FIRE Movement (Financially Ind./Retire Early)

[Marky Mark]

17 minutes ago, Jenksismyhero said:

I agree with a lot of this, though I also subscribe to the "treat yo self" model. For example, if you are in your car for 1-2 hrs a day, why not splurge a little and be happy with what you're driving? Same with the occasional gadget purchase, lunch, etc. You don't have to go crazy and you shouldn't do that stuff routinely, but the worst case scenario is you live a pretty boring life because all you're doing is thinking about saving for the future and then you die at 55. What a waste. You gotta live a little. There's a happy medium between being frugal and saving and enjoying life as you go.

 

 

Yep, whatever balance works best for you in both the long and short term.

[soxfan49]

3 hours ago, StrangeSox said:

The College Illinois plan stopped taking new applicants last year and is at risk of not actually being able to cover the tuition expenses down the road.

529's are good but you might not want to load everything in there as that money is more locked up for specific education expenses. If for some reasony our child doesn't go to college or gets scholarships etc. there will be penalties for withdrawing.

 

I used to be a financial advisor, but I could be wrong when I say that this is incorrect. I believe there are penalties for withdrawing but that's not the case if you wait until 59.5 years old and then you can change the beneficiary to yourself in which you can then use it like any other retirement vehicle.

You can also change the beneficiary to a grandchild or niece/nephew, I believe.

 

1 hour ago, Chisoxfn said:

Yep -The concept of a 529 is good but there are other vehicles you want to put your money in first and you certainly have to be cautious of some of the limitations of 529's. The use of 529's to me depends on how much you already put in 401K + other vehicles and what amount of liquidity you need.  

But what limitations are there? Sure, the growth isn't fantastic but with more growth comes more risk and you don't want to mess around with your children's education. Take the 2-3% and be happy with it.

It also depends on how important providing education is compared to retirement. If you want to work until you're 67-70 and education planning is a 10/10, then 401k contributions shouldn't matter.

Edited October 19, 2018 by soxfan49

[LittleHurt05]

Damn, you guys are making me feel like a bad parent. My kids entire potential college funds are basically invested in rental properties at the moment, lol. (Though not by choice)

[Marky Mark]

529s that are withdrawn and not used for college expenses:

-Your principle isn't affected

-Your gained interest is taxed and you'd have a 10% penalty.

[caulfield12]

My father died at 63 from a heart attack.  Never got to enjoy all those things that people save their whole lives for because we led a simple middle class life other than 2+ week family vacations every summer.  Never took out a loan for anything but mortgage on house with 1976, paid off in 15 years.

My mom never worked more than part-time, places like Hardee’s and Bishop’s Buffet.  She worked for the Federal government in clerical work in the 50s and 60s but was unable to adapt to technology changes when she tried to go back in the 80s when I was in middle school.  To this day, she’s never had a computer or cell phone, and has only travelled a couple of times on an airplane.  But she’s almost 90 now and was driving a car up until last year.

My father ate everything he enjoyed, didn’t care to exercise and almost never went to the doctor unless there was no other choice.  Pretty typical of that generation.

At any rate, I’m extremely happy I went to Iowa for BA English instead of Northwestern or Notre Dame. (Two Master’s were basically free due to teaching assistant positions, the other was like Teach for America and subsidized by a grant.) 

When he died in 1999, he’d managed to save about $375,000 (mostly Vanguard and value investing, like BRK.B), plus his government pension (some still goes to my mom now), the paid off house, gold coins (not a good ROI), etc.  Not bad for a person who never earned more than $44000 per year in a civil service position, and only one family income.

The only big decision we had was long term care coverage or not.  No was the choice.  Now, it’s costing $4500 per month out of pocket for assisted living, which is more or less offset by incoming money from pension, small amount of SS, dividends, forced distributions of taxable accounts, etc.

 

We’re much better off having invested that money (despite 2001-02 and 2008/09), rather than investing it into a pricey “elite” school.  It’s a bit ironic, since the students I’m working with here in China are going to Oxford, Cambridge, London School Of Economics...all of them are 1500-1600 on SAT, maybe 1530 average, and they’re all going to spend the maximum as international students at top 30-50 US or Canadian universities if they don’t go to UK, and that’s after $20000 per year for 3 years of high school, another $15-25,000 for training centers for IELTS, TOEFL, SAT, ACT, another $15,000 for agents to help with the overseas app process, like financial forms, essay editing, etc., and that doesn’t even count ESL training and expensive tuition for KG through Grade 9, music lessons, art classes to boost creativity, robotics or design, martial arts.  I would guess the average family invests at least $250-350,000 on just one child’s lifetime education, and $500k isn’t unheard of if you count MA/MS.  They also at the very least give their kids the down payment on a house upon marriage, another $150-250000 on average if you include the wedding/honeymoon.  Kids never get a job here until after they finish college, it’s all study, summer camps and extracurriculars to improve their admission opportunities.

Edited October 20, 2018 by caulfield12

[soxfan49]

Caulfield, good point on LTC. That can seriously fuck your retirement. I know one company (Northwestern Mutual) that still sells that coverage, and while expensive, it’s going to be far less of an expense in hindsight than an actual LTC event would.

Thanks for telling your story of your family, too. My dad passed last year at 67 of a heart attack.

[Chicago White Sox]

23 hours ago, Jenksismyhero said:

I agree with a lot of this, though I also subscribe to the "treat yo self" model. For example, if you are in your car for 1-2 hrs a day, why not splurge a little and be happy with what you're driving? Same with the occasional gadget purchase, lunch, etc. You don't have to go crazy and you shouldn't do that stuff routinely, but the worst case scenario is you live a pretty boring life because all you're doing is thinking about saving for the future and then you die at 55. What a waste. You gotta live a little. There's a happy medium between being frugal and saving and enjoying life as you go.

 

 

Great post.  Obviously no one should ignore their retirement planning, but at the end of the day tomorrow isn’t promised.  My view is to enjoy your life while you can & try your best to balance current and long-term objectives.

[caulfield12]

If It Feels Like Capitalism is Killing You — That’s Because It is

What American Collapse Teaches Us About Capitalism

https://eand.co/if-it-feels-like-capitalism-is-killing-you-thats-because-it-is-304690c453a5

 

A lot of the underpinning of the FIRE Movement is contained in this article...it might be bleak, but it’s understandable that more people are starting to question the assumed “must work until 67 1/2 or 69” mindset.  It’s meant to provoke, and push peoples’ buttons, and posit controversial ideas like Universal Basic Income paid for by corporations or higher taxes on everyone.  The alternative is just refusing to jump on the Hamster Wheel at all.  (Note:  most parents aren’t exactly going to support that notion, but it’s not just “lazy Millennials” with this idea.)

[he gone.]

On ‎10‎/‎18‎/‎2018 at 1:49 PM, Jenksismyhero said:

Oh it's a good time. Between daycare for 2 and student loan payments (law school + graduate school) ... My wife wants #3. I'm terrified of college expenses in 15-20 years.

What will a college education be WORTH in 18-25 years from now? That's the question. I think the idea of college "as is" is antiquated. For kids it's more or less "camp" to go off and learn and live on your own. To grow socially, to build that network. It also comes with continuing education, but like with most education it's really more or less a "test" of proving to employers you can be compliant and follow direction properly. The higher the GPA, the better the institution the more likely it is that you have the ability to work hard and be compliant to your boss/company. Because let's be honest, I remember taking "Tennis" class, I remember taking Biology, and theology, and a bunch of other completely worthless (and expensive) classes that have zero to do with my degree in Finance and Insurance. At that my major in insurance, although specific, STILL didn't translate to my job at an insurance company. I had more basic building blocks than my peers, however commercial insurance isn't rocket science and within a year we're all the same field of play. I would assume most of us out there applied less than 5-10% of what we learned in college to our actual jobs. It's what we learned about OURSELVES during that time away from home that shaped us into the worker you are today. At the end of the day college is one expensive summer camp teaching life skills and something that is imposed by society as a way to say someone is qualified for a job.

 

This is unlike when my parents (I'm 31) went to college. Then it was a true way to separate yourself from the pack. Still was a societal norm imposed, but there were less people who went. Now, it's college AND a masters. What's next college, masters, volunteering and PHD? My generation (i think) is fed up with debt, student loans, etc. and i think that will be passed down to the next generation. Also technology is rapidly evolving. I'm not so sure college in 2040 looks like it does now. Who knows though - these institutions have been around forever, but with the way they're spending there's going to have to be some shutdowns, some consolidation, and some change of the cost of an education because it can't continue on the trajectory it is now.

[Chisoxfn]

Brian - What do you do? Are you on the P&C side or Life side?  Credit analyst/portfolio manager?  

[Soxbadger]

College is a barrier of entry. Its not different than law school. Its a way to keep people out of the market and therefore have less competition for jobs.

If masters becomes too common, then it will be double masters etc.

[he gone.]

1 hour ago, Chisoxfn said:

Brian - What do you do? Are you on the P&C side or Life side?  Credit analyst/portfolio manager?  

I'm in Surety - which is more or less a financial product under an Insurance umbrella. More or less my job is credit analysis.

[raBBit]

1 hour ago, Soxbadger said:

College is a barrier of entry. Its not different than law school. Its a way to keep people out of the market and therefore have less competition for jobs.

If masters becomes too common, then it will be double masters etc.

This is what happens when you have a government guaranteed loans and a society that shames people who don't go to college. 

As to the thread, as others have illustrated. Esentially impossible unless youre' well off. 

[bigruss]

I don't know about y'all but since working my brain power has become so focused that I crave learning other things and I'm more thankful for my college electives because it expanded my brain, perspective and learning even when I didn't want it to.

 

And if you take Tennis then you can only blame yourself for not studying something else with more value.  I get we all liked easy courses in college (I am definitely included in that) but blaming college for offering Tennis and then shitting on it when you decided to take it is ridiculous.  Own some responsibility for your actions.

[he gone.]

1 hour ago, Soxbadger said:

College is a barrier of entry. Its not different than law school. Its a way to keep people out of the market and therefore have less competition for jobs.

If masters becomes too common, then it will be double masters etc.

Agree 100%. I see it in my field with professional designations. Everybody is out there taking useless tests to get extra letters after their name. They're not doing it to be a better professional or to become an expert -- it's all for $$.

 

There has to be some weeding out process, but at some point the cost has to level out. College/masters/law school, etc. is like any other economic equation - People will continue to pursue those options as long as there is a ROI. You saw it with Law School last decade -- all these schools popped up promising some grand life style to kids. Colleges made their money, but way too many lawyers out there. No jobs. It has balanced itself out somewhat over the next decade, but for every employed lawyer out there, there is another one that is underemployed. I'd say for the first time ever college is being viewed almost as a negative by Millennials. The value proposition is out of whack. I have so many friends that choose to have a kid or two less because of school debt... that's f***ed up. I am one of those. I married into a law degree and poof goes my savings of a decade. I told her no more than 2 kids because of that. When you have a whole generation that went through that along with living through some baby boomer crashes and likely another crash coming soon ... me just thinks that 20 years from between all of that and technology that college may not be only viewed different, but may be completely different experience.  The problem is that college is so engrained in our society it's hard to move away from. We shall see.

[he gone.]

6 minutes ago, bigruss said:

I don't know about y'all but since working my brain power has become so focused that I crave learning other things and I'm more thankful for my college electives because it expanded my brain, perspective and learning even when I didn't want it to.

 

And if you take Tennis then you can only blame yourself for not studying something else with more value.  I get we all liked easy courses in college (I am definitely included in that) but blaming college for offering Tennis and then shitting on it when you decided to take it is ridiculous.  Own some responsibility for your actions.

I don't blame myself one bit for taking tennis.  The real issue is why are universities wasting money on electives like tennis, bowling, etc. You have a hired staff to teach those. And then people wonder why college is so expensive.  

There's a wealth of information in the world and sitting and listening to some professor who's so engrained in academia is not my preferred way to do it. If I know my major is going to be finance/business oriented why waste 2 years taking Biology 101 and the sorts? Is it nice information to have? Yes. Does it challenge you to learn new things? Yes. Can I find those books at a library and endless information on the internet if I am interested? Yes. So why spend $50-75,000 on 2 years of something that doesn't apply to what you're going to do in your career.

Another food for thought is if you are going to MAKE students take those type of courses why not let them choose entirely. I would have loved to study more exercise science courses about the human body, and health and science. I would have studied more about foods, culture, etc. I would have studied the histories of religions. I would have taken a bunch of psychology courses. I would have taken a bunch more economic courses. But instead you have a guidebook and you're told you must take one science course, one calculus course, one English course, etc. You're paying someone -- they're your employee, yet they tell you what you have to learn to be a good rounded student in THEIR opinion. So instead of getting hungry kids eager to learn about what they WANT to learn about you get me taking a tennis course and writing 10 page papers about british literature wanting to stab my eyeballs out.

It's asinine and antiquated. College is for the birds in its current format.

[Soxbadger]

1 hour ago, raBBit said:

This is what happens when you have a government guaranteed loans and a society that shames people who don't go to college. 

As to the thread, as others have illustrated. Esentially impossible unless youre' well off. 

Loans are the only thing that give many people a chance. Not many people grow up with parents who can spend 500k on education (that is for multiple kids). Without loans the barriers would be even higher. College used to be the barrier, the reason its now masters/law/doctor is because the upper class wants to make sure that their kids always have a built in advantage. 

Loan debt isnt a consideration, masters/law school is just basically 2-3 extra years of partying for them. But it gives their kid a built in advantage in the market. 

[bigruss]

1 hour ago, BrianAnderson said:

I don't blame myself one bit for taking tennis.  The real issue is why are universities wasting money on electives like tennis, bowling, etc. You have a hired staff to teach those. And then people wonder why college is so expensive.  

There's a wealth of information in the world and sitting and listening to some professor who's so engrained in academia is not my preferred way to do it. If I know my major is going to be finance/business oriented why waste 2 years taking Biology 101 and the sorts? Is it nice information to have? Yes. Does it challenge you to learn new things? Yes. Can I find those books at a library and endless information on the internet if I am interested? Yes. So why spend $50-75,000 on 2 years of something that doesn't apply to what you're going to do in your career.

Another food for thought is if you are going to MAKE students take those type of courses why not let them choose entirely. I would have loved to study more exercise science courses about the human body, and health and science. I would have studied more about foods, culture, etc. I would have studied the histories of religions. I would have taken a bunch of psychology courses. I would have taken a bunch more economic courses. But instead you have a guidebook and you're told you must take one science course, one calculus course, one English course, etc. You're paying someone -- they're your employee, yet they tell you what you have to learn to be a good rounded student in THEIR opinion. So instead of getting hungry kids eager to learn about what they WANT to learn about you get me taking a tennis course and writing 10 page papers about british literature wanting to stab my eyeballs out.

It's asinine and antiquated. College is for the birds in its current format.

If you and hundreds of other students don't take tennis then they won't offer it.  I'm guessing those courses are super cheap to offer, the facilities are already there and they probably pay the teacher MUCH less than a real professor.

 

And why be forced to take some science courses?  Because it's part of a well-rounded education.  You would never touch a bio book if they didn't "make" you pick it up, but having that base knowledge will help you understand the world a bit more.  Yea you may not be researching biology as a career, but maybe you work for a pharma company in the future and you now have a slightly better understanding of what your company is doing because of that.  Not having a direct link to your career doesn't mean there isn't immense value in that education.  I work for a mutual company now in IT security, learning psychology has paid off in dividends.  Learning about weather in atmospheric science has improved my ability to understanding how the world's environments work a bit better.  Taking a class on German Fairy Tales taught me how cultures evolved, taught me to be a better writer.  Guess what a big part of my job is now?  Understanding other cultures and how things have evolved over time and communication.

 

Not understanding the world a bit more is antiquated.

[caulfield12]

The debate here is whether universities should continue to force students to spend money on required PE courses.

Univ of Iowa had two if I recall, so I took field hockey and racquetball.

I taught badminton, baseball/softball, tennis, volleyball, ultimate frisbee, basketball, etc., as a TA which paid for most of one of two Master’s degrees.

If you’re not going to be a healthy adult and spend all your time on gaming, it won’t matter.

You can also take AP or CLEP or test out of required classes...but still difficult to find interesting courses you want to take in your major/minor areas due to low priority status for underclassmen in scheduling.

Here in China, law school or medical school begins at age 18...you go directly into it.  The problem is a numbers game...if you don’t do well on exams in high school, you can’t g to college or they choose a crappy major for you which you spend two years trying to escape by earning top 3 marks in the class.  But no student loans, either.  Parents pay for everything.  Most kids never have their first job until somewhere between 21-24 years old.

[Chisoxfn]

4 hours ago, BrianAnderson said:

I'm in Surety - which is more or less a financial product under an Insurance umbrella. More or less my job is credit analysis.

Gotcha, back when I worked at Deloitte I had a client who was in Surety.  

[he gone.]

15 hours ago, bigruss said:

Not understanding the world a bit more is antiquated.

I feel like my arguments were pretty focused on my disdain of the current system - not taking shots at people's intelligence.  That being said I will stand by my intelligence any day of the week.

I stand by my argument that you don't need to spend $50-75k over your first two years of college taking courses the university deems important. Colleges date back 100's of years when there was no internet, digital books, podcasts, etc. I don't have to sit through Biology 101 in college to learn Biology 101 any longer. Chances are if you are not interested in Biology 101 you're not going to put the effort in our retain the information you learned anyways, which goes back to my point to let the students choose how they want to earn their credits.

[Soxbadger]

20 minutes ago, BrianAnderson said:

I feel like my arguments were pretty focused on my disdain of the current system - not taking shots at people's intelligence.  That being said I will stand by my intelligence any day of the week.

I stand by my argument that you don't need to spend $50-75k over your first two years of college taking courses the university deems important. Colleges date back 100's of years when there was no internet, digital books, podcasts, etc. I don't have to sit through Biology 101 in college to learn Biology 101 any longer. Chances are if you are not interested in Biology 101 you're not going to put the effort in our retain the information you learned anyways, which goes back to my point to let the students choose how they want to earn their credits.

That is really what AP classes are for. I started college with over 40 credits and could have had an additional 20 if I would have taken 1 foreign language class to qualify for retro credits.

Bio 101 you can get in HS as a Sophomore. I dont believe I took anything lower than a 300 level in college. 

[caulfield12]

Opinion: Mr. Money Mustache says Suze Orman has it wrong on financial independence and early retirement

 

By Mr. Money Mustache

 

https://www.marketwatch.com/story/mr-money-mustache-wants-suze-orman-and-everyone-else-to-understand-these-8-things-about-the-fire-movement-2018-10-05?siteid=yhoof2&yptr=yahoo

 

 

These are the bad things about early retirement that no one talks about

https://finance.yahoo.com/m/7ced7a9b-ab6a-37a4-add6-274aea4d8822/these-are-the-bad-things.html?bcmt=1

Edited October 28, 2018 by caulfield12

[raBBit]

On 10/25/2018 at 5:10 PM, Soxbadger said:

Loans are the only thing that give many people a chance. Not many people grow up with parents who can spend 500k on education (that is for multiple kids). Without loans the barriers would be even higher. College used to be the barrier, the reason its now masters/law/doctor is because the upper class wants to make sure that their kids always have a built in advantage. 

Loan debt isnt a consideration, masters/law school is just basically 2-3 extra years of partying for them. But it gives their kid a built in advantage in the market. 

People who grow up in poverty have far more options that just taking on college debt. There are plenty of scholarships and financial aid available to good chunk of Americans if they have the right demographic profile.

I am not saying there shouldn't be loans for college. I am taking exception to government guaranteed loans. That's a huge distinction. With government guaranteed loans teenaged kids are able to sign themselves up for a mortgage in some bs major with no understanding of the risk they are taking on or the future earnings that major affords them (or doesn't). If the private loan market was more involved and the government wasn't making billions off of student loan interest than private institutions could offer debt in accordance to an individual's likelihood to get it back and in turn, there would be less students in debt for their whole life. The alternative is a skewed supply and demand market where academia can charge whatever the want for tuition because students can get loans as soon as they sign up their social security number with the government. That's how you get tuition increasing 6x faster than inflation. 

I don't know who you knew that went law school to party but that is not typical.  

Edited October 29, 2018 by raBBit

[caulfield12]

Would it be better to have private loan companies charging 6-18% interest, or the government charging 3-5%?

This is the first complaint I’ve ever heard about the government being in a position to earn a profit.  We only hear about the USPS or Amtrak and how inefficient government enterprises shouldn’t be subsidizing public corporations with cheaper services than would be available through the private sector.

So what is the solution, to close most humanities programs and force the majority to study business, law, medicine, engineering, STEM, AI, robotics, VR, AR and IOT (internet of things/big data/cloud computing)?

If that’s the case, why even have general requirements?  Why not just directly into your major at 18 and graduate at 20?

 

And a low supply of doctors and oversupply of lawyers is one of many reasons why we’re currently experiencing exploding health care costs...if they want to rebalance, they should provide more grants/assistance for future doctors and make law school comparatively more expensive so we don’t end up with a glut of unemployed lawyers who can’t pass their state bar exams or pay back student loans.

Edited October 29, 2018 by caulfield12