Financial Freedom

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bogglek3sh4v
Posts: 48
Joined: Wed Sep 21, 2016 10:12 am

Financial Freedom

Post by bogglek3sh4v » Thu Apr 26, 2018 12:54 pm

I apologize if a similar thread exists but I was wondering what the simplest way to attain financial freedom would be.
This probably varies from person to person based on how much they make, age and other personal attributes.
But I am wondering if there is a general rule.
For instance you make so much, spend x amount, save x amount, invest x amount taxable/retirement, do not buy a car/house worth more than x amount, simple investment strategies (allocation/tools) that do not require outside help. Easy to manage investments with a set and forget strategy in mind.

P.S. I am not looking for a simple solution to attain FF. I need some good direction and the rest is upto me and almighty! If my question is incomplete, please ignore it :mrgreen:

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Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: Financial Freedom

Post by Pajamas » Thu Apr 26, 2018 1:09 pm

Marry well.

Tamalak
Posts: 537
Joined: Fri May 06, 2016 2:29 pm

Re: Financial Freedom

Post by Tamalak » Thu Apr 26, 2018 1:10 pm

My strategy:

1) Save half your after tax income
2) Invest it all in VT
3) Retire with an adjustable 4% withdraw rate (adjustable meaning 4% of current portfolio value, not starting value) after hopefully 15ish years. Keep it all in VT.
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.

About 3 years away, myself, most likely. With nominal market returns I'll be there by age 40 :D

Human productivity has been exploding. It makes absolutely no sense to work yourself into the grave any more. Lifestyle inflation has been ridiculous. Resist, resist, resist!
Last edited by Tamalak on Thu Apr 26, 2018 1:14 pm, edited 2 times in total.

lazyday
Posts: 3297
Joined: Wed Mar 14, 2007 10:27 pm

Re: Financial Freedom

Post by lazyday » Thu Apr 26, 2018 1:11 pm

Of course it helps to earn a lot, not spend much, and wait many years.

Not spending is doubly important because it increases savings directed to investments, and you can retire on a smaller portfolio if you're frugal.

Some people just make an obscene amount of money, then if they aren't too crazy in spending they'll be financially independent soon.

There's some early retirees here at Bogleheads, and if you like you can also check out http://www.early-retirement.org/forums/ which is more focused on the topic.

bloom2708
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Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Financial Freedom

Post by bloom2708 » Thu Apr 26, 2018 1:23 pm

Make saving (a high percentage) more fun than buying stuff.

Max your pre-tax 401k, max Roth IRA.

Invest in very low cost, diversified, index funds (Bogleheads)

Don't buy too much house. Buy just the right size or less house than you need.

Don't buy too much car.

Borrow (debt) if you must (home) and pay it off as fast as you can (Dave Ramsey)

Max your HSA if you have one available.

Start a taxable account if you have excess funds to invest.

Track your net worth, spending trends and categorize spending (Personal Capital, Mint, etc). Know where you are and where you are going. Outsmart yourself. Don't shop for fun.

Have hobbies that are free or low cost. Exercise frequently and keep your body and mind sharp.

Repeat for 20 years. See where you are at.
Where to spend your time: | 1. You completely control <--spend your time here! | 2. You partially control <--spend very little time here! | 3. You have no control <--spend no time here


magicrat
Posts: 391
Joined: Sat Nov 29, 2014 7:04 pm

Re: Financial Freedom

Post by magicrat » Thu Apr 26, 2018 3:02 pm

Tamalak wrote:
Thu Apr 26, 2018 1:10 pm

Be greedy and flexible, not conservative and inflexible.
I love this comment and am going to incorporate into my approach. Thank you!

ReadyToRetire
Posts: 62
Joined: Tue Oct 11, 2016 8:47 am

Re: Financial Freedom

Post by ReadyToRetire » Thu Apr 26, 2018 3:27 pm

All of the above are great advice.

I even married well. I didn't know it at the time - neither one of us had any money. But over the past 22 years, we have done ok following advice that is often dispensed here on Bogleheads.

The only thing I would add is don't go completely overboard. Saving well above national averages is completely necessary. No other way to do it (outside on unlikely scenarios like lottery wins, death of generous rich relatives, etc.). Spending well less than national averages is also completely necessary. However, trying to achieve some ridiculous rate (pick a percentage 70%, 80%, 90%) of take home pay so you can get there in less than 5 years is not necessary.

Be sensible. Work hard, save a lot, and enjoy the journey as much as I am sure you will enjoy the destination.

MiddleOfTheRoad
Posts: 145
Joined: Fri Jul 21, 2017 11:19 am

Re: Financial Freedom

Post by MiddleOfTheRoad » Thu Apr 26, 2018 3:47 pm

Although some people criticize him and he may be a little extreme on some things, Klangfool posted his process recently and it is worth a look. He has some very valid points. Search the forum for Klangfool.
Best of luck.

Edit: here is the link

viewtopic.php?f=10&t=247631

bikechuck
Posts: 350
Joined: Sun Aug 16, 2015 9:22 pm

Re: Financial Freedom

Post by bikechuck » Thu Apr 26, 2018 3:54 pm

Tamalak wrote:
Thu Apr 26, 2018 1:10 pm
My strategy:

1) Save half your after tax income
2) Invest it all in VT
3) Retire with an adjustable 4% withdraw rate (adjustable meaning 4% of current portfolio value, not starting value) after hopefully 15ish years. Keep it all in VT.
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.

About 3 years away, myself, most likely. With nominal market returns I'll be there by age 40 :D

Human productivity has been exploding. It makes absolutely no sense to work yourself into the grave any more. Lifestyle inflation has been ridiculous. Resist, resist, resist!
You are speaking in tongues, what in heaven's name is VT?

bogglek3sh4v
Posts: 48
Joined: Wed Sep 21, 2016 10:12 am

Re: Financial Freedom

Post by bogglek3sh4v » Thu Apr 26, 2018 4:04 pm

bikechuck wrote:
Thu Apr 26, 2018 3:54 pm
Tamalak wrote:
Thu Apr 26, 2018 1:10 pm
My strategy:

1) Save half your after tax income
2) Invest it all in VT
3) Retire with an adjustable 4% withdraw rate (adjustable meaning 4% of current portfolio value, not starting value) after hopefully 15ish years. Keep it all in VT.
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.

About 3 years away, myself, most likely. With nominal market returns I'll be there by age 40 :D

Human productivity has been exploding. It makes absolutely no sense to work yourself into the grave any more. Lifestyle inflation has been ridiculous. Resist, resist, resist!
You are speaking in tongues, what in heaven's name is VT?
Vanguard Total World Index Fund

snarlyjack
Posts: 780
Joined: Fri Aug 28, 2015 12:44 pm
Location: Montana

Re: Financial Freedom

Post by snarlyjack » Thu Apr 26, 2018 4:06 pm

Financial Freedom is a very interesting study.

Here is the Financial Independence Grid that really helped me.

Enjoy...

http://www.fourpillarfreedom.com/the-fi ... ence-grid/

lostdog
Posts: 1121
Joined: Thu Feb 04, 2016 2:15 pm

Re: Financial Freedom

Post by lostdog » Thu Apr 26, 2018 7:37 pm

Tamalak wrote:
Thu Apr 26, 2018 1:10 pm
My strategy:

1) Save half your after tax income
2) Invest it all in VT
3) Retire with an adjustable 4% withdraw rate (adjustable meaning 4% of current portfolio value, not starting value) after hopefully 15ish years. Keep it all in VT.
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.

About 3 years away, myself, most likely. With nominal market returns I'll be there by age 40 :D

Human productivity has been exploding. It makes absolutely no sense to work yourself into the grave any more. Lifestyle inflation has been ridiculous. Resist, resist, resist!
+1. Excellent advice.
Hear the clock ticking? That’s your life flying by while you listen to market pundits and watch stock prices fluctuate. -Humble Dollar

Tamalak
Posts: 537
Joined: Fri May 06, 2016 2:29 pm

Re: Financial Freedom

Post by Tamalak » Thu Apr 26, 2018 8:28 pm

bikechuck wrote:
Thu Apr 26, 2018 3:54 pm
Tamalak wrote:
Thu Apr 26, 2018 1:10 pm
My strategy:

1) Save half your after tax income
2) Invest it all in VT
3) Retire with an adjustable 4% withdraw rate (adjustable meaning 4% of current portfolio value, not starting value) after hopefully 15ish years. Keep it all in VT.
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.

About 3 years away, myself, most likely. With nominal market returns I'll be there by age 40 :D

Human productivity has been exploding. It makes absolutely no sense to work yourself into the grave any more. Lifestyle inflation has been ridiculous. Resist, resist, resist!
You are speaking in tongues, what in heaven's name is VT?
VT invests in a cost-effective approximation of every corporation in the world. It is the most diversified stock ETF available. I consider it the best way to not only grow your wealth but preserve your buying power in the long term.

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arcticpineapplecorp.
Posts: 3129
Joined: Tue Mar 06, 2012 9:22 pm

Re: Financial Freedom

Post by arcticpineapplecorp. » Thu Apr 26, 2018 8:33 pm

"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

MrPotatoHead
Posts: 429
Joined: Sat Oct 14, 2017 10:41 pm

Re: Financial Freedom

Post by MrPotatoHead » Thu Apr 26, 2018 9:51 pm

If you are in the United states of America and not physically or mentally handicapped it is a trivial exercise that simply requires discipline, possibly and likely sacrifices, and prolonged deployed gratification as compared to your generational peers.

The methods are readily identified and established, repeatable, and a relatively stable system(regulations, market access etc) is in place that supports your goal.

The trick is, as someone mentioned, flexibility. You need to recognize if you chose to attempt to build assets via investment vs brute force or entrepreneurship, you cannot count on market returns to get you there and must be prepared to execute contingency paths.

But once again, the methodology is well understood, the discipline to carry a plan out is what takes effort.

venkman
Posts: 669
Joined: Tue Mar 14, 2017 10:33 pm

Re: Financial Freedom

Post by venkman » Thu Apr 26, 2018 9:59 pm

Tamalak wrote:
Thu Apr 26, 2018 1:10 pm
4) If you get a 50% crash, reduce your budget and work at McDonald's or something until things clear up. Be greedy and flexible, not conservative and inflexible.
If there's a 50% market crash, it's probably due to a recession. If there's a recession, jobs will be hard to come by. The local McDonald's, if it's hiring at all, will have plenty of applicants to pick from. And they may not be interested in someone who plans to bail as soon as the market rebounds.

If you have job skills in a high-demand, recession-resistant field (e.g. nursing), that could be a viable option. But if not, I wouldn't make it a fundamental part of my plan to assume I could easily find a temporary job if the market tanks. Having a cash cushion to cover one or two year's worth of expenses is a lot safer.

heyyou
Posts: 3095
Joined: Tue Feb 20, 2007 4:58 pm

Re: Financial Freedom

Post by heyyou » Thu Apr 26, 2018 11:04 pm

The single most important decision is to choose the right partner, who is on the same path for financial independence, preferably before you met.

Find a spending level that suits you both for just enough car, just enough shelter, just enough hobbies, and stay at that spending level. Try to save all of each future pay raise after celebrating by spending only the boost on the first larger pay check.

Try to max all of your available retirement savings accounts (401k and Roth or traditional IRA), sooner each year, then continue to contribute at the same level to your after tax account. Some 401k plans allow after tax contributions so when your tax sheltered portion is full, your payroll deduction just continues at the same amount. When you pay off your mortgage early, keep making the same payment into your taxable savings account. An author named Bach recommended automatic payroll deductions directed to your various savings accounts. With that, you do not ever see a large balance in your checking account.

You will always be wanting to buy something, but if you track that, you will notice that it changes whether you buy it or not, so resist buying any of them. There will always be a coworker with a newer bigger house, another with frequent new cars, and someone else who vacations at nice faraway places. That is a constant, even after you retire, there will always be some who spend more, others will earn more, or even save more. Strive to feel satisfied that you are doing well.

Buy vehicles known for reliability, used, and maintain them regularly. If it suits you, learn to change your own oil, and to check the fluid levels in your car, maybe alternate between the DIY and the professionals. Youtube has significant auto maintenance info. With my shorter commute, a stick shift was okay with me, so transmission maintenance was easy to pay for. Consider shopping for housing that is not too far from work.

Learn to cook what you like to eat, so you can treat yourself to good food at home, but do splurge a little for special occasions but not every weekend like some do. It is all about choosing to like what you do have, instead of succumbing to the consumerism shown in advertising.

WanderingDoc
Posts: 1024
Joined: Sat Aug 05, 2017 8:21 pm

Re: Financial Freedom

Post by WanderingDoc » Thu Apr 26, 2018 11:15 pm

bogglek3sh4v wrote:
Thu Apr 26, 2018 12:54 pm
I apologize if a similar thread exists but I was wondering what the simplest way to attain financial freedom would be.
This probably varies from person to person based on how much they make, age and other personal attributes.
But I am wondering if there is a general rule.
For instance you make so much, spend x amount, save x amount, invest x amount taxable/retirement, do not buy a car/house worth more than x amount, simple investment strategies (allocation/tools) that do not require outside help. Easy to manage investments with a set and forget strategy in mind.

P.S. I am not looking for a simple solution to attain FF. I need some good direction and the rest is upto me and almighty! If my question is incomplete, please ignore it :mrgreen:
I attained financial freedom in only 3.5 years. It started when I put ~$20K down on a property which cost ~$350 in a coastal market. I initially lived in this place until recently. I purchased a couple of other rentals starting 4 years ago in the same area. I reinvested savings and cash flow from these properties into completely passive SFH and large apartment syndications. Right now, my real estate portfolio generates $4-5K per month in income after expenses, more than enough for me to live on. I could probably pay off most of the mortgages now and that cash flow would double, but I adore debt too much :D The fastest way I've found (and did) was with real estate. I know it can be done with investing in mutual funds, but I think that requires living in a very frugal way during the best years of your life (see Mr. Mustache blog) if you want to do it in 10-15 years. If you want to have a balanced life, it can take 25-40 years.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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tennisplyr
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Location: Sarasota, FL

Re: Financial Freedom

Post by tennisplyr » Fri Apr 27, 2018 6:51 am

Simple things are not usually worth attaining.
Those who move forward with a happy spirit will find that things always work out.

ReadyToRetire
Posts: 62
Joined: Tue Oct 11, 2016 8:47 am

Re: Financial Freedom

Post by ReadyToRetire » Fri Apr 27, 2018 8:28 am

tennisplyr wrote:
Fri Apr 27, 2018 6:51 am
Simple things are not usually worth attaining.
Excellent quote!

IlliniDave
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Joined: Fri May 17, 2013 7:09 am

Re: Financial Freedom

Post by IlliniDave » Fri Apr 27, 2018 9:17 am

The biggest knob for me was learning how to lower the amount I had to spend to have a lifestyle I am happy with. The less money you have to spend to be happy, the more financially free you truly are. At the same time the more money you have available the more financially free you are. You can look at is as a ratio of money available to money required. Most people focus on the numerator, so the first thing I'd say is don't forget the denominator.

The fastest way to get there is to simultaneously earn as much as you can while spending as little as you can and investing the difference as well as you can. But there isn't a formula with guaranteed results.
Don't do something. Just stand there!

BogleMelon
Posts: 1406
Joined: Mon Feb 01, 2016 11:49 am

Re: Financial Freedom

Post by BogleMelon » Fri Apr 27, 2018 9:22 am

snarlyjack wrote:
Thu Apr 26, 2018 4:06 pm
Financial Freedom is a very interesting study.

Here is the Financial Independence Grid that really helped me.

Enjoy...

http://www.fourpillarfreedom.com/the-fi ... ence-grid/
That was a nice way to illustrate it! Thanks for sharing
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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