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How would your life change if you reached Financial Independence and got to the point where working is optional? What actions can you take today to make that not just possible but probable. Jonathan & Brad explore the tactics that the FI community uses to reclaim decades of their lives. They discuss reducing expenses, crushing debt, tax optimization, building passive income streams through online businesses and real estate and how to travel the world for free. Every episode is packed with actionable tips and no topic is too big or small as long as it speeds up the process of reaching financial independence.
450 Episodes
Does your portfolio own enough of the companies that carry a lot of the growth over extended periods of time? When you buy index funds, you aren't as diversified as you think you are. Cap weighted index funds mean you are buying a lot of the companies that are doing really well. But there are two asset classes Paul Merriman is a fan of that he thinks don't get enough attention, small cap and value. Although many people claim to believe in a buy and hold strategy with investing, their behavior says otherwise. They like to buy when things are hot because they believe it's going to keep going up. If you look back as far as 1928, a lot of the time the S&P 500 is walloping small cap value returns, yet at the end of this 92 year period, small cap value made 24 times the amount of money the S&P 500 did. Even though there are long periods of underperformance, when small cap value does take off, there is outstanding performance. Then when it reverts back to the mean, there is a higher compound rate of return. Owning a large cap fund means each holding in that portfolio, and how much of the portfolio it represents is based on how large that company is. The big companies represent 80-85% of the corporate public value in our economy. However, history shows that the smaller companies and the value companies produce a better rate of return because they are more risky. It doesn't have to be a lot to make a big difference. If you were put 10% in a small cap value fund, it would give you a legitimate shot at having 20-30% more money when you retire. The top 20 companies probably make up 20-30% of the money you have invested. Investing in an S&P 500 or total stock market fund provides an illusion of diversity. As companies get to be bigger in size, it becomes increasingly more difficult to double or triple in size. Companies are valued by the number of shares times the price in the market. Large cap index fund companies average a market capitalization value from $50 billion to $150 billion. Small cap companies are roughly 1/50th the size of the big companies with values averaging $2 billion. They are legitimate companies, but many of them will fail. Since 1928, the S&P 500 or total stock market compound rate of return has averaged 10%. However, research has shown that only 4% of those public companies made virtually all of that 10%, while 96% of companies averaged just 3%. As an aggregate, small companies are much more likely to double or triple in size. Value companies can be seen as companies that are out of favor and years later, they may still be out of favor. Academics don't advise buying value companies one at a time. People come into value companies to make them more meaningful, profitable, and efficient turning those companies around. The problem with great companies with a great future is that when something happens to pop the ballon, those companies can fall 25% in a day, similar to what happened with the Dot-com bubble in 2000. Telsa, for instance, is a car company on the verge of bankruptcy several years ago and now it's up 400% even though it is barely turning a profit. With a current share price of $800, it's going to take a lot to double your money, yet people still believe in Tesla. Paul wants to help people figure out how to invest in an unemotional way and don't get caught up believing in something that isn't likely to happen. Last year, growth companies were up 35-40%, however, looking back at 90 years of evidence, growth produced a lower rate of return than value by 2% a year. Paul's latest book, We're Talking Millions!, is all about the extra half of 1%. For every half of 1% you can make on your portfolio over a lifetime, you add a million dollars. Finding more of those half of 1% and adding them up is a lot sexier than finding the hottest thing in the market. In his book, Paul lays out 12 simple ways to capture those half 1% that the market is ignoring. Paul's been hearing complaints for years that his work has been too complex. It's was something his firm did for his clients, but most individuals do not want to make it that complex. Someone in their twenties, investing just $5,000 a year for 40 years, can use these strategies to make millions over an investing lifetime. It's not all because you took more risk, it's also how you protect your money from others getting their hands on it, like money managers. Choosing to save can be a million decision, and choosing to save early can be another million. In one mind-blowing statistic, Paul says 25% of millennials will not put money in the stock market. The ultimate buy and hold portfolio might be difficult to replicate inside a 401K. To make things more simplified, Chris Pedersen developed a system to implement the philosophy with roughly 98% of the benefits. The goal is to keep it as simple as possible so that anyone can do it and won't need to manage it other than for a few minutes a year. One way to buy a target date fund. But because they don't have enough value or small cap companies represented, have 90% of contributions go to the target date fund and 10% to a small cap value fund. The target date fund is broadly diversified and automatically adjusts to become more conservative as you age. Chris said the problem is young people should have more invested in small cap value and came up with a formula for calculating just how much, which is 1.5 times your age into a target fund and the remainder in small cap value. For example, a 30-year-old should multiply 30 years x 1.5 to get 45% in a target date fund and 55% in small cap value. Paul and Chris encourage continuing to hold 10% in small cap value at the age of 60 and beyond which is good during the 30 or more years in retirement. Not all target date funds are created equal. Look for one that is low cost and contains total stock market funds. Jonathan doesn't like having bonds in his portfolio and notes that target date funds have bonds in them. Paul agrees and said he spoke with John Bogle about it once. He was told that bonds are defensive and do good when the rest of the portfolio is down 50%. You can reduce your exposure to bonds in target date funds by adding equities to your portfolio. With target date funds, the year indicates how aggressive it is. As with a traditional portfolio, rebalancing your portfolio is a part of the small cap value strategy. If you want to be true to your strategy, you need to sell some winners and buy some of the losers. Jonathan has modeled one of the Ultimate Buy and Hold Portfolio pies Paul has on his website in his taxable brokerage account with M1. Paul says it's never been easier or efficient to invest. Even if the market does return as much as in the past, you can probably make the same return because it used to cost so much to do before. They are coming out with all new recommendations for best-in-class ETFs. Paul has all his buy and hold funds in DFA dimensional funds and now anyone will be able to buy DFA funds through DFA or Avantis without paying a commission. Since it's an ETF, you can buy commission-free with M1. Pauls' book is free for teachers and students, just email Paul at to get the PDF by email. The book is also available on Amazon. If you can't afford the $14.95 price tag, email Paul for the PDF. Resources Mentioned In Today's Conversation ChooseFI Episode 130 Paul Merriman Introduces the Ultimate Buy and Hold Portfolio We're Talking Millions!: 12 Simple Ways to Supercharge Your Retirement by Paul Merriman M1 Finance Review – Completely Free Automated Investing! If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
For almost 12 months, we've all been trying to do the best that we can. As frequently discussed on the show, we try to do things slightly different, optimize in the ways that we can, and make the best of the situation. Jonathan's wife Dani has been coming up with all kinds of creative little activities for the kids. Even Jonathan was recruited for a rock painting project. Brad has been listening to a new podcast, Ordinary Sherpa, created by Heidi, a member of Jonathan's Talent Stacker podcast. The podcast is about creating little adventures in life with your family. At the same time, in the mastermind group Brad takes part in, he was inspired by a discussion related to dads really showing up to be a part of their kids' lives. The podcast theme and mastermind group discussion converged for Brad when his daughter, Molly, asked him to go explore the creek with her. Rather than playing along for a minimally acceptable amount of time, Brad showed up like he really wanted to be there and they had hours of fun exploring together. What if you started to show up for everything in your life with the attitude that you really wanted to be there? It's difficult to be focused on growth in all areas of your life at the same time. There are different seasons when you will be able to lean into one over another but it's good to figure out a baseline you're comfortable with and recognize when it's time to rebalance. Since Brad's financial life is on autopilot, it's not something he spends much time focusing on. However, sometimes things do backslide and he needs to return a little focus to it. Such as, he recently canceled two recurring charges for streaming services, not because their costs were going to have a significant impact, but because he was no longer getting value from them. Relationships is an area Brad believes he could spend more time focusing on. If he were to ask himself, “Am I showing up as the best version of myself for my wife and kids every day?” his answer would be “no”. Who should be leaning into and leveraging their Roth 401K? Sean Mullaney, The FI Tax Guy, says the Roth 401K works similar to a 401K except the funds going in are taxable today and come out later tax and penalty-free. Those currently in a high tax bracket looking to retire early are probably better off contributing to a traditional 401K. But someone just out of college in a 10% federal tax bracket may benefit from paying 10% in taxes today rather than 20-30% later on. Even someone who may have substantial taxable income in retirement may benefit from a Roth 401K. A Roth 401K can also be a hedge against future tax rates for anyone who prefers to lock in their tax rate today. If your 401K plan offers it, you don't have to do all Roth 401K or traditional 401K. You can split the difference. For example, a 60-year-old new retiree with a large 401K will be taxed on every dollar withdrawn. We don't know what future tax rates will be. Roth 401K withdrawals don't work the same way as traditional 401K withdrawals. You can structure it in a way that you can recover tax-free contributions, From a Roth 401K, you may need to rollover into a Roth IRA. For the early retirees who don't plan to retire at a super early age or anyone with artificially low income for a few years, the Roth 401K is a strategy to consider. If you aren't 59 1/2 yet, Roth 401K withdrawals are subject to the cream in the coffee rule where 2/3 of the withdrawal is tax and penalty-free but 1/3 is subject to ordinary income tax and a penalty. This is different than a Roth IRA where contributions may be withdrawn at any age tax and penalty-free. When you roll over a Roth 401K to a Roth IRA, the Roth 401K contributions go in as Roth IRA contributions, and earnings become Roth IRA earnings. You could then take out the full amount of contributions tax and penalty-free before touching the earnings. If you aren't 59 1/2 and need to access your Roth 401 contributions, it makes sense to roll them over to a Roth IRA first. If you have employer stock in your 401K, there may be net unrealized appreciation. You do not want to roll it over from a traditional 401K to a traditional IRA without considering a tax planning strategy. This requires assistance from a tax professional. If you want to do a backdoor Roth IRA, rolling over 401K to a traditional IRA isn't a good idea. The fees associated with 401K plans have gotten better over the last 10-15 years. The investment choices are better with lower fees. It may not make sense to do a rollover. As a general rule, retirement accounts have required minimum distributions (RMDs) once you turn age 72. The exception is the Roth IRA. While RMDs from a Roth 401K are not taxable, you want to keep that money growing tax-free as long as possible for you and your heirs. If you're 72, Sean would recommend you roll your Roth 401K to a Roth IRA for that reason. Generally, you need a separation of service to do rollovers from a Roth 401K to a Roth IRA. Look for your plan's Summary Plan Description (SPD) which details withdrawals. 401K plans are subject to the ERISA law, where creditors cannot access the funds, except for ex-spouses and the IRS. IRA creditor protection varies from state to state. Something to consider before a rollover. Dani and the ChooseFI Foundation are using meal planning as a financial literacy tool. Always looking for ways to get children interested and thinking bout decision-making and personal finance, they have put together Meal Planning Made Easy. The meal planning project helps kids put financial literacy concepts into a real-world contest. The goal is to make financial literacy concepts more than just habits but to have kids take ownership and have fun doing it. In the 3rd through 5th-grade video series, Dani talks them through meal planning. They are tasked with going into a grocery store, either in-person or virtually, and planning all three meals for one day. The meal planning project is adaptable to fit every socioeconomic setting. The tasks grow as children develop. High school students may plan meals for an entire week, searching the pantry first, and finding recipes to help on the budgeting side of things, just like parents have to do. Sign up for Meal Planning Made Easy at Resources Mentioned In Today's Conversation The FI Tax Guy Ordinary Sherpa Do Inner Work Roth 401K Withdrawals ChooseFI Foundation Get started on your own journey to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
288 | Mad Fientist

288 | Mad Fientist


Should you rush to reach FI? Or use it as a map in a lifelong pursuit to master your relationship with time, money, and happiness? Brandon, from the Mad Fientist, wishes he would have found more free time to work on other goals while on his journey to FI. When Brandon was first on the show four years ago, he had just reached FI and discussed the psychological hurdles he had to overcome. What's changed for him since then, and with the benefit of hindsight, what would he do differently? Brandon's dream as a child was to write music and put it out in the world. However, his musical tastes are not mainstream, so becoming a pop star was never one of his ambitions. He did not want to just be a consumer, he wanted to be a creator and always felt that it was his job that was holding him back. It wasn't until after reaching FI that he realized it wasn't was what holding him back at all. He had been spending his free time on things like television on travel instead of his music project. His problem was psychological. As a math and science guy, he didn't believe he could do it. Trying meant the risk of failure, and if he failed, the dream would be gone. It took Brandon two years to come to grips with and get over that hurdle. During his pursuit of financial independence, Brandon has tunnel vision, with all his time and effort devoted to making and saving more so that he could reach FI more quickly. The result was a decrease in his overall happiness. He admits that he did it wrong. The whole point is to master the relationship between money, time, and happiness. Mastery is probably better to focus on over goals. Goals delay your happiness because you are always looking to the future instead of enjoying the present or the journey. Reaching FI for Brandon didn't have an impact on his life other than making him more confident that he could step away from his job. Motivating yourself to do something is hard when you don't have any sort of external motivation to do it. In 2017, Brandon wanted to do two things: get better at songwriting and get fit. The personal trainer he was working with asked him how much he wanted to bench press or how much muscle mass he wanted to put on. Those were goals Brandon didn't care about. With his mastery mindset, he only wanted to get healthy and stay healthy. In contrast to getting fit, his specific goal for songwriting was to write a song and share it with his brother. When he finished it, not only was it awful, but the whole process was awful and it caused him to quit pursuing any additional songwriting until he summoned up the courage again in 2019. Pursuing mastery may be summed up by asking, “Am I better today than I was yesterday?” Continuing to answer yes is pursuing mastery. Brandon found it to be true that doing something consistently changes who you are. He never felt like a musician until he was doing it for 25 hours a week. He still feels like his triangle is skewed toward money at the expense of time and happiness so he has been trying to figure out how to use money to get more time or increase happiness. For example, he wrote eight songs and wanted to get them to sound as great as possible, so he hired a Grammy award-winning sound mixing engineer to help mix his album. He was able to both learn and make a better final product. He doesn't want to waste money but does want to figure out how to use it efficiently and maximize the triangle of money, time, and happiness. There's a lot of unconscious spending in society that doesn't really bring happiness either. Getting on the path to FI helps you sort out the equation a bit more. We're terrible at knowing what will make us happy. That's where experimenting comes in. Experiment with your spending and your activities. What still feels good a week later versus ended up being meaningless. It's okay to spend money sometimes as long as you do it from a place of value. If you are in a deprivation zone, one thing that helped Brandon was to relax for two years with respect to his spending. If it was something he and his wife wanted to do, they did it. At the end of the year, although it felt like they had lived an extravagant life, they spend just $3,000 more than normal. In the deprivation zone, you are testing the lower limits. You can test the upper limits and then hopefully find the sweet spot. It's difficult to find where the sweet spot is for you without testing the limits. Once you have the bigs things taken care of, the little ones don't seem to matter. Brandon had already limited his large structural recurring expenses. What he had given himself latitude with were the everyday one-off decisions that in aggregate, turn out to barely move the needle of his finances. Brad and his family have anchored themselves to a $2 per person per meal per day rule. It helps them to apply intentionality to their meal planning. He thinks it's better to try and optimize and then dial it back if gets to be a little too much than continue to go through life being unaware. Brandon is an introvert, so announcing publicly that he is releasing his first album is a big deal. Back when he wasn't making progress because he wasn't putting the time in, he talked his brother into going to a park and playing a show. The thought of doing it was scary, but he already knew what it was like not to it. He wanted to know what the world would be like if he did do it. While playing in the park, a man slipped Brandon his email address. It turned out he source talent for a music festival in Scotland and asked if they wanted to play at it. Brandon taking that chance in the park reminded Brad of a quote by Scott Young, “Your deepest moments of happiness don't come from doing easy things. They come from realizing your potential and overcoming your limiting beliefs about yourself”. Both financial independence and the pursuit of financial independence allow you to begin building armor. Failure is good. You have to be bad at something before you are good at it. FI definitely helped Brandon build his armor. He didn't have anyone to answer to or worry about stumbling across what he was doing. He also uses an alter ego for his work in the financial space, as well as another for his music. Something that Brand did to progress with his music was conduct an ultralearning experiment. He took three months where he blocked out all other activities competing for this attention to do the thing that he wanted to do, which was write songs. He committed to devoting 25 hours a week and built spreadsheets of prioritized tasks. He says it is the only reason he succeeded. He focused on the hours and the effort and then by-product comes out of it. For others just trying to get started learning, Brandon thinks copying what you love is a great place to start. Your unique set of influences is enough to make what you do unique. The unique skills each of them possess is what lead to this very podcast. Brad being a CPA with a travel rewards website is what got him a guest spot on Brandon's podcast. Then Jonathan heard the podcast and discovered both Brad and he lived in Richmond, which lead him to first contact Brad. Every good idea comes out of a bad idea, or an okay idea, or even a mediocre idea. You do not need to get it right the first time. The fact that you are willing to try gives you the opportunity to get feedback and iterate into something amazing. Brandon's album is available for just $5! You can pre-order your copy at Resources Mentioned In Today's Conversation ChooseFI Episode 017 Mad Fientist and Origin Story James Clear “Forget About Setting Goals. Focus on This Instead.“ Ultralearning: Master Hard Skills, Outsmart the Competition, and Accelerate Your Career by Scott Young If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
287 | The Examined Life

287 | The Examined Life


Are you the kind of person who sets New Year's resolutions? Like many Americans, Jonathan used to set weight loss goals for the new year, but not this year. Instead, he and his accountability partner, JD Roth, spent the previous nine months working on it and began the year, at or very close to their goal weight. Not having to work on big weight loss goals is allowing Jonathan to be aware and focus on testing smaller adjustments that will make him feel better and have more energy. Brad once had an experience while on vacation that made him realize how his normal diet was causing him joint pain. He wasn't even aware he had joint pain until one day it was gone. It was only then that he understood he had a problem that needed to be worked on. When you live an examined life, you don't have to accept the things that are reducing your capacity to function as normal. Brad thought his morning smoothies were a healthy choice, but it turns out the negative impact was a sugar crash necessitating an afternoon nap. It wasn't something he noticed until he stopped the daily smoothie routine. The examined life concept can be applied to your personal finance life as well. It's not as much a goal as it is a mastery of process. Brad embraces James Clear's concept of setting up systems that work in his life versus setting goals. He has set up eight different things he wants to accomplish as a part of a system with checkpoints along the way. In an attempt to develop two new habits, Brad is habit stacking. With habit stacking, you take one habit you have and combine it with another you want to create. Brad has combined his desire to become more fluent in Japanese with moving more during the day by taking walks around the neighborhood while listening to the Pimsleur language learning app. It's not perfect, but it's a system that is working for him. Brad is also following the advice of Chris Guillebeau and conducting his own annual review. This annual review sets the big picture, the intentions, the purpose, and outcomes. It then breaks life down into different areas where concrete goals may be set, such as self, health, family, community, travel, and others. While neither has large plots of land in suburban Richmond, VA, Jonathan and Brad have both contemplated starting some sort of micro garden. Listener James wrote in to say that he's been able to cut down on his grocery bill by going a whole year eating only vegetables he's grown himself. James says knowledge isn't needed. Just try growing things. You'll learn as you go. Also, grow what you are actually going to eat. Kale is great, but not if you won't eat it. And finally, squash is king as it produces pounds and pounds of food. Start with a 4'x4′ or 6'x6′ plot of land and plant 2 summer squashes and 2 winter squashes two feet apart. Water the roots, not the leaves. If you don't have a yard, get creative like a friend with a yard, a community garden, or a local farm. In your own garden, build up your soil health with compost. When you are genuinely interested in learning, finding mentors willing to help can be easy. Jonathan's brother, Andrew who edits the podcast, has been interested in sustainable homesteading. Through the ChooseFI Facebook groups, he has found a community to learn from and is getting free room and board in exchange for work. You get so much power and understanding in your own life just by understanding the concepts of FI. You don't need to be at your FI number to achieve power and autonomy in your life. It starts the moment you decide to make small changes to make your life better. Neither Jonathan nor Andrew have reached FI, yet for all intents and purposes, they are living a financially independent lifestyle. The goal isn't to have the most money, it's to be post-money, which is beyond the point where money matters. What do you want your life to look like, and what do you need to pull that off? Suzanne sent in a question about expense ratios. She didn't know where to look to find out how much she is paying across their various investments. First, there may be a fee attached to the fund for it being executed the way it is, known as the expense ratio. Second, if access to the fund is through a financial manager, there could be an assets under management fee. The impact these fees can have on your investments is enormous. They can cost an investor millions of dollars over a 40-year time frame. Brad suggested Suzanne google the funds' names or ticker symbol and expense ratio, such as “VTSAX expense ratio”. The result should be just one or two clicks away. To reduce costs, long-term investors should use a commission fee platform to purchase funds, such as M1 Finance when investing outside of your employer. Resources Mentioned In Today's Conversation Chris Guillebeau's “How to Conduct Your Own Annual Review” Grass to Veggies ChooseFI Episode 248 You are More than Your Social Capital with Laura Oldanie M1 Finance Review If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
286 | I Like to Dabble

286 | I Like to Dabble


Many industries we once believed were recession-proof have proven otherwise. What can we do to build multiple streams of income and the resilience needed so that we're not reliant on anyone else for financial security? Side hustles and passive income are key strategies. Daniella worked for an IT company for four years when they laid her the weekend before her wedding. Luckily, she quickly found a remote job working as a contractor but was laid off from it as well. The layoffs ruined Daniella's confidence and self-esteem. Before the first layoff, she was living paycheck to paycheck and carrying debt. Occasionally, she needed to sell things for gas money until the next paycheck arrived. It was a financial low. Daniella still had the severance from her first job in an emergency fund and was encouraged to freelance to keep stable while looking for a new job. Freelancing was something Daniella had some experience with and reached out to an old client. The talent stack Daniella developed was not simply technical. She had a strong artistic and design background which was mostly self-taught. She says when going for a job interview, be upfront about all of the experience you have. Think about it and write it all down so you don't leave anything out. Not all jobs require the employee to be a world-class expert. Sometimes having a wide variety of experience and being able to synthesize different pieces of information is what employers need. The freelancing came out of panic. In addition to the debt, she had not been aggressively investing for retirement and believed the only way to go forward was a job. After finally landing a new job with a FinTech company, Daniella began reading about personal finance for her blog about the journey she and her wife were on to get their finances together. Dabbling is something Daniella has done since high school but it was never something she believed could be used to build wealth. Reading the stories of others changed her mind. The future became clear on what they had to do versus what they wanted to do. While her original side hustles only fueled her spending behaviors, they eventually morphed into doing fun things. Her wife is an expert in reselling guitars, and in addition to freelancing, Daniella also did thrift store flips, repaired items for resale, and sold her own paintings of live concert events. Daniella is in a much different financial position now. They have one year's worth of an emergency fund saved up, and all of their debt is paid off. They still have their side hustles, and her blog makes a third of what she makes in her full-time job. If she were to lose her job again, she would be able to reach out to the huge online network she's built over the last three and a half years. Facebook, Instagram, Reddit, and Twitter and great for networking. Daniella started by searching for different hashtags on Twitter. Jonathan loves Facebook groups. When there is something he wants to learn, he leans into Facebook groups to benefit his talent stack. Daniella believes Twitter is especially good for freelance gigs, while Instagram is good for anything since people expect others to slide into their DMs and comments on that platform. Since she can work remotely from anywhere and they have multiple side hustles, Daniella and her wife are working on a move from Missouri to Washington State. Resources Mentioned In Today's Conversation Give your child a headstart with their financial and nutritional well-being with Meal Planning for Kids. Watch shows live and on-demand with Fubo TV. Build a better real estate investment portfolio with Fundrise. Get started on your own journey to financial independence today at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
What You'll Get Out Of Today's Show 2021 kicks off the fifth year of the ChooseFI podcast. Despite being at different points in their own financial journeys, Brad and Jonathan have experienced the benefit of incremental growth with both their finances and self-improvement. While it may seem simple and even mediocre, they are living amazing lives. You need to control what you can control, starting from wherever you are. If you can optimize at the margins, you can reclaim decades of your life. It's not just the ChooseFI podcast trying to share this message and concepts. The entire community is working to share this message. In a Facebook post from Jessica, she shares that her goal at the age of 19 was to save $5,000 so that she could feel stable. She began finally saving at the age of 26. By spending less and earning more, five years later, she hit the net worth milestone of $100,000. The concepts ChooseFI presents are not new. The show brings information together to tell a story to motivate and encourage people to take action with it. Don't just do what people tell you to do. Look at what they are doing. JL Collins' blog series, The Stock Series, started out as a way to document what he wanted to teach his daughter about investing. Warren Buffett plans ate leave 90% of his investments in a low-cost index fund. What is impressive about index fund investing is that there is ample evidence that over the long-term, this simple plan outperforms other strategies. Index funds, like total stock market index funds, are self-cleansing. Rather than trying to pick the winners or attempting to build your own index where you need to stay abreast of what's happening in the market, your ownership in companies performing poorly automatically decreases as a percentage with an index fund. To illustrate this point, of the original companies making up the DOW in the early 1900s, none of them remain within it today. With an index fund, you end up buying the up and coming companies that are replacing those losing value without having to do any research. It's an odd phenomenon that people do not like to buy stock when the market is down. There are drops of 10% just about every year, 30% every few years, and black swan events like 2020 are more common than we like to believe. Despite of the ups and downs, stay the course and keep investing. US currency is backed by the confidence of the federal government. As much as a large percentage of the world also has confidence in our government, $100 today is not worth the same as it was a hundred years ago. Not only has inflation eroded the value, but more money has been printed than 100 years ago. Whenever the government prints more money or injects a stimulus, our money is worth a little bit less. What is the value of cryptocurrencies, like Bitcoin? They are speculative. You buy now and hope later someone else will pay more for it. Brad has sworn off speculative purchases after a horrible real estate investment years ago, but as a life-long learner, he has a remote interest in it. Warren Buffett has described Bitcoin as “rat poison squared” because, like gold, it doesn't produce anything. Investing in it is speculative. Moving money back and forth for 5 billion people in the world is both difficult and expensive. People without real access to the world economy can use Bitcoin to meet their needs. There are thousands of different cryptocurrencies available and most of them may disappear at some point. Their value is volatile and utility limited. It's also subject to manipulation and is currently unregulated, but we'll keep hearing more about digital currencies. The future is going to change, so Brad is always willing to learn. Since it's the first episode of the new year, what can you do to make your life just a little bit better? Increase your contributions to your 401K by 1%. Look for investment options with the lowest fees and think about moving them over. Cut an expense you aren't getting value from. Max out your HSA account. Contribute to your 2021 IRAs and other retirement investment accounts. Use Trim to help you lower your recurring bills. If you are looking for a new career, train for a new SalesForce position earning $65-80,000 a year with the course Jonathan and Bradley Rice created. The five-day SalesForce Challenge with Talent Stacker is free. Resources Mentioned In Today's Conversation Meal Planning Made Easy ChooseFI Episode 284 JL Collins Get a free 60 day trial of Linkedin Sales Navigator Start the year with a smart money move and get up to $3,500 when you transfer to M1 Finance Fifth Wheel Physical Therapist ChooseFI Episode 072 Should I buy Bitcoin with Myles Wakeham ChooseFI Episode 099 Generous Giving on the Path to FI with Michael Peterson Save money magically with Trim ChooseFI Episode 117 Making the Case for Part-Time with Bradley Rice Sign up for the free five-day SalesForce Challenge If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
284 | JL Collins Returns

284 | JL Collins Returns


When it comes to investing strategies, one of the most influential books available claims that if you keep it simple, you'll actually do better. Here to talk about the philosophy behind his investment strategy is one ofChooseFI's most requested guests, JL Collins, author of The Simple Path to Wealth, and popular blog series, The Stock Series. The influence of JL Collins cannot be overstated. The content he produced changed the trajectory of Brad's life and made him feel comfortable investing. In 2011, JL's daughter was in college but was turned off of all things financial after he pushed too hard. Because he wanted her to know how to invest and handle money, he decided that he needed to write it down for when she was ready. It was suggested that he archive the advice in a blog and share with friends and family. Much to his surprise, strangers began to find it and he quickly had an international audience. The book came out of the growth of his blog. Always having the ambition to write a book, The Simple Path to Wealth became a more organized and concise compilation of his blog articles. Four years later, 2020 has been its best selling year and the success has greatly exceeded expectations. Readers have responded positively to the authenticity of his writing, which he believes is because he was writing for his daughter. Now that she is a young adult, she's been receptive to the information and is now on board with the strategy presented. For Brad, investing always seemed like something that required thousands of hours of understanding and special insight until he began reading The Stock Series on JL's website. It gave him hope that he had a chance at long-term success for wealth that would last for many decades. JL acknowledges the method in the book is the last and best method he came to after going through other iterations involving picking stocks and actively managed funds. The other methods work, but they are harder and a lot less powerful than a low-cost index fund. JL says this method isn't just for beginners, it's the best way to invest for everybody. The most powerful way to invest is the simplest and the easiest. He realized that not everyone wants to think about investing the way he like thinking about it. Most people know it's important, but have more important things they want to do with their lives. His approach allows them to set it and forget it. The investing world is complex by design because the more difficult it is to understand, the more Wall Street can charge in fees. Jack Bogle, the founder of Vanguard, was the first one to invent index funds and talk about index fund investing. Because outperforming the market as a whole is extraordinarily difficult, only 20% of fund managers in any one year can do it. After 30 years, the percentage of fund managers that can do it is less than 1%. Even Warren Buffet wrote in his 2013 Berkshire Hathaway shareholder letter that he would advise the trustee of his estate to invest 10% in government bonds and 90% in a very low-cost S&P 500 index fund. A mutual fund, or similarly, an Exchange Traded Fund (ETF), takes money from a lot of investors and lumps it together to invest it in something. The S&P 500 index invests in the 500 largest US companies that make up the S&P index, while an actively managed mutual fund may focus on a different parameter, such as energy or technology. An actively managed fund attempts to pick stocks that over time will outperform the index which is an expensive route and reflected in what the investor pays for the fund, called the expense ratio. Every fund has an expense ratio, but what matters is how high it is. Because index funds don't have those expensive fund managers, the fees are very low. JL's most recommended Vanguard fund, VTSAX, has a 0.04% expense ratio. Actively managed funds average 1%. The impact 1% has compounded over time is dramatic. On a $1M portfolio, you may be withdrawing 4%, or $40,000, each year, while 1%, or $10,000, goes into the pockets of those managing your portfolio. That's money not going to you or working for you by growing over time. In an article Brad wrote several years ago, he looked at the impact fees had on an investment portfolio. With a 1% expense ratio and/or a 1% fee for assets under management, the fees over a 40-year period cost millions of dollars. Owning index funds means you own all of the companies within that index, both the winners and the losers. VTSAX is Vanguard's total stock market index fund which invests in virtually every publicly-traded US company. There is very little difference between VTSAX and the S&P 500 index fund since VTSAX is capweighted, meaning it owns more of the largest companies. Only 15-20% are small or mid-cap companies. JL loves index funds because they are self-cleansing, meaning that you benefit from the winners while the losers drift away. The worst you can lose is 100% on a company, but you can gain 200% or even 1000% with the winners. Tesla is a great example of the upside. An S&P 500 index or total stock market index fund is essentially the same regardless of which brokerage firm it is purchased from. JL prefers Vanguard because it is structured where its interests are identical with the investors. The investors own the Vanguard funds which helps to continually drive down costs. The impact of changing from a fund with a 0.04% fee to 0.02% or even 0% isn't tremendous. JL prefers to stick with a company like Vanguard that favors the investor over the owner. Another thing Vanguard is trying to do is make investing more accessible. They have lowered the minimum investment for VTSAX from $10,000 to $3,000. Those without an initial $3,000 to invest can opt for VTI, the Exchange Traded Fund version of VTSAX. VTI is primarily a trading vehicle that any amount of money may be invested in. Like a stock, buy and sell orders are executed immediately, while index funds prices are set at the close of the business day. Traditionally, investors have needed to purchase whole shares of ETFs. Companies like M1 Finance have made it possible to buy fractional shares. It would be wonderful if we could time the market, but it's more important to have time in the market. The best way to lose money is to try and dance in and out of the market. Trying to time the market does not work. When the market began to drop during the beginning of the COVID pandemic, JL held strong in his conviction that no one knew what the market was going to do. The important thing to do is to stay the course. You have to expect market drops during your investing lifetime. JL says no one should follow his advice unless they are absolutely clear that they will not sell when the market drops. Selling is not an option. Market drops are temporary. After Black Monday in October 1987, JL, despite knowing better, lost his resolve and sold near the very bottom of the market. He didn't buy back in until the market had completely recovered. Now, market fluctuations don't bother him. Roughly 20 companies make up 30% of your holdings in an S&P 500 index fund. Any company or sector that rises to the top means you'll own more of it. When those companies fade away, the individual who owned them in an index fund will fare better than an investor who owned them as a single stock. The most powerful companies today will not be the most powerful companies decades from now. Of the original companies making up the DOW, not a single one remains in the DOW. With an index fund, you never have to worry about what's fading out or what's rising. You will always be there. Resources Mentioned In Today's Conversation ChooseFI Episode 019 The Stock Series Part 1 with JL Collins If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.  
It's Part 3 of ChooseFI's end-of-year wins where we hear directly from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. Are you building an amazing life or are you a cog stuck in a very depressing wheel? It could be either or it could be both. The community members featured in this end-of-year wins episode have had the wake-up call. We can't control everything, but there probably are some things we can control that we haven't yet considered. Hopefully, these wins from the community will provide inspiration and imagination to find improvement with at least one thing. Our first win comes from Sara, who teaches high school science. She began listening to the podcast in December of 2018 and after binge listening to half of the available episodes, she opened a Vanguard account with all of the money she had saved. This year, she put money into 457s, maxed out Roth accounts, and put some money in a 403b. And finally, Sara also just made her last mortgage payment, paying it off in just 11 years. With the mortgage paid off, Sara is now debt-free. A special shout out to MK who recently gave birth to a brand new tax-deduction, otherwise known as a baby girl. MK and her husband, Jason, hit FI in their late twenties, and in addition to working for ChooseFI, MK has written a handful of science fiction books and teaches others how to self-publish with her YouTube channel, Author Your Ambition. The next end-of-year win comes from Whitney who fired her financial planner this year. While her financial planner had set Whitney and her husband up fairly well, they were finally ready to fly on their own. Now that she understood what she was doing, she was able to get out of some of the actively-managed funds and do some tax-loss harvesting. After an unfortunate incident with a supervisor, Whitney was motivated to figure out how she could not work if she didn't want to. Previously, she had no extra time to figure things out, but being at home due to COVID allowed her to explore hobbies, take care of health issues, and do more activities with her son. Although making even the 1% better changes aren't always easy, it is a positive feedback loop where it becomes easier and easier. Whitney plans is to retire in the next couple of years. Next is Carlos, who welcomed a new baby this year. His wife took some photography classes and after seeing that her photos were pretty good, set up a new business as a photographer. Jonathan says he's noticed a pattern when trying to learn a new skill. The first is that it's something that interests you. Next is finding a community, getting some training, and finally doing it. Although Carlos‘ wife had to hit pause with the business a few times during the pandemic, she's still managed to have success even in this challenging year. Carlos started a blog this year. As an immigrant from Brazil, he had issues with the IRS and decided to share his experiences so that he could help prevent others from making some of the same mistakes. He's is writing the first article and will soon be launching Alien Moolah. Citlali and Jose have spent the last year adapting and keeping good habits. They moved to California three years ago and needed to get a budget together and manage cash flow after encountering high rent prices. They found ChooseFI early when just six episodes had been released. Living on a single income, they were open to the messages presented. Since then, they have tried house hacking, Citlali earned a degree through Udacity, got a job working on autonomous vehicles, and they moved to Texas, which decreased their cost of living. Jose says the aggregation of marginal gains has helped them to save. Meal prepping has cut their meal costs and allowed them more free time during the week for other things. Because the pandemic has them driving less and they've built up a good emergency fund, they've reduced their auto insurance coverage and cut the cost in half. They also frequently use the library for ebooks and more unusual things like museum passes. Citlali‘s big win this year for a 50% salary increase following her performance review which is helping to increase their gap. But Jose and Citlali are reaping the benefits of FI before reaching it. With family in Mexico that has been hit hard by the pandemic, they have been able to provide financial assistance to buy food and pay off medical debt. Shannon's year has been one of adaptation. She works at a college where her responsibilities have increased and transitioned. As a result, her boss was able to negotiate approval for her position to be full-time. The increase in Shannon's gap allowed her to pay off her car loan. Shannon also started a unique side hustle creating videos combining World of Warcraft and making cocktails, under the title TipsiGaming, which can be found on YouTube and Twitch. With no debt and this year's salary increase, Shannon hopes to buy a home and house hack the payment. Finding ChooseFI a little over a year ago, Shannon has one month in emergency savings and now she has seven months saved up. Wrapping up the series are Rob and Joni who are preparing to hit the road for RV life. They discovered the FI community about two and a half years ago. Starting from essentially zero, their net worth is up to $250,000 and their investments are at $150,000. They quickly got used to living in 200 square feet, enjoyed get rid of stuff, decluttering their life, and being able to quickly clean up their home. They both work from home, making them location independent. When they married in 2016, they followed a more traditional contribution of 10% into a 401K. Though they were debt-free when they found the FI community, they didn't start to crush the income side until about two years ago when Joni combined her skillsets, switched careers, and doubled her income. Rob and Joni's expenses are fairly low. The RV is paid off but they bought some land to put it on. when on the road, their base expenses should be roughly $2,000 a month. For more information on the free Five Day Challenge or to sign up for the newsletter, go to Next week JL Collins joins the podcast again to revisit the Stock Series concepts and share his perspective on some of the nuances discussed with other guests of the show. Resources Mentioned In Today's Conversation Your Money or Your Life by Vicki Robin ChooseFI Episode 019 The Stock Series Part 1 with JL Collins The Simple Path to Wealth by JL Collins If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
It's Part 2 of ChooseFI's end-of-year wins where we hear directly from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. After listening to the podcast for months or years, how did individual members of the community take in information and take action leading to success in a very challenging year? Success isn't just the nuts and bolts of money. Ultimately, it's a life optimization strategy. In response to Brad sharing in an earlier episode that he was joining Alan Donegan in his burpee challenge, Christine wrote in to share that she was inspired to step up her run by throwing in burpees along the way even if she couldn't complete the pushups. Being perfect isn't realistic. Challenge and struggling are important, as is trying to get to the point of mastery. You grow during times of discomfort and failure. The first end-of-year win comes from Eric. Introduced to FI by his best friends over a year ago, Eric binged listened to the podcast. In January of 2020, Eric and his wife re-scripted their financial life. Eric is an architect and started creating YouTube content as a side hustle on his channel 30X40 Design Workshop. Re-scripting their financial life started with paying down all their debt, including mortgage, with the cash they had saved that wasn't doing very much for them and built a six-month emergency fund. Having that headspace allowed them to take more risks during the year. They don't have a specific monthly budget, but as long as his wife keeps her job as a research scientist, they are good. Everything he makes is going toward FI, including a post-tax brokerage account and 529s. The FI literacy they've picked up from the podcast has shown they are a lot closer to their FI number than they thought. The friend who introduced Eric to FI was Jason, who also had end-of-year wins to share. Jason figured out early in his career that he didn't want to persist working for other people until retirement age. Five years ago, Jason learned about the FIRE community and began to buckle down, working toward a strategy. Jason says they've always been good savers and put salary increases and bonuses toward retirement savings. In 2019, he realized 2020 was the year they could hit FI. He actually achieved it in May 2019 and stayed at his job until June 2020 because he had some things he wanted to see through. In June, they moved from a high-cost-of-living area to a more moderately priced location. He began blogging on his website, The Next Phase is Now, to help work through the tornado of feelings he was experiencing. Before retiring, they lived on their FI budget for a full year to give them confidence. Currently, Jason is drawing from his cash reserves, which he moves from a Fidelity account to his checking account once a month like a paycheck. Next up is a question from Rebecca, who wants to know how to calculate her FI number when both she and her husband have pensions. Jonathan says the difference between your monthly expenses and your pension is what your FI number will need to cover. The book by Grumpus Maximus, The Golden Albatross: How to Determine if Your Pension is Worth It, as well as episodes 057 and 227 with Grumpus are good to check out if you have a pension. The next listener sharing her wins is Sara. Sara sold her care and began investing in VTSAX this year after graduating in 2019. As a new investor, the market fluctuations this year were intimidating, but after reading The Simple Path to Wealth, she felt like she was getting in during a low period. Sara's only debt is $78,000 in student loans which she hopes to pay off by age 30. During this 0% interest period, she has deferred making payments and has saved $20,000. It's a safety net that she's trying to decide what to do with. Her employer offers a .5% match up to 6% in her retirement plan. Sara has increased her contribution since deferring her student loan payments and is looking to roll over an account from a previous employer. Sara is trying to keep her expenses low and estimates her savings rate to be 30-40%. Listener Jake has made a lot of big moves this year, which means undoing all of the American dream ideas that had been drilled into him, like the fancy apartment, car, and clothes. They weren't making him happy. After listening to the podcast, Jake took action and moved into a place that cost him half as much, traded in the fancy car for a used Prius he paid cash for, and slashed his spending. Another big move Jake made was to refinance his private student loans with a 10% interest rate to 4%. He's putting every extra dollar toward student loans and will 100% debt-free by the end of January. The Talent Stacker podcast has lit a fire under him and Jake's goal for the end of 2021 is to hit $100,000 net worth. Being able to work remotely, Jake has moved back in with his parents and reduced his rent to zero. Bradsays he credits living with his parents after graduation as the springboard for everything that came after. Zach says it's been a great year figuring out his why of FI and taking actionable steps. He thinks whether we realize it or not, we're all chasing time and health. He wants to travel the world in business class and loves his 2006 Hyundai Sonata. For Zach, finding happiness wherever he is at is the FI goal. It's all about what you personally value. His investments are set up to meet his passive income goal. At the beginning of COVID, Zach started two businesses. While a pandemic doesn't sound like a good time to start a business, Zach says any time of strife and change creates opportunity. Next up is Kosta who says despite the tough year, his path to FI has accelerated and COVID hammered home the need to do it. Three years ago, Kosta and his fiance thought they had made it with their lucrative careers. But when he learned about FI in 2018, he was hooked. They worked together as a team to pay down student loan debt and put a 20% downpayment on the house they bought at the beginning of this year. Health issues that may take both of them out of work motivated them to ensure their later years were easier. And a by-product of FI, Kosta has lost 84 funds this year! Resources Mentioned In Today's Conversation Buy a ChooseFI ebook bundle and save an extra 15% with code “holiday15” Build a better portfolio with M1 Finance ChooseFI ebook store If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
It's the ChooseFI Christmas Edition where we hear end-of-year wins direct from our community members. During this live event, listeners shared the actions they've taken during the past year that have helped them to spend less, earn more, and enjoy the journey. This year, the year-end-win episode took place in a three hour live Facebook and YouTube event featuring around 20 members of the community. Despite how tough this year has been, many people were able to implement some of the strategies and tactics discussed on the show into practice and find more margin in their lives. The first featured win comes from Valerie. She purchased a condo a couple of years ago and has been working on renovating it. While not a financial win, Valerie says putting it behind her is her biggest personal win. Finally closing out the permits allowed her to refinance her mortgage, saving her $466 a month. She was also able to pay off her credit card renovation debt, saving her an additional $600 a month. In total, Valerie paid off $34,000 of debt. Besides the debt, Valerie also maxed out contributions to her HSA and because she now has an additional $1,000 a month, she increased her 401k contributions from 8% to 11%. Valerie opened her first taxable investment account and rebalanced her portfolio, while her side hustles earned her $4,000, mostly from participating in focus groups. Due to COVID, Valerie wasn't spending as much money and it allowed her to focus on things she might not have had the time to do and she's now one-third of the way to her FI number and hoping to retire by 2030. Brad comments that cutting $1,000 in monthly expenses is $300,000 less Valerie needs in retirement when using the 4% rule. Valerie has been sharing her copy of ChooseFI: Your Blueprint to Financial Independence with family members. The second end-0f-year-win comes from Michelle who learned about ChooseFI after Googling financial independence while attending a conference. To convert her husband, she had him read ChooseFI's book and then scheduled a date night to discuss it. Michelle‘s husband, Greg, never thought he could retire early. They didn't have a lot of debt but bought into the concept of getting 1% better and things began to snowball. During the last year, Michelle and Greg joined their finances, maxed out their 401k, sold a rental home, bought a short-term rental, and broke up with their financial advisor. They opened a Vanguard account and moved their accounts over after discovering their financial advisor was making a lot more in fees than the $50 per month to come up with an investment plan. Because Michelle and Greg met later in life, they had maintained separate accounts. After joining finances and being transparent, they found making small 1% better changes each week didn't hurt at all. All of the extra money that came in from COVID refunds or bonuses went toward paying off the debt from new windows. They also started travel hacking. Michelle says when breaking up with your finical advisor, chances are they won't understand FI, so state that it's you not them and feel free to contact her for help breaking up with your advisor. Up next is Chris, who has been a member of the FI community for about three years. He got started by reading The Simple Path to Wealth and Your Money or Your Life. For Chris, the pandemic has been an opportunity allowing him to save $15,000. He's been able to max out his HSA and Simple IRA. Chris also has two adult children to who he has introduced the concept of FI, as well as his nieces and nephews who have been very receptive to the information Chris has provided. He says to reach out and if they are interested they will let you know. One of the actions Chris took this year was to switch to Policygenius, which saved him 50% on policy premiums. The next end-of-year-win comes from Lauren. Lauren found ChooseFI in late-August and is on Episode 61R. Lauren got a side gig in August being a census worker which enabled her to pay off all $7,000 she had in consumer debt. With all of the premium pay she earned, it ended up being $1,300 a week. She says she wouldn't have taken on the side hustle if it wasn't for the podcast. After learning about 403b's, she switched from stocks and bonds to VTSAX. She and her husband also opened up a joint VTSAX account and reduced all of their monthly recurring bills to as low as they could possibly be. She's currently looking for hacks for satellite service. In July, they moved into a home that they are caretakers for, which is an upgrade that eliminated $1,100 in rent. They found the caretaker job through her mother but says other caretaker or home sitting positions can be found online. Since August, Lauren has earned or save roughly $9,000 since finding ChooseFI and taking action. They are now trying to pump as much money as possible into retirement accounts. When an old job asked her to come back to work for them, she opted to focus on what things were important, like the baby she and her husband are expecting and how they can raise it frugally. Resources Mentioned In Today's Conversation Register for The Simple Startup Winter Challenge and save 15% with the promo code “podcast” Automate your investing strategy with M1 Finance Sign up for the ChooseFI Foundation's FREE FI101 course Get the ChooseFI Foundation's FREE preK-12 finical literacy curriculum If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
280 | The Debt Free Guys

280 | The Debt Free Guys


Is it possible to live fabulously without being fabulously broke? The Debt Free Guys say you can. After a year and a half of dating, John and David finally came out of the closet to each other regarding their finances. Between the two of them, they had $51,000 in credit card debt even though they had 15 years of experience in financial services helping others with managing their money. Starting with the first credit card his parents gave him for emergencies, David began a 17-year run carrying credit card debt. Instead of reserving for emergencies, he viewed it as a source of side money and never understood the value of paying it off. Despite never paying the balance off, his credit card limits kept increasing. After accumulating a significant amount of credit card, he began having trouble making even the minimum payments. Once, when his parents wired him money, it was immediately garnished from his bank account because he had failed to make payments. And yet he still didn't learn his lesson. Both John and David came from a time when it wasn't okay to be gay. As a result of being a part of a marginalized community, many parts of society sent the message that they couldn't be who they were. The baggage they carried, as a result, manifested itself in various ways, one of which can be financial challenges. Prudential conducted a study that showed there is a sexual orientation and gender identity pay gap. A university study has also shown that simply being gender non-conforming can limit you from getting a job or being promoted. As a result, gay men sometimes seek validation through their clothing, bodies, cars, houses, and vacations even if they have to finance it. The LGBT community hasn't traditionally fit the image of retired couples financial services companies market to. The community hasn't been encouraged through representation to think about their finances. The premise of the Queer Money Podcast is the get the finance conversation started which is what any community needs to start moving toward financial security. They challenge the community to think about what it is they truly want in life despite how they are told they should look, act, and want. It was the trap they had been living in. Although they were making decent salaries and experts in money, John and David weren't living according to their values. After having the discussion, they decided what they wanted was to be able to retire comfortably, travel without accumulating credit card debt, and give back to the LGBT community in a way that didn't penalize them. David says that even in the financial services industry there is a facade and although the experts know what they should do, they are hiding the truth about who they really are. Even for those who know the tricks to save, it can be hard to put it into practice. When you don't tell the truth about who you really are, you don't seek assistance or help to become the person you are pretending to be. While their credit card debt was at $51,000, John and David were spending $10,000 a year in interest payments. They believe that like them, most people who have similarly high credit card debts have a spending problem, not an income problem. The first step is to sit down and have the conversation with yourself, your partner, or your family about what it is you want your life to look like. The second step was eye-opening. John and David performed a spending analysis tracking when every penny spent had gone in the previous year. They had been living like rock stars, spending money on dining out, happy hours, designer clothing, and travel yet they didn't think their quality of life had been that great. They finally realized they were financial messes when walking into their dark, basement apartment right after considering buying land to build a vacation home on in the Colorado mountains. They questioned where their life was going and confessed their debts to each other. Figuring out what they wanted took three to four months, the spending analysis took a weekend, and it was two and a half years to pay off the credit card debt. Unfortunately, after paying it off, they reverted to old habits and racked up $6,000 on reedit cards again. Realizing they were on the wrong path again, they corrected course and paid that off in several more months. The spending analysis showed that with several small tweaks, they could recoup a lot of their spending. Grocery and dining out costs were cut and when going out with friends, they tried to do it without spending much money so they could maintain the social aspect of their lives. John and David knew that if they could not have fun during the process of paying off debt, it would not last. When confessing why they couldn't spend on activities like before, they found the friends they told were completely fine with it. For some friends, it created an opportunity to have their own money conversation, while other friends did drift away. One of the strategies John and David used was to look for free or inexpensive actives they could do on the days they wanted to be social with others. They were blown away by the number of free and fun activities they found in the city of Denver. Learning that you don't have to spend a ton of money to have a good time changed the way they thought about having a good time. They called it the NSE for Not So Expensive. John and David believe that when you put it out that you are saving for your financial goals, you begin to attract other people who want to have that goal in their life too and build a community of people supporting the lifestyle you want to create. Another tactic John and David used were Milestone Rewards. They would stash away a small mouth of money to have some fun with as a reward when they had met a goal, such as paying off a certain amount of debt. After completing the spending analysis, they realized it would take four to six years to pay off their debt using the snowball or avalanche methods. They knew they needed to do it quickly or they would get bored. It was the high-interest credit card debt preventing them from paying it off quickly, so they came up with the debt lasso method. With the debt lasso method, they lowered their interest rate to as low as possible and consolidated the credit card debt to as few locations as possible. The debt lasso method has several pieces to it. You have to commit to not adding more to your card balances and commit to paying a specific amount every single month toward the balances. Next, similar to the snowball method, if you can pay one off in full in a month or two, do it and get the quick win. Then use the lasso process to pull all of the balances into as few locations as possible at as low-interest rates as possible. Then everything should be automated. When monthly payments are automated, you'll never miss a payment which is when interest rates will be raised. And finally, monitor your accounts so you know when a card is paid off and move payments to the next account or make extra payments when you can. The snowball method works on emotion and has you pay off cards with the lowest balances, one after the other. In contrast, the avalanche process has you pay off the cards with the highest interest rates first. Using the debt lasso method, they did have to pay approximately 3% in balance transfer fees, but they shaved years off the repayment plan saving more in interest payments. Because John and David each had good credit, they were able to consolidate the debt from two to three high-interest cards each to 0% interest for 12-18 months cards and continued to roll the debt to 0% interest cards as needed while paying down their debt. On the Debt Free Guys website, they have created a calculator to estimate how long it will take to pay credit card debt off using different payoff methods. They encourage folks to pay the most money toward cards with the highest interest rates. John and David say that while 0% credit cards may not be plentiful right now, they've found that credit card companies will often send out 0% offers when a credit card's debt has been paid off because they know you likely have other credit card debt. Just be sure to understand the fine print to avoid any unpleasant surprises. It is incredibly helpful for partners to be in the same state of mind when it comes to paying off debt. It's also useful to find a tribe of people who are doing it or an accountability partner. The Debt Free Guys have a weekly call named Money Therapy included with their credit card payoff course. To join the community and get the debt lasso calculator, go to Resources Mentioned In Today's Conversation Buy a ChooseFI ebook bundle and save an extra 15% with code "holiday15" Join the Debt Free Guys community Start investing outside of your retirement accounts with M1 Finance Find the right freelancer for your job with Fiverr and get one free year with promo code "ChooseFI" If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
Teachers have been getting taken advantage of when it comes to their investment options. Thankfully, the internet and technology have made it easier to get the word out and help teachers wanting to do better. During his first year of teaching, Dan Otter was asked if he cared about his financial future. He politely listened to a hardball sales pitch about an investment scheme he didn't fully understand. Rather than blindly following other teachers at his school who had invested in it, Dan began to educate himself by learning about John Bogle, Vanguard, and low-cost investing. He learned the salesperson who had approached him was trying to sell him a high-cost annuity inside a 403b and that it was a terrible product. Unfortunately, most of his colleagues had signed up for these poor investment products despite having more than 100 options available to them, including Vanguard. Dan began to speak up and asked pointed questions when other teachers began to talk about their sales agent in the teacher's lounge. Though he had never done it before, he started looking at their statements and showing them how much the fees were. Appreciating Dan‘s insight and help, it was suggested that he put on workshops. After thinking about it, he bought the domain 403bWise, and with help from a friend, they built and launched the website in March 2000. The mission of the website was education and advocacy, where teachers and school employees could come and learn about the 403b in a non-sales environment and also advocate for low-cost options like Vanguard. Although this was 20 years ago, Dan says the problem with 403b persists today. Teachers usually find 403bWise after they have been sold one of these expensive products. Dan says that not all 403b's are created equal. After working in different environments where 403b's are available. They were largely terrible in the public school systems with many vendors. Private schools generally have just one vendor, as do universities, like Fidelity, TIAA-CREF, or Vanguard. 403b's fall outside of federal oversight, specifically Arista regulation, so the employer does not have the same kind of fiduciary duty. Just being on the list signifies tacit endorsement, however, the vendors are not vetted by the school districts. Just because you aren't paying money out of pocket, doesn't mean there are no fees. Vendors make the fees hard to find. Teachers all over the country can get fee information on the website, Dan says to look for costs in two places; mortality and expense, and then look at the mutual funds that are part of the annuity. If you find out that you are in a bad product, you may also have to pay 7% of your balance just to get out of it. Using the hypothetical example of a relatively new teacher earning $50,000 per year who expects to retire after 30 years, the difference between investing in one of these terrible annuity products versus one found after learning more from 403bWise can be $200,000. Over 35 years, a teacher contributing $250 a month earning 6% will earn $185,391 when investing with one of the lunchroom sales agents, while the teacher investing the same $250 a month earning 6% interest with a low-cost company will have $343,000 at the end of 35 years. Dan was able to visit the Vanguard campus as a guest of their 403b unit and says they are very focused on this market and getting on vendor lists. A good fee for a 403b is 0.5, or 50 basis points, or less. Companies like Fidelity, Vanguard, and Aspire Financial Services are good. In California, CalSTERS, the state pension agency, created their own 403b after and is on most vendor lists. Do not confuse Fidelity with American Fidelity Assurance, which is a high-cost company. A 457 may be an even better plan than the 403b. Reputable 457 plan companies include TIAA-CREF, T. Rowe Price, and Vanguard. The National Tax Deferred Savings Association is a well-funded lobby with an interest in maintaining a high cost, multi-vendor 403b environment. Montgomery Country schools in Maryland is one of the few school districts to put their 403b plan out for bid. They reduced the number of vendors down to just one, Fidelity, and plan participation and contribution have increased. Dan would like to see every district do what Montgomery County did, but it needs to start with the teachers from the ground up. The 403Wise website has three main sections, education, advocacy, and community. Under the Quick Start Guide, the tool, Find a Good Vendor, on the home page allows teachers to search within their own school district. 403b compliance is often outsourced to third-party administrators who bring in vendors who yield them revenue. Even one of the big national unions, the NEA, has an endorsement deal with a financial company called Security Benefit, which offers a product called the NEA Value Builder with load fees of 5%. After being sued, they offer a fantastic and unadvertised product called NEA Direct Investment. Anyone who would like to try and make a difference in their school district should reach out to 403bWise because they are building a network of advocates. In addition to joining the Facebook group, reviewing the website, and learning about the 403b vendors available to you, check to see if a 457b plan is also available. A 457b works similarly to a 403b but has a few more amazing benefits. If you separate from service, you can access the money in a 457b tax and penalty-free. Also, when just three years before retirement age, you may double contributions. And finally, 457b's requires more fiduciary oversight. Resources Mentioned In Today's Conversation Register for the Simple Startup Winter Challenge and save 15% with the code "podcast" ChooseFI Episode 220 Fix My 403b with Nancy Bachety Fix My 403b Buy any 3 month plan and get another 3 months for free when you switch to Mint Mobile Create a shopping list with Honey for a chance to win! If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
Don't fall for the misconception that financial independence is just for 20 and 30-year-olds. It is for everyone at any age and it's not too late to get started. Amy had a wake-up call in her early 40s. Starting with no net worth, through flexibility and adaptability, she got started and reclaimed decades of her life. Amy describes herself as a trier of many things. She used to wonder how other people do it. How do other people drive new SUVs, live in a large home, dine out, and save for their kids' education and their own retirement? She says most people don't do it all. You have to select for yourself what's important and save wisely to spend on it. Previously, Amy was trying to keep up with everybody else, thinking that she needed it all to be happy. She was buying all the stuff but wasn't saving for the future. She heard something on the radio one day about needing to save a million dollars for retirement and thought it didn't seem possible to get there. She and her husband were in their 40s and she knew something had to change. Amy began looking at what other people were doing but what she didn't know if that everybody was just like her, trying to keep up and not saving for the future. She had grown up with a single mom who had a lower-middle-class income. She always wanted more because she felt like she was always lacking. When she got a job and was earning money, she worked hard and thought she deserved all those things everyone else had. She had fallen into the trap of thinking money equals happiness and once in, it was hard to get out of that trap. While she had a mortgage and car loans, she didn't have much other debt. However, she was spending almost everything coming in and her net worth wasn't moving forward much. After a divorce a the age of 43, Amy's net worth was approximately $150,000. The desire to get out of a job she hated and start her own business lead her to examine her spending. She began researching methods and ideas for saving money where she found Mr. Money Mustache and many other personal finance blogs and websites. Though Amy realized she and her new husband were older, she thought that they could make significant changes and create the financial space they needed to retire early for them. Trying to keep up with everybody else wasn't getting them anywhere, but she might be able to learn and try to keep up with the people saving money and retiring early even if they were far younger. Originally, they had been thinking they would don't retire until 67, so retiring in 10 years in their 50s sounded much better. Trying to convince her husband to get on board with the changes that needed to be made meant that his habits had to change. They had to reframe their thinking. Amy says the Dave Ramsey quote sums it up, “Live like no one else now, so you can live like no one else later.“ They realized that despite chasing happiness by going out to dinner and buying things wasn't actually making them happy. Cutting back didn't feel like deprivation because they weren't things that weren't meaningful or lighting them up. Amy and her husband reevaluated where their money was being spent. She thinks making communication a foundation of their marriage was essential. It was hard to talk about what they wanted their lives to look like 10 and 20 years down the road and how they were living five years ago wasn't going to get them there. Using the 25 times expenses rule, Amy guessed they would need a million dollars to retire and targeted 2024 for retirement. To do it, they cut expenses, got rid of their newer vehicles, and refinanced to a 15-year mortgage. To increase their incomes, they both changed jobs twice. With all of the changes they made and a phenomenal stock market, they have been able to cut their timeline to financial independence down. They considered themselves FI in 2019, just six years from when they started. Amy was able to increase her income during those six years by finally completing her degree after going to school part-time while also working. It gave her the confidence to try and find a better paying position. Because she was a hard-worker and stayed in touch with people on LinkedIn, she was approached about a new position. She then negated the significant salary increases. To prepare for salary negotiations, Amy used Glassdoor and LinkedIn premium to see what other positions were paying. Amy says you have to believe it's possible never too late to start. You have to be flexible, willing to embrace fear and go for it. Give up the ego and be willing to learn, even from a 25-year-old. Stop worrying about what other people think. Stuff isn't going to make you happy, but having your family safe and secure and being able to retire will. The changes Amy made were sacrifices, they were changes that gave her options later. If you're in your 40s and you've never questioned drift, there's probably 30% you can cut without missing it. Initially, Amy and her husband cut too far, but then they added some things back in. Now they mindfully choose when to go out and enjoy craft beer or eating out. Amy says happiness ebbs and flows. Her happiest moments are with her grandkids. She works a lot on her passion projects which brings her a lot of joy. Her blog, shares a little about her story, what she is doing, and how important it is for others to take action. was started as a safe space for women to learn about personal finance from a female perspective, though 40% of their audience is now male. The content on Women Who Money was leveled for Beginner, Intermediate, and Advances personal finance knowledge with over 400 articles. Resources Mentioned In Today's Conversation Set your business up for success finding freelance talent with Fiverr and get one year free and save 10% with promo code “ChooseFI”. Better optimize your payments with Checkout Get started on your own journey to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
Setting up your financial life includes updating your investor policy statement and examining the rationale for equal weighting inside your index funds. Brad is giving his physical fitness a boost in December with a month-long burpee challenge. A full-body exercise that can be done quickly at home without any equipment, Jonathan asks what would change about your life if you took the challenge of doing 10 burpees every day for the next year? Brad was inspired to take on the burpee challenge after watching Alan Donegan and his wife, Katie, in a video they posted of themselves doing burpees. They weren't holding anything back and completing each rep with a high degree of difficulty. He wondered what it would look like to give everything your all in life, like Alan and Katie were with their burpees? Jonathan reflected on how he is often more focused on getting to the end result than he is in the quality of the movement, which he likens to the old saying about losing sight of the forest for the trees. We should focus on systems, processes, and workflow, over results. Get up off the couch and do something that will make your life better in some small way. Cancel a subscription, get rid of convenience, meal plan, do something that makes your life 1% better. And if you start doing burpees as a result of this episode, send in an email to let Brad and Jonathan know. Although we often talk about and identify the massive actions people can take to make their financial lives better, the community has been very receptive to the idea of aggregation of marginal gains. This year, Jonathan has been having conversations with his wife about their investor policy statement and what changes they might make to it since they feel like they are in a place of calm and unemotional decisions can be made. Brad and Laura believe in thinking long-term, lowering their expenses, continuing to invest, and having things on autopilot. Their investments are almost entirely in low-cost brand-based index funds, like total stock market and S&P 500 funds. they also do have some bonds, international stock funds, and rental real estate. Jonathan and Dani have similar investing strategies. They invest for the long-term and diversify in low-cost funds to avoid fees. Recently, Brad and Jonathan discussed the difference between a total stock market index fund and an S&P 500 index fund and how with a cap-weighted fund you a disproportionate amount of the largest companies. A lot of investors believe you should try to have small and mid-cap companies equally weighted in your portfolio. It used to be difficult to set your portfolio this way. Recently, online investment firms have come online, such as M1 Finance, Betterment, and Wealth Front, whose interfaces have made this significantly easier to do. Jonathan recently conducted an experiment with his own investments following one of Paul Merriman's portfolios that can be found on M1 Finance. Fifty percent went into a total stock market index fund, and the other 50% went into an equally weighted fund. With the impact COVID had on small businesses this year, the equally-weighted portfolio was crushed. However, when pursuing FI, we are interested in performance over the long-term and Jonathan notes that the smaller companies that have been crushed this year, might actually be on sale. Because Jonathan doesn't like sitting on a bunch of cash, even in an emergency fund, the idea of negative correlation is appealing to him. He wants his emergency fund to hold steady or go up when the market is down and is willing to sacrifice a little bit of return to achieve that. Your options to equally weight index funds may be more limited at large institutional firms, but with M1 Finance, Jonathan was able to set up a Negative Correlation pie, a Can I Pick pie, and an Equities pie. Jonathan's M1 Finance account acts like an emergency fund but is also a growth machine. It is more conservative than his 401Ks. He views these taxable investments as another form of savings. Some of Paul Merriman's recommended ticker symbols are VIOO, the Small Cap 600, IJS, the Small Cap 600 value, VOV, the 1000 Value index fund, VOO, the S&P 500, and others like VEA and VWO. While many of us want to keep things simple and do not want to be stock picking, when investing in something like an S&P 500 Index fund, we are essentially stock picking. Understanding that, Brad still chooses to invest mainly in total stock market index funds. In episode 194, Frank Vasquez talked about after taking a hammering in 2008, he wanted something in his portfolio that would go up when others were fleeing the market. He discussed corporate bonds, precious metals, and US treasuries were some of the types of investments people flee to. Jonathan and Dani decided to invest in precious metals, which will hopefully be more effective than a savings account While Brad doesn't believe in investing gold, Jonathan notes that if there is ever a loss in confidence in government, people will flee fiat currencies. It's good to understand that these different tools are out there and react to market conditions differently. A year-end review is an excellent time to decide what to invest in rationally and from a point of understanding your own psychology. The first week's community win winner is Chris, who recently became debt-free, max out his 401K and HSA, as well as he and his wife's IRAs. They also began investing in a taxable account and contributing to their son's 529 accounts. The second winner is Khang, who negotiated faster internet for less money using online chat. It never hurts to ask, but if you never ask, it's always a no. Resources Mentioned In Today's Conversation Buy a ChooseFI ebook bundle and save 15% with the code “holiday15” M1 Finance Review Get $10 when you sign up today with M1 Finance Start building your better portfolio today with Fundrise ChooseFI Episode 075 The Unfair Advantages of the Individual Investor with Brian Feroldi ChooseFI Episode 200 Stock Fundamentals with Brian Feroldi ChooseFI Episode 122R Learn More About Dividend Investing ChooseFI Episode 194 The Role of Bonds in a Portfolio with Frank Vasquez Sign up for Brad's weekly newsletter at   If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
Continuing the conversation discussing financial basics, today's episode covers how to get started investing, banking, and setting up your financial life. As a recent college graduate, Brad had the motivation to get his financial life together but didn't really know how to go about doing it. During his first job, he wanted to open up a Roth IRA after learning about the power of compound interest. Unfortunately, the investment advisor who helped get him set up invested in a fund with a 5% upfront load. That means 5% of his investment automatically went to pay the advisor's commission. Brad'sinvestment was treated like a quick payday for the advisor. Not all financial advisors are bad, but you can learn how to get set up with a low-fee or no-fee investment without feeling confused or overwhelmed by the process. It's important to understand all of the possible fees that can impact the return on your investment. In addition to load fees, there are other fees to watch for, such as assets under management fees where you pay a percentage for the advisor to manage your account, or expense ratios which pay the team who actively manage the activity of buying and selling within the fund account, and with a surrender charge, you may pay fees to get your money out of the investment. If Jonathan was giving a family member financial advice on how to get started, it would begin with banking. Do they have a banking system set up and understand the differences between checking and savings accounts? What other variables should be considered? Getting a checking account set up is first and becomes the repository for income coming in and money going out, such as paying bills. Brad uses autopay to have many bills automatically draft from his checking account. Brad likes simplicity. Because he knows which days money will be coming in, he sets up his bill autopay dates around that. He also ensures he has a couple extra thousand dollars in his checking account to cover anything unexpected with him having to track the balance every day. Jonathan does something similar in that he uses the pay from last month to pay this month's bills, which means there is always around a month's worth of pay in his account giving him plenty of margin. Try to minimize fees in every aspect of your life. Select a bank account option that requires the lowest minimum account balance to avoid a monthly fee. Avoid overdraft fees by asking the bank to remove that option or connect to a credit card. Don't pay ATM fees by trying not to use cash or plan ahead and withdraw cash from your own bank fee-free. Some online banks will reimburse ATM fees. Brad doesn't keep all of his financial assets in a checking account. He used to use a saving account at the same bank that was connected to his checking account. However, it earned very little in interest. Online savings accounts, like those at CIT Bank, frequently offer a much higher interest rate on their savings accounts and still allow access to the money within 2-3 business days. Your investing goals are determined by two items: your cashflow and what sort of safety net you need. Money that might be needed in the short-term and accessible within days, such as for emergencies, should be kept in cash in a savings account. Money that isn't needed for 10 years or more, should be invested because money can lose value over time due to inflation. Instead, that money can be making money and beating inflation. To maintain value, your money needs to make 1-3% per year just to keep pace with inflation. Knowing how much to keep in savings and when to move to investing depends on your risk tolerance. Make sure your bank is FDIC insured, which means it's backed by the United States Government and covers depositors in the event of bank failure. Once you have a checking account set up and you are putting away something each month into savings, getting started investing would be the next step. Brad says the best place to get started is with your company's 401K. Find out what the 401K match is and invest at least up to the match. The match is free money from your employer and technically part of your overall benefits package. It may be something like a 100% match on the first 3% of your salary you invest. If you make $100,000, 3% equals $3,000, it means you invest $3,000 of your salary and your company also puts in $3,000. It's a guaranteed return. If there's an option to check a box and automatically increase your contribution by 1% each year, do it. Instead of a 401K, teachers may have a 403b or 457 which are essentially the same type of investment vehicle. The maximum amount an employee may contribute in 2020 is $19,500. The total limit for employee and employer contributions combined in 2020 is $57,000. Each person needs to figure out what works best for them in terms of funding an emergency fund, paying off debt, investing in their 401K, or Roth IRA. Since contributions may be withdrawn from a Roth IRA tax and penalty-free, it could be used like an emergency fund. A 401K is funded with pre-tax dollars, meaning it was invested before that portion of your income was taxed. When it is withdrawn at the age of 59 1/2 or later, it gets taxed at your marginal tax bracket. When picking a fund within a 401K, Jonathan's strategy has been to look for index funds or anything with the index beside it. Brad notes that the list of funds may also show the funds' expense ratios. Look for the ones with the lowest expense ratios which will be the most similar to total stock market or S&P index funds. Go to Google and type in the ticker symbol to find out more about the specific fund. Actively managed funds are run by teams of well-compensated people whose goal is to beat the market. Their fees are incorporated into the expense ratios. Index funds do not try to beat the market, they try to track their market index. Their expense ratios are dramatically smaller since they are managed by a computer algorithm not a team of managers. ChooseFI is anti-debt, but not anti-credit card. Credit cards a financial tool when used responsibly and paid off on-time and in-full each and every month. Brad tries to use his credit card as much as possible for the safety and security credit card purchases provide, as well as for the travel rewards points that allow his family to travel the world for free or almost free. Resources Mentioned In Today's Conversation Register for The Simple Startup Winter Challenge and save 15% with promo code “podcast” ChooseFI Episode 272 Understanding Compound Interest and Investing for Beginners Save money shopping online with Honey Purchase a ChooseFI Publishing ebook bundle and save with code “holiday15” Take the free ChooseFI Travel Rewards course The Simple Path to Wealth by JL Collins If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
It's no secret that Brad and Jonathan's families are board game fans. One way they can typically save 20-60% on the cost of board games is by watching for price drops on Amazon using CamelCamelCamel. Brad was able to save a substantial amount on the purchase of a squat rack simply by being able to stand by and wait for the price to drop. Listener Liz heard about CamelCamelCamel on the podcast and added a list of board games to her watchlist. She was eventually able to purchase all of them at roughly half the list price. Life may be the ultimate board game where your finances are a piece of it. When you know the rules, it makes it easy to win. Just like there are strategies for winning at Monopoly, there is an unwritten and unspoken framework for living a better life. Now that 2020 is getting back to a more steady-state, it may be time to start wargaming your finances and look at your risk tolerance. This year that stress-tested our investor policy statements and mindset. Perhaps you don't have the risk tolerance you thought you did. Times of stress and uncertainty are not the time to make changes. Adjustments should be made when times are calm. There are different variables to consider and one of the questions to ask is “How much does your life actually cost?”. This can change over time and affect your risk tolerance. A couple of years ago, Brad intentionally increased his costs by moving to a more expensive home. Though it increased costs by 40-50%, they felt the life benefits would outweigh the additional costs. The only debt Jonathan has is his mortgage, reducing his structural expenses to housing, food, utilities, and insurance. He thinks even some of that could be cut down to support a survival budget if required. If this year has shown us anything, it's that your income source may not be a stable as you might have previously thought. You shouldn't be dependent upon anyone. There's a mindset of positivity that takes a terrible situation and figures out how to pivot. With your wargaming plans set, you can find a way out of it. Brad lived through a financial calamity at 22 years old when he worked for Arthur Anderson. After the Enron scandal, his company went out of business. He witnessed others who were living on the financial edge, but because Brad lived at home and had very little debt, he was fine. Jonathan says he doesn't mind spending a lot of money on an item, but he doesn't want to spend a lot of money on something that locks him into structural, recurring payments that make his life more expensive. If something were to happen to his business, Jonathan is confident that with the skill set he's acquired and one year of financial runway he's saved, he would have a very soft landing. The events of the last year have him reevaluating his investor policy statement, possibly driving changes to his investment allocation to a more conservative approach now that the market is at record highs. Jonathan is considering making these changes after riding the roller coaster of the last year and holding firm. Now that things are back to relative calm, he can make decisions based on knowing himself better, not based on fear. In the episode with Paul Merriman, he made the case for a portfolio that weights all of the asset classes evenly. Total stock market funds are cap-weighted, meaning the top companies make up a disproportionate percentage of the total market cap. Therefore, a disproportionate amount of your money is invested in these top companies and you aren't invested as diversely as you think. Jonathan has had half his money invested in a total stock market fund and half in a portfolio more similar to what Paul Merriman recommends through M1 Finance. Paul Merriman's method has gotten crushed in the last year, but over a 40 year window, it should bring higher returns. Jonathan is trying to figure out a mix that he is comfortable with. Another expense area to look at are investment fees. It used to be expensive to invest, but investment costs have become much more competitive. You don't need to spend 1% on commissions and another in expense ratios. Fees have gone to near zero if you look for them. Don't let people “help” by trading on your fear. War game your finances out. Think about the variables unique to you, analyze your risk tolerance, your income, your expenses, and what you have control over. This year's Year-End Wins episode will be a live podcast on Dec 8th at 7:30 pm Eastern time. RSVP for the live event at If you want to share your 2020 win, send an email to This week's book winner is Abbey. She turned 22 this year, is almost finished paying off $17,000 student loans and maxed out her Roth IRAs for 2019 and 2020, as well as her 403b, 457, and HSA, and broke the $100,000 mark in her first year of nursing. Congratulations, Abbey!   Resources Mentioned In Today's Conversation Register for The Simple Startup Winter Challenge and save 15% with promo code “podcast” Track prices on Amazon with CamelCamelCamel Make sure your payment systems are optimized and get more out of every transaction with ChooseFI Episode 194 The Role of Bonds in a Portfolio with Frank Vasquez ChooseFI Episode 097 The White Coat Investor ChooseFI Episode 091 The Stock Series Part 1 with JL Collins ChooseFI Episode 052 FIRE State of the Union with Todd Tresidder ChooseFI Episode 130 Paul Merriman Introduces the Ultimate Buy and Hold Portfolio The Simple Path to Wealth by JL Collins If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
It's end-of-year tax planning time. As you get further along in your financial independence journey, there are likely more end-of-year tax planning items you'll need to be aware of. Having a checklist to review annually is useful. It's been an unusual year and December is that time to begin making end-of-year tax considerations. In addition to the normal checklist, there may be additional items to consider in this remarkably different year. Sean Mullaney says unique to 2020 are Roth conversions. While Roth conversions should be on the checklist every year, this year there was a much greater chance of diminished income which may provide the opportunity to make Roth conversions in a lower marginal income tax bracket. In any year when income is much lower than it normally is, Roth conversions would be at the top of your mind. The deadline is December 31 and there are no extensions. While complex situations may benefit from professional consultations, anyone with mostly W2 income can find their tax brackets online. If your income has dropped from 22-24% to 10-12%, locking in a Roth conversation at that lower rate is effective tax planning. A Roth conversion is when you go into a traditional IRA account and convert it to a Roth IRA. This is a taxable event, but you are intentionally choosing it because you are in a lower tax bracket for the year rather than convert or withdraw funds in a letter year when your income is higher and the taxes will be higher. How much money should be converted to a Roth IRA? Sean says he has never encountered a client who has had too much money in a Roth IRA. While the action is irrevocable, there is no penalty for converting too much. If a portion of the conversation is taxed at 22%, it is not the most efficient conversion, but your future self will likely still be quite happy that you did it. Some employers allow for Roth conversions within their 401K plans. The deadlines for completing some of these end-of-year tax planning checklist times vary. Solo 401Ks and qualified business income tax deductions should be completed as soon as possible. In addition to Roth conversions, another item with a Dec 31 deadline is charitable contributions. Checklist items with an April 15 deadline are traditional IRA, Roth IRA, and health savings account contributions. A good rule of thumb is individual tax accounts have a tax return deadline, not an end-of-year deadline. The reason solo 401Ks have an “as soon as possible” deadline is that unlike IRAs, solo 401Ks require more time and paperwork to do. It may not be necessary to have it funded by Dec 31, but you'll want it set up and have a well-documented game plan. S-corps do have to fund the employee-side by the end of the year. The first item on Sean‘s checklist is charitable contributions. With that category are two options to consider, a donor-advised fund if you plan to itemize deductions this year, or regular year-end charitable contributions. If you don't plan on itemizing, in 2020 up to $300 per tax return make be taken as a charitable contribution against your adjusted gross income. Another checklist item to be completed by the year's end are small business expenses since they are deducted when paid for, not when accrued. Businesses who have had a good 2020 may want to accelerate these payments to get the deduction this year. While businesses that have struggled in 2020 may want to hold off making payments until 2021. In response to a question from Brad regarding credit cards, Sean confirmed that credit cards work on a cash basis so the deduction takes place in the same in which the credit card was used, not when the credit card bill was paid. Paying bills with a check becomes a little trickier as you may need to prove to the IRS that the check was written and mailed on a business day prior to Dec 31 even if the vendor does not deposit the check until January of the following year. A backdoor Roth IRA applies when your income is too high to contribute to a regular Roth IRA. If you've done a backdoor Roth IRA in 2020, don't roll over any 401Ks, 403Bs, or 457s into tractional IRAs before Dec 31, wait until Jan 1 so it's not complicated by the pro-rata rule. To clean your investments up before leveraging the backdoor Roth technique, try and roll traditional IRA accounts into a new employer's 401K plan. Then implement the backdoor Roth IRA which may be done by April 15. Sean has a blog post describing the process to get clean with traditional IRAs before doing a backdoor Roth IRA. Tax-gain and tax-loss harvesting are also both Dec 31 deadlines. The stocks need to be sold by the end of the year. With tax-loss harvesting, you may not repurchase those securities within 30 days before or after the sale to comply with the wash sale rule. If you're in the 12% marginal federal income tax rate or lower, the capital gains rate today is 0%. You may want to sell stocks to diversify your portfolio or sell and rebuy the same stock to realize the large capital gain and reset your basis without paying federal income tax. Unlike tax-loss harvesting, there are no timing considerations to make when repurchasing the same stock with tax-gain harvesting. State income taxes may not favor capital gains in the same way the federal tax does. Keeping all of the rules and impacts of buying and selling straight can be confusing and time-consuming. It is helpful to keep your tax records as clean as possible by doing everything in a specific account for this purpose. Sean states that tax-loss harvesting should be a tactic and not a goal occurring only in years where you are down. State tax considerations to be mindful of are fourth quarter estimated tax payments and deduction planning. In California for example, it may be beneficial to take the standard federal deduction and itemize to take advantage of the state property deduction, possibly even pre-paying on property taxes. A FI framework allows you to play from a position of strength. The financial independence community can take advantage of timing their payments for certain things and make strategic decisions because they don't have the same issues with cashflow that people on a traditional path might have. While many in the financial independence community may be too young to think about required minimum distributions (RMD), it's good information to review for future planning. RMDs apply to all retirement accounts except Roth IRAs. Starting at age 72, minimum distributions will be required by Dec 31 or there is a penalty. However, in 2020, they have been canceled and you may want to convert it into a Roth. When you inherit an IRA, it doesn't matter how old you are. You are subject to an RMD or a 10-year rule. It would be wise to consult a tax professional when inheriting a sizable IRA. With an inherited Roth IRA, the account will have to be emptied within 10 years following the death of the original owner. Different rules may apply to eligible designated beneficiaries who may have RMDs instead. An adult who inherits a traditional IRA has a tax issue and probably will need professional assistance wit The year-end is a good time to update beneficiary designation forms. Financial institution accounts are governed by the beneficiary designation forms, not wills or trusts, so it's important to ensure these are up-t0-date. Year-end tax planning is great, but Sean likes long-term strategic tax planning to minimize your total tax over your lifetime. January is a great time to start long-term planning. As always, the discussion is general and educational in nature and does not constitute tax, investment, legal, or financial advice with respect to any particular taxpayer. Please consult your own advisors regarding your own unique situation.  Resources Mentioned In Today's Conversation Register for The Simple Startup Winter Challenge and save with promo code “podcast” Compare quotes from top insurers with PolicyGenius Take complete control over your finances with M1Finance Sean Mullaney's 2020 Year-End Tax Planning article Get started on your path to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
We're going back to basics and taking a deep dive into the Roth IRA and the levers, tools, and investing strategies available to investors. Although ChooseFI offers the free FI101 course, taking small actions are important. Get up to speed and start taking action with the free five-day challenge by going to ChooseFI/start. ChooseFI has presented basic investing strategies over the years and will revisit in the coming months to distill and hash out all of the different methods to understand the fundamentals. Many of the strategies have a lot of overlap starting with low-cost broad-based index funds. What they all share is a common-sense approach and simple investing strategy which is that time in the market is better than timing the market. Most traditional index funds are cap-weighted resulting in a higher percentage of money being invested in a few top companies. Rather than take a dogmatic approach to low-cost broad-based fund investing, it may require the application of scrutiny, being open-minded, intellectual honesty, and consideration. JL Collins helped open up Jonathan's eyes to the power of simplicity and helped give him the confidence to start doing better with his finances. But as the terms and concepts have become more familiar, other perspectives become visible, along with the pros and the cons, and the questions he's been able to ask have gotten better. The questions you have as you learn more are worth exploring to help build confidence in your plan. When investing, minimize fees as much as possible. Fees for buying and selling, expense ratios, and advisory fees are all negatively impact your long-term returns. We can learn new things and get rid of limiting beliefs. After a speculative real estate investment went poorly, Brad was afraid of real estate investing. However with some security, knowledge, and looking at it as a business, he has now invested in two single-family rentals which are doing well. Financial independence is not finances. It's not money, health, or time. It's all of it. It's making objective, fair-minded judgments about societal norms, seeking the truth, and making decisions in our best interests. Sean Mullaney is a big proponent of the Roth IRA and the possibility of using a Roth IRA as an emergency fund. Sean says that I all his years of practice, not one of his clients has ever had too much in Roth accounts. The advantage of the Roth IRA is flexibility. With a workplace 401k, your employer does not have to allow distributions and if they do, it is probably subject to penalties and taxes. In contrast, contributions may be withdrawn from a Roth IRA at any time, tax and penalty-free. In a world of uncertainty, you never know when you'll need access to these accounts, whether in an emergency or for early retirement. A Roth IRA can do double duty as an emergency fund and as retirement investing until a separate emergency fund can be established. Sean recommends reading the article on explaining Roth IRA Withdrawl and microlayers. Backdoor Roth IRAs are for high-income earners who do not qualify for regular Roth IRAs. Roth IRAs are funded with earned income up to an established limit outside of workplace retirement accounts. Roth IRA limitations for 2021 are a modified adjusted gross income of $198,000-208,000 for married couples and $125,00-140,000 for singles. For an emergency fund, only contributions that may be withdrawn from a Roth IRA. Over the course of contributing for many years, the balance should have grown, but only the contribution amount may be withdrawn tax and penalty-free. Roth IRA earnings may be withdrawn tax and penalty-free only if held in the Roth IRA for five years and you are 59 1/2. Contributions should really only be withdrawn for early retirement or in the event of an extreme emergency, not for minor emergency expenses as the money cannot be put back in. Sean says the same rule applies to health savings accounts. Leave the money in to grow tax and penalty-free because when you take it out, you stop the growth. Pay out-of-pocket instead and document the expenses to claim in the future when you really need the money. Brad and Jonathan scan their invoices into a Google drive. For those on the path to FI, unexpected expenses like a stained ankle are unfortunate events, not emergencies because FI puts you in a position of strength with additional options. This week's book winner is John, who negotiated a $100 per month rent discount by prepaying six months in advance using money saved for a future home down payment. The new location also allows John to bike to work saving on transportation costs. With this year being so tough for people, Jonathan thought back to an episode with Bradley, who made over $1 million in ten years with Salesforce. Intrigued by the conversation, he contacted Bradley again to see if his success was replicable. As a result, they built a training and job placement program and launched the Talent Stacker podcast. One of the students in the course was able to land a new job making $70,000 within 42 days of starting the program after being laid off from COVID. If interested in learning more about the program, visit talent As always, the discussion is general and educational in nature and does not constitute tax, investment, legal, or financial advice with respect to any particular taxpayer. Please consult your own advisors regarding your own unique situation.  Resources Mentioned In Today's Conversation Register for The Simple Startup Winter Challenge and save 15% with promo code “podcast” Enroll in ChooseFI's free financial independence training course ChooseFI episode 019 JL Collins The Stock Series Part 1 Sign up today with M1 Finance and get $10 to invest Purchase an ebook bundle from ChooseFI Publishing and get 15% with code “holiday15” ChooseFI episode 272 Understanding Compound Growth and Investing for Beginners Get started on your path to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
As the ChooseFI community continues to grow, it's necessary to discuss some fundamental basics that serve the audience who are just getting started, as well as provide a refresher for those who have been on the path for a long time. In this episode, we revisit the magic of compound interest and investing for beginners. Getting to financial independence where work becomes optional and your investments are producing enough income to live off of for the rest of your life is easier when you understand why saving and investing now is important. Kimberly asked a question in the ChooseFI Facebook group requesting help understanding compound interest and the basic principles of a compound interest account. Investopedia states that interest may either be simple or compounded. Simple interest is based on the principal amount. In contrast, compound interest is based on the principal amount plus the interest that accumulates on it every period. For example, in a simple interest calculation, a deposit of $1,000 earning 10% interest each year would earn $100 in the first year, resulting in a balance of $1,100 in year one, $1,200 in year two, and $1,300 in year three. In a simple interest calculation, the interest percentage is not applied to the interest earned beyond the initial principal. The real world, however, works on compound interest, which is based on the principal amount and the interest that has accumulated. Using the same example of $1,000 in principal and 10% interest, after the first year, the balance is the same at $1,100, but in year two, interest is calculated on the new balance, resulting in $110 of interest and a new balance of $1,210 going into year 3. It starts small in the early years but really ramps up later on. Using simple interest, a $1,000 investment at 10% will have earned $4,500 (45 years x $100), for a total of $5,500. To illustrate why compound interest is often called the 8th wonder of the world, when using compound interest, that $1,000 investment at 10% grows to $72,890. The difference becomes even more apparent when using the example of $1,000,000 earning 10% simple interest versus $500,000 earning 10% compound interest. After 45 years, the simple interest balance grows to $5,500,000, while the smaller $500,000 principal grows to $36,500,000 with compound interest. When you don't spend everything you make and invest in compound interest vehicles, you can be well on your way to becoming a millionaire or multimillionaire. Einstein has been attributed with saying, “Compound interest is the 8th wonder of the world. He who understands it, earns it…he who doesn't…pays it”. The benefits of saving and investing are not limited to the end of the 45 year period. There are benefits all along the way. Compounding returns are always working in your favor, creating income that you don't need to work for anymore. It's rare to earn a high enough income to become wealthy, but saving reasonable amounts of money and investing it can bring wealth in an intermediate amount of time. Where does a beginner go to start investing and earning compound interest? There's usually no one there to hold our hands and walk us through the process. Based on a video Brad recorded for The Simple Startup discussion how credit cards aid him while other pay interest on them, one of the students asked how Brad figured out how banking works and not pay interest on his credit cards. Using a credit card is frictionless for Brad. Not only are there excellent fraud and theft protections when using a credit card, he very rarely has to pay any fees to use it and he also has until the end of the statement close, followed by the statement due date to pay it off, which can be weeks after the purchase was made. As long as you pay in-time and in-full each month, there are no fees or interest when using a credit card. It is effectively an interest-free loan from the credit card company making it a great tool for those who have their financial life in order. You don't need to be afraid of credit cards, you just need to understand how they work. Do not get one if you cannot pay your balance on-time and in-full. You can reduce the friction and schedule it to autopay on-time in-full each month. There are studies that show people who use credit cards tend to spend 12% more on average. That may be true, but it's likely not the same people who understand the power of compound interest. The FI community is focused on increasing our savings rate, paying ourselves first, and buying back our own time. If you value something spend lavishly on it. If you don't care about something, why are you going to spend your money on Resources Mentioned In Today's Conversation ChooseFI's suite of financial calculators Learn ChooseFI's 3-card cashback strategy and earn $1,000 or more Get started on your path to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.    
271 | Future Proof

271 | Future Proof


In a world of uncertainty, how can we future-proof our skillset and also create an environment to help our kids thrive as adults? Growing up, Brad never thought about entrepreneurship, but as he has gotten more into this FI mindset, the concept has shifted for him and how he is a model and mentor for his girls. While Brad initially thought virtual learning might not be good, he has reframed it and now believes his daughters will look back on this year as a time when they were living their best life. Both girls have gone through The Simple Startup workbook, but Molly seemed especially taken to it. After spending a day last week cleaning out one of Brad‘s garden beds in her free time at home, his daughter Molly and her friend have decided they would like to start up a landscaping business. It may be that you just need to see the framework and behavior model for entrepreneurship. The business idea may not be as important as understanding the framework for building a business as quickly as possible. Brad sat down with Molly to help her think her way through what it is she is capable of and really wants to offer with her business. Whether or not her gardening endeavor ever takes off is less important than the thought process they worked through which can help her out the next time she has a business idea. Having these conversations with your kids is a great way to connect and future-proof their lives. While the majority of people in the world will never become entrepreneurs, it's good to start thinking like an entrepreneur and have evidence of what you have skills you have built. The Simple Startup still has openings for the Winter Challenge. One student from a previous course is 9-year-old Analise, who while hesitant at first, ended up crushing it with her business, Creative Card Designs. The concept behind Creative Card Designs are fun personalized cards you would want to send to someone to say hello, thank you, or for occasions like birthdays. Analise hand draws each card. She has some designs that can be personalized but also takes design requests. Her business mission statement is: To connect people by making quality, personalized cards for different occasions. Keeping her business under control, so far Analise has sold two cards. She wants to make it bigger, but sometimes she messes up and burns through her materials just making one card. So she's trying to scale her business by going digital. This will allow the cards to still be personalized, but make it easier on her. After coming up with the idea, starting the business, and creating different designs, Analise has set up a website for online ordering which goes directly to her Gmail account. Currently, she's charging about $5 a card and making a $2 profit, but by going digital, it will be easier to make the cards and allow her to possibly drop her prices. Brad thinks Analise will be able to test out the price for her cards and find the perfect per card price. Analise's motivation for starting the business was to make money, but also thinks it's good to learn how to take control of your own things and not always have to work for someone else. Andrea, Analise's mother, says the business has been going well and that her daughter has enjoyed learning and adding to her knowledge base. Andrea appreciates that someone is providing support and guidance when they have these ideas. Analise didn't go into the class with the card idea in mind. she had several ideas she was torn between and sought feedback from Rob and her classmates before settling on the personalized card business. Her advice to other budding entrepreneurs is that you have to come up with an idea for something people actually want, as well as something that will be profitable. She says that if you have a business, don't give up too quickly, and you have to work hard at it if you want to be successful. Analise isn't too afraid of failure. After drawing designs and spending all her money on materials, she realized she needed to just figure out another way. Andrea says that she's seen her daughter develop a sense of enablement, that she can come up with an idea and watch it grow, and also learning to persist when things aren't always simple or easy. The Simple Startup instructor, Rob, modeled coming up with solutions to get past obstacles the students encountered. Learning isn't about reciting facts, but learning how to flex your creative muscle and problem-solve to get things done. Andrea says The Simple Startup Camp was much more of a value proposition than she had expected. Being virtual, it was low-pressure, but also comprehensive and detailed with all the aspects of what's required to run a business. Analise even went through a mind-mapping exercise to assess her strengths, resources, and likes to come with a business idea. Although some lessons were virtual, Analise was always an active participant. Students in the camp had Rob and each other to reach out to if they were stuck. It was like her very own mastermind group. Anyone interested in purchasing a card from Creative Card Designs may visit, fill out the Google form, and Analise will get back to you. Payment will be made with Venmo. Analise is laying the groundwork for success, whether with this business of one in the future. Brad himself started several businesses before reaching some degree of success with Richmond Savers, Travel Miles 101, and finally ChooseFI. He picked up skills and knowledge all along the way. Since recording the podcast segment with Brad and Jonathan, Analise has gone digital, contacts more people, and doubled her orders. There's no fear of failure. It's iterative and failing forward. Once put into practice, all of the skills learned along the way while building a business become demonstrated skills for college and job applications. Adding skill to your talent stack and thinking like an entrepreneur is something that the FI community does well. Brad loves being able to read listener emails, like the one from Laura who found ChooseFI episode 265 Talent Stacker, really resonated with her. Because of Jonathan‘s story, she now realizes that she isn't stuck working as a veterinarian forever and can find something else that lights her fire. Many professionals like Jonathan and Laura took out six figures of student loan debt only to find that it wasn't a fair exchange. Getting rid of the student loan debt is tough, but it's the right choice. It will give you options. While Jonathan can point to a lost decade in his life that he spent in pharmacy school, it's an intellectual exercise. There was an opportunity cost, but there are no sunk costs anymore. Jonathan recently found a website and associated app called Supercook which allows you to save money by shopping your cabinets. After completing an inventory of your cabinets, the website will find recipes you can make by only adding a few ingredients. How much money could you save using up what you already have on hand? Reach out to and let us know the results. It's been a tough year for the ChooseFI local groups, but some are still meeting virtually or for socially distanced activities, like hikes. David wrote in saying Brisbane, Australia just has its first meetup. 2021 is bringing better things and we are coming back. ChooseFI is looking to do a grand meet up at a conference next Fall called The Unstuck Project. The date is still to be determined. This week's FI Weekly winners are Josh, Sheena, and Hayden. After finding the podcast this summer. since April, they have turned their garage into a guest house and listed it on Airbnb, bought an investment property, contributed all of his wife's income to her 401K, began contributing to an IRA, opened an M1 Finance account, opened a Roth IRA for their son, are closing on a second investment property soon, and opened a Chase Sapphire Preferred card. Resources Mentioned In Today's Conversation ChooseFI episode 269 Let's Make Lemonade With a Twist Register for The Simple Startup Winter Challenge Join the Facebook group, ChooseFI Meals and Recipes Purchase a ChooseFI Publishing ebook bundle and get an extra 15% off with code Holiday15 Easily shop for and compare life insurance with PolicyGenius Learn ChooseFI's 3-card cashback strategy and earn $1,000 or more Get started on your path to financial independence at If You Want To Support ChooseFI: Earn $1,000 in cashback with ChooseFI's 3-card credit card strategy.  Share FI by sending a friend ChooseFI: Your Blueprint to Financial Independence.
Comments (51)

Amber Ackerson

I never thought to use instagram or twitter to find work. great podcast!

Jan 14th

Matthew McKibben

I bought my first rental property Jan 1st 2020. it's a triplex in St. Paul, MN. I'm house hacking with the lady and we paid $245,000 for it. it needed a little work but we moved into the rough unit and have completed everything but the bathroom remodel. we are now living in an almost 1/4 of a million dollar property and pay about $340 out of pocket after all bill's and cap x. we now own our own property and are able to save an extra $860 a month because we are no longer paying $1200 to rent our old apartment. I got laid off for over a month because of Covid-19 and idk if we would have been able to afford our apartment. House hacking has not only increased my net worth but it also saved us from needing to move into my parents house to be able to afford our other responsibilities.

Nov 6th

Steve Diahy

what was the point of this episode

Sep 25th

Rute Silva Brito

Really interesting episode that will literally save me a ton of money! Thank you.

Jul 18th

Astrid Poole

You lost me at "we both had high salaries"... not relatable.

Jul 9th

Chad Crispell

Excellent episode.. Inspiring.. its just math! taketh what the alley giveth !

Jun 26th

Guillaume de Lamaziere

good for you

Jun 7th

Mr Charles

I have enjoyed this podcast from the beginning but no more. They're more focused on politics and censoring people at their Facebook page

Jun 4th


Great podcast but they have massively uped the number of adverts.

May 16th


This podcast has truly disrupted my status quo in all of the best ways possible. I was never a good saver or investor. After finding this pod in 2017 my wife and I have made incredible financial strides and it's all owed to Brad and Jonathan and their super informative, easily digestible, game changing teachings. These guys come off just like regular dudes that are extremely interested in getting this super power out to as many people as they can. Thank you Jonathan & Brad please keep up the great work...the fire is spreading!

Mar 5th

Steve Diahy

would of been nice to hear more of the how to and info on their portfolio

Jan 27th

Kim Litinas

Great podcast! Connected with me.

Dec 8th

Karen Meyer

guys, i love your podcast! after listening to this episode i purchased The Simple Path To Wealth and Choose FI. thank you so much for all you do...for educating me and giving me the tools i need to do this!!

Nov 19th

Gaurav Tewary

The maths is way off! If you’re paying 35% tax and need to spend $1000 post tax, you need to earn almost 1600, not 1300$ pre tax. 1600*.65=1040

Nov 18th

Ephraim Muchemi

This is such an amazing episode! It was relevant and due.

Oct 8th

Aaron Webb

this is super helpful!

Sep 30th

Christopher Wills

Super podcast, I have been listening for just under 2 years and the content is still relevant. great job covering a variety of topics associated with reaching FI, lifestyle and just being a good human.

Sep 16th

Clare Tyler

a lot of preamble! 15 mins in and haven't addressed the podcast title. I'm sure theres great info here but it makes for hard listening. I would appreciate a to the point style.

Sep 6th

Jenn l

how do you find the baseline point cost in order to determine the sweet spot?

Sep 4th
Reply (1)

Aoriseth Nirmno

What options are there for people living in Europe? Credit card rewards here seem to be underwhelming or non existent. Is it possible to open an American credit card while living in Europe and use the bonuses that way?

Aug 17th
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