Early Retirement Extreme Forums

Yeah, we need different words for:

1) buying a plane ticket on a major airline with a credit card, buying a taxi from the airport to a hotel that you booked online, and then spending a few days arranging to rent a condo and install high speed internet in it.

2) what the animal is doing

I'm not sure if I fully followed your words, Ego. Flying to Ho Chi Minh City would be dead easy, almost boring at this point. I think I do know what you were getting at that though.

Nimmanhaemin is scratching an itch belonging to my girlfriend more than scratching one of my own. I'm happy to be along for the ride though. Even if it's not what I expected, I can always entertain myself by starting a business or getting a menial minimum wage job or whatever. Also the food is out of this world and things are cheap, so I really shouldn't complain that much.

I agree that walking to Ho Chi Minh city would be pretty interesting. One of my friends from Chicago -- the "ERE Yoda" from earlier in my journal -- has been walking around the world for the past year or so. He took a sailboat across the Pacific, started in Portugal, and is approaching South Korea now! I think he might be making a homemade documentary about his friction filled journey.

akratic wrote:I'm not sure if I fully followed your words, Ego.

I'm not sure I follow them either. It made perfect sense when I wrote it, but now that I reread it, it seems like gobbledygook. Hah!

I guess what I was getting at is that in order to grow we must experience at least a little bit of hardship. For me, traveling is a good way to introduce a smattering of unstructured hardship into the day. If I didn't make a conscious effort to throw myself in over my head I would probably avoid it altogether. And we always need to regroup in places like Koh Samui before setting out into the chaos for another few months.

Such a great read! New follower here. One complaint: WHY haven't you blogged/vlogged your experiences thus far? I find they are interesting enough for a much broader audience than just the ERE community. I think a blog would be a great introverted way to indulge in your thoughts and share your experiences with others, in some ways to create a sense of thrill for you, rather than viewing what you have done so far as boring. Sharing with others makes something otherwise ordinary sometimes look much more interesting.

I know you have talked about starting your own streaming gaming channel so I figure something like YouTube would be right up your alley. Combine the already engaged followers you have with the lurkers who haven't posted a response yet and you're well on your way to a fairly passive type of income stream if you can get enough subscribers.

On the subject of traveling, I think one thing you have to realize is that you have been traveling your whole life. All throughout your quest for FI, you logged all of your travel expenses. I know you are traveling within your own country but any change of scenery and sense of adventure counts as traveling in my opinion. The states are not very diverse culturally (except maybe pockets of major cities or Amish life or extremely rural areas) but there is as much diversity in scenery here as there is anywhere in the world. I guess my point is that I've lived in rural Western North Carolina all my life and the farthest south I've been has been Charleston, SC. North, Virginia Beach. I have a major itch to explore and throw challenges at myself to renew my motivation for finishing school and finding a high paying job.

It's just like for Jacob - its easy for him to say that he has developed a sense of travel through introspection because he has already traveled tons and he lives in, my opinion, one of the top five cities in the world. Why go anywhere when you have everything you want right where you are? I enjoy small town, rural, beautiful countryside living. But at the same time, I'm ready for a change - and since change is inevitable, I might as well view it as necessary.

For me, I guess, I'm trying to figure out what type of traveling is best for me. I want to be engaged everywhere I go and be met with challenge, but I am very much an INTJ type as well and I can be happy nearly anywhere as long as I have my laptop and a comfortable place to sleep and dwell.

"Necessity is the mother of invention" is such an interesting quote. We never know what we are capable of until we are faced with adversity. Being FI and living in first world countries doesn't present much of a reason to extend beyond the daily necessary activities of living. I think you secretly WANT to start a business and have something that is successful and constantly occupies your mind but at the same time you see no point when you're already FI and can make money quite easily in other, albeit less satisfying ways.

@akratic: thanks for taking time to write a long post.

For me travel is a hobby: I have never been in a package tour, or stayed in expensive hotels - I started off with visiting few historic places, but over the years I have gotten better and have visited 30+ countries. Eventually, I would like to live/visit all countries/continents. I can travel for 3-6 months, and traveling years at a time is something I cannot do as I have other hobbies as well

Human behavior is one of my fascinations, and travel gives me unlimited chances to interact with people, see things, and have my own personal world view of how things have evolved.

Sure, smartphones, rampant consumerism, tourist attractions are everywhere - it does not make travel uninteresting - I am visiting places to experience other things I mention above. We are all marching towards this disease called aging and we all eventually die - that is not a good enough reason to stop enjoying life in ways that gives us joy.

I hate staying indoors, so thats another reason to travel

I like ~2 weeks of relaxed travel and then enjoy returning home.

@Ricky: thanks for the enthusiasm. I do think it'd be fun to try to write a popular blog one day, but I haven't found a mission or voice or thing that I'd want to keep writing about.

The lifestyle blogs that are mostly "look how cool my life is" aren't really my style either. It seems kinda, I dunno, pretentious? Also an undercurrent to how I think about these things is that this might work for me but it wouldn't work for others.

I think I actually got so sick of people proselytizing at me based on their own personal preferences -- that are nothing like my own personal preferences -- that I have a hard time attempting to convert others to my way of life. Like my whole life people have been telling me "you should do X" and they've been wrong. X might make sense for them, but not for me. jacob is one of the first people who wasn't wrong!

Basically if I were to write a lifestyle blog:
1) I wouldn't want one that's just veiled bragging and showing off
2) I wouldn't want a life advice one either, because I'm so weird that only a very small fraction of people could actually benefit from living like I do (the others that are similarly weird)

But then again I've benefitted a lot from other people's blogs, so I dunno. Maybe it's okay to write to a small fraction of people and trust the internet to sort it out. I don't know what I could say on this particular subject though that isn't said already on ERE blog, MMM blog, or the Lacking Ambition blog.

Regarding traveling: yeah I traveled for years and years before it started to seem routine. Long before ERE I bought a one way flight to Australia where I met my girlfriend, for example.

Regarding challenges: yeah, I need to manufacture them or stagnate, but I can also be lazy (see: akrasia) and default to challenges that I'm certain I can overcome (video games) rather than legitimating challenging things (entrepreneurship). How to not be lazy.

@others: I didn't mean to say anything about whether anyone else should travel

While we're talking challenges / lazy:

(This is a suggestion for all. Not just you)

Why not give yourself a serious fitness challenge? This can provide a level of challenge that is more than video games, not as certain, and can be much more beneficial. It can be as easy (be able to run a 5k) or as hard (a 2:30 marathon? One-arm chin up? Winning some crossfit competition?) as you like. If you're worried about damaging your body with running or something else, there are safer options such as swimming (unfamiliar myself) or bicycling (work up to a brevet, or get as close as you can to 30 flat solo out and back miles in 60 minutes)

My experience with such challenges. I worked really hard (dreadful practice every other day for a couple of months each time) to be able to clean and press 2x70 kettlebells; and 220+ points in the clubbell sport challenge. I reached both goals. However, I have only ever pressed 2x70 once(!). I never did it again. My goal turned into a been there & done that. That's a lot of work merely to peak and lose some of the gains again. Of course the work is overall useful, but I'm worried whether it's the best method for sustained motivation.

jacob wrote:I never did it again. My goal turned into a been there & done that.

When I started running a few years ago, a friend told me that the first marathon will be easy, it's the second one that's a challenge. I think if he hadn't said it and made me think about it like that, I probably wouldn't have managed the second one:)

Yeah, fitness isn't a bad idea. This CrossFit gym in Chiang Mai is a lot shittier than the one I went to in Cuenca, Ecuador, and that has kinda derailed my fitness plans.

They're introducing a new open gym system though where people can come in for 10am - 11am and do whatever workout they want instead of doing the daily group WOD, and maybe I'll just switch to open gym instead, because the WODs at this gym in particular really haven't been motivating me.

I think I'll choose rowing as my body-friendly challenge. Perhaps I need graphs and such.

But yeah, to jacob's point, whenever I've chosen a fitness goal in the past, it hasn't sustained my interest for that long.

That comment about the second marathon being harder than the first is interesting, thank you!

Challenge for challenge's sake seems fairly shallow. I find that most 'challenges' don't interest me (nor do their benefits, such as fitness) and hence I don't seem to care.

very nice journal thx for posting!

Good point Jacob, but I don't think he (or most people) want a permanent challenge. There are some that could be very long-term or life-long pursuits though. Here are some examples:
- Mountain climbing - climbing higher and higher mountains. Or just more that you haven't climbed yet. Might get boring though??
- Bicycle racing - try to be a National champion in a certain racing discipline (Mountain - CC, downhill, Road, Criterium, Track, Cyclocross, time trial, etc...). This takes a very long time to work up to. There are age groups - I think they break them into 5 year ranges after 35. So you can continue trying for a very long time. Can be expensive though. This might apply to many other sports (running, triathlon, and a lot more?)
- Golf. Seems to be a sport that some play for many many years. There is always room to improve and there is no end point.

I am so glad you posted! I was wondering what you've been up to. I have so many thoughts I have to restrain myself and go write on my own journal after reading yours.

I just wanted to echo your travel sentiments.... I spent a couple years in Europe and when all of the European cities began to look the same I knew I was done. I am not sure what I was seeking while I was doing that. I think it was a feeling of "Everyone else thinks this is awesome and I have this opportunity so I should take it" so I did. I suppose it was very ISTJ of me to do so. I got bored with it. There's a few places I want to see on the planet but mainly because they have a geographic feature I've never seen before (Like glow in the dark plankton in the ocean of the Maldives, so the water glows at night? Like that would be cool to see!). But in the end it gets old. I guess when I think about the ways I need/want to grow travel actually hurts me than helps me. So it doesn't really pull at me, then again, it never did.

Funny about your Apple store idea - I was just thinking about getting a server job one day a week even though it would pay shit money just to get out of the house and be forced to be social and meet new people. I would hate it though but hey maybe I could do it 6 months or something. *shrugs*

So good to hear from you.

I'm currently drowning in tax stuff and thought I'd post about it here to wrap my head around it and because you all are quite good at this stuff.

So my only income for 2013 was small, just my salary for the month of January and some dividends, lets call that sum x.

When I left my job and transferred my 401k into my IRA at Vanguard, I noticed I had the option to do a full or partial conversion into my Roth IRA -- instead of simply putting it into a Traditional Rollover IRA. I chose to do the conversion into Roth, thinking "well my income for 2013 is almost nothing, so this is great timing for a conversion". I chose full conversion to keep things simple (I'm quite bad at paperwork) and because I was only sure my income would be low for 2013, past that who knows.

I had ~$80k in my 401k, which apparently all counts as taxable income with the conversion, so basically I went from paying taxes on x, to paying taxes on $80k + x, which means my tax bill went from a small refund to a $13k bill, plus a $220 fine for underpaying by so much.

To make things worse, I stupidly made my 2013 personal $5.5k IRA contribution into a Traditional IRA instead of a Roth IRA, but bumping my income up to $80k + x means that I no longer get any deductions on the Traditional, and doing a personal $5.5k into a Roth would have been better in all ways. I'm trying to wrap my head around this "recharacterization" process where I change the Traditional IRA to a Roth IRA within a certain timeline and undo my mistake.

The $5.5k traditional IRA instead of a Roth IRA was a pure blunder, since I get no tax break this year from traditional.

The $13k hit I'm taking now in exchange for moving $80k into Roth I'm less sure about. It actually is quite good for me to have all that in a Roth. From doing some more reading, it appears the optimal play would have been to do partial conversions, converting the money slowly over time, as much as I could do each year with favorable taxation. That sounds like a lot of work! But $13k is a lot of money! I do think I will end up saving more than $13k (inflation adjusted) way down the road by having all this money in Roth, but my spreadsheet doesn't capture that too well, so it's a pretty annoying hit to my net worth as represented on the spreadsheet.

I haven't filed my taxes yet because I still haven't figured out how to recharacterize my traditional IRA. It might also be able to use this recharacterization thing to undo some of the damage of moving that huge 401k all at once, but I'm not sure.

I hate this stuff. Also it's kind of weird that this single 401k -> Roth IRA conversion decision ended up costing me more money than all of my expenses combined while traveling the world for the past year.

Have you poked around the Bogleheads forum and wiki?

This thread might help (not all of it pertains to your situation) http://www.bogleheads.org/forum/viewtopic.php?t=46179 .

The IRA section of the wiki http://www.bogleheads.org/wiki/Category:IRAs .

Can you do a backdoor roth with the extra $5.5K you put into the traditional?

I'm still not an expert on this stuff, but there appears to be no reason for me to backdoor the $5.5k. Even with all the craziness I'm under the $112k/yr income threshold that Roth starts to get phased out at. Conventional backdoor seems like a trick mostly for people trying to get around that $112k/yr threshold, but I don't have to worry about that.

I just wish I had put the 2013's $5.5k into Roth IRA from the very beginning, which is basically what recharacterization accomplishes... it will make it as if I did the right thing from the beginning, as simple as if I had just put the $5.5k straight into Roth.

Thanks for the links though, I'm continuing to learn.

...

So I think I'm in the clear with the recharacterization; I have some paperwork to go but it'll be all good in the end.

Regarding the 401k that I shotgun converted to Roth, here's what I believe I should have done, and what anyone following in my footsteps should endeavor to get right the first time.

2013 Marginal Tax Brackets: The way I did it I overflowed into the 25% bracket, and even a little into the 28% one (thanks, dividends). The optimal thing to do is probably to jam everything in at the 10% bracket, but that would last years and years and be quite annoying. I wish instead that I had converted the maximum in the 15% bracket that I could have.

So basically $36,250 - x is what I should have converted in 2013!

I calculated that if I could have done it at 15% across a few years instead of what I did, then I would have saved $5,911 total.

I'm not sure what's the biggest financial mistake of my life:
1) the day I drove a brand new $17k Mazda 3 car off the dealer parking lot when I was 22 or
2) the day I converted my whole 401k to Roth in one shot.

The question for me now is whether it's too late to undo this mistake. If it is, I can stomach the lost $6k and chalk it up as a very expensive life lesson. But if it's possible to fix, it'd be worth the time to do it.

All hope is not lost. You can do a recharacterization.

http://www.investopedia.com/terms/r/rec ... zation.asp

acratic wrote:I had ~$80k in my 401k, which apparently all counts as taxable income with the conversion, so basically I went from paying taxes on x, to paying taxes on $80k + x, which means my tax bill went from a small refund to a $13k bill, plus a $220 fine for underpaying by so much.

Unless you envision a busy working life ahead creating boatloads of wealth, conversion to Roth is not as advantageous as the literature says. Either you could have done the conversion over few years slowly, or only convert partially since keeping it tax-sheltered should be part of withdrawal strategy. Example: medical bills above 7.5k per year are tax deductible, so withdrawing from tax-sheltered account at that time is more advantageous than drawing from Roth. Roth401k/IRA is great if retirement income is insanely huge.

I'm sorry to hear the mishap has caused so many headaches.

I share your sentiment about doing a slow IRA to Roth conversion. Too many financial gymnastics to deal with.

Given the size of your potential tax liability, it might be worth consulting a tax accountant.