PR'd financially today

freeflowme

Triple-Digit Post Count
Hey all,

Possibly a strange place to do this, but since I don't talk about finances with anyone in my family besides my wife (as it tends to come with a lot of judgment no matter what I'm doing) or with friends (because all of my friends seem to be in struggling financial situations) I wanted to just share somewhere that as of closing yesterday (I only check in on things quarterly, so as to not freak out about every hill and valley) I hit the penultimate milestone in my financial goals that I set out to achieve a little over 10 years ago now. Only the ultimate goal now lies ahead (although to be fair I've pushed that goal a little higher since setting out).

Basically, I set out to FIRE (become Financially Independent and if so choosing Retire Early) before the term was really coined, and I'm now 50% of the way there. Given how compounding works, I could theoretically "coast" the rest of the way there, depending on how long I want it to take until I reach financial independence / have the ability to retire early. Our lifestyle has really changed since having kids, though, and I also want to be successful in my career, so I imagine I'll keep working for a long time, although it'd be nice to be able to take on work because its meaningful not just out of necessity.

Pursuing a financial goal rather single-mindedly has meant that I've eschewed a lot of hobbies along the way. It was actually the realization that my life had become rather... sparse... as a result that made me want to get a barbell and some weights and start PTTP-ing in pursuit of some personal enjoyment of life, as strength training has always been one of the things I enjoy the very most. So, I guess maybe there is a connection there ;)

Anywho, upward and onward.
 
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Jak Nieuwenhuis

Quadruple-Digit Post Count
Good on you for pursing and sticking to FIRE.

It is a rather sparse life at times. "Free" hobbies are essential for keeping the goal in motion.

A barbell is a great investment, but it will set you back more than other options. Ex: a station for chin -ups/dips (~ $100 -$150) or a classic set of KB ( 16kg, 24kg, 32kg)..

You could also buy a quality adjustable dumbbell bar for very cheap, along with a few plates (100 pounds worth is like $50 or $60). This is actually really good training in terms of farmer walks, presses, goblet squats, snatches.

Bodyweight training isn't totally free, but a good pull up bar may provide you with a lot of quality strength gains without the cost, or space requirements of a barbell.
 

Sean M

Quadruple-Digit Post Count
Nice! I learned from Mr Money Mustache that the objective of the “game of life” financially is to build up a nest egg 25x annual expenses, so that you can withdraw 4% a year and (historically with few exceptions) have that nest egg outlive you. The sooner you save that up, the sooner you “win”. Also puts lifestyle in check: evaluating every purchase and lifestyle decision in terms of “How many months/years will this push out the finish line?” Way to go and keep it up!
 

Phil12

Quadruple-Digit Post Count
Congrats! I think there are quite a few FIRE minded people on the forums.
 

freeflowme

Triple-Digit Post Count
Good on you for pursing and sticking to FIRE.

It is a rather sparse life at times. "Free" hobbies are essential for keeping the goal in motion.

A barbell is a great investment, but it will set you back more than other options. Ex: a station for chin -ups/dips (~ $100 -$150) or a classic set of KB ( 16kg, 24kg, 32kg)..

You could also buy a quality adjustable dumbbell bar for very cheap, along with a few plates (100 pounds worth is like $50 or $60). This is actually really good training in terms of farmer walks, presses, goblet squats, snatches.

Bodyweight training isn't totally free, but a good pull up bar may provide you with a lot of quality strength gains without the cost, or space requirements of a barbell.
I suppose a barbell and plates wasn't the cheapest way to get back in the strength game, but I love the primary barbell movements a lot and I had saved gifts that I had received for years, so I splurged a little on myself. It has felt very worth it. :)

Nice! I learned from Mr Money Mustache that the objective of the “game of life” financially is to build up a nest egg 25x annual expenses, so that you can withdraw 4% a year and (historically with few exceptions) have that nest egg outlive you. The sooner you save that up, the sooner you “win”. Also puts lifestyle in check: evaluating every purchase and lifestyle decision in terms of “How many months/years will this push out the finish line?” Way to go and keep it up!
I've been keeping a 3.5% or even 3% withdrawal rate in the back of my mind, in hopes that my nest egg will keep growing as I get older, instead of dwindling. I'd like to be able to help out my kids and theoretically grandkids as I get older, and hey... maybe I'll live past 100. (y)
 

mprevost

More than 500 posts
Hey all,

Possibly a strange place to do this, but since I don't talk about finances with anyone in my family besides my wife (as it tends to come with a lot of judgment no matter what I'm doing) or with friends (because all of my friends seem to be in struggling financial situations) I wanted to just share somewhere that as of closing yesterday (I only check in on things quarterly, so as to not freak out about every hill and valley) I hit the penultimate milestone in my financial goals that I set out to achieve a little over 10 years ago now. Only the ultimate goal now lies ahead (although to be fair I've pushed that goal a little higher since setting out).

Basically, I set out to FIRE (become Financially Independent and if so choosing Retire Early) before the term was really coined, and I'm now 50% of the way there. Given how compounding works, I could theoretically "coast" the rest of the way there, depending on how long I want it to take until I reach financial independence / have the ability to retire early. Our lifestyle has really changed since having kids, though, and I also want to be successful in my career, so I imagine I'll keep working for a long time, although it'd be nice to be able to take on work because its meaningful not just out of necessity.

Pursuing a financial goal rather single-mindedly has meant that I've eschewed a lot of hobbies along the way. It was actually the realization that my life had become rather... sparse... as a result that made me want to get a barbell and some weights and start PTTP-ing in pursuit of some personal enjoyment of life, as strength training has always been one of the things I enjoy the very most. So, I guess maybe there is a connection there ;)

Anywho, upward and onward.
I achieved financial freedom at 48. I retired in a position to never have to work again, with enough reserves for unexpected circumstances. I cannot even begin to tell you how wonderful it is to have such freedom. The freedom is more valuable to me than anything I could have purchased along the way. Instead of buying stuff (mainly prestige purchases), I chose to buy freedom, to be cashed in upon retirement. It was a great choice.
 

LukeV

More than 300 posts
I don't discuss this with anyone because it can come across boastful or insensitive to those not so fortunate but I turn 50 in October and have just advised my employer that I am leaving. It's been a lot of years of putting money away, small amounts usually but regularly, and finally I can reap the benefits. I won't "retire" because I have no hobbies or interests outside of weight lifting (and posting on this forum lol) plus I genuinely enjoy working but I don't have to worry particularly about what work I do or what salary I make. It's a great feeling!
 

Anna C

More than 5000 posts
Elite Certified Instructor
Great thread. I wish our society would encourage people to talk more about financial sucess. Then others could learn. Thanks for sharing!

I think if I were to condense my financial advice it would be 1) start investing by age 25 whatever small amount you can start with, 2) be consistent over time paying yourself first, and 3) drive inexpensive vehicles and keep them for a long time. These 3 things have worked really well for me and my family.

Unfortunately the best financial strategies can be undone by medical costs and insurance these days, so that needs to be high on the priority list as well -- to live and work such that you can have decent medical care and coverage.
 

wespom9

More than 500 posts
Certified Instructor
My goal is not necessarily to retire early, but achieving financial independence (which to me means not stressing about money) is very high on my priority list. I am not a minimalist by any stretch of the imagination, but rather adhere to many recommendations by Ramit Sethi about "money dials" regarding living your life that is the best for you has allowed me to have so much freedom and joy while still hitting, and even surpassing, many of my savings goals. I'm very lucky my dad is extremely financially literate, got me started on RRSP's and investing and whatnot before I even graduated high school. I've always been a "saver" rather than a "spender", but learning in my mid-2o's about compound interest (thank you Art of Manliness) and reading more personal finance blogs has really helped me get on the right track toward retirement.
 

mprevost

More than 500 posts
I was lucky in that I fell into what Nassim Taleb would call a "barbell" strategy of investing. My portfolio is "antifragile." I am very risk averse. I periodically ponder the situations in which I could be financially ruined (even if the situation is unlikely), and then I fix my portfolio to at least be robust against that threat. I have gone about as far as I can go in that direction. Even a catastrophic medical condition will not ruin me.

It is similar to the advice I gave about preparing for special forces selection. Think of the challenges that can break you or break you down and train for that. Train for resilience rather than performance. If you are not broken and have not quit, you are still in the game.

Same with investing and building wealth. If you focus on returns only, you will end up over leveraged in risky investments and can be wiped out quickly. We don't see it and tend to underestimate the risks because of survivorship bias.

Finally, another strategy I have employed is to reduce my wants and needs, but freely enjoy the luxuries that come my way. "Use silver as though it is earthenware and earthenware as though it is silver." Seneca
 

wespom9

More than 500 posts
Certified Instructor
@mprevost I am a large fan of Taleb and think often of this strategy and it's applicability to different domains. Financially - I consider myself well versed in personal finance (long term planning, budgeting, etc.) but not as smart regarding the actual "investing" part. I do what most personal finance experts say NOT to do, and I have a money manager I use t buy mutual/index/whatever funds and handle all my investments. I try to learn as much as I can but feel there is too much I don't know to make as an informed decision as I would like.

I realize talking about money is taboo so please feel free to deny this request, but what holdings would you consider "risk averse" and what do you consider as risky? What threats do you consider? In what ways would you create robustness around those perceived threats?
 

Oscar

Quadruple-Digit Post Count
This is an interesting thread. Living in a country with 50% yearly inflation and a crisis every 15 years, living out of rent is pretty challenging. I'm working for it though. It's interesting how these things can be more or less planned in civilized countries, but not so much in others.
 

mprevost

More than 500 posts
@mprevost I am a large fan of Taleb and think often of this strategy and it's applicability to different domains. Financially - I consider myself well versed in personal finance (long term planning, budgeting, etc.) but not as smart regarding the actual "investing" part. I do what most personal finance experts say NOT to do, and I have a money manager I use t buy mutual/index/whatever funds and handle all my investments. I try to learn as much as I can but feel there is too much I don't know to make as an informed decision as I would like.

I realize talking about money is taboo so please feel free to deny this request, but what holdings would you consider "risk averse" and what do you consider as risky? What threats do you consider? In what ways would you create robustness around those perceived threats?
Besides my military pension, I have a significant amount in a CD ladder. Zero risk. Less than 5% of my savings are in the stock market. A trivial sum. I have looked at lots of risks.

1. Housing crash. Does not impact me. I rent.
2. Job market crashes. I am not hurt because I don't need a job.
3. Stock market crashes and loses 50% (or more) of it's value. Does not affect my wealth at all. I'm not in the market.
4. Runaway inflation. Affects my savings but my pension is adjusted to the CPI so my purchasing power is protected.
5. Catastrophic health crisis. Financially I am limited to $3K of out of pocket expenses per year for me and my wife
6. Lawsuit: My savings are at risk but my pension is protected from lawsuits and leins by law.
7. Theft: Everything I own fits in my van. They can have it. It is easily replaceable. I rented my condo furnished so theft, natural disaster etc. hardly affects me at all financially, even if everything is wiped out.
8. Complete collapse of the US government. This is the only one I don't have an answer to other than some cash reserves, the ability to live very simply and practicing Stoicism.

What I consider risky now is anything that can lose value. I would consider taking on more risk if I were younger and had more time to recover from a crash. But I have achieved critical mass, so there is no reason for me to accept ANY risk at all if I don't have too.
 

Sean M

Quadruple-Digit Post Count
@mprevost I guess I’m in sort of the opposite circumstance:
  • Own a home, have mortgage. But, got the house when I made 20% less than now, and even then PITI was <25% of take home pay. So I have both equity and cashflow cushion there.
  • Salary job, but no side-hustles or other income. It’s place-based (can’t work it from anywhere). Tons of imputed savings from my wife being a SAHM the last 8 years - our youngest is entering pre-K now.
  • All my “wealth” is in 401k (cheapest S&P500 index fund I can find) and home equity. About a month ahead of regular expenses in the bank, some piggy bank funds for specific items coming up.
  • Health: Stop-loss insurance for catastrophic event(s), but it’s tied to employment. Can rely on family for help too.
  • Lawsuit: Umbrella policy, but otherwise everything is at risk (?).
  • Theft: Don’t care much about the stuff itself, it’s the feeling of being violated and the effect on my family that bothers me.
  • Death: Life insurance for me and wife, she’d pay off the house and live on the interest until back on her feet. Hers would be for child care.
  • “Zombie apocalypse”: No choice but to mutually rely on group/community in that scenario. Not many practical outdoors or combat skills (none actually), but I’m an administrative type and that would still be useful in a settlement/fortified community situation.
I have a long way to go to move those things into the other column...

Also:
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mprevost

More than 500 posts
[QUOTE="S
  • “Zombie apocalypse”: No choice but to mutually rely on group/community in that scenario. Not many practical outdoors or combat skills (none actually), but I’m an administrative type and that would still be useful in a settlement/fortified community situation.
I have a long way to go to move those things into the other column...
[/QUOTE]

I forgot about the zombie apocalypse. Got nothing for that either ; )

I think you are tracking. The first step is to change the way you think about money...you are there. One step at a time.
 

LukeV

More than 300 posts
I'm also a fan of Taleb. My investment strategy is to have as much money as possible in the highest earning asset class (shares) while minimizing the prospect of having to sell in a correction or recession. (You never lose money if you never have to sell, right?)

To that end I have currently 2.5 years of my minimum income requirement held in cash and I'm building that up to 5 years minimum income. This is based on research that three to five years is sufficient to ride out recessions if you also have the capacity for a bit of belt tightening (ie in a recession I will be strictly eating at home and shopping at Aldi but okay).

The rest I hold in a diversified portfolio of Australian and international shares with an emphasis on resilience within the economic cycle (eg healthcare, infrastructure, food, waste management etc).

So in a nutshell I hold shares (high risk, high return) and cash (low risk, low return) with hopefully enough cash to ride out any need to sell shares in a declining market
 

wespom9

More than 500 posts
Certified Instructor
Alright there is some cool things to unpack here. I love the way many of you think regarding these topics. I too value "not ruin" over "high risk high reward". That being said,

What is a CD ladder?


1. I am young (30). Theoretically, unless the market absolutely crashes and burns I have time to hold investments and let it recover.
2. I am split between real estate (I own a house) and the market, though more than 2:1 is in the market. I bought my house (with my wife-to-be) at a low mortgage rate, far below what we were approved for, and allows us to live very comfortably without worrying about making payments. A housing crash would not be ideal, however we are in a "10 year +" home: we don't have kids yet, but if we do we are happy with the school division they would one day be in. To me, this situation is like the market; I'm willing at this stage to ride some fluctuations in the market.
3. We keep a good amount of money readily accessible in a high-interest savings account (also a way to at least combat inflation I would think). Nothing to the 90%10% Taleb's barbell strategy would recommend, however. This is the distribution I'm not sure if I should switch more towards as a low risk strategy
4. She is covered with critical illness health insurance through work, me partly but also pay insurance out of pocket. Living in Canada helps here as well for all basic health issues.
5. Both of us have good pensions matched by our employer.

I suppose I am exposed to theft/damage/etc, but I agree that violation of me/my family would weigh more on my mind that loss of tangible items. I have some belongings near and dear to me (music equipment, etc) but nothing I would lose sanity over missing.
 

LukeV

More than 300 posts
I too value "not ruin" over "high risk high reward". That being said,
1. I am young (30). Theoretically, unless the market absolutely crashes and burns I have time to hold investments and let it recover.
For what it's worth my only regret is that I didn't take bigger risks with my investments when I was your age.

Even at 30 (I am nearly 50 now) I had money in cash and fixed income and didn't more aggressively target shares until about a decade ago (which just coincidentally was a good time to get aggressive). From about age 40 I held zero cash and fixed income and while this has paid off it would have been more desirable to reverse the sequence - hold riskier investments while younger and pivot slowly towards less risky investments in my forties.

Whatever strategy you adopt should be age appropriate based in large part on your investment timeframe. With your attitude at your age it's hard to go wrong.
 
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