Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

I have a nest egg so very little risk. If I lost my house I could build another one for $150,000. With no debt, I could pay that mortgage from delivering pizza if necessary. I have enough in savings to cover it though. Very little risk invloved

Are you sure about that? Maybe ballpark, sure. But it might also be more like $200k.
Also, you would have to replace your belongings. All of them.
Also, you would have to live somewhere while your house is being built. That wouldn't be free either.
Could you get a mortgage without a job? Maybe you could, but that would be a drag against your nest egg. 4% rate wouldn't be safe anymore.
Also, if you live as close to the beach as you brag, hurricanes roll in every year, with a direct hit every 3 or 4 years. You need insurance. Unless you are counting on government aid but that isn't a given. (I'm not judging, but risky in this political environment).

I grew up in Alabama. I don't know a single person that lost a house to a hurricane unless they had beachfront property. My brother lives up the street and he is single and would have no problem letting us live with him while we rebuild. I could easily build a house with $150,000. It's not even a concern. I started with a nest egg of $1 million 4 years ago. Look at the stock market since then and figure out how much I have now. I have $50k in an emergency fund. I have very little risk in my life. I planned it that way, there was a lot of planning that went into this.

It sounds like you have alot in stocks, which is a risk itself. The 4% withdrawal rate study was done on a balanced portfolio, by the way.

I grew up in Alabama too and I live there now. We have significant roof damage every 3-5 years from hail. You don't have to have your house blown away in order to need home insurance.

I would say that we are in a similar financial boat (but a little behind you)- no mortage and low expenses, sufficient 529 savings for in-state schools and we expect to have 1 million in additional investments in 2 years. But there is no way, I would retire in 2 years. It sounds like your family will be just fine as long as everything in your life goes right. I love my family too much to bet their security on good weather, low inflation, high stock market returns and health for all. (That being said there is a risk to working your life away and I completely get that and factor that into my decision making as well.)

Anonymous wrote:My brother is 45 and lives in rural Maine. He will earn about $25K this year. He has 2 kids--16 and 18.

Do you live near your family? If not how do you afford going to see them?

We visit him. He rarely visits us. If he does, it's because we have subsided plane tickets. My dad and I live in DC.

- Do you have hobbies? What are they?

He and his boys ski, snowshoe, go camping, hiking

- Do you ever travel for fun? If so, what's your approach? Not really.

A big trip for them is heading to the Maine beaches for the day. When I want my kids to spend time with their cousins, I pay for my brother and his kids to come on vacation with us.

- Do you ever find yourself really wanting something that is outside your MMM budget (like a trip to Australia, or some expensive shoes)? Do you ever given in to those urges or do you just figure you'll get over it?

It's not even in the realm of his consideration. That said, our mom made sure we were well traveled and both of us have seen the world. His kids however have not.

- What do you eat most days? Do you ever buy the expensive mustard or the fancy tomatoes?

He eats very well. Groceries by him are much less than here. He grows vegetables in the summer and cans/freezes them. He doesn't buy fancy mustard or tomatoes because he doesn't enjoy them any more than the non fancy ones. To him, the value just isn't there.

- What do you do for yourself, that you see other people spending money on for others to do for them? Do you make your own clothes, or grow your own vegetables, or...?

He has a lovely vegetable garden

- Are most of your friends in the same boat? If not how do you do it when your friends want to get together at a restaurant, or to go see a concert, or whatever? You just say no and have them over for a potluck instead, or...?

Pretty much his entire town lives about the same

- What sort of house or apartment do you live in? Did you pick that place in order to be able to spend very little? Do you like your home?

He has a 3bd/2ba house on 10acres that he purchased 3 yrs ago for $89K. He loves his house and he does a lot of the repairs the we in DC would outsource. This year he put a new roof on the house and installed new windows. He is rather cheap when it comes to heat--65 is standard in the winter. He tells me to put on more clothes when we visit in the winter.

- What do you think are the big misconceptions about how you live? What do you wish others understood about your approach to money - what do we outsiders usually get wrong?

He is MUCH better at living within his means and budgeting than I am. He really is one of those people that is happy with what he has and wants no more.

Anonymous wrote:

Anonymous wrote:Rainy day here today so no outdoor activities. But to answer a previous poster. As an account and nurse, we would have no problem earning enough money to replace the house if shit hit the fan. We aren't disabled, we can still earn a paycheck if necessary which minimizes any remaining risk. Early and mid 40s there are a number of ways to pay off a $150 to $175k mortgage

I thought you were retired? Are you sure you can resume your professional career exactly when you need, especially if the local economy is suffering from a natural disaster?

Anonymous wrote:Rainy day here today so no outdoor activities. But to answer a previous poster. As an account and nurse, we would have no problem earning enough money to replace the house if shit hit the fan. We aren't disabled, we can still earn a paycheck if necessary which minimizes any remaining risk. Early and mid 40s there are a number of ways to pay off a $150 to $175k mortgage

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

I have a nest egg so very little risk. If I lost my house I could build another one for $150,000. With no debt, I could pay that mortgage from delivering pizza if necessary. I have enough in savings to cover it though. Very little risk invloved

Are you sure about that? Maybe ballpark, sure. But it might also be more like $200k.
Also, you would have to replace your belongings. All of them.
Also, you would have to live somewhere while your house is being built. That wouldn't be free either.
Could you get a mortgage without a job? Maybe you could, but that would be a drag against your nest egg. 4% rate wouldn't be safe anymore.
Also, if you live as close to the beach as you brag, hurricanes roll in every year, with a direct hit every 3 or 4 years. You need insurance. Unless you are counting on government aid but that isn't a given. (I'm not judging, but risky in this political environment).

I grew up in Alabama. I don't know a single person that lost a house to a hurricane unless they had beachfront property. My brother lives up the street and he is single and would have no problem letting us live with him while we rebuild. I could easily build a house with $150,000. It's not even a concern. I started with a nest egg of $1 million 4 years ago. Look at the stock market since then and figure out how much I have now. I have $50k in an emergency fund. I have very little risk in my life. I planned it that way, there was a lot of planning that went into this.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

I have a nest egg so very little risk. If I lost my house I could build another one for $150,000. With no debt, I could pay that mortgage from delivering pizza if necessary. I have enough in savings to cover it though. Very little risk invloved

Are you sure about that? Maybe ballpark, sure. But it might also be more like $200k.
Also, you would have to replace your belongings. All of them.
Also, you would have to live somewhere while your house is being built. That wouldn't be free either.
Could you get a mortgage without a job? Maybe you could, but that would be a drag against your nest egg. 4% rate wouldn't be safe anymore.
Also, if you live as close to the beach as you brag, hurricanes roll in every year, with a direct hit every 3 or 4 years. You need insurance. Unless you are counting on government aid but that isn't a given. (I'm not judging, but risky in this political environment).

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Why do you not need home insurance and life insurance?

Not PP, but I think the answers to these are straightforward.

Home insurance is a requirement levied by your mortgage lender. If you don't have a mortgage, you don't really need homeowner's insurance. You may choose to, but that's up to you.

Life insurance is intended to replace your income or provide your family with financial stability in the event of your death. If your family is not dependent upon your income to make ends meet then you don't really need it. There is no mandate to have life insurance, and a lot of people who would like to have life insurance are rejected and can't get it.

Yep that's my thinking

It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

I don't know a single person that has lost a house and had to use their insurance to replace it. The odds of that happening are incredibly small.
I am drawing $36k per year off my investments. If I kick the bucket life goes on for my family with one less person. Money stays the same, no insurance needed.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

I have a nest egg so very little risk. If I lost my house I could build another one for $150,000. With no debt, I could pay that mortgage from delivering pizza if necessary. I have enough in savings to cover it though. Very little risk invloved

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

I have a nest egg so very little risk. If I lost my house I could build another one for $150,000. With no debt, I could pay that mortgage from delivering pizza if necessary. I have enough in savings to cover it though. Very little risk invloved

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.

At the standard withdrawal rate of 4%, you need $900,000 to generate $36,000 per year. And yes, that's a pile of money. But for FIRE to work, the principal has to remain untouched, and continually kick off that income. If the replacement cost is $100,000, with no insurance, the $36,000 return all of a sudden is down to $32,000. (And that's not including ancillary expenses, such as rent, replacement of furnishings and personal items, etc. if the house is destroyed.) When your margin for error is so small, that's a big difference.

This just further demonstrates that many of the FIRE people are only "financially independent" by cutting corners, taking significant risks, and relying on the charity of others and the largess of government.

Anonymous wrote:Without subsidized medical insurance, the FIRE concept would be difficult for those who FIRE with minimal assets. If asset level is too high, it would generate too much income to qualify for medical subsidies which in turn increase medical premiums and eat into income available to live on.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:All these $25,000 budgets seem to leave out car insurance and car maintenance on the cheap car you own, home insurance real estate taxes, and home maintenance costs on the fully paid for house, college savings for kids, life insurance, and any kind of emergency spending, like if a relative dies and you need to fly to a funeral.

Mine is $36k. Car insurance is $40, don't need home insurance, don't need life insurance, taxes are cheap in Alabama, I have an emergency fund for major home repairs, kids college funded with 529, they will go to a state school, emergencies are funded from my emergency fund.

For reference, my $189,000 house has an annual property tax bill of $660 in Alabama

Anonymous wrote:

Anonymous wrote:
It's not a legal requirement to have home insurance, obviously. But it is stupid not to, unless you have a huge pot of money to replace your house if it burns down. And if you are living on $25,000 per year, you obviously don't have a huge pot of money.

Same with life insurance. There is obviously no requirement that you have it. But if you have a family and do not have a huge pile of savings, it is incredibly irresponsible not to have life insurance.

If the point is that you can life on $25,000 if you shirk important responsibilities to your family, I suppose that is true. But should that the be the point?

If you are sitting on investments that generate more than $25,000 in income every year then you ARE sitting on a pile of savings. If you look back at the first post of this thread, it's not supposed to be about people working hard and only bringing in $25,000 a year. It's supposed to be about people who are choosing to live off their investments.

Expected value on all insurance is negative. It exists almost exclusively for people who are NOT sitting on a pile of money and cannot absorb the costs of a catastrophic event.

The PP who FIREd has investments that throw off something significantly more than $25,000 a year. If he dies tomorrow his investments are not going anywhere, and that income will continue.

There are a lot of situations where having a lot of life insurance doesn't make a whole lot of sense. That's part of the reason that term life insurance exists. If you are working and have people depending on your income, then YES, you should try to have life insurance if at all possible (again, some people get rejected). If you don't have people depending on your job income, then there's really not much reason to have it.