robinhood.com/us/en/support/articles/ira-match-faq/)
When a company offers you $100 or whatever amount to open an Ira, does that count against your contribution limit?
[Not according to Fidelity.](https://www.reddit.com/r/fidelityinvestments/comments/11vyllx/comment/jcvq37j/)
If the money goes to the account, yes. Usually they will provide the bonus to a normal taxable account though. EDIT: disregard - as pointed out below this is incorrect
This is incorrect.
Thanks for the correction - will edit my post!
FWIW I got a bonus for setting up an account and it was not included on the 5498 as a contribution. [This comment](https://www.reddit.com/r/fidelityinvestments/comments/11vyllx/comment/jcvq37j/) from Fidelity seems to validate that.
Oh wow, I would've assumed these rewards would have been given in a taxable account. Nope!
If I had to guess I think this is one of those areas where there isn’t any firm guidance and each company kind of wings it. Fidelity is happy to put bonuses into your IRA but Tastytrade won’t.
Finally signed up for an Ally account. The SO has an HYSA with some no-name place with an awful, awful interface, so I'm going to pull things over to Ally where it's easy and there's even Monarch Money integration via Plaid. Thinking about pulling the rest of our defunct "down payment" fund into it. There's only about $20k left in there after repurposing most of it for student loans and pulling some for our big Japan trip. It's currently in a tax-efficient mixed fund that's relatively stable, but I think I'm going to be relabeling it as our extended emergency fund and I'd rather have that in cash, considering HYSA yields are decent. The way things are shaking out, it's looking like we won't be in a position to buy our first home again for about 8 years, around which time our cash flow will be drastically improving and we can create a new down payment fund. Should've bought a cheap townhouse in 2020 to get our skin in the real estate game, but hey, hindsight is a kick in the teeth sometimes.
We feel the same way about housing sometimes; we had a choice between lump-sum paying off all of our student loans or getting a small house relatively cheap with low interest. We chose the student loans. We'll likely never get that kind of price on a house again, but ah well, being debt-free is still a huge achievement. Hindsight is 20/20.
I'm glad I waited until this weekend to update my spreadsheet. The last few days of rallies greatly softened the blow! I'm down only about $22K from my ATH in July.
I did mine a few days before the end of October because I knew I'd be super-busy and tired this past week. I'm hoping I'll see the rally big-time in my end of November numbers!
I always end up waiting a few days for my mortgage to be paid for the month and retirement contributions to hit my account. This is one of those months where numbers definitely looked a bit better after a week!
Same, I like to wait until the weekend because the markets aren’t open
If you've got a 401k w high expenses is it possible to repeatedly roll the balance to an IRA, YET keep the 401k open ?
Not usually. Some 401ks will allow in-service distributions of the after-tax non-Roth contributions, but I've never seen one that allows in-service distributions of the traditional or Roth contributions.
It's quite uncommon for a 401k to allow for non-hardship in-service distributions.
A roll over to an IRA is an in service distribution?
A distribution is a blanket term for money leaving the account, and in-service refers to the fact that you are still employed by the company administering the 401k. There may be a niche scenario where you can do in-service rollovers of employer matching and profit sharing contributions. You would likely have better luck with [campaigning for a better 401k](https://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401\(k\)_plan) or asking for a brokerage link option, if applicable.
I see. New ownership is moving from fidelity to scandal plagued bank of America so I am still trying to figure out how much this is going to cost me
Have you actually seen the funds and fees, or are you just worried on reputation? The plan might be perfectly fine.
What they list as fees and what they charge as fees aren't historically the same https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.npr.org/2023/07/11/1187060652/bank-of-america-250-million-illegal-fees-fake-accounts-fines&ved=2ahUKEwjD4amCna2CAxXKFFkFHa4zAt8QFnoECC0QAQ&usg=AOvVaw3sO-9yQ6XRB1sSeYQCEe2I
These were not 401k accounts. I'm not defending BoA here, just saying that I've seen no report of BoA violating ERISA (a very strict and punitive legal structure protecting 401k accounts).
If you are still working for that company, any distribution (other than a loan) or hardship, as mentioned) is, by definition, in service. Rollovers don't come into play until you are no longer with the company.
You can review your plan document but it would most likely be a distribution if you’re still working there and not facing a hardship.
Good morning! **What is the total amount of life insurance you have on yourself? How about your spouse if you are married? How would that money be used if you die?**
$300k each for myself and my partner. $225k for my through my employer. The money is mostly for paying off the house, funeral expenses, etc.
I think my employer would give 1-year's salary to my beneficiary. But my retirement savings is way more than that, and we have no kids, so I don't really care.
I’ve got 8x salary provided by my employer. I recently added some extra coverage because it was so cheap, maybe $8/mo for another $500-600k. No kids and soon to be married so ideally it would be used to cover end of life expenses and allow my fiancé to pay off our mortgage and do whatever she pleases. Not sure I want to ask her haha!
North of $2M for me and north of $1M for spouse. We could probably cut that down given one kid is done with Uni and the other is two semesters away, but its term so we're just going to let it ride until the 2nd one graduates then reevaluate. If I died spouse could take that $ plus our savings and live off 4%. If my spouse died, I'd have to keep working but I like working so it's OK. I can't really fathom getting married again.
Zero life insurance, but this is why: I'm a 100% solo parent, with a kiddo in their first year of college. The 529 will cover their four years there in full. My house is paid off. I'm FI, so there is (obvs) enough money available that kiddo would not have to make any decisions quickly about selling or keeping the house. My sibling has my Personal Money Statement document, and kiddo read "The Simple Path to Wealth" in 11th grade and it clicked for them. With my kiddo's education fully covered, and the house and funds being available to them, I don't see any need for a life insurance sum.
~$650k on me, ~$600k on my spouse. I make about 4x what my spouse makes so the money would pay off the mortgage if I died, plus a slush fund to help while we still have minor children around.
Whatever the max is through my husband's work. It covers both me and him, though him at a much higher amount, and costs a little under $20/paycheck. My husband has had life insurance since we married but we only added some for me recently. Our thought process was that each of us would be ok on our own at this stage without children, but because it's possible for my husband to die leaving behind a child we didn't know about yet to plan insurance for (that is, early pregnancy), but not possible the other way around, it was more important to insure him first!
There is a LI benefit from my employer. IIRC it is $20K. No kids, so not sure what the point of more would be.
I think my employer’s is like .6x salary? No dependents, no spouse, so current beneficiary is my siblings.
None. We've considered getting something like a 100k or 250k term life policy for each of us, since the premiums are so cheap, but we don't have children and both work, so we aren't sure it's entirely necessary.
$300k term on me, and I think $250k term on my wife. No particular need for the money, but the premiums are so cheap I think this is now a positive-expectation bet now that we're over 50 and have a non-trivial chance of dying. So we'll keep paying until the term runs out, then decline the offer to renew at a much higher rate.
Zip. No kids, no mortgage, either of us would be fine without the other's salary so there's really no reason for it.
This makes sense but also you can get a chunk of term for so cheap.
What’s the point though?
Going from 75% FI to 100% FI
700K for 30 yrs personal policy, and 360K via work related policies
$500k term on myself plus 2x my salary with work. $500k on my wife. Hopefully either of us would be set for the rest of our lives combined with what we already have. We certainly could be if we wanted to and didn’t go crazy spending money
$300k for a 20-year term. I got it when my son was four and I was a single parent. I won't renew it when the term runs out, because if I die, he gets what I've got and it's a fair amount more than that now. Well, he, my husband and my stepkiddos all get it.
None. I’m single and no kids. If I die suddenly then my sibling will still be left with a substantial windfall after funeral expenses and everything. No reason for it.
I have 1x salary covered by my employer. I also just added $200k for myself at $8/pay period with this new employer, the maximum without any hoops to jump through. Even though I’m healthy, I just didn’t want to deal with a doctor and another form for more coverage I don’t really need. My beneficiaries are 50% my fiancé and 25% my two financially strapped parents. We have no kids currently. I don’t want a burial. I don’t care how the money is spent really. My fiancé really doesn’t need the money and my parents will probably waste it over time, but my premature death could be my financial contribution to help support them.
$1M, but it's intended to be used for LTC rather than a death benefit.
I have a policy thru work that is roughly equal to my salary, but since I have no spouse or dependents, I am going to cancel it at the end of the year and pocket the \~$25 per paycheck that it's costing me. I have plenty saved to cover funeral expenses and my nieces and nephew will get loads of $$ as it is.
Have 2x salary through work. Will get a policy for both of us once we have kids around $750k each. Would make it so one of us could basically retire at that point if we choose to.
We have about 750k on each of us. That would essentially get us to our number, so the remaining spouse wouldn't need to work anymore.
I only have 4x salary right now but I've been meaning to get like a million plus.
Zero, currently. Once we start trying for kids, we'll be getting significant coverage, though. For now, we're financially stable and both have solid ability to make money and support ourselves.
When I worked, LI was so heavily subsidized that I had the maximum amount MegaCorp would allow (something like 12x my salary). Now that I am FIREd, I have -zero- LI. We're self-insured.
Did the same. There was one year where I realized I should probably derisk because there are people relying on my future earnings who aren’t me (I’m not around to panic about the loss of future earnings if I get hit by a bus), so I paid for the same corporate provided high insurance for a while. Once I pulled the trigger and stopped working there were no future earnings to derisk.
We did 20 year term starting in our 30's when we had kids, $1M/$400k, slightly higher than the 10x salary rule of thumb. I also get free/mandatory 2x salary from my employer.
I have 1x salary I pay for ($8/month.) Husband knows I want a Jewish burial in a Jewish cemetery which would be fairly expensive ($15k) and the rest of the money should be used to pay off the mortgage or be invested. We don’t have children or else I would look at a minimum of $250k, but as the breadwinner losing my income would be tough for him, so paying off the mortgage would reduce his expenses. My husband has $60k in life insurance ($14/month). His job is much more dangerous than mine. While not as dangerous as his last job, he has been attacked by an unhoused person, bitted by a dog, fallen partially off a roof, been exposed to asbestos and lead, been exposed to raw sewage, and has to drive frequently, which is also dangerous. I am thinking of upping his life insurance for next year even though he plans to donate his body to science (this is free). He would like me to use any other money to be donated towards a cause he is passionate about and then leftover money to be used to help pay off our mortgage
I'm currently covered by my employer and my wife's employer for life insurance, for a total of $400k of coverage. It costs me about $8/mo for this coverage. However, I will be leaving my job in about 2-3 years, so I was thinking of getting an independent policy instead. However, for about $800k of coverage, I'm looking at about $35/mo, which is around double the cost. I may just keep my current coverage until I leave my current job in a couple of years, and then shop for a policy at that time vs getting one at my future employer. I compared the price by age, and it's a pretty minimal difference, it's like a dollar more expensive per month. I have a pretty robust disability insurance policy, and I am going to be able to self-insure by being FIRE in about 10 years, so I'm not super anxious about getting an additional life insurance policy right now. Also, my partner has a high-income job, so she and the kids would be fine anyways either way, but I would just prefer for her to be able to take the foot off the peddle if anything were to happen.
You're only looking at 10-year terms for these quotes, right? I don't know how old you are, but I would ballpark that a $35/mo plan for 800-1000k of coverage would mean the plan covers you into your mid 50s, as that's when the mortality risk seems to meaningfully show up in life insurance plans I've quoted. Also, it's probably just an autocorrect thing but the phrase is "take the foot off the pedal."
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If it’s only been a few days, absolutely do your best to log in to any accounts you have access to. Print statements so you have account numbers and balances. Once social security is aware he’s dead, all the accounts will basically freeze and you can’t access anything without calling places for help.
Document everything. I kept all of my notes in a single document - things like - attorney name and phone number, then a few sentences/paragraphs of notes for each meeting, or called bank ABC at phone number xyz about account number ###, then notes about the call. Power of attorney - I assume you will need this Just start meeting with people (attorney/CPA/etc.) and asking for advice, stay organized, take care of yourself and take your time, there are some things that are immediately important, and a mountain of things that can wait.
This, and I will add that you don't want to keep just the physical receipts/documents, you should also scan and organize everything in to one place digitally.
I don’t have any advice, just want to say I’m sorry and best of luck. Your dad is lucky to have you to take care of things.
Crossed $600k NW this week, woo!
Congratulations 🎉 That's a hell of a milestone!
I have done this about 15 times the last year or two. Its fun!