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curious about the journey to FI for frum people. ...
# financial-independence
t
curious about the journey to FI for frum people. A few years ago my goal was 10k month passive, and then I could leave my full time. And I made substantial progress towards that goal. But our expenses keep growing and growing and we do not live luxuriously at all. Is it actually realistic to achieve FI in the frum world?
m
Well I obviously believe it is ( hence starting a non profit trying to help people do it ) so I am probably not the right person to respond here 😂 What do others think?
t
but do you see actual ppl achieving it?
and sorry I misunderstood teh goal of your non-profit. I thought it was to promote financial literacy and soundness
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m
I see promoting financial literacy as the same thing as achieving FI, maybe we have a different definition, but I think they are pretty interdependent. Are you thinking of FIRE (with the retire early component of FI)? That I could see being extremely hard for a frum family
but FI as a whole is just knowing what you need to eventually stop working and heading towards that
t
well i think of FI as the ability to RE, whether or not you go ahead and do that
m
Yes, so if someone’s plan is that they hit FI in 40 years when they turn 65, its still FI, and therefore I think very achievable for a frum family. What do you think?
t
hmm i guess so. I was aiming for 35, and missed that, so maybe that's where i went wrong 😂
m
hahaha yeah so I guess that is my point. do I think FI is achievable? YES! Do I think FI is the same thing as financial literacy? YES! Do I think the average frum person can get there at 35? NO!
t
yeah i guess you're right, eventual retirement is financial independence. I was speaking more about the expedited process, and follow a bunch of (not jewish/not frum) ppl who have achieved it quite young. Curious if anyone knows anyone who has done so in our community
m
Yeah i definitely know a bunch of people and we have a handfull of frum.finance members that have done it but 35 is not realistic or something I even consider a hava mina for the vast majority
f
I think it's achievable, but you do have to break the mold. • Save and invest. But the stock market won't do. You'll need to do potentially riskier leveraged RE investments. • Break the mold. Things that are considered must-haves in the frum world need to be ignored. Think cramming more kids per bedroom, no cleaning help, no eating out, low cost clothing etc. • Start very young. Once you have a few kids, you lose the ability to save as much, and momentum counts for a lot. It's important to note that part of RE is continuing this lifestyle after RE, this lowering the need for high income to begin with. Personally, I don't think it's worth it. I'd rather have a comfortable job for another decade or two and live like a human.
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t
I have RE investments. We have no cleaning help right now, we don't eat out, we buy our clothing from Shein and Walmart. We only have 5 kids. And it's still out of control how expensive life is
m
the kids per bedroom, no cleaning help, and no eating out are very powerful ideas. We do all of those (well for the kids per bedroom its a plan right now since we only have 2 but plan to do 2/3 or 4 per room depending on ages/genders/personalities IY”H). I think those are all great points of advice
(though I’ll admit my mom buys me sushi bc she knows I don’t eat out to save money and i’m sad without sushi)
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t
aww that's so nice of her
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f
One more note. If you're gainfully employed, interview often, at least twice a year. Interviewing skills are way more valuable that job skills, and changing jobs often leads to 20%-30% "raises", which you'll likely never get at your current job.
t
@faint-rose-48029 yes! that is absolutely true
m
@faint-rose-48029 agreed!!
t
Some of these ideas like cleaning help may make sense if it frees up time that can be used more productively. When we were younger, we had 3 kids under 4, I worked full time, and my wife worked 24 hours a week. Cleaning help (and babysitting) enabled her to work. Once we had 4 kids under 6, she had to stop working. (The fourth child had a number of health issues and required a lot of care. B"H, she is much better now.) Fortunately, I was able to make more over time and replace her salary.
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w
@faint-rose-48029 Please explain the interviewing 2-3 times a year point
t
@wooden-belgium-47527 general idea is don't let yourself get rusty, keep your interviewing skills sharp, and always be ready to make a move for a better opportunity
in tech at least, you can see huge salary bumps from job hopping
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m
@thankful-raincoat-91160 100 percent. Cleaning help either because functionally it enables you to be successful in other areas, whether it be because it frees up your time or because it frees up your sanity, I think is not part of the cheshbon of lowering expenses. In my mind anytime we are discussing cutting expenses, we are discussing optional expenses. Cleaning help that enables you to have time for a job or remain sane are not optional expenses.
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w
@faint-rose-48029 you make valid points but I'd tread carefully when referring to break the mold. While certain parts of the mold are perhaps extras, many of them are for sanity. Even families who don't have both parents working, require cleaning assistance for sanity. I agree with you, FI isn't worth it and forsure not RE if it's cost is happiness/sholom Bayis/resentment etc.
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c
Consider the biggest expenses and figure out how to lower those. 1. Housing: living "out of town" is realllllly helpful with this. 2. Tuition: ditto on the out of town. Some have vouchers. 3. Cars: only get used, dont get more than you need. 4. Food: find where the prices are cheaper (costco, aldis) for whatever you can. The savings are small but often so they add up to a lot. Also, you dont need 4 separate neat dishes of the most expensive meats for yom tov. 5. Healthcare: hard to manage this one. Only thing to consider is if healthshare would work for you. They're pretty significantly cheaper.
m
I would argue if someone achieves FI at the expense of happiness then they in fact did not achieve FI. https://waitbutwhy.com/2015/12/the-tail-end.html
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c
At the same time, one can learn to be happy with less.
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w
Back to the original question: is FI achievable? Depends on your definition, depends on your needs etc. What I like about this is that even if I never get there(which I personally believe is possible if you are willing to give it a serious shot), being more Financially Literate is a solid accomplishment in its own right. One of the reasons I love reading this and very grateful to @mysterious-tomato-10057.
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f
I would note that if you need any of these things for your sanity, then what I wrote is likely not for you, as you aren't serious enough about FI. I know I am not. We are absolutely capable of shouldering a lot more than we do now. But nobody I know does, so I feels like I wouldn't manage without it. Don't underestimate strong determination. Most of us would give up cleaning help if it meant trading it for a lifesaving treatment for a child, for example. My point is that 'needs' are basically a hierarchy where they start out as wants on the low end and end up as needs on the high end. If you put FI above cleaning help, you'll probably manage without. I don't.
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t
I don’t see the fact that having cleaning help negates FI. We just have to make more money and budget accordingly no?
f
Not FI, but FIRE
m
yeah FIRE (which isn’t what I promote) is about avoiding all expenses to an extreme that I don’t recommend at all.
FI is FIRE with a smile
t
well, lean FIRE is. fat FIRE is not
m
I think these are too many terms at this point lol. there is lean FI and fat FI. I can’t with lean and fat FIRE haha
t
Ah interesting. Subtle differences but cool, thanks for pointing them out
m
fat fire is antithetical to the concept of FIRE and is probably just the Fat FI movement today.
again i think this goes to the FIRE movements relatively recent disappearance replaced by FI
since people didn’t like the cut throat nature of it
I don’t think frum people can be making decisions that put finances ahead of mental health, family, or their marriages. 🤷‍♂️
I would say fat FIRE vs fat FI would be whether or not you are cutting expenses to an extreme or not like @faint-rose-48029 describes. I don’t think fat removes the difference between FI and FIRE. even if you are aiming for a higher goal, you can still be extreme cost cutting.
What do others think?
n
Another point worth mentioning is that if you enjoy your job, you can spend a little more to make your life easier now, retire later, and be happy throughout. I see myself happily teaching accounting for decades to come, b'ezras Hashem.
m
@nutritious-raincoat-28876 that is FI 👍👍 🎉
I plan to keep working well after I reach FI for that reason also.
My attempt to sum up the FIRE vs FI nuance here. The head of ChooseFI has reviewed it and likes it 🙂 https://frum.finance/2023/02/01/fi-vs-fire-vs-ramsey/
t
@mysterious-tomato-10057 love it. Only thing I slightly disagree with is that with FIRE, the ability/freedom to retire early is the high priority, not necessarily actually doing it. From what I've seen, anyway
m
That is FI from all I can tell. FI is about getting that ability, FIRE is retire asap. I added a section this morning FI vs FIRE caveat. Did you see that?
t
yeah I saw that. Not sure, the FIRE subreddits are still active 🙂 I'm not a hardcore follower so I don't really have insight into the broader communities. Just to highlight the distinction I'm saying, having a goal of a robust retirement account by age 65 would be FI. Aiming for stock accounts big enough that a 3-4% withdrawal could support your lifestyle by age 45 would be FIRE even if you love your job and don't want to quit
m
Based off all the current FI podcasts and literature I would disagree with that. Actually the more in digging into this and the more I'm asking around to big personalities the more I'm seeing that the distinction is more in people's misunderstanding of the movement than the movement itself. FI/FIRE is about empowering you to do what's best for you. For some people that could be hitting 45 or 65. the age itself is certainly not a differentiating factor. I'll be updating the article with some more of my findings and then I'd like to hear from you if you think I cleared it up anymore. I definitely don't think your picture is the one painted by MMM, ChooseFI, Colin's, or Perkins, etc.
Updated, I have reworked my entire position 🙂 https://frum.finance/2023/02/01/fi-vs-fire-vs-ramsey/
t
Great work man. I didn’t go through each link but this looks like a succinct explanation
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