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Intro and your advice
Old 04-28-2018, 08:48 PM   #1
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Intro and your advice

Hi, I just learned about this FIRE concept through Money Magazine and am interested in learning more from all of you. It is a goal to shorten the timeline to retirement and want to dramatically speed up the process.

I will read through many posts and start learning your methods.

Starter questions:
1. What is your advice for a newbie to this site who is looking for reducing expenses to increase investment money?
2. What is your advice for a married couple where 1 person wants to put more work/save more for retirement than the other person?
3. One lady from Money Magazine is renting a property on AirBNB and putting profits in retirement account. What are your thoughts on AirBNB as an investment vehicle?

Look forward to learning from you and appreciate your help.
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Old 04-28-2018, 09:37 PM   #2
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Agree on a savings target and then "pay yourself first"... IOW, pre-program your savings to come out of your earnings and then whatever is left can be spent on "life". Invest those savings in no-load, low-cost equity mutual funds like the Vanguard Total Stock Market index fund, reinvest dividends and let it grow.

Find a copy of Quicken Deluxe or higher and go thorough the Quicken Lifetime Planner to plot out your plan... then use Quicken to monitor your progress.

Slow and steady wins the race.
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Intro and your advice
Old 04-29-2018, 04:39 AM   #3
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Intro and your advice

Regarding question number 2. It is important that you and your partner agree on your financial goals, particularly spending and budgeting. If you don't reach consensus than one or both of you will be frustrated and I believe financial matters are the leading cause of divorce. Like many things, compromise in marriage is essential to success. One person prevailing over another is not a winning strategy. Having said that, I think one way to achieve agreement is to educate yourselves together (there is a great reading list somewhere on this forum) perhaps before developing a budget that BOTH parties can stick to. Something as simple as rewarding yourselves for reaching a particular financial milestone can help focus you as a couple and help blunt any resentment of the party that is more into immediate gratification. And identifying long term goals and what happiness that financial independence will bring to you in the future may encourage the big spender to defer gratification. Counting your pennies and charting your progress can be fun. It sounds as though you are the saver and your DW is the spender. Good luck!!


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Old 04-29-2018, 04:43 AM   #4
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To the OP; I would advise you to change your user name quickly to an anonymous user name. That way you will avoid unwanted contacts from all manner of shady characters. The admins can help you with that.


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Old 04-29-2018, 05:15 AM   #5
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Greetings and welcome. You did not say how old you and your spouse are or a rough age that you want to retire. That will help shape some of the advice. I agree with Golden sunsets. It’s very important for you and spouse to be one the same page. A good example is when I lost weight. DW was very supportive and while she was very good at maintaining her weight, she still started eating like me and also refrained from bringing junk food into the house. So to answer the question about what to do when you’re not on the same page - address that up front and keep it in the forefront. Like the diet, you can’t have one person living large while the other is trying to save and live frugal. You have to find agreement on the level of commitment you have to this.

Reducing expenses is a state of mind. You either embrace it or you don’t. Remember, one way to live below your means is to increase your means (make a lot of money) while not proportionally increasing your spending. It does not necessarily mean living a low cost, meager, lifestyle. Make $150K per year and live like someone making $75K and you’ll be early retiring in no time. As to the question, how to reduce expenses?, focus on house and cars first. Those are the two biggest expenses. Do what you can to drive cheap. If you can buy used and run cars into the ground, do it. If your not too mechanically inclined, buy new, keep them maintained and drive them into the ground. As for your house, focus on need. People like to have a big house, but you can save a lot by keeping your house in check. Most helpful is to reduce (or never accumulate) stuff. If your house has extra space or an extra garage for stuff you don’t really use, that’s a good place to focus. Me and DW went from a house with a full basement and a three car garage to a house on a slab and a two car garage. It was tough, but it made us realize how much stuff (crap) we had that we didn’t really need or even use. Again, money is very much like a diet. Focus on the big things like eating ice cream every night and the rest is continual improvement until you build good habits.
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Old 04-29-2018, 06:09 AM   #6
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Welcome!

I've been through a marriage in which I was the saver and he was the spender. It did not end well. As the others said, you both need to be on the same page. When my sister married (1975), BIL told her he was really bad at saving and she should "hide" money in savings accounts and not tell him it was there. That actually worked; he grew up and he now manages their investments. In my case it was a disaster- we both had jobs but he spent everything he had and then ran up credit card debts. We kept separate accounts but if we needed a new roof or the water heater died, guess whose account supplied the money. (Second marriage was to a dear man who shared my goals.)

Airbnb: are you thinking of buying a place to rent out, or renting out your own once in awhile? You need to be aware of applicable laws- many vacation places are outlawing or limiting the extent to which homes can be used for Airbnb rentals. It changes the character of a neighborhood or a building when several units have transients every week, and in some markets, speculators have driven the prices of houses/condos way past what the average person can pay.

As for occasional rental of your own place- sure, if it's legal and you have a cheap place to go. I rented a lovely place in Iceland last year from a lady who apparently stays nearby with her daughter when she rents out her apartment. I was a very good tenant (just one person, quiet, left the place as I found it) but she may have had horror stories- I don't know.
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Old 04-29-2018, 07:55 AM   #7
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Welcome to the forum! Great advise from the posters above. I won't be able to help with questions #3 about the airbnb. However, regarding saving money, and getting both partners on board, something that helped us was to "reverse engineer" our early retirement. Figure out when you would like to be financially free, and what your lifestyle will look like when you are. You then need to figure out how much money it will take to fund your future lifestyle. The next step is to figure out how much money you will need to save and invest each year between now and your early retirement date and come up with a concrete plan to make it happen. It's certainly not a perfect ratio, and lots of assumptions come into play, but it can help you to keep your eyes on the prize. Make sure you are both in it together, and you talk and dream together. Hope that helps! Good luck and keep us posted on your journey!
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Old 04-29-2018, 09:33 AM   #8
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Welcome!

Plenty of direct answer to your questions here; I'll just recommend a quick read, William Bernstein's "If You Can." Only 16 pages and subtitled "How millennials can get rich slowly." The philosophy is quite good, as are the reading recommendations.

https://www.etf.com/docs/IfYouCan.pdf
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Old 04-29-2018, 10:05 AM   #9
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Originally Posted by Golden sunsets View Post
To the OP; I would advise you to change your user name quickly to an anonymous user name. That way you will avoid unwanted contacts from all manner of shady characters. The admins can help you with that.
Thank you, a moderator PM and asked to change my name but when replying to him the site says:
Due to abuse by spammers, new members are not allowed to send links in their private messages until they have become trusted members.

How do I reply to him with the name I want to use?
What qualifies a "trusted member"?
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Old 04-29-2018, 10:45 AM   #10
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Originally Posted by FIREarly View Post
Thank you, a moderator PM and asked to change my name but when replying to him the site says:
Due to abuse by spammers, new members are not allowed to send links in their private messages until they have become trusted members.

How do I reply to him with the name I want to use?
What qualifies a "trusted member"?
OK, I changed your name temporarily so now you should have absolutely no difficulty whatsoever in sending a PM to that moderator (with no URL or links in the PM) and letting him know the username that you would prefer.
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Old 04-29-2018, 11:01 AM   #11
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Quote:
Originally Posted by FIREarly View Post

Starter questions:
1. What is your advice for a newbie to this site who is looking for reducing expenses to increase investment money?
2. What is your advice for a married couple where 1 person wants to put more work/save more for retirement than the other person?
3. One lady from Money Magazine is renting a property on AirBNB and putting profits in retirement account. What are your thoughts on AirBNB as an investment vehicle?
My $0.02:

#1: Diligently sort through your spending, separate needs from wants, pay yourself first.

On the needs, inspect how much "want" has slipped into "need."
You need a car...do you need that car?
You need housing...do you need that house?
Even more, do you need that hneighborhood where everyone (especially the kids) are surrounded by a higher level of consumption?

After you sorted your needs, pay yourself first.
Aim for at least 30% of your income and seek to increase over time.

Whatever is left after true needs & savings is what you spend on your wants.


#2: Getting the team aligned on the goals is critical.

In our house, we have pretty traditional roles. I work out of the house while DW stays home with the kids and volunteers in the community.

We've had a good offense and a good defense.

I earn as much as I can, she shops frugally and says "no" to the kids when they want $100 Uggs b/c all the other kids have them. (Bear Paws are perfectly fine, thank you.)

We bank >50% and in good bonus/option years up to 70% of our income. But even if I earned $10M/yr, if DW was spending $9.99M/yr (or more) we'd be jogging in place.

A good way to bridge from where you are to where you both want to be is to settle on a good starting point and then use raises to increase percentage savings. For a long time we put 50% of any raise to savings and the other 50% to lifestyle. At a certain point, we decided that our lifestyle was more than fine and 100% of raises went to savings -- though recently we've invested money in big family experiences with the kids. You can do that if you're on firm foundations.


#3: Focus on Blocking & Tackling First...AirBNB is a tactic not a plan

Get your financial foundations in place...

- Have a written budget & follow it

- Emergency fund of at least 6 months, preferably 12
- Be allergic to non-asset debt (e.g., car loans & credit card debt )
- Max 401k to get full match;

- Take the time to think thru & write an investment plan.
What are your long term goals (FIRE, college, etc.)?

Are you saving for Harvard or State U?
What will college really cost?

What is you desired post-FIRE retirement lifestyle?
What does that imply in terms of cash flow needs & retirement assets?

Are you aligned with DW on these goals?? Repeat point #2.

What is your plan for saving & investing to reach these goals?
What rates of return are you expecting?

Translate the above into an appropriate asset allocation and methodically follow that investment plan from now until you hit your goals. (There are a zillion threads on these topics.)
If Real Estate/AirBNB becomes part of your disciplined financial plan, that's great...but there are many paths to FIRE.


Part 4...Remember that life isn't a balance sheet exercise.

Live life, share family experiences, pass along your values, send the kid(s) to college, and FIRE happy not just early.


Hope that is helpful.
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Old 04-29-2018, 04:37 PM   #12
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First, congrats on setting your eyes on the prize.
Others have shared great financial advice, so I'll skip that.
As to alignment with DW, it's a thing - a big thing. When I first got married, both wifey and I burned money on crap/stuff, while racking up CC debt, car debt, etc. A few years later, I realized that we were on a plan to financial ruin and decided it was time for a change. I tried to get her on board, but to no avail. I ended up DX-ing her for a low cost model that's still purring ~30 years later. Retired at 60 without a care - coulda done it earlier, but was late to the game.

*DX - an Army (DOD?) term. It fits.
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