SWB's path to financial independence

Where are you and where are you going?
SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

I received my second Moderna vaccination shot a week or two ago. I had a somewhat rough 1.5 days in that I started feeling like I had the flu after about .3-.4 days in, then at .5 had the chills with whole body shaking a bit for about 1/2 hour or so, then slept for roughy 3/4 of the next 1 days. Then I was fine except feeling like I was jet lagged due to weird sleep.

It could have been worse but, while I wasn't sure what to expect, it was more than I had guessed. I think the unexpectedness of the chills with teeth chattering made it a bit more exciting than I would have liked although later I googled and apparently there is a 11% chance of that so I didn't spend much time becoming informed of the side effects. I was out a day from work as the whole day was a week day (in hindsight, I would have tried to get the second shot on a Friday).

But I'm glad to have had the second shot and shortly will be past the two week "develop lots of antibodies" window. My wife is getting the second shot this week and I'm hoping she will have a weaker reaction as otherwise I'll be on the hook for all of the kids and not be able to work billable hours (life of a contractor). But we'll survive either way!

mountainFrugal
Posts: 83
Joined: Fri May 07, 2021 2:26 pm

Re: SWB's path to financial independence

Post by mountainFrugal »

Congrats on the vaccine! I had Pfizer and had a terrible headache for 12 hours. My brother had Moderna and had similar symptoms as you for 18 hours. The plus side is that your immune system is doing its job to slow you down to spend energy on building defenses!

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

Last progress reported was overstated due to not having 2020 taxes taken out and not having done the 1st quarter tax payment for 2021. I think I've figured out roughly how to do quarterly taxes which is surprisingly annoying as it feels so inexact. But I realized it doesn't have to be perfect just close enough. So going forward, should be a little more precise.

To be clear, this is due to being a self-employed contractor which means the payments from my clients do not have any taxes taken out.

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 79.3% ($952,000 / $1,200,000) minus some 1099 taxes (but not as much)

Progress percentage stayed about the same but had a lot of taxes due plus caught up on quarterly taxes for this year. On the investing front, I put a lot of funds into AMD and XLNX. A big chunk of the AMD buy-in was at peak but I bought a bunch while it was down too along with some XLNX. AMD is merging with XLNX assuming it passes regulatory approval but it seems likely to not get blocked. I think that'll take until the end of the year or even early next year and I tied some of our post-tax funds that we could have used for house buying up with this.

On the house buying front, market is still really high here. A lot more listings came on the market within the past month. As I've been at this contracting gig for a while (with brief employment intermission), I'm going to go see if I can get pre-approved for a mortgage while being self-employed. I'm guessing I'd get pre-approved but we'll see. I also know pre-approved is not the same as approved (at least that is my understanding) so it'll be frustrating if we get pre-approved, want to buy and find out we're not approved in closing.

That said, not sure we'll actually find a house in this market and I'm honestly fine with just renting for a couple more years given the market. If it wasn't for the market, I would buy right away. Mostly for the non-financial aspects including:

- buying here means we're serious about staying so some of our family is more likely to move here
- having more storage as right now we rent most of a house but I think the landlord had bad experience with past tenants and we're starved of storage space in the basement which means our housing is cluttered up
- backyard for our kids
- changing the kitchen faucet if I want to and that kind of thing (actually, first thing would be not having carpet under our dining table, not sure why this rental has it setup that way but it's horrible particularly with kids)

If we find the right place, there are some other bonuses like being able to store our RV and boat on our property.

SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

I've been thinking about how I pulled out of the market earlier this year (or late last year) for a bit with some of our funds and... I realized the investment advice/thinking for those post-FI is almost certainly different from pre-FI. Mostly around risk because pre-FI, you haven't "ended" yet and if the markets are unkind, you can keep on working/accumulating. I think I see it as the risk of staying out is higher than the risk of staying in if you are still in accumulation mode and are not going for a fixed target date to go to a lower income stream. So while it gave me comfort to pull out, it was probably the wrong move. I just have to keep this in mind when reading about others take on the market and what they are doing because I do think the perspective and approach changes.

Douglas
Posts: 73
Joined: Fri Feb 10, 2017 11:36 am

Re: SWB's path to financial independence

Post by Douglas »

started reading your journal, thanks for sharing! I'm reaching out when I read of other family situations on the forum...strength in numbers!

We're also shooting for ~$1.2M for FI with a paid off home but may keep going as high as ~$1.9M if we want to inflate our lifestyle (you know hot tubs and season passes to ski resort). At some point would like to work part time 100% remote to keep the good times rolling. Its nice to have options.

mountainFrugal
Posts: 83
Joined: Fri May 07, 2021 2:26 pm

Re: SWB's path to financial independence

Post by mountainFrugal »

It took me a while to get my head around sequence of return risk which I think is what you are getting at here. Mainly, if you blindly followed some withdrawal rate without taking into account the first 5 or so years of when you pull the trigger on living entirely off your assets you might be in for a big surprise if the market goes down or has very low returns in the first years. Depending on how long you are wanting to money to last, these initial years can have a much larger impact on things as you try to extend your "glide path" out as far into the future as possible. If I recall correctly, I think that earlyretirementnow blog had some interesting simulations with various assumptions for longer "retirement" horizons than a 30 year that is generally assumed for most planning. This is of course more relevant if you are never planning on making money again rather than using your additional time to develop more skills to replace having to pay for specialists etc. etc. Might be worth a read for a nuanced view.

WRT the pre-approval on housing... I include this anecdote to add more nuanced example for final loan approvals. I found the entire process much more opaque than I anticipated given how many homes are bought/sold each year in the US. I thought it would be way more standardized than it is. In some respects it is standardized, but there are still many human decisions that go into the process. Obviously this will be different depending on the local market and this is just one data point...but I took 6 months off from regular work before applying for the loan after starting my new job, we got pre-approved, but then in the final loan approval they only ended up using my partners job in the final underwriters approval packet. Because I had been out of full time work for 6 months (long full time work history before that) and my new position is at least a 2 year contract with ability to extend (written into the contract that was part of packet) the loan officer decided that this would somehow hurt our chances.This is despite the fact that we have assets outside of traditional retirement accounts (towards our FI goals), great credit scores, we work remote and make much higher than median income for our local rural area, the house is small and way below the traditional view of asset/house ratios, there is NO guarantee that my partner will still have this job in 6 months and assuming she did keep her job, we would both be employed full time for the next two years. This seemed completely arbitrary rather than based on some more standardized criteria. i am not complaining about the outcome, because we are amazingly grateful to have ended up where we are, but the process! Godspeed @SWB!

SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

@Douglas Reading about other people with families trying this is helpful. I'm following your journal now! I also agree it's great to have options. I realized I wanted an attainable goal and some base level of FIness to fall back on and then I want to build on top of that for a number of reasons. I find it hard to set a definite goal number because it's a balance of other things too such as wanting to go on a sailing adventure with my kids before they get old (but not when they are too young either). At some point, I also want to be done too although I suspect that "done" is either taking a long break from regular work or taking a break and then pivoting to irregular work. Anyway, options are good!

@mF I was thinking more that if I was still accumulating money, I had less to loose if the market went down quite a bit. I have been thinking about the withdrawal rate issue and I realized my goal is to get to a lump sum and then try to do things to bring in enough to cover the basic expenses and let the lump sum grow. I guess with that approach, the sequence of return risk is removed. Well not removed but it ends up on the top end between perfectly comfortable and excessively wealthy instead of on the lower end with "not enough to make it" and perfectly comfortable.

Thanks for the insight into your mortgage experience. I agree that makes no sense but at the same time, it doesn't surprise me. While I complain about how high the market is here, it is very relative as we are definitely not in the coastal city/major expensive metropolis situation. So while I complain, we could purchase in cash at some point. It's just I guess I value that cash more than those signing mortgages for the same amount so there is a mismatch in perceived value where I'm looking at the lump sum and most others (general public) are looking at monthly mortgage costs. I'm having a hard time getting over that.

SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

This morning, we crossed over the $1M line!

mountainFrugal
Posts: 83
Joined: Fri May 07, 2021 2:26 pm

Re: SWB's path to financial independence

Post by mountainFrugal »

Rock and roll!

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 84.4% ($1,013,000 / $1,200,000)

@mF Thanks!

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

FANG company is back knocking on my door. I'm going to talk to them. I'm biased against wanting to work for them and yet I am still considering it for a couple of reasons:

- curious what is like to work for a FANG (I know experiences vary, really depends on what team you end up on, luck, etc)
- having the FANG on my resume is worth something later
- greater compensation (but we'll see -- I'm making good money and I read this FANG has at least two tiers for remote pay scales based on major/minor city and I wouldn't be surprised if they are adding another tier)

Last time I spoke with this FANG, they mostly wasted my time as they hadn't yet rolled their remote effort out to general country wide. No big deal though as it was only a few brief conversations but it was somewhat annoying. This time, I'm going to make sure to get to the bottom of the compensation bit because if I can eliminate them that way, I can avoid wasting time with their interviewing process. In the past, it's always been vague assurances though so maybe the best I can get is some kind of range but I can at least ask about the tiers and try to find out if they have added a 3rd tier for people like me in very remote areas (which I presume they think can be hired at lower compensation).

Laura Ingalls
Posts: 487
Joined: Mon Jun 25, 2012 3:13 am

Re: SWB's path to financial independence

Post by Laura Ingalls »

Good progress on the net worth front. Adding a comma feels good.

On the macro economic level mortgages with self employment income shouldn’t be either too hard or easy.

My FANG fan boys would be pretty stoked to work for them I do think there is cache having them on your resume.

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

@LI Thanks. I agree on the mortgage front. It just makes you realize how skewed the system is when you read about other peoples experiences. In our case, I think it will force us to go cash which is fine as it keeps our upper limit down. Although it is a bit tricky as our market is high (like everywhere else) and it might mean we'll end up in a fixer upper which I have mixed feelings about. Mostly because the one we're currently considering needs a lot of work.

What I really need is a security-backed mortgage but I think that doesn't happen until you add another comma or two on to the net worth (at least I couldn't find any readily accessible information on that via Google). But if I could somehow sign up my securities to act as collateral...

Qazwer
Posts: 226
Joined: Thu May 16, 2019 6:51 pm

Re: SWB's path to financial independence

Post by Qazwer »

https://www.mrmoneymustache.com/2021/01 ... kr-review/

You can do it via margin (collateral backed borrowing) but you risk losing more than just that amount if it gets called. I would not take that risk especially given all the advantages of mortgages, but YMMV

SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

@Qazwer Ah! That is interesting. I agree it's just I think right now I'll have a hard time getting a mortgage. For 1099, they want 2 years of income and I might have that but I did a 3-4 month W2 stint in the middle of it. I'll give it a shot though and see how it goes.

SavingWithBabies
Posts: 730
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 90% ($1,082,000 / $1,200,000) but minus a bit as next quarterly taxes come up soon (I've prepaid a bit but not all of it)

Big chunk of gains due to AMD/XLNX run up on beating earnings (and no doubt other things). I wouldn't be surprised if we have a slump down though as AMD really varies. Still fun to see.

I posted one article a while ago on the investment thread about inflation and questioning if it was really that bad. But I'm tending towards thinking all the money printing is causing inflation and this recent run up in my net worth is partly due to that. I worry about people like my parents who have (potentially not enough) retirement money in low yield investments like CDs. I suspect I'm getting a free bump up in net worth but it's not real in a sense that you get it if you have money invested in securities but otherwise you end up having less due to inflation? Might have some of that wrong. I also have a tendency to be skeptical of good things so I try to factor that in.

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