Reddit can be a very interesting place for people interested in personal finance and FIRE (Financial independence and early retirement).
Here are the top must-read Reddit Personal Finance threads.
First access to Reddit threads
As you can easily see, Reddit’s front page is a mess of random insider jargon.
It’s really difficult to understand what’s going on, specially when you’re getting started.
Anyway Reddit is an incredibly powerful social network.
It is a message board where people organized in communities engage interesting discussion on a variety of topics.
Here’s some common lingo:
- Subreddits: channels focused on a particular topic. They are denoted by r/”Topic” .
- Upvote / Downvote: readers can upvote or downvote a comment. The “score” is the sum of upvotes and downvotes.
- Karma: Reddit awards big contributors with Karma, when they receive many upvotes on their comments and questions.
- OP: Original Poster.
- TL;DR: Too Long, Didn’t Read. After a really long post, some users will provide a one or two-sentence summary and preface it with TL;DR for the readers who found the original post too long to read.
Now that we’ve cleared it up, here are some of my favorite personal finance tips from Reddit.
1. Side hustle to start
“$5 to $20 per item may not seem worth the effort to sell something, but it adds up. We’ve focused on this at our house and have made a couple hundred bucks now.”
Everyday we buy things we don’t really need, so we have too much useless stuff in our homes.
Decluttering takes huge psychological and financial benefits.
Today many sites (e.g. eBay) gives you the opportunity to sell your unwanted stuff. it may not seem worth the effort, but it sure does add up.
2. Why you should not buy a home.
“While it is true that when you buy a home a portion of your monthly mortgage payment will be going to principal, and therefore you are paying yourself in some ways, however, the cost of home ownership is significant. Some of the lesser known costs include the lack of flexibility, stress, the risk of home price declines, home maintenance, real estate taxes, and HOA fees.”
3. Early Retirement Extreme – Jacob Lund Fisker.
Here’s, in Reddit Personal Finance community, another interesting subreddit about the implementation of an extremely frugal lifestyle.
“ I’ve read Jacob’s blog and listened to some interviews, and it is inspiring. If you aren’t aware, he basically spends $7,000 a year, and retired at 33 with around $175,000. He gets his expenses that low by rejecting consumerism and only spending money on things he needs to survive. He also develops “systems” to save money, such as living in an affordable place near a grocery store so that one can not have a car and walk to essential places.
While I don’t think $7,000 a year is realistic for me (my rent is $1,100 a month in a VHCOL city), I have been brainstorming to get expenses down to $20,000.
Has anyone managed to cut their expenses extremely low?”
4. The power of compounding.
“ About 4 years ago I wrote this post. If you ever needed evidence of the power of compounding, it took a decade to get to 500k, and only 4 years to get the next 500k and a paid off condo, which is insane when you consider that I’ve held a 50/50 stocks/bonds AA most of that time. Increased comp has done some of that work, but I’m still in the south east. We’re not talking Bay Area pay :^).
I started out on SSI and food stamps. If not for my degree, I’d still be there today. That shapes you. The biggest thing I wanted from FI was a sense of financial security. By any measure, I’ve achieved it, but 2020 taught me I was not entirely rational. Remember the food shortages at the start of the pandemic? Remember how staples were out of stock? That was enough to make me completely regress back to ‘poverty mode’ for a while. You know what was funny? I had a stable job and I made more from comp and stock trades than I ever had in my entire life, yet I found myself cooking and eating like I was surviving on $90 a month food budget again. I didn’t snap out of it until I found myself inventorying pounds of dried beans in my pantry. Absolutely strange.
I’m beyond FI for myself, but my ultimate goal is to be able to comfortably support a family at the median household income. My RE target is somewhere around 2M. I’d guess I’ll hit that in my mid 40s. Between now and then, I’ve intended to purposefully my lifestyle in line with what my portfolio can support at 3%. The thing is? I’m finding it awfully hard to spend my ‘fun budget’. Some of that has been down to the pandemic (and a good chunk has gone to charity), but some of it is me holding every purchase to a ‘is this really worth it’ analysis that helped me survive back in the day. It’s a good problem to have I guess, and there aren’t any budget police ready to swoop down from black helicopters if I don’t spend it, but I hope it gets easier for me to find balance.
I’m in my late 30’s and I’ll probably retire by my mid 40’s. That leaves me 5-10 years left to really sort out all the non-financial aspects that I’ve neglected. Stuff like health, hobbies, friends and dating. If the pandemic taught me anything, I really have to put in the effort to get this squared away. My retirement experience will be a dreary grey experience otherwise. Hitting FI has evaporated so much of my work stress and worry that I can finally focus on what’s important. I don’t know how the next decade will turn out, but I think I’ll be a better, more rounded person at the end of it. If I can do this, I think just about anyone can. Good luck and god speed.”
5. How FIRE can change your life.
Here is the another interesting topic in the Reddit Personal finance community, about the benefits of F.I.R.E.
“ As the title states….
I’ve been a long time lurker and just crunched the numbers tonight and wanted to share. I am so happy. I did it. Brings tears to my eyes.
I’m 32, African American and a single mom of 1 teenager. I was born and raised in a true “hood”, long ago, before gentrification came along. My parents were a part of the 80s crack epidemic that wiped out many families, especially African American families. I ended up in foster care and remained there my entire childhood until being emancipated and left to fend for myself in the streets of NYC at 15 years old in the early 2000s. I was a homeless and pregnant teen and immediately became a single mom.
Through this turmoil and the crippling depression and feeling of hopelessness that came along with the “humble beginnings” of my life, I was able to graduate school early, find a job, saved just enough money to go to a trade school (it was $700 back then and every single dime that I had.) Through HARD work and insane grit and perseverance, I obtained all of my certifications and began my career at age 19. I’ve never looked back.
I discovered the FIRE and personal finance community nearly 3 years ago and its been a God send. I am rewriting my families wealth tree and I couldn’t be prouder.
I am navigating the world solo (no biological family besides my son) yet I’ve found the will to succeed, despite all of the trials, tribulations and abandonments.
At 12:15am on 7/16/19, 32 years of age, 13 years into my career, 1 teen son, and a LOT OF PRAYERS along the way….later.. my NET WORTH is $103,408!
A MIXTURE of 457, 457 Roth, 401K, 529, smaller investment portfolio and pension.
I will be retiring at age 45 with a full pension and God willing a MILLION DOLLAR portfolio.
This is the most I’m willing to share. Please don’t nit-pick, pry more or be passive aggressive. Just wanted to inspire someone somewhere who may not have as many or ANY resources to succeed.
Long Story Short: No one thought I’d make it out from under the shitty hand I was dealt. I did and just surpassed a $100K Net Worth!”