Congrats on the move. I'm assuming you didn't watch Fargo before you made your decision.
That's interesting about Austin. And come to think about it, he's not really my friend. I took a PHD seminar in his specialty and I think he got ass hurt that my paper was better than his stupid thesis because he never told me what he thought about it. Not only that, I knew him for years before I found out he had a a sister who died of alcoholism and it was from his mother when she herself drank too much at a church picnic and blurted it out. That's why it's not good to drink with old women. It always ends up with disclosures about abortions, miscarriages, dead siblings, fingers inserted where they shouldn't have been. Plus, there was the time I left my sunglasses in his office but he didn't volunteer it. I'm guessing he spent a month wearing them.
I honestly don't see the appeal of cross country skiing. Isn't it just an expensive form of shuffling in the snow? Plus, you get lost in blizzard conditions, pick the shortest straw and before you know it, you're being eaten by your companions. That type of scenario probably plays out at least once a year in that region. My suggestion is to stay inside during the winter.
Giskard's Journal - slingin code to reach FI
Re: Giskard's Journal
Haha, noted. Maybe I'll just try some nice winter biking with a fat tire bike instead. Or ice fishing. Or ice skating.Jason wrote: ↑Fri Jun 09, 2017 1:20 pmI honestly don't see the appeal of cross country skiing. Isn't it just an expensive form of shuffling in the snow? Plus, you get lost in blizzard conditions, pick the shortest straw and before you know it, you're being eaten by your companions. That type of scenario probably plays out at least once a year in that region. My suggestion is to stay inside during the winter.
-
Jason
Re: Giskard's Journal
I love ice skating. I dreamt of being a professional figure skater as a child but my family moved to New Jersey where if you admit to such an aspiration you are hung from a lamp post by your underwear. Which just goes to show how stupid people in New Jersey are. I mean outside of the Presidency of The United States of America, what other profession allows you to grab a girl by her pussy?
Re: Giskard's Journal
June 2017 Summary
Selected asset breakdowns:
Cash Eq Assets: $36.6k
Post Tax Brokerage Accounts: $135K
Retirement Accounts: 127.5K
Overall Net Worth (end of June 2017): $299k
Well, I finished my move up to Minneapolis. I took a few weeks off before starting work (still off work actually), and I'm taking the time to do a lot of exercise and reading. I really feel great and grounded. But I'm going to alter course here I think.
For the past 5 years I did the prototypical ERE plan: live very cheaply and invest the surplus into the market. At this point I think that went well and my finances are in good shape. But, for a couple of reasons, I want to start doing a bit of Real Estate investing. I'm looking more seriously at exit plans now and I decided on some requirements and I think owning property will help.
Just a tiny bit of Real Estate investing will help me use some leverage to get to a point where I have enough cash flow to quit my job. I'm also getting tired of moving so much and I just want to set up a home base somewhere. For the past 5 years I moved every year, and never accumulated many things. I'm just tired of living that lifestyle at this point. I know I really like to live in medium sized cities.
So here is the plan: save up about 40k to 50k (in cash) and buy a duplex or tri-plex with 20% down. Live in one of the units and rent the other(s) out. I'll ease into being a landlord/managing property. I read some of the Bigger Pockets books so I know the general rules about what to look for with rates of return. Basically, I can do this every year, maybe twice a year even, until I have about 10 to 15 units. Some time before that I will be able to quit working and still have cashflow, and if I make sure to put 20% down everytime, I will have a lot of equity with low (I hope) monthly payments on the loans. If each unit cashflows between $200 and $400 a month I could have a few thousand a month in free cash flow to live off of. And I could do that in 5 years. And each year the mortgage will stay the same but I can increase rent with inflation.
Anyway, I ran some projections:
You can see how much more quickly the cashflow increases due to the leverage. These numbers are even fairly conservative and I am assuming I won't find good deals. Just average, and 25% of the rents will be eaten by expenses, vacancies, taxes, ect.
The downside is that the more units you have, the more it becomes a job. However, I think that fewer than 10 units will not be too time-consuming. Alternatively, the more expensive units you get, the more cashflow per unit, and the work per unit should remain similar. So ideally, getting nicer units, with higher-end tenants is the way to go.
Selected asset breakdowns:
Cash Eq Assets: $36.6k
Post Tax Brokerage Accounts: $135K
Retirement Accounts: 127.5K
Overall Net Worth (end of June 2017): $299k
Well, I finished my move up to Minneapolis. I took a few weeks off before starting work (still off work actually), and I'm taking the time to do a lot of exercise and reading. I really feel great and grounded. But I'm going to alter course here I think.
For the past 5 years I did the prototypical ERE plan: live very cheaply and invest the surplus into the market. At this point I think that went well and my finances are in good shape. But, for a couple of reasons, I want to start doing a bit of Real Estate investing. I'm looking more seriously at exit plans now and I decided on some requirements and I think owning property will help.
Just a tiny bit of Real Estate investing will help me use some leverage to get to a point where I have enough cash flow to quit my job. I'm also getting tired of moving so much and I just want to set up a home base somewhere. For the past 5 years I moved every year, and never accumulated many things. I'm just tired of living that lifestyle at this point. I know I really like to live in medium sized cities.
So here is the plan: save up about 40k to 50k (in cash) and buy a duplex or tri-plex with 20% down. Live in one of the units and rent the other(s) out. I'll ease into being a landlord/managing property. I read some of the Bigger Pockets books so I know the general rules about what to look for with rates of return. Basically, I can do this every year, maybe twice a year even, until I have about 10 to 15 units. Some time before that I will be able to quit working and still have cashflow, and if I make sure to put 20% down everytime, I will have a lot of equity with low (I hope) monthly payments on the loans. If each unit cashflows between $200 and $400 a month I could have a few thousand a month in free cash flow to live off of. And I could do that in 5 years. And each year the mortgage will stay the same but I can increase rent with inflation.
Anyway, I ran some projections:
You can see how much more quickly the cashflow increases due to the leverage. These numbers are even fairly conservative and I am assuming I won't find good deals. Just average, and 25% of the rents will be eaten by expenses, vacancies, taxes, ect.
The downside is that the more units you have, the more it becomes a job. However, I think that fewer than 10 units will not be too time-consuming. Alternatively, the more expensive units you get, the more cashflow per unit, and the work per unit should remain similar. So ideally, getting nicer units, with higher-end tenants is the way to go.
Re: Giskard's Journal
Fantastic work so far. I've come back to reread your journal a couple of times now for inspiration because we seem to be in similar situations and have eerily similar mindsets/attitudes towards FI. I'm about a year behind you with regards to the FI journey and net worth, so its fun to imagine myself in a similar financial situation a year from now
Regarding your most recent post...I think building cash flow through rental property accumulation is the way to go (I plan to do the same thing). Good plan with the multifamily purchase while living in one of the units. I considered going that route, but ended up with a single family residence and renting a room to a friend. In my particular situation and from my perspective, there are a couple of advantages to the single family residence route for your personal living situation, but I'm curious to see what you end up doing. There's no doubt though that multifamily residences are the way to go for rentals.
I just recently stumbled upon the BRRRR method of real estate investing... It seems to be a good way of quickly accumulating rental properties and it would be also inherently meet your higher-end tenant criteria since you are essentially flipping the properties. Have you thought about this, and if so, what are your thoughts?
Regarding your most recent post...I think building cash flow through rental property accumulation is the way to go (I plan to do the same thing). Good plan with the multifamily purchase while living in one of the units. I considered going that route, but ended up with a single family residence and renting a room to a friend. In my particular situation and from my perspective, there are a couple of advantages to the single family residence route for your personal living situation, but I'm curious to see what you end up doing. There's no doubt though that multifamily residences are the way to go for rentals.
I just recently stumbled upon the BRRRR method of real estate investing... It seems to be a good way of quickly accumulating rental properties and it would be also inherently meet your higher-end tenant criteria since you are essentially flipping the properties. Have you thought about this, and if so, what are your thoughts?
Re: Giskard's Journal
Last year I went through all the (free) bigger pockets books and podcasts. I did like this method a lot. I actually think that going through the BRRRR method gives you a lot real world skills as well, which to me is quite appealing.jbc wrote: ↑Tue Jul 04, 2017 1:34 pmI just recently stumbled upon the BRRRR method of real estate investing... It seems to be a good way of quickly accumulating rental properties and it would be also inherently meet your higher-end tenant criteria since you are essentially flipping the properties. Have you thought about this, and if so, what are your thoughts?
The thing that concerns me a lot right now is this: flippers are everywhere and buying up every cheap property, I think the low-interest rates and TV shows have helped propel this. Recently lots of friends and family have talked to me about flipping and they clearly have no idea what they are talking about when I probed them about numbers and finances, which seems indicative of broader trends and is worrying. I actually don't think I could find a property in bad shape cheap enough to make this work very easily.
I think this year I am going to ease into a small duplex purchase where I can live, or like you did get a SFH and rent out rooms to friends / coworkers. I'm not going to try to do anything other than shoot for at least a 1% of purchase price monthly rent.
I'll continue to save up some cash and then see if increasing interest rates push real estate prices down. Have you had any luck on looking for properties that look like BRRRR candidates?
Re: Giskard's Journal
Yeah, there definitely seems to be a flip fetish going on right now, which certainly doesn't help.
While I haven't specifically been looking at properties with the BRRRR method in mind, I do remember that while looking for a live-in duplex a few months back there were several multifamily properties whose total monthly rent (per the seller) were greater than 1% of of listing price and all were in decent areas. I didn't consider many of them since I wasn't looking to do a flip at the time even though the issues were mostly cosmetic/cheap materials. Now that I think about it, they were probably decent BRRRR candidates... I plan to do some homework over the next few weeks and I'll shoot you a PM if I find anything.
While I haven't specifically been looking at properties with the BRRRR method in mind, I do remember that while looking for a live-in duplex a few months back there were several multifamily properties whose total monthly rent (per the seller) were greater than 1% of of listing price and all were in decent areas. I didn't consider many of them since I wasn't looking to do a flip at the time even though the issues were mostly cosmetic/cheap materials. Now that I think about it, they were probably decent BRRRR candidates... I plan to do some homework over the next few weeks and I'll shoot you a PM if I find anything.
Re: Giskard's Journal
August 5, 2017 Update
So far the new job is going pretty well. I like the work, the company, the team, ect. It is refreshing as hell to be able to walk / bike to work everyday! My finances have changed a lot, however. Some good, some bad. Overall though, I think my quality of life here has risen by 5x or so. This is just such a nice place to live and the job is so much better.
Once again due to soaring stock prices and all of that my net worth has increased. I measure it to be 318k in total now. So on the plus side my new job pays better: 120k a year. On the negative side taxes are more expensive in this state, AND my apartment is quite expensive but I wanted to be safe since I was renting it sight-unseen in a city I don't know. Next year I will be able to find something for half of what I am paying, a bit farther away, in a less-nice neighborhood, but for now I am just going to deal with it.
My monthly expenses and earnings now look something like this:
- Rent: $1300
- Electric: $30
- Internet: $35
- Other utils: $30
- Phone: $25
- Gas: $20
- Food: $250 (ish ?)
- Other misc: $200
- Insurance: $70
Approximate Total Spending Base: $2000 a month.
Approximate Post tax job Income: About $6000 a month.
So my savings rate is something like 60 to 70% now, which is fine for this year. Next year my savings rate will be higher because I think I can find a place to live / find a roommate to end up with a place around $700 or $800 a month. Also, I will probably be making more money if I do well at work and get a raise / the company does well and good bonuses are paid out.
I also feel pretty OK about the increased spending now just because I know this is only temporary. In a couple of years I'll probably end up doing the digital nomad thing, or moving again to another city and another job that will probably pay even more. And really, at this point I feel like I basically have reached my goal for base FI, and the last 180k will come pretty quickly. I would even be fine with a 50% savings rate and then be able to spend a bit more freely on hobbies and social outing type things.
So far the new job is going pretty well. I like the work, the company, the team, ect. It is refreshing as hell to be able to walk / bike to work everyday! My finances have changed a lot, however. Some good, some bad. Overall though, I think my quality of life here has risen by 5x or so. This is just such a nice place to live and the job is so much better.
Once again due to soaring stock prices and all of that my net worth has increased. I measure it to be 318k in total now. So on the plus side my new job pays better: 120k a year. On the negative side taxes are more expensive in this state, AND my apartment is quite expensive but I wanted to be safe since I was renting it sight-unseen in a city I don't know. Next year I will be able to find something for half of what I am paying, a bit farther away, in a less-nice neighborhood, but for now I am just going to deal with it.
My monthly expenses and earnings now look something like this:
- Rent: $1300
- Electric: $30
- Internet: $35
- Other utils: $30
- Phone: $25
- Gas: $20
- Food: $250 (ish ?)
- Other misc: $200
- Insurance: $70
Approximate Total Spending Base: $2000 a month.
Approximate Post tax job Income: About $6000 a month.
So my savings rate is something like 60 to 70% now, which is fine for this year. Next year my savings rate will be higher because I think I can find a place to live / find a roommate to end up with a place around $700 or $800 a month. Also, I will probably be making more money if I do well at work and get a raise / the company does well and good bonuses are paid out.
I also feel pretty OK about the increased spending now just because I know this is only temporary. In a couple of years I'll probably end up doing the digital nomad thing, or moving again to another city and another job that will probably pay even more. And really, at this point I feel like I basically have reached my goal for base FI, and the last 180k will come pretty quickly. I would even be fine with a 50% savings rate and then be able to spend a bit more freely on hobbies and social outing type things.
Re: Giskard's Journal
Thank you for sharing your update. Your SR is really great, compared to consumer standards. If you can even increase it in the next few years, it would be perfect for ERE. Your journey looks quite good so far. The last "180k" will come for sure. I like it always to read journals, like yours, with great progress. It makes me confident, that ERE and maybe FIRE is also achievable for me. It is motivating for others, especially for those who have started ERE recently and newcomers. Unluckily not many others from our society find and follow ERE principles. It could be so much better for personal finances, freedom, ecologoy, society, .... Well, I guess, we ERE'es are a special kind of group (sometimes looking weird to others also) 
What kind of "hobbies and social outing type things" do you have in mind?
What kind of "hobbies and social outing type things" do you have in mind?
Re: Giskard's Journal
Yeah I think we probably often look weird to others!MDFIRE2024 wrote: ↑Sun Aug 06, 2017 3:25 am... Well, I guess, we ERE'es are a special kind of group (sometimes looking weird to others also)
What kind of "hobbies and social outing type things" do you have in mind?
So I have a couple of hobbies that could easily get more expensive - one is road biking. It is very easy to spend lots of money on nice road biking bikes, gear, upgrades, ect. The speed gets addicting. At least it is probably good in terms of health, and cheaper than sports cars! The other expensive things I have been getting into is FPV quadcopter flying / racing. This is another thing where there are endless upgrades and equipment that can be bought (along with replacements from crashes), and also you get a nice andrenaline rush from it. I'm a software developer and general bad with hardware, but actually I have learned a lot about hardware from this hobby! I am at least getting a bit better a soldering components.
Re: Giskard's Journal
9/4/2017 - Closing out Aug 2017
Well another month, another few steps on the journey. Net worth was 324k, and that big gain is due to a signing bonus being paid out to me by my employer as well as some decent stock market performance. As I have said before - I basically feel content at this point, and as long as I can slowly grow that number I think that is great.
I actually spent a (relatively) lot of money this month thanks to getting new car insurance for the new state I live in, and also, I bought a toy: an FPV racing quadcopter. Which has honestly been one of the best things I have done in the past few years in terms of sheer enjoyment.
Flying FPV is fantastically fun. It is also an expensive hobby. I mean like it can get expensive if you crash a lot and don’t have much luck with the repairs, but once you have most of the stuff it is not terrible. So far I have replaced a lot of parts I broke crashing due to learning how to fly in “acro” mode (this means there is no auto-level software turned on). Overall though, I’m very happy I spent the money to get into this hobby, even if it may not be very ERE compatible.
I’m pretty tempted to take the FAA section 107 test and try to do some commercial drone photography stuff for fun on the side. I have also heard you can do various kinds scans for construction companies and make good money that way too, but a lot of people are doing photography for realtors or inspection work. I think that would at least bring the hobby up to a break even level but actually it would be fun too. I started reading the study guide the FAA published for the exam and there is a lot of stuff in there. It is pretty dense but I’m finding it interesting, I might try to take that test in a month and buy a Phantom.
Anyway I’ll follow up here with how that stuff goes.
Well another month, another few steps on the journey. Net worth was 324k, and that big gain is due to a signing bonus being paid out to me by my employer as well as some decent stock market performance. As I have said before - I basically feel content at this point, and as long as I can slowly grow that number I think that is great.
I actually spent a (relatively) lot of money this month thanks to getting new car insurance for the new state I live in, and also, I bought a toy: an FPV racing quadcopter. Which has honestly been one of the best things I have done in the past few years in terms of sheer enjoyment.
Flying FPV is fantastically fun. It is also an expensive hobby. I mean like it can get expensive if you crash a lot and don’t have much luck with the repairs, but once you have most of the stuff it is not terrible. So far I have replaced a lot of parts I broke crashing due to learning how to fly in “acro” mode (this means there is no auto-level software turned on). Overall though, I’m very happy I spent the money to get into this hobby, even if it may not be very ERE compatible.
I’m pretty tempted to take the FAA section 107 test and try to do some commercial drone photography stuff for fun on the side. I have also heard you can do various kinds scans for construction companies and make good money that way too, but a lot of people are doing photography for realtors or inspection work. I think that would at least bring the hobby up to a break even level but actually it would be fun too. I started reading the study guide the FAA published for the exam and there is a lot of stuff in there. It is pretty dense but I’m finding it interesting, I might try to take that test in a month and buy a Phantom.
Anyway I’ll follow up here with how that stuff goes.
Re: Giskard's Journal
10/21/2017 - October 2017
Net worth is now 341k by my count. The majority of it is due to stock market appreciation, and how sustainable can that really be at this point? I know the numbers are essentially theoretical but I could be FI if I had cheaper housing. It makes me feel good and simultaneously stupid for not acting on the opportunity. Those numbers break down like this:
The other thing is housing. I can continue to move around a lot from apartment to apartment and state to state, or I could try to build up a home base. I think the issue here is finding a place I could tolerate fulltime that is not incredibly expensive. Either way, this year is going to be over before I know it and I need to figure out what to do. I could stay in Minnesota or I could head to Texas, which is what I have been thinking of doing for a while now.
None of these things are problems, they are all just options. It is great to have many options, but also I feel like I am navigating a hedge maze. I think about the Seneca quote a lot "It is a misfortune to live under constraint, but there is no constraint to live under constraint". Living under constraint is simple (it may not be easy), it gets complicated at the forks.
Net worth is now 341k by my count. The majority of it is due to stock market appreciation, and how sustainable can that really be at this point? I know the numbers are essentially theoretical but I could be FI if I had cheaper housing. It makes me feel good and simultaneously stupid for not acting on the opportunity. Those numbers break down like this:
- 164.7k in taxable accounts
- 136.1k in retirement accounts
- 12.5k in crypto currencies
- 27k in cash
- 2k in misc other things like HSA
The other thing is housing. I can continue to move around a lot from apartment to apartment and state to state, or I could try to build up a home base. I think the issue here is finding a place I could tolerate fulltime that is not incredibly expensive. Either way, this year is going to be over before I know it and I need to figure out what to do. I could stay in Minnesota or I could head to Texas, which is what I have been thinking of doing for a while now.
None of these things are problems, they are all just options. It is great to have many options, but also I feel like I am navigating a hedge maze. I think about the Seneca quote a lot "It is a misfortune to live under constraint, but there is no constraint to live under constraint". Living under constraint is simple (it may not be easy), it gets complicated at the forks.
12/16/2017 - December 2017 update
12/16/2017 - December 2017 update - boring crap first
Net worth accumulation is going frighteningly well. I just tallied my NW and I am at 392k now?? This is mostly due to last month being a 3 paycheck month, and having a little bit of cryptocurrency, which I am now selling off and converting into stock. I still have the bulk of the cryptocurrency but I am waiting until January to sell some of it in order to try to ease the tax burden over 2 year tax years.
I'm tempted now to purchase a cheaper house where I am living now. I moved to this new city about 6 months ago and I am finally starting to build up some groups of friends. I could see myself living here for a while, the city overall is much nicer than where I grew up. Yes taxes are high, and yes it is very cold here in the winter but I can deal with it I suppose.
I figure I am FI at 500k with my lifestyle here, and If I get a house and get a roommate or two, that number will be very comfortable. I could work a couple of more years and finish off that balance, of which I am about 110k shy now.
Hobbies that induce FEAR
I'll be honest - I don't like heights. That is part of why I rock climb, and especially do bouldering. I like bouldering because there is a lot of problem solving that you have to do on some projects. I also like it because it scares me but not excessively. It only scares me a lot on sketchy top-outs. Though here is thing - I think the fear is good. Here is my theory I want to test: the more acute fear you experiences the lower overall anxiety you will have. So I think regularly experiencing being terrified will make you happier overall.
My job is pretty damn boring so I think I need this more. I build trivial software, and people I work with make it out like its hard. It's not, we just make it hard with all the political bullshit, its trivial crap that has been solved thousands of times before. There is little risk to my job with anything I do and I'm not senior enough to make any decisions that carry any risk.
I'm not a thrill seeker. I'm a little bit too sensitive to be a true thrill seeker, but I think I need to inject more extreme fear into my life. Maybe just more extreme situations. I'll probably start to do more top-roping, and I will start to highline when I can get the gear and the balls to do it. I like slack lining because it takes a lot of focus and is almost like forced meditation. But add in highlining and now you have some serious fear.
Socializing in general
I sit behind a desk and write instructions to computers all day. That is what I do. It's fun in a lot of ways in small doses but in others it is alienating. I think being a software engineer diminishes social skills. Which is a major problem if you are going to become FI soon, because WTF are you going to do all day?
I'm 28 now, and everyone on my team at work but me has kids. I fucking hate it I feel like these people are dead to the world. I have never hung out with any of them outside of work because kids. But I never want kids. I never want reproduction to be what my life revolves around. But when that is what the majority is doing and now you have all of the time in the world, what do you do? I think the answer is to find lots of friends and have lots of hobbies to do things with these friends. People seem to have kids to give their lives meaning, which I think is bullshit (maybe that is harsh, but I think meaning should be from some internal mission in life, not biological programming).
So I think a really important part of being FI is develop a lot of very social hobbies that can keep you busy and help you connect with new people. If I don't start doing this now I will just end up going back to work so I'm not bored and isolated all day.
Anyway, this is what I'm thinking and this is what I'm working on. I feel like at any point I could quit now and get a part-time job as a bartender while I work up some software ideas and my life would be infinitely more fun but I'm holding out for that damn FI number.
Net worth accumulation is going frighteningly well. I just tallied my NW and I am at 392k now?? This is mostly due to last month being a 3 paycheck month, and having a little bit of cryptocurrency, which I am now selling off and converting into stock. I still have the bulk of the cryptocurrency but I am waiting until January to sell some of it in order to try to ease the tax burden over 2 year tax years.
I'm tempted now to purchase a cheaper house where I am living now. I moved to this new city about 6 months ago and I am finally starting to build up some groups of friends. I could see myself living here for a while, the city overall is much nicer than where I grew up. Yes taxes are high, and yes it is very cold here in the winter but I can deal with it I suppose.
I figure I am FI at 500k with my lifestyle here, and If I get a house and get a roommate or two, that number will be very comfortable. I could work a couple of more years and finish off that balance, of which I am about 110k shy now.
Hobbies that induce FEAR
I'll be honest - I don't like heights. That is part of why I rock climb, and especially do bouldering. I like bouldering because there is a lot of problem solving that you have to do on some projects. I also like it because it scares me but not excessively. It only scares me a lot on sketchy top-outs. Though here is thing - I think the fear is good. Here is my theory I want to test: the more acute fear you experiences the lower overall anxiety you will have. So I think regularly experiencing being terrified will make you happier overall.
My job is pretty damn boring so I think I need this more. I build trivial software, and people I work with make it out like its hard. It's not, we just make it hard with all the political bullshit, its trivial crap that has been solved thousands of times before. There is little risk to my job with anything I do and I'm not senior enough to make any decisions that carry any risk.
I'm not a thrill seeker. I'm a little bit too sensitive to be a true thrill seeker, but I think I need to inject more extreme fear into my life. Maybe just more extreme situations. I'll probably start to do more top-roping, and I will start to highline when I can get the gear and the balls to do it. I like slack lining because it takes a lot of focus and is almost like forced meditation. But add in highlining and now you have some serious fear.
Socializing in general
I sit behind a desk and write instructions to computers all day. That is what I do. It's fun in a lot of ways in small doses but in others it is alienating. I think being a software engineer diminishes social skills. Which is a major problem if you are going to become FI soon, because WTF are you going to do all day?
I'm 28 now, and everyone on my team at work but me has kids. I fucking hate it I feel like these people are dead to the world. I have never hung out with any of them outside of work because kids. But I never want kids. I never want reproduction to be what my life revolves around. But when that is what the majority is doing and now you have all of the time in the world, what do you do? I think the answer is to find lots of friends and have lots of hobbies to do things with these friends. People seem to have kids to give their lives meaning, which I think is bullshit (maybe that is harsh, but I think meaning should be from some internal mission in life, not biological programming).
So I think a really important part of being FI is develop a lot of very social hobbies that can keep you busy and help you connect with new people. If I don't start doing this now I will just end up going back to work so I'm not bored and isolated all day.
Anyway, this is what I'm thinking and this is what I'm working on. I feel like at any point I could quit now and get a part-time job as a bartender while I work up some software ideas and my life would be infinitely more fun but I'm holding out for that damn FI number.
Re: Giskard's Journal - slingin code to reach FI
What kind of social hobbies would help reduce lonliness? I am FI but feel somewhat isolated. It may be the winter season. I may get a job just to be part of a team, even though I will probably end up being disappointed.
Re: Giskard's Journal - slingin code to reach FI
@sky I'm looking for more of these myself. Right now bouldering is my favorite one because it is very easy to hang out at the gym and meet people when you are working on a problem. It's a very social activity. I also have heard that volunteering is just about the ultimate hobby for meeting people. I want to get more involved in volunteering work when I am FI because it sounds great - like a job where everyone is working together and actually wants to be there. Anyway hope you find some things to do. Winter is pretty hard for me too sometimes.
Re: Giskard's Journal - slingin code to reach FI
Thanks! And yes, I hope to try some volunteering soon!cimorene12 wrote: ↑Mon Dec 25, 2017 8:42 amVolunteering is a great way to get in some social interaction without having to deal with office politics where nobody wants to be there but keeps showing up for the paycheck. I've really enjoyed reading your journal, Giskard.
Update 1/6/2018 - Asset bubbles
Update 1/6/2018 - Asset bubbles
My net worth crossed 400k on Thursday, it doesn't feel real. The US stock market is in an incredible rally. Cryptocurrency continues to be bubbly. Housing is getting much more expensive. Bond yields are still low. There is a sub-prime auto loan crisis developing. Student loan debt is at record levels. A massive corporate tax cut will juice corporate earnings over the next several quarters.
Does this all feel unsustainable? It does to me. I figured I would be FI @ 500k, and now that I am 4/5ths there, how much will I have to give back when things go back to normal? What do you do when you feel like everything is upside down? Sell everything?
Conventional wisdom is "don't time the market", but is this a conventional time? Circumstances seem rather exceptional.
What do you think?
My net worth crossed 400k on Thursday, it doesn't feel real. The US stock market is in an incredible rally. Cryptocurrency continues to be bubbly. Housing is getting much more expensive. Bond yields are still low. There is a sub-prime auto loan crisis developing. Student loan debt is at record levels. A massive corporate tax cut will juice corporate earnings over the next several quarters.
Does this all feel unsustainable? It does to me. I figured I would be FI @ 500k, and now that I am 4/5ths there, how much will I have to give back when things go back to normal? What do you do when you feel like everything is upside down? Sell everything?
Conventional wisdom is "don't time the market", but is this a conventional time? Circumstances seem rather exceptional.
What do you think?
Last edited by giskard on Sat Jan 06, 2018 9:02 pm, edited 1 time in total.
Re: Giskard's Journal - slingin code to reach FI
I mean, they've probably always felt exceptional to the person at that time. It is an interesting idea - just sell the 400K worth of stuff and then reinvest it when the markets collapse. Of course, you could also be wrong and the market could rally for the next few years. Then, when it does fall, it falls to a number greater than you originally sold at.
Maybe you could consider bumping up the amount in your Savings and Checking accounts? That way you have more reserves when the market tanks, and you can buy lots of assets when they're down too. Good news is, if the capital markets do tank, all are not affected equally. You could always sell some bonds, which tend to do better than equity in recessions, for some cash flow during bear times.
In any case, congratulations on the 400K network and even more importantly, on being able to work a high-powered job for a few years. It ain't easy.
Maybe you could consider bumping up the amount in your Savings and Checking accounts? That way you have more reserves when the market tanks, and you can buy lots of assets when they're down too. Good news is, if the capital markets do tank, all are not affected equally. You could always sell some bonds, which tend to do better than equity in recessions, for some cash flow during bear times.
In any case, congratulations on the 400K network and even more importantly, on being able to work a high-powered job for a few years. It ain't easy.
Re: Giskard's Journal - slingin code to reach FI
Based on the popular CAPE valuation metric, the only other time we have been at this valuation level in the US market was in the late 90's. Early '99 to early '09 (bottom of the Great Recession crash when CAPE returned to "normal" levels) saw a real total return (inflation adjusted price + dividends reinvested) of -5.9% per year over that ten year period (https://www.advisorperspectives.com/dsh ... er-coaster). So you have to realize that those kinds of returns are what you might expect based on a historical sample size of 1. The reality could end up being much better or even worse (after all the '09 minimum was far from all time low valuations).
Some options are:
- Stick to your current allocation knowing that you'll probably have to work longer or work part time after "FI" to be safe
- Adopt a more diversified portfolio with a lower US allocation since international equities are cheaper
- Go even more extreme with no US stocks, US bonds, or European low yield bonds (further reduce risks of low expected return but be less diversified)
- Become a trend-follower to limit drawdown but still be exposed to short term volatility, whipsaws, etc.
- Buy slightly out of the money SPY put options, which are relatively cheap since VIX is at historical lows, but are really only insurance and will most likely end up being worth $0
I am not advising for or against any of these options. These are just a list of the options I have considered over the past year or so as I have been faced with the same risk of hitting a major setback while being so close to FI. I plan on quitting later this year, so of course I don't want to blow it now, but I also have to be invested in something and not just wait for low valuations indefinitely. I believe I have now settled on assets/strategies that I will be comfortable with for the foreseeable future, but it took a lot of research over a long period of time to find what suits me.
If you have your projected net worth and FI date in your spreadsheet / tracking software (if not I recommend adding that), see what would happen under various scenarios: if the stock market drops 50% over the next two years, if you put more money in something conservative, etc. You might find that with a more conservative investment style you can just work an extra month to eliminate the risk of having to work an extra year if the stock market crashes. On the other hand, maybe you're fine with trying to maximize returns for now, and are OK with working for however long you have to work - after all, when you limit your downside risk with a more conservative portfolio, you're limiting your upside as well!
Some options are:
- Stick to your current allocation knowing that you'll probably have to work longer or work part time after "FI" to be safe
- Adopt a more diversified portfolio with a lower US allocation since international equities are cheaper
- Go even more extreme with no US stocks, US bonds, or European low yield bonds (further reduce risks of low expected return but be less diversified)
- Become a trend-follower to limit drawdown but still be exposed to short term volatility, whipsaws, etc.
- Buy slightly out of the money SPY put options, which are relatively cheap since VIX is at historical lows, but are really only insurance and will most likely end up being worth $0
I am not advising for or against any of these options. These are just a list of the options I have considered over the past year or so as I have been faced with the same risk of hitting a major setback while being so close to FI. I plan on quitting later this year, so of course I don't want to blow it now, but I also have to be invested in something and not just wait for low valuations indefinitely. I believe I have now settled on assets/strategies that I will be comfortable with for the foreseeable future, but it took a lot of research over a long period of time to find what suits me.
If you have your projected net worth and FI date in your spreadsheet / tracking software (if not I recommend adding that), see what would happen under various scenarios: if the stock market drops 50% over the next two years, if you put more money in something conservative, etc. You might find that with a more conservative investment style you can just work an extra month to eliminate the risk of having to work an extra year if the stock market crashes. On the other hand, maybe you're fine with trying to maximize returns for now, and are OK with working for however long you have to work - after all, when you limit your downside risk with a more conservative portfolio, you're limiting your upside as well!