Author Topic: Case Study - Hi! I'm a stripper looking to FIRE  (Read 8593 times)

Laa

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Case Study - Hi! I'm a stripper looking to FIRE
« on: May 09, 2017, 02:11:47 PM »
Life Situation: 0 Dependants (3 dogs,), living in the USA. I'm a happy stripper; no drugs, no alcohol, just making money by being happy and sharing happiness with others. I have been doing this for 9 years now and feel very solid in my income and life. I am 27. Stripper income at my level of success generally stays steady or goes up until age 38, and stays steady a little low (maybe only 60k a year) between ages 38 and 45. I work hard, and I am sure of these numbers... but I don't want to have to work hard to pay bills anymore but instead work for fun stress-free, so I want to save enough to make 20k a year from investments.  I bought a house while the rate was low but am now free to save for retirement now that all debts are paid (besides the house, because the rate is so low!) I am an S-corp and pay quarterly taxes.  I have paid off all debts over 8% interest including all student loans and am ready to go full-on saving for Early Retirement. 27 years old may not be the youngest and 14k saved at my age may not be the best (almost 20k including the money in the bank I am about to invest,) but I can easily save 30k this year and plan to. I just need reassurance that I am doing things the right way.

Gross Salary/Wages: One month I'll only make 3.5k because I'm feeling lazy or sick, the next I'll make 10k. 65-80k a year. On average, 75k.

Individual amounts of each Pre-tax deductions: 2016 was 18,761 in deductions, 2015 was 19,904... stripping is expensive. I spend more on it than hobbies (which cost maybe 9$ a month in the tackle and bait.)

Adjusted Gross Income for my S-corp: 2016 was 54,967$, 2015 was 45,387$

Taxes: Um... I do pay taxes as an S-corp, but I am not sure which bracket I am in or where on my tax returns to find it. All I know is I have to pay it, so I do. I hire a CPA who does all of that for me so I can focus on work and life. I know my S-corp pays me, but I am not sure if you're asking the tax my S-corp pays or that I pay.

Current expenses: House at 1200$ a month for the mortgage ($98,145.06 remaining, $5,101.06 was paid towards the principal in 2016, $3,181.43 towards the interest.) It is a 15-year mortgage. My car is 250$ a month (I would only save 150$ in interest to pay it off early so I don't plan on doing that.)

Assets: 1500$ in fine metals, 5500$ in cash (this cash is going in an emergency fund with Vanguard. I'll probably have it at 15k by July and then max my IRA for 2017? I'm unsure, that's why I am here.), just over 14k invested in my traditional IRA's so far.



Specific Question(s): Traditional IRA seems right both because I get to take it off of my taxes now and because I make a fuckton of money now and only need 25k a year from my investments to pay all expenses + the mortgage (and this includes 6k of a buffer for hobbies and unexpected expenses). Ideally, by age 35, I'd be gaining 25k a year from my investments and only "have" to make 20k a year to keep saving and pay for further unexpected things like injuries. It is very unlikely I'll retire and stop working so I am not dependent on investment return at age 35, but I want to have access to the money for the sake of being able to grin and tell anyone I don't want to work with to go fuck themselves so I can go make less money with someone more fun and still be able to pay all my bills without a single bit of stress or worry. Plus, there are always slow days or the odds that I'll accidentally ugly my face/body somehow and have to get a "normal" job. Either way, I'm going to make a fuckload of money now, and... do something with it... and somehow be able to tell assholes to go fuck themselves. A fuck-you fund. That's my goal.

So! What should I do with my extra 20k-35k a year--as a self-employed stripper--after maxing my 2017 IRA and filling out my emergency fund to 150% more than I feel that it needs to be if I plan to use it this way?I have a Vanguard account and a Betterment, although I have yet to put money into Betterment. If saving 30k a year for the next 7.5 years isn't enough to make 20k a year from ages 35-59, how much would I have to save a year? I could work extra to save more and make more if I super have to in order to meet this goal of 20k a year by age 35.



A big thank you to anyone who helps me in this without judgments. I searched the forums for information for strippers/sex workers and only found one other user who had such a job and it was for side income. A lot of you joked about blowing money on strippers when you had too much and that made me grin. Uh, not in the way where I think I could make money off of people on the forum... noooo I just think it was neat to see that people thought a "waste of money" (as in non-invested) was well wasted blown on a stripper for fun. Granted, I could be misinterpreting what blowing money on a stripper means. ¯\_(ツ)_/¯

:)
« Last Edit: May 09, 2017, 02:19:52 PM by Laa »

Malum Prohibitum

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #1 on: May 09, 2017, 02:22:21 PM »
I am 27. Stripper income at my level of success generally stays steady or goes up until age 38, and stays steady a little low (maybe only 60k a year) between ages 38 and 45.
  I find that difficult to believe.  Are there a number of middle aged, 38-45 year old strippers making $60k+ a year at your place of employment?

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #2 on: May 09, 2017, 02:25:31 PM »
Thank you for your service.
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Malum Prohibitum

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #3 on: May 09, 2017, 02:28:59 PM »
I can easily save 30k this year and plan to
  That is a good bit of savings annually.

Quote
Adjusted Gross Income for my S-corp: 2016 was 54,967$, 2015 was 45,387$
  And you will save $30k of it?

Quote
Current expenses: House at 1200$ a month for the mortgage ($98,145.06 remaining, $5,101.06 was paid towards the principal in 2016, $3,181.43 towards the interest.) It is a 15-year mortgage. My car is 250$ a month (I would only save 150$ in interest to pay it off early so I don't plan on doing that.)
  What is the interest rate?  It may be better to invest than pay down extra principal.


Quote
So! What should I do with my extra 20k-35k a year--as a self-employed stripper--after maxing my 2017 IRA and filling out my emergency fund to 150% more than I feel that it needs to be if I plan to use it this way?I have a Vanguard account and a Betterment, although I have yet to put money into Betterment. If saving 30k a year for the next 7.5 years isn't enough to make 20k a year from ages 35-59, how much would I have to save a year? I could work extra to save more and make more if I super have to in order to meet this goal of 20k a year by age 35.
Since you have an S-Corp, I would look into setting up a 401(k) for your business.  You can put up to $18k in it for salary deferral in 2017.  In addition, your corporation can provide a "match" of up to 25% of your W-2 compensation.  All of this is a tax deduction for you, so you will not pay income taxes for 2017 on that income.



Laa

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #4 on: May 09, 2017, 02:30:57 PM »
Very much so yes Malum Prohibitum, especially when they have the skills, history of work, demand, and client base that I have. Often times a very wonderful woman of heart and dedication with a body she took care at age 35 of will be more likely to succeed than an immature, unmotivated, drunk/druggy 22-year-old with an equally taken care of body. Some people strip as a career to retire and live well taking the job seriously and working hard; others do it from time to time for extra income, the worst do it when they need money either out of desperation for expenses (necessary ones or not.)


I am one of the very rare strippers who are happy in the job, don't get on drugs/alcohol to work, and take it seriously with a schedule and goals beyond one day's income. We nearly always stay badass because of our work ethic, dedication, experience, and lack of desperation.

LifeHappens

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #5 on: May 09, 2017, 02:34:24 PM »
It's great you have your S-Corp set up and are paying quarterly taxes. Since you have no debts except your mortgage (and it's great you bought an affordable home), I would suggest focusing on reducing your tax burden.

You can set up a SEP-IRA or Solo 401K through Vanguard and save far more than the $18,000 allowed through a Traditional IRA. Some basic information is here, https://investor.vanguard.com/what-we-offer/small-business/overview, but you should talk to your CPA before selecting.

Do you have health insurance? Selecting a plan with an HSA is another good way to save for health care and pay lower taxes now. You do run the risk of physical injury in your work, so mitigating that risk is important.

You sound happy in your chosen career, which is great. Keep working on that FU money and maybe think about an alternative field if something does happen that makes it impossible for you to keep stripping as long as you plan right now.

secondcor521

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #6 on: May 09, 2017, 02:35:39 PM »
Here's my comments/suggestions:

1.  Good job so far.  Your mortgage and car look reasonable given your income.
2.  Make sure you max out your traditional IRA every year.
3.  Look into setting up a retirement vehicle through your S-Corp...either a SEP-IRA or a simple IRA look like decent options, but talk with your CPA and get advice from them.  The main point for you to understand is that you can generally put money into both your traditional IRA *and* your retirement vehicle at work.  With as much money as you plan to save, you'll need more room than the $5500 traditional IRA limit.
4.  Getting to $20K in income in the next 7.5 years is a tall order.  Around here, most people look at 4% as a sustainable withdrawal rate, so you'll need about $500K to produce that $20K per year.  Depending on what you invest in, you'll probably need to put away somewhere in the neighborhood of $40K-$50K per year and maybe make it there in 8-10 years.
5.  I'd avoid Betterment personally and would recommend Vanguard.  Others would disagree with me.

Good luck!
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Laa

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #7 on: May 09, 2017, 02:36:52 PM »
I can easily save 30k this year and plan to
  That is a good bit of savings annually.

Quote
Adjusted Gross Income for my S-corp: 2016 was 54,967$, 2015 was 45,387$
  And you will save $30k of it?
 

Mmhm. 20-35k of it will be easy this year now that my debt it all paid off. That's how much I spent on debts/savings last year (excluding the mortgage.)

Quote
What is the interest rate [on the mortgage]?  It may be better to invest than pay down extra principal.
I agree based on the bit of information I know. That's why I have not been trying to pay it off early. The interest rate is only 3.375%.



Quote
Since you have an S-Corp, I would look into setting up a 401(k) for your business.  You can put up to $18k in it for salary deferral in 2017.  In addition, your corporation can provide a "match" of up to 25% of your W-2 compensation.  All of this is a tax deduction for you, so you will not pay income taxes for 2017 on that income.

Awesome. I'll look into that, thank you. Once I had looked into a SEP-IRA for businesses (My CPA said it wouldn't be worth it,) but I hadn't thought of a 401(k).

Laa

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #8 on: May 09, 2017, 02:51:34 PM »
LifeHappens - thank you for the suggestion and yes, I am oh-so-happy. If something does happen I have a degree in STEM if I ever need another job. As a woman it is likely I'll get hired easily (sorry guys, the system is against you right now,) after a gap of work in their eyes. I do take part-time classes to maintain my level of education in the field and keep my resume looking lovely. I could get an easy job right now around 35k from my degree, but that's a lot less money and more hours so for the time being I'll keep stripping. No concern there. Granted, benefits would be nice, but that is why I try to make enough to pay myself as a stripper and as a boss since I am technically both.


I do have health insurance, yes. My husband pays for that. He makes a lot less than me but will also be getting a pension of ~20k in ~14 years. I do not want his income considered for my retirement, thus I left it out. This is my goal and my plan with my income. I pay bills that are tax-deductible as a stripper or expenses that are my wants/needs, he pays things that are not (such as his truck or his wants/needs.) The way we handle finances works for us.

A debt-free FIRE life has inspired me in the freedom it will give me both in and out of work and thus I need to keep the inspiration since the biggest part of my income as a stripper is a dependant on my mindset. It is very easy to sit and have a chat with a friendly guy that makes me laugh for 10$ an hour, but sometimes I need to leave him be after 20 minutes and go make more money with someone else.



Ok secondcor521. I can work on saving 40-50k. That's do-able, tough, but do-able, plus, even if all I do is try it will get me closer so I will definitely try :) There is no loss when you're saving more than you thought you would simply because you tried to. I'll just have to work those few weeks that I feel like being lazy to push those 3k months into 6k or 8k months.
« Last Edit: May 09, 2017, 02:58:03 PM by Laa »

mxt0133

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #9 on: May 09, 2017, 03:04:48 PM »
I was going to suggest to find a roommate or significant other so cut down your living expenses but I just read that you are already married, so scratch that.

The only way you can achieve 20K in investment income in 8 years is to save 3.5K a month with an average rate of return of 7% a year.

Could you get a part-time job?  I know others in your line of work that work 4/10 shifts and work weekends.  They earn more during two or three days they work from their full time jobs.

Overall with it seems like even if you miss you goal as long as you have adequate savings and spend less than you make you won't have to put up with anyone's BS if you don't want to.  That's why most of us are here working towards FIRE.

SilveradoBojangles

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #10 on: May 09, 2017, 03:27:31 PM »
I second the suggestions to ask your CPA about setting up a 401k (I have an S-corp as well and have found that a 401k provides me with the ability to save more than a SEP-IRA does). It sounds like you've got your expenses pretty dialed in, and you've talked about working more to save more. The other piece of the puzzle is doing everything you can to pay less in taxes. I find this post helpful if you haven't seen it yet: http://www.madfientist.com/retire-even-earlier/

Do you know how much your S-Corp pays you in wages vs. owner distributions? For a 401k you are limited to deferring your wages (these are employee contributions) up to 18000 a year, plus the company can match up to 25% of your W-2 wages. In my case this has meant thinking carefully about how much to pay myself as a wage (where FICA taxes are due, but this contributes to my 401k) vs. a distribution. Your CPA should be able to help you out.

You should also read up on how to access money set aside in a 401k/IRA before age 59.5, as it sounds like that is something you are planning on doing.

secondcor521

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #11 on: May 09, 2017, 03:40:16 PM »
(My CPA said it wouldn't be worth it,)

Do you recall the reasoning for this?

I'm not a small business retirement expert, but I do know that there are costs associated with setting up the various retirement plans, so maybe that's what your CPA was referring to.  That being said, if you're planning on saving as much as you describe, I'm not sure I agree with your CPA's opinion.
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Laa

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #12 on: May 09, 2017, 03:45:04 PM »
@mxt0133 Given how much I make an hour and how I can usually work more hours than I already do, it is very hard for me to justify getting another job either for the benefits, resume, or alternative income. When sick I work on things such as advertisements or balancing my checkbook.


I think I can do 3.5k a month. This goal along with knowing about 401(k)s should help prevent that "eh, I made 1000$ today... maybe I should just go fishing tomorrow" feeling that often ends up being the number one reason I occasionally make less than 5k a month (or a 10k month followed by a 3k, things like that.)



@SilveradoBojangles Ok. Thank you, I'll look into saving more with taxes. A lot of people are saying to talk to my CPA; I had thought he was just for taxes, but I will give him a call.


Looking at my tax returns, line 7 for "Compensation of officers" is 9,000$ and wages is a blank line. My CPA determines this.


@secondcor521

When I asked him about the SEP IRA a year ago, he said:
"SEP IRA's are good, but your contributions are limited to your W2 wage. You can contribute 25% of your W2 wage. If you take a $12,000 wage, you are limited to $3k in contributions.
I would stick with the traditional IRA instead of the SEP."

Maybe he didn't realize that I can save more than 5,500$?

So I believe this means I would be able to put 20250 in a 401k. After I hit the 15k for the emergency fund and the IRA, I'll focus on that then.





This variable income along with it being so much more lucrative while young rather than increasing income with age, without benefits, made it very difficult to find information online as it is the opposite of most people's financial situation. I thank you all very much for your information and time.


My spendings are very low already so I relate to a lot of the stories I read about FIRE here for those of us without debt, but if there are any other strippers out there who want to save (I know we're rare, but don't let those materialistic girls goat you into buying all that stuff you don't need!), I am certain this information will help them as well. I'm glad it will be on the internet for a long time.

11ducks

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #13 on: May 10, 2017, 01:04:29 AM »
I would really set an income goal for each month (like $8k), so that you are hitting that consistently (and then take the time off as a personal 'reward' towards the end of the month). Hopefully you'll love your job long term but if not, the more money saved now the better (extra compounding time).

Have you considered moonlighting at other places? Being the new girl among the regulars- picking up a few extra shifts at another establishment could boost your savings too (though I guess that would depend on availability of shift and whether it is permitted at your current workplace).

Are there ways you can cut down on expenses? Do you currently do your own tanning/nails/hair etc? Do you have any skills in outfit/costume design that can save you some money?
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Bicycle_B

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #14 on: May 10, 2017, 01:35:42 AM »
Your planning might get clearer if you calculate your savings rate and years to retirement similar to MMM in this article:  http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

Forgive me if that is too obvious. 
You've already got the target in $/year (20,000) so as others pointed out, you need 500k investments based on the 4% rule.
The key is to figure out your net income, after deducting all tax payments and work expenses (example, 75k gross minus 15k expenses, 60k gross income; subtract 9k FICA taxes and 9k income tax, 42k net income).
Then savings = net income minus this year's living expenses (your not-work expenses, such as groceries, housing costs).  If 19k expenses, savings = 42k -19k = 23k in this example.
Then savings rate = savings divided by net income = 23k / 42k = 54.7%. 

This may not give you the answer you want.  Happens sometimes but then you can decide what to do.  It sounds like you like your job and have a clear picture of income potential.  My guess is you should optimize expenses saved and hours worked to the extent you can, then work the needed years to achieve FI.  Might take more than 8 years, but the savings rate table will tell you if you gather the data.  (It tells you what happens based on typical market results; could go a little faster or slower, but all other details in your control.)

Bateaux

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #15 on: May 11, 2017, 08:51:06 PM »
I have absolutely nothing to add to the discussion.   I just think it's neat as hell that we have strippers on board.  Take that Bogleheads!  Your job is no less honorable than most any other we've all held to fund our future.  You're doing honest work, certainly just as honest as an investment advisor skimming 1 or 2% of a persons portfolio. Best of luck Laa.  Wishing you and your husband sucess with your plan. 
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bender

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #16 on: May 11, 2017, 09:21:19 PM »
Have you considered taking a day job in your field and continuing stripping on nights and weekends?  This could super accelerate your path to FIRE.

I only mention it because starting salaries in your field may be only 35k, but you may be able to climb the ladder quickly and earn several times that in a few years depending on your skill and specific industry.  Like you said, women have an advantage these days and many large companies are looking to place strong women in high positions.  Stripper confidence, good looks and charisma could be a great asset when combined with some decent technical skills.


ElleFiji

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #17 on: May 12, 2017, 06:15:12 AM »
If you look up monstermonster, helping you out is her thing. And she fully gets the costs and income streams associated.

I'm also a contractor (but in health care) with a widely fluctuating income. In rich months, I pay all my bills, give myself a few hundred, and stash the rest in savings. In poor months, I pay all the bills, and pull a little from short term savings. But you've been managing your income a lot longer than I have... And it sounds like you can choose never to have a super low month.

To retire in 7 years, I think you need to save 75% of all your income. If you get strict, I bet an empty chewuing account will inspire you to avoid low earning months.

LifeHappens

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #18 on: May 12, 2017, 07:24:16 AM »
If you look up monstermonster, helping you out is her thing. And she fully gets the costs and income streams associated.

That's a great suggestion. monstermonster is a money coach working with people in creative jobs with fluctuating incomes. If you PM her I'm sure she could help you get to FIRE more quickly.

Malum Prohibitum

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #19 on: May 12, 2017, 10:24:15 AM »
Awesome. I'll look into that, thank you. Once I had looked into a SEP-IRA for businesses (My CPA said it wouldn't be worth it,) but I hadn't thought of a 401(k).
  One of the benefits to the 401(k) is that you not only pay no income tax on the money you put in, but you pay no payroll tax on the money your corporation matches.

I assume you are an S Corp so that you pay yourself a salary, with payroll taxes, and profits, with which you escape payroll taxes?

hobbes1

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #20 on: May 12, 2017, 12:05:38 PM »
I'm curious about your interest in having $20k in income from your investment. Are you wanting $20k income in the form of dividends/interest or are you wanting it in the form of withdrawals of principal? Another consideration: people are advising you to do a 401k. This is good advice....however....if you contribute all to a 401k you can not tap that money until you are 59.5 years old. UNLESS, you look into Substantially Equal Periodic Payments. This is an IRS approved method of getting money out of a retirement account, and paying tax on it as income, with no penalties for early withdrawal.

If you want $20k income per year from your investments/savings not touching the principal, then as noted you need a LOT of money put away, have good yielding investment(s) and avoid dumping so much into retirement accounts (unless you SEPP).

good luck!

Classical_Liberal

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #21 on: May 12, 2017, 12:19:05 PM »
A quick thought, based on your relatively aggressive goals & the the information regarding the cost of your home.  If you live in an area in which real estate price to rental income is reasonable, consider using leverage to purchase a small multi-unit (2-4) in your area. Low interest rates can provide the leverage you need to maximize returns.  A good real estate situation could seriously accelerate savings, but would likely require some side-hustle on your end.

Don't jump into something like this haphazardly though, do your research.

secondcor521

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #22 on: May 12, 2017, 03:08:29 PM »
This is good advice....however....if you contribute all to a 401k you can not tap that money until you are 59.5 years old. UNLESS, you look into Substantially Equal Periodic Payments. This is an IRS approved method of getting money out of a retirement account, and paying tax on it as income, with no penalties for early withdrawal.

In addition to or as an alternative to the SEPP method, she could do a Roth pipeline.  Roll the 401k into an IRA, then convert some money annually, paying income tax on the conversions.  After 5 tax years, the converted funds can be withdrawn tax and penalty free, even before 59.5.

I have had an interest in early retirement for about 20 years, and was planning on using a SEPP myself until I learned about the Roth pipeline method.  It is more flexible than SEPP and also pretty easy to understand.  I'm currently retired and in year 2 of my Roth pipeline and it's all pretty much working as planned so far.
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Axecleaver

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #23 on: May 13, 2017, 09:24:47 AM »
In terms of the SEP, you'll get better results from a SoloK in your situation. This is a one-participant 401k plan, and it's ideal for you. Shame on your accountant for not advising you of this! You can contribute up to 18k to a 401k plan even in years your business loses money, limited to 100% of earned income. There are two parts to the contribution limit, 18k for the "employee" part and 36k for the "employer" part.

https://www.irs.gov/retirement-plans/one-participant-401k-plans
http://www.investopedia.com/articles/financial-advisors/012716/solo-401k-vs-sep-which-best-biz-owners.asp

Definitely get in touch with monstermonster. Her popular journal is here: https://forum.mrmoneymustache.com/journals/bikes-bowie-and-business-using-glitter-to-double-my-net-worth-by-30/ .

She has worked as a stripper in Portland, and has advocated specifically for financial education for strippers. I believe she has a link in her journal to a newspaper article where her advocacy work was highlighted. She may have some connections/advice that those of us without experience in your field can't offer. Good luck to you - you're doing really well, especially on taking business deductions aggressively. With some optimization you will do even better.


SwordGuy

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #24 on: May 13, 2017, 11:29:02 AM »
Congrats on having a job you like and a solid intent to reach Financial Independence!

A lot of folks use investing in the stock market to reach that goal.   A reasonably safe method is to live off 4% of your stock market investments.  If you're wanting an income of $20,000, you'll need 25 times that, or $500,000. 
This is a great introduction to the whole concept of investing in the stock market:  http://jlcollinsnh.com/stock-series/

$30,000 for 7 years isn't likely to get you to FI in that time frame.   It will definitely get you there over time, but it will take longer.  Here's a calculator to help you figure out different scenarios:  https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator.  Relevant numbers are 7% for after-inflation growth and to compound annually.  So, if the market toodled along at the historical average growth of 7% after subtracting out inflation, you could expect about $260,000 in your market account.  It would take about 12 years at your current savings rate.   Of course, the market might do better or worse than average in any 12 year time span, so you might get there quicker or slower.   But you will get there.

Another option is real estate investing to purchase and fix up properties to rent out.   Every real estate market is different.
In my own market, I buy homes in the $33,000 to $40,000 price range.   Total cost to get them rented out runs between $45,000 to $50,000.  At that point, they are worth about $80,000, so we're looking at a $30,000 to $35,000 jump in net worth just by fixing them up.  I rent them out for about $800 a month, of which $400 is profit.   So, I can count on about $4,800 a year in profit.   The rest of the money goes to taxes, insurance, the property management company and repairs.  A portion of the rent is set aside to pay for things that haven't broken or worn out yet, but which surely will.   Ditto for paying expenses like utilities when the property is empty.   I don't have a big kitty saved for big repairs in the first few years, so I have to be able to pay cash or arrange financing if, for example, the HVAC dies earlier than expected.

Here's a 7 year plan for my market given your savings rate.   Assumptions are that you start collecting rent the year after you buy the house and that you do a fair bit of the work yourself to keep $ costs down.  And that you plough the profits back into funding more houses.   The remaining assumption is that you don't have a major $10,000 repair bill before you have saved up enough from gross rents to pay for it. 


Year   Savings        Buy  Running Total  Gross Rent  Profit   
1      30000            0          30000         
2      30000       -50000          10000         
3      30000            0          40000    9600        4800    
4      34800       -50000          24800    9600        4800    
5      34800            0          59600   19200        9600    
6      39600       -50000          49200   19200        9600    
7      39600       -50000          38800   28800       14400   
8                                  38800   38400       19200   


So, not quite $20,000 in 7 years, but pretty close.

There are other ways to do real estate deals, but this is a simple one that can work.  We've been having good results from it.

The Real Estate topic on this forum contains links to good books on how to find and structure good deals.

Hope that is helpful.
« Last Edit: May 13, 2017, 12:55:18 PM by SwordGuy »

seattlecyclone

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #25 on: May 13, 2017, 04:25:05 PM »
Individual amounts of each Pre-tax deductions: 2016 was 18,761 in deductions, 2015 was 19,904... stripping is expensive.

I have to admit I'm curious about this bit. What are the biggest sources of business expenses you have? I wouldn't have thought it would be very expensive, but I have very little knowledge of the matter.

Have you explored ways to reduce these expenses?
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lhamo

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #26 on: May 13, 2017, 07:33:50 PM »
Do you have both short- and long-term disability insurance?  If not I would get that lined up ASAP.   There are probably ways you could still generate a ok income if you blew out a knee or something, but when you are relying on your body to make a living the risks are always higher than for those of us in more sedentary pursuits.

Also highly recommend monstermonster as a resource -- you'd be a great person for her to profile on her podcast!
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WhiteTrashCash

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #27 on: May 13, 2017, 09:37:03 PM »
First of all, congratulations on your success. I think it's great when someone manages to utilize their assets, skills, and talents to make a living. It sounds like you have a good head on your shoulders to be focused on retirement at age 27. Where I'm from, stripping is a common occupation for young women, but most of them unfortunately come from backgrounds that don't prepare them to responsibly handle sudden wealth and they usually end up with drug/alcohol problems or wasting their prime earning years with frivolous spending on ultimately worthless status items. You've managed to avoid those problems and you seem to be aware both of the usually short career length of most strippers and the physical maintenance required to extend a stripping career as long as possible.

I would advise you to just forget about Betterment. It's pretty much a scam that's being sold through affiliate links on personal finance blogs. Vanguard is definitely the way to go. It's fairly simple to balance your portfolio yourself with Vanguard and the fees are miniscule, which means more money saved for retirement.

You have some unique problems that most of us don't deal with on here due to the fact that you are an independent contractor. Have you looked into services you could get by associating with a freelancers' guild? Perhaps a strippers/sex workers trade association? If you could get yourself into some kind of group, it would be a lot easier to get reasonably priced financial services -- including retirement -- for yourself.

Also, you may want to look into obtaining rental property and becoming a landlady as a side hustle. That way, if you run into an illness or injury that cuts your career short, you'll still have reliable income.

TomTX

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #28 on: May 14, 2017, 09:09:59 AM »
I am 27. Stripper income at my level of success generally stays steady or goes up until age 38, and stays steady a little low (maybe only 60k a year) between ages 38 and 45.
  I find that difficult to believe.  Are there a number of middle aged, 38-45 year old strippers making $60k+ a year at your place of employment?

The one stripper I know is 37 andmakes well over $60k/year, working an average of 2-3 nights a week.
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SwordGuy

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #29 on: May 17, 2017, 07:12:34 PM »
I hope you found some helpful info from us all.

Mr. Paws

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #30 on: May 19, 2017, 10:56:08 AM »
Have you thought about traveling to Vegas to strip to supplement income?  My friends wife did that.  She would fly to Vegas occasionally and dance.  She said she made much more over a weekend there then she could ever make here.  She a lot of the other girls there did the same thing.  Fly in for a weekend from their home state and make a bunch of money.

trollwithamustache

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #31 on: May 19, 2017, 11:06:02 AM »
I second the suggestions to ask your CPA about setting up a 401k (I have an S-corp as well and have found that a 401k provides me with the ability to save more than a SEP-IRA does). It sounds like you've got your expenses pretty dialed in, and you've talked about working more to save more. The other piece of the puzzle is doing everything you can to pay less in taxes. I find this post helpful if you haven't seen it yet: http://www.madfientist.com/retire-even-earlier/

Do you know how much your S-Corp pays you in wages vs. owner distributions? For a 401k you are limited to deferring your wages (these are employee contributions) up to 18000 a year, plus the company can match up to 25% of your W-2 wages. In my case this has meant thinking carefully about how much to pay myself as a wage (where FICA taxes are due, but this contributes to my 401k) vs. a distribution. Your CPA should be able to help you out.

You should also read up on how to access money set aside in a 401k/IRA before age 59.5, as it sounds like that is something you are planning on doing.

THIs.

If you want to work more, (or less) then this advice a great way to figure this into the plan.  You can shovel a lot of $$ into long term savings before taxes.

Bicycle_B

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #32 on: May 19, 2017, 11:10:16 AM »
Have you thought about traveling to Vegas to strip to supplement income?  My friends wife did that.  She would fly to Vegas occasionally and dance.  She said she made much more over a weekend there then she could ever make here.  She a lot of the other girls there did the same thing.  Fly in for a weekend from their home state and make a bunch of money.

If the wages are better in Vegas, why not just move there? 

Real estate is cheap, so cost of living shouldn't be too high.  Maybe moving to the right location would let Laa achieve her goal of FI in 8 years instead of 12.

Proud Foot

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #33 on: May 19, 2017, 01:01:58 PM »
Is there a reason you made the S-Corp election?  Looking at your numbers I don't see how the taxes would be any different than being taxed as a sole-proprietor. Unless you employ other strippers I think it would be hard to justify a lower salary than your net income.  Plus then you wouldn't have the additional costs of having a S-Corp.  Not sure how that would effect any of the previous suggestions of a Solo401k or SEP-IRA.

clarkfan1979

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #34 on: May 19, 2017, 05:08:55 PM »
Also, you may want to look into obtaining rental property and becoming a landlady as a side hustle. That way, if you run into an illness or injury that cuts your career short, you'll still have reliable income.

Would it be possible to buy a 3-4 bedroom rental property close to the club and rent out rooms individually to your co-workers on a month-to-month basis?

If you rent individual rooms, I would recommend living in the house to keep the peace. If you do it month-to-month, I think you could get above average rent. Most girls should be able to pay above average rent based on income.

With This Herring

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #35 on: May 19, 2017, 11:12:25 PM »
Do you have your ability to work in this profession insured?  I know that some surgeons insure their hands, as their medical knowledge isn't as useful to them without the physical ability to perform a surgery without any shakiness.  I think (but am not sure) that this is different from disability insurance.  Can you get similar insurance at a reasonable rate? 
Because your toaster got hacked because you tried to watch porn on your blender.

6-year CPA currently on hiatus.  Botched this.  Working again. 
Go soak your beans.  You know you keep forgetting.

monstermonster

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #36 on: June 07, 2017, 05:51:52 PM »
I'm just very happy you are here. Former dancer and made a zine for years called the "tax guide for Oregon strippers" and taught a class called Economics of Stripping. Just happy generally to see you here in FIRE land.

So few dancers file taxes let alone contemplate retirement - I'm so happy to see that you're thinking FIRE + even have an S-Corp (though I agree with some other posters that you might not need a S-Corp and could have an LLC + solo 401k instead for lower costs).
« Last Edit: June 07, 2017, 05:54:38 PM by monstermonster »

Laa

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #37 on: July 22, 2017, 02:24:41 AM »
I do apologize for not replying to everyone soon. Mid summer is causing me to go through an up period. I'll be putting over 8k+ towards retirement this month alone (and installing a new roof!) The month isn't even over yet.

It has me working a lot of hours.




I now have health insurance through my husband (he changed jobs again, but thinks he'll keep this one til he retires.) That, too, has me working more because he can only be home 38 hours a week now. Not having him around sure does get boring... so I work harder.

When I get another slow period I'll be back.

Until then, thank you for your help.


I'll look up that tax guide, thanks so much and hello to you! :)


As for why I chose my Scorp; it is what my tax guy recommended.


I am buying cheap lots close enough to me to border my property; people are leaving the country for the cities. It's way overpriced in the city. One day I believe the land here will be worth a lot more; I mean, for one, it is on a lake, acres of it, 40 minutes from a growing city. Most of it came with my house. I'd not sell the land but instead if I had even more money than I needed put homes on it... but that's long term. For now I just need to make as much money as I can (without hurting myself or loosing my happiness in the job [happy strippers make a lot more money]) and save it away following the advice you all freely and kindly gave me.

I don't believe I'd make the same amount as a landlady right now as I would putting the same time into stripping or self care (staying fit/healthy/etc... none of that expensive pampering stuff that doesn't really make you feel happy [at lest for me! You do what makes you happy :) I'd rather go fishing than have a massage!])



Terribly written I know, but I must have fallen asleep 30 minutes ago so I may work more tomorrow while the money is good.

libertarian4321

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Re: Case Study - Hi! I'm a stripper looking to FIRE
« Reply #38 on: July 22, 2017, 04:05:52 AM »
Thank you for your service.

Exactly.

I'm a veteran, but I appreciate the service of strippers everywhere.  They do just as much as I ever did, and more than Trump does, to "Make America Great."