The Intersection of FIRE and Disney

[QueenIsabella]

Yeah, our "parked" money isn't making much at all--even our money market, I didn't bother to roll over $$ from our regular checking account, not worth it. WE have one starting college in the fall, so the money is kind of hanging out until the tuition bill is due.

 

[disfanforlife]

Yeah, our "parked" money isn't making much at all--even our money market, I didn't bother to roll over $$ from our regular checking account, not worth it. WE have one starting college in the fall, so the money is kind of hanging out until the tuition bill is due.

I hear you. I keep investing slowly. But want to keep some cash too. We only have one still in college. Next year is the last year. Contemplating a new CC to pay to tuition with this summer. Of course, will pay off bill after.

 

[WVMomof3]

How do you calculate your effective tax rate? I have Tax (line 16). Then you have total tax (line 24) after child tax credits but I also have refundable credits (line 32) that I guess are not technically part of the taxes, but they do lower my tax bill. So would I use line 16 or Line 16-32? I have a spreadsheet of taxes paid going back to 1994 when we got married. I guess I just need to be consistent. Also is the correct thing to use your AGI or your taxable income? Just wondered if I were having a discussion with someone and I said my effective tax rate is X% I would like to know if I am talking about the right number.

 

[ski_mom]

Yeah, our "parked" money isn't making much at all--even our money market, I didn't bother to roll over $$ from our regular checking account, not worth it. WE have one starting college in the fall, so the money is kind of hanging out until the tuition bill is due.

I have opened a number of high interest checking accounts but I'm starting to question if it's worth all of the debit transactions I have to do each month to earn the higher interest.

The highest is 3.3%, which I feel is worth the hoops I have to jump through, but the lowest has gone down to 1.39% and sometimes, it's such a pain to get the transactions in that I may look for another solution.

 

[QueenIsabella]

Yeah, it's not worth my time and stress to do the "churn" thing, either with checking accounts or credit cards. I have money anxiety already. I know that people can earn great rewards, and I'm in awe of them, but I just stick with a couple good rewards cards that I know I can manage. We all like to save money and earn free stuff, but you have to find your own comfort level.

 

[DisneySoldier]

How do you calculate your effective tax rate? I have Tax (line 16). Then you have total tax (line 24) after child tax credits but I also have refundable credits (line 32) that I guess are not technically part of the taxes, but they do lower my tax bill. So would I use line 16 or Line 16-32? I have a spreadsheet of taxes paid going back to 1994 when we got married. I guess I just need to be consistent. Also is the correct thing to use your AGI or your taxable income? Just wondered if I were having a discussion with someone and I said my effective tax rate is X% I would like to know if I am talking about the right number.

I'm a part-time tax preparer for a major tax retailer, so while I'm no expert - we do calculate effective tax rate for our clients. It's your "income tax" (line 16) before any tax credits (regardless if refundable or non-refundable), divided by your "total income" (line 9) before adjustments or deductions (which then determine your "taxable income"). While we say your "tax rate" is X% based on the bracket for your highest portion of taxable income, your "effective" tax rate is always lower for a few reasons.

First, as I mentioned above - your "total income" is always higher than your "taxable income" due to adjustments and deductions being subtracted from total income to arrive at taxable income.

Second, since the US has a progressive tax structure, all of your taxable income is not taxed at the same rate. For 2020 - if your filing status is Married Filing Jointly, the first $19,750 is taxed at 10%, then from $19,751 - $80,250 is taxed at 12%, then the income from $80,251 - $171,050 is taxed at 22%. This continues to progress, and any income above $622,051 is taxed at 37%.

Third, not all categories of income are taxed at the same rate. For example, long term capital gains and dividends are taxed differently (lower) than ordinary earned income. That's why you hear stories about Warren Buffett paying a lower tax rate than his administrative assistant.

 

[disfanforlife]

Yeah, it's not worth my time and stress to do the "churn" thing, either with checking accounts or credit cards. I have money anxiety already. I know that people can earn great rewards, and I'm in awe of them, but I just stick with a couple good rewards cards that I know I can manage. We all like to save money and earn free stuff, but you have to find your own comfort level.

I understand totally. I have churned a couple of cards but I agree some times it is stressful. I also have a couple of cards that I use that have good promotions that make it worthwhile for me to keep using. It might not end up being as much as a new SUB but at least it is a bonus that helps.

 

[dclpluto]

Just up my 401k to 24 percent was at 20 percent. Been at 20 for about 6 months before that was at 16 for years.

did 9 percent regular 401k
Did 3 percent catch up
9 percent Roth 401k
3 percent Roth catch up

could of done Roth 401k about 4 years ago. First time I did Roth Can’t turn back time but maybe I should have it all going into Roth? What you think have 925k in there now? 401k will be about 50 percent of our retirement dollars.

 

[Carol_]

Forgive me, budget board, for I have shopped at Whole Foods.
Man.

 

[BridgetBordeaux]

Forgive me, budget board, for I have shopped at Whole Foods.
Man.

Just don't make it a habit.

 

[RamblingMad]

Forgive me, budget board, for I have shopped at Whole Foods.
Man.

Whole Foods is fine. You just have to figure out what stuff to buy and what stuff to pass on.

 

[SouthFayetteFan]

Whole Foods is fine. You just have to figure out what stuff to buy and what stuff to pass on.

So basically buy nothing and pass on everything?

(I’m kidding... also never been in a Whole Foods)

 

[RamblingMad]

So basically buy nothing and pass on everything?

(I’m kidding... also never been in a Whole Foods)

I've eaten at a lot at Whole Foods. As long you do the sit down, it's a good price for their pasta. I'd skip their pizza and chicken.

Their store brand also has good deals like Costco.

Finally, it's the only place I can find French Lentils. And they have the best ice cream.

 

[QueenIsabella]

I went to Whole Foods once, with my older daughter when she was visiting. I bag of groceries: $54. And she's a vegetarian! She does love her cheese, though. I did like that they sold parmesan rinds, but I'm not going back, just for that. DD and I would both rather shop at Aldi's, now that we both live near one.

 

[BridgetBordeaux]

We had multiple days of record highs this week.

You should have your 3/31 statements by now.

Compare that value to your balances when you log into your account tomorrow morning.

You should be pleased................the S&P was up about 1.5 percent during the past week alone.

 

[QueenIsabella]

DH showed me our new, improved bottom-line number the other day. It's going up, despite our best efforts (arranging investments to cover our soon-to-be-college kid, planning a trip to Hawaii, and now it looks like we'll be adding a whole-house generator this year).

 

[LilSweetPeaPhoto]

Hi all.....

I'm swinging over here from the credit card thread. My head is currently spinning, LOL. I just watch the state webinar for retirement. I'm a teacher, sitting pretty at year 23, year 28 with buying years. I can retire in 2024. At that point I'll have a 19yo and a 14 year old. Oh did I mention I'm divorced (aka single mom) and 44. I've always joked I'm going as soon as I can. But that seems to possibly be more reality than joking these days.

I think what has put me over the edge is reading up more on the realities of the financials from other teachrs who took the leap. A teacher from my district wrote up a lovely step by step guide to truly figure out the difference in pay, staying vs going. He had a few more years on me, so his calculations came out to needing a job that paid at least $5/hr to make up the difference. I'm coming more in at like $15/hr. I've said many times that I think I'm going to retire and become a flight attendant. My BF is a pilot, and has much better flight benefits with his job than he can give me. For me to be on the same level as him, I basically need to become a FA, LOL. And having flight benefits will help w/ the travel portion of my budget, LOL.

I'm sitting on $3k in debt (still from my divorce) which is on a 0% card. I have the money in savings to pay it off, but I was moving the debt around for free when my savings still was getting some good rates. I'm guessing I'll pay off the balance when this 0% runs out. I have $32k in savings. I just refi'd my house in October, and I've been trying to move the savings ($150/mo) into savings each month as well. Right now, I pretty much "live" paycheck to paycheck outside of the $150 I'm putting aside. Once I pay off my CC bill, that will bump to $350.

I guess there are a lot of factors to be hashed out over the next 3 years to determine how much of a reality retiring will be. My DD plans to attend a community college and enroll in a dental hygienist program. Total cost is under $10k, so I'm pretty confident my ex and I can handle that. My 11yo is a wild card, no idea what his plans will be. To stay on my insurance (while retired) they have to be under 18 or full time college students. However my divorce decree does state their dad can cover them if needed. My house value has gone up so much (like everyone) and I wish I could sell, but there would be nothing to move to. However, I do get my mom's house (newly rebuilt from the ground up after a fire) when she passes. She lives 1 mile from me and has cancer. Of course I'm hoping that this isn't a factor for 20 more years (all signs point towards healthy so far). If I sold today (lowballing the amount), I'd have another $65k to play with. There is also the possibility of moving in w/ my BF after my son graduates to factor in (can't until then as he lives 30 min away). Seeing as my mortgage is the biggest part of my monthly expenses, if that was off the table, it would make retiring absolutely doable.

Knowing now, as it stands, that I would either need to retire and then go back to teach (I can do that for 3 years and collect my pension and a teaching salary since I'm a critical shortage area) or find another job at least until the mortgage is off the table, my son graduates, etc. Seeing as my "back up" to teaching is currently flight attendant, I would have to hope that the majors start back hiring. I know Spirit has started back up (where my BF is a captain). But I would much prefer Delta. The BF has told me getting hired at Delta is harder than getting into Harvard.

I'm hoping to follow along a here for awhile. Perhaps learn some things. Like what to do w/ my $32k which has it accessible (for emergencies) but earning more than the .04% Discover gives these days. Sorry for my rambling. It's just kinda crazy for me to think that I can quit teaching at 47! I keep joking I just need a sugar daddy, LOL.....Thank you for attending my Ted Talk!

 

[Frwinkley]

Will you have a pension? How about any lump sum contribution?

I am a teacher in PA. What will you do for health insurance? I'm not sure how you can retire if you're living paycheck to paycheck. At 44, you have a lot of life ahead of you!

 

[elaine amj]

What kind of pension will you have if your retire in 2024? Do you have a good idea how much you spend each year currently? You say you will need an income of $15/hr (at a full time job?) to make up the difference between your current spending and your pension - so $30k/year income or $750k in savings.

The term you are looking for is Coast FIRE where you switch to a lower stress/part time work.

The other option to decrease needed income/savings is to reduce your annual expenses. A lot of us who FIREd early went to a lot of effort to reduce expenses so that long term needs are less.

It is cool to explore the possibilities.

 

[elaine amj]

Just curious how people estimate expenses for when one spouse passes? The spreadsheet I have put together increases our desired retirement income by 3% each year and if we work until I'm 56 (DH will be 62 but really has no desire to retire early), if we continue our retirement contributions at our current rate, our pensions plus SS and 401k will get us through our whole life. The spreadsheet is coming out with plenty left in 401k when I'm 107 and DH is 113, so I think we're covered lol.

But, our pensions are options for life of retiree only, life of retiree with 2/3 to surviving spouse, 1/2 to surviving spouse, etc, so our income will go down when one of us passes. I know expenses should also go down, but just curious if there's a standard percentage or anything like that? I know it wouldn't be 1/2 because you would still have a certain amount of fixed costs, etc that wouldn't go down.

I know it's different for everyone, just curious how others plan for this situation.

In my situation, DH has 2 small defined benefit pensions and a chunk in his IRA/RRSPs. He would also get money from both Social Security and CPP (he's dual American and Canadian and has worked in both countries).

I figure IRA/RRSPs would be rolled over to me and I would get survivor benefits from the pensions, Social Security and CPP. So income would be reduced, but not by a massive number (since we only expect nominal amounts from his pensions/SS/CPP due to early FIRE).

And of course, expenses would go down supporting only one person instead of two. So in our case, I felt I didn't need to crunch the numbers too deeply because we are not heavily relying on sources that would get reduced by a death.

If you are more heavily reliant on say, a pension - then doing the math based on the possible scenarios would be important. Unfortunately I have not heard of any rule of thumb. Maybe surviving spouse lives on 60-75% of joint expenses sounds kinda accurate? But I dunno. You could even spend way less if the survivor is the frugal spouse.