Getting closer to FIRE!

[nun]

It's funny because I fall down on the personal responsibility side of the aisle (to the right if you know what I mean). But I would be a fool NOT to take advantage of opportunities that present themselves.

Some here criticize, and question whether I can look my kids in the eye. Now I'll have more time to spend with them. I try to explain to them that the system is frequently broken in many places. But I would not in good conscience be able to council them against receiving free money when offered. Because they will be paying it back. While all the current folks on this board will be ER'd, my kids will be slaving away paying taxes to repay the debt currently incurred and to pay the social welfare benefits (medicare and SS) of those retired. Thems the breaks.

I guess no one wants to hear about how my kids will probably get free or nearly free lunches at school either? (gas to FIRE gas to FIRE)

WOW! I think the issue is that you received something of value that has in some way helped you on your road to ER and you now plan to default on your loan. I'm glad my Dad didn't act like you, he would never have been able to justify such behaviour.

 

[WB52]

nun, Certainly an interesting delema. However it does not go as far down the unethical path as we have been discussing. You have not taken a loan and promissed to pay it back...I have a problem with promisses unkept.

 

[nun]

Look, all these entitlement programs and subsidies bug me too. I wish we weren't paying for all this, because it doesn't seem like it is necessary in many cases (in my case and many others).

But, hey, some day I may need the money I am saving to do things like pay for other social welfare programs via higher income taxes, broader reach of AMT, imposition of a National sales tax or VAT, partial loss of SS and/or medicare due to means testing, etc.

I would prefer the system to be rejiggered so that we don't spend money like drunken sailors on this stuff, but I'm not going to let myself be taken advantage of in the mean time.

If this is supposed to justify your behaviour you have serious issues. This is no longer worth my time

 

[FUEGO]

Fuego,
+1 to those critical of your position regarding defaulting on the student loans as a strategy and not a necessity.
You CAN pay them back, but you chose not to because you do not WANT to and think you can get away with it. You have placed your WANTS in front of your integrity. If it benefits you to steal or lie (both of which you are doing by defaulting on the loans), would you continue to do so?
Shame.

I am neither lying nor stealing. I AM paying these loans off currently. When my income is reduced during ER, I intend to continue paying my loans subject to the rules currently in place for Income Based Repayment. I may end up paying them all off in full if my assets rise to a sufficient level where my withdrawals (and therefore income) are large enough to make my Income Based payments of sufficient size that would result in full payment over 25 years. I'm not expecting that to happen, but if I get lucky, the taxpayers get lucky!

 

[FUEGO]

There may be a similar ethical choice in my future. I live in MA and if my annual income is under $35k a year I will be eligible for state subsidized health care. I've looked at the forms and made initial enquiries with the state and it seems that they don't take total assets into account, just annual income. With my house paid off and no other debt my need for income is less than $35k a year. So even though my portfolio will be more than $1M, I can arrange things so that I take enough each year to qualify for the subsidized health care. Should I do that when I can easily afford to pay for health care without the state subsidy?

I don't see this as an ethical choice. Seems like strictly financial, similar to my choice to use Income Based Repayment for student loan debt.

Would you seriously NOT consider taking the subsidy? Who is better at deciding how to allocate your money, you or the state of MA? Why not take the subsidy and donate it to friends, family, charities, etc? Wouldn't that represent your personal values much more than having politicians blowing it on whatever wins them votes?

I guess don't respond since you are "done".

 

[aida2003]

Well, congratulations on your little student loan scam & it's boost toward your ER. Rationalize it all you want, it's still cheating, and the pats on the back you're getting for your accomplishment disgust me enough to exit this forum permanently.

Huh, do you or anyone against FUEGO's strategy read BusinessWeek that featured articles how billionaires or billions worth companies manipulate the tax code, laws with loopholes? It's all legal and the rich get richer. And here a mere mortal found a way to use our "smart" government's created laws to his advantage, and y'all got upset. If it's legal, good for him . Like someone said, law is not always ethical, but it's legal

 

[FUEGO]

On a more humorous note, this thread is really making me want to keep working at my public sector job! Heck, 10 more years of it and I'll have those loans forgiven completely without paying a dime and no one can say I didn't work for it. My wife could retire right now and we could get the free government lunches immediately.

AND, I would get my awesome government pension! Which would bring the derision of many here.

If it makes anyone feel any better, I am currently paying into my mandatory government pension, and I plan to, at best, get merely a refund of what I have put in without any interest on it even though it will sit in their plan for many years. A government run program that cuts against me. Gotta git while the gittin is good! Cause you are going to be subsidizing something somewhere. Can't keep Uncle's hands outta your pocket.

 

[Westernskies]

Like someone said, law is not always ethical, but it's legal

Probably a quote from a Yellow Pages lawyer.

 

[Culture]

I have to admit that as I get older, I am moving more and more toward a position similar to Fuego. In the past, I was happy to pay taxes to finance the public good. However, I now realize that the majority of the county is looking out one for number 1 (themselves):

All taxes are bad except the ones they do not pay
All tax breaks are bad except the ones they get
All entitlement programs are bad except for the ones they participate in
All earmarks are bad except the ones that benefit them

I am starting to feel that the minority who actually ask "what is good for the county" are being fleeced by the majority who ask "what is good for me." The system can always tolerate a few people who think this way, and they will always exist. However, when they become a strong majority, this is a big problem.

In todays self-centered environment, I would do the same as Fuego. It is financial self-defense.

 

[FUEGO]

In todays self-centered environment, I would do the same as Fuego. It is financial self-defense.

Thanks for the comment!

At this point I am not going to respond to any more comments regarding income based repayment of loans (or default as some refer to it), free lunches, or other ancillary aspects of my FIRE plan due to a request to "stop trolling" from the mods (whom I respect). Paying less than 100% of my student loans and getting my kids reduced price lunches are relatively minor aspects of my FIRE plan.

Other questions/comments regarding my FIRE plans are welcome and will be addressed.

 

[Purron]

DH and I have a [-]friend[/-] former friend who bragged to us about how he lives in a state with no sales taxes and claims residency in a state with no income taxes via a mail forwarding service. The only time he goes the his *resident* state is to renew his driver's license. He insists it's legal because he has a RV and property overseas so they can't prove where he lives most of the time.

We must be pretty stupid since we pay sales and income taxes to our state. Plus, we both worked our way through college without ever taking a student loan or money from our family.

At least we can take comfort in the fact our portion of the tax burden supports [-]those in need[/-] those who figure how how to aviod/evade their share.

 

[bulletbiter]

Why would anyone want to shamelessly boast on this forum about taking advantage of a loophole in the system (which directly affects our forum community's bottom line through higher taxes in the long run and/or reduced education benefits for those who truly need them) is beyond comprehension. You signed for a loan knowing full well you did not intend to pay it in full (even though you have the means to do so). At least keep it to yourself so people can THINK you were able to ER by more ethical means.

 

[73ss454]

Remember one thing,"what goes around comes around"

In my 62 years I've seen it over and over. So, who ever knows in their heart they are doing the wrong thing gets it worse in the end.

 

[teejayevans]

Remember one thing,"what goes around comes around"

In my 62 years I've seen it over and over. So, who ever knows in their heart they are doing the wrong thing gets it worse in the end.

Oh how I wish that was true

TJ

 

[Rambler]

I'll be lobbying my elected representatives to eliminate this and all other freebies like it for people who simply don't want to work. Mind you, I have no problems paying my taxes to protect the country, to help the poor those in need with a hand up (not a hand out such as this is) and such. And I certainly have no issues with people who work hard and save enough to fund their own retirement. I have no qualms with pensions, government or otherwise, that are offered as part of compensation when hired. But this is simply an immorality. With the stuff going on in congress right now, I hope we can put a stop to this nonsense before another freeloader can take unfair, unethical, and immoral advantage of it.

Thanks for lighting a fire under me to write to my congressmen. They WILL get an ear full, and I will provide them with a link to this thread so they understand why a lot of us around here are so furious.

R

 

[NW-Bound]

I have to admit that as I get older, I am moving more and more toward a position similar to Fuego. In the past, I was happy to pay taxes to finance the public good. However, I now realize that the majority of the county is looking out one for number 1 (themselves)...

I have to say that when I was young and an idealist, I used to be more liberal. But as I got older and had to raise two children, I gradually became more conservative.

"From each according to his ability, to each according to his needs" - Karl Marx.

My children demonstrated this principle to me on the daily basis, in their teenage years. They had all those needs, like money for clothes and the movies, etc... But came time for house chores, boy oh boy, they suddenly had no abilities whatsoever. I couldn't throw them out on the street when they made me mad, but I knew that I had to wean them off, else they would be dependent on me for the rest of my life. I knew an old engineer who was still working in his 70s to support his daughter, who was in her 50s and able-bodied. She had "a lot of needs", while the old man had "abilities".

 

[NW-Bound]

I fumed mightily at the Bush tax cuts (and at the Reagan cuts before them) despite the fact that they would clearly be a bonanza for me...

Although I may agree with you about the need to raise taxes to balance our budget, I don't see how any tax cut can be compared to money that is given away.

A tax cut means somebody is now taxed less than he was before. The proper question should be "Was the earlier tax too high?" or "Is the tax now too low?".

With a tax cut, we now take less from the rich than we did before. We now take 35% from them, in lieu of the 39.6% that we did before. It is not the same thing as "giving money" to the rich.

 

[KingB]

Thanks for lighting a fire under me to write to my congressmen. They WILL get an ear full, and I will provide them with a link to this thread so they understand why a lot of us around here are so furious.

R

I was thinking of doing this too but I am not very good at words (or anything).
Can you PM me your letter so I can also send it to my congressman/senators.

 

[traineeinvestor]

The notion of adopting a course of action intended to avoid repaying a loan and imposing the resulting cost on the already overburdened taxpayer is ethically challenging. In addition, widespread abuse should in theory make it harder for future generations to obtain access to the same funding.

That said, if the rules provide for it, it's not really any different from a number of other problems with the rules which determine how much each person pays into or gets out from the system. It's the system that needs [-]to be tossed overboard and completely replaced [/-]fixing.

 

[donheff]

Although I may agree with you about the need to raise taxes to balance our budget, I don't see how any tax cut can be compared to money that is given away.

A tax cut means somebody is now taxed less than he was before. The proper question should be "Was the earlier tax too high?" or "Is the tax now too low?".

With a tax cut, we now take less from the rich than we did before. We now take 35% from them, in lieu of the 39.6% that we did before. It is not the same thing as "giving money" to the rich.

My point had nothing to do with whether I was right to think the tax cuts were bad. My point was that I personally benefited from a tax cut I opposed as bad for the country and do not think that ethics or integrity would call on me to give the bounty to the Government as many often argue.

 

[obgyn65]

Well done Fuego. Congratulations.

 

[accountingsucks]

Wow, nice work - I think I'm being ambitous thinking I can pull the plug in my early 40's. Just wondering though, does your budget include stuff like auto replacement and home maintenance? These things don't necessarily occur every year, but eventually you will have to spend the $. I am banking on $5-$6K on average every year for these two things.

 

[FUEGO]

Wow, nice work - I think I'm being ambitous thinking I can pull the plug in my early 40's. Just wondering though, does your budget include stuff like auto replacement and home maintenance? These things don't necessarily occur every year, but eventually you will have to spend the $. I am banking on $5-$6K on average every year for these two things.

I have factored those in to what I will need above and beyond my current spending levels. I do track house maintenance as a separate category, but it was running less than 1% of the value of my house. I figure I'll add in enough money to at least cover 1% of my house value (and maybe then some), or in the alternative, put together a detailed spreadsheet showing replacement costs for key depreciating items (roof, a/c and furnace, paint/siding, appliances, hot water heater, etc) and figure out an annualized replacement cost for these items, plus enough to cover recurring annual expenses (minor repairs and maintenance tasks, lawn care, etc).

Cars? I am including roughly enough to have a new-ish car every so often. That is above and beyond my current spending (which only includes maintenance and associated carrying costs for our 2 cars).

And I have a 10% contingency above my basic costs to allow for variations above the baseline. My hope is that after a few more years of detailed expense tracking I can see how expenses vary.

Then I have a certain amount included for "higher kid related expenses" to cover the teen years.

In reality, my ER spending target is a moving target at this point, as is my ideal SWR. As a result I don't know exactly how much I "need" for ER, other than that I may have roughly enough in a few more years (unless we want to work for "just one more year"). And I may consider switching to part time consulting in a few more years.

 

[boont]

Statements

Based on FUEGO's statements I would think that a slightly closer look at his world would yield far more shady things than so far revealed.

The funny thing is, that the cops and the IRS are looking more and more at "social" type sites on the internet. I would include this one, as one to monitor.

I think FUEGO has given more than enough clues to smoke him out.

Good luck under scrutiny.

 

[Aiming_4_55]

Interesting thread!

I guess... should one accept freebies when offered? There's another thread on accepting Senior Discounts.

Life is a game, we're always looking for the best strategy to reduce how much we pay in taxes, i.e. TIRA vs. Roth IRA, short vs. long term investments, 529 vs out of pocket, etc. it's just a game in the long run.

Just have to learn the rules.