Author Topic: Long intro, how do full time workers who love their career fit in  (Read 3598 times)

RamS

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Hello all, I just came across this website from the reddit forum on ETFs. This is a long introduction as well as hopefully the start of a discussion.  I'm interested in money only tangentially, primarily from a mathematical problem solving viewpoint as someone who does complex systems research (i.e., the market, economy etc) in a different field. I'm also always looking into new ideas for self actualisation, finding balance, self recognition, etc. so I see this site as doing a mix of both and I've already learnt a bit from reading the forum and blog. Any knowledge/experience I have I will contribute moving forward.

I'm wondering about the fit of someone like me who works full time as a passion but has achieved FI. But you all seem like a great group of people, so here we go. I've always held the philosophy that we should decouple work from money. I truly believe we can create a fully automated future where no one has to every work for the basics: food, shelter, health, and education. The rest of it, you can follow passions or do work that can't be automated for certain luxuries, etc., so I'm glad for everyone who has managed to achieve FI and/or FIRE.

As far as myself, I was born FI (not in the US). Not only because of my affluent family but because I was contented easily. In my teenage years, I grew disaffected with this for a variety of reasons (I can elaborate in detail if anyone really cares but mainly it is the fact that whatever I had wasn't really from my efforts but rather my family's and I wanted to see if I could do it on my own).  So I left for the US at age 17 (1990) with $400 in my pocket lucky to be on a full scholarship and fortunate to climb up the academic ladder rapidly, achieving tenure a year early (which is when I first started thinking "there's some work involved here"),  doing scientific research into understanding our universe via computational biology/bioinformatics with applications in therapeutic discovery and medicine. This often comes with both academic and entrepreneurial choices for myself and my mentees.

That's me at age 48. My wife (43) on the other hand grew up dirt poor. But she is smart and a serial entrepreneur and she ran a successful restaurant and made a lot of money that was just gravy on top of my salary/savings and we've invested it in a variety of ventures in the US and beyond. She sold the restaurant in 2014 and retired at age 36 and until COVID-19 had a great routine going, along with thinking of opening another. It helps that my income exists but it is not needed.  I can't say we were responsible with money those early years where we worked and partied hard, but over time my wife and I grew up and learnt our lessons and between the two us, we've already saved up enough in mutual funds and assets/property internationally to be FI if that's what we wanted. I say "international" but I really mean "Thailand" primarily since that's where I/we wish to die. We have an older son who's on his own now (he now owns/operates a restaurant), an older daughter who is in college (last semester) and a younger daughter who's 13 who says she will follow in my footsteps as a scientist.

Except for a few administrative things (which I've gotten pretty good at delegating and, um, avoiding) this is what I would be doing even if I was formally retired. So I don't see the problem in pulling in a paycheck and as long as my health permits, I hope to never retire nor stop working as long as inspiration strikes. So this is why I wondered about fitting in. I understand the caveat that appears many times on this forum/site about "RE" being about the 9-5 drudge work in a job you don't like but my scenario is the opposite:  I'm deeply self-motivated to solve the problems I'm working on and there was a time when I was even willing to give up my health and relationships in an all consuming focus (which I think is helpful but it is burning the candle at both ends AND the middle!) but ultimately decided a path of moderation/balance/steady state is more important. In addition to the actual research, I really enjoy the aspect of "paying it forward" mentoring and interacting with my bright amazing students who range from high school to postdoc and beyond like I myself was by my mentors.  (I often joke that if I didn't have my group I'd become a monk.)  Even the hobbies I have are in service of my passion to understand the abiotic and biotic universe (astrophotography/astronomy, music, Pokemon Go, investing, etc.). To me this process of FIRE is really about self actualisation (i.e., it's when your life really gets started) but I wondered how many others felt the same way vs. how many are fine with a simple life (nothing wrong with either choice IMO).

I have a lot of freedom in my position because it's all computing (and COVID-19 has made that transition 100% but even prior, it was like 80% "anywhere in the world") and fortunate to be able to more travel (prior to the pandemic) opportunities than I desired. Lest someone gets the wrong impression, my group and I are always being productive: we tend to always be doing something in the background at least (the computing cluster is always working even if I am writing this post) and this is really a 24/7 passion (i.e., I solve these problems in my sleep once in a while and wake up and begin coding/writing). It's perhaps the one thing I can't "turn off" unlike many people with traditional jobs but I feel blessed/fortunate to be in this position so no complaints here.

As far as immediate money issues, we have a lot of cash sitting in the sidelines. We were going to buy another property/home down south in part so I can pursue my AP hobby in warmer weather while getting away from brutal WNY winters but COVID-19. Like MMM, we don't really believe in debt so the idea was to pay cash for this home in a non-light polluted location. But since that has been held up, this money earning 0.5% interest per year is really bothering me. And I've been thinking about ways to make it work better, and whether I should even do this or not, etc.  Right now I'm playing around with ETFs in small amounts to see how they behave, etc. I wondered about making this a case study post instead but then thought this is a general issue, it's not specific to my financial situation. Do people on this forum have a lot of spare cash sitting in the sidelines (I'm not talking about the emergency fund) or do they always make it work for them even if they may need in the short term (1-5 years)?

Another somewhat philosophical related issue about money is that if you have more, there is more to give away, which we do and we also have a lot of plans for the future in this regard (scholarship, foundations, etc.) depending in part on how much ends up being left in our estate aside from what we give our children.  So another reason I'm at this site is because I'm planning out the last 40-60% of our lives (hopefully!).

In closing, I appreciate a lot of what MMM is trying to do.  I like the site because of the way it is structured - it is giving away what the creator desires without any conditions (like my own site from 1993 which is my version of such an effort). Money insecurity is a big issue IMO preventing people from self actualising. I'm glad it exists.

So a big hello to you all and I look forward to any responses.

--Ram

Bloop Bloop Reloaded

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Re: Long intro, how do full time workers who love their career fit in
« Reply #1 on: November 29, 2020, 12:54:39 AM »
Even if you love your job and want to work fairly intense hours, being fired can help you to do any or all of the following:

- Only take on work that is really interesting, meaningful or lucrative (or whatever appeals to you)

- Only work for clients whom you really want to work for

- Direct your income wholly towards causes you care about

- Work only in the manner that you prefer, and only on your own terms

etc

I think that is part of the freedom that being financially independent gives you.

Abe

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Re: Long intro, how do full time workers who love their career fit in
« Reply #2 on: November 29, 2020, 01:24:21 AM »
Welcome! I agree with Bloop Bloop.

Personally I'm in a research-oriented field and plan to continue that part even when I am FI and ready to slow down. That's acceptable (even encouraged) at my institution. My wife will probably fully retire at that point.

Regarding your specific questions/comments:
Aside from an emergency fund, anything we'll need in 2-5 years we keep in bonds. For example, down payment on a house was kept in bonds for the last 3 years while we rented, and had a 4% return per year. We don't spend a lot relative to income, so don't plan on cash reserves except for 1 year living expenses.

It seems you have found a balance in life that most people can't afford to reach for, so that's good.

Freedomin5

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Re: Long intro, how do full time workers who love their career fit in
« Reply #3 on: November 29, 2020, 01:51:28 AM »
So youíre a SWAMI.

Satisfied Working Advanced Mustachian Individual

MMM wrote a post about that.

former player

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Re: Long intro, how do full time workers who love their career fit in
« Reply #4 on: November 29, 2020, 02:26:41 AM »
Cool story.

I think most people here would agree with you that the point of FI is to find a gainful occupation in life that is independent of someone else telling you what to do and independent of someone else giving you money.

And yes, I probably have far more in cash than mustachians here would think optimal.  But I'm FIREd and I don't have to do what they say either.

John Galt incarnate!

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Re: Long intro, how do full time workers who love their career fit in
« Reply #5 on: November 29, 2020, 02:32:01 AM »

 I'm also always looking into new ideas for self actualisation, finding balance, self recognition, etc. so I see this site as doing a mix of both and I've already learnt a bit from reading the forum and blog.

I'm wondering about the fit of someone like me who works full time as a passion but has achieved FI. But you all seem like a great group of people, so here we go.

So a big hello to you all and I look forward to any responses.

--Ram

Hello!

Anyone's FI status includes the options of   RE or not.

Whether FI or not,  one's only general obligation is their performance of the social contract which is to live their lives and manage their affairs so as not impose any burdens on society at large.

 In actuality, no one is burdened by any  other exogenous obligation to tailor their  choices so they  "fit in."

 Self-actualization is impossible in the absence of knowledge of self. I cannot  overemphasize the  indispensable  importance of one's knowing of their own mind which is precedent of, and key to, their happiness and contentment.

"To thine own self  be true." Polonius

Though you are FI there is nothing whatsoever that is objectionable or inappropriate about your choice to continue working "full time as a passion" for the sake of your "self actualisation,...balance, self recognition, etc."

"I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine."   Ayn Rand



« Last Edit: November 29, 2020, 02:35:38 AM by John Galt incarnate! »

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #6 on: November 29, 2020, 05:48:45 AM »
Thank you all for the responses Bloop Bloop, Freedomin5, Abe, former player, and John Galt incarnate! They indeed clarify a few things.

Abe, yeah, I went into bonds last week and after that the returns went down three days in a row which made me a bit nervous but on Friday it all came back and just a bit more. Glad to know others have made the same risk/reward trade off.  I also will probably feel better once the month end distributions come in and a bit of time passes. The breakdown of the relationship between stocks and bonds is really bizarre even though we probably understand why (but "serenity prayer").

Yes, Freedomin5, SWAMI sounds right!  Thanks for the pointer to that article - there's a lot on the site that is worth reading and I'm glad to find others more aligned to my current worldview.  I think it is there but it seems to be hidden and I fully understand it: people who need help may be in a different state of mind (see below) so better safe than sorry but it did strike me as going against the very "moderation in all things" driven mentality that is present in most places here.  I mean we can always take everything to an extreme and I used to do that and be proud of it but since complex systems balance isn't about finding the midpoint between two extremes but rather what restores equilibrum, I've adopted a lot of that research to my life.

While I was searching for SWAMI in Google, I came across another post by whitecoatinvestor who claims to be acquainted with MMM personally and talks about the issue I was trying to put a finger on but maybe he goes the other way. IMO, the advice there is great for people who really have their stuff together and then we can argue about the best way to be FIRE/SWAMI. When I read MMM, even though I agree with a lot of the advice, this self-actualisation ladder is one I would view differently until I understood the definition of "retire" which could include "retiring in one's mind" (per the SWAMI article).

I guess the philosophy differences come to the approach that worked for us to find our happiness and contentment: for us looking only at securing our US position, it was a combination of both increasing income and managing costs. (I felt I could make the moves I did because I always had the security in case I failed, but my wife took similar risks and she grew up money insecure and she felt she just had "prove the naysayers wrong" - many years of marriage have made the two of us achieve near perfect complementary and synchronocity to meet in balance, i.e., she's moved more towards my POV in this regard at least, no longer penny wise pound foolish.) I also believe from a purely mathematical perspective you should make your money work for you (i.e., I'm not greedy and tend to give away what I have if I can but if you give me a sum of money and I'll be thinking of ways of optimise what I call its self-velocity).

--Ram

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Re: Long intro, how do full time workers who love their career fit in
« Reply #7 on: November 29, 2020, 10:39:57 AM »
My spouse is a SWAMI.  We have enough to be medium-FIRE.  He will work at least another three years and likely more than that because he has work goals unrelated to money, and he generally finds most of work like to be fulfilling. 

But the money is nice, and will increase our FIRE standard, especially with regard to travel (when that's a thing we can do again).   

So I don't think you are quite as rare or alone as your posts suggests.  The money gives you the freedom to quit if you ever want to, to shift to a lower paying job if it seems more rewarding, or to blow off the parts of your job you don't like.

I will say that you mentionMMM is anti-debt.  It's been a long while since I read the blog, but I'm not sure that's the case for mortgages.  There is a very strong case to be made in support of having a mortgage, even if you could pay cash.  I suggest you read up on that. 

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #8 on: November 29, 2020, 05:53:36 PM »
This is a very common mistake that newbies make here.
People join the forum and assume that the members here are for the most part similar to MMM in terms of values and path.

MMM's path is extremely rare. You won't find many people here who follow it closely. Many posters here are high earners who deeply value their careers and don't retire particularly young.

Spend some time reading and participating and you will rapidly discover that your concerns about being different from us are really not worth worrying about.

Honestly, if you were retiring by 30 like MMM, you would have a harder time finding people here to relate to than you will with your current situation. You won't be rare here, and you won't find the culture of moderation in everything that you seem to think we have.

Here you will find people who love luxury cars, owning multiple homes, owning private planes, hiring housekeepers, etc, etc. And you will find people who focus almost entirely on the income side of things.

You will find some active investors, some Bitcoin folks, some real estate investors, and even some market timers.

We're not a cultural monolith.
« Last Edit: November 29, 2020, 06:01:21 PM by Malcat »

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #9 on: November 29, 2020, 09:53:46 PM »
Thank you again for the responses - my question about fit was indeed driven a lot by what's on the main MMM site so glad to know there's a diverse group here and I look forward to reading and participating more. I also from reading more can see that FI is really a mindset you achieve and that's perhaps more important than the material FI - in other words, people who achieve FI materially may not realise it and continue their rat race (which is why I think the MMM site is useful) whereas the FI mindset is both necessary and possibly sufficient if you are honest with yourself or in specific circumstances.  And it's possible to lose the mindset if you achieve it. Basically thinking about "retirement" as a mental state of mind is necessary.

--Ram

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #10 on: November 30, 2020, 06:49:48 AM »

I think most people here would agree with you that the point of FI is to find a gainful occupation in life that is independent of someone else telling you what to do and independent of someone else giving you money.

But what about folks who choose the entrepreneurial path looooong before FI.  Have they already "won" the game or do they have to save 25X their annual expenses before setting off on their own (;

Absolutely not.

They need to save 25X their expenses to be financially independent. How that changes their work (or not) is up to them.
« Last Edit: November 30, 2020, 06:51:20 AM by Malcat »

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #11 on: November 30, 2020, 07:01:09 AM »
Thank you again for the responses - my question about fit was indeed driven a lot by what's on the main MMM site so glad to know there's a diverse group here and I look forward to reading and participating more. I also from reading more can see that FI is really a mindset you achieve and that's perhaps more important than the material FI - in other words, people who achieve FI materially may not realise it and continue their rat race (which is why I think the MMM site is useful) whereas the FI mindset is both necessary and possibly sufficient if you are honest with yourself or in specific circumstances.  And it's possible to lose the mindset if you achieve it. Basically thinking about "retirement" as a mental state of mind is necessary.

--Ram

Nope.

FI is a financial thing. That's it. What it means to you is personal. Some people can start living their best lives well before achieving FI, but they're not FI. Others feel they need to achieve FI before they can focus on their own happiness.

Living a happy and fulfilled life is not the same thing as being FI. There are plenty of miserable FI people out there. FI doesn't create a happy life, it conveys nothing beyond the ability to choose to not generate income.

I personally read MMM's posts and thought "wait, he makes more money now living his best life, screw the decade of work, I'm jumping straight to the post-FI type of life he's living". He never needed FI in the first place. It's what helped him feel free to live his ideal life, but it didn't create it, he did once he felt he could.

We all have different paths, different things that make us happy.

For my particular set of circumstances, with my particular type of work options, FI is virtually irrelevant.

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #12 on: November 30, 2020, 04:35:16 PM »
Sorry I was using "happiness and contentment" in a financial/material sense - i.e., synonymous with FI but I agree, it's unclear: you can be FI and still be emotionally miserable.  Just substitute "happiness and contentment" with "FI" and the rest of it holds.

The MMM site has an essay arguing for retirement as a state of mind.

But what you're saying: "I personally read MMM's posts and thought "wait, he makes more money now living his best life, screw the decade of work, I'm jumping straight to the post-FI type of life he's living". He never needed FI in the first place. It's what helped him feel free to live his ideal life, but it didn't create it, he did once he felt he could."

also tells me FI is a mindset.

And regardless, for my path also, FI is entirely irrelevant (or like I said, I was born FI).

--Ram

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #13 on: November 30, 2020, 05:09:25 PM »
Sorry I was using "happiness and contentment" in a financial/material sense - i.e., synonymous with FI but I agree, it's unclear: you can be FI and still be emotionally miserable.  Just substitute "happiness and contentment" with "FI" and the rest of it holds.

The MMM site has an essay arguing for retirement as a state of mind.

But what you're saying: "I personally read MMM's posts and thought "wait, he makes more money now living his best life, screw the decade of work, I'm jumping straight to the post-FI type of life he's living". He never needed FI in the first place. It's what helped him feel free to live his ideal life, but it didn't create it, he did once he felt he could."

also tells me FI is a mindset.

And regardless, for my path also, FI is entirely irrelevant (or like I said, I was born FI).

--Ram

I understand what you are saying, but FI isn't a mindset, it really is just a financial thing.

Not everyone who reaches FI has the same mindset, if that were the case, then every retired person in the world would be living like MMM, and that's not the case.

Also, reaching FI won't magically make someone happy either. It's just money, not magic.

If you want to articulate what I think you are trying to say, then you will need to find another way to describe it if you want anyone here to be able to understand you. Because if you start saying here that you don't have enough savings to retire, but you still claim that you are financially independent because of how you feel about your job??? Yeah, that's not going to go over well.

You are either financially independent or you are still obliged to work for money. Regardless of how you feel about that work.

I would have never, ever claimed to be FI back when I decided I didn't need 25X savings in order to quit my full time job and only do work I love. I was inspired to live a life more similar to MMM's post-FIRE life, because I felt FI wasn't necessary to live that way.

I would have simply been lying if I said I was FI though. I can have whatever mindset I want, but if I don't have enough wealth to support myself without working, I'm not financially independent. Period.
« Last Edit: November 30, 2020, 05:15:07 PM by Malcat »

Villanelle

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Re: Long intro, how do full time workers who love their career fit in
« Reply #14 on: November 30, 2020, 05:18:34 PM »
It sort of feels like you are purposefully trying to make things deep and philosophical.  FI=Financial Independence  FI means, basically, have enough money that you don't need to make any more (whether or not you choose to).  That's it.  It just means "I have enough money for forever".

What you do with that, how it alters your choices, how it makes you feel, etc., do become somewhat philosophical questions.  The answers to those things can be a mindset.  But FI/Financial Independence just means "I have enough money". 

jinga nation

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Re: Long intro, how do full time workers who love their career fit in
« Reply #15 on: November 30, 2020, 06:12:29 PM »
Wife and I are maybe 65-75% FI. I work for a SMB employer that values me, clients enjoy working with me, and I love being at the technical front-end. I work 40 hours/week, never more. Sometimes less.

Wife has a good stable job, she's at a career level that's stable and not too challenging. If she wanted to make more, it'd be a lifestyle change with crazy hours, but she doesn't want to. We have fuck-you money if she wants to walk away from it (she nearly did a month ago, but her boss acquiesced when she made it clear she wouldn't take his BS). She works 32 hours/week, sometimes more, but never more than 40.

We have a good routine with work, raising kids, and leisure. Our work is meaningful and impactful and provides us purpose. We don't want to retire yet since we enjoy what we do (or at least I do). Wife and I have agreed that in 10-12 years I'll quit my full-time career, and maybe do some short-term consulting if I'm bored. She may quit her career anytime in the next 1-3 years. But she knows that she'll be bored soon and start looking for something to do. There's only that much one can go to they gym and cook in a day. As @RamS mentioned, we're contented (an average home and 2 cars, by American standards... which is considered living like a prince in some countries).

My parents and paternal grandparents worked in their own business and my in-laws still run their family business. Wife and I come from a working family culture but realized early on to invest in both equities and income-producing real estate so that we aren't tied to the responsibilities of running a business. (I've seen how hard it was for my day to wind down and sell his business; FIL sold his flagship business but at 75 he's working on building a mini-mall in his small town in a foreign country.) This gives us plenty of good returns with the opportunity to retire around age 52.

If you love your career, use that as leverage to plan ahead to FI/FIRE/ERE/SWAMI/whichever model fits you.
This is good article on Jeff Bezos planning ahead in business, but can be applied to personal retirement planning: https://www.fastcompany.com/90578272/how-jeff-bezos-makes-decisions
« Last Edit: November 30, 2020, 06:14:57 PM by jinga nation »

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #16 on: November 30, 2020, 08:57:15 PM »
I understand what you are saying, but FI isn't a mindset, it really is just a financial thing.

Not everyone who reaches FI has the same mindset, if that were the case, then every retired person in the world would be living like MMM, and that's not the case.

Also, reaching FI won't magically make someone happy either. It's just money, not magic.

If you want to articulate what I think you are trying to say, then you will need to find another way to describe it if you want anyone here to be able to understand you. Because if you start saying here that you don't have enough savings to retire, but you still claim that you are financially independent because of how you feel about your job??? Yeah, that's not going to go over well.

I'm saying there is a FI mindset, which is a state of mind (not that all of FI in its entirety is that mindset). I'm not saying it's the same exact state of mind for everyone nor do I think it is, but it is a state of mind which I believe is necessary (because  of situations where you could achieve FI materially and not believe/know you have done so) and possibly sufficient (depending on the context, see below). 

I've come across at least one example on the MMM site of articles (or in the comments therein) where a person who was SO good at his job/craft that  he could just say FU to their employer at whim and never do a single task they disliked.  So this is a case of a FI mindset winning over material FI. I am fine with that person saying they are FI - in the sense they don't care if they lose the job or not even if they weren't materially FI and wouldn't behave differently otherwise. Such a person would presumably be willing to starve (if they weren't already materially FI or had lived in a country with a decent social net that this would never really happen) instead of doing something they don't love. Their actions are absolutely no different than someone who is materially FI. So here the mindset is driving the behaviour.

It's not important: I said many other things besides that post in this thread and hopefully the rest of it is clear and I hope my clarification above helps. This point isn't that important: for me, it was A (not "only") way I could understand what some of what people were saying to me in their responses to understand the different/variety of people here (and reconciling what was written on the blog with what was written in responses to me).  That's all.

I'm willing to accept another secondary definition of FI being purely only a material FI but then we have cases of people achieving FI but not realising it - they're caught up in the game----there are many articles about this on MMM which is what drew me to this site. So there is a mental state that goes along with the material achievement. Perhaps for some people FI is both a mindset and a material FI. For some others in special circumstances, the mindset is enough. According to you, only the material FI is what matters and nothing else but given the contradictions I've seen in different cases so far written here and elsewhere, I believe the two together are necessary and possibly sufficient (there may be other types of FI I've not considered)?

--Ram

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Re: Long intro, how do full time workers who love their career fit in
« Reply #17 on: November 30, 2020, 09:11:23 PM »
It sort of feels like you are purposefully trying to make things deep and philosophical.  FI=Financial Independence  FI means, basically, have enough money that you don't need to make any more (whether or not you choose to).  That's it.  It just means "I have enough money for forever".

What you do with that, how it alters your choices, how it makes you feel, etc., do become somewhat philosophical questions.  The answers to those things can be a mindset.  But FI/Financial Independence just means "I have enough money".

Guilty as charged - yeah, as I wrote in my very first post, I'm interested in the topics of self-actualisation, self-improvement, etc.  And what I found interesting about the MMM site was that it connected the two aspects, the financial independence with the philosophical aspects.

It's not a big deal however, just pseudointellectual discussions which is a lighter version of the normal stuff I deal with. So a pleasant distraction for me. I have to say though I didn't really think of the FI mindset until I read the MMM blog and until I read all your responses, so for me that's a win.

As far as the definition of FI only being "I have enough money", you have to also THINK that, right? It's not enough to just have the money as many examples on the MMM blog illustrate. That's what I mean. I know many many people  who have WAY more than they need to retire comfortably at their lifestyles but still are in jobs they dislike because they're conditioned to be that way. So IMO there's a FI mindset component to becoming FI.

Conversely there are examples of people who are FI in their mind but not have enough money but have enough of a FU skill and/or live in a place with a strong social net so they can behave as though they are retired if the situation should ever arise. So even though they are not materially FI they behave as though they were. It's not a big deal to me but if these people called themselves FI I wouldn't disagree. There are other scenarios as well like with certain sinecure position

Like is the British royal family FI or not? Were Harry and Meghan FI PRIOR to them taking a break from their royal duties? I can see arguments for all kinds of answers. Or take an adult son of a wealthy father: let's assume the adult son is starting out with 0 or negative net worth (i.e., has more loans than assets) but if he fails, he can run back to his father. Is this person FI or not? Again, I wouldn't disagree if they were FI.  The essays I've been reading on the MMM blog (and comments therein) are about these kinds of examples/stories (in a different, milder fashion of course) so that has influenced my thinking.



RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #18 on: November 30, 2020, 09:21:24 PM »
But she knows that she'll be bored soon and start looking for something to do. There's only that much one can go to they gym and cook in a day.

Congrats on getting as far as you have. That's funny - my wife, who did retire at 36 after working 14 hours/day operating a restaurant and as the head chef for many years, had a great routine going with going to the gym and cooking (and some gardening and home improvement but the first two were the main things she did). But with the gym closed and the weather getting bad, it is really getting difficult for her! My wife made a huge circle of friends at the gym and she'd spend most of the day swimming, sauna, working out, etc. and then evening come back and take care of the daughter with me. But COVID-19 has messed that up but hopefully the end is in sight.

--Ram

Fru-Gal

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Re: Long intro, how do full time workers who love their career fit in
« Reply #19 on: November 30, 2020, 10:40:43 PM »
I really like your post, for 3 reasons:

1. You seem to have escaped the ennui/existential angst that some posters here have expressed about inherited wealth -- a feeling that always chills me to the bone! This seems to be similar to the "is this all there is" feeling that some feel upon declaring themselves retired. Anyway, 2 feelings I wish to avoid once I hit total FI, since I am perfectly capable of wallowing in misery without FI.

2. Your passionate approach resonates. I am the same way, working in a few fields that offer a lifelong path toward mastery. Part of the reason I wish and plan to live vibrantly past 100 is simply because of the skill I will be able to achieve in that span of time (no prodigy here, LOL). Also, necessity taught me that the myth of working only on your passion was silly. My philosophy is that work teaches you how to work, and that is the most valuable skills you can have. That said, I've worked long enough and gained enough mastery to now achieve the ultimate "cushy job," whose downside is a bit of complacency and ennui, similar to inherited wealth, I suppose.
 
3. Love the concept of "self-velocity" for money.

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #20 on: December 01, 2020, 06:04:05 AM »
I understand what you are saying, but FI isn't a mindset, it really is just a financial thing.

Not everyone who reaches FI has the same mindset, if that were the case, then every retired person in the world would be living like MMM, and that's not the case.

Also, reaching FI won't magically make someone happy either. It's just money, not magic.

If you want to articulate what I think you are trying to say, then you will need to find another way to describe it if you want anyone here to be able to understand you. Because if you start saying here that you don't have enough savings to retire, but you still claim that you are financially independent because of how you feel about your job??? Yeah, that's not going to go over well.

I'm saying there is a FI mindset, which is a state of mind (not that all of FI in its entirety is that mindset). I'm not saying it's the same exact state of mind for everyone nor do I think it is, but it is a state of mind which I believe is necessary (because  of situations where you could achieve FI materially and not believe/know you have done so) and possibly sufficient (depending on the context, see below). 

I've come across at least one example on the MMM site of articles (or in the comments therein) where a person who was SO good at his job/craft that  he could just say FU to their employer at whim and never do a single task they disliked.  So this is a case of a FI mindset winning over material FI. I am fine with that person saying they are FI - in the sense they don't care if they lose the job or not even if they weren't materially FI and wouldn't behave differently otherwise. Such a person would presumably be willing to starve (if they weren't already materially FI or had lived in a country with a decent social net that this would never really happen) instead of doing something they don't love. Their actions are absolutely no different than someone who is materially FI. So here the mindset is driving the behaviour.

It's not important: I said many other things besides that post in this thread and hopefully the rest of it is clear and I hope my clarification above helps. This point isn't that important: for me, it was A (not "only") way I could understand what some of what people were saying to me in their responses to understand the different/variety of people here (and reconciling what was written on the blog with what was written in responses to me).  That's all.

I'm willing to accept another secondary definition of FI being purely only a material FI but then we have cases of people achieving FI but not realising it - they're caught up in the game----there are many articles about this on MMM which is what drew me to this site. So there is a mental state that goes along with the material achievement. Perhaps for some people FI is both a mindset and a material FI. For some others in special circumstances, the mindset is enough. According to you, only the material FI is what matters and nothing else but given the contradictions I've seen in different cases so far written here and elsewhere, I believe the two together are necessary and possibly sufficient (there may be other types of FI I've not considered)?

--Ram

I'm not trying to argue with you.

The ideas you are trying to talk about aren't rare here. Tons of people here love their work.

I'm just giving you advice that the community here has a clear definition of FI. You are welcome to your own definitions of whatever you want. I'm just trying to help you since your initial post seemed to express concern that you might not fit in here.

Your ideas will fit in fine, plenty of people share them. You don't need to worry about that.

bmjohnson35

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Re: Long intro, how do full time workers who love their career fit in
« Reply #21 on: December 01, 2020, 09:00:13 AM »

"As far as the definition of FI only being "I have enough money", you have to also THINK that, right? It's not enough to just have the money as many examples on the MMM blog illustrate. That's what I mean. I know many many people  who have WAY more than they need to retire comfortably at their lifestyles but still are in jobs they dislike because they're conditioned to be that way. So IMO there's a FI mindset component to becoming FI."

Your concept reminds me of the reference of being "institutionalized" in Shawshank redemption.  We are programmed to live a certain way in society and FIRE doesn't necessarily align with the accepted norm.  I agree with Malcat that the majority of us on MMM probably think of FI as strictly as financial, but it's not really important.

The problem I have with your opening post is clarifying what you are asking of the group.  You seem to have it together better than most, so it appears your questions are about some cash you have set aside. You haven't explained the purpose of the money you have set aside.  I tend to group my funds into three categories: Speculation, Investing, Emergency funds and maintenance funds.  Speculation is when you place money into a form of investment with the intent to make money fast. These funds can move around regularly, depending on what you perceive as the best short-term results.  Money I place into investment funds are generally allocated into a set ratio and I only move it around to maintain the ratio, mutual funds are the most common instrument for this fund, but it could also be real-estate, stocks, bonds, or whatever.  Emergency funds money is usually in bank accounts (money market, savings, cd's).  My maintenance accounts are saving/checking accounts where I hold money for paying the monthly bills. 

I retired earlier this year and our funds are allocated as follows:

Investments:  20% bonds, 80% stocks (all in mutual funds, both standard brokerage accounts and retirement accounts)
Speculation Funds: A few stock holdings
Emergency Funds: I keep around 3 yrs of living expenses available to draw upon in the event the market crashes or we need to pull a large amount for a large unexpected expense.
Maintenance Funds - I top off these accounts every month or two, as needed from our other accounts.   

Every person has their own approach and I'm sure that many on this forum will find fault in our process.  I only share it as an example, so you can clarify what exactly you are asking. 

spartana

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Re: Long intro, how do full time workers who love their career fit in
« Reply #22 on: December 01, 2020, 01:38:16 PM »
For me the math tell you if you are FI or not? If current expenses and planned future expenses plus some variable $# for SHTF expenses adds up to your current stash then I'd call it FI. Maybe the variable $# for SHTF expenses tie people to their jobs longer in the belief that they may have something catastrophic happen.that only Suze Ormand stash levels would be enough. In any case I'm in camp FI is material/math derived and not emotion driven although I do under stand what the OP was saying.

Also, @RamS I think you are very much the norm around here. In my experience most people here who reach FI continue to work an income producing job in some capacity rather than retire and never have a paid job again (or have working spouses). Whether they do that because they love their jobs, want to try new jobs/careers or just want the extra income varies. There seem to be very few people who quit their job at a relatively young age and never earned any income again. I'm one of them but we are rare. Even MMM did paid work since he FIREd before he started his blog.
« Last Edit: December 01, 2020, 01:52:04 PM by spartana »

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #23 on: December 01, 2020, 05:18:43 PM »
I'm not trying to argue with you.

The ideas you are trying to talk about aren't rare here. Tons of people here love their work.

I'm just giving you advice that the community here has a clear definition of FI. You are welcome to your own definitions of whatever you want. I'm just trying to help you since your initial post seemed to express concern that you might not fit in here.

Your ideas will fit in fine, plenty of people share them. You don't need to worry about that.

Likewise - that is useful information so I appreciate it (that the community has a definition of FI that is strictly material - I will bear that in mind).  Like I said, the small concern I had earlier is the difference between what's on MMM (which I've ready a lot of) and what's on this forum (which I've read little of) and so with your reassurance, that's no longer an issue for me. Thanks a lot! 

--Ram

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Re: Long intro, how do full time workers who love their career fit in
« Reply #24 on: December 01, 2020, 05:20:27 PM »
I really like your post, for 3 reasons:

1. You seem to have escaped the ennui/existential angst that some posters here have expressed about inherited wealth -- a feeling that always chills me to the bone! This seems to be similar to the "is this all there is" feeling that some feel upon declaring themselves retired. Anyway, 2 feelings I wish to avoid once I hit total FI, since I am perfectly capable of wallowing in misery without FI.

2. Your passionate approach resonates. I am the same way, working in a few fields that offer a lifelong path toward mastery. Part of the reason I wish and plan to live vibrantly past 100 is simply because of the skill I will be able to achieve in that span of time (no prodigy here, LOL). Also, necessity taught me that the myth of working only on your passion was silly. My philosophy is that work teaches you how to work, and that is the most valuable skills you can have. That said, I've worked long enough and gained enough mastery to now achieve the ultimate "cushy job," whose downside is a bit of complacency and ennui, similar to inherited wealth, I suppose.
 
3. Love the concept of "self-velocity" for money.

Thanks! The reason I physically left my family (physically) and moved to another country was to escape that ennui which did grip me during my teenage years. I too shudder whenever I reminisce at how narrow of an escape it was and being stuck in that life. It wasn't just that I had this desire but I also had to get good enough grades and do well enough on my SATs to be able get a scholarship, get a visa, etc.  It was touch and go there for a bit but by the kindness of strangers it worked out and I scraped through.

Yeah, same problem with cushy jobs in academia - the grind can wear you down but there are easy ways to manage it and most of the issues are due to people not taking care of themselves mentally (learning to say "no" for instance). I like to say that if once we reach this state, we only have ourselves to hold responsible if we can't find ways to step out of our comfort zone and not fall into the ennui pit. Right?

Nice profile name!

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #25 on: December 01, 2020, 05:42:07 PM »
The problem I have with your opening post is clarifying what you are asking of the group.  You seem to have it together better than most, so it appears your questions are about some cash you have set aside. You haven't explained the purpose of the money you have set aside.  I tend to group my funds into three categories: Speculation, Investing, Emergency funds and maintenance funds.  Speculation is when you place money into a form of investment with the intent to make money fast. These funds can move around regularly, depending on what you perceive as the best short-term results.  Money I place into investment funds are generally allocated into a set ratio and I only move it around to maintain the ratio, mutual funds are the most common instrument for this fund, but it could also be real-estate, stocks, bonds, or whatever.  Emergency funds money is usually in bank accounts (money market, savings, cd's).  My maintenance accounts are saving/checking accounts where I hold money for paying the monthly bills. 

Thanks! That's exactly it: what I need is something like your categorisation of funds which I've not done. So far we've had retirement funds and everything else which is disorganised. "Everything else" covers a lot of savings and a sudden cash inflow. I also had some movement in retirement funds that has lead a large cash influx (now sitting in bonds).  So to get even more specific, I have:

Cash: If we assume that my retirement portfolio is our main source of FI, i.e., it represents a figure that is 100%, we have ended up saving a lot of money in addition representing another 50% of our portfolio and it is sitting in cash earning 0.5% - If I invest this, it would be after tax.  That bothers me. So I'm trying to decide what to do with it. Part of this was meant for a purpose: to buy a second home down south (FL, TX, LA, AL, etc.) on the coast ideally with low light pollution (I will create a separate post on this on the area of  forum where I've seen others do this) but part of it is just extra funds. The plan was to buy the property in cash but given low interest rates and given the additional savings (i.e., spending on this property would exhaust about half the spare cash), why not get a loan at say 3% and then invest all these funds in the market.

But I need to categorise this "cash" in the way you have, but in a way that works for me.  We need to decide whether to buy this home in cash or mortgage. Either way there's some cash that should be invested and I guess I'd need four categories:

1. Pre-tax long term (retirement).
2. After tax cash (bills).
3. After-tax short term/speculation.
4. After-tax long term.

Anyone have thoughts on this?

Retirement: $20% of my investments are in a bond fund (FXNAX) I would like to move to stock mutual fund but feel the market is overvalued (i.e., I had more and I bought about 10% in the last dip in October). Deciding what to do with that.  This 30% is from a movement from another provider that I had  forgotten about. The rest of the money (which represents 70%) are in a variety of mutual funds and that's going well - no concerns there and that's our primary source of FI in the US. I max out the $57K/year I can do in retirement contributions each year.

Our current home is 100% paid off.  No other debts. We've basically done only two things in terms of saving: saved for retirement, and saved in cash. We've not considered investing the cash until now but I'm thinking I should take all this cash and invest it. I have a steady income and even if we buy that property, it'd be more than enough to cover any mortgage. But regardless of this decision, we can invest at least half the cash and leave it for the long term.  I guess I'm so conditioned to pretax investing that I haven't actively thought of after tax investing so I need to come around to that (which I've started doing, so I have a  TINY amount of cash in high risk ETFs which are doing well which would fall into the (3) category above).

--Ram



RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #26 on: December 01, 2020, 05:51:43 PM »
For me the math tell you if you are FI or not? If current expenses and planned future expenses plus some variable $# for SHTF expenses adds up to your current stash then I'd call it FI. Maybe the variable $# for SHTF expenses tie people to their jobs longer in the belief that they may have something catastrophic happen.that only Suze Ormand stash levels would be enough. In any case I'm in camp FI is material/math derived and not emotion driven although I do under stand what the OP was saying.

Also, @RamS I think you are very much the norm around here. In my experience most people here who reach FI continue to work an income producing job in some capacity rather than retire and never have a paid job again (or have working spouses). Whether they do that because they love their jobs, want to try new jobs/careers or just want the extra income varies. There seem to be very few people who quit their job at a relatively young age and never earned any income again. I'm one of them but we are rare. Even MMM did paid work since he FIREd before he started his blog.

Thank you and everyone - like I said, I came in from reading MMM a lot which is why I posted what I did - but I recognise the diversity which is great and I also recognise Malcat's point that most people on this forum see FI as a material/math thing. That's good - and I'll keep that mind.

--Ram

bmjohnson35

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Re: Long intro, how do full time workers who love their career fit in
« Reply #27 on: December 02, 2020, 09:37:45 AM »
The problem I have with your opening post is clarifying what you are asking of the group.  You seem to have it together better than most, so it appears your questions are about some cash you have set aside. You haven't explained the purpose of the money you have set aside.  I tend to group my funds into three categories: Speculation, Investing, Emergency funds and maintenance funds.  Speculation is when you place money into a form of investment with the intent to make money fast. These funds can move around regularly, depending on what you perceive as the best short-term results.  Money I place into investment funds are generally allocated into a set ratio and I only move it around to maintain the ratio, mutual funds are the most common instrument for this fund, but it could also be real-estate, stocks, bonds, or whatever.  Emergency funds money is usually in bank accounts (money market, savings, cd's).  My maintenance accounts are saving/checking accounts where I hold money for paying the monthly bills. 

Thanks! That's exactly it: what I need is something like your categorisation of funds which I've not done. So far we've had retirement funds and everything else which is disorganised. "Everything else" covers a lot of savings and a sudden cash inflow. I also had some movement in retirement funds that has lead a large cash influx (now sitting in bonds).  So to get even more specific, I have:

Cash: If we assume that my retirement portfolio is our main source of FI, i.e., it represents a figure that is 100%, we have ended up saving a lot of money in addition representing another 50% of our portfolio and it is sitting in cash earning 0.5% - If I invest this, it would be after tax.  That bothers me. So I'm trying to decide what to do with it. Part of this was meant for a purpose: to buy a second home down south (FL, TX, LA, AL, etc.) on the coast ideally with low light pollution (I will create a separate post on this on the area of  forum where I've seen others do this) but part of it is just extra funds. The plan was to buy the property in cash but given low interest rates and given the additional savings (i.e., spending on this property would exhaust about half the spare cash), why not get a loan at say 3% and then invest all these funds in the market.

But I need to categorise this "cash" in the way you have, but in a way that works for me.  We need to decide whether to buy this home in cash or mortgage. Either way there's some cash that should be invested and I guess I'd need four categories:

1. Pre-tax long term (retirement).
2. After tax cash (bills).
3. After-tax short term/speculation.
4. After-tax long term.

Anyone have thoughts on this?

Retirement: $20% of my investments are in a bond fund (FXNAX) I would like to move to stock mutual fund but feel the market is overvalued (i.e., I had more and I bought about 10% in the last dip in October). Deciding what to do with that.  This 30% is from a movement from another provider that I had  forgotten about. The rest of the money (which represents 70%) are in a variety of mutual funds and that's going well - no concerns there and that's our primary source of FI in the US. I max out the $57K/year I can do in retirement contributions each year.

Our current home is 100% paid off.  No other debts. We've basically done only two things in terms of saving: saved for retirement, and saved in cash. We've not considered investing the cash until now but I'm thinking I should take all this cash and invest it. I have a steady income and even if we buy that property, it'd be more than enough to cover any mortgage. But regardless of this decision, we can invest at least half the cash and leave it for the long term.  I guess I'm so conditioned to pretax investing that I haven't actively thought of after tax investing so I need to come around to that (which I've started doing, so I have a  TINY amount of cash in high risk ETFs which are doing well which would fall into the (3) category above).

--Ram

Let me start out with stating that I and not a licensed financial advisor, nor do I have any formal training in investing.  My recommendation(s) are based on what I have read in books/online and through personal life experience.  If you buy a 2nd house soon while rates are low, I would seriously consider financing.  We are a fan of being debt free as well, but we are FIRED.  Considering the rates right now and the fact that you plan to continue working throughout your lifetime, financing makes sense.  It never hurts to keep some liquid funds available for unexpected large expenses, but given your situation, it doesn't need to be house funds large.  If it was me, I would probably just drop the money in a mix of index funds inside a standard brokerage account.  For example, a stocks/bonds mix based on your level of risk tolerance.  Depending on the amount you have in them, the annual dividends would pay part or all of your mortgage payments on the 2nd house.  The dividends and capital gains are taxable, but life is full of compromises. 

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #28 on: December 03, 2020, 02:14:53 AM »
Let me start out with stating that I and not a licensed financial advisor, nor do I have any formal training in investing.  My recommendation(s) are based on what I have read in books/online and through personal life experience.  If you buy a 2nd house soon while rates are low, I would seriously consider financing.  We are a fan of being debt free as well, but we are FIRED.  Considering the rates right now and the fact that you plan to continue working throughout your lifetime, financing makes sense.  It never hurts to keep some liquid funds available for unexpected large expenses, but given your situation, it doesn't need to be house funds large.  If it was me, I would probably just drop the money in a mix of index funds inside a standard brokerage account.  For example, a stocks/bonds mix based on your level of risk tolerance.  Depending on the amount you have in them, the annual dividends would pay part or all of your mortgage payments on the 2nd house.  The dividends and capital gains are taxable, but life is full of compromises.

Thanks!

Yeah, I  am more comfortable with that, but I have to pitch it to the wife and see if she'll go for it. I guess even for me, it's one of those things that just sticks in the back of my mind when I have a balance I owe and I'll know I have this debt. Right now I have set up all my CCs (I prefer to use debit) so it's set to pay off in full automatically each month and we've not touched them in years (actually $10, in about six years). And I got them since they have like 2-3% cash back I was going to play robin hood with but these ideas fall by the way side.   Easy to keep track of debit card spending.

But a mortgage is different. Esp. for a second home. WE used to have a LOT of debt before (12 years ago) so my wife is worried having all that cash will be tempting but we've had a lot of cash for years and we've not gone off the deep end so hopefully our youthful personalities are in check now. 

I'll give it another try and see it how goes. Thanks again.

--Ram

Villanelle

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Re: Long intro, how do full time workers who love their career fit in
« Reply #29 on: December 03, 2020, 10:34:54 AM »
Let me start out with stating that I and not a licensed financial advisor, nor do I have any formal training in investing.  My recommendation(s) are based on what I have read in books/online and through personal life experience.  If you buy a 2nd house soon while rates are low, I would seriously consider financing.  We are a fan of being debt free as well, but we are FIRED.  Considering the rates right now and the fact that you plan to continue working throughout your lifetime, financing makes sense.  It never hurts to keep some liquid funds available for unexpected large expenses, but given your situation, it doesn't need to be house funds large.  If it was me, I would probably just drop the money in a mix of index funds inside a standard brokerage account.  For example, a stocks/bonds mix based on your level of risk tolerance.  Depending on the amount you have in them, the annual dividends would pay part or all of your mortgage payments on the 2nd house.  The dividends and capital gains are taxable, but life is full of compromises.


Thanks!

Yeah, I  am more comfortable with that, but I have to pitch it to the wife and see if she'll go for it. I guess even for me, it's one of those things that just sticks in the back of my mind when I have a balance I owe and I'll know I have this debt. Right now I have set up all my CCs (I prefer to use debit) so it's set to pay off in full automatically each month and we've not touched them in years (actually $10, in about six years). And I got them since they have like 2-3% cash back I was going to play robin hood with but these ideas fall by the way side.   Easy to keep track of debit card spending.

But a mortgage is different. Esp. for a second home. WE used to have a LOT of debt before (12 years ago) so my wife is worried having all that cash will be tempting but we've had a lot of cash for years and we've not gone off the deep end so hopefully our youthful personalities are in check now. 

I'll give it another try and see it how goes. Thanks again.

--Ram

If you are saying you don't use the credit cards at all, know that this might be cause for the companies to close your accounts, which could hurt your credit score, which can matter if you ever want a mortgage or other loans. 

If you have any month subscription service, consider putting that on a CC.  Perhaps you also use the CC when you make a large purchase occasionally.  Do this on your oldest cards and perhaps the one with the highest credit limit as well. 

I wouldn't never use them, if you think you will ever need to use your credit score in the future.   

Malcat

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Re: Long intro, how do full time workers who love their career fit in
« Reply #30 on: December 03, 2020, 10:52:52 AM »
Let me start out with stating that I and not a licensed financial advisor, nor do I have any formal training in investing.  My recommendation(s) are based on what I have read in books/online and through personal life experience.  If you buy a 2nd house soon while rates are low, I would seriously consider financing.  We are a fan of being debt free as well, but we are FIRED.  Considering the rates right now and the fact that you plan to continue working throughout your lifetime, financing makes sense.  It never hurts to keep some liquid funds available for unexpected large expenses, but given your situation, it doesn't need to be house funds large.  If it was me, I would probably just drop the money in a mix of index funds inside a standard brokerage account.  For example, a stocks/bonds mix based on your level of risk tolerance.  Depending on the amount you have in them, the annual dividends would pay part or all of your mortgage payments on the 2nd house.  The dividends and capital gains are taxable, but life is full of compromises.


Thanks!

Yeah, I  am more comfortable with that, but I have to pitch it to the wife and see if she'll go for it. I guess even for me, it's one of those things that just sticks in the back of my mind when I have a balance I owe and I'll know I have this debt. Right now I have set up all my CCs (I prefer to use debit) so it's set to pay off in full automatically each month and we've not touched them in years (actually $10, in about six years). And I got them since they have like 2-3% cash back I was going to play robin hood with but these ideas fall by the way side.   Easy to keep track of debit card spending.

But a mortgage is different. Esp. for a second home. WE used to have a LOT of debt before (12 years ago) so my wife is worried having all that cash will be tempting but we've had a lot of cash for years and we've not gone off the deep end so hopefully our youthful personalities are in check now. 

I'll give it another try and see it how goes. Thanks again.

--Ram

If you are saying you don't use the credit cards at all, know that this might be cause for the companies to close your accounts, which could hurt your credit score, which can matter if you ever want a mortgage or other loans. 

If you have any month subscription service, consider putting that on a CC.  Perhaps you also use the CC when you make a large purchase occasionally.  Do this on your oldest cards and perhaps the one with the highest credit limit as well. 

I wouldn't never use them, if you think you will ever need to use your credit score in the future.   

Not only this, but using your debit card for everything dramatically raises your risk of your accounts being compromised.

We keep fairly low limits on our credit cards and use them for everything. They've been compromised multiple times over the years, but there's a maximum to the damage they can do, and cc companies tend to be pretty good to deal with when it happens. It's been easy every time to get things reversed.

For my main accounts where are my money is kept, I basically never use my card for anything.

BicycleB

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Re: Long intro, how do full time workers who love their career fit in
« Reply #31 on: December 03, 2020, 11:10:19 AM »
The problem I have with your opening post is clarifying what you are asking of the group.  You seem to have it together better than most, so it appears your questions are about some cash you have set aside. You haven't explained the purpose of the money you have set aside.  I tend to group my funds into three categories: Speculation, Investing, Emergency funds and maintenance funds.  Speculation is when you place money into a form of investment with the intent to make money fast. These funds can move around regularly, depending on what you perceive as the best short-term results.  Money I place into investment funds are generally allocated into a set ratio and I only move it around to maintain the ratio, mutual funds are the most common instrument for this fund, but it could also be real-estate, stocks, bonds, or whatever.  Emergency funds money is usually in bank accounts (money market, savings, cd's).  My maintenance accounts are saving/checking accounts where I hold money for paying the monthly bills. 

Thanks! That's exactly it: what I need is something like your categorisation of funds which I've not done. So far we've had retirement funds and everything else which is disorganised. "Everything else" covers a lot of savings and a sudden cash inflow. I also had some movement in retirement funds that has lead a large cash influx (now sitting in bonds).  So to get even more specific, I have:

Cash: If we assume that my retirement portfolio is our main source of FI, i.e., it represents a figure that is 100%, we have ended up saving a lot of money in addition representing another 50% of our portfolio and it is sitting in cash earning 0.5% - If I invest this, it would be after tax.  That bothers me. So I'm trying to decide what to do with it. Part of this was meant for a purpose: to buy a second home down south (FL, TX, LA, AL, etc.) on the coast ideally with low light pollution (I will create a separate post on this on the area of  forum where I've seen others do this) but part of it is just extra funds. The plan was to buy the property in cash but given low interest rates and given the additional savings (i.e., spending on this property would exhaust about half the spare cash), why not get a loan at say 3% and then invest all these funds in the market.

But I need to categorise this "cash" in the way you have, but in a way that works for me.  We need to decide whether to buy this home in cash or mortgage. Either way there's some cash that should be invested and I guess I'd need four categories:

1. Pre-tax long term (retirement).
2. After tax cash (bills).
3. After-tax short term/speculation.
4. After-tax long term.

Anyone have thoughts on this?

Retirement: $20% of my investments are in a bond fund (FXNAX) I would like to move to stock mutual fund but feel the market is overvalued (i.e., I had more and I bought about 10% in the last dip in October). Deciding what to do with that.  This 30% is from a movement from another provider that I had  forgotten about. The rest of the money (which represents 70%) are in a variety of mutual funds and that's going well - no concerns there and that's our primary source of FI in the US. I max out the $57K/year I can do in retirement contributions each year.

Our current home is 100% paid off.  No other debts. We've basically done only two things in terms of saving: saved for retirement, and saved in cash. We've not considered investing the cash until now but I'm thinking I should take all this cash and invest it. I have a steady income and even if we buy that property, it'd be more than enough to cover any mortgage. But regardless of this decision, we can invest at least half the cash and leave it for the long term.  I guess I'm so conditioned to pretax investing that I haven't actively thought of after tax investing so I need to come around to that (which I've started doing, so I have a  TINY amount of cash in high risk ETFs which are doing well which would fall into the (3) category above).

--Ram




Lots of thoughts! You'll have to decide which ones, if any, to follow up concretely though - no clear advice, other than gain greater clarity yourself.

It sounds like you have money but not a systematic investment plan. For the moment, you face decisions about allocating part of your portfolio (the part that was for the new property), a part that is now in cash.

I notice 3 common approaches to allocation decisions:

1. Have a plan that serves your purpose. For that, you need to be clear about the purpose of the dollars you are allocating. It also helps if you have an overall plan, in the sense that the details of how to allocate on part of your portfolio logically flow from the state of the overall portfolio and whether the overall portfolio meets your life goals

2. When in doubt, find an allocation that suits your emotional as well as practical needs.

3. First, ensure your portfolio safely ensures that your desired expenses can be paid from passive investments as long as you live. After that, do what you like with the rest of the money. Arguably, this is just the version of 1 that is common among this forum.

You've explained 1 in general terms, but not addressed 3 very specifically. Most posters here implement 3 by detailing their expenses clearly enough to establish a reliable figure for desired income. From that, a figure for investments needed can be calculated.

I'm going to guess that you're right about being "safe" already, in which case what your investment is doesn't matter much. Also, since you like your work, a risky approach to 2 is probably safe for you. So probably, your maximum dollars would flow from investing some of the cash into stock funds - but when we say that, we're guessing; it's hard to know for sure.

I also have questions.

4. Re personality, most people strongly dislike seeing their net worth numbers or their investment values go down. You mentioned your wife came from a poorer background. If you do invest the property money (or in future, the proceeds from the mortgage on your 2d home) in stock funds and they go down, how will she feel? For that matter, how will you feel?

5. You also mentioned not wanting to be taxed on possible investments. Why? It's uncool? You think it might be unwise? You are anti-government? The reasons could affect how to optimize your investing toward your goals. Does it affect your outlook to consider that, generally, you'll only pay tax if you're making money - which implies that, after tax, you're still making money? Which is better: 100% of a .5% return, or 60% of a 5% return?

PS. Re your four categories, it's true that others mentioned speculation as a category, because it's important to distinguish that from other purposes. But why do you need to speculate? You have enough money. What's the point?

In your shoes, I'd go with pretax retirement, bills, backstop for variable expenses (some people call this emergency fund), and taxable long term.
« Last Edit: December 03, 2020, 11:14:23 AM by BicycleB »

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #32 on: December 07, 2020, 02:57:43 AM »
If you are saying you don't use the credit cards at all, know that this might be cause for the companies to close your accounts, which could hurt your credit score, which can matter if you ever want a mortgage or other loans. 

If you have any month subscription service, consider putting that on a CC.  Perhaps you also use the CC when you make a large purchase occasionally.  Do this on your oldest cards and perhaps the one with the highest credit limit as well. 

I wouldn't never use them, if you think you will ever need to use your credit score in the future.   

This already happened unfortunately (or fortunately).  I was 18 in 1990 when I got my first CC and paid them all off in 2008 when I got angry when a card with 0% rates decided to jack it up, and closed them all down and paid off our first home's mortgage from 2000 after selling the home (my score was very high when we did this - like 780 or something - we were on time payers but with crazy levels of credit). Deal with cash since then including buying our second home (after move) and about 6-7 years later, almost all of it fell off our credit report! It's like we have a virgin credit - it's pretty crazy given how cluttered it was and now it's clear - I think there's one item that goes back like 14 years but that's it, no record of that first card from 1990 which used to be there as long as I maintained credit.  Anyways I just got new cards a year or two ago to increase my score again and I had to start by paying them $200 and they refunded the money but I've kept the cards open and the CC company hasn't closed them off.  These were very low limit cards ($1000-1500) so not worth using I felt but they do go back a couple of years. 

My score is now 670-690 but based on the conversations we've had with KeyBank (about financing this property down south) they've said our income is high enough to overlook a "weak score" and they said they'll give us the best rate possible. But for the first time in 10+ years we've now gotten a $18K card (last week, not even verified it yet) and we do plan to use it regularly from now on. 

So thanks but yeah, we've already experienced the loss of the credit score but it's not a big deal - for the most part we can live with cash. I do find it mentally liberating and I'm torn about this move but that 3% cash back is sounding good and I can always donate that money.

--Ram

RamS

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Re: Long intro, how do full time workers who love their career fit in
« Reply #33 on: December 07, 2020, 03:12:30 AM »
Not only this, but using your debit card for everything dramatically raises your risk of your accounts being compromised.

We keep fairly low limits on our credit cards and use them for everything. They've been compromised multiple times over the years, but there's a maximum to the damage they can do, and cc companies tend to be pretty good to deal with when it happens. It's been easy every time to get things reversed.

For my main accounts where are my money is kept, I basically never use my card for anything.

That also has unfortunately happened a couple of times which makes it a PITA and I keep track of where my DC is used and it's like changing nearly two dozen places at once. I suppose using multiple CCs shifts that burden a bit.  But when it occurred, the bank has treated it like a CC and refunded all my money, even some dubious instances where I was cheated internationally (i.e., I ordered something and paid with the card and signed under duress).  It's the number changing that is tricky.  I understand there are less protections for DCs but so far at least it hasn't gone too awry.

Only our checking account is connected to it and usually only a pay period's pay sits in there. I move excess savings routinely to a separate savings account. And I also have a second checking account and another DC connected to that for even more dodgy purchases which has only $500 in it.

I do the same for places where I have to give the full account # instead of the DC # - like paying for my daughter's college - I don't even give them the first account # but the second and then move the money at that time of payment.

Anyways, that's my system on how to deal with DCs only but it looks like I'm moving to your system.  I would still have to do the maintenance of moving money so I can earn the interest. But the real advantage of a CC I see is the up to 3%  cash back---my wife's influence has really rubbed off on me (I'm the free spender in the family and 90% of the reason we got in the CC mess 10+ years ago though I've changed a lot since then and she has also loosened up). With a large limit we can put mostly everything on that card except for the dodgy stuff and use the rewards money for something positive.

Thanks...

--Ram

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Re: Long intro, how do full time workers who love their career fit in
« Reply #34 on: December 07, 2020, 03:50:24 AM »
Lots of thoughts! You'll have to decide which ones, if any, to follow up concretely though - no clear advice, other than gain greater clarity yourself.

It sounds like you have money but not a systematic investment plan. For the moment, you face decisions about allocating part of your portfolio (the part that was for the new property), a part that is now in cash.

I notice 3 common approaches to allocation decisions:

1. Have a plan that serves your purpose. For that, you need to be clear about the purpose of the dollars you are allocating. It also helps if you have an overall plan, in the sense that the details of how to allocate on part of your portfolio logically flow from the state of the overall portfolio and whether the overall portfolio meets your life goals

2. When in doubt, find an allocation that suits your emotional as well as practical needs.

3. First, ensure your portfolio safely ensures that your desired expenses can be paid from passive investments as long as you live. After that, do what you like with the rest of the money. Arguably, this is just the version of 1 that is common among this forum.

You've explained 1 in general terms, but not addressed 3 very specifically. Most posters here implement 3 by detailing their expenses clearly enough to establish a reliable figure for desired income. From that, a figure for investments needed can be calculated.

I'm going to guess that you're right about being "safe" already, in which case what your investment is doesn't matter much. Also, since you like your work, a risky approach to 2 is probably safe for you. So probably, your maximum dollars would flow from investing some of the cash into stock funds - but when we say that, we're guessing; it's hard to know for sure.

I think that's fair. It's perhaps the goals/purpose we'd need to figure out first. We know we want the property down south but aside from that, we've not thought beyond that except to leave half our wealth to our children and half to set up some kind of a foundation/scholarship/etc. for underprivileged kids when die. In between (now and death), we've been going goal by goal. The reason we've not invested in after tax is because I felt we were investing enough in our retirement funds and the money is tied up there and the rest of it was meant to "live large"/"life's too short". Yet as we've become prudent with money we've also gotten in good habits with spending money freely so we no longer live large as we used to and our expenses are minimal. Perhaps this will change after my younger daughter goes to college and we'll have more time to travel but as of now, we're simply accumulating savings as we're spending far less than we make after  saving for retirement. Once in a while my wife will say something about buying another restaurant or starting another business and if she does we'll need some capital but there's definitely some thought that'll have to be put into this and find some balance (perhaps something like continue to put half the money in savings for these kinds of "projects" and the other half for long term after tax retirement or perhaps even that once we decide on a new goal, we start saving towards that goal if the market is down). But your suggestions and thoughts I believe are on the right track for us specifically. So I really appreciate that.

4. Re personality, most people strongly dislike seeing their net worth numbers or their investment values go down. You mentioned your wife came from a poorer background. If you do invest the property money (or in future, the proceeds from the mortgage on your 2d home) in stock funds and they go down, how will she feel? For that matter, how will you feel?

If she knows about it, she may feel worse than I do but she'll largely trust me and I will feel fine. If I am holding for the long term I am absolutely fine with volatility but you ask a good question: this would be after tax funds and my first instance of really investing such funds but I think I'd be as fine as with the retirement funds. I'd have to commit to a long term, as long as it takes - so it could be 10-20 years or more (there are 20+ year windows where the market has been stagnant I believe). The reason we've not put in more than the $57K allowed per year is for this reason - it potentially ties up the investment if the market underperforms. I definitely do not wish to sell in a down market and unless some really unexpected thing happens I don't see a reason we'll need to.

5. You also mentioned not wanting to be taxed on possible investments. Why? It's uncool? You think it might be unwise? You are anti-government? The reasons could affect how to optimize your investing toward your goals. Does it affect your outlook to consider that, generally, you'll only pay tax if you're making money - which implies that, after tax, you're still making money? Which is better: 100% of a .5% return, or 60% of a 5% return?

I think I might not've been clear. Up till now, the only investment I've done is via my retirement accounts which are all pretax. I have no problems at all with taxes and understand their reason for being even if it can be painful at times.  We've invested the maximum allowed for retirement all the rest of it is sitting in savings. I've no problem as I said above if my retirement funds go up and down since I don't plan on drawing from it until I have to (70.5) and even we plan to take only least amount required (and will look into things like a Roth conversion which will be a bit painful but perhaps worth it since I wouldn't even have to take the RMDs) and that's 22 years from now and 40 years from when I started but in all this time I didn't think about investing this money sitting in savings long term. Thinking about after tax investment is why I ended up on these money sites. I do have $2500 of cash in ETFs (I bought a single share of 14 ETFs) which unfortunately as of now are all doing well and I was doing it to get my feet feet in ETF investing  but perhaps I don't even need ETFs.  (My plan was to whittle the 14 ETFs into a few, 4-5 max, based on which ones were doing well but as I said, they all are doing pretty good as of now but I think I should wait at least a few months to decide - I just did this last month and it's just been a constant rise since then.)

PS. Re your four categories, it's true that others mentioned speculation as a category, because it's important to distinguish that from other purposes. But why do you need to speculate? You have enough money. What's the point?

In your shoes, I'd go with pretax retirement, bills, backstop for variable expenses (some people call this emergency fund), and taxable long term.

I just put that in the same category as after tax short term - there's no guarantee what'll happen so this amount will never be that high, whereas the "long term" can be arbitrary. You're absolutely right - there's no benefit at all to me speculating as I'm learning from 1 share buy in 14 ETFs.  Your plan would be the easiest for me to handle. The salary I make per month is more than enough to live comfortably. Even if I got a mortgage for the second property, same situation. So do that and then take all my current cash and treat it like savings for the long term. If the market is doing well we can take it out when/if needed and if the market is doing poorly, we live off cash as we have been. I think once I settle on this (unless there are some flaws with it) that'll help our overall financial picture.

Thanks again!

--Ram



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Re: Long intro, how do full time workers who love their career fit in
« Reply #35 on: December 07, 2020, 04:16:51 AM »
Looking post, but short comment:
Financial Independence and Retire Early are not necessarily bundled.

You may love your job, but it's probably just one or two management changes away from turning into something you would quickly grow to hate.
Financial Independence gives you the leverage to say no, stand up for yourself, or ultimately to quit (and look for new employment if you like - or not).

iris lily

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Re: Long intro, how do full time workers who love their career fit in
« Reply #36 on: December 10, 2020, 09:11:42 AM »
Looking post, but short comment:
Financial Independence and Retire Early are not necessarily bundled.

You may love your job, but it's probably just one or two management changes away from turning into something you would quickly grow to hate.
Financial Independence gives you the leverage to say no, stand up for yourself, or ultimately to quit (and look for new employment if you like - or not).

Exactly.

Today is not tomorrow. Today I love my job. Tomorrow I hate my job. It happens to all humans.

Iíve been hanging out on simplicity/frugality/early retirement forums for at least 20 years. Youíd be surprised how many people say oh but I want to work until I am  70. But somewhere between age 50 and 70 they donít wanna work anymore. And they resent having to work.

So what you do is compile your stash for that day. No one says you have to retire if you love your job.

2sk22

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Re: Long intro, how do full time workers who love their career fit in
« Reply #37 on: December 10, 2020, 12:08:21 PM »
Iíve been hanging out on simplicity/frugality/early retirement forums for at least 20 years. Youíd be surprised how many people say oh but I want to work until I am  70. But somewhere between age 50 and 70 they donít wanna work anymore. And they resent having to work.

Got a chuckle out of this as it hit very close to home :-) Even at age 55 I thought that I wanted to keep working as long as possible. By the time I turned 57, I was thoroughly sick of work and retired soon thereafter.

iris lily

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Re: Long intro, how do full time workers who love their career fit in
« Reply #38 on: December 10, 2020, 12:56:09 PM »
Iíve been hanging out on simplicity/frugality/early retirement forums for at least 20 years. Youíd be surprised how many people say oh but I want to work until I am  70. But somewhere between age 50 and 70 they donít wanna work anymore. And they resent having to work.

Got a chuckle out of this as it hit very close to home :-) Even at age 55 I thought that I wanted to keep working as long as possible. By the time I turned 57, I was thoroughly sick of work and retired soon thereafter.
Yes, it happens that fast.

tipster350

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Re: Long intro, how do full time workers who love their career fit in
« Reply #39 on: December 11, 2020, 07:57:09 AM »
Iíve been hanging out on simplicity/frugality/early retirement forums for at least 20 years. Youíd be surprised how many people say oh but I want to work until I am  70. But somewhere between age 50 and 70 they donít wanna work anymore. And they resent having to work.

Got a chuckle out of this as it hit very close to home :-) Even at age 55 I thought that I wanted to keep working as long as possible. By the time I turned 57, I was thoroughly sick of work and retired soon thereafter.
Yes, it happens that fast.

Yeah my Dad hit that this year; Covid probaly accelerated.

But seemingly overnight he went from "maybe a few more years or at least part time" to " I'm f*#king done!!"

Raises hand. 59 years old, soon to be 60

To be honest, I was never in love with my career. I've wanted to retire for a long time. Very much. But at the same time, it wasn't PAINFUL to work. I've heard about that light switch moment when older workers are so done, there is no new day when they will feel differently. I wondered how I could want to retire more than I already did. I figured I wouldn't experience the light switch moment because I was already ready to retire.

HOWEVER, recently, I hit that wall.  The switch flipped. Every day I am wishing for release, pining for all the activities I want to do on my own time and schedule. I am SO DONE with rushing, so done with needing to live every day with a project plan to handle everything. So done with office politics and with the observation after many years, one sees that the job treadmill is Groundhog Day. It all keeps repeating, the patterns, the messages from leadership, the reasons to give away your free time evenings and weekends for today's critical project.

I want to live my life on my own terms.

I am desperately holding on until the end of April, when I will have collected one final bonus and vested in another set of RSUs.