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Are you including family support in your plans for financial independence?
Sylvia is a practicing lawyer who plans to retire in 2021. She already hit her financial independence number but is working these last few years so she can support family members who may need her help in future. She’s also a real estate investor and has a rental property in Tennessee.
You’ll love Sylvia and her story.
We also chat about…
- How Sylvia hit her coast FI number 5 years ago
- Budgeting for landlord life
- The magic of automation and how Sylvia left herself $200 per month for discretionary expenses
- Splitting bottles of vodka as a way to save money (funny story)
- Advice for lending money to family members
- The benefits of becoming an independent contractor versus a salaried employee
- Self-directed solo 401(k)s
Sylvia was an absolute delight to speak with!
Enjoy this chat with Sylvia, and please subscribe to us in iTunes if you enjoyed it!
Show notes and links from today’s episode
Key takeaways from our chat with Sylvia Hall
1 – Consider buying a property in a state with no state income tax
Sylvia chose a rental property in Tennessee because there is no state income tax.
She doesn’t include the income from her properties in her savings goal though.
She doesn’t feel comfortable putting all her eggs in the real estate basket. She feels better saving until she hits her financial independence number .
The rental money is just gravy on top to her.
2 – “Be the lunch that you want to go to”
Instead of having FOMO when friends eat out, Sylvia recommends being the event that you want to go to.
Bring the party to your home and have a group of friends that don’t mind rotating.
Sylvia is a huge fan of the potluck and invites her friends over for “BYOB” all the time.
3 – Go tiny in a high cost of living area and maximize the delta
Sylvia has a tiny apartment but can capture a big city salary.
This is a similar approach that Justin of Saving Sherpa recommended in his episode.
Many people are scared away by a high cost of living area but its possible to save massive amounts of money if you can go tiny or live with roommates.
4 – Budget for family support in your retirement plan if that applies to your situation
Sylvia is working these last few years so she can provide her parents and family support should they need it.
She loves her hardworking parents and wants to be there for them. She would never trade their security for her early retirement.
Gwen has supported her sisters for their missions. Although, she wouldn’t support her parents since they are financially comfortable.
J is also planning to support her parents.
Gwen, J & Sylvia all feel this is something that is not talked about enough in the financial independence community which is a shame.
Sylvia recommends the following advice for anyone planning to support family members financially:
- Log the support you regularly provide to family and budget it like any other expense
- Make sure you use the ‘airplane method’ and save yourself future. Provide when you’re in a position of strength.
- Only do it willingly and not if you will feel resentment
- Consider gifting frequent flier miles or another non-monetary gift
5 – Consider moving to independent contractor status instead of salaried employee
Sylvia has her own practice but still works in her same job as a lawyer as an independence contractor. It’s a win win for her and her employer since they don’t have to pay her social security and only pay her for what she bills. It has financial benefits to her including home office deduction, solo 401k, access to an HSA account.
It was something that she pitched to her employer and she recommends presenting it as a win-win to her employer. You could do it hourly or for contract job.
It doesn’t make sense for everyone since there are a lot of employee fringe benefits that you lose when you move to independent contractor.
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Angela @ Tread slightly Retire Early says
I loved the discussion on family support. We’re fortunate in the fact that neither set of parents will ever need financial support from us, but this is an important topic. I can’t imagine letting family members struggle while we were sitting comfortably.