You kind of should belittle people who want that shit it it's current state, in opposition to the marketing that tells them they are special if they buy that shit. Counter marketing is fair and reasonable in today's market place.
I would go further: I would say that anyone who understands the severe harm to both privacy and free speech that these things cause almost has a moral obligation to educate potential victims about that harm, whenever possible.
I remember grabbing one of those because it was a free hackable barcode scanner, but I never got around to actually doing anything with it. I'm pretty sure I still have it in the bottom of a drawer somewhere.
Sure I could continue to live frugally forever, and die with a veritable fortune in the bank.
I think you misunderstand me: I'm saying you should calculate your SWR and therefore retirement data after accounting for frugality. If you're keeping your expenses in retirement even lower than your SWR allows, you didn't retire soon enough.
Or said a third way, if the "expected" budget for your standard of living while working would be, say, $60K/year, but you're frugal enough to match that standard of living with a budget of $40k, then you should also be able to get a $60K standard of living for $40K in retirement, too. That means you'd only need to save $800K instead of $1.2M (assuming a 4% SWR) and could retire that much sooner.
At a certain point you have to strike a balance. I've decided that for me, the best balance is to continue to save enough to retire relatively early (though not in my 30s), while enjoying some of my earnings in the meantime.
It doesn't have to be all or nothing, there's nothing wrong with spending on an expensive toy, or an expensive vacation once in a while, what makes it wrong is if it puts you in financial hardship. I have certain funds earmarked for retirement, as long as I don't touch those, or go in to debt, I don't see any reason I can't blow the rest on anything I like.
Sure! Balance is perfectly fine. I'm just saying that if your savings rate is so high that early retirement is only a couple of years away, skipping the expensive vacation now to retire that much sooner might not be that big a deal -- especially since, without the job to worry about, you can trade a fancy but short (due to limited PTO) vacation for a less-fancy one that lasts literally as long as you want (and lets you use your money more efficiently, e.g. by leasing an apartment by the month instead of renting a hotel room by the night).
Yes, really. Let's go through an example. Assume a 3-person household with $60,000 in household income (i.e., the median household, rounded to 1 significant digit). Assume all income is earned by one person, is classified as 1099, there are zero business expenses, and the filing status is "married filing jointly." Crucially, assume that the taxpayers actually contribute to retirement accounts (a self-employed 401k, two IRAs and/or an HSA), up to the maximum allowed by the IRS or $30,000, whichever is smaller, and that all contributions are traditional (not Roth).
On Schedule C-EZ, line 3 (net profit) is $60,000. On Schedule SE, line 3 is $60,000, line 4 is $55,410, line 5 (self-employment tax) is $8,477.73 and line 6 (deductible portion of self-employment tax) is $4,238.87.
On the Pub. 560 "Deduction Worksheet for Self-Employed," step 1 is $60,000, step 2 is $4,283.87, step 3 is $55,716.14, step 4 is 0.2, step 5 is $11,143.23, step 6 is $66,250, step 7 is $11,143.23, step 8 is $53,000, step 9 is $18,000, step 10 is $35,000, step 11 is $37716.14, step 12 is $18,858.07, step 13 is $11,143.23, step 14 is $44,572.91, step 15 is $18,000, assume no catch-up contributions, step 19 is $29,143.23, step 20 is $0, and step 21 (maximum deductible contribution) is $29,143.23.
On form 1040, line 2 (filing status MFJ) is checked, line 6d (total exemptions) is 3, line 12 (business income) and line 22 (total income) are both $60,000, line 27 (deductible SE tax) is $4238.87, line 28 (self-employed qualified plan deduction) is $29,143.23, line 32 (IRA deduction) is $856.77, line 36 (total deductions) is $34238.87, line 37/38 (AGI) is $25,761.13, line 40 (standard deduction) is $12,600, line 41 is $13161.13, line 42 (exemptions) is $12150, line 43 (taxable income) is $1011.13, line 44 (tax) is $101, line 51 (saver's credit) is $101, line 52 is probably non-zero but irrelevant (because we already hit $0 tax liability, so additional non-refundable credits don't matter), line 55 (total credits) is $101, line 56 is $0, line 57 (self-employment tax) is $8477.73, line 63 (total tax) is $8477.73 and line 74 (total payments) is $0.
TL;DR: In this example, contributing to retirement plans reduced AGI so much that the "regular" tax was a big fat zero dollars and the overall tax rate including SE tax was 14%. Moreover, there was plenty of room for optimization (i.e., the family could have saved less -- or saved as Roth contributions -- without increasing their tax liability). Even if the example had no children (and thus one less $4050 exemption), they would have qualified for a full $2000 worth of saver's credit and still would have ended up with an overall tax rate of only 18%.
...Says the person who is the exception but thinks he's the rule.
Firstly rents, in major canadian cities, "cheaper" means moving 1-2 hours away from your place of work. You pay more to live closer to downtown and not waste 4 hours commuting a day. Im sure major american cities are the same.
Nope. Places like Toronto and Vancouver are the Canadian equivalent to NYC and San Francisco -- weird HCOL areas that are very much unlike the rest of America. Most American cities have plenty of inexpensive housing close to the city center. It's just that stereotypical middle-class white people are too cowardly to live there.
(After flipping a coin and guessing you're in Toronto instead of Vancouver, I'll point out that Detroit is only a couple hours down the road. Go see [an extreme example] for yourself if you don't believe me.)
Secondly, mortgages, we are in a housing bubble and only a fool buys anywhere near the top of a bubble.
No, "you" are in a housing bubble. Not "we." Buying in Toronto or Vancouver (or NYC or San Francisco) is clearly a bad idea, but that's not nearly as true for, say, Ottawa, Winnipeg or Montreal.
And yeah i dont have 2 million for a "starter" house thanks.
The median home price in Canada (not "starter home," just "home" in general) is $500,000, not $2M (Canadian dollars).
At any rate, if "find a cheaper apartment or buy" doesn't work in your current city, that doesn't mean the advice is inapplicable; it just means you also need to change cities!
Then I stopped and had a bit of a life altering realization. Without debt from the mortgage (or anything else), and with my relatively frugal lifestyle, I was saving money at a fantastic pace, and could probably retire incredibly young, and then.... and then what?
The answer is, "do whatever the Hell you want!" That even includes work, if you really can't think of anything better to do. But even then, the fact that you don't need to work means you're freed from ever having to put up with bullshit for the sake of keeping your job, which is a huge benefit all by itself.
Personally, I'm aiming for retirement around age 40 or so. After that, things I'm considering include running a Free Software project, buying a live-aboard sailboat and bumming around the tropics, or maybe even going into politics.
(plus, for each bit of that you want to do, you have to save even more)
As a fellow frugal person, you know better than most that that isn't true. You just have to continue the same habits that got you to extreme early retirement in the first place.
If you only own 5-10% of your home, you are extremely highly leveraged.
Not all leverage is created equal. I would argue that having a mortgage (especially a fixed-rate one) is a lot safer than investing on margin since mortgages aren't subject to margin calls.
Diversified investments *on average* have good returns, but it's fraught with occasional complete cock ups that make it a poor lifestyle choice for day to day living versus having a healthy amount of liquidity and an actual earned income.
Also, evidently everyone in the world can pick aggressive investments and come out ahead, and not get wiped out by making what will become an incorrect investment choice.
That is a misunderstanding of the idea at best, or a strawman argument at worst.
The mistake is living in Silicon Valley to begin with.
I mean, it's possible for it to make sense if your strategy is "live like a college student, or even a hobo, while saving so much of your income (i.e., 66% or more) that you can retire completely to a decent house in a LCOL area in less than ten years," but since you've been there for 12 and you're still complaining that clearly isn't what you did.
And when they have kids, it's hard to tell them that they should save that money instead of sending Timmy on the school trip to the museum
No it isn't. I'll do it right now:
Hey dumbass parents, get your financial shit together before spending money to send Timmy on that school trip! Seeing the museum is way less important for Timmy's well-being than not becoming homeless because the house got foreclosed on, or not having his parents divorce because of financial stress, or not relying entirely on the school subsidized lunch program for food (and not eating healthy food at all in the summer)
I have never once heard of a water pipe exploding. What would cause that? Maybe the plumbing here in Seattle is better...
No, it's because Seattle doesn't often get sustained temperatures low enough for it to be an issue. The pipes burst because the water in them expands when it freezes.
On the contrary, crashes are even better because your dollars buy more shares than they did before. All you have to do is not be the sort of utter moron who panics and sells everything at a loss. Ideally, you simply ignore the market and your portfolio completely and let your automatically-scheduled investing continue doing its thing, same as in a bull market.
(This is predicated on having a diversified portfolio such as a three fund portfolio, of course. Gambling on individual companies is a separate kind of idiocy.)
if those 2 months are high enough to be 25+% above their average income
I'm pretty sure that a three-paycheck month would tend to be about (3/2) - 1 = 50% higher pay than a two-paycheck month, give or take things like health insurance that don't get deducted from the "extra" paycheck. Since that applies to two out of twelve months (1/6), the other ten months are (1/6) * 50% = 8.3% below average just because of that.
After five years of consecutive rent increases, rent and unemployment are the same number.
Time to find a cheaper apartment, or better yet, buy with a fixed-rate mortgage so that you're at least somewhat insulated from inflation.
(Of course, in theory the unemployment benefit amount should have increased over time at the same rate as the rent, but that's a rant for a different day.)
I void warranties every day of the week... and twice on Sundays!
But seriously, I don't care. I can't remember the last time I used a warranty, especially since half the stuff I buy (especially mechanical things, rather than electronics) is bought used long after the warranty expired anyway.
Now, you do have a larger point, which is correct: Chromebooks are certainly not an ideal choice since Google's intent is for them to be locked-down. I agree, it would definitely be better if they were designed to run arbitrary traditional applications by default. However, I am not convinced that they're any worse than the average Windows 10 laptop since there's no guarantee that the malware that is Windows 10 would be allowed to be removed at all. At least with a Chromebook it's guaranteed that the damn thing runs Linux and that it's possible to remove the untrusted stuff (give or take things like IME, anyway).
The less predictable your cash flow is, the more you need to save. You can only ever rely upon the fraction of your cash flow that is reliable (which is so obviously true that it's actually a tautology).
That means the fixed expenses + minimum variable expenses in your budget should always be less than the minimum you might get paid in a month, excluding things like bonuses, commissions, or overtime.
Moreover -- and I realize that people would consider this extreme -- if you can get your bare-bones budget down below the amount of income you'd get from unemployment if you lost your job, that would be even better. For example, in my state unemployment pays the about same as full-time minimum wage and my household has two working adults, so double-unemployment would net about $2,400/month and that's the number I budget around.
Clearly, you did not actually read what I wrote (not that I actually expected you to, but hope springs eternal).
Among the things that you missed were:
I referenced uMatrix, not adblock, which implements a plain old
"default deny/allow whitelisted" policy that can't be sold out to advertisers since you do all the whitelisting yourself.
No host file-based solution, including yours, is capable of blocking conditionally, which is absolutely necessary.
If you're going to use a host file, you might as well keep it on the router instead of maintaining it on every computer on the LAN. Your "engine" doesn't do that.
By the way, it almost goes without saying that there's no way in Hell I'd ever use closed-source software written by a raving lunatic like you anyway, even if it did fulfill the requirements listed above.
I haven't actually tried it yet, but I'm pretty sure that if you don't care about Chrome OS you can flash the firmware to standard CoreBoot and run a normal Linux without any developer mode warnings.
Slashdot Mirror
I see your XKCD and raise you Dilbert.
I would go further: I would say that anyone who understands the severe harm to both privacy and free speech that these things cause almost has a moral obligation to educate potential victims about that harm, whenever possible.
I remember grabbing one of those because it was a free hackable barcode scanner, but I never got around to actually doing anything with it. I'm pretty sure I still have it in the bottom of a drawer somewhere.
It is indeed worst case planning, but it's still "true" because IMO the worst case is the correct case to plan for.
I think you misunderstand me: I'm saying you should calculate your SWR and therefore retirement data after accounting for frugality. If you're keeping your expenses in retirement even lower than your SWR allows, you didn't retire soon enough.
Or said a third way, if the "expected" budget for your standard of living while working would be, say, $60K/year, but you're frugal enough to match that standard of living with a budget of $40k, then you should also be able to get a $60K standard of living for $40K in retirement, too. That means you'd only need to save $800K instead of $1.2M (assuming a 4% SWR) and could retire that much sooner.
Sure! Balance is perfectly fine. I'm just saying that if your savings rate is so high that early retirement is only a couple of years away, skipping the expensive vacation now to retire that much sooner might not be that big a deal -- especially since, without the job to worry about, you can trade a fancy but short (due to limited PTO) vacation for a less-fancy one that lasts literally as long as you want (and lets you use your money more efficiently, e.g. by leasing an apartment by the month instead of renting a hotel room by the night).
Yes, really. Let's go through an example. Assume a 3-person household with $60,000 in household income (i.e., the median household, rounded to 1 significant digit). Assume all income is earned by one person, is classified as 1099, there are zero business expenses, and the filing status is "married filing jointly." Crucially, assume that the taxpayers actually contribute to retirement accounts (a self-employed 401k, two IRAs and/or an HSA), up to the maximum allowed by the IRS or $30,000, whichever is smaller, and that all contributions are traditional (not Roth).
On Schedule C-EZ, line 3 (net profit) is $60,000. On Schedule SE, line 3 is $60,000, line 4 is $55,410, line 5 (self-employment tax) is $8,477.73 and line 6 (deductible portion of self-employment tax) is $4,238.87.
On the Pub. 560 "Deduction Worksheet for Self-Employed," step 1 is $60,000, step 2 is $4,283.87, step 3 is $55,716.14, step 4 is 0.2, step 5 is $11,143.23, step 6 is $66,250, step 7 is $11,143.23, step 8 is $53,000, step 9 is $18,000, step 10 is $35,000, step 11 is $37716.14, step 12 is $18,858.07, step 13 is $11,143.23, step 14 is $44,572.91, step 15 is $18,000, assume no catch-up contributions, step 19 is $29,143.23, step 20 is $0, and step 21 (maximum deductible contribution) is $29,143.23.
On form 1040, line 2 (filing status MFJ) is checked, line 6d (total exemptions) is 3, line 12 (business income) and line 22 (total income) are both $60,000, line 27 (deductible SE tax) is $4238.87, line 28 (self-employed qualified plan deduction) is $29,143.23, line 32 (IRA deduction) is $856.77, line 36 (total deductions) is $34238.87, line 37/38 (AGI) is $25,761.13, line 40 (standard deduction) is $12,600, line 41 is $13161.13, line 42 (exemptions) is $12150, line 43 (taxable income) is $1011.13, line 44 (tax) is $101, line 51 (saver's credit) is $101, line 52 is probably non-zero but irrelevant (because we already hit $0 tax liability, so additional non-refundable credits don't matter), line 55 (total credits) is $101, line 56 is $0, line 57 (self-employment tax) is $8477.73, line 63 (total tax) is $8477.73 and line 74 (total payments) is $0.
TL;DR: In this example, contributing to retirement plans reduced AGI so much that the "regular" tax was a big fat zero dollars and the overall tax rate including SE tax was 14%. Moreover, there was plenty of room for optimization (i.e., the family could have saved less -- or saved as Roth contributions -- without increasing their tax liability). Even if the example had no children (and thus one less $4050 exemption), they would have qualified for a full $2000 worth of saver's credit and still would have ended up with an overall tax rate of only 18%.
...Says the person who is the exception but thinks he's the rule.
Nope. Places like Toronto and Vancouver are the Canadian equivalent to NYC and San Francisco -- weird HCOL areas that are very much unlike the rest of America. Most American cities have plenty of inexpensive housing close to the city center. It's just that stereotypical middle-class white people are too cowardly to live there.
(After flipping a coin and guessing you're in Toronto instead of Vancouver, I'll point out that Detroit is only a couple hours down the road. Go see [an extreme example] for yourself if you don't believe me.)
No, "you" are in a housing bubble. Not "we." Buying in Toronto or Vancouver (or NYC or San Francisco) is clearly a bad idea, but that's not nearly as true for, say, Ottawa, Winnipeg or Montreal.
The median home price in Canada (not "starter home," just "home" in general) is $500,000, not $2M (Canadian dollars).
At any rate, if "find a cheaper apartment or buy" doesn't work in your current city, that doesn't mean the advice is inapplicable; it just means you also need to change cities!
The answer is, "do whatever the Hell you want!" That even includes work, if you really can't think of anything better to do. But even then, the fact that you don't need to work means you're freed from ever having to put up with bullshit for the sake of keeping your job, which is a huge benefit all by itself.
Personally, I'm aiming for retirement around age 40 or so. After that, things I'm considering include running a Free Software project, buying a live-aboard sailboat and bumming around the tropics, or maybe even going into politics.
As a fellow frugal person, you know better than most that that isn't true. You just have to continue the same habits that got you to extreme early retirement in the first place.
Not all leverage is created equal. I would argue that having a mortgage (especially a fixed-rate one) is a lot safer than investing on margin since mortgages aren't subject to margin calls.
Awesome, thanks!
You need to learn about the concept of the safe withdrawal rate.
That is a misunderstanding of the idea at best, or a strawman argument at worst.
The real claim is that everyone can forget about "picking" investments entirely and instead just blindly buy literally everything in the market (i.e., invest in index funds), match -- not beat -- the market return, and come out ahead because the market always goes up.
The mistake is living in Silicon Valley to begin with.
I mean, it's possible for it to make sense if your strategy is "live like a college student, or even a hobo, while saving so much of your income (i.e., 66% or more) that you can retire completely to a decent house in a LCOL area in less than ten years," but since you've been there for 12 and you're still complaining that clearly isn't what you did.
No it isn't. I'll do it right now:
Hey dumbass parents, get your financial shit together before spending money to send Timmy on that school trip! Seeing the museum is way less important for Timmy's well-being than not becoming homeless because the house got foreclosed on, or not having his parents divorce because of financial stress, or not relying entirely on the school subsidized lunch program for food (and not eating healthy food at all in the summer)
See, that wasn't hard at all.
No, it's because Seattle doesn't often get sustained temperatures low enough for it to be an issue. The pipes burst because the water in them expands when it freezes.
I don't give a shit about testimonials. Tits^W Source code or GTFO.
On the contrary, crashes are even better because your dollars buy more shares than they did before. All you have to do is not be the sort of utter moron who panics and sells everything at a loss. Ideally, you simply ignore the market and your portfolio completely and let your automatically-scheduled investing continue doing its thing, same as in a bull market.
(This is predicated on having a diversified portfolio such as a three fund portfolio, of course. Gambling on individual companies is a separate kind of idiocy.)
I'm pretty sure that a three-paycheck month would tend to be about (3/2) - 1 = 50% higher pay than a two-paycheck month, give or take things like health insurance that don't get deducted from the "extra" paycheck. Since that applies to two out of twelve months (1/6), the other ten months are (1/6) * 50% = 8.3% below average just because of that.
Time to find a cheaper apartment, or better yet, buy with a fixed-rate mortgage so that you're at least somewhat insulated from inflation.
(Of course, in theory the unemployment benefit amount should have increased over time at the same rate as the rent, but that's a rant for a different day.)
I void warranties every day of the week... and twice on Sundays!
But seriously, I don't care. I can't remember the last time I used a warranty, especially since half the stuff I buy (especially mechanical things, rather than electronics) is bought used long after the warranty expired anyway.
Now, you do have a larger point, which is correct: Chromebooks are certainly not an ideal choice since Google's intent is for them to be locked-down. I agree, it would definitely be better if they were designed to run arbitrary traditional applications by default. However, I am not convinced that they're any worse than the average Windows 10 laptop since there's no guarantee that the malware that is Windows 10 would be allowed to be removed at all. At least with a Chromebook it's guaranteed that the damn thing runs Linux and that it's possible to remove the untrusted stuff (give or take things like IME, anyway).
The less predictable your cash flow is, the more you need to save. You can only ever rely upon the fraction of your cash flow that is reliable (which is so obviously true that it's actually a tautology).
That means the fixed expenses + minimum variable expenses in your budget should always be less than the minimum you might get paid in a month, excluding things like bonuses, commissions, or overtime.
Moreover -- and I realize that people would consider this extreme -- if you can get your bare-bones budget down below the amount of income you'd get from unemployment if you lost your job, that would be even better. For example, in my state unemployment pays the about same as full-time minimum wage and my household has two working adults, so double-unemployment would net about $2,400/month and that's the number I budget around.
Clearly, you did not actually read what I wrote (not that I actually expected you to, but hope springs eternal).
Among the things that you missed were:
By the way, it almost goes without saying that there's no way in Hell I'd ever use closed-source software written by a raving lunatic like you anyway, even if it did fulfill the requirements listed above.
Chrome OS apps are glorified web pages, so you can develop them on anything that can run Chrome itself and edit text.
My Chromebook does run GCC, in Crouton.
I haven't actually tried it yet, but I'm pretty sure that if you don't care about Chrome OS you can flash the firmware to standard CoreBoot and run a normal Linux without any developer mode warnings.
My Chromebook runs Debian and I use it for software development. How is that not "general purpose?"
If anything, my Windows 7 desktop is the "appliance" since I pretty much only use it for gaming.