First a note: This is not intended to take the place of good old fashioned learning (books). This is one of many resources you should use to get the answers you need. As with any advice and information given over the internet, this is given over the internet. And as such inherits all the wonderful can of worms that information and advice can have when it's given over the internet. Take all this with a grain of salt and educate yourself. Knowledgeable questions will lead to better answers. Those questions will come from some basic knowledge.
You will notice many answers have a common theme of “depends on your circumstances.” That is because it... well it depends on your circumstances. Hopefully the conversations in the links will help you narrow your answer down.
Any sort of investing advice given in this does not guarantee performance or returns.
If you disagree with any of this, GREAT!!! Put up a thread and outline why. Remember to back up your opinion as all these threads have tried to do the same.General TopicsCommon acronyms (FI, RE, AA, SWR …)
I'm just going to be lazy and link to someone who has already done
it (thank you Jeb whoever you are). Feel free to PM (private message) me if you don't see one and I'll add it below.
AA – Asset Allocation
PM – Private Message
SWAMI - Satisfied Working Advanced Mustachian IndividualHow do you calculate a Savings Rate?
The quick and dirty answer to this question is how much money do you save as a percentage of take-home pay. It starts to get more complex as we introduce various factors; such as income streams, pensions, pre-tax savings...etc.
This topic has been started with MMM's post about “The Shockingly Simple Math Behind Early Retirement
” and has been covered several times in the
forums.How do I use the MMM calculation to calculate years to FI if my net worth is not zero? Or, what are the best retirement calculators?
. They're the best
we got until something better
. Run all of them, play with your assumptions, this will help you understand what the various factors in saving for retirement and actually retiring.How does this work if I'm not making 60K+ etc?
Just the same
. Many people will say that you should focus on increasing your income and I'm not saying that isn't true, it will work. But your % savings works regardless of your income level so cutting your expenses is just as effective. If you're stuck, for whatever reason, at a lower income this can still work.
I consider myself a walking example of this at a 40k income. Now I am single and that helps but it has been the drive to save money by reducing the big expenses such as housing, transportation, and food (roommates, bicycle, and not eating at restaurants) that gets me at a >50% savings rate.Should I rent or buy?
less based on your circumstances? Go with that one.My SO is not on board. What should I do?
Seriously though, love, communication, and patience can work wonders. This journey is a lifestyle change if you're used to the typical US/European/Australian lifestyle. And all lifestyle changes take time.
Here is MMM
's post and some
to browse through
.What are the most likely ways to reduce your budget?
As mentioned before, if you hit your big ticket items (usually housing/transportation/food) you will have the greatest impact on your expenses; get a roommate, buy a bike, learn to cook, whatever solution you can come up with. Reducing the big items is the most effective way to reduce your expenses.
Now some people don't want to tackle the big things and like those aspects of their lifestyle. That's fine you can still have an impact on your budget but you will be forced to focus on the small items. Stop buying coffee at the coffee shop, bulk shopping, bring your lunches to work...etc. The “small items” may not even be small. How much do you pay for internet/television/cell phone? All of these can be optimized.
Here is MMM's spending
as an example.
If you think you're already frugal and can't cut anymore but are still spending $40k+ go ahead and start a new thread and post your budget. We'll be more than happy to give some love taps (read facepunches) on your budget. :)What is a "safe" SWR?
.00000001% That should be safe enough.
According to the Trinity
study that investigated safe withdrawal rates, 4% has become commonly mentioned in most financial circles.
The true answer is going to be whatever percentage you're comfortable with. This is one of those risk based questions. If you're conservative you will want to go for a smaller SWR, if you're not conservative or have a larger than necessary “stache” greater than 4% is possible.Other forum topics
on the standard withdrawal rate
. And MMM's take
.How can I make more money with side hustles?Here are some
ideas.What will I do when I retire/should I continue to work because I like it?Live life
/yes if you want to. And a shout
out to Nords' related post on his site.How do I handle my debts?Pay them off
. The general advice is to pay off ASAP whatever is more than what you can reasonably expect from investment returns within the same period. I'm personally a rather debt averse person so I would say to get rid of any debt but I can see the math behind keeping low interest debt and investing for a better return on your money.Should I count on Social Security or inheritances or other future earnings?Social Security
? Hahahahahahaha no
. Social Security will be there if you have put into it. It may not be the same, it may not be the amount promised today (it won't be), but it will be there in some way shape or form.
Should you factor these things into your plan? That is up to you
. The various calculators do ask what you expect from Social Security, inheritances, or future earnings. Try a few different scenarios, understand the impact these future dollars will have on your plan and act accordingly.InvestingShould I pay off my X% interest rate mortgage?
This question really boils down to should I pay more than what is required to pay for my mortgage?
The answer is all up to you and your circumstances. There will be several factors to consider. Factors such as time left on the mortgage, the interest rate on the mortgage, and what you can expect to get as a return on an investment over that same time period. Mathematically speaking if you can get a return on an investment which is more than the interest rate on the mortgage it is financially optimal to do so. This does not take into account the emotional aspect of truly owning a home. There is no requirement to own a home free and clear to FIRE. You can just factor in mortgage/rent payments in your FIRE budget. There are several topics which have covered this
on it runs through a couple of those factors as well.Should I pay off mortgage or invest?
See the should I pay off my X% rate mortgage question as it is essentially the same question.Where should I save my [short term] money?
Depends. Often times people want to know what can give them a 10% return for the next year as they save up for a house. This does not exist in a repeatable form.
When saving money for goals you have to consider the framework of the goal. Is the goal far away, such as traditional retirement? Then you can put in in less liquid investments which provide higher returns. Is the goal in the near future, such as a plan to put a downpayment on a house in the next 1-2 years? Then a more liquid but lower return may be better. Please see these posts which have covered
these subjects.Where should I put the money for my house down payment over the next X years?
Depending on your risk tolerance and timeline, you can have a couple options:
(1) Keep it in a savings account.
- Good if you're going to make your purchase within 1-5 years
- You will not earn any interest but that's not your goal if you're planning on buying a house soon
(2) Put it into a low cost index fund
- Good if you're going to save up money over a longer period of time such as 10 years
- You will hopefully keep pace with inflation and maybe exceed it
Personally, I wouldn't wait more than 5-6 years to save up for a down payment on a house. In the United States, if you have to save for more than 5 years to put a down payment on a house, you should probably either (1) jack up your savings rate by cutting expenses or raising your income, (2) move to a part of the country that has more affordable housing, or (3) be satisfied with knowing that if you want to stay in this expensive area, you should probably rent instead of own. [Written by birdman2003]What do you do if you don't want to invest in Wall Street?
Before we cover what to do if you don't want to invest in Wall Street let's cover the why
. Give it a read. There are some important questions about the ethics of pursuing FIRE which you should answer for yourself regardless of your feelings towards Wall Street.These
topics cover how
the bad in the path
towards FIRE.Should I invest in my 401k?
Yes. Tax deferred investments have a big impact on time to FIRE. This is all based on some assumptions. madFIentist
has a good post
outlining the assumptions and the results. Your case may be different but it may not be.
MMM has also covered
this topic, and it has been asked in forum
topics in the past.
The general answer has almost always been yes.I'm not eligible for a Roth IRA due to my income. I've heard of a Backdoor Roth IRA... sounds dirty what's the deal?This
is the deal.Should I try to time the market?Probably not.
It's probably best to stick with index fund investing.What does everyone see in Vanguard, anyway?
They deal with index funds primarily which are low cost and give market performance which is better than most mutual fund managers can provide. How much is most? I'll link to an article titled “Why Vanguard Sucks
.” If you didn't read that the author's major point is that only 10% of mutual fund managers have been able to beat Vanguard. He proceeds to do some other terrible analysis outlined in a table below (it's terrible because he averaged the fees instead of applying the actual fees of each fund to their respective fund, and no data). But that is irrelevant he already made the big point. Ask yourself this, can you pick that 10%? Or do you want to go through the company that can beat the other 90%?
There are several other reasons to like Vanguard but their fund performance being based off of the indexes combined with low fees made them a game changer for the common (wo)man investor looking to retire. And read the articles in the link to jlcollinsnh's site. They're good for beginners.TransportationWhere do I buy a bike?
Craigslist. Find a used bike that is in your size and suits your needs. Read Bakari's guide
. What gear do I need?
Feet. Or maybe not
Either way here
is the holy grail for bicycling. It's a bit interesting to navigate so if you don't want to research here's a good forum
post.I'm a beginner bicycle commuter, what do I need to know?
Don't be a dick. But that goes for more than bicycling. I'm going to link
back to Bakari on this one. And Sheldon Brown again
.What's the true cost of: owning and operating an older car/owning and operating a new car/Leasing a car?
I'm not going to answer this directly. The actual costs are covered better
than I could do in other places
.Buy used, no loan if possible.CommunicationsHow can I reduce my communications costs?Thank you I.P. Daley.
You should thank him too.
More links from the hard work of I.P. Daleyhttp://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/http://forum.mrmoneymustache.com/share-your-badassity/communications-tech-discussion-thread-1/http://www.techmeshugana.com/
- His own websiteMisc.
Please turn off the tapatalk spam. There should be an option in the settings to do so.
And thank you fellow forum members. Your guys questions and answers are what mostly populate this.
Any feedback is welcome. If there is a question you feel I missed feel free to ask it.
*Edit - 11-7-13 - Link to common acronyms was broken and now fixed, ty Mr. Minsc.
*Edit - 7-31-14 - Updated to include definition of SWAMI and a plea to end the Tapatalk labels.
*Edit - 8-19-15 - Updated to fix links, remove dead links, and add additional links for communication/cellphone section.