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– The Mad Fientist

35 comments for “Email Request Confirmed

  1. tom
    March 15, 2015 at 6:08 pm

    I am trying to understand all the financial issues that lead to FIRE. I believe that I am there but I continue to work until I have everything sorted out and I am CONFIDENT that I don’t have to work anymore.

    I think my situation is unusual but not unique. I don’t see it discussed by the various FIRE blogs.

    I’ve invested in the market since employment in 1991 chiefly through Deferred Compensation (403b). I am a Law Enforcement Officer (LEO) and recently retired from one job before moving on to another. I collect a pension from the previous job and now have a new salary.

    My wife has Rheumatoid Arthritis and recently stopped working because of it. Currently we maintain the same lifestyle because my new job replaces her income. I stay employed because of concerns about insurance and future expenses. Not to mention I enjoy an expensive hobby(flying). We have a few rental properties that we have done well with. I recently refinanced them to take advantage of good rates and improve ROI.

    My question is, how does a pension figure into calculations. Mine is 48K a year. This is on top of 660K in investments. We also have two kids, 8 and 9 yoa.

    Part of the 660K is 178K in an IRA that I am trying to work out a ladder conversion to ROTH.

    At my new job I just maxed out the HSA because of your great article. I am currently debating paying down a HELOC I have at 3.25% as opposed to allocating money to Deferred Compensation in my new job. Because of the HELOC, I have access to cash if I need it. This would allow me to reduce my current salary tax wise through some of your strategies. Or I could pay down the HELOC after tax. My current salary is about 45K.

    I am curious about your opinion of the above.

    When I have calculated FIRE with a pension, I extrapolate 48K * 25 = 1,200,000 and add it to my investment portfolio.

    I rarely tell anyone about my financials because I am hyper conscious of appearing to gloat.

    I’ll end here.

    Tom

    • The Mad Fientist
      April 10, 2015 at 9:45 am

      Hi Tom,

      You don’t mention how much you spend every year so I wouldn’t be able to say if you’re ready to retire or not but the way I’d incorporate your pension is I would use it to reduce your annual spending in the calculations.

      For example, say you spend $80k per year, your FI savings would need to only cover $32k because your pension covers the other $48k so assuming you’re happy with a 4% withdrawal rate, you’d need to have $800k saved up to cover the excess $32k ($800k * .04 = $32k).

      Make sense?

    • Christine
      January 25, 2019 at 9:42 am

      I have the same situation here…I have EDS (Ehler Danlos Syndrome) which is chronic pain much like Rheumatoid Arthritis…… I was the breadwinner with the 6 figure income. We are, what I call, financial freedom, not quite independence since we still need a little bit more income to keep adding to retirement accounts, but no debt (minus mortgage). I also don’t like to talk about it with others since I sound like I am trying to tell them what to do….. :)

      Glad to hear there is someone else in my court.

  2. robert
    April 9, 2015 at 8:16 pm

    sounds like you have more than enough to retire.

  3. Roy Stacey
    May 20, 2015 at 4:43 pm

    I am in my 3rd year of retirement (at are 60 when retired). Am enjoying life, and my wife and I worked, and saved to get here. Debt free, (I hate debt, thanks) own a home, and with about $745,000 frolicking in various Vanguard accounts 64/36 % stk / bnd mostly total stock market index, but also a bit in REITS, Healthcare, Utility ETF, and my personal love of fiddling with individual stocks a bit of XOM, and CVX.

    I get a defined pension (Federal FERS) of about 20G plus my SS and my wife’s SS so money isn’t an issue. We take a bit out of the holdings 2-4% a year if we need it. About 200K is in ROTH’s the rest is 401K taxable dough. (We swing about 30G a year into the ROTH and pay the 15% tax rate on the conversion).

    I’m here to learn a little, laugh a bit, and see what you know. I read Mr. Money Mustache, and JL Collins and enjoy them both, which brought me to you.

    So, what can you teach a fairly dim old dog who enjoys doing his own investing?

  4. Edward
    May 22, 2015 at 10:17 pm

    i have recently become disable and i was just wondering what to do with my accounts. i currently have the majority of my money in 401K and the rest in Roth IRA. I am also getting divorced. i know . Not my best year. So i would appreciate any help in what to do.

    • tom
      May 14, 2018 at 9:13 am

      Divide it up and figure out your new run rate for expenses due to disability. Do the divorce paperwork yourself or face losing a third of your net worth to lawyers and court fees.

  5. aliens
    March 31, 2016 at 7:28 pm

    I’m very interested in becoming FI, yet I’m so naive when it comes to investments….where should I start? Feeling overwhelmed!!!

    • The Mad Fientist
      April 1, 2016 at 3:53 am

      You should read JLCollinsNH’s Stock Series!

      Investing doesn’t have to be difficult so that series should tell you everything you need to know!

  6. andrea zachrisson
    July 21, 2016 at 1:04 pm

    Thank you for taking the time to create and share this information! I have loved every single interview in your podcast and I am now in the path to FI. I am also so please to hear from your guests how much they like Guatemala and the people since I am one of them ;) I live in the US but all my family is there and we have a house in Antigua and the lake so if you are ever heading that way let me know. I would love to share places, contacts etc. Also it would be interesting to do a Mad Fiestins “spanish version” :)

    Thank you again!!

  7. Mollie
    August 20, 2016 at 10:45 am

    I just signed up for your FI Laboratory (and email list), and I have a question about our savings rate. Currently, we save 40% of our take home pay. However, the majority of that is going to a bank account for a house downpayment and not to investments. Therefore, our savings rate when it comes to FI is actually pretty low. Do I have that right? None of the blogs I’ve read seem to make the distinction between money saved in the bank and money invested, and it all seems to get lumped together as “saving.” I get it, but I may not be doing as well as I thought!

    • tom
      May 14, 2018 at 9:17 am

      You are spending on the house. You need to include the value of the house and mortgage as part of your net worth statement to account for the value.

      Meanwhile, your direct savings are actually pretty low. Houses eat money and taxes.

      • Sarah
        October 27, 2018 at 12:56 pm

        Hi Tom, new here ! I believe I’m in a similar position to Mollie and I thank you for taking the time to reply to her for both of our benefit! I apologize in advance if my question seems obvious but I’m hoping you can spell it out a little more for this novice fientist – I’m the beginning stages of my FI journey while where should I be directing my savings? Straight into vanguard index funds? Toward cash flowing and equity generating realestate investments? A little of both?

        I am currently living rent free (I rented a 5 bedroom hours and subsequently subletted the rooms, I keep one at no cost to me), and saving about 60-65% of my income. Which nets to around 40k a year. I’m in the process of purchasing a rental property that my business could rent from me (the corporation might as well pay me rent if it has to pay rent), and with the 2nd unit the property will probably cash flow about a grand a month – maybe some expenses I’m not thinking of coming off that.

        I should also mention that I’m canadian living in Ontario. Thanks in advance, I appreciate your time and your great podcasts!

  8. Charles
    October 11, 2016 at 11:58 pm

    I recently came to the conclusion on my own that I’d like to be FI at 45 (currently 28) and shortly afterwards came across your your blog and others which have been great resources. I have noticed that it seems like the monthly expenses that are given exclude housing expenses which makes them very low. I live in the SF Bay area and rent is by far my largest expense and I’m in a 1 bedroom apartment when I would prefer to be in at least a two bedroom so I could have a bedroom for visitors. Do you have any thoughts for my situation.

    • tom
      May 14, 2018 at 9:20 am

      Rock and a hard place. Move to cheaper digs, pack in renters.

  9. Matt
    December 13, 2016 at 3:21 pm

    Hey dude – a friend got me onto your podcast a few months back and I’ve been religiously working my way through them all. Bizarrely only just occurred to me to check out your blog though.

    A big THANK YOU from me for opening my eyes to a new way of thinking and planning. Well done on all your work – keep it up! :)

    Best
    Matt

  10. allan manley
    May 27, 2017 at 10:19 pm

    I have recently stumbled upon the FI way of life a couple of months ago.I’ve been researching around the net a bit and have come across a lot of the American sites but my problem is I’m from the UK,so all the talk about ROTH,IRA and 401ks does not equate to anything here.Are there any websites or books that apply to the British environment.Any suggestions would be greatly appreciated.

    Thanks Allan.

  11. Aaron Olson
    August 29, 2017 at 11:10 pm

    Thanks for your podcast!

  12. Michelle
    September 5, 2017 at 8:56 pm

    I need u! Don’t unsubscribe me.

  13. frank
    November 28, 2017 at 6:35 am

    I know that you use taxable accounts and was wondering if you could let me know how the way your taxes work at the end of the year if you buy and hold VTSAX? My father had a bad investment and was going to sell and was looking to put it into VTSAX, its a pretty large amount. Would it be ok to put 400k into a taxable account?

    Thanks
    Frank

  14. scott
    January 1, 2018 at 7:40 pm

    I am looking for some clarification on the Mega Backdoor Roth. I work at a job that has a 401k and so does my wife. We both are over 50 and we max out the 18k plus the 6k catchup. Each of our companies has a match of 9.9% .

    I have a small barely profitable business on the side and have set up a solo 401k with a Roth component to it. My question is , can we make after tax contributions to a IRAs and then move them to the Solo 401k Roth ? Can the amount take us up to the 53,000 maximum retirement contribution?

    Also I am not sure what all counts toward the 53000 cap. There is the 401k contribution, 18,000 , then the catch up of 6000, then the company match of 9.9% and then at both companies there is a profit sharing contribution that is made pretax into an account. Also the HSA contribution of 6500. Pretty sure the HSA doesn’t count, but not sure about company match and profitsharing.

    Do you know these answers? I would like to get as much into Roth as possible . My goal is to have a very low tax, high income retirement income.

    Thank you for any input.

  15. tom
    May 14, 2018 at 9:04 am

    I read the Tightwad Gazette and have religiously tracked my net worth in Quicken since the 80’s, lifetime records input so I could shred and discard in the 90’s. I’ve been an advocate of the HSA, Roth, IRA, conversions, 72t, … feels like you found me! I have been advocating (far less effectively) that FI is more important than raw Income or spending all my life. My graph is one and done, I’m FI.
    New to me: in-service rollovers and after tax top ups for Roth to $55k. I never had plans flexible or salary sufficient to be relevant though.
    Motley Fool has a Live Below Your Means section similar in intent but not in degree to FI that I enjoy. As a long time Stock Advisor member, I have averaged growth of 10% annually, which is what Warren Buffett advertises as best expectations. If you avoid the temptation of trading and develop an investor mindset (avoiding biases and pitfalls well described by FI, MF, and elsewhere) a extra few percentage points will get you to FI sooner. Work Less, Live More (revised edition) is also a good start on low cost allocation to boost returns/reduce variance.

    Lastly, I participate with an independent non-qual mortgage supplier. Essentially, I am the bank, loaning capital at 10% interest only. Buyer has 30% equity I am first in line for default, no second liens. Supplier skims a few percent and handles filings/accounting/marketing/lender qualification. I consider this fixed income, better than bonds, less sensitive to interest rate creep, secured by property. (requires independent investor status, $1M)

    Keep up the good work

    • Tim
      August 1, 2018 at 9:49 pm

      Thank you for the ideas. Could you provide more information on the independent qualified mortgage supplier program? I have done well for the past 15 years with land sale contracts but the state where I live changed the rules somewhat a few years ago to where it is more difficult to evict non payers. So the program you describe sounds much more appealing. About half my net worth is in RE. The rest in the stock market (mostly Vanguard Total Mkt) but I was looking for an alternative to bonds. Blessings.

  16. David Moore
    August 24, 2018 at 11:39 am

    Tom, We have no bills, house paid off in CA. We have no need for my wife’s life insurance anymore (UVL) its 500K. Premiums are $500/yr. How do you sell a policy?

    Dave M

  17. li
    September 5, 2018 at 9:34 am

    Hi,
    I don’t know if anyone reads or replies to these, but if anyone could help, I would really appreciate it. I just stumbled into all this Fi/FIRE stuff, and it’s really intriguing and aspirational, but as it turns out I understand less than I ever thought I did, but I really want to try to learn how to manage and track everything

    I’m a decent saver, I think, and I’m decent at math– but that’s really useless if you don’t know where to begin with all these calculations.

    I contribute nominally to a 403 B every couple of weeks, but I’m completely clueless about setting up bonds, IRAs, or low cost index funds — I don’t even know what a withdrawal rate is, so I can’t even effectively use the calculator.

    I’ve heard these words thrown around everywhere, but I barely understand what any of them are, or how I go about setting anything up, and I’m feeling really stupid and overwhelmed.

    • Steve kohn
      November 28, 2018 at 12:06 am

      Go over to jlcollinsnh.com and read his stock series,it will provide you with much of the info you are looking for.

  18. Jeff Filice
    October 6, 2018 at 11:05 am

    The bulk of my savings is in a 401k that that I can not touch without penalty until 59 1/2 years old. I currently am getting a 15% defined benefit based on my gross in to the 401k, and I am additionally maxing out my personal 401k contribution at 18.5k. For FIRE, do you suggest stopping the tax benefit of maxing the 401k and contributing the money to a taxable account?

    Does FIRE take into account that the majority of peoples savings is in tax deferred accounts that can not be accessed without penalty until they are 59.5?

  19. Chris
    January 25, 2019 at 5:35 pm

    Hey mad fientist my name is Chris and ever since I stumbled across your podcast I’ve been addicted. In 5 short days I’ve gone from the very first podcast of your from 2012, all the way into podcasts of 2017. Here’s my question to you because I feel it hasn’t been brought up. How can someone who earns a lower income, that also has the ability to save $400 or more per month, maximize gains in financial markets? I’ve considered working more hours on the side to increase my overall income, but wanted to have a clue or tip to turn $4,800 a year, into something much bigger. Like most everyone else, I find myself waking up everyday thinking “there’s more to life than working 5 days a week.” You’ve inspired me along with all the other big names on your podcast to make a switch. I’m just looking for a few tips on a low income basis. Much love!

  20. Kam Reddish
    March 4, 2019 at 3:26 pm

    Mr. Fientist,
    Thank you for all that you have put out. I am currently in the stage of consuming as much as I possibly can on financial independence, and loving every minute of it as I plan freedom for my future family.
    I do have a question though, that may be obvious. Once you have optimized your tax deferred investment vehicles such as IRA, 401K, HSA, etc. do you have any other options for tax deferred investments? Or at that point do you need to use after tax dollars in your own account such as with Vanguard? I was looking at the limits for these vehicles and I feel confident I can save more than their limits! Any ideas?
    One addition to this question as well, could one set up a personal business and use investment vehicles through it for more tax-deferred growth?
    Thanks for all the awesome-ness you make,
    Kam Reddish

  21. Leonard
    June 1, 2019 at 5:37 am

    Hi
    I have just started my retire planning.
    I live in Australia and are wondering what are the best index funds to invest in Australia for FIRE

  22. Leah
    June 7, 2019 at 7:02 pm

    Hi! I absolutely love the podcast. It’s not common to listen to a podcast that is consistently delivering new, interesting and even life changing information. Yours does! I am a teacher in Southern California and I have a brutal commute that is made better by listening to your super knowledgeable and entertaining guests. Some of the teachers you have interviewed have been really inspiring. So thank you!

  23. Henry
    August 27, 2020 at 1:12 pm

    I am hoping to be able to figure out how to stagger withdrawals for FI. I am married 58, spouse 54 and want to retire at 60. Spouse at 57
    If my job holds out Covid might end it sooner.
    I have a net worth of 1,116000.00 composed of 403b 457b Ira and Roth IRA’s, and stocks.
    I have a pension that will begin when I leave work. of 8600 a year…and plan to Take my SS at 70. My spouse will start at 67 and possibly switch to mine at 70
    I also am expecting an inheritance of around 400k in the next 10 years..possibly more..but that would be the base.
    Monthly expense 7800 month with current mortgage that will be paid off in 3 years…but I hope to sell and downsize and use equity in house to pay cash for next house. so expense would drop about 1k if that were to occur (I still would have property taxes etc). Plus added health insurance until 65
    It’s the staggering I am having difficulty making sure I am calculating correctly . 2021-2034 would be the span I would use investment the most and then could back down significantly when my SS kicked in..also the inheritance. can piece meal it together..using different calculators…but would be nice if you could put in for those factors..as you wanted them to hit…..most calculators if you put in your taking SS at 70 assume you are working until 70…

  24. Evan
    April 4, 2021 at 6:29 am

    Your podcasts are great. Looking forward to learning more.

  25. Andrew
    June 17, 2021 at 10:47 am

    Hello kind sir! Thanks for the great content on both podcasts and here. I’m 35 and looking to be fully FI (whatever that means) in ~7 years. I’m in the phase of figuring out a side hustle (some sort of unique content) and trying to figure out what platform to leverage. Anywho, am excited for all future prospects. Hope you are living the dream my friend. ROWYCO. Cheers!

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