Author Topic: I just bought 2 days per year of free life, indefinitely. 363 to go.  (Read 52923 times)

moof

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #250 on: January 12, 2018, 11:06:02 AM »
It can also decelerate at a gut wrenching pace.

We all (mostly) suffer from recency bias during this last bull.

Being at 20X and having a bad market crash take you to 15X while you save 75% of your income will be an interesting feeling to say the least.
Just keep telling yourself you are buying low, you are buying low, you are buying low...

Roothy

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #251 on: January 12, 2018, 11:27:14 AM »
Yes, it feels bad when you put in monthly contributions only to have them "disappear" the next day.... month after month.  That has happened to me a handful of times over my investing life, which started in 2005.  On the other hand, tax loss harvesting REALLY, REALLY helps with the psychology of it.  Or it did for me, anyway. 
 

saving_dutchman

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #252 on: January 15, 2018, 08:49:35 AM »
Yes, it feels bad when you put in monthly contributions only to have them "disappear" the next day.... month after month.  That has happened to me a handful of times over my investing life, which started in 2005.  On the other hand, tax loss harvesting REALLY, REALLY helps with the psychology of it.  Or it did for me, anyway.
I'm from the Netherlands and we don't have tax loss harvesting unfortunately. We do however have this rule where we pay 1% in taxes annually on any net worth above 25€k. So devaluation in stocks lead to a lower tax bill...

When the  inevitable downturn comes we will get a support topic going to keep us on track!

Slow&Steady

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #253 on: January 15, 2018, 01:27:35 PM »
At $60k/year and only looking a 401k/IRA

Feb-17 = 17 days
Sept-17 = 21.7 days
Oct-17 = 22.05 days
Dec-17 = 23.03 days

There should be a lot of changes in the next year; baby #2, SL paid off, new job (fingers crossed), DH company continue to grow, etc.  Some of these might not be so great for this number in the short term (baby #2, SL pay off) but we will see.  Hopefully, this number starts speeding up (increased contributions & compounding interest) because 0.5 days per month = an unacceptable  amount of work left for me.

At $60k/year and only looking a 401k/IRA.  Edited below to look at end of month instead of beginning of month.

Jan-17 = 17 days
Aug-17 = 21.7 days
Sept-17 = 22.05 days
Nov-17 = 23.03 days
Dec-17 = 23.71 days
15-Jan-18 = 24.54 days

I got the job and it came with a 30+% raise!  I won't be able to contribute to 401k for the 1st 30 days and will be on maternity leave shortly after that so this will probably not grow to much for the 1st half of 2018 but then I hope to see it pick up some pretty good steam!!

Babybalrog

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #254 on: January 17, 2018, 12:31:34 PM »
I wanted to check in on people and see how y'all are adjusting your spending rates when you do these calculations? I'm thinking of going back and charting my freedom days since 2007, but my spending has grown since then. Mostly inflation, grrrrr. But still it means i need to code each month with spending rates. Do y'all use one value for the year? or just back project current spending rates?

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TexasRunner

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #255 on: January 17, 2018, 09:47:46 PM »
I wanted to check in on people and see how y'all are adjusting your spending rates when you do these calculations? I'm thinking of going back and charting my freedom days since 2007, but my spending has grown since then. Mostly inflation, grrrrr. But still it means i need to code each month with spending rates. Do y'all use one value for the year? or just back project current spending rates?

Inflation is built into the 4% rule...  And lifestyle inflation is (used to be) facepunch worthy around here.  As such, you % complete towards FIRE number is your days free.

I'm doing it as a straight % of net worth goal times 365.

FIRE number of 1,000,000.  You have 250,000 = 25% 
25% times 365 = 91 days
91 days = April 1st

Thats the easy math that nets the same result.  (If you are using the 4% rule)
"The mathematical formula for the number of motorcycles you need is   x+1, where x is the number of motorcycles you currently have."

Babybalrog

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #256 on: January 18, 2018, 09:55:24 AM »
To build off your example.

Someone spending 40,000
Stash 250,000
FIRE number 1,000,000

So today they are 25% funded. But they can't retire. Let's say they work 10 more years before pulling the trigger. Let's assume 2% inflation /year so 20% total for 10 years (simple math). That means, without any lifestyle creep, this person needs to replace 48,000 of spending, not 40,000. And thus their stash target has grown to 1,200,000 also. If they have hit their 1,000,000 target, they are not 100% funded, but only 83%.

Basically, however many "freedom days" you've bought now, they loose purchasing power with inflation just like anything else. You're investments, will out pass it, but you still need to take into account the time order difference.
“He was swimming in a sea of other people’s expectations. Men had drowned in seas like that.”
― Robert Jordan, "New Spring"

TexasRunner

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #257 on: January 18, 2018, 04:52:19 PM »
To build off your example.

Someone spending 40,000
Stash 250,000
FIRE number 1,000,000

So today they are 25% funded. But they can't retire. Let's say they work 10 more years before pulling the trigger. Let's assume 2% inflation /year so 20% total for 10 years (simple math). That means, without any lifestyle creep, this person needs to replace 48,000 of spending, not 40,000. And thus their stash target has grown to 1,200,000 also. If they have hit their 1,000,000 target, they are not 100% funded, but only 83%.

Basically, however many "freedom days" you've bought now, they loose purchasing power with inflation just like anything else. You're investments, will out pass it, but you still need to take into account the time order difference.

I'm pretty sure the consensus on here is that you re-evaluate your fire number at least annually, based on your spending.  Also, most find that they spend less in retirement.  Since its extremely rare for inflation to beat out investment returns, its generally safe to say your investments will grow more, naturally from returns, than they lose to inflation.

Beyond that, If someone determines a fire number today and blindly follows it ten years down the road without ever re-analyzing...  I think they have bigger problems.

When you adjust your FIRE number, yes you might lose some days but those are days you gained 'for free' as your investments grew over the year, but I don't think crystal ball-ing inflation numbers is going to help.  And when you adjust your fire number, if its as small as 2% then we are talking about 7.3 days.  Once things start getting exponential, it'll make even less difference.

tl:dr  - If you adjust your fire number (for example, due to inflation), you adjust your 'days purchased' and 'cost of days' numbers as well.
"The mathematical formula for the number of motorcycles you need is   x+1, where x is the number of motorcycles you currently have."

2Birds1Stone

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #258 on: January 18, 2018, 07:43:24 PM »
My glorious cubicle calendar......in three years, only one person has asked me what it meant.

https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/msg1860531/#msg1860531

(I can't figure out how to link the picture here as it's sitting on a different computer)
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CCCA

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #259 on: January 18, 2018, 11:10:37 PM »
My glorious cubicle calendar......in three years, only one person has asked me what it meant.

https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/msg1860531/#msg1860531

(I can't figure out how to link the picture here as it's sitting on a different computer)


awesome!  here's the link if you want to put it in your post:
https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/?action=dlattach;attach=43208;image

by the way, I really like how you color coded when you achieved those dates.  It's great to see.
Check out some of our projects.

and the Financial Freedom Calculator.

Babybalrog

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #260 on: January 19, 2018, 08:56:11 AM »
I like the color coding as well.

It's interesting to track the point where investment returns start being larger than what you are contributing to the stash.
“He was swimming in a sea of other people’s expectations. Men had drowned in seas like that.”
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CCCA

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #261 on: January 22, 2018, 12:25:39 PM »
My glorious cubicle calendar......in three years, only one person has asked me what it meant.

https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/msg1860531/#msg1860531

(I can't figure out how to link the picture here as it's sitting on a different computer)


Arebelspy had suggested I add a calendar view to the freedomcalculator and your picture inspired me to do it.
Here's the updated version.
http://engaging-data.com/freedom-calculator/#calendarupdate


Check out some of our projects.

and the Financial Freedom Calculator.

Dicey

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #262 on: January 22, 2018, 12:44:27 PM »
It can also decelerate at a gut wrenching pace.

We all (mostly) suffer from recency bias during this last bull.

Being at 20X and having a bad market crash take you to 15X while you save 75% of your income will be an interesting feeling to say the least.

It must be scary to see your net worth dropping like a brick while still saving and trying to increase it. Because I've only been investing for the past 4 years there have only been a few minor dips in my portfolio but nothing major.


I'm old enough to have lived (and invested) through the dot-com crash in 2000 and the 2008 recession.  Yes it is gut wrenching but in the past it has always bounced back.  Hopefully, future crashes will also follow this pattern.

You are a small percentage of the forum I would guess.

I wonder how it would feel for someone who has only invested through a bull run to experience 2008 all over again, didn't stocks take ~4.5 years to return to pre crash valuations? That's a long time to wait for newer investors (mentally, in the long run if they keep investing their portfolio value should recover faster).

I'm in the later pool, my investing career only began in 2012, so I am curious to see how I react.
I'm older, and I've seen a lot. It's all a mindset. Train yourself now that you're not going to panic and you'll appreciate the effort later. The crash of 2008 greatly accelerated my progress because i kept steadily adding $$$ to my investments all the way down. When the market recovered (and it always does), my NW zoomed. I view the next inevitable downturn as a buying opportunity.
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kaypinkHH

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Re: I just bought 2 days per year of free life, indefinitely. 363 to go.
« Reply #263 on: January 22, 2018, 01:48:43 PM »
Arebelspy had suggested I add a calendar view to the freedomcalculator and your picture inspired me to do it.
Here's the updated version.
http://engaging-data.com/freedom-calculator/#calendarupdate


Very very cool! Thanks for doing this!